- A $300 million lawsuit against Greenpeace, filed by Energy Transfer, is moving forward, with opening statements happening this week. The company claims Greenpeace orchestrated protests against the Dakota Access Pipeline, causing it financial harm.
- Greenpeace denies the allegations, arguing that tribal leaders led the movement and that the lawsuit is an attempt to silence environmental advocacy, while Energy Transfer claims the protest was peaceful until the environmental advocacy group arrived.
- The trial is expected to last five weeks before jury deliberations take place, with Greenpeace prepared to appeal if the ruling is unfavorable.
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The $300 million lawsuit filed against Greenpeace over its involvement in protests against the Dakota Access Pipeline is proceeding. Opening statements took place during the week of Feb. 24 in a North Dakota courthouse.
The lawsuit, initiated by pipeline operator Energy Transfer, alleges that Greenpeace played a masterminded the 2016 demonstrations at the Standing Rock Reservation opposing the project. Energy Transfer accused the environmental group of defamation, conspiracy and other unlawful actions that it claims harmed its business during the pipeline’s development.
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What is Greenpeace’s response to this lawsuit?
Greenpeace, however, denies all of these claims. A senior strategist for the group, Charlie Cray, addressed the case, telling Straight Arrow News that Energy Transfer’s allegations of defamation are “frankly ridiculous.” He added that the company has presented an “aggressive argument” and acknowledged it could be a “a tough trial.”
“Greenpeace had nothing to do with orchestrating the protest at Standing Rock,” Cray said. “I think they’re going after Greenpeace because they don’t want to see organizations like Greenpeace join activists on the front lines of the climate justice movement. They want to make nonprofits think twice.”
Greenpeace also asserted that the lawsuit is an infringement on its First Amendment rights. Cray contended that the litigation is an attempt to “silence” and “muzzle” environmental advocacy groups, preventing organizations like Greenpeace from supporting climate justice activists.
How does Greenpeace describe its role in the protest?
According to Cray, Greenpeace had six representatives who traveled to the protest site only after demonstrations had already begun. He also criticized Energy Transfer’s assertion that Greenpeace was the driving force behind the movement, calling it a “racist rewrite of the history of Standing Rock.”
Cray argued that tribal leaders and grassroots activists led the protests and that targeting Greenpeace undermines their leadership.
“They’re essentially displacing the leadership at the grassroots and tribal level of the movement that led the protests at Standing Rock,” Cray said. “We do not just walk in and claim leadership on anybody’s fight, yet they’re kind of concocting this story as if we were orchestrating this, as if people couldn’t organize for themselves.”
What is Energy Transfer’s argument?
Meanwhile, Energy Transfer maintains that while the protests started peacefully, they escalated after Greenpeace arrived. The company claimed that Greenpeace representatives trained other demonstrators. The company alleged those demonstrators contributed to more aggressive protest tactics. The Energy Transfer’s legal team has previously accused Greenpeace of instigating what it describes as “acts of terrorism.”
“[Greenpeace] exploited a local community issue and a small, peaceful, and disorganized protest with no regard for the consequences for their own purposes,” Trey Cox, Energy Transfer’s lead attorney, said. “They didn’t think that there would ever be a day of reckoning, but that day of reckoning starts today.”
Energy Transfer also rejected Greenpeace’s argument of a First Amendment infringement, stating that the case is “not about free speech” but rather about Greenpeace allegedly engaging in unlawful conduct. The company claimed that Greenpeace falsely accused it of mismanaging the pipeline project and that these statements led eight banks to withdraw financing for the construction.
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What happens next?
The trial is expected to last five weeks before moving to jury deliberations. Should the ruling be unfavorable to Greenpeace, the organization has indicated that it will appeal the decision to the state Supreme Court if necessary.
THE 300 MILLION DOLLAR LAWSUIT BROUGHT AGAINST GREENPEACE OVER THE ENVIRONMENTAL ORGANIZATION’S INVOLVEMENT IN PROTESTS OPPOSING THE DAKOTA ACCESS PIPELINE’S CONSTRUCTION IS MOVING FORWARD.
THIS LITIGATION WAS INITIATED BY THE PIPELINE’S OPERATOR, ENERGY TRANSFER-
WHICH HAS ACCUSED GREENPEACE OF MASTERMINDING THESE DEMONSTRATIONS AT THE STANDING ROCK RESERVATION-
WHILE ENGAGING IN DEFAMATION, CONSPIRACY AND OTHER UNLAWFUL ACTIONS THAT HARMED ITS BUSINESS DURING THE PROJECT’S DEVELOPMENT.
EARLIER THIS WEEK WE TOLD YOU ABOUT THE FINANCIAL IMPLICATIONS OF THIS TRIAL FOR GREENPEACE.
NOW, OPEN STATEMENTS HAVE TAKEN PLACE AT A NORTH DAKOTA COURTHOUSE-
AND GREENPEACE SENIOR STRATEGIST CHARLIE CRAY TOLD US MORE ABOUT THESE LEGAL PROCEEDINGS.
“The case itself has to do with claims on defamation. Statements that Greenpeace allegedly made. The kinds of claims they’re making are, frankly ridiculous, but they have good counsel. They are laying out to the best they can a very aggressive argument about what happened in Greenpeace’s role.” -Charlie Cray, Greenpeace senior strategist
CRAY SAYS GREENPEACE HAD SIX REPRESENTATIVES TRAVEL TO THE SITE OF THE DAKOTA ACCESS PIPELINE PROTESTS-
WHO ONLY ARRIVED AFTER THE DEMONSTRATIONS WERE ALREADY UNDERWAY.
HE CLAIMS ENERGY TRANSFER’S ASSERTIONS GREENPEACE ORCHESTRATED THIS MOVEMENT ARE RACIALLY INSENSITIVE TO THE TRIBAL LEADERS WHO FIRST STARTED RAISING AWARENESS ABOUT THE PIPELINE’S IMPACTS ON NATIVE COMMUNITIES.
“This is a racist rewrite of the history of Standing Rock. By targeting Greenpeace, they’re essentially displacing the leadership at the grassroots and tribal level of the movement that led the protests.” -Charlie Cray, Greenpeace senior strategist
HOWEVER, ENERGY TRANSFER COUNTERED THESE CLAIMS-
SAYING THE PROTESTS STARTED OUT PEACEFUL BUT TOOK A TURN AFTER GREENPEACE ARRIVED ON THE SCENE-
WHICH WAS ENCOURAGED BY THE ORGANIZATION’S SIX REPRESENTATIVES TRAINING OTHER DEMONSTRATORS.
“They claim that there was sort of an eco conspiracy. Their lead attorney uses the phrase that Greenpeace instigated terrorists like tactics by others.” -Charlie Cray, Greenpeace senior strategist
MEANWHILE, GREENPEACE IS ALSO ACCUSING ENERGY TRANSFER OF INFRINGING ON THEIR FIRST AMENDMENT RIGHTS BY FILING THIS LAWSUIT-
WITH CRAY SAYING THE COMPANY IS ATTEMPTING TO SILENCE THEM.
“It’s just wrong, and it just reflects the real intention of this case, which is to muzzle movement groups, to squash their critics, and to divide the movement itself. I think they’re going after Greenpeace because they don’t want to see organizations like Greenpeace join activists on the front lines of the climate justice movement.” -Charlie Cray, Greenpeace senior strategist
ENERGY TRANSFER CONTENDS THAT, CONTRARY TO THESE CLAIMS, THEIR LAWSUIT AGAINST GREENPEACE IS NOT ABOUT FREE SPEECH-
BUT RATHER ABOUT THE ORGANIZATION NOT FOLLOWING THE LAW.
ALLEGING GREENPEACE ILLEGALLY HARMED ITS REPUTATION BY FALSELY CLAIMING ENERGY TRANSFER WAS CARELESS IN ITS MANAGEMENT OF THE PROJECT-
AND THAT THE COMPANY’S SECURITY CONTRACTORS USED EXTREME VIOLENCE AGAINST PEACEFUL DEMONSTRATORS.
STATEMENTS WHICH CAUSED EIGHT BANKS TO BACK OUT OF FINANCING THE PIPELINE’S CONSTRUCTION.
LOOKING AHEAD, THE TRAIL IS SET TO LAST FOR FIVE WEEKS BEFORE JURY DELIBERATIONS BEGIN-
AFTER WHICH, GREENPEACE WILL HAVE AN OPPORTUNITY TO APPEAL THE RULING SHOULD IT NOT GO IN THEIR FAVOR.
“No matter what happens, we will have a legal recourse to appeal. We will have a chance to appeal this, and we will appeal if necessary in the state Supreme Court.” -Charlie Cray, Greenpeace senior strategist
FOR MUST UPDATES ON THIS ONGOING CASE, DOWNLOAD THE STRAIGHT ARROW NEWS APP AND SIGN UP TO GET ALERTS FROM ME- JACK AYLMER.
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U.S. officials are reportedly investigating whether Chinese AI startup DeepSeek illegally went around U.S. export controls to score the best Nvidia chips. A Bloomberg report citing people familiar with the matter said the White House and FBI are involved.
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U.S. export controls bar Nvidia from selling the most advanced AI chips to Chinese companies. The U.S. suspects DeepSeek might have gotten around the restriction using third parties in Singapore.
DeepSeek disrupts AI race
During the week of Jan. 26, DeepSeek disrupted the AI race with its chatbot R1. It dethroned OpenAI’s ChatGPT on top of the Apple App Store chart and tanked tech stocks in the process.
Nvidia’s stock is still down about 12% from its share price last Friday. The company shed around $600 billion in market cap on DeepSeek’s arrival. It’s the biggest one-day loss for a U.S. company in history. The higher you climb, the farther you fall.
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A big driver to what’s damaging other tech companies is the price DeepSeek claims to have paid to train its high-performing chatbot. According to its research paper, DeepSeek used inferior Nvidia H800 chips to build it and spent just $6 million to train it. But many aren’t buying it.
“I do not believe that DeepSeek was done all above board. That’s nonsense,” said Howard Lutnick, President Donald Trump’s pick for commerce secretary. “They stole things. They broke in. They’ve taken our IP. It’s got to end. And I’m going to be rigorous in our pursuit of restrictions and enforcing those restrictions to keep us in the lead because we must stay in the lead.”
“It doesn’t seem like it’s an obvious red flag that this cannot have been done,” said Tara Javidi, a professor of electrical and computer engineering at UCSD. “Many of us have been doing research in the space, in various aspects of the space, to make the training process cheaper, to make the models smaller, to really think about open-sourcing.”
“When people report the cost of training, they report the cost of training for their last successful attempt where it went through,” she added, indicating DeepSeek’s $6 million total wouldn’t include any previous failed attempts.
Nvidia responds to reports
Since DeepSeek’s arrival, Nvidia has come out saying it doesn’t believe DeepSeek broke any rules. Nvidia told Bloomberg it insists its customers comply with the law and act accordingly if they don’t.
Earlier this month, Nvidia publicly criticized the Biden administration over the export controls put in place. The company said it was looking forward to working with Trump.
Tags: AI, Artificial Intelligence, Chatbot, ChatGPT, DeepSeek, FBI, Generative AI, Howard Lutnick, NVIDIA, OpenAI, Semiconductor Chips, White House
Simone Del Rosario: U.S. officials are reportedly investigating whether Chinese AI startup DeepSeek illegally went around U.S. export controls to score the best Nvidia chips.
A Bloomberg report citing people familiar with the matter said the White House and FBI are involved.
U.S. export controls bar Nvidia from selling the most advanced AI chips to Chinese companies. The U.S. suspects DeepSeek might have gotten around the restriction using third parties in Singapore.
This week, DeepSeek disrupted the AI race with its chatbot R1. It dethroned OpenAI’s ChatGPT on top of the Apple App Store chart and tanked tech stocks in the process.
Nvidia’s stock is still down about 12% from its share price last Friday. The company shed around $600 billion in market cap on DeepSeek’s arrival. It’s the biggest one-day loss for a U.S. company in history. The higher you climb, the farther you fall.
A big driver to what’s damaging other tech companies is the price DeepSeek claims to have paid to train its high-performing chatbot.
According to its research paper, DeepSeek used inferior Nvidia H800 chips to build it and spent just $6 million to train it.
But many aren’t buying it.
Howard Lutnick: I do not believe that DeepSeek was done all above board. That’s nonsense. They stole things. They broke in. They’ve taken our IP. It’s got to end. And I’m going to be rigorous in our pursuit of restrictions and enforcing those restrictions to keep us in the lead, because we must stay in the lead.
Simone Del Rosario: Nvidia publicly criticized the Biden administration over the export controls they put in place. They said they were looking forward to working with President Donald Trump.
Since DeepSeek’s arrival, Nvidia has come out saying they don’t believe DeepSeek broke any rules. Nvidia says they insist their customers comply with the law, and act accordingly if they don’t.
I want to bring in Tara Javidi, Lewak Endowed Chair and Professor of Electrical and Computer Engineering at UCSD. Tara, you’ve read DeepSeek’s research paper. I know it’s a lengthy one. Do you believe that they were able to achieve what they have using the modified chips and as little money as they claim?
Tara Javidi: So thank you for having me. Yes, I’ve been looking at this. So I think there are multiple ways to answer this question. Of course, as an academic researcher, I don’t have investigation possibility of knowing the details of their implementation. But I can tell you that a lot of the components of the study are really pulling together lots of work and innovation that has been in the open research space throughout the years. So they have managed to pull that. So in that aspect, the results are not so surprising in the sense of pulling it together. It doesn’t seem like it’s an obvious red flag that this cannot have been done. Many of us have been doing research in the space, in various aspects of the space, to make the training process cheaper, to make the models smaller, to really think about open-sourcing, maybe possibly some of the larger models and questions of this sort have been thrown around in the research community. And then when people report the cost of training, they report the cost of training for their last successful attempt where it went through. They don’t usually report all those other sort of, I have to stop, something was not right, I have to redo. So those are not reported as it’s never reported in any of these studies and including for the DeepSeq. So it’s a little bit of a complicated story there when we talk about the cost of training and whether a big company that already has a nice secret sauce with the training of large models and they have this sort of long training pipeline. whether they will want to take the same risk and really try these more, these methods that are more researchy and are proposed to do this. And this is sort of definitely a bit of the hallmark of this study and the work that has been put out by DeepSea.
Simone Del Rosario: Well, let me ask you this, how is DeepSeek different from OpenAI’s chat GPT and other language learning models?
Tara Javidi: So I guess the most important fact for many of us in the research community is that it’s a large model that is yet open source. And most of the open source efforts that we have seen previously have been at the smaller, what is called smaller model. I want to emphasize these models are still quite large in terms of the number of parameters. So that’s the one piece that is different is that this model, despite the fact that it’s large, it’s open source. Another fact is that it incorporates many methods, as I was saying, from the research community in terms of trying to make the efficiency of the training much more than classical methods that have been proposed for training these large models. So in that sense, the training process itself has been made much more efficient in their cycle.
Simone Del Rosario: Look, with a lot of attention comes a lot of people poking around. Security researchers are finding DeepSeek to be very vulnerable to malicious attacks. We saw that on Monday when they had to actually stop allowing new users to come on board. They limited it to Chinese phone numbers for a bit. But since then, the subsequent research has shown that it is very vulnerable. Is that the risk of being open source or is there something more here?
Tara Javidi: Yeah, I haven’t followed that precisely, but what I can say is that it’s a combination most probably of the process of training and making a model robust. You usually often try to make it robust by ingesting more data and classical ways of dealing with robustness is actually making sure that you build safeguards and these safeguards require you to really think about constructing data and queries that are adversarial to build that. So it could be a byproduct of trying to be very efficient in the first round. You might miss some of the ability to build these safeguards. Of course, if a model is open source, the real difficulty of, know, the economics of this. It’s a lot of work and effort to build a model. And so when you put it open source, anybody can sort of have access to the model to fine tune it, to train it and use it for other. So there are two levels of robustness issues that comes in. one is that your weights are known and the source, the model is known. So the source is available for people to sort of build other things. And that’s one form of lack of robustness. And the other one is sort of safeguarding it against jail breaks and like, you know, getting it to do things that you didn’t mean to build into that.
Simone Del Rosario: So with all of that in mind, do you think that DeepSeek is a worthy competitor in this space right now?
Tara Javidi: In engineering, usually when when the first study that proves something that was imagined to be plausible, yet nobody was doing it, when when that happens, it sort of gives this sense what is doable or what is plausible, sort of brings that. It has definitely, for me, it has been a sort of a point of reference that looking at this now I can be more forceful talking to, for example, federal agencies and really thinking about more support for this kind of foundational research and academic institution. This is a good possibility study to say this is possible and it’s not something that we only need very established methods. That’s the only way that works. It opens the door for a lot of fundamental research at universities to be gaining attention. So in that sense, for academics, this has been a really interesting study to pay attention to.
Simone Del Rosario: Yeah, it opens it up beyond saying, well, only a Microsoft or a Meta or an OpenAI is able to develop something like this.
Tara Javidi: Yeah, and also only the sort of more robust and economically certain paths of doing this kind of model training is the only way to do. As I said, as I was trying and I don’t know if I did a good job as I was trying to explain at the beginning is that when you are a company, you really have you have an obligation really to be picking, you know, sort of the risks that you are taking in a much more calculated way than if you’re doing research at a university. So that has been a major sort of question that we do open in the open research community. We do advocate certain ways of training to modify the understood ways to enable for more efficient training for smaller models for compression and so on and so forth. But we don’t expect that large companies to just jump on that research and immediately do it because of the financial implications. So I think in that sense this is an interesting study for those of us who have been in the research community because it validates, at least on the surface, validates a lot of the sort of open, the kind of questions that have been in the public domain in the research space.
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The Trump administration took its first major step toward reducing the number of federal workers. But how will it impact the wider job market if hundreds of thousands of employees accept a “deferred resignation” offer?
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The Office of Personnel Management emailed most federal employees Tuesday, Jan. 28, titled “Fork in the Road.” Elon Musk used the same subject line in a similar downsizing move at Twitter.
In the email, government employees were offered the option to quit their jobs by responding to the email with the word “resign” by Feb. 6. OPM said in return, employees will receive pay and benefits through the end of September. There are around 3 million federal employees, although not all are eligible.
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“It’s very badly explained in the email and beyond, but apparently, what happens is you resign, you are kept on staff, but put on administrative leave,” former acting Labor Secretary Seth Harris told Straight Arrow News. “You are paid during that administrative leave, but you can be pulled off of administrative leave to do work if you are needed, and that will last until September. So that’s not really a buyout.”
Is the email offer legal?
Unions representing federal employees are skeptical. The National Treasury Employees Union sent a message to members urging them not to resign. The union said the so-called “deferred resignation program” is trying to “pressure,” “entice or scare you into resigning from the federal government.”
“Purging the federal government of dedicated career civil servants will have vast, unintended consequences that will cause chaos for the Americans who depend on a functioning federal government. This offer should not be viewed as voluntary,” the American Federation of Government Employees, which represents 800,000 federal workers, said in a statement.
Harris said it doesn’t appear this is a traditional severance, where an employee and employer cut ties in exchange for a lump sum.
“It appears that you stay on administrative leave and you don’t work,” Harris, who is a senior fellow at the Burnes Center for Social Change, said. “Many federal employees have unions, and the unions are explaining to them, educating them, and also their non-union coworkers, many of whom work side by side, about what this deal really looks like. And they’re explaining that it is not legal to have federal employees on administrative leave for longer than I think it’s a 10-day period. You can’t be on administrative leave for eight months.”
Will hundreds of thousands flood the job market?
A fork in the road https://t.co/vzk1RYbM5u
— Elon Musk (@elonmusk) January 28, 2025
Elon Musk’s America PAC posted to X saying they anticipate 5% to 10% of the workforce will accept the offer, resulting in $100 billion in salary savings. If the estimate is accurate, that could mean up to 200,000 federal employees leaving their positions.
Harris says if Musk’s estimates are correct, it will have little impact on the labor market.
“I don’t think it will have a very dramatic effect,” he said. “You’re talking about 100,000 to 200,000 people. They’re not all going to leave at once. Apparently, this is going to get stretched out over an eight-month period.
“Just to put it into context, in December of 2024 alone, the economy produced [256,000] more jobs,” he added. “So it’s not like the kind of layoff event that we experienced during the pandemic recession, where millions and millions and millions of workers were losing their jobs in a week.”
Harris pointed out that because federal employees are spread out all over the country, the impact will not be isolated.
“If you had 200,000 people losing their jobs just in Washington, D.C., that would have a depressive effect on the local and regional economy,” he said. “But these folks are absolutely everywhere because they’re serving Americans everywhere.”
While Harris doesn’t necessarily believe it will have a major impact on the labor market, he does see it causing issues with the effectiveness of government services, especially amid tax season.
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“If half of the IRS frontline staff who advised taxpayers with respect to filing their taxes, if half of that staff took this plan and they left the government, they stopped working for the government, what would that mean to efficiency and to customer service at the IRS?” Harris asked.
“When you offer a blanket exit strategy, you don’t really know who’s going to say yes,” Harris said.
Tags: Bureau of Labor Statistics, DOGE, federal employees, Jobs, OPM, Twitter, Elon Musk, Donald Trump, U.S. Economy, Unemployment, Economy, Unemployment rate, Labor Department, Government funding, Labor
Simone Del Rosario:
Nearly two million federal employees have a weighty email waiting in their inbox … a fork in the road, if you will.
The Trump administration made its first move Tuesday to reduce the size of the federal workforce, but how will this broad-strokes move weigh on the entire labor market?
The email, sent to most federal employees, is titled “Fork in the Road.” Elon Musk used the same subject line in a similar downsizing move at Twitter.
In the email, government employees are offered the option to resign by Feb. 6 and receive pay and benefits until the end of September.
All they have to do is respond to the email with the word “resign.”
Unions representing federal employees are skeptical.
Among them, the National Treasury Employees Union sent an urgent message to members urging them not to resign. They said the so-called “deferred resignation program” is trying to “pressure,” “entice” or “scare” employees into resigning.
Meanwhile, the American Federation of Government Employees represents around 800,000 workers. President Everett Kelley said in a statement:
“Purging the federal government of dedicated career civil servants will have vast, unintended consequences that will cause chaos for the Americans who depend on a functioning federal government. This offer should not be viewed as voluntary.”
Elon Musk’s America PAC posted to X that an estimated 5-10% of the workforce will accept the offer, resulting in $100 billion in savings.
If that estimate rings true, that would be between 100 and 200 thousand government workers.
That means that many people could soon be flooding the private sector with job applications.
I want to bring in Seth Harris. He is the senior fellow at the Burnes Center for Social Change and the former acting labor secretary of the United States. Seth, thank you so much for joining us as we’re continuing to get new information about this email. What was your initial reaction and where you know? Do you have any warning signs? What’s going on? What are you thinking about here?
Seth Harris
Yeah, so I’m, like most Americans, I’m really familiar with spam emails or phishing emails that try to get you to buy gold or crypto or something else like that. This very much felt like that. This proposal from the Trump Musk administration is designed to sort of trick federal employees into giving up their jobs, not in return for what we typically experience in a buyout where you get a large block of money and then you’re basically out of your job. You leave your job in return for the money in order to make room to downsize the organization, whatever it is that the organization is trying to accomplish, that is not what this plan does, as far as I can tell. Let me just say it’s very badly explained in the email and beyond, but apparently, what happens is you resign, you are kept on staff, but put on administrative leave. You are paid during that administrative leave, but you can be pulled off of administrative leave to do work if you are needed, and that will last until September. So that’s not really a buyout, and it’s kind of hard to know why a federal employee would want to say yes to that proposal. So
Simone Del Rosario
it’s not this idea of an eight month severance like it appears to be on its surface,
Seth Harris
as they have explained it, now, it’s not eight months of severance in that they cut you a check and then you go away and look for another job, or you retire, or you whatever. You live out your fantasy of becoming a potter or a musician. It appears that you stay on administrative leave and you do know work you either do or don’t go to the office. Apparently, for remote work people, they’re able to stay wherever they’re located. It’s just, it’s, it is not what we think of when we think about a buyout. And it’s for that reason there’s a lot of confusion among federal employees. This is similar to what was done at Twitter when Elon Musk took over Twitter. In fact, the language as you as you mentioned in your setup, was the same language they used in the email from Twitter. The difference between Twitter and the federal government is many federal employees have unions, and the unions are explaining to them, educating them, and also their non union co workers, many of whom work side by side, about what this deal really looks like, and they’re explaining that it is not legal to have federal employees on administrative leave for longer than I think it’s a 10 day period. You can’t be on administrative leave for eight months. Um. So it’s unclear that you can ask people to leave, or certainly force them to leave with the threat that their jobs are going to be eliminated. So the unionized workers in the federal government and many others who are going to know their rights, because they’re very smart people. I’ve worked with federal employees, these are very, very smart, savvy people who know the rules governing the civil service system, I think we’re going to see a very, very, very small uptake in this, this buyout scheme. You
Simone Del Rosario
mentioned a couple of legal red flags, which would lead me to believe there will be legal challenges to this email. So what about those employees that want to resign, that want to respond and say, you know, I’m ready to move on from this. This sounds like a great deal for me. Should they have confidence that the terms set forward in that agreement are going to hold with these legal challenges? No,
Seth Harris
they should not have confidence, because the system that has been established by the Office of Personnel Management, the new leadership team put in by President Trump, is not consistent with law. There are existing authorities in federal law for voluntarily downsizing the federal government. You can give people voluntary ways of leaving the federal government. They’re very carefully laid out in the law, and this is not them, and so there’s no binding authority that if employees end up getting screwed in this deal that they can turn to to enforce the terms of the deal not doesn’t seem to be the case that this is a binding contract between the federal government and federal employees. It’s not a part of the collective bargaining system between the federal employee unions and the federal government. Many of these unions have contracts that govern situations like this, so perhaps there will be bargaining along the way, but I think that if I were a federal employee, I would treat this like anything else that gets caught in my spam filter or my junk email filter on my email, ignore it and wait to see how things develop.
Simone Del Rosario
Yeah, they’re certainly in a tough in a tough spot, if they’re interested in taking this offer to have just a week when we know these legal challenges are coming. In fact, you mentioned, you know the system and OPM even the way that the email was sent out is being legally challenged. So there’s a lot of question marks about this, but I want to look a little bit broader now. Let’s say five to 10% of the federal workforce does decide to resign. This goes through and and they are able to significantly reduce the size of government. What is that going to do to the labor market as a whole, hundreds of 1000s of people looking for new jobs? Yeah,
Seth Harris
I think it will. If the numbers are that small, five or 10% I don’t think it will have a very dramatic effect. You’re talking about, you know, 100,000 to 200,000 people. They’re not all going to leave at once. Apparently, this is going to get stretched out over an eight month period. You know, just to put it into context, in December alone, December of 2024 alone, the economy produced 226,000 more jobs. So it’s not like the kind of layoff event that we experienced during the pandemic recession, where millions and millions and millions of workers were losing their jobs in a week, right? This is going to be a fairly small number of workers. Also one of the things that people don’t understand about federal employees is they’re spread out all over the country. They’re not all in Washington, DC. If you had 200,000 people losing their jobs just in Washington DC, that would have a depressive effect on the local and regional economy. But these folks are absolutely everywhere, because they’re serving Americans everywhere, and so I think it will be absorbed into the economy and the labor market fairly easily. Let me just say large layoffs are not a good thing ever. It’s not good for the economy as a whole. But I don’t think that we will see a measurable effect if five to 10% of federal employees accept this sham offer. What
Simone Del Rosario
about within government? I mean, you were at the top of a major government agency. What would losing five to 10% of the workforce look like?
Seth Harris
Right? I think that this is going to be a disaster for the American people, because when you when you offer a blanket exit strategy, let’s call it that, since it’s not really a buyout. When you offer a blanket exit strategy, you don’t really know who’s going to say yes, right? And so the Trump folks have excluded immigration employees, National Security employees, intelligence employees. But imagine, for example, two. Months, two and a half months before the tax filing deadline. If half of the IRS frontline staff who advised taxpayers with respect to filing their taxes, if half of that staff took this plan and they left the government, they stopped working for the government, what would that mean to efficiency and to customer service at the IRS. Imagine if half or three quarters of the people who process social security claims took this offer right, or if the people who are responsible for cyber security in the government, in all the agencies that have cyber security professionals took this offer to go off to work in the private sector. It is. It’s just an extraordinarily bad way to accomplish the result of downsizing the federal government, which is not a result that any of us should want. There is no good argument for downsizing the federal government, except that you hate government, and you don’t very much like the people that government serves, but I think that this could really have some unpleasant side effects, not really side effects, core effects, because we don’t really know who would say yes if this were a real offer, and that’s going to hurt the services that the government provides to Hundreds of millions of Americans, so I it’s just a bad idea all around.
Simone Del Rosario
Seth Harris, senior fellow at the burnes center for social change. Thank you so much, Seth, it’s always a pleasure talking with you. Thanks. Simone, okay.
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DURING PRESIDENT DONALD TRUMP’S FIRST WEEK IN OFFICE, HIS ADMINISTRATION INSTITUTED A NUMBER OF EXECUTIVE ORDERS AIMED AT FURTHERING THEIR VISION FOR THE U.S. ENERGY INDUSTRY-
ROLLING BACK SEVERAL BIDEN-ERA ENERGY POLICIES IN THE PROCESS.
THIS INCLUDED A HALT ON PERMITTING FOR ONSHORE AND OFFSHORE WIND DEVELOPMENTS-
A RESUMPTION OF OIL DRILLING LEASES IN THE ARCTIC AND ALONG THE U.S. COAST-
AND THE DECLARATION OF A NATIONAL ENERGY EMERGENCY WHICH WILL GIVE TRUMP SPECIAL EXECUTIVE POWERS TO FURTHER INFLUENCE THE SECTOR.
SO WHAT DOES ALL THIS MEAN FOR CONSUMERS?
“In all likelihood, with Trump’s mandates coming in, hopefully energy prices are going to be reduced. The government was essentially paying in the renewable energy space.”
AARON CIRKSENA IS THE FOUNDER AND CEO OF FINANCIAL CONSULTING FIRM MDRN CAPITAL.
HE SPOKE WITH STRAIGHT ARROW NEWS ABOUT HOW TRUMP’S RECENT ORDERS RELATED TO ENERGY ARE EXPECTED TO IMPACT EVERY DAY AMERICANS.
“We should see a gradual decrease in things like prices at the pump. The more reliant that we can be on our own energy sources and our own ability to have our own oil and gas production here, it’s just going to long term cause our prices to go down because we become far less reliant on foreign oil.”
WITH TRUMP SET TO PUT A SIGNIFICANTLY GREATER IMPORTANCE ON FOSSIL FUELS IN U.S. ENERGY THAN THE PREVIOUS ADMINISTRATION-
CIRKSENA FORECASTS THIS WILL MEAN LOWER POWER BILLS FOR AMERICANS THAN WHAT RENEWABLES CAN CURRENTLY OFFER.
“It’s going to produce lower overall prices, comparative to what renewable energy sources like wind energy, are going to be able to provide. People might have this misconception that he’s subsidizing the oil and gas or the drilling industry, but that’s not the case. He’s simply lifting restrictions on those industries. That’s hopefully going to lower the overall energy prices that we pay in the country.”
ACCORDING TO CIRKSENA THIS POLICY SHIFT WON’T SPELL THE END FOR THE AMERICAN RENEWABLE ENERGY SECTOR-
BUT RATHER GIVE CLEAN POWER DEVELOPERS MORE TIME TO REFINE THE INTERMITTENT NATURE OF THEIR TECH PRIOR TO ITS EVENTUAL MORE WIDESPREAD IMPLEMENTATION.
WITHOUT SO MANY FEDERAL DOLLARS FOOTING THE BILL TO DO THAT MORE IMMEDIATELY AS HAD BEEN HAPPENING UNDER BIDEN.
“It’s going to give the renewable energy sector more time to get more private investment, rather than getting more investment from the government to improve their technologies. Because eventually, right over a period of decades, we are going to have to transition more to sustainable renewable energy sources. It’s just right now that isn’t the case.”
FOR MORE STORIES FROM THE ENERGY SECTOR, DOWNLOAD THE STRAIGHT ARROW NEWS APP AND SIGN UP FOR ALERTS FROM ME- JACK AYLMER.
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President Donald Trump discussed his declaration of a national energy emergency during the World Economic Forum in Davos, Switzerland, during the week of Jan. 19, saying the move would help “unlock the liquid gold under our feet” and “pave the way for rapid approvals of new energy infrastructure.” Increased oil production and the expedited permitting of new energy projects were also seen as potential benefits of the declaration by the head of a national industry trade group.
Tim Tarpley, president of the Energy Workforce & Technology Council, which represents over 650,000 American workers in the sector, echoed Trump’s sentiment. He emphasized that faster permitting to support a major buildout of U.S. power infrastructure is required as a result of rising U.S. energy demands, which he also foresees fossil fuels playing a major role in helping to meet.
Point phone camera here
Tarpley cited projections that electricity needs in the U.S. could jump 50% by 2050, driven largely by data centers powering artificial intelligence and cryptocurrency operations.
“It’s going to require a significant amount of permitting, and right now we’re not getting those permits fast enough, so it is scaring off investors,” Tarpley told Straight Arrow News. “But I just think natural gas can be a big part of the grid in the coming, you know, 20 or 30 years. So we should be really focused on that.”
According to Tarpley, the anticipated rise in power demand is expected to necessitate a corresponding 50% increase in American power infrastructure over the next 30 years. He expressed optimism about the energy sector’s future under Trump’s administration, contrasting it with what he described as regulatory challenges during the Biden administration.
“Our industry is looking very positive at this new administration and is looking forward to a fresh start. There were a lot of actions taken by the Biden administration that seemed to target oil and gas, and I would argue, unfairly, target oil and gas,” Tarpley said. “To take out that regulatory uncertainty that was there during the Biden administration, in addition to the expedition of permitting that was in the other executive order, we think both of those combined will be a positive thing for the energy industry in the U.S.”
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With the administration signaling a more favorable stance on fossil fuels and promising a speedier approvals process for the construction of energy infrastructure, Tarpley voiced confidence in the sector’s growth.
“We think demand is, in the long term, going to increase. So we’re very bullish on the industry,” Tarpley said. “I’m personally very bullish on gas. I think we’re going to continue to see growth.”
[Jack Aylmer]
PRESIDENT DONALD TRUMP THIS WEEK DECLARED A NATIONAL ENERGY EMERGENCY.
DURING HIS SPEECH AT THE ANNUAL WORLD ECONOMIC FORUM MEETING IN DAVOS THURSDAY, HE DISCUSSED WHY HE DID IT.
“I declared a National Energy emergency, and it’s so important, national energy emergency to unlock the liquid gold under our feet and paved the way for rapid approvals of new energy infrastructure.”
THAT SENTIMENT IS SHARED BY THE PRESIDENT OF A NATIONAL ENERGY TRADE GROUP, REPRESENTING OVER 650,000 AMERICAN WORKERS IN THIS SECTOR.
TIM TARPLEY OF THE ENERGY WORKFORCE AND TECHNOLOGY COUNCIL BELIEVES EXPEDITED PERMITTING WILL BE REQUIRED FOR A MAJOR BUILD OUT OF U.S. POWER INFRASTRUCTURE-
NEEDED TO MEET RISING DEMAND IN THE COMING YEARS-
AND FOSSIL FUELS WILL PLAY A MAJOR ROLE IN THAT.
“It’s going to require a significant amount of permitting, and right now it is not, we’re not getting those permits fast enough, so it is scaring off investors. But I just think natural gas can be a big part of the grid in the coming, you know, 20 or 30 years. So we should be really focused on that.”
TARPLEY TOLD US THE U.S. COULD SEE ENERGY DEMAND JUMP 50 PERCENT BY 2050.
TO MEET THESE RISING ELECTRICITY NEEDS-
LARGELY DRIVEN BY DATA CENTERS POWERING AI AND CRYPTO OPERATIONS-
TARPLEY SAYS A CORRESPONDING 50 PERCENT INCREASE IN AMERICAN POWER INFRASTRUCTURE IS LIKELY TO BE REQUIRED.
“The most estimates that we see is about a 50% increase in the next 30 years … It’s a significant build out, and we don’t have the permitting situation in place to really support that. That’s what they’re getting at with, with that national emergency declaration is they’re saying, ‘look, we have a lot of work to do, and the last thing we need to do is have our own government regulations getting in the way of that.’”
TARPLEY SAYS THE ENERGY SECTOR IS WELCOMING TRUMP’S EMERGENCY DECLARATION-
AND IS OPTIMISTIC ABOUT OIL AND GAS CONTRIBUTING MORE TO POWERING THE U.S. THAN IT DID UNDER THE PREVIOUS ADMINISTRATION.
“Our industry is looking very positive at this new administration and is looking forward to a fresh start. There were a lot of actions taken by the Biden administration that seemed to target oil and gas, and I would argue, unfairly, target oil and gas. To take out that regulatory uncertainty that, that was there during the Biden administration in addition to the expedition of permitting that was in the other executive order. We think both of those combined will be a positive thing for the energy industry in the U.S.”
WITH POWER DEMANDS ON THE RISE AND AN ADMINISTRATION IN PLACE WITH A MORE FAVORABLE OUTLOOK ON FOSSIL FUELS-
TARPLEY EXPRESSED CONFIDENCE ABOUT THE ENERGY SECTOR’S FUTURE.
“We think demand is, in the long term, going to increase. So we’re very bullish on on the industry. I’m, I’m personally very bullish on gas. I think we’re going to continue to see a growth.”
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The U.S. is once again pushing up against the debt limit. That means Congress is on the clock to raise the debt ceiling or risk defaulting.
The Treasury Department is taking “extraordinary measures” to keep from borrowing more than Congress has allowed to date. The national debt clock is now above $36.2 trillion.
“They’re saying, ‘Oh, we have too much debt.’ Well, guess what? You helped create it without funding it,” said Kathleen Day, a lecturer at Johns Hopkins Carey Business School. “And that’s actuarially, financially, fiscally irresponsible. Do your job.”
Point phone camera here
Sometime in the next few months, the treasury says it will run out of tricks. Congress will either raise the debt ceiling to pay the bills or face catastrophic default. But is there a third option?
Repeal the debt ceiling
Since winning the election, President Donald Trump proposed getting rid of the debt ceiling. During a phone interview with NBC News in December 2024, he said it would be “the smartest thing [Congress] could do. I would support that entirely.”
“It doesn’t mean anything, except psychologically,” Trump added.
“I agree with President-elect Trump that the debt limit should be repealed,” Sen. Elizabeth Warren, D-Mass., said during Treasury Secretary nominee Scott Bessent’s confirmation hearing.
“If he wants to eliminate the debt limit, I will work with him and you on that,” Bessent told Warren.
“I still don’t think it makes it more likely to happen, and I think it might be a bad thing if it does because what it’s saying is, we want to tell the voters we want to cut the debt, but let’s hide the fact that we haven’t done it,” Day told Straight Arrow News.
Trump wants to but do Republicans?
While the leader of the GOP is floating a repeal of the debt ceiling, some conservatives in Congress are not on board.
“No, we absolutely need a debt ceiling limit,” Sen. Ron Johnson, R-Wisc., said on Fox Business. “We absolutely need that debt limit, or there’s no control over out-of-control government spending.”
“They look at it as another lever that they can use to try to call attention to the debt,” Day said.
What happens if the debt ceiling isn’t raised, suspended or repealed?
Congress has never allowed the U.S. government to default on its debt. While resolutions sometimes get pushed to the limit, the holders of the purse strings always come to some kind of consensus before it’s too late.
Since 1960, Congress has acted 78 times to raise, extend or revise the debt limit, according to Treasury Department data. It has been done 49 times under Republican presidents and 29 times under Democratic presidents.
“No one believes the United States is going to default on its debt, although it’s not as remote an idea as it used to be, because we’re so politically crazy right now,” Day said.
Global credit rating agencies have blamed this brinkmanship for harming the United States’ ratings and global standing. In 2023, both Fitch Ratings and Moody’s downgraded the nation’s credit rating after a debt-ceiling deal came down to the wire.
“The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” Fitch Ratings said when announcing the downgrade.
“Everyone believes the United States will eventually pay his debt, but there’s no longer this assurance that it will be paid on time,” Day said. “Time is money. If you delay paying a debt you owe, you are deemed a riskier borrower, and so it costs more to borrow money.”
In turn, higher borrowing costs increase the nation’s debt, working against efforts to lower it.
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“Congress has to get its ‘you know what’ together – both sides – and figure it out. Because if they don’t, there’s going to be ‘you know what’ to pay at some point. The ‘you know what’s’ going to hit the fan,” Day said. “Get rid of the debt ceiling. You haven’t fixed the problem. There’s an underlying problem.”
Watch the full interview in the video above.
Tags: budget, Debt, Debt ceiling, debt limit, default, Donald Trump, Economy, Elizabeth Warren, House Republicans, Medicare, National Debt, Republicans, Ron johnson, Scott Bessent, Social Security, The Pentagon, Treasury Secretary, U.S. Congress, U.S. Congressional Budget Office, U.S. Treasury Department
Kathleen Day: They’re saying, Oh, we have too much debt. Well, guess what? You help create it without funding it. And that’s actuarially, financially, fiscally irresponsible. Do your job.
Simone Del Rosario: For the umpteenth time in U.S. history, the nation is pushing up against the debt limit. That means Congress is on the clock to raise it.
The Treasury Department is taking “extraordinary measures” to keep from borrowing more than Congress has allowed to date. And how much is that amount? It now exceeds $36 trillion.
Sometime in the next few months, the Treasury will run out of tricks. Congress will either raise the debt ceiling, or the U.S. will default. Those are the two options … or is there a third?
Scott Bessent, Treasury Secretary nominee: If he wants to eliminate the debt limit, I will work with him and you on that.
Sen. Elizabeth Warren, D-MA: Great, great, because I agree with President elect Trump that the debt limit should be repealed.
Kathleen Day: I still don’t think it makes it more likely to happen, and I think it might be a bad thing if it does, because what it’s saying is, we want to tell the voters we want to cut the debt, but let’s hide the fact that we haven’t done it. I’m Kathleen Day. I am a journalist masquerading as an academic. I have been teaching financial crises at Johns Hopkins University Business School for going on 15 years, 13 to 15 years, I’d have to recount, but my expertise is in financial crises.
Simone Del Rosario: Failing to raise, suspend or do away with the debt ceiling would certainly cause one of those. In this interview, we’re going to talk about what function, if any, the debt ceiling serves; where it came from in the first place; and why life gets more expensive for all Americans the longer Congress takes to come to a resolution.
So you don’t think with a Republican president who wants to get rid of the debt ceiling, and Democrats who have been calling to get rid of the debt ceiling, you don’t think that there will be a time soon where they decide to actually do that?
Kathleen Day: I don’t, because I think that there is an entrenched group and in the Republican party that’s very radical and really wants to like, get rid of Social Security, get rid of Medicare, get rid of Medicaid. Social Security in particular, and they look at it as another part of another lever that they can use to try to call attention to the to the to the debt.
Simone Del Rosario: Yeah, we didn’t always have a debt ceiling. How did this come about? And how did we borrow money before it?
Kathleen Day: We’ve always borrowed money. And as Alexander Hamilton and Jefferson agreed, you know, borrowing money can be good, and I’ll just give you this little picture. So Jefferson was kind of against it, but Alexander Hamilton understood, and this is an essential economic truism, if you borrow too much money, it’s bad. Obviously it can sink you, but borrowing money reasonably is helps everybody. For example, if you want to build a factory, you can save up the money to build the factory, and that takes a long time. In the meantime, people aren’t employed, whatever. If you can borrow the money at a reasonable rate, and you can afford it, and you build the factory, and you’re making things, you’re employing people, and you pay back the debt, that’s good for everyone, and it’s good for the economy. So a little bit getting rid of the debt completely, which some people would like, isn’t necessarily a good thing. Too much debt, of course, it can sink us. And I can give you an example, if you remind me later, of when holding too much, when having too much debt and having foreign adversaries hold it can be a national security issue, but we can hold off on that. Yeah, but so we always borrowed money. But in leading in World War starting in World War One. The Constitution gives to the house and gives to Congress the purse strings. Which it which it should it basically says the will of the people. You can’t spend money without you can’t tax without representation, unless you live in the District of Columbia or you can’t and you should not be spending without the the vote of people who’ve been elected by the people of the United States. So this idea of controlling the purse strings from Congress is is a good one, and I don’t, can’t think of a better way to do it. What do you want? You’re not going to give the Supreme Court the right do it, or just let the President spend whatever so it resides there, but going up. Now, there’s several things that happen. You have a budget process and appropriations, and we can go into that, but the bottom line, once the United States has decided what money it’s going to spend, it goes out and borrows. Now, it used to be that the Treasury before it would actually borrow the money, would get approval from Congress. But World War One, it became so frequent. Pretty soon Congress said, you know, we’re going to put you on autopilot a little bit. And then it was loosened more and more. And basically, for the last 100 years, we they you the Treasury. Doesn’t have to go to Congress every time. Instead, they put in a debt ceiling. They say, We don’t, you don’t have to come back to the well every time and put the bucket down and come up with approval. You don’t have to get approval every time, but we’re gonna set a limit on it so that that’s the way in which I think a debt ceiling is appropriate. It reminds everyone that Congress, at the end of the day, does have responsibility for setting this and it does remind people that there is a debt out there now it is not the place to try to reduce the debt, even though hardliners use it that way, extremists do use it that way when they didn’t get what they want earlier in the process, when the budget was set. So we got it because Congress said you don’t have to come to us every two minutes. We’re just gonna put up. We’re gonna put a ceiling there, instead of you having to come to us every time you go to the market to borrow.
Simone Del Rosario: Yeah, but Congress is the one who decides where the money gets spent and how much money gets spent. Anyway, it’s like, it’s like asking Congress for permission twice. It’s actually ask Congress for permission to charge the credit card, and then you have to ask Congress permission to pay that credit card bill when it comes due.
Kathleen Day: Not raising the ceiling when we’re bumping up against it is very much like incurring a debt and then not giving yourself the means to pay it so and that could be disastrous, and that’s a whole nother conversation. What that would do to we already you and me and everyone involved in this show and everyone listening pays more money in taxes, or at least we, we we don’t pay less our taxes. The cost of borrowing for the United States, and therefore for taxpayers, is higher than it would be if we didn’t have this debt ceiling fight all the time. So it’s ironic that the people who are refusing to raise the debt or the debt limit or eliminate it, are are people who are doing that in the name of wanting to lower the nation’s debt, and instead they increase it. Because when you do that, the financial markets say, okay, no one believes the United States is going to default on its debt, although it’s not as remote an idea as it used to be, because we’re so politically crazy right now, but, but death, we have had Moody’s and Fitch. I believe, I think it’s Moody’s, or maybe it’s Moody’s and S and P have lowered the rating of the US debt because of these interminable fights and impasses and games of chicken. So everyone, everyone believes the United States will eventually pay his debt, but there’s no longer this assurance that it will be paid on time. Time is money. If you delay paying a debt you owe, you are deemed a riskier borrower, and so it costs more to borrow money. And so, for example, in 2011 when we became perilously close, it added about $1.3 billion to the cost. This impasse cost added about $1.3 billion by Moody’s or S and P s estimate in raising the cost of borrowing. So the people who are trying to lower the debt by doing it here at the debt ceiling debate, in the stream of funding the US government. When you do it at this stage of the process, in the name of trying to lower the debt, you actually raise the cost. You raise the debt because you raise the cost of borrow.
Simone Del Rosario: And I appreciate you kind of explaining that out, because that was going to be a question of mine, is just, how do people living in this country, you and me, get affected by credit downgrades?
Kathleen Day: And it’s that the US has to pay more for things. It adds to the debt. Because we the government. You know, people get irritated when Washington doesn’t do its job. So when there’s a budget impasse and there’s a threat of government shutdowns, or when we’re up against the ceiling and we don’t raise it, then social security checks aren’t going to go out. Everyone’s affected by all these things. But one, there’s many ways. Number one, it increases the cost of borrowing, and that means taxpayers, more taxpayer money has to go to borrow for so if you were borrowing $1 before and paying three cents to borrow it, you’re not going to pay six cents. That’s a cost. Number two, it erodes. The United States is standing in world markets, for better or worse, we are for all our bickering right now, because of our court system, because, even though this has been tested lately, because we are a democracy and because we are play a government, we are a society that believes no one is above the law against that’s been tested lately, but no one’s above the law. These are the things that make the dollar and our economy so strong. This is why Putin and she like to invest secretly in the United States, because we have a democracy. That is what is backing our dollar. Our dollar is backed by democracy and our our court system, our strong military, all these things that make us a strong, free, law abiding society. That’s what gives us our heft and are paying our bills on time. So if we default, Russia has really never recovered from defaulting on instead. But you know, Russia has many other problems. They’re sort of a one note Johnny on an economy and stuff. We have such a great economy. We have so many things going for us that that, that when you do this, that so those are two ways that you hurt people. You raise the cost of borrowing, you undermine our credibility, and therefore raise our cost of borrowing. And then secondly, if, for example, if, if you don’t raise the debt ceiling, and the Treasury can’t borrow, and social security checks and Social Security is another thing, because the government taxpayers don’t have to borrow to fund social security, but because it’s a government run program, when it hits the debt ceiling, checks can’t get issued. So that’s a confusion. People love to raise. Social Security is raising the debt, and it does not. It may someday, but it does not now and it hasn’t. In fact, the it lowers the cost of borrowing for the US government because it has a surplus that the Treasury borrows from. But in any case, if we hit the debt ceiling and we don’t raise it, and the Treasury everything stops, people aren’t going to get their social security checks, military people aren’t going to get their pay. What? That doesn’t just hurt the people at the end getting those checks that is a ballast for the whole economy. So if, if those checks aren’t sent and that money isn’t spent, that is a drag on the economy, and then that hurts other people, and then they can’t they’re not getting revenue they need, and it’s a reverberation.
Simone Del Rosario: Consumer confidence is one of the most important things we look at in the economy. And it seems silly to say, well, you know, we look at a lot of numbers and cents and everything else like that, but it’s really how people feel about the economy that is a most important driver for what drives the economy. So it’s not just like you just talked about. It’s not just whether you know other investors are willing to buy our debt, and how many and how big that pool is, if they love margins, if Americans aren’t confident that those checks are going to come out regularly, if we prove that that’s not stable and reliable, then that takes a hit to the confidence. And even if that completely then again, people start wondering, well, when’s the next time? What’s going to happen next?
Kathleen Day: When you raise the cost of borrowing, you know, who loves it? Our enemies. So Putin and Xi, they are big investors, big holders, like 30. Percent of US debt, they hold it, and so if the interest rates on that debt goes up, and partly because of the disinformation that they’ve sowed to make us politically immobilized and paralyzed, they love it because they just make more money off us.
Simone Del Rosario: Do you think it matters how much foreign countries own of our debt?
Kathleen Day: It surely does. It absolutely does. And you can have too much debt again, that’s the factory. It’s It’s bankers have a saying, you know, if you borrow, or investors, if you, I am paraphrasing this, it has different incarnations. But if you say, I borrow $100 the bank owns you. If you borrow $100 a bank, if you borrow a million dollars from the bank, you own the bank because they can’t afford to have you fail. So that that that is that’s why, when you see consumers get in trouble, banks are not very keen to help you work it out. But if a company gets in trouble, they’re very keen to do it because they’d rather have a lower interest rate than have the whole loan go up. Let me give you an example. So in the housing crisis of 2007 to 2012. Going into that, one of the things that happened, this is a true story, mortgage backed securities, which are just bonds that are backed by millions of homeowners, home loans. So it’s a, it’s a, it’s a debt on a debt. It’s a, it’s a bond collateralized by yours and my mortgages. And they’re very they’re deemed almost as safe as as US Treasuries, because they’re issued by two government chartered corporations, which we don’t need to get into, Freddie Mac and Fannie Mae. But they’re deemed very safe, but they pay a slightly higher interest rate because they’re not exactly like Uncle Sam. So they get to pay more anyway, the biggest holders of that, of that, of those, those bonds, were China and Russia. Are two of the biggest, the Saudis, Japanese two, but Russia and China owned a lot. And in this, at the start of our crisis, Putin actually approached China and said, Hey, let’s do a coordinated sell off of everything we own. It would have torpedoed our economy. So there’s an example of how well, first of all, the people that made the dumb loans at the root of this are to blame, but and it exposed us, but also just having all that debt, basically the Chinese and the Russians and the Saudis and foreign operations really helped finance America’s housing boom in in the in the last part of the 20th century and into the 21st century, which is great unless you have too much exposure and you do something really dumb, like make loans, start making toxic loans to people that they you know, that’s a whole nother story, but just suffice it to say, Wall Street, by its own admission, made a lot of really stupid loans that looked profitable short term, but were long term, they knew they were going to lose. So the point is that having foreigners hold our debt can be good. They’re giving us money to have a great economy, or they can also now China is was more rational because they realized if they repeated our economy, we really might not repay the loans that they held, so they were more rational. But, you know, Putin has a real bug in his ear about democracy, but so it didn’t happen, but it was a real conversation, and it just highlighted the vulnerability.
Simone Del Rosario: I want to get back to the debt ceiling. Did you catch the back-and-forth between Senator Warren and Scott Bassett during the confirmation hearing? Were they agreed on this, where they talked about the hand break?
Kathleen Day: I didn’t catch that particular one, but there was one where they actually amazingly agreed that we needed to get rid of the debt ceiling.
Scott Bessent, Treasury Secretary nominee: If he wants to eliminate the debt limit, I will work with him and you on that.
Sen. Elizabeth Warren, D-MA: Great, great, because I agree with President elect Trump that the debt limit should be repealed.
Kathleen Day: That’s like, Kumbaya, everybody, but you know, I don’t know. Again, I’m just, I know. I’m a I’m on the I’m an outlier in the sense that I don’t think having a debt ceiling is so bad, even though it’s unique to us. But we’re, we’re unique. We are a unique economy, and, and, and, but so I don’t know, I still don’t think it makes it more likely to happen, and I think it might be a bad thing if it does, because what it’s saying is, we want to tell the voters we want to cut the debt, but let’s hide the fact that we haven’t done it
Simone Del Rosario: On its face, what is the debt ceiling supposed to do?
Kathleen Day: It’s supposed to just make sure that Congress has that authority. It reminds the spenders of the money that the keepers of the purse strings are the people of the United States, the elected officials.
Simone Del Rosario: But the spenders of the money, you know, the Treasury is it’s just doing what it’s told by Congress. So the spenders of the money is Congress.
Kathleen Day: It doesn’t make any sense. So here’s how it works. Congress and the president work for to create a budget every year. And they go back and forth and they do that. Then the next part is, there’s all these parts to it. Then Congress has to take what’s been agreed to and decide how to appropriate money to actually fund the budget. So they decide, this agency gets this much. This agency gets this much. They can do it for this they can do it for the new to maintain the nuclear arsenal, or we’re going to put an extra, you know, $100,000 in DOE to make sure that that that our nuclear weaponry is up to date and doesn’t suddenly go off and fly into the air start dropping bombs because of outdated wiring or whatever. So the point is that they have to, they have to agree on what to spend. They have to appropriate the money, and then they have this debt limit. So when you appropriate money and you agree on a budget, you get there’s only two places you can get money, taxes or borrowing. That’s it. So if you look, I can, I have a chart here. So the person, the president who really raised our debt, the national debt is went up by that 160% is Ronald Reagan, because they lowered taxes without any commensurate increase in funding. People say they hate taxes, but they don’t like it when there’s potholes, so they like if there’s tax funded plan to repair the roads or to make sure that public transportation works on time, or that the military works in case we’re attacked, people then suddenly say we like that. There’s a real disconnect. When people think about who pay they’re paying taxes, or who pays for services they want. There’s a lot of research on this. People want, like a great public education, but hell no, I’m not going to pay any more of my taxes to fund it. So it’s a disconnect. But anyway, back to this. So if you agree to a budget and you don’t appropriate enough and it exceeds tax income, you’re going to have to borrow there. That’s the obligation. You approve it. We’re going to spend this right there. There’s your obligation. People who don’t like the end result of that in any given year and think there’s too much debt, the debt, there’s a there’s a deficit in every budget that there’s not enough taxpayer funding, so you have to borrow. The accumulation of that deficit each year is the national debt. Okay? So it’s an accumulation. So people who were unhappy that they weren’t able to work their will during the budget process try again in saying, okay, but we’re going to come back at you by not allowing you to go above the debt ceiling. So that is how they then use it. But they already lost, and so it I get why they why they want to do it, but whether it’s good for the country or not, is another question.
Simone Del Rosario: When you’re taking action on this debt ceiling more than once a year, why? Why do you still believe that it’s an effective tool?
Kathleen Day: I don’t think it is the most effective tool. I think it’s an ingredient in the overall because it says, Guys, you have not gotten your dot. You have not reached a compromise and really worked together to fix the budget process. So, for example, security, Social Security, very popular. I may be wrong here, but I think if you do away with it, I think I think voters would be unhappy just to guess, just to guess. I think so. But you know, that doesn’t get to whether it’s you should have it or shouldn’t have it. So they should have a discussion about whether they should have it. I think the people who think you should will win out of it. Then you say, how do we fix it? But they won’t come together and do that. So a pox on both their houses, because it’s like, it’s like the border. They finally got together for a border bill, and then, and then it was torpedoed by Trump and friends because they wanted to use it as a political tool. At some point, they’ve got to stop doing that, and they’ve got a deep we have real problems in the United States. We’re a very strong country, but if we keep on kicking the can down the road, we’re going to end up with one crisis after another. Now it is true that sometimes Congress will not act, unless it’s stepping over dead bodies. It has to have a real crisis before it acts. And then then maybe it’ll do something to really fix Social Security, or maybe then it’ll really do something to clean up the Pentagon’s budget, or maybe then it will really do something to secure the borders, but all these sort of made for TV scenarios to do it don’t help anybody, and it really is kicking the can down the road. To use a hackneyed phrase, yes, once a year. But so if you don’t do it once a year, that doesn’t fix the problem. The problem is Congress has not, for a long time, genuinely worked together across the aisle to fix key problems facing the United States. Fixing those problems costs money. When it costs money, you have to think about revenue. You’re going to raise tax. You can’t just keep lower. Donald Trump raised the deficit by $8 trillion because of his tax cut. That which you know is great and popular among really wealthy people. It didn’t help rank and file, people who are the middle class, who are the ballast of the economy, by the way, and retailers know that. So if you don’t deal with these problems, then you’re not doing anyone any good. So just because lifting, lifting the debt ceiling, just because it comes once a year, it’s coming more and more and more frequently because failure to deal with the problem, the car engine just can’t be taped together. The car engine is failing. Analogy, I think of is when Marion Barry was mayor of Washington, DC, it turned out that he had not been using taxpayer allocated funds to maintain the water supply system, and so what he did is he just kept pouring in more and more chlorine. And for those of us who lived here for a while, we turned on the shower and it smelled like a swimming pool, like what’s going on his failure to do what he should have done from the beginning meant that at the end, it was a real crisis, a water crisis, not to mention that he was caught snorting cocaine and he had other problems. But the fact is that that failure to deal with a problem, it’s like pensions in the. Country, state funded or government pensions, state in states in particular, have kicked the ball down the road. They’ve borrowed from their pension funds and said, we’ll pay it back later. But if they never get around to it at some point it you can’t keep doing that. Congress has to get its you know what, together both sides and figure it out. Because if they don’t, there’s going to be, you know what to pay at some point the you know what’s going to hit the fan. Get rid of the debt ceiling. You haven’t fixed the problem. Yeah, there’s an underlying problem.
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The automotive industry is bracing for Monday, Jan. 20, when President-elect Donald Trump is sworn in. Back in November 2024, he promised to place 25% tariffs on neighboring Canada and Mexico as one of his “many first executive orders.”
“Think about this, 70% of all the auto parts we make in Michigan go directly to our neighbors,” Michigan Gov. Gretchen Whitmer said Wednesday, Jan. 15. “Every time a Michigan auto part crosses over the border and gets taxed, those costs will be passed on to you and to consumers at the dealership. Sometimes those parts cross a couple of times throughout production.”
Point phone camera here
Whitmer is a Democratic governor in a state won by Trump in November. She told Michiganders she’s “not opposed to tariffs outright,” but that they shouldn’t be used to punish America’s closest trading partners.
Trump said the tariffs will stay in place until Mexico and Canada stop the flow of illegal immigration and drugs. Whitmer said if Trump follows through with his plans, China wins.
“They would love nothing more than to watch us cripple Americans’ auto ecosystem all by ourselves,” she said. “This is a matter of national security.”
Recently, Ford CEO Jim Farley warned, “A lot of our supply chain depends on countries from around the world, and so tariffs are really challenging for any company.”
“What a lot of people might not realize about the automotive industry is that parts cross and go back and cross and go back over the borders, especially in a state like Michigan,” Cox Automotive Executive Analyst Erin Keating told Straight Arrow News. “How do the vehicles actually get tariffed? Is it once they’re finally assembled and they come over? Is it every time a part or a piece or a car passes through the borders?
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“So it will be a significant change for a lot of the automakers, especially as it goes on, the longer it goes on, and it will definitely affect consumers,” Keating added.
Keating said in anticipation of tariffs, the auto industry has been stockpiling parts ahead of the transition. Because of strategic moves like that, customers might be shielded from immediate impacts.
Tags: Auto industry, Automakers, China, Cox Automotive, Donald Trump, Ford, Gretchen Whitmer, Michigan, Tariff
Simone Del Rosario: Gretchen Whitmer is one of those Democratic governors who leads a state won by President-elect Donald Trump. But this week, she’s warning Michiganders one of his policies could harm what drives the state’s economy.
Gov. Gretchen Whitmer: Right now the future of the entire auto industry is at stake. The very core of Michigan’s economy is on the line.
Simone Del Rosario:She says if Trump follows through on his plans to put 25% tariffs on Mexico and Canada, the only winner is China. She says they’d love nothing more than to watch Americans cripple their auto ecosystem all by themselves.
Gov. Gretchen Whitmer: Think about this, 70% of all the auto parts we make in Michigan go directly to our neighbors. Every time a Michigan auto part crosses over the border and gets taxed, those costs will be passed on to you and to consumers at the dealership. Sometimes those parts cross a couple of times throughout production.
Simone Del Rosario: Trump said in November that on his first day on the job, he’ll put 25% tariffs on all products coming from Canada and Mexico. He says those tariffs will stay in place until our neighbors stop the flow of illegal immigration and drugs.
For how the auto industry is preparing for that day, which is this Monday, I want to bring in Erin Keating, executive analyst at Cox Automotive.
Erin, Governor Whitmer is not the only one raising the alarm bells about what’s coming next week. Ford, CEO recently said a lot of their supply chain depends on other countries, and tariffs are going to be challenging for any company. Is there genuine reason to be concerned about Trump’s tariff policies, or do you think auto companies are going to be able to take this in stride?
Erin Keating: No, I think there’s some genuine reason. I mean, we do a lot of back and forth commerce between Mexico and Canada, and it’s not even just the time that the assembled vehicle might arrive over here, or one part might arrive over here. What a lot of people might not realize about the automotive industry is that parts cross and go back and cross and go back over the borders, especially in a state like Michigan, it butts right up against Canada and a lot of the auto manufacturers and suppliers being there. So the threat could really come from actually figuring out, how does, how do the parts, how do the vehicles actually get tariffed? Is it once they’re finally assembled and they come over? Is it every time a part or a piece or a car passes through the borders? So it’s it will be a significant change for a lot of the automakers, especially as it goes on, the longer it goes on, and will definitely affect consumers.
Simone Del Rosario: And it sounds like right now, we don’t have that answer. Will that part get taxed multiple times every time it passes back over, or will it just be like a one time tag?
Erin Keating: Not so far as I know. I have not heard from the administration any or because they’re not in office quite yet. Any details on exactly how that tariff would work. It does seem that Mexico and Canada would be at the most amount of risk for us because of the amount of assembly and parts that come over between those two borders. I mean, certainly we have some manufacturers that are very heavily produced in Asian countries and European countries. We’ve heard some rhetoric around what those tariffs might be, but I think the most concerning and immediate issue is whether Mexico and Canada get impacted.
Simone Del Rosario: And he said he’s doing it on day one. I wanted to ask about why these parts get passed across the border several times over this process. Why does that happen?
Erin Keating: Well, I mean, the way that we assemble cars in the United States. A lot of people, you know what does made in the USA mean anymore, but we have, you know, there’s over 30,000 components to an automotive vehicle, a vehicle being manufactured. And a lot of people don’t realize that just the complexity that goes into designing and building and manufacturing a car. And so every one of those components or pieces are sometimes farmed out to all the suppliers in the industry, and those suppliers can be anywhere around the globe. And so if you’ve got a component which might be made up of several parts, and the parts are coming from various companies, you can imagine how that part might go over to an assembly plant that’s pulling together the component. That component then might re enter the United States for some other part, or for some quality inspection and things like this, and then might get even put back across the border to go to the assembly plant for the final vehicle. So this is where you’ll see the complexity of producing and manufacturing vehicles, and why automakers are concerned about almost seemingly lack of information about how supply chain really does operate in the manufacturing business, especially around such a complex thing as an automotive, I mean, as an automobile.
Simone Del Rosario: Could these tariffs bring that supply chain back to the US? And in your opinion, would that be a good or bad thing?
Erin Keating: You know, I think everyone in the US, you know, agrees that any kind of manufacturing we can bring back within our borders is always great for our economy and great for our people living here. But you know, we need to be cognizant of what does that really mean, and how does that impact pricing for all types of production and manufacturing. It’s not realistic to believe that just because tariffs are put onto things that immediately people are just going to open up manufacturing facilities in the US. First of all, those take years, and never mind that we do have opposing regulations. Sometimes that actually puts more restrictions on where you can build factories and what can you actually use in the factory, so that it’s just such a complex picture. And so a lot of times when we’re caught up in headlines or rhetoric from, you know, campaigns, we’re forgetting about the fact that most things in life today, especially how automated we’re getting with all the new technology we’re getting in all of our products, and expecting not just that we’re getting, but the consumers are expecting in our products. It’s complex, and the supply chain does need to be varied, and we get the best innovation by allowing the right partners in the right places to do the work and to bring the best technology at the least expensive cost for consumers. But that doesn’t mean that we don’t want to advocate for us made products. It just matters on whether we’re actually able to accomplish that.
Simone Del Rosario: Understanding that it’s not next week yet, we haven’t seen the executive order, any paperwork that President Elect Donald Trump plans to sign. What do you think the effect is going to be on pricing in the auto industry if these 25% tariffs are in place?
Erin Keating: So to be honest with you, I think that it’s going to take a little bit for us to see that. And there’s a couple reasons why. One is because, obviously, a lot of the production, a lot of the vehicles have has already happened, right? So manufacturers, everyone was anticipating that some of this might happen. So some of the products have been brought over in advance. We saw that if you looked at port activity and import activity towards the end of the year, we know that across all industries, people were starting to stockpile different things based on the fear of a tariff coming to play. So one, it may take us a minute to get through some of the inventory of pieces and parts that are impacted by that. But two, any manufacturer, not every one of their vehicle lines is manufactured across borders and so forth. And so what they’ll probably be looking at it first is to, how do they do it, sort of for lack of a better word, democratize that expense across their entire production lineup, as opposed to perhaps saying this one vehicle because it is truly and solely impacted by this tariff is going to just shoot up in price to keep things relatively normal for dealers, for consumers to manage, and for the manufacturer to manage, they’ll likely spread that cost out across the model lineup, and so that will make it seem, you know, maybe something will be really high, something will be really low, but will probably, as a consumer, feel relatively normalized.
Simone Del Rosario: Okay, how much influence do you think these big American auto companies are going to have in the Trump administration when it comes to talking about how these tariffs impact the auto industry.
Erin Keating: I think more than maybe we anticipate. We’ve heard all of the CEOs, especially those in Detroit, say they are more than willing and open to have conversations with President Trump and his administration, and there seems to be a lot of individuals being brought into the administration with a lot of business background. So I personally anticipate that there’s gonna be a lot of cooler heads really talking through the impacts of this across the economy, and, you know, trying to figure out which levers really make sense for the goals he’s trying to accomplish, such as less integration, less drugs coming across the borders. There may be better ways to deal with that, but I do think that the automotive industry will have an impact. It’s a large industry. It’s a major engine of the economy here in the US, and I can’t imagine the administration would ignore that.
Simone Del Rosario: We’ll leave it there. Erin Keating, executive analyst at Cox automotive. Thank you so much.
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President-elect Donald Trump is threatening military and economic force against Denmark to gain control of Greenland. The autonomous territory is part of the Denmark kingdom, while the U.S. has maintained a military presence there since World War II.
“We need it for national security. That’s for the free world. I’m talking about protecting the free world,” Trump said this week.
He threatened to “tariff Denmark at a very high level” if it acted against him.
Point phone camera here
“We’re sitting in Denmark and thinking, ‘What’s he talking about? He already has military control,'” said Peter Viggo Jakobsen, a lecturer at the Royal Danish Defence College and expert on U.S.-Danish relations.
What’s he talking about? He already has military control.
Peter Viggo Jakobsen, Royal Danish Defence College
Trump’s threats have stunned the close U.S. ally, which Jakobsen says has Denmark “holding their breath and waiting” until Trump takes office.
“When Trump talks about military control of Greenland, then he probably missed a history lesson or two, because the U.S. already has military control of Greenland,” Jakobsen said.
Since WWII, the U.S. has been allowed to operate military bases in Greenland. Currently, the U.S. has Pituffik Space Base, formerly known as Thule Air Base.
“If you get into a military confrontation with Russia and Russia decides to fire a nuclear missile from Russia towards the United States, then the shortest route for a missile is crossing over Greenland,” Jakobsen explained. “And that is, of course, why the United States, back during the Cold War, established the Thule Air Base where they have this warning radar that will enable the U.S. to get a warning if Russia should decide to fire missiles against the United States.
“So it’s a vital part of the warning chain that the U.S. established during the Cold War to keep the American homeland safe,” he continued. “So, for that reason, it has become increasingly important as the relationship between the United States and Russia has deteriorated after the Russian decision to take Crimea and start the war on Ukraine in 2014.”
Jakobsen said under the current agreement between Denmark, Greenland and the U.S., the U.S. could expand its military presence or add additional military bases in Greenland simply by consulting and informing Copenhagen and Nuuk. With this in mind, Jakobsen said Denmark doesn’t understand what more Trump wants.
“At the moment, he only has to pick up the phone and say, ‘Hey, I would like another installation here. Could you please fix it?’ And that may also be what he has in mind, but we have no clue,” Jakobsen said.
However, should the U.S. gain control of Greenland over Denmark, Jakobsen points out that the U.S. would also have to take over the subsidies Denmark provides.
“In Greenland, they can’t afford to run their own state and they’re getting huge subsidies every year from the Danish state,” he said. “So on the one hand you have the Greenlanders wanting to decide everything themselves, but they still want Denmark to pay for it.”
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“They can choose between being subsidized by Denmark or being subsidized by the United States because they cannot generate enough revenue of their own, either from mining or fishing or tourism, to basically pay for the subsidies that they are currently receiving from Copenhagen,” he added.
In the end, Jakobsen said controlling Greenland is not that strategically important from the Danish perspective, though he acknowledged a lot of Danes and politicians would disagree with that statement. He said the most important facet of Greenland is that it gives Denmark special access to the U.S.
“We can offer the United States something they want and we have these meetings in the Arctic Council and so on,” he said. “If Greenland were to go independent, I really don’t see that as a major strategic loss from the Danish perspective. Denmark would still be a valuable ally for the U.S. because we also control the straits that give you access to the Baltic Sea.”
Tags: Baltic Sea, Denmark, Donald Trump, Greenland, Military Defense, missiles, Russia, Russia-Ukraine War, Tariff, U.S. Economy
Peter Viggo Jakobsen: We’re sitting in Denmark and thinking, what’s he talking about? He already has military control.
Simone Del Rosario: President-elect Donald Trump is threatening military and economic force against Denmark to gain control of Greenland.
Donald Trump: We need it for national security. That’s for the free world. I’m talking about protecting the free world.
Simone Del Rosario: But his threats…
Donald Trump: I would tariff Denmark at a very high level.
Simone Del Rosario: …are stunning the close U.S. ally. Since WWII, the U.S. has maintained a military presence in Greenland while the world’s largest island remains part of the Denmark kingdom.
Peter Viggo Jakobsen: When Trump talks about military control of Greenland, then he probably missed a history lesson or two because the US already has military control of Greenland. My name is Peter Viggo Jakobsen. I’m a lecturer at Royal Danish Defence Academy and I’m working on international relations, user force coercion, Danish foreign and security and also Denmark’s relationship with the US, its NATO partners, so on and so forth. I’ve been looking at the Arctic for quite a while, but I’ve also been dealing with US-Danish relations for the past 20 years.
Simone Del Rosario: While the U.S. and, even specifically, Trump, have tried to acquire Greenland in the past, Danish authorities are understanding Trump is serious this time. It’s left Denmark “holding their breath” until Trump takes office to see what happens next.
Peter Viggo Jakobsen: The Danish reaction to the latest statement from Trump that he would not rule out using force or economic coercion in dealings with Greenland is basically to say, hey, the US is our best and closest ally. usually discuss issues and we don’t see any crisis and then let’s see what’s going on. So of course, Internally, the Ministry of Foreign Affairs and the Diplomatic Corps, there’s been some sort of, hey, what’s going on? This is very unusual. How come Trump addresses allies like this? But externally, it’s basically treated as, yes, we’ll deal with it if an issue arises. So it’s been played down from the Danish perspective. And to be quite frank, it’s really unclear with Trump is on about, it’s very unclear what he aims to achieve, but making these seemingly off the cuff remarks. So until we know what the US is going to demand once Trump takes office, everybody is sort of holding their breath and waiting.
Simone Del Rosario: What makes Greenland so strategically important for either side?
Peter Viggo Jakobsen: From Denmark, from a Danish perspective, I would say is primarily identity. It’s about being this United Kingdom and Greenland has been part of the Danish kingdom for a very long time. So having to give that up would be seen as a sort of a defeat. Greenland currently has home rule. There’s a growing aspiration for independence. But the problem is in Greenland that they can’t afford to run their own state and they’re getting huge subsidies every year from the Danish state. So on the one hand you have the Greenlanders wanting to decide everything themselves, but they still want Denmark to pay for it. And of course it doesn’t quite work that well. If can’t pay your own bills, the people who are paying your bills would also want some say in what’s going on. But from a strategic perspective, I would say that if you ask in the Ministry of Foreign Affairs, They say, it’s very important to have Greenland because then you get special access to the United States. You mean something special to them. We can offer the United States something they want and we have these meetings in the Arctic Council and so on. But if we cut to the chase, I would say that it’s not really that important from the Danish perspective. And even if we were to…If Greenland were to go independent, I really don’t see that as a major strategic loss from the Danish perspective. Denmark would still be a valuable ally for the US because we also control the straits that give you access to the Baltic Sea. So in that sense, I don’t really think it’s that important from the Danish perspective. You’d probably find a lot of Danes and certainly politicians who would disagree with it. But from a sort of strategic, rational perspective, Greenland is not that important. But from the US it’s a different story. And that’s because if you get into a military confrontation with Russia and Russia decides to fire a nuclear missile from Russia towards the United States, then the shortest route for a missile is crossing over Greenland. And that is of course why the United States back during the Cold War established the Tule Air Base where they have this warning radar that will enable the US to get a warning if Russia should decide to fire missiles against the United States. So it’s a vital part of the warning chain that the US established during the Cold War to keep the American homeland safe. So for that reason, it has become increasingly important as the relationship between the United States and Russia has deteriorated after the Russian decision to take Crimea and start the war on Ukraine in 2014.
Simone Del Rosario: How long has Greenland been under Denmark’s control?
Peter Viggo Jakobsen: I would say almost since time immemorial. mean, think we began to have, I mean, we had settlers going back to the Viking age and then there’s probably a debate as to whether they emanated from Norway or Denmark or wherever they came from. But then I think from the 1700 something, we started to have trade going up there. And so we have basically been having settlers been there for some hundred years.
Simone Del Rosario: And how many times has the United States and for how long tried to purchase, acquire, and in other ways get Greenland into its hands?
Peter Viggo Jakobsen: Well, the first time the discussion started in the US was about the time when the US was also buying Alaska from Russia. Then there was also an American senator, if I remember correctly, who proposed that the US should also buy Greenland. The issue, I think, surfaced again at the time when Denmark sold the West Indies to the US at about the start of the last century. And then the issue popped up again after World War II. As you are probably aware, the US, after making arrangements with a Danish diplomat, the Danish ambassador to the US, he allowed the US to basically take control of Greenland during World War II. And then after World War II, the Danish government politely thanked the US for looking after Greenland during World War II, and then they asked the US to leave again. And then the US basically told Denmark, it’s not quite going to work this way, guys. You either sell us Greenland or you give us the military bases we want. And then we made a base agreement with the United States in 1951. And this is the agreement that is still in operation. It was amended in 2004. And what that agreement basically says is that the US can do whatever it wants in the base it has in Tule or the Petrofique space base as it’s now called today. If the US wants additional military bases or additional military presence on Greenland, the US has to consult and inform Copenhagen and Nuuk. So basically the US can put more military power or personnel into Greenland if it wants to. It only has to tell the Danish government and the government in Greenland that now it’s going to put more forces in. We cannot do anything to prevent it. So when Trump talks about military control of Greenland, then he probably missed a history lesson or two because the US already has military control of Greenland.
Simone Del Rosario: What do the Danish think about his, you know, off-the-cuff comment about tariffs, about making this an economically painful situation for Denmark if they don’t agree to give up Greenland?
Peter Viggo Jakobsen: We’re sitting in Denmark and think what’s he talking about? He already has military control and if he wants more military control all he has to do is tell us that he wants more military control and then if he goes about it in a clever way we’ll probably also pay for the facilities that the US so desires. We’re currently building a new airstrip in Kangalusuaq and we’re doing that in order to please the Americans. So in a we are building an airstrip that the US military wants. At the moment, he only has to pick up the phone and say, hey, I would like another installation here. Could you please fix it? And that may also be what he has in mind, but we have no clue. The other thing about economic sanctions, that that’s a bit, again, it’s a bit, it’s a bit hard to understand why he wants to do this, because if he wants control over Greenland, that’s a decision for the Greenlanders to make and how that would work in the real world would be that Denmark currently subsidizes the running of the Greenlandic state. If we stop paying, their whole society collapses. So what Trump could do if he wants to take over Greenland is basically to buy Denmark out and make the government a nuke and an offer saying, hey, we’re going to pay as much as the Danes are paying or even a bit more. And then Greenland can take the political decision to declare themselves independent and then let the US take over the running of their state. So in that sense, if Trump does not get his way and he imposes sanctions on Denmark, he’s hitting at the wrong people because it’s not the Danish government’s decision to make. It’s for the Greenlanders to decide. And it’s a bit tough for the Americans to impose tariffs on Greenland because last time I checked, Greenland wasn’t really exporting anything of any importance to the US. So in that sense, his threat does not make any sense.
Simone Del Rosario: Aside from the military aspect of this, does Greenland have any natural resources that the U.S. would be interested in?
Peter Viggo Jakobsen: They do have some deposits of rare earth minerals, also have uranium and they also have some oil and gas. But the interesting thing is that whenever we have had commercial firms up there looking at this, they have decided that it’s not worth their while because it’s not profitable. But of course there are some deposits of rare earth minerals that you could argue would be in the interest of the US to get assessed to because China is at the moment controlling most of the rare earth minerals. So if the US government would want to subsidize such a production, then that might be worthwhile. But so far, the mining companies that have been up there have not really been able to start profitable operations. So it’s not my area of expertise, but it may sound greater than it actually is.
Simone Del Rosario: When all is said and done, do you think that Greenland will remain under Copenhagen’s control?
Peter Viggo Jakobsen: That depends on whether the US is going to offer them a better deal. Because if that does not happen, the Greenlanders don’t have any choice. They can choose between being subsidized by Denmark or being subsidized by the United States because they cannot generate enough revenue of their own, either from mining or fishing or tourism, to basically pay for the subsidies that they are currently receiving from Copenhagen. So the only way that they can get declare independence or change control is if they can find another sponsor. if that’s what Trump is trying to achieve, it seems weird to talk about coercion and sanctions because what he should be doing is basically bribing the Greenlanders to move from Danish control to American control.
Simone Del Rosario: Professor, thank you so much for your thoughts today.
Peter Viggo Jakobsen: Sure, no problem.
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Tags: Economy, Federal Funds Target Rate, Federal Reserve, Freddie Mac, Housing Market, Interest rates, Mortgage, mortgage rate, rate cut, Rate hikes, Real estate
Simone Del Rosario: I can see the Google search now … “Why are mortgage rates going up while the Federal Reserve is cutting rates?”
Prospective home buyers who thought, “I’ll just wait until the Fed starts cutting its interest rate and then I’ll score a better mortgage rate,” they’ve been sorely disappointed.
Since the date of the Fed’s first cut in September, the rate on a 30-year fixed mortgage has gone up nearly a full percentage point, even though the Fed has cut two more times since then.
Why are they going in opposite directions? And will it get worse or better in 2025?
Let’s get into it with Bright MLS Chief Economist Lisa Sturtevant. Lisa for people who’ve been waiting patiently to get into the real estate game, this certainly is a frustrating phenomenon. Why are rates climbing?
Lisa Sturtevant: Yeah, it’s so unusual, isn’t it, people have been saying, Look, I’ll wait until the Fed cuts interest rates and then I’ll get a better mortgage rate. And we’ve seen, as you point out, exactly the opposite. And I think the key reason is that the mortgage market is reacting to expectations as opposed to actions, right? So back in September, what we saw was that mortgage rates had been following from the beginning of July all the way through the rate cut in September, the Fed had been telegraphing that they were going to do that rate cut in September, so it was already baked in. And then in December, while the Federal Reserve cut interest rates, they also released their updated economic projections that said, Look, we’re a little bit more worried about inflation. We’re only going to cut rates twice in 2025 instead of 2024 and then so mortgage rates rose on account of that information, as opposed to the rate cut itself.
Simone Del Rosario: So you talked about that September moment where the 30 year fixed hit around 6% did buyers miss their very brief chance at that low of a mortgage?
Lisa Sturtevant: I think there were a lot of buyers that capitalized on that dip in mortgage rates. Yeah, we did. We saw a lot of uptick in pending sales data. That’s data on the number of people making an offer on a home in September. But I think just as many, if not more, missed out and are waiting to see when their next opportunity will be to get into the market. And it’s never a good time to try and time mortgage rates. But I do think we’re going to see more buyers in this market try and act opportunistically right when they see movement in rates, trying to jump into the market, being ready to act as quickly as they can.
Simone Del Rosario: Yeah, I’ve seen some of the headlines. Mortgage rates could go as high as 8% even as the Fed cuts. Where do you see this heading in 2025?
Lisa Sturtevant: I think I don’t think we’re going to get to 8% for sure. I think we are in a new normal where, you know, in the mid sixes is going to be a good mortgage rate. And for some people, that’s hard to swallow, since during the pandemic, we saw rates down around 3% but actually over the last 50 years, the average rate on a 30 year fixed has been about seven and a half percent. So we’re not high by historic standards. We’re just high by what people had come to expect during the pandemic.
Simone Del Rosario: How do you think the housing market is going to respond to this environment if they’re not seeing the mortgage rate budge? Do you think people are going to see that missed opportunity in September and say, You know what, I’m just going to go ahead and dive in, our price is going to drop because there isn’t a lot of movement. What do you think is going to happen with all of this?
Lisa Sturtevant: Yeah, so I think there’s a couple of things. You know, we’re in such an unusual market, and a lot of the old rules don’t apply. It’s really hard to forecast in the best of times, and now it’s even more challenging. But here’s what I’m thinking. I think that buyers and sellers have re anchored their expectations about mortgage rates. So a few years ago, everyone was waiting for rates to be around three or four, but now consumers are looking back a year, 18 months, remembering rates at 8% or 7% and now six and a half percent seems like a pretty good rate. So I think even if we don’t see rates come down a lot, if we see a downward trend in rates, that’s going to bring buyers in the market, because there’s a lot of unmet demand. Pent up demand that will be unleashed in the market in 2025.
Simone Del Rosario: We’ve been talking about the Fed cut so much as you mentioned. Now the Fed is forecasting just two cuts in 2025 Is it time for us, given the fact that the Fed cut and the rates went up, is it time for us to stop paying attention so much to fed cuts and be looking a lot closer at the 10 year treasury, and what do you anticipate that’s going to do?
Lisa Sturtevant: Oh, yeah, that’s a great that’s a great point. We spent a lot of time wringing our hands and thinking about what the Federal Reserve is going to do, but the Fed is reacting to economic data, and that is what we should be looking at when we want to think about where mortgage rates are headed. Yeah, and so as you point out, the 10 year treasury yield tracks very closely to mortgage rates for a variety of reasons. And so paying attention to what happens to that metric is going to be really important. I would argue we also need to be watching maybe three other metrics. You know, inflation, of course, we saw inflation had come down, but then it reversed for a couple of months there. If inflation continues to reverse, we could see mortgage rates rise. Then we also need to pay attention to the labor market, which has been very strong. If that continues to strengthen, even get stronger, that could also lead to higher rates. And then the last thing is a little bit squishy, but I have to mention it. How people feel is going to make a big difference to the 2025 housing market. So paying attention to those consumer confidence measures, I think, are also going to be really important to projecting where we might be in the months ahead.
Simone Del Rosario: Those are all really good data points for us to be looking at. And I think that, as history has shown us, very recent history, if we’re waiting until the Fed acts, it’s already too late, because the mortgage rate industry has already baked all of that in, so we’ll be looking at those other measures for sure. Bright MLS chief economist, Lisa Sturtevant, thank you so much for your thoughts today.
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The FBI and the Cybersecurity and Infrastructure Security Agency said China has been targeting commercial telecommunications infrastructure in what they describe as a broad and significant cyber espionage campaign. The joint announcement came three days before President Joe Biden’s meeting with Chinese President Xi Jinping in Peru.
The FBI and CISA said the People’s Republic of China (PRC) targeted multiple, unnamed telecommunications companies and stole customer call records, private communications of individuals who work in government or politics and also obtained information that was subject to U.S. law enforcement requests pursuant to court orders.
In the announcement, they said they expect to discover the extent of the network breach is even larger as the investigation continues.
Point phone camera here
The FBI and CISA are working with the companies to render technical assistance and inform victims. They are also working to strengthen cyber defenses across the commercial communications sector. They are asking any organization that thinks its network may have been compromised to contact their local FBI office.
During their meeting, the White House said Biden will emphasize maintaining military-to-military communications at all times and the importance of responsibly managing the world’s most consequential relationship.
Straight Arrow News spoke with Rep. Dusty Johnson, R-S.D., who sits on the House Committee on the CCP, about cyber espionage and how President Biden should address it with Xi.
Johnson’s key points include the following:
- Biden needs to emphasize to Xi that the US does not want a hot or cold war with China, but acts of aggression cannot be ignored.
- Engagement between the two countries must continue.
- China steals data and uses it to create weapons the U.S. does not fully understand the capabilities of.
The following interview has been edited for clarity. Watch the video above for the full conversation.
Ray Bogan: What should the president’s message be?
Rep. Dusty Johnson: Clearly, every single day, China is looking to undermine our country and cyber security attacks are a huge part of that. The president has got to be clear with Xi Jinping that we do not seek a hot or cold war with China, but acts of aggression cannot be ignored. I would like President Biden to display some strength. One thing we know about Donald Trump is that he will certainly display strength.
Ray Bogan: This, as you alluded to, is a pattern of behavior. How do you have diplomatic relations with a country that does this on a regular basis?
Rep. Dusty Johnson: I do know the tendency is to say, “They’re bad people, we want to quit talking to them.”
That makes the world a whole lot more dangerous. Those are the sort of petty fits and tantrums that China will throw. We do something they don’t like so they quit picking up the red phone that link our two militaries. Engagement keeps the world safer. Engagement gives you a mechanism to be able to tell China when their behavior is totally unacceptable. It is important we have lines of communication open, but we need to make it very clear with China that we’re not going to be bullied around, period.
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Ray Bogan: And then finally, this particular attack targeted personal information, even call logs. Why should an everyday American care if somebody in China has your call logs?
Rep. Dusty Johnson: China, the Chinese Communist Party, they are experts at using data, piled upon data, piled upon data to put together some really exquisite weapons that we don’t even fully understand the capabilities of, but we know that no enterprise in the history of humankind has ever been able to use data as a weapon like the CCP has. I don’t know what they’re all doing. I know they clearly find some value with it if they’re going to spend tremendous resources in constantly probing our defenses to get in and steal that information.
Tags: China, Chinese Communist Party, Cyber attack, cyber crimes, Cybersecurity, Joe Biden, People’s Republic of China, Xi Jinping
The FBI and the Cybersecurity and Infrastructure Security Agency say China has been targeting commercial telecommunications infrastructure in what they describe as a broad and significant cyber espionage campaign. The joint announcement came three days before President Biden’s meeting with Chinese President Xi Jinping in Peru.
The FBI and CISA said the People’s Republic of China (PRC) targeted multiple, unnamed telecommunications companies and stole customer call records, private communications of individuals who work in government or politics, and also obtained information that was subject to U.S. law enforcement requests pursuant to court orders.
In the announcement, they said they expect to discover the extent of the network breach is even larger as the investigation continues.
During their meeting, the White House says President Biden will emphasize maintaining military-to-military communications at all times and the importance of responsibly managing the world’s most consequential relationship.
Straight Arrow News spoke with Congressman Dusty Johnson, who sits on the House Committee on the CCP, about cyber espionage and how President Biden should address it with Xi.
Ray:
What should his message be?
Rep. Johnson:
Clearly, every single day, China is looking to undermine our country and cyber security attacks are a huge part of that. The President has got to be clear with Xi Jinping that we do not seek a hot or cold war with China, but acts of aggression cannot be ignored. I would like President Biden to display some strength. One thing we know about Donald Trump is that he will certainly display strength.
Ray:
This, as you alluded to, is a pattern of behavior. How do you have diplomatic relations with a country that does this on a regular basis, perhaps even, maybe even daily?
Rep. Johnson:
I do know the tendency is to say ‘They’re bad people, we want to quit talking to them’. That makes the world a whole lot more dangerous. Those are the sort of petty fits and tantrums that China will throw. We do something they don’t like so they quit picking up the red phone that link our two militaries. Engagement keeps the world safer. Engagement gives you a mechanism to be able to tell China when their behavior is totally unacceptable. And so listen, it is important we have lines of communication open. But we need to make it very clear with China that we’re not going to be bullied around, period.
Ray:
And then finally, this particular attack targeted personal information, even call logs. Why should an everyday American care if somebody in China has your call logs?
Rep. Johnson:
China, the Chinese Communist Party, they are experts at using data, piled upon data, piled upon data to put together some really exquisite weapons that we don’t even fully understand the capabilities of. But we know that no enterprise in the history of humankind has ever been able to use data as a weapon like the CCP has. And so listen, I don’t know what they’re all doing it. I know they clearly find some value with it if they’re going to spend tremendous resources in constantly probing our defenses to get in and steal that information.
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