Did Biden Really Have COVID-19?

Biden’s onset of COVID comes at a convenient time when he’s in dire need of sympathy and a distraction. Don’t fall for it.

by Brandon J. Weichert for American Greatness

For months leading up to his recent overseas trip, Joe Biden’s staff and their stenographers in the press insisted this trip would be a reset of Biden’s poor showing on the international stage, notably in the Middle East. We were assured Biden would restore healthy relations with America’s traditional allies in Israel and the Sunni Arab world (notably in Saudi Arabia, led by Crown Prince Mohammed bin Salman, a perennial target of the American Left’s outrage machine). 

In typical Biden fashion, the overhyped trip landed with a thud. 

Realizing that Biden’s trip would require him to shake hands with Middle Eastern leaders the Left hates, Biden’s handlers forbade 46 from shaking hands out of an abundance of  COVID caution. Or so we were told.  Naturally, the first thing Biden did when he reached the tarmac at Ben Gurion Airport was shake hands with former Israeli Prime Minister Benjamin Netanyahu (another object of the Left’s abject hatred). 

Biden further infuriated his left-wing base by effectively standing with Israel rather than condemning its policies toward the terrorist-run Palestinian Authority. Biden didn’t win any friends on the Right, either, because his pathetic showing in the Middle East came in the context of his greater desire to restore the ill-fated Obama-era Iran nuclear weapons deal. 

After blundering in Israel, Biden hopped on his plane and jetted over to Saudi Arabia. Unlike past presidential trips from Israel to the Sunni Arab world, though, Biden was allowed to fly directly from Tel Aviv to Riyadh. The historic moment could not be acknowledged publicly, however. To do so would have meant acknowledging the accomplishment of Biden’s much-maligned Republican predecessor, whose visionary Abraham Accords set the conditions for these historic changes between Israel and the Sunni Arab world.

Once in Saudi Arabia, it was fist bumps all around. The crisis of Joe Biden shaking hands with MBS—a man the Western press and Democratic Party holds in as much contempt as they do former President Trump—was averted. Mission accomplished, Ron Klain! 

Sadly, an entirely new disaster unfolded shortly thereafter. While burbling out a speech to the leaders of Saudi Arabia, one could not help but notice that Biden’s audience was . . . well, sleepy. Most of the Arab leaders looked away from the American president with a combination of resignation and annoyance. Other Arab leaders glanced down at their cellphones. Even Biden’s own advisers arrayed behind him looked bored as he stammered on about U.S.-Arab relations. Brett McGurk, Biden’s Mideast adviser and architect of the trip, appeared nonplussed at best during the president’s slurred speech. 

Compare Biden’s pathetic showing in Saudi Arabia with former President Donald Trump’s showing at the same venue a few years earlier. That meeting was probably the most important conference in the Arab world attended by an American leader since 9/11. It set the stage for Trump’s Abraham Accords and brought the United States, Israel, and the Sunni Arab states closer than they had ever been, united against the rise of a nuclear Islamist Iran and the ongoing threat of Jihadist terrorism from within the Sunni Arab world. 

Whereas Biden’s shambolic tour of the region raised more questions about the U.S. role in the world than it answered, Trump’s had solidified America’s position. Biden offered no vision. He didn’t even offer a handshake! And while Biden was on his meandering trip to nowhere, his vice president was back in the White House meeting with California Governor Gavin Newsom. When the old cat is away, the younger cats plot his downfall, evidently. 

To make matters worse for Biden, he gave a bizarre speech in Delaware last Wednesday in which he appeared to say he has cancer. A panicked White House Press Office issued an immediate “clarification.” Considering Biden was dumping on Big Oil at the time, he may have been exaggerating for effect. It’s just as likely, given his outward signs of senility, he got confused and misspoke. Either way, the caustic response from the otherwise sympathetic press and social media was brutal. 

The very next day, news broke that Biden had tested positive for COVID-19. Just like that, scathing assessments of Biden’s failed Mideast trip disappeared, along with his bizarre cancer claim. In their place were the sullen faces of Biden team members doing everything in their power to manage the public perception of Biden’s illness. It was reminiscent of a scene from “House of Cards,” when Francis Underwood advises all politicos suffering through a public scandal to “kill and throw [the press] something fresher.” As if sensing the skepticism from people in the press like me, the Biden team released a bizarre video—akin to a“proof of life” image—of Biden struggling to speak while sucking on a throat lozenge, insisting he’s fine. 

He probably was fine because he probably didn’t have COVID! Everything about this administration is a grotesque pantomime, a grand façade meant to conceal the fact that we’re led by an incompetent figurehead. We’re to believe that a 79-year-old got over the novel coronavirus from Wuhan, China in just a few days? Like so much about this presidency, rather than address the real fact that Biden is totally unfit to lead, his minders have concocted a false narrative; a distraction about him getting sick to protect the Democratic Party’s tenuous grip on power. 

Everything about this presidency is a damn, dirty lie. Biden’s onset of COVID came at a convenient time when he was in dire need of sympathy and a distraction. Don’t fall for it.

X22, On the Fringe, and more- July 28

 

Evening. Here's tonight's news:

The Ukrainian Verdun ~ VDH

The United States is nearing a gut-check on Ukraine.

by Victor Davis Hanson for American Greatness

Five months after Russia invaded Ukraine, the war is now reduced to one of attrition. The current dirty, grinding slog is fought mostly with artillery and rockets. Everything from Ukraine’s shopping centers to apartment buildings—and the civilians in them—are Russian targets. 

Most outsiders have already forgotten the heroic Ukrainian winter repulse of the botched Russian shock-and-awe effort to sweep into Kyiv, decapitate the government, and declare the eastern half of the country a Russian protectorate within mere days.

Months later, the long war devolves further into a contest of mass and weight—tons of explosives blowing up pathways for massed troops grabbing a few more charred miles of ruined landscape.

Vladimir Putin bets he can throw in more men and more shells than Ukraine and its Western suppliers can match. He is quite willing to “win” by laying waste to eastern Ukraine even if it means losing three Russian soldiers for every Ukrainian. 

When war becomes such gridlocked carnage, each side looks to new game-changing diplomacy, strategies, allies, or weapons to break the deadlock.

For Putin, such escalation means more flesh, steel, and explosives. His country is 28 times bigger than Ukraine, and over three times more populous, with an economy 15 times larger. 

As for Putin’s financial reserves, the Western oil boycott means increasingly little to him when 40 percent of the planet’s population in India and China are eager to secure near-limitless Russian energy. 

Another 750 million people in Europe once talked tough. But as a second winter nears, their gas and oil imports from Russia will further wither. Then their Churchillian rhetoric may chill. 

So, the Ukrainian war increasingly will depend on endless U.S. aid and escalation.

To stop the Russian steamroller, Ukraine demands sophisticated American missiles to sink Russia’s Black Sea Fleet. Kyiv requests shipments of U.S. jet fighters to knock down Putin’s missiles and planes.

It asks for more rockets and artillery to ensure tit-for-tat retaliation for every incoming Russian shell and bomb. Kyiv negotiates for more Western intelligence to take out more Russian generals and more lift capacity to stage airborne raids into Mother Russia itself.

We in the West abhor Putin’s war as senseless carnage, the last mad act of a vainglorious and delusional dictator. 

Yet Putin trusts that future Russian generations will come to appreciate his grinding effort as the brutal restoration work of Vladimir the Great. When the wreckage is forgotten, Putin is convinced he will be viewed as the world’s most successful irredentist—one who had already battered Georgia, Ossetia, Chechnya, Crimea, and Eastern Ukraine back into the reborn Russian empire. 

If Putin can smash Ukraine into submission, the former jewel in the Russian imperial crown, then he thinks he can eventually swallow all the remaining former Soviet republics that are far less formidable than Ukraine.

The United States is nearing a gut-check decision. There are plenty of dangerous firsts in radically upping our role with Ukraine. No one quite knows the post-Cold War rules of engagement when one nuclear power openly fights the surrogate of another. 

In the old days of the Soviet Union and a backward Maoist China, conventional American triangulation ensured that neither nuclear power grew closer to each other than to us. 

After Ukraine, both nuclear powers are de facto allies, ganging up on a common American enemy. As global inflation spikes, recession looms, and oil prices soar, some of our sworn and de facto allies, including India and Turkey, prefer Russian oil to Western sermons. 

The heroic Ukrainian resistance may have brought European NATO states and the United States closer. But oddly, Ukraine’s supporters seemed to have soured the rest of the world on Western economic boycotts and sanctions—and the torpid leadership of Joe Biden and his European counterparts.

In the West, there are dissident rumblings of a possible plebiscite to adjudicate the Russian-speaking Ukrainian borderlands—with possible guarantees of an Austria-like, non-NATO neutrality for Ukraine. 

But such compromise talk earns charges of appeasement from Western zealots. Apparently, American moralists intend to fight for the principle of the sanctity of national borders to the last Ukrainian. 

Vastly upping aid to Ukraine has become the cause célèbre of the West. But few have fully explained the ensuing costs and dangers of escalation to the American people. The United States appears to be heading into a stagflationary recession following the loss of deterrence from the Afghanistan catastrophe, and with restive renegades like Iran and North Korea joining the Beijing-Moscow nuclear axis.

For now, no one knows whether greater American escalation would tip the balance for an allied democratic victory, and a repeat of our savior role in the two World Wars. Or will the proxy war suck the United States into a Vietnam, Iraq, or Afghanistan-like quagmire? 

Worse: will our intervention trump even the brinkmanship of the Cuban Missile Crisis—with the nuclear standoff nightmarishly unpredictable?

DOJ Insiders Say Delaware US Attorney’s Office Too Inadequate To Investigate Biden Family Corruption

Conflicts of interest aside, the complexity and scope of the Biden corruption investigation exceed the capabilities of the Delaware U.S. Attorney’s Office.

Margot Cleveland reporting for The Federalist

The Delaware U.S. Attorney’s Office investigating Hunter Biden lacks the wherewithal and resources to adequately probe the dubious financial dealings of the Biden family and their business partners, according to three current or former Department of Justice officials.

“If any single one of the dozens of issues had been alleged about the Bush or Trump families, a special counsel would have been appointed immediately,” said one career official familiar with the probe. “[The Delaware office] needs help. There’s no way it can tackle everything it needs to, even if it tried.” Two other officials also expressed concern about resources available to the investigation, particularly given the political sensitivity and complexity of the underlying issues.

In March 2022, the New York Times reported that David C. Weiss, the U.S. attorney for Delaware, was overseeing the criminal investigation into Hunter Biden, noting that the probe may also involve the scrutiny of various other connected individuals and businesses. Sources told the Times that a grand jury continues to gather evidence “in a wide-ranging examination” of Biden’s international business dealings, with prosecutors considering charges for tax fraud, criminal foreign lobbying, and money laundering.

On July 8, Sens. Chuck Grassley, R-Iowa, the ranking member of the Judiciary Committee, and Ron Johnson, R-Wis., the top Republican on the Permanent Subcommittee on Investigations, wrote to Weiss, a second time, inquiring about the investigation. In addition to asking the attorney whether Nicholas McQuaid, a former associate of Hunter Biden’s criminal attorney and now the principal deputy assistant attorney general for the DOJ’s Criminal Division, had any involvement in the investigation, Grassley and Johnson sought assurances concerning the funding and scope of the investigation.

Has the U.S. Attorney’s Office for Delaware issued grand jury subpoenas “to Wells Fargo, USAA, Bank of America, TD Bank, JPMorgan Chase, PNC, Morgan Stanley, Citibank, Bank of New York Mellon, Bank of China and First National Bank of Omaha for records relating to Hunter Biden, James Biden, Sara Biden, John R. Walker, Eric Schwerin, Devon Archer and corporate entities linked to them, including but not limited to, Hudson West III and the Lion Hall Group?” the letter inquired. 

Those financial institutions should have relevant information related to Weiss’s criminal probe, the senators explained, referencing bank records introduced on the Senate floor establishing financial connections between James Biden (the president’s brother) and Hunter and the communist Chinese regime. 

During floor speeches earlier this year, Grassley and Johnson displayed multiple records confirming the transfer of funds from top Chinese officials and various entities run by President Joe Biden’s family members, including one transfer of $100,000 from the Chinese-owned firm of CEFC and Hunter Biden’s firm, Owasco. Another wire transfer from communist-connected Chinese businesses totaled $5,000,000, with the proceeds reaching Hunter and James Biden through a variety of business organizations they controlled — a maze the senators walked people through on the Senate floor earlier this year, including Hunter Biden’s Hudson West III and James Biden’s Lion Hall Group. Other bank records established high-value transfers to James Biden. 

Revelations of Hunter and James Biden’s profiteering from communist China represent but one aspect of the financial dealings of the duo. According to the New York Times, Hunter Biden’s joint global equity firm, the Bohai Harvest Equity Investment Fund, helped arrange the purchase by a Chinese mining company of the world’s largest cobalt source in the Congo. “Hunter reportedly launched that new joint enterprise with Chinese business partners less than two weeks after he traveled to China on Air Force Two with his then-vice president father.”

That Hunter and then-Vice President Joe Biden made the joint trip to China shortly before the younger Biden partnered with Chinese businessmen proves even more significant now, given the recent release of a tape capturing Hunter bragging of his influence over his father. “He’ll talk about anything that I want him to, that he believes in. If I say it’s important to me, then he will work a way in which to make it a part of his platform,” Hunter can reportedly be heard saying. “My dad respects me more than he respects anyone in the world, and I know that to be certain, so it’s not going to be about whether my dad thinks it’s going to affect his politics.” 

In early July, even more questions concerning dealings with China were raised when news broke that the Biden administration had sold nearly 1 million barrels of oil from the U.S. Strategic Petroleum Reserve to Unipec, which is the “trading arm” of the Chinese company known as Sinopec. “Sinopec is also tied to Hunter Biden, whose private equity firm, BHR Partners, bought a $1.7 billion stake in the company seven years ago.”

Beyond China, Hunter Biden’s role in Ukraine and his appointment to Burisma Holdings board of directors at a reported salary of $50,000 per month during his dad’s time as vice president adds to the deep dive required on the Biden family financials. Sources familiar with Weiss’s investigation also claim the Delaware U.S. attorney is looking at the Washington consulting firm Blue Star Strategies, which worked for Burisma in a deal Hunter Biden reportedly helped broker.

But there is more, with a Senate report documenting Hunter Biden’s receipt of a combined $3.5 million from the wife of the former Moscow mayor, a Kazakhstan investor, and several other individuals. 

Closer to home, James Biden’s financial dealings also evidence a complicated pay-to-play scandal underlying his investing in the health care sector. According to court filings and interviews with former business associates, James Biden told his potential partners, including at Americore Health Hospital, “that his last name could open doors and that Joe Biden was excited about the public policy implications of their business models…” 

According to Politico, Tom Pritchard, a former Americore executive, said that James Biden held out the “promise of a large investment from the Middle East based on his political connections,” even introducing Pritchard to the now-president. James Biden later reportedly helped Americore obtain a loan from a hedge fund, before taking “a six-figure personal loan out of Americore’s coffers,” but then the Middle East investment never materialized, and neither did James Biden’s repayment of the loan. 

Similar allegations suffered in a Tennessee case brought by two health-services firms that sued James Biden and his business partners, “alleging James and his partners promised to provide a large investment from the Middle East, then pushed the firms to make expensive acquisitions, as part of a scheme to drive them out of business and steal their business models.” “Those firms alleged that James Biden cited his family’s political connections and promised his older brother would promote their health care model as part of his 2020 presidential campaign.’” 

Grassley and Johnson’s letter to Weiss suggests the Biden family’s apparent attempt to profit in the health care sector from their relationship with Joe Biden is on the radar of investigators, as the senators specifically called out Sara Biden as an interested party. Politico’s exposé into the Biden family’s health care investments reported that Platinum Global Partners, “a Florida corporation that lists James and his wife Sara as managers,” faced claims in a court case in Palm Beach County related to a purported investment agreement James and Sara Biden’s business reneged on. And according to Politico, an “executive involved in litigation against James Biden,” claimed James Biden said he “could get the Biden Cancer Initiative to promote” an “oral rinse” with purported benefits for cancer patients. 

The other names called out in the letter to Weiss provide further insight into the breadth of the financial dealings the Delaware office must entangle. Devon Archer, for instance, served as a partner with Hunter Biden and John Kerry’s stepson Chris Heinz in their investment firm, Rosemont Seneca Partners. Archer has already been convicted of fraud in an unrelated case in New York.

Eric Schwerin, another person Grassley and Johnson identified whose banking records would likely be relevant, was at one time president of Rosemont Seneca Partners. However, “during the eight years of Joe Biden’s vice presidency, Schwerin gradually became a de facto financial planner for the wider Biden family.” And according to a new book by Hunter’s ex-wife, Kathleen Buhle, Schwerin “managed almost every area of [her and Hunter’s] financial lives.” 

Significantly, “emails from Hunter Biden’s abandoned hard drive show Schwerin moving money on behalf of father and son and helping Hunter Biden handle family expenses.” Another email showed that while Joe Biden was vice president, Schwerin received his “Delaware tax refund check” and that Schwerin and Hunter discussed various payments for Joe Biden’s expenses.

While the Times reported that “over the last two years, federal prosecutors in Delaware have issued scores of subpoenas for documents related to Hunter Biden’s foreign work and for bank accounts linked to him and his associates, including two formerly close business partners, Eric Schwerin and Devon Archer,” the senators’ letter requests confirmation of that fact from Weiss. 

In addition to Hunter’s business dealings, the letter questioned Weiss on recent reports suggesting that “Joe Biden may have unwittingly financed Hunter Biden’s ‘participation in an escort ring tied to Russia.’” The senators then stressed that in their September 2020 report, they had “noted that records in our possession indicated that ‘Hunter Biden paid nonresident women in the United States who are citizens of Russia and Ukraine’ and that some transactions are linked to what ‘appears to be an Eastern European prostitution or human trafficking ring.’”

Such “potentially criminal behavior must be thoroughly investigated by law enforcement entities according to the highest ethical standards,” last week’s letter cautioned, while noting that the senators “have serious concerns about your review of this matter as well as the ongoing Hunter Biden criminal case.”

Those “serious concerns” led the senators to once again ask Weiss whether he discussed with the attorney general “the need for a special counsel or independent counsel to properly investigate the Hunter Biden criminal matter,” and whether the District of Delaware’s U.S. Attorney’s Office has “received sufficient resources and support from the Justice Department to properly execute the Hunter Biden criminal case.”

Calls for a special counsel have been percolating since April when a group of nearly 100 House Republications wrote Attorney General Merrick Garland to demand he appoint a special counsel to investigate Hunter Biden. “We are concerned that in the case of Hunter Biden the Department has an actual conflict of interest and certainly has the appearance of a conflict of interest that could prevent a fair and impartial investigation of his activities,” the lawmakers wrote, adding, “You were nominated to your position by Hunter Biden’s father and ultimately work for him.” 

Those concerns have been heightened with the announcement of several whistleblowers in the Department of Justice sounding the alarm about politically charged decisions to limit or shut down investigations of the Biden family business.

The White House has to date rejected calls for a special counsel, but three current or former DOJ officials tell The Federalist that conflicts of interest aside, the complexity and scope of the investigation exceed the capabilities of the Delaware U.S. Attorney’s Office. 

With Weiss’s investigation already into its third year and with evidence continuing to trickle out from Hunter’s laptop confirming both his and his uncle James’ questionable business dealings and that Joe Biden benefitted financially from those enterprises, Grassley and Johnson are right to question whether Weiss has adequate resources for the probe into the Biden family financial dealings.

Those familiar with the investigation, however, believe a special counsel is needed to ensure the right people with the necessary skill sets are available — something the Delaware U.S. Attorney’s Office just cannot possibly have.

Library of the Benedictine Abbey of Admont, in the Austrian Alps.

 

GOP Drops Hammer on FBI, DOJ Over Hunter Biden Investigation and Wider Issue of Political Prosecution

Nick Arama reporting for RedState 

Things with Hunter Biden seem to be heating up. As we reported, the criminal investigation into Hunter Biden supposedly has reached a “critical stage” with the U.S. Attorney considering whether to charge him, according to multiple reports.

Meanwhile, Congressional oversight in regard to Hunter has increased over the past couple of months.

House Oversight Committee Ranking Member Rep. James Comer (R-KY) sent a letter to Hunter Biden’s financial adviser Edward Prewitt, demanding he turn over documents regarding transactions flagged by banks with Suspicious Activity Reports, financial information on Biden’s businesses and any communications from Hunter Biden, James Biden, Joe Biden, Eric Schwerin, or any agent for them. Comer said in the letter that Hunter Biden knew he was being scoped by the reports and was trying to avoid detection. The letter also went into Joe Biden’s possible connection.

Text messages show that Hunter Biden was aware of these SARs and took steps to avoid detection in his financial dealings.2 Information reviewed by Committee Republicans reveals you were advising Hunter Biden on financial transactions when U.S. banks were flagging suspicious activity by the Biden family.3 As Hunter Biden’s financial advisor, you are in a unique position to know how these transactions originated and why they were flagged by U.S. banks. As such, we request information regarding Hunter Biden’s financial transactions, including any documents related to SARs.

Documents reviewed by Committee Republicans show you and your firm managed the financial accounts of Hunter Biden’s business entities Owasco PC, Owasco LLC, Skaneateles, and Rosemont Seneca Advisors. Your firm was also at least aware of transactions made by Hudson West—another Hunter Biden company—which has been used in transferring millions of dollars to Hunter and James Biden from CEFC, “a company that’s effectively an arm of the Chinese Government.” This raises serious questions about what these transactions were for and whether money was transferred to the Biden family from America’s adversaries.

Additionally, the records reviewed by Committee Republicans show transactions connected to Hunter Biden’s accounts were flagged by Wells Fargo Corporate Compliance for further scrutiny and you brought this fact to Hunter Biden’s attention in an email. These documents also tie Eric Schwerin who had access to Joe Biden’s financial accounts to the same accounts managed by your firm and tied to the Bidens. Schwerin—a longtime business associate of Hunter Biden had multiple meetings with then-Vice President Joe Biden, Hunter Biden, as well as foreign business associates, according to records in the possession of Committee Republicans. Schwerin’s inclusion in these transactions raises questions about President Biden’s involvement in the management and knowledge of these various entities’ activities.

“The American people deserve to know the President’s connections to his son’s business deals, which have occurred at the expense of American interests and may represent a national security threat,” Comer wrote to Prewitt.

Prewitt didn’t respond to inquiries from Fox News.

Meanwhile, the senators who have been pursuing Hunter Biden oversight are raising even bigger questions about the FBI and the DOJ being tainted by politics, in what cases they choose to pursue and what cases they don’t choose to pursue.

The ranking member on the Senate Judiciary Committee, Chuck Grassley (R-IA) wrote a letter to FBI Director Christopher Wray and Attorney General Merrick Garland, noting he had received information from whistleblowers within the FBI. The whistleblowers said there had been a continuing effort among certain FBI officials to improperly discredit any negative information about Hunter Biden. Not only that, but Grassley said he had information that they were doing things like opening up investigations regarding the Trump campaign on media reports, while trying to call things concerning Hunter Biden disinformation.

I remain very concerned that political bias by a select group of Justice Department and FBI officials has infected the Justice Department’s and FBI’s usual process and procedure to open and pursue high-profile and politically charged investigations. […..]

Attorney General Garland and Director Wray, simply put, based on the allegations that I’ve received from numerous whistleblowers, you have systemic and existential problems within your agencies. You have an obligation to the country to take these allegations seriously and immediately investigate.

Grassley also laid out the issues to Newsmax.

Meanwhile, Sen. Ron Johnson (R-WI) is demanding the appointment of a special counsel and an investigation into the whistleblower allegations, saying there may have been an effort by the FBI to undermine their Congressional investigation.

“If these recent whistleblower revelations are true, it would strongly suggest that the FBI’s August 6, 2020 briefing was indeed a targeted effort to intentionally undermine a Congressional investigation,” Johnson wrote in the Tuesday letter. “The FBI being weaponized against two sitting chairmen of U.S. Senate committees with constitutional oversight responsibilities would be one of the greatest episodes of Executive Branch corruption in American history,” Johnson continues.

“For nearly two years I have sought to get information from the FBI and the Office of the Director of National Intelligence (ODNI) about the purpose of, and who ordered, this briefing. On May 3, 2021, Senator Grassley and I reiterated these requests in a letter to Directors Wray and Haines. Both failed to provide complete responses,” Johnson stated.

Grassley and Johnson have been demanding answers for months, and it looks like with the latest whistleblower information, they’ve finally had enough and they’re demanding answers from Garland and Wray

Here We go Folks, U.S. Trade Imbalance Shrinks as Imports Plummet

Sundance reproting for Conservative Treehouse 

Imports are plummeting… should be a good thing… trade imbalance shrinks…. that lifts GDP calculations…. but the problem is…

…. Consumer Demand Has Collapsed.

The state of the U.S. economy is not as difficult as the ‘experts’ always claim.  Simple business and checkbook economics always, always, tell you the future. You just have to be willing to accept things as they are, not as you would wish them to be.  Let’s have an honest chat. We need it.

Remember, it was November 2021, and no one was paying attention but retail hiring was negative.  The month before the 2021 Christmas holiday, when historically businesses would be adding people to their payrolls to support the increase in shopping, and retail businesses did no hiring. In fact, 20,000 retail jobs were LOST the month before Christmas.  Retail sales had plummeted. That was a major flare, no one paid attention. Everyone was distracted with the Supply Chain crisis.

Then the fourth quarter 2021 GDP result came in at 6.9%, massively higher than the visible reality on Main Street.  The reasoning was identified as a major increase in the value of inventories. While the Biden administration liked the GDP figure, the existence of the unsold inventory was another major flare.  Add unsold inventory units to the massive inflationary value of those units (+8%) and you quickly see the +6.9% was bad news, not good news.  Major increases in the value of goods have no value unless people are purchasing them.  It wasn’t happening.  Again, no one (except us) was paying attention.

Then the first quarter of 2022 GDP result came back with a negative 1.6% result.  With high inflation those inventories were stagnant.  The eight-percentage point GDP swing from the fourth quarter of 2021 to the first quarter of 2022 was another warning flare.  Again, no one was truly paying attention.  Retail sales -as measured in units purchased- had been in a contracting position since June of 2021, when the stimulus ran out.  However, skyrocketing inflation was hiding lower unit sales.

With inventories stagnant, purchase orders to manufacturers stopped. Orders for non-durable consumer goods dropped.

Due to lengthy supply chains, including trans-pacific shipments, the process to stop deliveries in the electronic goods sector takes around 90-days before the drop in retail sales reaches the manufacturer to stop production.  Here is the announcement from Samsung: “Samsung Electronics is temporarily halting new procurement orders and asking multiple suppliers to delay or reduce shipments of components and parts for several weeks due to swelling inventories and global inflation concerns, sources have told Nikkei Asia.” 

Pay attention to the dates.  Prices were dropping because consumers were not spending:

If the USA economy was really in the shape that appeared statistically, you would see it on Main Street.  We did see it on Main Street.  Consumer purchases of non-essential goods had stalled and contracted.  Everyone was paying more for food, energy, housing and fuel.  There was/is no room in the household budget to spend on non-essential purchases.  People are hunkering down.  That was very visible.

When the U.S. consumer stops purchasing goods, the overseas suppliers of those goods need to stop manufacturing and sending them here.  As a result, if the economy was in really bad shape, we would expect that imports would drop dramatically.  This drop in imports would obviously impact the trade deficit.  Well….

WASHINGTON, July 27 (Reuters) – The U.S. trade deficit in goods narrowed sharply in June as exports surged, while business spending on equipment remained strong, reducing the risk that the economy contracted again in the second quarter.

The better-than-expected reports from the Commerce Department on Wednesday left economists scrambling to upgrade their gross domestic product estimates for the last quarter, which had ranged from negative to barely growing. The data were published ahead of the release on Thursday of the advance second-quarter GDP estimate.

[…] The goods trade deficit shrank 5.6% to $98.2 billion, the smallest since last November. Goods exports increased $4.4 billion to $181.5 billion. There were strong gains in exports of food and industrial goods. But fewer capital and consumer goods as well as motor vehicles and parts were exported.

Imports of goods fell $1.5 billion to $279.7 billion. They were pulled down by imports of motor vehicles and food.

[…]  The Commerce Department also reported on Wednesday that wholesale inventories increased 1.9% in June, while stocks at retailers rose 2.0%. Retail inventories were boosted by a 3.1% jump in motor vehicle stocks.  Excluding motor vehicles, retail inventories increased 1.6%. This component goes into the calculation of GDP.

And here comes the kicker….

[…] According to a Reuters survey of economists, GDP likely increased at a 0.5% annualized rate in the second quarter. The survey was conducted before Wednesday’s data. The economy contracted at a 1.6% pace in the first quarter.  Investors have been nervous about another negative quarterly GDP reading, which would mean a technical recession. (read more)

Does that 0.5% look familiar?  It should.

From CTH in June: “We can see no political scenario where the Bureau of Economic Analysis (BEA) will report a negative second quarter GDP number, despite the reality of a contracted economy.” … “CTH predicts the BEA is likely to generate a statistical report somewhere in the +0.5% range. Just enough positive GDP to avoid the literal definition of a recession.  The BEA report will be issued at the end of July and if they follow recent patterns, they will likely underestimate the inflation rate as well as under-calculate the import data.”

From CTH in July: “CTH has predicted the people within the BEA research group, ie those who make the determinations of GDP, will circle the statistical wagons and generate something akin to a positive 0.5% GDP figure for Q2.“

Three other factors also impact the import data. (1) Operation hide the ships continues (CA regulation issue). (2) There is an ongoing labor dispute with the west coast longshoreman union, and shippers trying to avoid issues are rerouting to Gulf of Mexico and East coast. And (3) There is an ongoing independent truckers strike and protest happening at California ports.   All of these provide convenient justifications for lower port data, which, conveniently for the Biden administration, inflates GDP.

The Bureau of Economic Analysis is likely to attribute a 0.5% calculation of GDP (release tomorrow) to the lowering of imports (a deduction to GDP) and then apply a liberal dose of inflation to the value of goods and services created by the economy.

A +0.5% BEA result avoids the pesky technical definition of a recession.