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--:-- Georgia Howe: This episode is brought to you by LifeLock. Between two-factor authentication, strong passwords, and a VPN, you try to be in control of how your info is protected. But many other places also have it, and they might not be as careful. That's why LifeLock monitors hundreds of millions of data points a second for threats. If your identity is stolen, they'll fix it. Guaranteed or your money back. Save up to 40% your first year. Visit LifeLock.com slash podcast for 40% off. Terms apply. U.S. mortgage rates rose to 7% this week as the Dow entered a bear market. Whenever the economy does break, and we're closer to that point than many expect, it will kind of happen all at once. Is the U.S. economy on the brink of collapse as some are warning?
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--:-- Georgia Howe: I'm Georgia Howe with Daily Wire editor-in-chief John Bickley. It's Thursday, September 29, and this is Morning Wire. Philadelphia is experiencing a record number of homicides and shootings, with many blaming District Attorney Larry Krasner for the violent climate in the city of brotherly love. We discuss the action being considered by lawmakers. And the Nord Stream pipeline was badly damaged on Monday in what experts are calling a deliberate act of sabotage using underwater drones. I think the reality is this pipeline probably is permanently lost. What are the effects of the damage and who is being blamed for the attack?
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--:-- Georgia Howe: Thanks for waking up with Morning Wire. Stay tuned. We have the news you need to know. Do you like to be the first to know about trendy news and current events? If so, you gotta get the Daily Wire Plus app. Not only will you receive mobile notifications whenever something's happening, but you'll also have access to the best commentary to break it all down. Download the Daily Wire Plus app and keep up with the facts no matter where your day takes you.
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--:-- John Bickley: The Dow Jones officially entered a bear market this week, leading to a chaotic day of trading on Wall Street Wednesday, amid looming concerns about inflation and a recession. Joining us to discuss is Joe Livornia, chief economist at SMBC and former chief economist for the White House National Economic Council. Thanks for joining us, Joe.
--:-- Joe Livornia: Thanks for having me.
--:-- John Bickley: Now, there are a lot of factors at play here in the current economy, but what are you most concerned about? Inflation is certainly a major issue of which the Fed bears some significant responsibility, but I'm concerned that the Fed is raising rates much too quickly and by too large an amount.
--:-- Joe Livornia: For example, since March, when the economy actually started shrinking, the Fed has raised rates 300 basis points. That is the second fastest increase in rates in history. It is twice what the Fed did back in 94, 95, but unlike then, the economy was healthy. So this tremendous increase in interest rates is going to have a very strong negative effect on the economy. In fact, we're already seeing it in housing, which appears to really be rolling over in all shapes and forms.
--:-- John Bickley: At the same time, the Fed is doing quantitative tightening, which is taking liquidity out of the market. So effectively, there's fewer dollars for investors to recirculate back into fixed income. In other words, it's fewer monies that they have to buy mortgages or buy corporate debt or buy treasuries or even equities for that matter.
--:-- Joe Livornia: Now, as you mentioned, the Fed has taken some aggressive action that's driving up rates. What comes next? What comes next? The Fed is likely to raise interest rates in November, and they're telling you in December as well. In fact, the Fed is saying it's right now is planning on increasing rates 75 basis points for a fourth time in November and then 50 basis points in December You can infer those numbers from their latest forecast
--:-- John Bickley: The financial markets are starting to think already maybe the Fed has gone too far that the Fed shouldn't be raising rates as aggressively as they are. My fear is that because the Fed sees the labor market as being very tight, they look at an unemployment rate that is below 4%, they're increasingly uncomfortable with the inflation backdrop and believe therefore they need to raise rates further. and if need be inflict pain on the labor markets, the broader economy, as well as financial markets. And in turn, the demand destruction, if you will, will then bring inflation down.
--:-- Joe Livornia: In other words, if you lose jobs and you lose income and you lose wealth, then people, households, businesses are likely to spend and produce less. It's a very blood-instruct monetary policy, but that seems to be the course the Fed wants to go down and is the main reason why the stock market is down so sharply this year.
--:-- John Bickley: Now, many economists are warning about coming layoffs and even an economic collapse. How could rising unemployment impact the market and the economy generally? I mean, we're on the edge of potentially a hard economic landing with a recession that pushes an employment rate up wealth through 5%, maybe even up to 6%. Whether I call that a collapse is a different matter. I do believe if the Fed were to pursue these policies as strictly as they're saying, it's more likely you'd have a market collapse, which you've had, by the way, many times for the past 20 years, and the economic damage sometimes isn't particularly deep or isn't as deep as might fear. 2001 is a good case in point.
--:-- Joe Livornia: But I don't want to just say make the point, and that is that the outcome is not preordained. The bond market is telling us the Fed is already going too far, and you see that from the inversion of the two- and 10-year treasury curve, meaning the two-year treasury yield is above the 10-year treasury yield. That's an anomaly. So I like to see Jay Powell and the company acknowledge that they were too late in raising rates and in effect caused a lot of this inflation. They also need to be careful not to overdo it because when financial markets get away from the Fed and the economy goes into a downswing, your ability to arrest that and have even a potentially more worse outcome is limited.
--:-- John Bickley: So I would like, as I sell people some optionality, I like the Fed chair to buy some options, be more agnostic on the outlook and not be so hard on the inflation side because financial markets right now are not telling us, as crazy as this inflation is, that longer term inflation is going to come back down. So I would just be a little bit more flexible in the outlook and not pre-commit to anything. I guess that would be my advice.
--:-- Joe Livornia: Well, Joe, thank you for coming on. That was Joe LaVornia, chief economist at SMBC.
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--:-- Georgia Howe: Philadelphia District Attorney Larry Krasner is under mounting pressure from Pennsylvania lawmakers who say he's failed to control crime. The legislature is even considering removing the progressive DA. Daily Wire investigative reporter Marietta Lordi is here with more details for us. Hey, Marietta, Krasner's name continues to be in headlines. What is the latest in Philly?
--:-- Marietta Lordi: Hi, John. Well, a lot of turmoil. So Krasner is really under fire from the Pennsylvania legislature right now. Earlier this month, lawmakers voted to hold him in contempt for refusing to cooperate with a committee that's investigating potentially impeaching him. The committee said Krasner twice refused to accept subpoenas they tried to hand deliver to him, and his lawyers also refused to comply with the subpoena. The subpoenas were related to the committee's investigation of his handling of crime in the city. Lawmakers are frustrated because Philadelphia's violent crime rate has spiraled seemingly out of control, and they blame Krasner for being soft on criminals.
--:-- Georgia Howe: Right. What does crime look like right now in Philly? It pretty alarming Already this year Philadelphia has seen nearly 400 homicides as of the last week of September That slightly fewer than this time last year but still sky high for Philly which before 2020 had not seen murders rise above 260 by this time in the year since 2008 In 2017, the year Krasner was elected, there were about 220 homicides by this point in the year. An even more damning statistic is that Philadelphia has had more than 1,700 shooting victims so far this year. That's much higher than in New York or Los Angeles, which are much larger cities.
--:-- Marietta Lordi: One incident from last weekend went viral. A group of about 100 juveniles looted a Wawa convenience store in northeast Philly on Saturday. Video of the incident circulated online showing the mobs of teens running back and forth across the store, grabbing whatever goods they could carry. Philly police said the mob caused thousands of dollars in damage to the store. So far, there have not been any arrests, police said.
--:-- Georgia Howe: Has Krasner attempted to defend himself in his record on crime? Yes, but he's tried to deflect blame and gone on the attack against the lawmakers who want him gone. In June, Krasner actually tried to blame Philadelphia's shootings on, quote, NRA lobbyists in a tweet and urged people to boycott NRA donations. Speaking of legal firearms in Philly, another noteworthy data point is that firearm-carrying applications have skyrocketed in the city over the last few years. Before 2020, about 11 or 12,000 people a year would apply to legally carry a gun in Philly. In 2021, more than 70,000 people applied.
--:-- Marietta Lordi: Okay, so what are the next steps for the legislature as they go after Krasner? Well, for now, the committee, called the House Select Committee on Restoring Law and Order, is just trying to finish its investigation into Krasner's handling of crime. On Thursday and Friday, the committee is planning to have hearings to decide if they should recommend impeachment to the state house. We should note, too, that even though the impeachment effort has been spearheaded by GOP lawmakers, the contempt vote had support from quite a few Democrats. 162 lawmakers voted to hold Krasner in contempt, including 49 Democrats and 10 of those Democrats from the Philly area. So there's clearly a lot of frustration with Krasner, even in his own party.
--:-- Georgia Howe: Yeah, apparently so. And as we've noted previously on Morning Wire, Krasner is not the first progressive DA to face attempts to remove him over out-of-control crime. San Francisco ousted Chesa Boudin in June, and George Gascon in Los Angeles faced a recall attempt, but that attempt failed. Well, we'll see how this attempt to kick out yet another progressive DA unfolds. Great. Thanks for reporting.
--:-- Marietta Lordi: Thanks, John.
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--:-- Georgia Howe: That was Daily Wire investigative reporter Marietta Lordi. On Monday, the Nord Stream pipeline was significantly damaged in an act of suspected sabotage. Theories abound as to who was behind the attack, with the CIA and most European countries pointing fingers at Russia. Since Monday, millions of cubic meters of methane gas have been released into the Baltic Sea, causing untold damage to marine life and raising concerns about an escalation of war in Ukraine. The attack comes just days after the inauguration of a new European pipeline transporting gas from Norway to Poland. Joining us to discuss is Daniel Cochis, Senior Analyst for European Affairs with the Heritage Foundation. Daniel, thanks so much for coming on.
--:-- Daniel Cochis: Thank you for having me.
--:-- Georgia Howe: So what happened to the Nord Stream pipeline on Monday? So on Monday, a number of European countries registered a drop in pressure in these pipelines. What we know now is there was actually some explosions which happened in the pipelines. They were registered on the Richter scale. And what is believed is that the Russians sabotaged the pipelines, likely with an undersea drone. and that has led us to where we are today
--:-- Daniel Cochis: And will this have a direct effect on the flow of energy to Germany Well so the pipelines are essentially defunct So they were filled with gas because you needed to have gas in them to maintain the pressure, which, you know, because it's at the bottom of the sea. But because of the fallout over the Russia's war in Ukraine, there was no actual gas flowing into Europe. I've seen other estimates from Western sources that say, basically, this pipeline is lost. It'll never actually be able to be repaired. And so we think about the energy implications of this. It has implications in terms of the spike in prices. And I think that it makes Europe's turn towards alternative sources of energy, both in terms of renewables and nuclear sources, but more importantly, in terms of alternative suppliers, more long lasting.
--:-- Georgia Howe: I think that the return to Russian dominance in the energy sphere in Europe is just a thing of the past. And so it'll be very interesting, I think, to see what the Russians do in terms of the overland routes. If they close those off further, I think that that's just another chip in trying to raise prices in Europe. But of course, that also has implications for Russia as well, because the gas infrastructure in Russia, most of this flows west historically towards Europe. There is some infrastructure, in particular LNG infrastructure, which can be sent towards the east, towards China. But so they're going to be losing out on quite a bit of revenue because it's not like they can just pump this gas elsewhere. And so it has implications inside Russia as well.
--:-- Daniel Cochis: Now, I want to turn to the environmental effects. What is currently being released into the ocean and how large is this spill? So methane gas being released into the ocean, it's three sites. They're pretty significant. So the Danes, who have control over the seabed where this is happening, have put in place beacons in order to guide ships away from it. Ships are being asked to stay away from the sites. Airplanes are being asked to stay a little over 3,200 feet above the sites. When you see the pictures that you probably have in the videos, it's just this huge kind of frothy bubble which is coming up. And so you think about the environmental implications. Well, one, you have, of course, methane released to the atmosphere. But probably the more pernicious one is in terms of either wildlife in the area. But also, this is a really sensitive part of the Baltic seabed. So after World War II, a number of allies dumped old munitions, in particular the Soviet Union, dumped munitions in the area, in the vicinity of where these pipelines were built. And so these are things with, in particular, chemical nerve agents, mustard gas, some really nasty things. and we're not really 100% sure where all of these barrels lie within the ocean seabed. So you think about the explosions or the continued vibrations could have impacts in terms of setting off some of those things, which obviously have a broader detrimental environmental impact.
--:-- Georgia Howe: All right. Well, Daniel, thanks so much for coming on today.
--:-- Daniel Cochis: My pleasure. Thank you for having me.
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--:-- Georgia Howe: Another story we're tracking this week. Category 4 Hurricane Ian made landfall on the west coast of Florida on Wednesday afternoon. Only the fifth storm in U.S. history to reach land at 150 miles per hour. Destructive winds and storm surge battered the Fort Myers area, and multiple counties have experienced widespread flooding. For the latest updates on the storm, visit dailywire.com.
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--:-- Georgia Howe: Thanks for listening to Morning Wire. We created this show to bring more balance to the national conversation. If you love our show and you stand with our mission, please consider subscribing, leaving us a five-star rating, and most importantly, sharing our podcast with a friend. Thanks for waking up with us. We'll be back this afternoon with more of the news you need to know.
