Zelensky is warmly received in Congress.
A performance that comes with an account (Photo: Reuters)
The American House of Representatives, which houses 435 members, is still under the control of the Democrats until Friday at midnight.
If there is no last-minute change, he is expected to approve today, Friday, a bill for a massive budget increase of about 1.7 trillion dollars, to deal with new expenses that have arisen for the current budget year, which began only three months ago, in October.
The budget increase of 5% for civilian expenses and another 8% addition to the American security budget, comes to meet the civilian agenda of President Joe Biden and the Democratic Party (increasing the security budget according to the concept of both parties together). The Senate is controlled by the Democrats and houses 100 senators , already approved last week by a majority of 68 senators against 29, the bill to increase the budget and the urgent approval today, is required before the composition of the House of Representatives changes, next week, in favor of the Republican majority.
The new budget already approved by the Senate includes 772.5 billion dollars for civilian expenses and another 858 billion dollars for additional security expenses.
The budget also includes funding of $44.9 billion for military support in Ukraine including economic and humanitarian aid.
The budget was approved one day after Biden's meeting in Washington with Ukrainian President Volodymyr Zelensky who delivered a speech in the US Congress.
Another 40 billion dollars to the American security budget, beyond the military and civilian aid to Ukraine, is intended to renew the ammunition stocks of the American army, which also supplies equipment for Ukraine and the US allies in NATO.
The bill also includes additional help for students, the disabled, the homeless or the homeless, including military veterans, for the protection of workers' rights and vocational training within a factory.
The new budget also includes protection for victims of local violence.
The bill includes infrastructure budgets as well as the massive help from the US government to establish advanced memory chip factories to reduce dependence on such an important component of a developed modern economy, including military applications.
This budgetary expansion of the US within the framework of the intensifying war between the US and Russia (not directly, but on the 40 degrees east longitude, the border between Ukraine and Russia), should remind us of the Korean War that broke out in 1950 and ended in 1953 with the determination of the border at the 38 degrees street line north.
The beginning of the war between the blocs is minimal but is getting stronger and the huge budgets that have been poured out are getting bigger.
French President Emmanuel Macron calls on European countries to invest even more in the defense industry, as it is no longer possible to rely only on the NATO alliance (Photo: Reuters)
More but painful
Please note, the US budget deficit may increase this year due to the economic slowdown and even fears of a recession later in the fiscal year. Already in November, the budget deficit increased by 30% compared to the corresponding month last year.
The Congressional Budget Committee expects two years of an average deficit of 3 trillion dollars per year , this is before the new approval to increase the budget. The deficit in the base of the budget in the current fiscal year 2023 is supposed to be 3.7%, there are estimates for a larger deficit also against the background of the emerging economic slowdown. The result, the increase in the budget deficit will oblige the Fed to continue raising interest rates in order to suppress inflation. The Fed expects Because in a year the interest rate will be an average of 5.1%. But against the background of the increase in federal government spending that will be approved today, the process of raising the interest rate may take longer, climb more and be more painful.
The higher than expected interest rate increase in 2023 will lead to interest rate increases all over the world and in Israel, which does not bode well for the global capital market after the huge losses for savers and investors in the outgoing fiscal year.
The world's investing public has lost and continues to lose trillions of dollars this year from its savings and investments in the capital market, heavy losses in the stock market that plunged in 2022, severe losses in the global bond market, including the government bond market, a crash and drop in the value of crypto assets that blackened this investment channel also because scams
To these we will add the latest damage as a result of the rise in interest rates and the price of capital and the collapse of house and apartment prices in most of the Western world, especially where the bond yield curve has inverted. Even the most cautious, defensive, whose money was in checking accounts or in short-term deposits bearing very low interest, lost a lot of money Through the hidden taxation of governments in the world, called inflation, it has spread across all markets.
In the coming year, the global average inflation rose to 8.8% after 4.7% in 2021 and will continue to erode assets with inflation of 6.5% in 2023, with another global price increase of 4.1% expected in 2024.
Within four years, the world's cash-holding public has lost a fifth of its money .
This is a tremendous crisis that has no cure and balm in the coming years.
Mainly affected are the poor in countries like Argentina and Turkey where inflation is between 92%-84% respectively as well as the poor in the other countries who do not have the tools to deal with the erosion of their capital or alternatively to raise their wages.
The public in the world and in Israel hopes that the light is just around the corner, and not her.
The war in Ukraine continues and its security budgets and those of the invading Russia are on the rise.
The defense budgets of the European countries have also increased sharply, so much so that French President Emmanuel Macron calls on the European countries to invest even more in the defense industry, as it is no longer possible to rely only on the NATO alliance.
The Germans are steadily increasing the defense budget, intending to reach 2% of GDP within a few years as they committed to NATO (and have not fulfilled for many years). Germany enters the year 2023 with a recession, a 0.3% decrease in GDP, this is already a fact. It will be accompanied by another country From the "axis" of the Second World War, Italy, which is expected to decrease by 0.2%. The government of Japan, a third axis country, has been increasing the defense budget consistently for the past two years, by 2027 it will double the budget to 2% of the GDP compared to 1% that was until recently ( According to agreements with the American occupier at the end of World War II.)
Japan will still grow in 2023 by 1.6%, but the inflation that has taken hold of its wings, 3.7%, excluding food, deprives the employees and workers in the economy of sleep, whose wages have been eroded by about 3% in the last year. More for security, less per standard of living, less consumption biased growth.
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The eastern front
The Russians know how to fight for many years with civil austerity, that's why they don't get tired of the Americans who don't spare to increase the aid to Russia's rivals, which has returned to being the number one enemy of the Americans like in the days of the Cold War.
Commodity prices, especially energy, refuse to fall despite Western attempts to impose price restrictions on Russian oil and gas prices.
The world is thirsty for black oil and Russian gas, countries are buying from Russia with no choice.
These energy products are essential for the functioning of any economy.
The granary of Ukraine and Russia also does not guarantee a good year ahead.
If the world there will love a China that will be able to return to being suppliers of everything that comes to our mind as it was in the 42 years until two years ago since the industrial revolution and the revolution of reforms of Deng Xiaoping, it has been deceived.
China's production and exports are weakening, China can no longer sell cheaply, simply because raw materials and labor costs have risen beyond expectations.
The manpower at its disposal, to operate the economy, has drastically decreased against the background of the renewed spread of the corona virus with tens of millions of patients.
Growth in the coming year is only 2.7%, a drastic drop compared to previous forecasts, and next year it will be maybe 4.3%.
The hope that China will help moderate the price increases has been dashed.
Without the importation of deflationary pressures from China, the result is the continuation of interest rate increases in the world, even in countries that refused to do so vehemently and hoped that the global inflation was "transitional", i.e. temporary.
The Central Bank of Europe realized that there was no hope that inflation would go down on its own and announced that it would continue to raise interest rates at the same rate of 0.5% each time, no matter what the dismal results for the Eurozone would be.
Although the Israeli economy is strong relative to the world, the pain will continue in Israel and even spread to the housing market with the continued increase in the cost of taking out mortgages due to the continuation of expected interest rate increases in Israel beyond what the Bank of Israel thinks, in order to catch up with the interest rate increases required in the US. If we do not maintain a strong shekel through interest rate comparison Compared to the Americans, the shekel will weaken and expose us to higher inflation that will severely harm employees, savings, equality and the ability of the economy to function.
Everyone was talking about the 20.3% increase in apartment prices in the last year, few, if any, noticed that the prices of new apartments fell in the last reported month, September /October 2022 by 0.4%, the first decrease in new apartment prices since August/September 2021, when they decreased by 1.4%.
It is not yet a crisis, but it is the first rupture in the housing market, which certainly does not invite investors to try their luck in this market as a replacement for the disappointing capital market.
According to the chief economist at the Treasury, the number of transactions for the purchase of an apartment by investors decreased by 80% compared to October last year and by 32% compared to September.
Contractor sales decreased by 66% compared to October 2021 and by 35% compared to September.
According to preliminary data, the downward trend continues in November as well. As soon as apartment prices fall at a real rate, expectations will rise for continued declines and sales will decrease. Even those who thought they would be able to help their parents, who had provided provident funds for them, will find that their capital has eroded this year by November by 5.7% of that Education funds decreased by 5.8%, investment provident funds lost 7.7%.
All of this without taking into account that the shekel decreased in value in the last year due to inflation of 5.3%, so that in total the public actually lost 11% of their capital from their "safe" investments with the institutions.
Even those who wanted to play it safe and invested in a linked or non-linked government bond basket, in both ways lost in the last year of about 9.5%.
It will also be impossible to find solace in the new government which will surely raise resources and impose taxes to finance the non-productive sector that elected it to power. So even if you want to immigrate abroad, sorry to tell you, in most of the world the situation will be even worse than Israel which still functions as the strongest economy in the world.
You will have to wait for better years, even if you are asked to leave because of the stated policies of the members of the new anti-LGBT and anti-other coalition, good luck.
At least you can rely on the fact that the American defense budget will increase next year.
According to studies, it turns out that when there is an increase in security spending in the US, Israel's security spending is slightly reduced.
At least it is not required, thanks to the inflated American security budget, to add heavy taxation in Israel that will be imposed on the 4.2 million active and toiling employees in the economy to finance more security.
But tax payers' money will be increasingly used to increase budgets for those who evade security, work and labor jobs.
Nechama Purta.
Of money
world money
Tags
Joe Biden
Ukraine
recession