Tuesday, April 5, 2016

Tuesday, April 5, Night Wall Street Roundup: After rally, earnings gloom takes hold on Wall Street

By Noel Randewich
April 5, 2016

Wall Street fell sharply on Tuesday as investors took gains off the table following a recent rally and ahead of an upcoming quarterly reporting season that is expected to reveal sharply lower earnings.

Following a 13-percent surge over the past seven weeks, the S&P 500 declined 1.01 percent, with all 10 sectors down and a sharp drop in pharmaceutical company Allergan.

It was the S&P's first decline in six sessions, leaving the index flat for 2016.

As S&P 500 companies hand in their first-quarter reports over the next several weeks, average earnings are expected to fall 7.1 percent from the year-ago period, with the energy sector weighing most heavily, according to Thomson Reuters data.

"General consensus is that we're going to see declining earnings," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. "The big question is how big are those declines going to be?"

Reflecting concerns on Wall Street, International Monetary Fund Managing Director Christine Lagarde on Tuesday warned of increasing risks to global economic growth unless policymakers take stronger measures.

A week earlier Fed Chair Janet Yellen urged caution on rate hikes, citing a shaky global economy and low oil prices.

Oil steadied near one-month lows after Kuwait said an output freeze by top producers would proceed without Iran. [O/R]

Data on Tuesday showed the U.S. trade deficit widened more than expected in February, while another report showed services sector activity rose in March.

The Dow Jones industrial average .DJI dropped 0.75 percent to end at 17,603.32 and the S&P 500 .SPX lost 20.96 points to 2,045.17.

The Nasdaq Composite .IXIC fell 0.98 percent to 4,843.93.

Among the 10 major S&P sectors, the interest rate-sensitive utilities sector .SPLRCU fell the most, down 1.88 percent.

The S&P financials sector .SPSY dropped 1.44 percent, led by Wells Fargo (WFC.N), which lost 2.04 percent.

Allergan (AGN.N) shares fell 14.77 percent after the U.S. Treasury unveiled rules to curb tax inversion deals, potentially derailing the drug maker's merger with Pfizer (PFE.N). Pfizer climbed 2.1 percent.

Allergan was the biggest negative influence on the S&P 500.

Baker Hughes (BHI.N) fell 5.09 percent after Reuters reported that the U.S. Justice Department will file a lawsuit as soon as this week to stop oilfield services provider Halliburton Co (HAL.N) from acquiring the oil services company.

Declining issues outnumbered advancing ones on the NYSE by 2,131 to 878. On the Nasdaq, 1,971 issues fell and 818 rose.

The S&P 500 index showed 14 new 52-week highs and two lows, while the Nasdaq recorded 21 new highs and 37 lows.

About 7.2 billion shares changed hands on U.S. exchanges, a little below the 7.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Article Link to Reuters:

How Can We Properly Remember Woodrow Wilson?

By Noah Rothman
April 4, 2016

Princeton University has determined that Woodrow Wilson’s legacy is a complex one and is, thus, worthy of preservation. Perhaps only those whom the 28th President would have regarded as his political enemies will be happy with that outcome.

On Monday, a committee convened by Princeton University with the aim of determining if it was still appropriate to recognize the legacy of the school’s prodigal son reluctantly concluded that it was. The 10-member board had the mission of reviewing Wilson’s legacy – specifically, his unapologetically racist and pro-segregationist views – with the aim of establishing whether modern standards of decency should force the institution to consign Wilson’s image to an ignominious grave. They determined that, in spite of the fact that he was an avowed racist, Wilson’s accomplishments were such that his record deserved recognition by the university, although without any whitewashing. Let future generations render their own judgments on Wilson, warts and all.

This committee made the right decision. Yes, Wilson’s legacy deserves preservation not in spite of the fact that he was a flawed human being but because of it. This is a step toward correcting the revisionism that has typified recollections of Wilson and figures like him for generations.

Posterity regards Wilson as a reluctant warrior, but his first act on the international stage was to attempt to oust the military-backed government in Mexico and, soon after that, to become embroiled in an intervention into the nation’s civil war. Wilson ran on a peace platform in 1916, but his policies were anything but neutral toward the belligerents populating static trenches channeling their way from one end of Europe to the other. It was inevitable that the United States would be drawn into that war on the Allied side – an inevitability his famously pacifist Secretary of State William Jennings Bryan foresaw and over which he resigned. That unavoidable outcome came to fruition when the German government sought to support the restoration of Greater Mexico and to formalize the low-intensity border war already ongoing in the American Southwest.

In the course of conducting an American intervention in World War I, Wilson presided over a crippling recession. His heavy-handed attorney general severely curtailed American civil liberties and, eventually, deported American citizens suspected (albeit correctly) of sympathizing with the Bolshevik revolutionary government in Russia. The Wilson administration nationalized a number of key U.S. industries, including coal production, telegraph and telephone companies, and railway lines. To finance the war, Wilson secured a constitutional amendment legalizing a federal income tax – a development which radically enhanced the central government’s power and paved the way for Prohibition by eliminating Washington’s reliance on revenue derived from the sale of spirits.

On top of all this, Wilson was also an unapologetic racist who institutionalized segregation in the federal government. His administration favored hiring and promoting whites over African-Americans. Federal offices like the Treasury Department, the Post Office, and others suddenly had separate facilities for black employees. The tone having been unmistakably set, the city’s police and fire departments soon stopped hiring African-American applicants. In 1919, African-American men at arms returned home from Europe to find a markedly more racist country than the one they had left. The tensions culminated in what would be remembered as Washington D.C.’s first race riot, which, according to the historian Tom Lewis’s account, more closely resembled an armed rebellion than an act of spontaneous urban violence.

Seventh Street became an armed camp. Random killing seemed to be everywhere. Blacks fired on whites from speeding cars; one opened fire on white people in a crowded streetcar; and a seventeen-year-old black girl who had locked herself in a room of her house killed a detective from the Metropolitan Police Department. Finally, later that day, Woodrow Wilson called out 2,000 troops. The soldiers’ presence and a hard rain that night ended the violence.

“It’s important for students to understand great people are complicated,” said Cecilia Rouse, dean of Princeton’s Woodrow Wilson School of Public Policy and International Affairs. “We can sandblast a name from the building, but to actually change how we operate, and what our community is like is much harder.” Rouse is absolutely right. At a time when the progressive left has determined that the nation’s collective heritage must be purged from the history books because of its embrace of cultural norms regarding race that are now rightly judged prejudicial and taboo, Princeton’s decision is welcome pushback.

A free society does not expunge its ugliest moments from the history books, although it must also be careful to observe them within the proper context. Wilson’s racial animus is finally getting its due in center-left circles after decades in which the progressive wing of the American political spectrum thought that to properly admonish Wilson would be to open the doors to more sweeping criticisms of his liberal record. They’re right; it would, and it should. The same impulse should be applied to any number of beatified figures in American history whose records are rarely given a thorough review, and whose legacies are jealously guarded by their liberal inheritors.

The obvious example to cite here is Andrew Jackson, the bombastic populist and the epitome of the 19th-century frontiersman who gave birth to the modern Democratic Party. Jackson, too, was a God awful president. This conclusion is now generally accepted across the political spectrum, although – like Wilson – for a narrow set of reasons that deserve to be broadened. Jackson’s prosecution of the Indian Removal Act, what came to be known as the Trail of Tears, renders him a toxic historical figure and briefly resulted last year in a campaign to have his image scrubbed from the $20 bill. Equally deserving of posterity’s opprobrium is Jackson’s decision not to renew the Bank of the United States charter, leading to nearly a century of financial turbulence. The legacy of the nation’s 7th president wasn’t all terrible. Jackson presided over the continuation of an era in which the franchise expanded to a variety of demographic groups that previously could not vote. Though his administration was dubbed the “Reign of King Mob” by his detractors, Old Hickory ignored appeals from influential citizens at a time of potent evangelical fervor to weaken the division between church and state. As Dean Rouse noted, “people are complicated.”

If men like Jackson and Wilson were removed from their positions of political reverence, would their mixed legacies be properly taught? Would there be, as there is today, an effort to accurately appreciate their historical roles and their all too human flaws? It’s doubtful. What’s more, a weightier question looms: Is there any limiting principle to this? There is a less legitimate effort among maximalists on the left to cut the image of Thomas Jefferson – one of the Enlightenment’s most foundational intellects – down to size because he was a slaveholder. If that is the only measure of a man’s worth, why not rename Washington State or the nation’s capital city? And by what criteria will we be judged? If some future generation determines that our standards of conduct violate some yet unset norm and are intolerable, what will be our fates? Will we be remembered by our grandchildren as anything other than one-dimensional monsters?

These are complicated subjects, and there is space to debate all sides of the issue when discussing the most prudent way to remember the dangerous legacies of the flawed people. But remembering has to always be the objective, lest we doom ourselves to relive their experience.

Article Link to Commentary:

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When Drugs Are Legal, Gangs Will Diversify

By Megan McArdle
The Bloomberg View
April 4, 2016

I’ve long supported drug legalization for many reasons, but like many other advocates, I consider the reduction of violent crime to be the main benefit. Deprived of the ability to enforce contracts through the relatively peaceful legal process used by other markets, black markets are accompanied by high levels of violence: Gangs fight for territory, enforce business agreements and try to defer defections.

The more profitable the black market is, the more incentive there is to use violence to protect your profits, which may be one reason that the introduction of crack cocaine was accompanied by such a huge increase in violent crime. Legalizing drugs cuts into the profits and gives industry players legal means to settle their disputes, so in theory, this should reduce the prevalence, and the brutality, of violent gangs.

But while in theory, theory is the same as practice, in practice, it often isn’t. Will legal marijuana, and the accompanying decline in profits, really mean the demise of the gangs -- particularly the Mexican cartels -- that trade in it?

We seem to have a handy test case: Prohibition. Starting around the end of World War I -- a period that roughly coincides with the Volstead Act -- homicide started to spike in America. Probably some of that was because of the demobilization of large numbers of soldiers at once, rather than the black market in alcohol, but a significant portion of the homicides were driven by gang wars over bootlegging profits. How can we be sure of that? Because right around 1933, when Prohibition was repealed, the homicide rate begins a rapid collapse.

That’s good fodder for today's legalizers. On the other hand, we should be modest about how much the end of Prohibition achieved. Because the Mafia did not simply disappear along with the source of its biggest profits. Instead, like any business, it sat back, took stock, and opened up new lines of business. Labor racketeering, gambling, extortion -- these things might once have been sidelines, but they became the main show.

In other words, policy outcomes have a lot of path dependence. The Mafia was not created by Prohibition; it seems to have been an outgrowth of post-feudal Sicily, and it made its way to America along with Sicilian immigrants. But the advent of Prohibition greatly increased their profits and power, and by the time Prohibition ended, they were far too big and well-organized to simply slip softly and silently away into the night.

Had we never passed the Eighteenth Amendment, the Mafia might have remained a local problem in Italian neighborhoods, and slowly died along with the ethnic enclaves where it had its foothold. But repealing Prohibition was not the same thing as never having had it in the first place. We created a monster, and the monster outlived its initial habitat.

It’s too early yet to know what effect marijuana legalization will have on the gangs that got rich on marijuana prohibition. But given the scale and ferocity of the violence that has convulsed Mexico in recent years, it’s hard to imagine that the gangs will simply fold up if they’re deprived of their revenue. Indeed, they are already moving into other drugs. They may also try to take over currently legal operations, as the Mafia did with many labor unions.

This offers a lesson for policymakers -- and not just those who focus on drug policy. Often in policymaking there are no backsies; undoing some policy mistake gives you very different outcomes from the ones that you would have gotten if you’d never tried it in the first place.

That’s not an argument for never experimenting, but it is an argument for caution. You break it, you own the outcome.

Article Link to the Bloomberg View:

Suge Knight: Dr. Dre Tried to Kill Me

The imprisoned ex-music mogul filed legal docs alleging that a Los Angeles sheriff’s deputy conspired with Dr. Dre to have him murdered at a West Hollywood club.

By Marlow Stern
The Daily Beast
April 5, 2016

Just when you think the saga of Suge Knight couldn’t get any crazier, it does.

On Friday, Knight’s new lawyer, Thaddeus Culpepper, filed a motion with Los Angeles Superior Court alleging a “massive cover-up”: that Knight's former pal-turned-foe, Dr. Dre, conspired with the L.A. County Sheriff’s Department to have the plus-sized music mogul murdered at a club in Los Angeles. The motion further argued that Knight is currently being held on lockdown—sans any communication or visitor privileges—in order to prevent him from “connecting” his current murder case with the nightclub shooting.

According to TMZ, Knight claims that on the night of August 24, 2014, Sheriff’s Deputy Henry Boyd was working at the nightclub 1 Oak in West Hollywood, California. It was a pre-MTV Video Music Awards party hosted by Chris Brown, and according to the docs filed by Knight’s attorney, there is surveillance footage showing Deputy Boyd allowing the alleged gunman into the club right before Knight was shot six times. In a strange twist, Knight also alleges in the legal docs that “the shooter confessed that Dr. Dre paid him and a friend $50K for the hit,” and that not only did the L.A. Country Sheriff’s Department “inexplicably release the shooter from custody,” but that Culpepper is “privy to video shot at LAX which allegedly shows Deputy Boyd helping the gunman flee the country,” reported TMZ.

Knight, 50, is currently behind bars on murder and attempted murder charges stemming from his involvement in a January 29, 2015, incident in which he killed one man and maimed another with his vehicle in the parking lot of the Compton fast food joint Tam’s Burgers, near where a promo shoot was occurring for the N.W.A biopic Straight Outta Compton. The gruesome incident was caught on video.

As for the 1 Oak nightclub shooting, The Daily Beast reported at the time that, according to a source connected to the venue, “The Game was coming to hang with Chris [Brown] and they didn't let him in, which caused tension outside. The Game is connected to the Bloods, and that means Chris is around Bloods.”

Meanwhile, eyewitness Katie Clendon, 21, told The Daily Beast there was lax security at the venue that evening—bags weren’t checked and there “were no pat-downs”—and that the whole terrifying ordeal left her in a state of shock.

“I was dancing with one of my friends,” said Clendon. “My other friend called us over to the table she was at directly across the way. As I was turning around and walking away from Chris Brown’s table, I heard three loud bangs. Everyone dropped to the floor, and then immediately after evacuated. One of the men who was shot rushed past me holding his shoulder and dripping blood. Everyone was screaming and trying to get out of there as quickly as possible. The cops were immediately on the scene as we were leaving 1OAK. We saw a man being carried out on a stretcher, then we were asked to leave the area immediately.”

Despite being shot six times, Knight was able to walk from the venue to the ambulance, and recovered shortly thereafter.

It wasn’t the first time Knight’s been shot at a pre-VMAs party, either. On August 28, 2005, he was shot in the leg in the Red Room of Miami’s Shore Club at a pre-VMAs event honoring Kanye West. According to police reports, six shots rang out at the club, with one hitting Knight, shattering his leg.

As for the history of acrimony between Knight and his former Death Row artist Dr. Dre, well, the two have plenty of history. Knight still seems to hold ill will towards Dre for severing ties with Death Row (and the mogul), and starting his own label, Aftermath Entertainment—the development is even depicted towards the end of the film Straight Outta Compton. Since then, Knight’s made it a point to slander Dre as often as possible.

In 2002, just after his release from yet another prison stint, Knight went on The Howard Stern Show and, in a truly batshit interview, claimed that he: A) “folded up like a lawn chair” when he went to jail for assaulting veejay Dee Barnes, B) accused Dre of “snitching” on him to his parole officer, landing him back in jail, C) accused Dre of being “gay” and having a lover named Bruce who he’s been sleeping with “for years,” and D) claimed that Tupac once confronted Dre about his alleged homosexuality, telling him, “I don’t wanna be in the studio doing no songs with a guy who’s pounding other guys in the butt.”

The feud seemed dormant for a while, with Knight headed in and out of prison—and battling various financial woes—but seemed to spark back up with the release of Straight Outta Compton, which depicts Knight as a thug and bully who used intimidation to bend his stable of Death Row artists to his will.

As The Daily Beast’s Jen Yamato reported last year, “According to a court documents reviewed by The Daily Beast, Knight was upset he wasn’t getting paid for the use of his likeness in [Straight Outta Compton] and sent threatening text messages in 2014 to an unidentified victim that read, ‘I will see u in person… u have kids just like me so let’s play hardball you bitch ass Nigga’ and ‘I’m from Bompton… time has arrived Faith in God keep people safe The Devils money can’t save no 1…I will make sure u an that Fagg [Dr. Dre] and Taft High school graduate [Ice Cube] receive your hugs…’”

Knight will stand trial on the murder and attempted murder charges on Aug. 1. Dr. Dre, meanwhile, is almost a billionaire.

How America Lost Its Groove

President Obama, Vice President Biden, and Secretary of State Clinton all had a hand in it.

By Victor Davis Hanson
The National Review
April 5, 2016

Deterrence is lost through lax foreign policy, an erosion of military readiness, and failed supreme command — often insidiously, over time, rather than dramatically, at once. The following random events over the seven years that Barack Obama has been in office have led to the idea abroad that the U.S. is no longer the world’s leader and that regional hegemonies have a golden opportunity to redraw regional maps and spheres of influence — to the disadvantage of the West — in the ten months remaining before the next president is inaugurated.

The otherwise disparate Boston Marathon, Fort Hood, and San Bernardino Islamist bombers had three things in common: First, the killers had all communicated on social media with radical jihadists, or had come to the attention of both U.S. and foreign intelligence, or had expressed jihadist beliefs. Second, their attacks were followed by administration warnings about not embracing Islamophobia, as Obama doubled down on his administration’s taboo against the use of terms such as “jihadist,” “radical Islamist,” and “Islamic terrorist.” Third, after each of these incidents, there was no stepped-up administration vigilance; instead, there was a flurry of sermons about not blaming Islam for inciting such killers. The greatest check on ISIS terrorism may lie in the hands of ISIS itself: If its operatives continue to cull the Western herd by a few dozen murders every few months, the U.S. will likely continue to do little. If they get greedy and seek a repeat of something on the scale of 9/11, then the American public will force this administration to act. Unfortunately, ISIS may not be so much energized by anger over supposed Islamophobia as buoyed by the administration’s inability to say “radical Islam.”

The Bowe Bergdahl swap for five Taliban terrorists — and National Security Adviser Susan Rice’s praise of the deserter Bergdahl’s service — reinforced the global message that the Obama administration did not necessarily see Taliban killers as killers or American deserters as deserters, apparently because such definitions are anachronistically absolute concepts. After all, who would willingly swap five killers for one deserter? Apparently everything is negotiable and political, given that the U.S. does not feel deeply about either terrorist killers or those who have renounced their duty to thwart them.

On the diplomatic front, Hillary Clinton’s praise of Egyptian President Mohamed Morsi — a member of the radical Muslim Brotherhood — reversed postwar U.S. policy in Egypt and put America on the side of “one election, one time” radical Islamicization. We are now in a truly 1984scenario in which the current Egyptian head of state, Abdel Fattah al-Sisi, warns the West of radical Islam, while Obama objects that Westerners, the target of such Islamists, have exaggerated the threat: so much so that the White House recently, in an official video, edited out French President François Hollande’s reference to “Islamic terrorism” — though the passage was restored after the gap was widely remarked.

The bombing of Libya not only violated U.N. resolutions (no-fly zones and humanitarian aid only), but also destroyed the government of the monster-in-rehabilitation Moammar Qaddafi, leaving nothing in its place but a terrorist badland. The logical follow-up was the attack on the American consulate in Benghazi. Almost everything the administration then said about Libya was crude or simply a lie. Secretary Clinton was especially immoral in her chortles about “We came, we saw, he [Qaddafi] died,” “What difference does it make?” and, more recently, “No Americans died in Libya” — bookended by her face-to-face lies to the families of the men who died, whom she told that a videomaker, not al-Qaeda, had prompted the attacks. Note that Susan Rice (wrong about Egypt, wrong about Libya, wrong about Bergdahl) spoke misleadingly quite often on the Sunday talk shows, attempting to protect the Obama reelection narrative that al-Qaeda was “on the run” and incapable of such attacks. Long live “Bin Laden is dead, GM is alive.”

Just as the failure to get in on the ground floor when Mubarak was deposed in Egypt had sparked Obama’s interest in preempting in Libya, so too it is probably Libya’s implosion that paralyzed Obama into doing nothing when violence overwhelmed Syria. The administration somehow then managed to achieve almost every negative result imaginable during the Syrian mess: Obama issued red lines about WMD use, did not enforce them, and then denied that he had ever issued them at all — eroding not just U.S. credibility but the very idea that a U.S. president should tell the truth. He failed to arm Syrian “moderates”; eventually they disappeared and Syria became a war between Bashar Assad and ISIS. In pre-reelection panic, Obama then invited Vladimir Putin into the Middle East and outsourced to him Assad’s WMD program. Refugees swamping Europe, a quarter-million dead in Syria, Putin’s bombing, and the end to the Christian community in Syria sum up the result.

Iraq’s fate was in some ways worse, because the present destruction of that country was likely preventable. Obama and Vice President Biden had until 2011 praised the quiet in Iraq — which they had inherited from the Bush administration — as their own, only to squander it by needlessly pulling out all U.S. peacekeepers for the price of another cheap reelection talking point. Now, when it is too late, we are quietly sending back in U.S. troops, who might as well have stayed where they were when it was not too late.

At least Putin had assumed in 2008 that a divided United States and an unpopular George W. Bush would address Russia’s annexation of South Ossetia and its bullying of Georgia. When the Bush administration leveled some mild punishments, the deterioration in the region became an Obama campaign talking point of blaming the Bush administration and promising to reset the reset. Obama kept the reset promise, but the new reset failed, and meanwhile Obama had sent the message that he blamed the U.S. more than Russia for rocky relations — and a delighted Putin green-lighted further aggression in Crimea and Ukraine. Now the administration is reduced to insulting Putin rather than deterring him.

Dismantling joint strategic-missile-defense initiatives with Poland and the Czech Republic did not win over Putin, but it did confirm that Obama was ambivalent about our allies, and did not care much for any nation naïve enough to believe that the United States’ foreign policy of deterrence going back seven decades was still in force. The mullahs in Tehran noticed that the administration had embarrassed America’s friends, did not believe in expanded missile defense, and had kept quiet when a million dissidents hit the streets in protest against their dictatorship, and concluded that it was time to formalize a pathway to an eventual nuclear weapon. They guessed rightly that a legacy-hungry Obama would circumvent the Senate by saying the proposed treaty was not really a treaty, and blasting Republican skeptics while speaking far more respectfully of anti-American Iranian theocrats.

Central to Obama’s foreign policy was a redefinition of allies, enemies, and neutrals, as if such distinctions were fossilized Cold War relics. Obama reached out to regimes, like the ones in Iran and Cuba, that had long despised the United States. Yet even if they were to become friendly toward us, neither could offer America any strategic benefits — and both have lots of downsides given their rank oppression of their own people and their propensity to undermine their neighbors. After such outreach, both Fidel Castro and the Iranian theocrats gratuitously defamed the United States and Obama in particular. Allies like Britain, France, and Israel have been snubbed, as Obama and his aides leaked disdain for their leaders via interviews and open-mike slurs.

All of these lapses could be seen as haphazard, but, in fact, in aggregate, they reflect a coherent worldview, as articulated, for example, in Obama’s Al Arabiya interview, his Cairo speech, and his recent lengthy Atlantic Monthly exegesis. What most Americans have assumed was a successful bipartisan 70-year foreign policy — which led to unchecked affluence and security for Western and Westernized nations in Europe, the former British Commonwealth, North America, and the Far East (Japan, South Korea and Taiwan) — Obama instead believes was a carry-over of Western imperialism and colonialism that had shorted Africa, Asia, and Latin America, and that was propped up by inordinate U.S. defense spending that diverted investments at home from underfunded social programs.

In Obama’s sophomoric view of the world, there is no connection between the 21st-century appurtenances that he takes for granted as president — trips on state-of-the-art Western planes, predicated on a global air-traffic-control system, run on sophisticated Western gadgets and all underwritten by Western free-market capitalism — and an established postwar Western order led by the United States. He will see no contradiction between his rhetoric and his own looming lucrative, hyper-capitalist post-presidency and the sources of capital that will fuel it. Instead, capitalism, national security, and globalization are seen as occurrences that just arose out of nowhere (cf. his recent advice to Argentina to adopt tenets of either Communism or capitalism, as if they were simply morally neutral choices), as if Nairobi designs new smartphones, Lima offers the world new ideas in municipal sewage treatment, China’s pharmaceuticals are superior to Western counterparts — or Islam taught us about medicine, navigation, and religious tolerance.

Add to the above the radical cuts in the U.S. military, the use of the Pentagon to implement by fiat gay and feminist agendas, the restrictive new rules of engagement in Afghanistan, the slapdowns of David Cameron and Nicolas Sarkozy, and iconic episodes such as the Iranian capture of a U.S. boat in the Persian Gulf and an Iranian missile striking near a U.S. carrier, and we come to a growing sense not that Obama can afford to dispense with traditional U.S. foreign policy because his isolationism rests on an overwhelming military force. Rather, his foreign policy reflects the increasingly more obvious fact that the American military is eroding and is simply unable to meet even its shrinking responsibilities abroad. Just as Ronald Reagan believed that tax cuts might starve the federal entitlement beast, so Obama trusts that cuts and redefining the military will choke off traditional foreign policy — thus giving others, who have been too long silenced, overdue roles in the ensuing vacuum.

All of the above was put in some context recently by a few emblematic gestures: Obama, in that Atlantic interview, blamed the “sh–storm” in Libya on uninspired and pompous French and British leadership, and he bragged about issuing and then not meeting his red line in Syria — and then later he flashed a hippie peace sign, 1960s-style, at a formal photo-op of world leaders convening to discuss nuclear-security issues. He alone of Western leaders can act so adolescently, because he is no longer invested in the traditional postwar role of a U.S. president — and has become a cooler version of Jimmy Carter, without the latter’s 1980s second thoughts over the consequences of his appeasement. It is only April, and the bills from the last seven years are going to come due thick and fast in the next ten months. What most see as chaos and danger, Obama welcomes as a brave new world.

Article Link to the National Review:

Low gas prices could put Democrat in White House, says economic model

By Vicki Needham
The Hill
April 5, 2016

Low gas prices could give Democrats a third straight term in the White House, an economic election model said Monday.

The March Moody's Analytics prediction shows that the Democratic nominee will win in November as long as prices at the pump stay low.

But without gas prices factored into the equation, the Republican nominee would have the edge.

"The two drivers giving the most support in the model to Democrats are gasoline prices and the president’s approval rating," wrote Dan White, a Moody's economist who compiles the monthly election forecast.

"In fact, without gasoline prices in the model, Republicans would be projected to win," White said.

Between the combination of President Obama's rising popularity and low gas prices, there is little room for Republicans to win in November, according to the model.

For example, the president's approval rating would have to drop to 45.7 from 52 percent and gas prices would need to rise sharply to $3.53 a gallon to shift the model into the GOP's favor.

Even though prices have ticked up recently, the national average for a gallon of regular unleaded gasoline is sitting at $2, according to AAA.

Gas prices are expected to be around $2.93 per gallon on Election Day.

In an earlier analysis, White said the chances are remote that gas prices will move enough by November to alter the projected outcome.

However, the president’s approval rating "is a variable that could move quickly enough, in concert with higher gasoline prices to change the forecast."

The president's approval rating is at 52 percent and has been rising against the backdrop of a chaotic primary season.

Moody's latest model shows Democrats would win the electoral college vote 332 to 206 over Republicans.

However, several important swing states remain extremely close.

"Nevada, Ohio, Colorado, Virginia, Florida and New Hampshire could all swing very easily with only small changes to the underlying economic drivers," White said Monday.

Democrats have held the edge in the model since the first one for 2016 was released, in August.

"The economic variable most beneficial to the Republican challengers in the model is household income growth, which has come in below expectations much of the year," White wrote in the March analysis on Monday.

"As we near full employment toward the end of the summer, we’ll have a better idea how large a role slower growing wages will be on the election. But as of today, the forecast is clearly in favor of the incumbent party."

Article Link to The Hill:

Top Republicans talking up Paul Ryan as nominee

One of the nation's best-wired Republicans sees a 54 percent chance that Ryan will end up as the nominee.

By Mike Allen
April 5, 2016

On the eve of the Wisconsin primaries, top Republicans are becoming increasingly vocal about their long-held belief that Speaker Paul Ryan will wind up as the nominee, perhaps on the fourth ballot at a chaotic Cleveland convention.

One of the nation's best-wired Republicans, with an enviable prediction record for this cycle, sees a 60 percent chance of a convention deadlock and a 90 percent chance that delegates turn to Ryan — ergo, a 54 percent chance that Ryan, who'll start the third week of July as chairman of the Republican National Convention, will end it as the nominee.

"He's the most conservative, least establishment member of the establishment," the Republican source said. "That's what you need to be."

Ryan, who's more calculating and ambitious than he lets on, is running the same playbook he did to become speaker: saying he doesn't want it, that it won't happen. In both cases, the maximum leverage is to not want it — and to be begged to do it. He and his staff are trying to be as Shermanesque as it gets. Ryan repeated his lack of interest Monday morning in an interview from Israel with radio host Hugh Hewitt.

Of course in this environment, saying you don't want the job is the only way to get it. If he was seen to be angling for it, he'd be stained and disqualified by the current mess.

But Ryan, 46, a likable Midwesterner, could look too tempting to resist as Republicans finally focus on a beatable Hillary Clinton. He got rave reviews for a "State of American Politics" speech on March 23 (hashtag on his podium: "#ConfidentAmerica," the title of his high-minded manifesto at the Library of Congress in December). In the "State of Politics" address, Ryan offered himself as the anti-Trump (without mentioning The Don): "Politics can be a battle of ideas, not insults."

On "Morning Joe" Monday morning, Joe Scarborough said that if Trump falls even one vote short of a clinch, the convention will "look for someone else": "If Trump doesn't get the number, they'll say they have rules for a reason." And Karl Rove told conservative radio host Hugh Hewitt last week: "A fresh face might be the thing that would give us a chance to turn this election and win in November against Hillary."

Top Republicans say "fresh face" is code for "Paul Ryan."

A Ryan friend chuckled when we asked if he wants it, and pointed to last month's address: "That was somebody who was laying out the speech that, in most cases, you'd give six months before you announce you're going to run - when you're going around the country, raising money for your leadership PAC."

Article Link to Politico:

Hillary Has Had It with Young Voters

By Noah Rothman
April 4, 2016

If the Democratic presidential primary is pretty much over, someone forgot to tell Bernie Sanders’s voters. For the eccentric democratic socialist from the Green Mountain State, the dream may never die – even if the dream must persist in a vegetative state on life support.

It would take a spectacular collapse in her geographic stronghold – a not impossible, but highly unlikely prospect – for Bernie Sanders to overtake Hillary Clinton in the count of pledged delegates. That is to say nothing of the Democratic Party’s network of “super delegates.” Those delegates’ allegiance is fluid but, today, they back Clinton over Sanders to the tune of 469 to just 31. Still, despite the practically insurmountable hill Sanders must climb, the Vermont senator’s supporters remain so infatuated with his candidacy that they continue to breathe fresh life into it and, thus, compel the septuagenarian socialist on in his Long March.

In the last month alone, Sanders raised an eye-popping $44 million, according to his campaign. The impression that Sanders’s candidacy remains surprisingly viable will be lent confirmation on Tuesday when he is expected to perform strongly in Wisconsin’s primary. While this likely victory and Sanders’s healthy war chest will propel the candidate on well into April and perhaps even into June, Hillary Clinton’s presumed strength in the Northeast is expected to push the ultimate prize beyond the socialist senator’s reach.

Though it remains unlikely that Sanders can derail Clinton’s bid for their party’s presidential nomination, it is by no means impossible. Clinton faces the frustrating prospect of a long primary campaign now, and the narrative set by a dramatic loss in Wisconsin could dispirit Clinton supporters ahead of April 9th caucuses in Wyoming, or the critical April 19th New York state primary.

The former secretary of state would love to declare the Democratic primary over and pivot toward the general election. It is more likely by the day that the GOP’s nominating contest will go all the way to the nominating convention in Cleveland, where the Republican Party may be able to narrowly avoid a Trump nomination and the ensuing disaster for down-ballot Republican candidates. From the Democratic perspective, the work of branding the GOP “The Party of Trump” needs to begin yesterday. As long as Sanders appears viable, neither Clinton nor her allies can afford to pivot and give her left-flank any more reason to oppose her bid. Clinton knows this, and she so resents it. That resentment is no longer especially well-concealed.

Clinton’s irritation appears increasingly reserved for Bernie Sanders’s most devoted cohort: young voters. As FiveThirtyEight’s Nate Silver concluded, research suggests that young people are by far the most favorable toward the concept of socialism, but this same group contradicts itself insofar as it is not nearly as friendly toward the practice of wealth redistribution. So what gives? Silver identified a clue in that “Sanders’s support now and Ron Paul’s support four years ago are not all that different.”

The underlying messages of these two superficially divergent candidacies, central to which is a fundamental redefinition of American politics in both practice and purpose, are so similar that Sanders fans are even appropriating the Paul campaign’s slogans and logos. “What’s distinctive about both the Sanders and Ron Paul coalitions is that they consist mostly of people who do not feel fully at home in the two-party system but are not part of historically underprivileged groups,” Silver wrote. That is the definition of a kind of parlor radical who deserves and receives little in the way of sympathy from the nation’s more established institutional leaders. For her part, Clinton isn’t even trying to display empathy toward the fanatical young Sanders voter.

Last week, the former secretary of state snapped at a Green Peace activist who confronted Clinton on a rope line and asked her if she would pledge not to take more money from fossil fuel firms. “I am so sick – I am so sick of the Sanders campaign lying about me,” Clinton asserted. “I’m sick of it.” Asked about that incident on Sunday in an appearance on NBC’s “Meet the Press,” Clinton reiterated her contention that the nation’s youth have been misled by political opportunists in their midst. “I feel sorry sometimes for the young people who, you know, believe this,” Clinton said of her record on climate and alternative energy. “They don’t do their own research.”

Clinton’s decision not to back down from her passionate criticism of the Sander campaign and to transition toward a critique of Sanders’s voters is an extraordinary development. Surely, there is a bit of frustration in Clinton’s tone, which is likely due to her aggravation with the long primary race she perhaps thought would be — and by rights ought to be — over by now. But it is also reflective of a calculation on her part, and it’s likely an accurate one. Clinton does not need younger Democratic voters.

The latest Pew Research center national survey shows Clinton leading Sanders outside the margin of error overall while losing the support of nearly three-quarters of voters age 18 to 29. What’s more, neither Ted Cruz nor Donald Trump (especially Donald Trump) are particularly popular among this age group. Lacking an attractive Republican alternative, Clinton can reasonably assume that young voters will return to the Democratic fold in November. That is a reasonable presumption, and one that demonstrates the extent to which young Democratic voters have marginalized themselves over the course of this process.

Hillary Clinton is now claiming outright that younger voters are low information voters. While that admission is likely to frustrate and anger those same voters, the former first lady has demonstrated that she doesn’t think she has to care about this demographic. And she is probably right.

Article Link to Commentary:

Trump is in trouble in Wisconsin

The GOP front-runner’s campaign has hit turbulence at the worst possible time.

By Patrick Reis
April 5, 2016 

Winning has been Donald Trump’s cure for all of his failings this campaign. But while his failings have been on full display this week, a Wisconsin win on Tuesday looks unlikely.

Trump trails Ted Cruz in each of the last six major polls, including a Marquette University Law School survey last week that put Cruz in first place with 40 percent of the GOP primary vote, leading Trump by 10 percentage points.

If those results hold, Cruz would not only win Wisconsin, but he’d take the lion’s share of the state’s 42 delegates thanks to Wisconsin’s “winner-take-most” primary rules. Those are delegates Trump badly needs to stay on a narrow path toward the 1,237 delegates required to clinch the GOP nomination before a possible contested convention.

And Trump’s chase for 1,237 has taken on new urgency last week, as Trump’s rivals repeatedly outfoxed him in the behind-the-scenes struggle to install favorable convention delegates in state after state and Trump himself courted fresh controversy with Republican primary voters.

None of this is new for Trump. In the run-up to the election, Trump answered every critique with his surging poll numbers. And since the voting began, his string of wins and massive delegate lead has been an effective rebuttal to anyone attempting to pick apart his political heterodoxies and disorganized campaign. But his campaign faces fresh problems ahead of the only primary contest for the next two weeks.

The problems only got worse over the weekend. In Tennessee, where delegates will be able to vote freely after two ballots at the convention, the Trump campaign accused party officials of making a last-minute push to approve anti-Trump delegates. Trump supporters rushed a party meeting where delegates were being selected, but the party voted its slate through anyway.

And in North Dakota, where delegates are free to vote how they want from the start, only one of the 25 delegates picked at the state party gathering this weekend is publicly supporting Trump. 18 of those 25 slots, however, were filled by candidates on Cruz’s preferred slate.

While primary or caucus results determine almost all of the delegates’ first-ballot votes, if that ballot fails to produce a winner, many of the delegates are free to vote how they choose in later rounds. And as POLITICO reported last week, those delegates are ready to flee Trump in droves.

Trump did little to help himself in the past week, generating a string of controversies over his Twitter treatment of Cruz’s wife and whiplash-inducing shifts on punishments for women who have abortions. The businessman’s campaign did little to pick up the slack, with campaign manager Corey Lewandowski getting charged with simple battery over his rough treatment of a reporter on the campaign trail.

Regardless of Tuesday’s results, Trump will end the day still firmly in first place, but the campaign foundation has worrisome cracks. And unless Trump can pull off a Wisconsin upset, he’ll end Tuesday with out a win to paper them over.

Wisconsin Republicans will dole out 42 delegates Tuesday. Here’s what to watch for.

The “winner-take-most” system and the rest of the rules

Wisconsin uses a hybrid system to dole out its 42 delegates. The statewide winner gets 18 delegates. The other 24 are allocated based on the results in the state’s eight congressional districts, with the winner in each district claiming all three of its delegates.

As for the people who will actually fill those delegate slots and go to the Republican National Convention, that’s complicated too. Of the 18 at-large slots for delegates for the statewide winner, three are members of the Republican National Committee, while the other 15 are chosen at the state convention in May. The delegates for the 24 district-level slots will be filled at various district caucuses over the next month.

When the chosen delegates arrive in Cleveland in July, they’re bound to vote according to the results of the primary. That’s true on the first ballot as well as subsequent ballots, barring two conditions: The delegates become unbound if the candidate releases them, and they become unbound if the candidate they’re standing for receives less than a third of the vote on any given ballot.

Isn’t this like every other time Trump was supposedly “in trouble?”

Trump has continually disproven his would-be Cassandras, who in the campaign’s earlier stages were eager to declare each Trump controversy a fatal one. Those predictions, however, were largely based on a similar premise: that Trump’s latest flap would be the one to finally drive away his supporters.

In Wisconsin, however, Trump’s problem isn’t that he’s losing support. It’s that he’s not gaining any and his rivals are.

When the Marquette University Law School poll surveyed state Republicans in February, Trump’s sat at 30 percent, good enough for an 11-point lead over Cruz. In Marquette’s latest poll, Trump was still at 30 percent — but now 10 points behind a surging Cruz.

The good news for Trump is that polls have him crushing the competition in the next contest, a New York primary on April 19 with 95 delegates at stake. But Trump’s safest path to the nomination is to clinch it with a majority of delegates, and poll results like Wisconsin’s make it unclear how he can do that without broadening his base of support.

Cruz feels the pressure too

Meanwhile, Cruz’s identity as the lone candidate who can defeat Trump will be tested in Wisconsin.

At this point, the biggest risk to Cruz appears to be John Kasich, who, with poll support consistently in the high teens and low twenties, is unlikely to win. But he could still play Cruz spoiler, pulling anti-Trump votes away from Cruz and paving the way for the billionaire to once again take advantage of a fractured field.

The senator is bolstered by the state party’s anti-Trump movement, which has been almost uniquely unambiguous in favoring Cruz over Kasich. Cruz is also no longer splitting votes with Marco Rubio, his super PAC has attacked Kasich in the last week, he has the endorsement of Gov. Scott Walker and major party players, and he is benefitting from a primary immediately following one Trump’s most tumultuous weeks of the entire campaign.

If Cruz can’t win there and now, then where and when?

There’s the Milwaukee-area, and then there’s everywhere else

Wisconsin boasts distinct strains of conservatism concentrated in the state’s different regions. They have put up a united front in recent elections, especially Democrats’ efforts to oust Walker, but the divisions could show in the primary.

The establishment’s power is concentrated in the suburbs and counties surrounding Milwaukee — the state’s most populous area. It’s a political powerhouse filled with affluent conservatives, many of whom have united behind Cruz in an attempt to take down Trump (though not without a wandering eye or two in the direction of Paul Ryan).

Trump’s hope for overcoming that coalition is two-fold. He needs to turn out anti-establishment Republicans in the state’s rural areas, and, as Wisconsin Republicans have an open primary, he needs to rope in independents and new voters. Trump has long said that blue-collar independent voters will flock to him, and Wisconsin — with places like Milwaukee, Janesville, Racine and Beloit that have felt the sting of deindustrialization — would seem a solid place to back up that claim.

Article Link to Politico:

Obama: George W. Bush With Drones

America can't kick the quagmire habit.

By Akhilesh Pillalamarri and Lisa A. Bergstrom
The National Interest
April 5, 2016

It is a testament to how deeply the doctrine of neoconservatism has left its mark on the American foreign policy that the Obama Doctrine, for all its professed restraint, has ended up in practice looking very similar to the gung-ho interventionism of the George W. Bush administration, with the main difference being the degree of intervention. While engagement with Iran and Cuba are victories for realism that would have been unthinkable during the Bush years, Obama has not shied away from unnecessary military action—action that does not improve the United States’ security situation or shore up the international order. In the past seven years Obama has, in addition to continuing to fight in Iraq and Afghanistan, conducted airstrikes to remove Muammar el-Qaddafi in Libya, conducted airstrikes against Islamic State in Syria, funded rebels fighting Syrian President Bashar al-Assad, supported Saudi Arabia’s air campaign in Yemen, and conducted extensive drone strikes in Pakistan, Syria, Yemen and Somalia.

Is it inevitable that anyone in the Oval Office will succumb to the tragic pressure to use the military to put out fires around the world? Or is there a way to uphold the United States’ role as defender of the world order without falling into the neoconservative morass of constant military intervention that by bleeding America dry of treasure and blood, will precipitate in not greater but lesser America security? President Obama himself got it right when he said that “we can’t, at any given moment, relieve all the world’s misery. . . we have to choose where we can make a real impact.”

This might be best accomplished by following the example of the British in the nineteenth century, whose role the United States has now assumed. Militarily, this would consist of three primary components: (1) maintaining American forces near key chokepoints, such as the Gulf of Hormuz and the Malacca Straits to ensure the freedom of the seas; (2) shoring up relations with close allies in prosperous and free rimland of western Europe and East Asia that give the international system global staying power; and (3) only using force to prevent any power from using armed force to seize enough territory and resources to threaten the world order. Most other countries, including other great powers, are disinclined to rock the boat and dispute this basic order, which provides enough space for most of their ambitions and internal arrangements.

Yet, instead of pursuing the very commonsense ideas he himself seems to advocate, Obama’s policy in the Middle East and North Africa has been a disaster, though he himself has acknowledged that he was dealt a bad hand to begin with. Mindless intervention, for no good purpose but to influence domestic arrangements in other states, has led to unintended consequences. Removing Muammar el-Qaddafi has left Libya an all-but-failed state and destabilized surrounding states like Mali. Half-hearted support for Syrian rebels has only contributed to the years-long stalemate. Yemen is fast becoming a second Syria, a humanitarian catastrophe affording terror groups free reign. These events are of no benefit to anyone.

Furthermore, Obama seems to believe that he should indeed accomplish the same things other politicians would accomplish with direct American intervention, just by using drones, airstrikes and proxy wars. This is really just business as usual, in another form. It is easy to abjure responsibility for instability, following regime change, in a country where American soldiers never stepped foot. Aircraft don’t take prisoners, so there is no need to worry about where to put detainees, or whether indefinite detention offends our liberal democratic ideals. The drone wars will leave no new Guantánamos for Obama’s successor. Most importantly, air, drone and proxy wars can be waged with relatively few domestic political restraints. Without the sight of flag-draped coffins returning home, the American public is remarkably uninterested in what is being done on its behalf.

Of course, wars with few barriers to entry are not necessarily wars with few consequences. While drone strikes and funding rebels can help topple an existing regime, they can't fill the power vacuum that results. To paraphrase a Mongol saying, you can conquer a country from the air but you can’t govern from the cockpit.

Drone strikes against a wide swath of the Muslim world, conducted with seemingly little regard for civilian causalities, provide a powerful recruiting tool for jihadists and set a dangerous precedent for other powers.

More promising, at least conceptually, is the “Pivot to Asia,” which would both disentangle America somewhat from the Middle East and serve as a model for a more successful foreign-policy plan. President Obama is correct in seeing Asia as a core interest in the way the Middle East—with barely 5 percent of the world’s population and economy—never was. But the pivot goes much too far if the United States merely repeats many of the same policies it pursued in the Middle East in Asia. America ought merely to ensure freedom of navigation and the security of its main allies, and not get involved in every territorial dispute, question of sovereignty and domestic situation. It would be a pity if the United States simply took its ships, bases and bad ideas in the Middle East and swung them 180 degrees toward Asia, which would eventually repeat the mistakes of the Middle East in a far less forgiving environment.

Therefore it is with great trepidation that we view the so-called pivot to Asia. It would not be an escape from the chaotic politics of the Middle East, but a new chapter of intervention, domestic interference and competition with a regional hegemon (with China replacing Iran), which would lead to further and unnecessary American entanglements and petty obsessions over exaggerated security threats. Pivoting to Asia should mostly be economic and political, not military.

Obama came to office promising end the reckless interventionism of the Bush years. Yet for all his talk of using U.S. military power judiciously, the Obama Doctrine turned into a failed attempt to continue interfering in the Middle East through the seemingly less costly means of air power and proxies. One can only hope that if he or his successor actually manages to pivot to Asia, they will not repeat the mistakes of the Middle East. The U.S. military cannot be used to solve all the world’s problems, and it falls on the president to resist the temptation to try.

Article Link to the National Interest:

Tuesday, April 5, Morning Global Market Roundup: Dollar slides to 17-month low vs. yen as stocks, oil fall


April 5, 2016

The dollar fell on Tuesday to its weakest against the yen since October 2014 as investors' view of riskier assets soured, pushing shares and oil prices lower as the outlook for U.S. interest rates remained clouded.

The Japanese currency, often sought in times of market turmoil or economic uncertainty, fell as low as 110.30 per dollar as the Asian trading day ended with losses in many stock markets. European shares also fell in early deals.

Crude oil, which had fallen in recent days on fading prospects of agreement among producers to curb oversupply, took another hit from data showing U.S. demand for gasoline fell in January for the first time in 14 months.

Further muddying the waters for investors, two senior officials of the U.S. Federal Reserve said the market's views of when the central bank would raise interest rates may be too pessimistic.

Just a week ago, Fed Chair Janet Yellen said the Fed would process cautiously in raising rates -- remarks viewed as dovish and which drove U.S. stocks to 2016 highs.

The dollar fell 0.8 percent against the yen and last traded at 110.40 yen. The euro fell 0.3 percent to $1.1364.

"Clearly risk sentiment is not good and oil prices are declining this week and ...feeding and driving the dollar lower against the yen," said Yujiro Goto, currency strategist at Nomura in London.

The Australian dollar fell with commodity prices and was down 0.5 percent to $0.7563, having risen after the Reserve Bank of Australia left interest rates unchanged, as widely expected.

In stock markets, the FTSEurofirst 300 share index dropped 1.5 percent. Germany's DAX index slid 2.2 percent after data showed German industrial orders unexpectedly fell 2.1 percent in February due to weak foreign demand, especially from euro zone countries.

MSCI's broadest index of Asia-Pacific shares outside Japan was earlier down 1.3 percent. Japan's Nikkei index fell 2.4 percent to an eight-week closing low, as the yen rallied, hurting exporters.

Australia's S&P/ASX 200 index fell 1.4 percent.

Chinese shares bucked the trend, closing up 1.3 to 1.4 percent as trading resumed after a market holiday.

Oil prices, which have fallen from above $100 a barrel since mid-2014 on a global supply glut to a trough of $27.10 in late January, fell again on the signs of subdued U.S. demand.

The U.S. Energy Information Administration said on Monday that gasoline demand fell 0.6 percent in January. Total U.S. oil demand fell 1 percent compared with January 2015.

Brent crude, the international benchmark, traded 30 cents lower at $37.39 a barrel, down from a 2016 high of $42.54 touched in mid-March.


As stock prices tumbled, yields on low-risk government bonds fell. German 10-year Bund yields, the benchmark for euro zone borrowing costs, fell as far as 0.92 percent, their lowest in almost a year.

"The data signals weaker export growth, softer demand both within the euro zone and abroad and thus suggesting that the ECB's challenge as regards boosting inflation and inflation expectations is and will remain very much an uphill battle," Rabobank strategist Matt Cairns said.

U.S. 10-year Treasury yields fell nearly 5 basis points to 1.731 percent, their lowest since March 1.

Gold, another perceived safe haven and a top-performing asset in the first three months of 2016, rose more than 1 percent, reversing losses of 1.4 percent chalked up in the last two days. It traded at $1,228.40 an ounce.

Copper was having a better day after falling for the last seven, gaining 0.3 percent to $4,774.50 a tonne.

Military wipes its hands of Turkish politics

Rumors and denials of a possible coup by the Turkish military are a symptom of the malignant political atmosphere in the country.

By Metin Gurcan
April 5, 2016

The Turkish military appears to be taking a hands-off approach to the country's toxic political environment, refusing to get stuck between the president's impassioned followers and fervent foes.

In recent years, Turks had come to believe that the word “coup” had been discarded from the lexicon of the civilian-military relationship and that the news media had forgone using the Turkish Armed Forces (TSK) as a tool for shaping perceptions among the public. The virulence of the current political atmosphere is evident in recent speculation and media commentary that the military might once again intervene in politics. Efforts by both the ruling Justice and Development Party (AKP) and the opposition to benefit from this situation will only erode confidence in civilian politics.

The TSK high command evidently have had enough of the allegations about it and felt compelled to share its uneasiness with the public in a rare political statement issued March 31. “Discipline, absolute obedience and firm chain of command are the basic elements of the TSK,” the General Staff remarked in a post on its official website. “It is inconceivable to think that the TSK would tolerate any illegal phenomenon or action that would digress from the chain of command. We have initiated legal action against those who spread such news and comments, which have absolutely no legal and logical basis and which contravene media ethics.” The statement further asserted, “News and comments in some media organs without any foundation naturally negatively affect the morale and motivation of our personnel.”

Of interest, the Turkish media have split over the identify of the intended recipient of the generals' message. Some believe it was a stern response to a March 27 article, “Operations Targeting Turkey and Erdogan,” by Rasim Ozan Kutahyali in the daily Sabah, which is close to President Recep Tayyip Erdogan. In the article, Kutahyali claims that the Russian plane shot down Nov. 24 was intentionally targeted by Gulenist pilots in the Turkish air force, and he said 50% of F-16 pilots are pro-Gulenist. Kutahyali added that all such pilots will be dismissed from the TSK en masse in 2016, and if Chief of the General Staff Hulusi Akar resists the move, he will have to resign.

Another possible explanation for the statement is the TSK's discomfort over allegations, particularly in the international media, that it might stage a coup against Erdogan. One such piece is “Could There Be a Coup in Turkey?”, a column by former Pentagon official Michael Rubin, a resident scholar at the American Enterprise Institute. According to Rubin, if the army were to intervene against Erdogan as was done in Egypt, there would not be much opposition to it.

Will there be a coup in Turkey? If so, how? If not, why? A couple of retired military officers shared their opinions with Al-Monitor.

Retired Col. Ali Bilgin Varlik of the Ankara-based Central Strategy Institute noted that Turkey has maintained a democracy for 100 years, albeit with some hiccups. He commented, “There can’t be any more coups in Turkey. Grounds for a coup could become fertile [if there were] extreme conditions of ideological and societal fragmentation, economic collapse, lost wars, etc. But I don’t see any of this happening in the near future.”

Why then is such speculation making the rounds? “I think the AKP is using coup rumors to suppress the domestic opposition,” Varlik asserted. “With these rumors, it prevents its policies from being questioned while it concocts an internal threat to unite its base behind the party.”

A retired general who requested anonymity agreed with Varlik, stating, “Actually, the issue that had forced the TSK to release that statement is precisely the thing we should be discussing. Why is the TSK still a popular tool both for the media and the politicians? Why can’t civilians refrain from reverting to the TSK for issues they should be dealing with themselves, and why is it there are always these expectations of the TSK? There is something missing in respect for the army. These are the matters we should discuss.”

What is happening today is that Turkish society is splitting not over the role of the AKP, but over Erdogan. Today if the committed anti-Erdogan front is approached, one will hear a virtual chorus of, “It doesn’t matter if the country is set on fire, if there is a crisis or a plot, as long as Erdogan goes.” Meanwhile Erdogan partisans proclaim, “Let there be instability, polarization and clashes, as long as Erdogan remains in power.”

In a country squeezed between fervent, unquestioning Erdogan lovers and those who despise him with a passion, both sides have their expectations of the military. Their intensity is so deep that they don’t hesitate to provoke the TSK or use it to intimidate the opposing side. This is why the TSK is basically saying, “Leave us out of this. We are busy enough.”

Article Link to Al-Monitor:

Military wipes its hands of Turkish politics

The ISIS-Hezbollah Rivalry in Latin America

The Leaders of Latin America Must Coordinate Their Vigilance and Counter-Measures.

By Shimon Samuels and Ariel Gelblung
The Jerusalem Post
April 5, 2016

The Sunni-Shi’ite conflict has come to Latin America. Sunni Islamic State (ISIS) is following in the footsteps of the long-entrenched Shi’ite Hezbollah.

Venezuela under Hugo Chavez was an Iranian playground, giving free rein to its Hezbollah acolyte to arm, train and convert. During the 2006 war with Israel, the entire Wayuu indigenous tribe converted to Islam, adopting the Hezbollah name and consecrating the act by a failed attempt to bomb the US Embassy in Caracas.

Now Dabiq, ISIS’s website, has announced its mission to convert the native Mayas in Chiapas, Mexico and across the border in Guatemala.

Exploiting the poverty and marginalization of the indigenous peoples, ISIS announced an “anti-colonial” campaign to Islamicize, among others,the Tainos in the Caribbean, the Wayuu beyond Venezuela in Ecuador, the Guarani and Amazonian tribes in Brazil.

Such sensationalist pretensions are improbable, but the Mexican beginning replicates the Syrian/Iraqi example of cooperation with smuggling cartels.

Another Dabiq release, picked up by the Breitbart website, indicates that ISIS “could purchase a nuclear weapon in Pakistan and then smuggle it into the U.S. through Mexico by using existing traffic networks in Latin America.”

The Nuclear Security Summit, just ended in Washington, assembled 50 states, discussing on its broad agenda the fungibility of fissile materials in the hands of jihadi terrorists.

Last week’s Brussels bombers had, reportedly, conducted surveillance of Belgian nuclear scientists.

The prestigious Bulletin of the Atomic Scientists quoted the Nuclear Threat Initiative’s naming of Latin American countries, “home to groups interested in illicitly acquiring nuclear materials,” listing in Central America and the Caribbean Guyana, Honduras and Surinam, and in South America Colombia, Ecuador and Peru.

Indeed, among these are countries identified in the last report of the assassinated Argentinian AMIA Jewish Centre atrocity investigator Alberto Nisman – countries he claimed to have been infiltrated by 90 Hezbollah sleeper cells.

Deeply implicated in the Teheran- planned 1992 Israeli Embassy and 1994 AMIA attacks, Hezbollah has long been active across the continent, especially in the lawless “Triple Frontier” region between Paraguay, Brazil and Argentina.

When looking from the Paraguay side across the bridge over the Iguazu Falls, huge Shi’ite mosques dot the Brazilian horizon. Ayatollahs in SUVs dart across this no-man’s land.

Down the road, at the signposted Arab Sports Club, locals told us of hearing continual shooting from inside, claiming it was a para-military training range.

In the Triple Frontier, there reigns a harmony of sorts between gangs busy with money laundering, human trafficking and smuggling of drugs, arms and body parts, human trafficking.

Turf wars are rare.

An ISIS arrival, a Sunni infiltration into what prime minister Yitzhak Rabin called “Hezbollahland” – could create a firestorm.

Far more dangerous in its rivalry with a Shi’ite Hezbollah network – now battle-hardened in Syria and the beneficiary of Iranian largesse – are the prospects of a radioactive/radiological dispersion device or dirty bomb as a demonstration of ISIS Sunni one-upmanship.

The Pan-American Highway from Argentine Patagonia to the Mexican Rio Grande could be its cartel-delivery route to North America. The leaders of Latin America must coordinate their vigilance and counter-measures.

As the Bulletin of Atomic Scientists vividly illustrates, the current threat stands at “three minutes to midnight.”

The clock is ticking.

Article Link to the Jerusalem Post:

ISIS-Hezbollah rivalry in Latin America

How Poland Saved the World from Russia

The world expected a rapid Communist victory. The Poles had other ideas.

By Michael Peck
The National Interest
April 3, 2016

In the summer of 1920, Russia seemed poised to take over Europe.

Newly victorious in the Russian Civil War [4], but convinced that the capitalists were bent on strangling the cradle of Communism, the Bolsheviks looked for salvation. Their gaze fell on Germany, exhausted and embittered by defeat in the First World War, and now engulfed in civil strife [5]between Communist revolutionaries and proto fascist freikorps [6] paramilitaries. If only the Red Army's bayonets could install a Bolshevik regime in Berlin, then the two most powerful states in Central and Eastern Europe would be united in a Communist monolith. And from there, perhaps Communism would spread to Italy, France, Hungary and beyond. Could Marx's prediction of world revolution finally be at hand?

Unfortunately for Lenin and Trotsky, an obstacle stood in their way. It was called Poland.

Like Communist Russia, Poland was also a new nation, though of a very different kind. The Bolsheviks only needed to overthrow the Tsarist government to take over the Russian state: the Poles had to create their own state. Though the seventeenth-century Polish-Lithuanian Commonwealth [7] had extended deep into present-day Russia and Ukraine, Poland as an independent nation had been snuffed out in the eighteenth century, its territory partitioned between the Russian, German and Austrian empires. When those empires collapsed after World War I, the Poles took advantage of the chaos to resurrect their nation.

Yet as they had for centuries, Poland and Russia again would go to war. One reason was rival claims for the borderlands between the two nations—those "bloodlands" of Belarus and Ukraine that were perpetual battlefields. The deeper cause was geography; a glance at the map shows that the land bridge from Moscow to Berlin runs through Poland, whose unfortunate fate was to be wedged between Germany and Russia.

The Bolsheviks saw Poland as a semifeudal state of nobles and rich landowners exploiting the workers and peasants. The Poles feared the Red Army would march through Poland on the way to Germany, and never leave. Ironically, the Poles had refused British entreaties to help the Whites defeat the Reds for fear that the former Tsar's generals would be just as likely to reclaim Poland for the Russian empire.

War would pit David-ski versus Goliath-ovitch. Britain and France rated Poland's chances for victory as nil against a Russian colossus endowed with vastly superior manpower and resources. But the West had not reckoned on the force of Polish nationalism and the powerful personality of Field Marshal Josef Pilsudski [8], the self-taught general who proved far shrewder than the professional military officers who had so badly bungled Verdun and the Somme.

Peace talks continued while both sides prepared for war. Poland struck first, launching a preemptive offensive in April 1919 that swiftly seized Kiev. But they failed in their goal to destroy the retreating Russian armies and, even worse, discovered that the Ukrainians hated Polish occupation as much as they did the Bolsheviks. Poland also learned that nationalism cuts both ways; thousands of patriotic Tsarist officers, a group once targeted for murder by the Communists, now offered their professional expertise to the Red Army in patriotic outrage against the Polish attack.

The tide turned against Poland. Led by Marshal Mikhail Tukhachevsky [9], the genius of mechanized warfare later executed by Stalin, the heavily reinforced Russian armies marched on Warsaw, driving the outnumbered and outgunned Polish forces before them.

The fighting was epic, colorful and merciless. The Poles raised divisions of enthusiastic but inexperienced and poorly armed volunteers, leavened by their countrymen who had learned soldiering in the armies of Germany, Austria and Russia. From America came the Kosciuszko Squadron [10] of American volunteer pilots. From France came the Blue Army, a Polish force trained and equipped by the the Allies to fight on the Western Front, and which even brought its own tanks.

But the Bolsheviks had their 1st Cavalry Army [11], the dreaded Konarmiya, a horde of thousands of fast, hard-hitting horsemen led by mustachioed Marshal Semyon Budyonny [12]. Russia also had sympathizers abroad; British dockworkers and German and Czech railwaymen heeded Moscow's call to save the socialist motherland and refuse to load supplies for Poland. Just as in 1939, Britain and France promised support but did little, other than to send a few advisers (Charles de Gaulle among them) who claimed much credit but contributed very little to the Polish war effort.

The Russo-Polish War was a world apart from the trenches and barbed wire of the Western Front. As Hitler's armies later discovered, the East was simply too vast for armies to form continuous lines of troops, which made warfare far more mobile. The plains of Central Poland lacked defensible terrain, and neither side had the time or resources to build the trenches that stalemated the Western battlefields. In France, cavalry had become an anachronism that sat idle while the infantry and artillery did the fighting. In Poland and Ukraine, the mobility and shock power of cavalry ruled. Despite the handful of tanks and airplanes, the fighting was almost Napoleonic, as Cossack horsemen and Polish lancers clashed in the last major cavalry battles in history.
There was no thought of mercy. Russians butchered Polish soldiers, though officers were first tortured before being killed. The Poles behaved likewise. As always, the Jews were victims: Polish and Russian troops both continued their traditions of looting and murdering them at will.

By August 1920, Warsaw appeared doomed as the Red Army advanced on the city, where Communist sympathizers were already rising. But the Russian offensive was disjointed; the more that Tukhachevsky and his armies in central Poland drove on Warsaw, the more jealous became Stalin, who helped command the Russian forces in southern Poland. Instead of supporting Tukhachevsky, Stalin aimed to drive south to liberate the workers and peasants of Hungary, Austria and Italy.

Just as all seemed lost, Marshal Pilsudski unleashed his masterstroke [13], a move worthy of Robert E. Lee or Rommel. While the central Russian armies were fixated on Warsaw, a Polish strike force sideslipped to the south of the city, and then turned north in a left hook into the exposed Russian flank. Surprised, demoralized and outmaneuvered, the Russian armies disintegrated, with some retreating back to Russia and others fleeing to German territory to be interned. Pilsudski's counteroffensive was assisted by the breaking of Russian codes, a Polish specialty that they later used to crack the Nazi Enigma machine.

The Poles called it the "Miracle on the Vistula." Not only had the new Polish nation survived, but the ensuing peace agreement gave it much of the disputed territory. The cost for both sides totaled more than one hundred thousand dead and further devastation of war-wracked economies.

Poland had defeated Russia, but this quite a case of good defeating evil. Poland between World War I and II was ruled by authoritarian governments that imposed or tolerated anti-Semitic measures that Hitler's brownshirts would have approved of. In 1938, Poland even joined Hitler in dismembering Czechoslovakia as it grabbed its share [14] of Czech territory.

Nonetheless, in 1920, Poland had stopped the Communist Revolution in its tracks. Had Poland fallen before the Red Army and advanced into a tired, war-ravaged and disillusioned Europe, then much of the continent—Germany, Hungary, Italy—might have gone Communist. Some naive souls might have looked forward to the workers and peasants breaking their capitalist chains. The reality would probably have been Stalin's NKVD secret police conducting show trials [15] in Berlin and Paris.

In the event, Poland's independence was again tragically cut short by the Nazis in 1939, after which the country was "liberated" by the Soviets for a forty-year occupation.

Then the Soviet empire also crumbled. Poland became free, only to recently elect an authoritarian government [16]. On its border is a nationalistic Russia that has attacked Ukraine and is now asserting its influence in Eastern Europe.

For the sake of Poland and Russia, let's hope history doesn't repeat itself.

Article Link to the National Interest:

The Panama Paper Leaks Are a Chance to Fix a Broken Financial System

In creating shell companies and setting up what is essentially a tax haven, Mossack Fonesca didn't break any laws—and that's the problem.

By Daniel Hough
The New Republic
April 4, 2016

In every crisis there lies an opportunity. And that applies even to a crisis as large and potentially scandalous as that revealed by the so-called Panama Papers.

Over the coming days and weeks the financial behavior of many rich, powerful, and influential individuals will come under the microscope. There will be accusations of hypocrisy—and much embarrassment.

But some of those influential individuals have the opportunity to grasp the nettle and push for more transparency in the world’s dark financial corners.

A compelling defense

The background to this is quite extraordinary. More than 11 million documents have been leaked from a Panamanian law firm, Mossack Fonseca. They appear to outline how the firm helped clients complete an array of potentially tricky financial tasks. These ranged from helping some of the world’s best-known rogues to filter money back into the financial system, to helping them (and others) get around awkward sanctions. Mossack Fonseca also appears to have helped rich individuals keep funds away from the prying eyes of curious tax authorities.

To be clear, Mossack Fonseca will be defending itself rigorously, and it’s already gone on record to say that it has never been charged with any criminal wrongdoing.

It has also noted that it has operated beyond reproach for more than 40 years. It might deal with people and organizations who don’t win popularity contests but, it will argue, there is no law against that. Indeed, anyone—providing they pass a set of due diligence tests—can, for a fee, use the services that such law firms provide. Mossack Fonseca, in other words, certainly won’t be taking the revelations lying down.

Given the sheer volume of data that has been leaked, it will take time to unpack what precisely has been going on. But two things are likely to become apparent.

The first is that Mossack Fonseca’s employees will likely be shown to know the rules that govern their work inside out. They are already claiming that everything they do is above board and they see no reason to apologize, let alone accept any sort of punishment, for helping clients complete what are legal financial activities.

There are, furthermore, good reasons to allow the owners of some companies to remain anonymous. If you live in a country in which criminal gangs come after those who do well for themselves, it makes no sense to punish people who make money legally by forcing them to go public about it. That the likes of Mossack Fonseca use these rules to help clients who are not in similarly delicate positions is not the law firm’s fault—the rules allow them to do it, and it’s those rules that desperately need changing.

But what will also become clear—as if it wasn’t already—is that the legal infrastructure that governs the behavior of companies in offshore jurisdictions (essentially tax havens) is woefully inadequate.

Pressing for change

As of Sunday evening the BBC was claiming that 72 current or former heads of state were linked to Mossack Fonseca, and that they had potentially problematic financial affairs that needed investigating. That the rich and powerful appear to be able to act largely anonymously while squirrelling their wealth away from prying eyes should be deeply troubling to anyone who believes that transparency is the best disinfectant against corruption, fraud, and tax evasion.

And here Britain’s David Cameron in particular has an opportunity—despite therevelations about his family. In 2013 Cameron openly criticized tax secrecy and tax havens. In truth, and despite periodic background noise, little happened between then and 2015.

Last summer, Cameron raised the issue again in a high-profile speech in Singapore. There, he said that he regarded the anonymous ownership of companies as deeply problematic. That led to a plan to introduce (in June 2016) a register to identify those who own companies and make profits from them (so-called “beneficial owners”).

There are still plenty of reasons to doubt that this move will have the intended impact. There is not, as yet, any agreement to create an international list that everyone can access. But Cameron is at least talking about something that others recognize to be deeply important. Given both the size of the UK’s financial services sector and the fact that many of the tax havens that the likes of Mossack Fonseca use fall under UK jurisdiction, the UK government has an opportunity to push others in to a corner and make a difference.

Cameron has called an international anti-corruption summit in London in May. It could—let’s be honest—end up as nothing more than a talking shop. But it might also be the perfect forum to push for an international agreement on stricter rules concerning beneficial owners. It is also a moment to generate commitments to actually implementing such legislation.

The UK, in other words, will inevitably be at the center of pushing for, or kicking back against, changes in international financial regulations. Cameron has the choice between watching and worrying from the sidelines, or seeing the Mossack Fonseca case for what it really is—a wake up call to try and finally do something about the long outdated rules and regulations that shape international financial transactions.

Article Link to the New Republic: