Thursday, April 7, 2016

OREX has come thru nicely -- a decent 5%+ Intraday Gain based on the recommended Buy Price. Dump it @ $.57

Orexigen Therapeutics - Symbol OREX -- is a quick Intraday Buy @ $.52; +/- .0175

WRES has already returned a nice 8% gain -- sell it at $.14

Warren Resources -- Symbol WRES -- is an early Intraday Buy @ $.115; +/- .0125

Today's Stock In Play is CTI BioPharma -- Symbol CTIC

There's Still Time for a Serious Third-Party Presidential Run

It's not too late—yet—for Trump or an anti-Trump to make a credible independent bid.

By Russell Berman
The Atlantic
April 6, 2016

How late is too late for an independent or third-party presidential run?

That question is becoming paramount as the Republican Party barrels through its primary season bitterly divided and with the chances growing that it will open its July convention without a nominee in hand. Conservatives resolutely opposed to a Donald Trump presidency have been investigating a third-party bid for weeks, hoping that if they can’t rally the party behind Ted Cruz then at least they’ll be to give the Never Trump movement an alternative not named Clinton in November. And the recent, if hardly surprising, demise of the paper-thin “loyalty pledge” that Republican candidates signed last year means that either Trump or Cruz could conceivably mount an independent campaign if they lose the GOP nomination in Cleveland.

The short answer is that no, it’s not too late for a third-party or independent run, and it might even be possible for someone as wealthy and well-known as Trump to launch a serious campaign as late as July. (Note: Serious does not necessarily mean winning.)

But for the anti-Trump forces scrambling to find a conservative alternative, time is very much running short.

The most organized Never Trump group includes Erick Erickson, the Georgia-based conservative activist and radio host, and William Kristol, the editor of the Weekly Standard. They met in Washington last month with about a dozen other supporters, and Erickson said another meeting is planned for next week. They settled on a two-track strategy of trying to deny Trump the GOP nomination while simultaneously laying the groundwork for a third-party bid if they can’t. With Trump stumbling recently and Cruz defeating him in Wisconsin, the group is, for the moment, focused more on stopping him in Cleveland. For Erickson, that means trying to rally the party around Cruz, a candidate who many members of the anti-Trump GOP establishment despise nearly as much as Trump. Yet as Erickson acknowledged in a Monday phone interview, “there is a real risk if we wait too long.”

The three main options for the anti-Trump group would be to use existing minor-party lines to field a conservative candidate, to create an entirely new party, or to back an independent candidate without a party affiliation. The consensus, Erickson said, is to use existing parties—although they might not be the same one in every state. The Libertarian Party already has a ballot line across the country, and the Constitution Party—which runs on a strict conservative platform—expects to be on as many as 25 state ballots by November. “It’s an all-of-the-above approach,” Erickson said. “If, let’s say, Candidate X is on the Constitution Party in one state and the Libertarian Party in another state, well the Electoral College members are bound to vote not for the party but for the person.”

And who might ‘Candidate X’ be? Who knows. Erickson has talked up former Texas Governor Rick Perry as a possibility, but since Perry has already endorsed Cruz, he isn’t publicly entertaining a third-party run. And given that intra-party divisions are, in part, what led to Trump’s dominance in the first place, it might be difficult to get conservatives to rally around a single alternative. “We’ll worry about the candidate later,” Erickson told me.

That won’t be good enough for either the Libertarian or the Constitution Party, neither of which is willing to simply let disaffected Republicans walk in and take over their parties. They view the current chaos in the GOP as a nearly unprecedented opportunity to expand their reach—and as a potential threat. “We don’t want a protest candidate,” said Peter Gemma, a member of the Constitution Party’s executive committee who attended the anti-Trump meeting in D.C. “If there’s some Republican who’s in a snit because Donald Trump has got the nomination or it looks like he has the nomination, that’s a protest. We’re an independent party. We think the elephant is dead.”

“We don’t want a protest candidate.”

The Constitution Party’s nominating convention is next week in Salt Lake City, but Gemma said it was possible for individual state parties to drop their affiliation with the national party and put someone else on the ballot. At the meeting, he said he was open to working with the anti-Trump forces, but he told them that any candidate would have to commit to the party and embrace its platform, which lines up with conservative Republicans domestically but stands in opposition to an interventionist foreign policy. “Name recognition isn’t as good as the policy. You’ve got to agree with the platform,” Gemma said. “We don’t care how fancy the guy looks or how he speaks. It’s, ‘Does he understand and will he run with it? And is he committed to stay there?’”

There wasn’t much of a response. “It’s my personal view that they patted me on the head,” he said.

The Libertarian Party has more ballot lines, and it won’t pick its nominee until a Memorial Day convention in Orlando. But its chairman, Nicholas Sarwark, has a similar open-but-wary attitude to the possibility of a GOP defector. “For a change politically, we kind of hold all the cards,” he told me. “So if somebody wants to come to Orlando and try to get our nomination, they’re going to have bring their A game and come and convince delegates that they’re Libertarians, or Libertarian enough. That’s something that’s going to be up to the delegates.”

He or she would also have to compete against several candidates who have been running for months, including former New Mexico Governor Gary Johnson and John McAfee, who developed the eponymous computer anti-virus program. To have a chance of winning, Sarwark said, a candidate would likely have to voice their support for marijuana legalization and opposition to the drug war and interventionist foreign policy. “It will be a hell of a fight if someone tries to hijack it,” he said of the convention.

One option that might have been available four years ago but is not now is the Americans Elect line, which won ballot access in 29 states by 2012 but failed to recruit a bipartisan ticket nominated through an online ballot. The organization shut down last year, and its founder, Peter Ackerman, actually went to court to get the ballot lines taken down so they could not be used by a candidate who ran counter to its mission. “We shut down specifically so Americans Elect was not available to anyone else,” Ackerman said.

“I wouldn’t say plenty of time, but there’s more time than the media seems to realize.”

If Cruz or another Republican toppled Trump at the GOP convention, the billionaire could still run as an independent either without a party affiliation, by running on the lines of other minor parties in different states, or by running as a write-in candidate in the 43 states that allow it. (“Trump is easy to spell,” Democratic strategist Tad Devine noted this week in USA Today.) But there’s no indication that Trump’s organization is planning for that possibility, and if he doesn’t lay the groundwork now, the best he might be able to hope for after July would be to play spoiler.

The deadline for running as an independent or new-party nominee in Texas is in May, and those for other key states like Illinois, Florida, and Michigan fall before or immediately after the Republican convention. “There’s a lot of states where you’d be helpless if you didn’t start to do anything until the convention,” said Richard Winger, the longtime editor of a newsletter called Ballot Access News. Another obstacle for Trump would be so-called “sore-loser” laws in a few states, including Texas, that forbid candidates who have appeared on the primary ballot under one party from running in the general election as an independent.

In California, leaders of the right-wing American Independent Party have already tried reaching out to Trump’s campaign about running on their ballot line if he doesn’t get the GOP nomination. But they’ve gotten no response from his national headquarters, said Markham Robinson, chairman of the party’s executive committee. “Our electorate here is, for better or worse, inclined to vote for a celebrity,” Robinson told me. Yet Trump might be reluctant to align with the American Independent Party for the same reason many others in California are: It is best known for having nominated segregationist George Wallace in 1968. “We do suffer from the difficulty of people having too long a memory,” Robinson conceded. “They think we’re still a segregationist party. And that has been obsolete for some time.”

When former New York Mayor Michael Bloomberg was considering his own independent campaign, he reportedly set a March deadline for making a decision because he knew how difficult and costly it is to get on the ballot in all 50 states and the District of Columbia. Aside from paying for ads and a typical campaign infrastructure, an independent candidate would likely have to spend millions of dollars to hire petitioners who can gather the tens of thousands—in some states, hundreds of thousands—of signatures needed to secure a place on the ballot.

Experts like Winger say that may have been an overly conservative timeline, especially for a billionaire like Bloomberg. Winger is fond of reminding reporters that in 1980, John Anderson didn’t declare his independent run until April 24. “He got on the ballot in all 51 jurisdictions. And the laws are better now than they were then,” Winger said. The bottom line is there is still time for a late twist to this already zany election—but not a lot. “I wouldn’t say plenty of time,” Winger said, “but there’s more time than the media seems to realize.”

Article Link to the Atlantic:

How America’s Political Trends Favor Democrats in 2016 and Beyond

We may be in the midst of a New Progressive Era, with a semi-realignment coming this November.

By Mark Green
The New Republic
April 7, 2016

Predictions are hard, especially about the future. But politics is as much a science as an art. There are historical trends that tell us a lot about what will happen in November and beyond. As John Lubbock noted, “Great battles are won years before they are fought.”

"The values of modern liberalism, instead, have been vindicated by America’s peristaltic history of progress."

We appear to be in the midst of a New Progressive Era, whose beginnings can be traced to the waning of the Reagan Revolution under President Clinton. Although he lamented to staff that he was “a liberal president in a conservative era,” Clinton’s Southern roots, his outsized political skills, and his successful economic record—not to mention his tactical shifts on welfare and crime—enabled him to blunt standard Republican attacks on “tax and spend” liberalism.

Of course, George W. Bush’s two terms interrupted the ascendance of a liberal order. But it’s hard to deny his presidency was a multi-level disaster. Barack Obama’s historical impact will not be confined to his back-to-back majority wins, remarkable as those were. Rather, beyond holding conservatives even as Clinton had done, he went on the offensive to, more often than not, prevail over implacable foes.

Despite shrieks and screeds from conservative presidential candidates and their media chorus, it’s clear that this is what a very successful presidency looks like—as his recently rising poll numbers indicate. No personal scandals, no indictments of major officials, no economic collapse, no invasions of the wrong country. A presidential educator-in-chief using his intellect and eloquence to change policy on health care, climate, use of force, LGBT rights, Cuba, Wall Street, the auto industry, the drug market, and immigration reform. Most significantly, there’s been steady economic growth based on a middle-out paradigm, not a trickle-down one.

His successes and equanimity have only unhinged an already angry GOP base and elites who are akin to Japanese generals refusing to leave their caves long after the war is over. “He doesn’t love America,” spewed Rudy Giuliani. Other than one New York Times column by David Brooks, none give him any credit for anything.

The Clinton and Obama presidencies, especially as contrasted with Bush 43, have established a baseline that, this fall, may lead to a semi-realignment irrespective of the names Trump, Cruz, Clinton, or Sanders. It’s now easy to imagine a Democrat winning the presidential vote for the fifth time in seven elections; a progressive Supreme Court for the first time in a half-century; a Democratic Senate again; and, after the 2020 Census and reapportionment, even a Democratic House.

There are at least five reasons leading to a partial realignment:

1. GOP Extremism

The last real realignment occurred after the 1960s Civil Rights Act chased millions of white Southerners from the D to R column. That backlash in the short term surely helped the GOP win a series of presidential elections and eventually the Congress. But longer term, it has tethered them to a nativist base out of step with a changing America.

Significant percentages of today’s Republican Party believe that the American president is not an American, that Islam should be outlawed, that we should spend $300 billion to round up and ship 11 million “illegals” out of the country, that Benghazi is worse than Watergate and ‘reverse racism’ worse than racism, that shutting down the federal government and maybe even defaulting on our debt is ok, that global warming is a hoax, that water-boarding—a war crime—is justified, that thousands of eligible voters should be disenfranchised because .00000001 percent of those who vote may have engaged in voter impersonation, and that, for the first time ever, a presidential Supreme Court nomination should not receive any serious Senate consideration.

Where are the Democratic equivalents of birchers, birthers, white militia, xenophobes, secessionists, Jade Helm conspiratorialists? There aren’t any.

The result of all these developments? Obama became the first Democrat since FDR to win two national majorities. In the latest Pew numbers, self-identifying Democrats out-number self-identifying Republicans 48-39 percent (counting leaners), which has created a “Blue Wall”, in the phrase of journalist Ron Brownstein, of 242 electoral votes that went for the Democratic nominee in six of the past six elections. The GOP has an overall popularity of minus 21 percentage points—37 percent favorable to 58 percent unfavorable. In 2014 and 2015, self-described conservatives fell from 37 to 33 percent and self-described liberals rose from 23 to 27 percent. For the first time in years, according to a new Democracy Corps poll, Democrats have opened up a six-point lead in the congressional vote.

Given these numbers, GOP party leaders are like the mayor in Jaws assuring everyone on the beach that there’s no shark ... until swimmers are dragged down by something with a big fin and teeth.

The core problem is not Donald Trump or Ted Cruz. It’s the talk radio hosts, the Fox News pundits, the party leaders and intellectuals who chose to be accelerants to an already inflamed reactionary base.

The values of modern liberalism, instead, have been vindicated by America’s peristaltic history of progress. While conservatives are inclined to go back to the 1950s—or even the 1850s—large majorities of Americans are not. They favor Social Security and Medicare, upholding Roe v. Wade, pay equity, a path to citizenship for undocumented immigrants, climate change initiatives, systemic campaign finance reform, marriage equality, diplomacy over war, higher taxes on the most wealthy, reversing Citizens United, universal gun background checks, universal voter registration, and expanded health care.

2. Conservative economic theories have been debunked 

Our extreme economic inequality is not inevitable, but results from intentional policies drafted by the American business elite for themselves. The old paradigm that giving more money to the rich helps the middle class, that higher deficits invariably mean higher interest rates, that spending on transfer payments depresses economic growth, have been exposed as little more than “intellectual malfeasance,” according to Paul Krugman. A new school of thought not only rejects the assumed trade-off between growth and equality—starting with Thomas Piketty’s Capital in the Twenty-First Century and more recently Robert Reich’s Saving Capitalism—but also establishes that less inequality produces more jobs and growth. The reason should be self-evident: Companies hire when consumer demand signals there are markets to be supplied, not when a few top executives are plied with more after-tax income.

Conservative economists and politicians who continue to cling to theories discredited by both Herbert Hoover and George W. Bush are playing a losing hand. While the GOP is seen as the party of the rich and big business—with its 2012 presidential nominee seemingly sent by central casting for this purpose—63 percent of all Americans, including a majority of Republicans, believe the economic system is rigged, according to the Pew Research Center. Then there’s this devastating comparison: according to my own research, growth and employment rates over the past 54 years—split between Democratic and Republican administrations—were 40 percent greater under the Democrats.

Given these numbers, it’s hard to imagine that the progressive party in 2016 can lose the economic argument to a party that exists to lower taxes on the rich and privatize Social Security. What have they done for working people? Anything?

3. Demographics 

What may have otherwise been a routine Census Bureau report from May 17, 2012, heralded the emergence of a different America: For the first time in the country’s history, whites were a minority of the roughly four million babies in the United States born in the period between July 2010 and July 2011.

While the white share of the presidential electorate in 1992 was nearly 90 percent, it will likely fall to less than 70 percent in 2016. In only a quarter-century, this fact alone has meant a net shift of about 12 points to Democrats since Bill Clinton won the White House by five points. Donald Trump’s harsh nativist slanders have certainly worsened a problem that already led to Obama beating Mitt Romney 73 to 27 percent among Latinos in 2012. Pat Buchanan’s nightmare that his country would be non-white will arrive about 2043. Then America will look—and vote—like California.

And as Alexis de Tocqueville wrote, “Each new generation is a new people.” Millennials, who now number 75.3 million, surpassing the Baby Boomers in 2015, are those new people. Surveys confirm they can’t see why marijuana is illegal, were years ahead of the Supreme Court on marriage equality, think undocumented immigrants should have a pathway to citizenship, and are just barely fonder of capitalism than socialism. Though skeptical of both parties, the bottom line is that they support the Democratic Party by much wider margins—51 to 35 percent—than other generations.

4. All the Single Ladies

If a young woman is ardently pro-life, she’ll likely vote for a Republican candidate. But every state and region of the country is rife with women who feel threatened by lawmakers who seem to value the health of microscopic potential humans over actual adult women. Nor do they much appreciate being called “murderers” when exercising the constitutional right to choose to end a pregnancy. Single women, with or without children, now number 55 million, and they’re growing by nearly a million a year.

Republicans even voted against the reauthorization of the Violence Against Women Act. They had not one, but two Senate candidates make such absurd comments about rape that it cost them the Senate in 2012—this in a year that the gender gap favored Obama by 11 percentage points. Either Trump, a blatant misogynist, or Cruz, forcing raped women to term, will only widen that chasm.

5. Losing our Religion

From 2007 to 2014, the number of Americans identifying as Christians dropped from 78 to 70 percent, and the number of those who were unaffiliated with religion—the “nones”—rose from 16 percent to nearly 23 percent. More Americans now identify with no religion, surpassing all other affiliations but evangelicals. The problem for Republicans is that while religion in America might be waning, the religious right that helped sweep Ronald Reagan into office still holds sway in Republican politics.

Democrats can either extend or slow the new progressive era depending on their reaction to Robert Frost’s classic observation that “a liberal is a man too broadminded to take his own side in a quarrel.”

Confronting a minority party spouting reactionary twistifications (Jefferson’s word), Democrats are oddly often on the defensive. But when Chicken Little Republicans confuse the hyperbolic and apocalyptic for the patriotic, progressives should vividly counterattack. Why are Republicans sacrificing American lives by allowing domestic terrorists to have access to guns, by calling for an end to Obamacare, by opposing a climate accord that could stop our coasts from being submerged?

Democrats must also expose the oxymoron that you can love your country yet hate its democratically elected government. It’s tragic and ironic that “trust in government”—which is often the instrument of liberal change—has steadily fallen since the illiberal calamities of Vietnam and Watergate. Reagan’s inaugural observation that “government is not the solution to our problem, government is the problem” is one of the most unpatriotic things any president has ever said. That formulation runs counter to two centuries of progress, as democratic government, however imperfectly, battled crime, pollution, racism, an economic depression, dangerous products, infant mortality, tobacco deaths, wildfires, floods, and extreme economic inequality.

If anti-government slurs go unanswered, they become accepted. That creates a “vicious cycle,” according to the trenchant Barney Frank, in which “people understandably are disappointed that government doesn’t work and then elect candidates who don’t want it to work.” The only way to break this fever is for Democrats to actually fight for government that solves problems—call it “democracy”—and remind voters that the issue isn’t the size of government but whose side it’s on.

In the face of these tidal trends, the GOP is now relying on undemocratic laws to buy, steal, or rig elections, whether it’s through Citizens United, voter ID laws, or gerrymandering. Or waving the bloody shirt of terrorism. But when these tactics fail to alter the results this fall, the party may have to admit it was done in by a combination of ideological suicide and demographic reality, and finally engage in an overdue reappraisal.

In the march of history, progressive patriots now clearly have the better case and the broader base.

Article Link to the New Republic:

How Ukraine's Military Will Defeat Russia's Rebels

By Samuel Bendett
Real Clear World
April 6, 2016

Tensions between Ukraine and Russia show no signs of abating, and Ukrainian President Petro Poroshenko was unsparing when he recently criticized Russia for destabilizing his country.

Speaking on March 25 at a government meeting marking the creation of the Ukrainian Security Service, or SBU, Poroshenko said that of the more than 200 terrorist attacks prevented by Ukraine in 2015, most were prepared in Russia. The president said such attacks were meant to to destabilize the political situation in the country and were planned for Kiev, Odessa, Nikolaev, Kherson, Zaporizhzhya, Kharkiv, and Lviv -- the nation's major cities and regions.

"The attacks ... are a key element of the hybrid war that is now being waged against our country," Poroshenko stressed. Ukrainian security services are successfully countering such attacks "by being effective in the information campaign and presenting to society sufficiently convincing evidence of the effectiveness of their work. The Ukrainian people today have something to thank the SBU for," Poroshenko summed up.

A Stronger Military

Meanwhile, two years of armed conflict with Russian-backed rebels in their country's east have begun to transform the Ukrainian military into a stronger and more professional armed force. looked at several new weapons in a recent report that cited improvements, upgrades, and acquisitions by Ukraine's armed forces.

When major hostilities broke out in 2014 in the Donbas, Ukraine's embattled eastern region, Ukrainian artillery and military units found themselves outmatched by rebels armed with the Russian-made Grad multiple launch rocket system, which, first developed by the Soviets decades ago, is the most widespread weapon of this kind in use throughout the world. Today, the answer to the army's needs is the "Verba," or Willow, a domestically-produced 122 mm multiple rocket launcher.

According to the report, the biggest differences in the new system, developed by the Kharkiv Morozov Design Bureau, are the automation of combat use; the introduction of modern navigation systems; and the chassis, changed to the domestically-produced KrAZ heavy trucks. The report notes that in earlier multiple launch rocket systems, the launcher was loaded manually, whereas Verba automates the process with special charging machines, increasing the re-armament rate sevenfold. The report adds that switching to Ukrainian KrAz truck beds not only ends system dependency on Russian-made Ural cars, but also significantly increases the vehicle's terrain navigation capabilities.

Additionally, notes that the rocket launcher can equip the domestically-developed Raptor armored truck, which is built on the KrAz chassis. According to Roman Romanov, General Director of Ukroboronprom, the nation's main defense conglomerate, "the time has come to leave the Soviet past behind and to start looking to the future. Willow is new technology that can be supplied to the military on an industrial scale."'s report also covered the most widespread weapon in the ongoing conflict -- thesemi-automatic descendants of the ubiquitous AK-47 Kalashnikov rifle. Ukraine's defense sector wants small-arms procurements to be domestic. The varied Kalashnikovs in Ukrainian storage since Soviet days fall far short of modern battlefield requirements. According to the report, on the front lines fighters are forced to improvise upgrades to their Kalashnikovs, mounting modern sights, anatomical handles, and other improvements, making the weapon more convenient and saving precious seconds of combat that can prove absolutely crucial.

Creation of a new weapon was undertaken by the experts from InterProInvest, a design enterprise that decided to modify the existing Kalashnikov. They ended up creating a new type of small arm, leaving only the barrel and the receiver from the original weapon. The main feature of what they dubbed the Maluk semi-automatic gun is the use of a forward-looking bullpup layout, which significantly reduces the size of the weapon and has a positive effect on its balancing, allowing the fighter to maintain accurate automatic fire. This design is already incorporated into a number of rifles made in the United Kingdom, France, Israel, and Austria. The Maluk has already passed military tests, grading out with the highest scores on most testing parameters. The new weapon is now recommended for adoption by the Ukrainian special forces, and its serial production has been taken on by Ukroboronprom.

Ultimately, it is not just the weapons, old or new, that will determine the success of Ukraine's military in its struggles against Russian-backed rebels. That success will depend on raising professional standards for all fighting units, and on incorporating new tactics, techniques, and procedures that would allow for the waging of a modern warfare, where older forms of fighting coexist with state-of-the-art communications, observation, and command and control technologies.

Article Link to Real Clear World:

Mega Deals Morph Into Mega Problems For Wall Street

By Carl O'Donnell and Pamela Barbaglia 
April 7, 2016

If 2015 was a dream year for Wall Street's top dealmakers, 2016 is starting to take a nightmarish turn.

Some of the mega transactions that had champagne corks popping in boardrooms are running into antitrust problems and, in the case of pharmaceutical firm Pfizer Inc's (PFE.N) $160 billion takeover of rival Allergan PLC (AGN.N), political opposition to a deal that envisaged the biggest drug company in the United States moving to Ireland to lower its taxes.

The U.S. Treasury unveiled new rules this week that, while they did not name Pfizer and Allergan, had provisions that targeted a specific feature of their agreement and prompted both parties to walk away from what would have been the second-largest deal of all time.

The move by the Obama administration to suddenly change the rules has sent a chilling message to dealmakers and comes on top of a number of legal challenges to big transactions such as Halliburton Co's (HAL.N) takeover of rival oil services company Baker Hughes Inc (BHI.N) on antitrust grounds.

The political uncertainty and antitrust concerns mean that firms will think twice about future tie-ups that consolidate industries and move tax dollars offshore.

"As uncertainty increases on multiple fronts, companies are markedly more cautious and the number of transformational deals worth $10 billion or more has significantly dropped this quarter compared to last year," said Luigi Rizzo, head of mergers and acquisitions (M&A) for Europe, the Middle East and Africa at Bank of America Merrill Lynch.

The new U.S. rules do not directly affect most inversion deals, in which an American company buys a foreign counterpart and then moves abroad to lower its tax bill, but they have sent a message to company bosses about the risks of attempting to move their tax addresses overseas.

Intercontinental Exchange Inc (ICE.N), the U.S. exchange considering a bid for the London Stock Exchange Group PLC (LSE.L), has ruled out structuring any possible deal for the LSE as an inversion, despite it being possible to do so, according to people familiar with the internal deliberations, who declined to be identified.

Intercontinental Exchange declined to comment.

Tax inversions have been a political hot button issue in Washington for years.

The rules unveiled this week were the Obama administration's third effort to stop U.S. companies renouncing their American citizenship but they are only a temporary stopgap.

Formal legislation to overhaul U.S. tax rules would be needed to bring a permanent end to the practice.

"We have succeeded in making it significantly harder for companies to strike inversion deals and redomicile overseas," said U.S. congressman Peter Welch. "But we still need action in Congress."

With a U.S. presidential campaign looming later this year there is much uncertainty about what shape such legislation would take, making deals all the more difficult to strike.

Unique Challenges

Last year was a record for M&A and a bumper year for mega matches. Out of the $4.6 trillion in deals inked, the number of individual transactions that exceeded $30 billion in value was 18 compared with seven deals worth more than $30 billion in 2014, Thomson Reuters data showed.

But the consequence of greater consolidation is increased scrutiny by antitrust officials. That was exemplified on Wednesday by the U.S. government filing a lawsuit to stop Halliburton from buying Baker Hughes, arguing the combination of the No. 2 and No. 3 oil services companies would lead to higher prices in the sector.

The Justice Department and Federal Trade Commission (FTC), which enforce antitrust law, have filed lawsuits to stop an unusually high number of deals in the past 18 months. FTC officials are in court this week to block a merger between Staples Inc (SPLS.O) and Office Depot Inc (ODP.O).

"It isn't just the number of proposed deals that makes this a unique moment in antitrust enforcement; it's their size and their complexity," U.S. Attorney General Loretta Lynch said in a speech on Wednesday.

"This represents a remarkable shift toward consolidation and it presents unique challenges to federal enforcers in our work to maintain markets that serve not just top executives and majority shareholders, but every American."

In Europe, meanwhile, talks between Orange SA (ORAN.PA) and Bouygues SA (BOUY.PA) to create a dominant French telecoms operator collapsed last week, amid competition concerns and a stand-off between Martin Bouygues and French Economy Minister Emmanuel Macron about the clout the billionaire would have gained in the former state monopoly, according to people familiar with the matter.

For bankers, scuttled deals cost money.

Investment banks on the Pfizer and Allergan deal, including Goldman Sachs, JP Morgan, Centerview and Moelis, lost more than $200 million in fees when the companies walked, showed data from consultancy Freeman & Co.

Faced with greater hurdles to get deals through, some investment bankers are rethinking how they want to structure their payoffs, including trying to get more cash upfront rather than a big check after a deal closes, said a person familiar with the matter.

Article Link to Reuters:

The Enormous Fraud of the Iran Deal Is Catching Up with Obama

By Fred Fleitz 
The National Review
April 7, 2016

After a recent surge in threatening behavior by Iran and reports that it may soon be given access to the U.S. financial system, the House Intelligence Committee opened an investigation into whether Obama officials misled Congress about the July 2015 nuclear deal with Iran (the Joint Comprehensive plan of Action, or JCPOA). The “historic” deal, they said, would help bring Iran into the “community of nations” and lead to improved relations between Iran and the United States.

While this congressional investigation is a welcome development, it is too little and too late to reverse the Obama administration’s policy of offering any and all concessions — including over $100 billion in sanctions relief — to get a nuclear agreement with Iran. Most members of Congress thought the JCPOA was a bad deal; the majority of them voted against it last fall. But many now realize that this agreement is in fact an enormous fraud that is undermining Middle East and international security.

As I have explained here on National Review Online, in “Obama’s Iran Deal Is the Opposite of What He Promised the American People,” the negotiations that produced the JCPOA were an endless series of fallacies and deceptions. To get Iran to the negotiating table, the Obama administration foolishly agreed that the mullahs could continue to enrich uranium and develop advanced enrichment centrifuges. This means that the timeline for an Iranian nuclear weapon will shorten when the JCPOA is in effect, because Iran will all the while be improving its capability to produce nuclear fuel.

Obama officials made several misleading statements about the JCPOA last July that have come back to haunt them. These will be the focus of the House Intelligence Committee’s investigation.

One of the most controversial of these statements was President Obama’s and Secretary Kerry’s assertion that under this agreement, Iran agreed to comply with U.N. Security Council resolutions barring missile tests for eight years. But there is no language barring missile tests in the JCPOA; this provision is buried in a U.N. Security Council resolution (Resolution 2231) that merely endorsed the JCPOA.

Obama officials later clarified that although the JCPOA does not bar Iranian missile tests, existing U.N. and U.S. missile sanctions would remain in place. But this isn’t exactly true, either. After the International Atomic Energy Agency certified that Iran had taken certain steps to roll back its nuclear program (a certification the IAEA made in January this year), Resolution 2231 lifted previous Security Council missile sanctions and replaced them with much weaker language “calling” on Iran not to test missiles. According to diplomats cited by Reuters, this new formulation is not legally binding and cannot be enforced under Chapter Seven of the U.N. Charter, which deals with sanctions and authorization of military force. The Obama administration made no mention of this in its briefings to Congress on the JCPOA.

For its part, Iran says it never agreed to missile restrictions in the JCPOA and claims its missile tests do not violate Security Council resolutions because they are not designed to carry nuclear warheads. This is absurd. Iran’s missile program is widely believed to be a delivery system for nuclear warheads. If Iran were telling the truth, it would be the only nation in history without a nuclear-weapons program that nonetheless developed missiles with a range of 2,000 kilometers or more. Iran is not building long-range missiles to carry warheads full of dynamite or to fire monkeys into space.

Iran tested ballistic missiles last fall and last month. Written on the sides of some missiles recently launched were the words “Israel must be wiped off the earth.” Last week, Iran’s supreme leader, Ayatollah Ali Khamenei, responded to criticism of the missile tests by saying that Iran’s future is a world of missiles, not negotiations.

Congress is worried that the Obama administration, in an effort to make sure Obama’s “legacy” nuclear deal is not jeopardized, will refuse to take any significant action against Iran for its missile tests. Tellingly, the administration has studiously avoided saying that the missiles Tehran tested were capable of delivering nuclear weapons and that they violated any Security Council resolution. A joint letter sent last week to the U.N. Secretary General from the United States, the United Kingdom, and France said that Iran’s missiles tests were “inconsistent with” and “in defiance of” Resolution 2231 but did not refer to them as a violation.

Congress knows there was at least one secret side deal to the JCPOA that was not briefed to Congress as required by the Corker-Cardin Act. One side deal allowed Iran to inspect itself for evidence of past nuclear-weapons-related work; it was discovered when Senator Tom Cotton (R., Ark.) and Representative Mike Pompeo (R., Kan.) questioned IAEA officials about the JCPOA during a meeting in Vienna last July. Another secret side deal appears to require the IAEA to dumb down its reports on Iran’s nuclear program and its compliance with the JCPOA.

Congressional investigators are also troubled that contrary to administration claims that the JCPOA has the strongest verification provisions in history, the IAEA is unable to visit military facilities because the Iranian parliament approved an alternative version of the deal last October that put these facilities off-limits. The Obama administration has not publicly responded to the Iranian parliament’s action.

One of Congress’s newest concerns about the JCPOA stems from reports that the Obama administration is considering giving Iran at least partial access to the U.S. financial system. As Ilan Berman wrote last week on NRO, the administration may be about to violate promises it made to Congress last summer that it would not give Iran access to U.S. financial institutions or allow it to engage in off-shore dollar transactions with U.S. banks. If so, this would represent another concession to Iran and a sign that Congress cannot trust anything Obama officials have said about the JCPOA.

The House Intelligence Committee will also review a growing list of other belligerent actions by Iran contradicting the Obama administration’s claim that the JCPOA will help bring Iran into the community of nations. On March 29, for instance, the U.S. Navy intercepted an Iranian ship in the Persian Gulf that was transporting 1,500 Kalashnikov assault rifles, 200 rocket-propelled grenade launchers and 21 .50-caliber machine guns that were probably en route to Houthi rebels in Yemen. The Washington Post reported Monday that there have been at least two similar seizures over the last two months.

In addition, since the nuclear deal was announced, Iran has increased its support for Syrian president Bashar al-Assad’s regime, giving financial support and supplying Iranian and Hezbollah fighters. And last week, the U.S. indicted five Iranians for cyber attacks against U.S. banks, NASDAQ, and a New York dam.

Perhaps the most stunning indictment of Iran’s belligerent behavior since the JCPOA was announced was an unprecedented April 3, 2016, Wall Street Journal op-ed by United Arab Emirates Ambassador to the United States Yousef Al-Otaiba, in which he said:

"Sadly, behind all the talk of change, the Iran we have long known — hostile, expansionist, violent — is alive and well, and as dangerous as ever.

Iran’s destabilizing behavior in the region must stop. Until it does, our hope for a new Iran should not cloud the reality that the old Iran is very much still with us — as dangerous and as disruptive as ever."

President Obama said at last week’s nuclear-security summit that Iran is following the “letter” but not the “spirit” of the JCPOA by complying with the terms of the deal but testing missiles, continuing to call for the destruction of Israel, and supporting terrorism. The House Intelligence Committee investigation indicates that Congress rejects this ludicrous statement and wants a full accounting of what the White House really agreed to in the JCPOA and whether the Obama administration deliberately misled lawmakers.

The House Intelligence Committee’s investigation will not kill the JCPOA or lead to new sanctions against Iran. Its report might condemn Obama officials for misleading Congress, but these officials are certain to ignore the report. Nevertheless, this is an important investigation: If it exposes the JCPOA as a fraudulent agreement that has only exacerbated Iran’s destabilizing behavior, it will pave the way for a Republican president (if one is elected in November) to throw out the JCPOA entirely and begin the process of forging a better agreement with our European allies. The committee’s investigation also may give Americans a better understanding of what kind of legacy President Obama really earned from the JCPOA and his nuclear diplomacy with Iran.

Article Link to the National Review:

The Panama Papers Actually Reflect Pretty Well on Capitalism

By Megan McArdle
The Bloomberg View
April 7, 2016

The leak of confidential documents from Panama law firm Mossack Fonseca has had many interesting results. We’ve seen the biggest dump of confidential documents in history. Prominent international figures have been revealed as the holders, or near-holders, of shadowy offshore accounts. The prime minister of Iceland has resigned over allegations of impropriety.

Less interesting is the predictable result: a flurry of people rushing to blame “global capitalism.”

“The documents, which show the extraordinary lengths the global elite have gone to in order to shield their wealth from taxation, are at once big news and old hat,” says my friend Freddie deBoer in Foreign Policy. “They provide the nasty details of the kind of business most savvy people assume goes on all the time. You and I pay our taxes; the wealthy find ways to avoid them. For some, reading about the Panama Papers will feel like being told by your parents that Santa isn’t real: merely the final confirmation of a suspicion that you have harbored for a very long time. The game is rigged, and unless you are part of the global one percent, it isn’t rigged to help you.”

A libertarian of my acquaintance wrote to inquire whether this is going to sour people on global capitalism.

It shouldn’t. What we’ve seen from the papers so far is not so much an indictment of global capitalism as an indictment of countries that have weak institutions and a lot of corruption. And for all the outrage in the United States, so far the message for us is pretty reassuring: We aren’t one of those countries.

Consider the big names that have shown up so far on the list. With the notable exception of Iceland, these are not countries I would describe as “capitalist”: Russia, Pakistan, Iraq, Ukraine, Egypt. They’re countries where kleptocratic government officials amass money not through commerce, but through quasi-legal extortion, or siphoning off the till. This is an activity that has gone on long before capitalism, and probably before there was money. Presenting this as an indictment of global capitalism is like presenting Romeo and Juliet as an after school special on the dangers of playing with knives.

The only American I’ve so far seen identified was a Chicago-area financial coach I’ve never heard of. Moreover, even the folks who may be putting money offshore won’t necessarily be doing so to avoid taxes or hide nefarious activity. Hedge funds, for example, are often incorporated in the Caymans for boring reasons having to do with quirks in the U.S. tax code (which would tax foreign investors on certain types of transactions) rather than to hide income or let Americans avoid their legally owed tax liabilities.

For that matter, even foreigners who are trying to hide their names might not be doing so for entirely unsavory reasons. People living under unstable regimes may have very good reasons to want to move assets outside the country; Jews in 1930s Germany did not put money in Swiss accounts because they were trying to lower their tax bill, but because they were trying to ensure that they would have enough set aside to flee the genocidal maniac ruling their country.

Trying to lump all these behaviors together under the rubric of “global capitalism” distorts the term to uselessness. While the economy is certainly more global than it used to be, most capitalism is local. There is, of course, a fair amount of interaction between economic elites. Nonetheless, most of those people still live under local law and local government, and make their money in a particular local economy. When some of those people break their local laws, this is not some sort of collective enterprise that indicts everyone, everywhere.

But there’s a common tendency, when talking about “global capitalism” to forget that borders and governments still exist. A few weeks back, I was the designated capitalist punching bag on a panel well attended by socialists. A woman in global development stood up and delivered a heartfelt rebuttal to my arguments on the grounds that places like Saudi Arabia had immense and wild excess, while their near neighbors had desperate poverty. This, she said, was something that we needed to fix.

That discussion rapidly went south when I asked her how many troops she wished to commit to this project. Saudi Arabia is its own country. Even if the rest of the world went socialist, we’d probably have to give them something in exchange for their oil, which would mean that there would probably be wealth disparities between them and their nearest neighbors.

“We” are not going to rectify this situation without some pretty old-school empire building, in which we invade and seize the lands of folks who happened to end up sitting atop some valuable natural resources, and then reassign those resources to uses that “we” deem more appropriate. By “we,” of course, I mean educated affluent white people in Western countries.

Projecting our concerns onto the governance problems of Pakistan, or pretending that the Russian oligarchs are part of some club that jointly rules the world with the Walton family, is a convenient way to give our local complaints extra oomph by projecting them onto the world stage. But while it may be emotionally satisfying, it’s worse than useless, because it suggests terrible policy solutions to those complaints, or no solution at all.

What we seem to have learned from the documents so far is that this particular sort of corruption isn’t a big local problem for the U.S. We do of course have some law breakers, because there is no such thing as a law that won’t be broken. But it seems to be a minor, furtive thing, rather than the mass habit you see in parts of the developing world. The IRS is very good at finding offshore tax cheats, and getting better all the time. I am confident that if U.S. scofflaws should be revealed by these documents, the tax authorities will waste no time ensuring that they get what is coming to them.

Other governments may fail to enforce their laws, perhaps because the named figures sort of are the local government. That is a big problem. But that doesn’t mean that it’s our problem. Global capitalism didn’t create the issues plaguing weak states. And global anti-capitalism won’t fix them, either.

Article Link to the Bloomberg View:

Are Robots Job Creators?

Or are they the reason for the economic decline of working-class Americans?

By Moshe Y. Vardi
The New Republic
April 6, 2016

If you put water on the stove and heat it up, it will at first just get hotter and hotter. You may then conclude that heating water results only in hotter water. But at some point everything changes—the water starts to boil, turning from hot liquid into steam. Physicists call this a “phase transition.”

Automation, driven by technological progress, has been increasing inexorably for the past several decades. Two schools of economic thinking have for many years been engaged in a debate about the potential effects of automation on jobs, employment and human activity: Will new technology spawn mass unemployment, as the robots take jobs away from humans? Or will the jobs robots take over release or unveil—or even create—demand for new human jobs?

The debate has flared up again recently because of technological achievements such as deep learning, which recently enabled a Google software program called AlphaGo to beat Go world champion Lee Sedol, a task considered even harder than beating the world’s chess champions.

Ultimately the question boils down to this: are today’s modern technological innovations like those of the past, which made obsolete the job of buggy maker, but created the job of automobile manufacturer? Or is there something about today that is markedly different?

Malcolm Gladwell’s 2006 book The Tipping Point highlighted what he called “that magic moment when an idea, trend, or social behavior crosses a threshold, tips, and spreads like wildfire.” Can we really be confident that we are not approaching a tipping point, a phase transition—that we are not mistaking the trend of technology both destroying and creating jobs for a law that it will always continue this way?

Old worries about new tech

This is not a new concern. Dating back at least as far as the Luddites of early 19th-century Britain, new technologies cause fear about the inevitable changes they bring.

It may seem easy to dismiss today’s concerns as unfounded in reality. But economists Jeffrey Sachs of Columbia University and Laurence Kotlikoff of Boston University argue, “What if machines are getting so smart, thanks to their microprocessor brains, that they no longer need unskilled labor to operate?” After all, they write:

Smart machines now collect our highway tolls, check us out at stores, take our blood pressure, massage our backs, give us directions, answer our phones, print our documents, transmit our messages, rock our babies, read our books, turn on our lights, shine our shoes, guard our homes, fly our planes, write our wills, teach our children, kill our enemies, and the list goes on.

Looking at the economic data

There is considerable evidence that this concern may be justified. Eric Brynjolfsson and Andrew McAfee of MIT recently wrote:

For several decades after World War II the economic statistics we care most about all rose together here in America as if they were tightly coupled. GDP grew, and so did productivity — our ability to get more output from each worker. At the same time, we created millions of jobs, and many of these were the kinds of jobs that allowed the average American worker, who didn’t (and still doesn’t) have a college degree, to enjoy a high and rising standard of living. But … productivity growth and employment growth started to become decoupled from each other.

As the decoupling data show, the U.S. economy has been performing quite poorly for the bottom 90 percent of Americans for the past 40 years. Technology is driving productivity improvements, which grow the economy. But the rising tide is not lifting all boats, and most people are not seeing any benefit from this growth. While the U.S. economy is still creating jobs, it is not creating enough of them. The labor force participation rate, which measures the active portion of the labor force, has been dropping since the late 1990s.

While manufacturing output is at an all-time high, manufacturing employment is today lower than it was in the later 1940s. Wages for private nonsupervisory employees have stagnated since the late 1960s, and the wages-to-GDP ratio has been declining since 1970. Long-term unemployment is trending upwards, and inequality has become a global discussion topic, following the publication of Thomas Piketty’s 2014 book, Capital in the Twenty-First Century.

A widening danger?

Most shockingly, economists Angus Deaton, winner of the 2015 Nobel Memorial Prize in Economic Science, and Anne Case found that mortality for white middle-age Americans has been increasing over the past 25 years, due to an epidemic of suicides and afflictions stemming from substance abuse.

Is automation, driven by progress in technology, in general, and artificial intelligence and robotics, in particular, the main cause for the economic decline of working Americans?

In economics, it is easier to agree on the data than to agree on causality. Many other factors can be in play, such as globalization, deregulation, decline of unions and the like. Yet in a 2014 poll of leading academic economists conducted by the Chicago Initiative on Global Markets, regarding the impact of technology on employment and earnings, 43 percent of those polled agreed with the statement that “information technology and automation are a central reason why median wages have been stagnant in the U.S. over the decade, despite rising productivity,” while only 28 percent disagreed. Similarly, a 2015 study by the International Monetary Fund concluded that technological progress is a major factor in the increase of inequality over the past decades.

The bottom line is that while automation is eliminating many jobs in the economy that were once done by people, there is no sign that the introduction of technologies in recent years is creating an equal number of well-paying jobs to compensate for those losses. A 2014 Oxford study found that the number of U.S. workers shifting into new industries has been strikingly small: in 2010, only 0.5 percent of the labor force was employed in industries that did not exist in 2000.

The discussion about humans, machines and work tends to be a discussion about some undetermined point in the far future. But it is time to face reality. The future is now.

Article Link to the New Republic:

Are Robots Job Creators?

Donald Trump Ignores Europe’s Far-Right

Euroskeptic politicians flew to Washington to meet the billionaire.

Politico EU
April 7, 2016

PARIS — Europe’s far-right politicians are desperate to make friends with Donald Trump, but the U.S. Republican candidate is snubbing them — at least for now.

As Trump continues to dominate headlines — in the U.S. and in Europe — with provocative statements that women who seek abortions should be subject to “some form of punishment” or that NATO is “obsolete,” far-right and Euroskeptic groups from France to Italy to the Netherlands are trying to ride the billionaire’s momentum to make gains at home.

In early March, a group of MEPs linked to French far-right leader Marine Le Pen traveled to Washington, where they hoped to meet Trump at the Conservative Political Action Conference, according to several sources with direct knowledge of the trip.

Unfortunately for the delegation, whose members belong to the Euroskeptic Europe of Nations and Freedom group, Trump decided at the last minute not to attend the conference. Instead, Le Pen’s allies (including parliamentary adviser Ludovic De Danne, French MEP Bernard Monot, Austrian MEP Georg Mayer, Belgian MEP Gerolf Annemans, and former UKIP member Janice Atkinson) met with Ben Carson, who has endorsed Trump, plus a group of Trump youth supporters. They also saw U.S. House Speaker Paul Ryan, whom many top Republicans are talking up as a possible fallback nominee at a brokered Republican convention in July.

“I spoke to Ludovic De Danne,” said a U.S.-based source who described himself as an adviser to the Trump campaign and manager of his social media pages, but asked not to be named. “He called me because he knows I work with Trump. He said: ‘While we are there it would be nice if we could meet with some senior Republicans, including Donald Trump.'”

“One of the reasons they came was to meet him,” the adviser said.

The source added that while Trump was “super concerned” with the situation in Europe, he did not want to meet foreign politicians who would do little to advance his domestic campaign.

“I think the moment he has the nomination he will be a lot more free to reach out,” the source added.

Trump spokeswoman Hope Hicks did not respond to requests for comment.

De Danne told POLITICO that the MEPs had paid for the trip out of a parliamentary budget for fact-finding missions.

At the Conservative Political Action Conference, they met with two supporters of Trump’s rival for the GOP nomination, Ted Cruz: Congressmen Robert Pittenger and Steve King.

“We were also meant to meet Trump, had he been free. But the goal of the trip was not to express support for the Trump campaign,” De Danne said.

While De Danne said that Marine Le Pen was equally interested in Democratic presidential hopeful Bernie Sanders and Trump as “anti-establishment” candidates, a National Front official in the U.S. said that a meeting between her and Trump was possible in coming months.

“Rest assured, Marine Le Pen has very good contacts on a high level with his [Trump’s] campaign,” said Denis Franceskin, the Front’s representative in the United States. “During the [French] presidential campaign this will become clearer.”

‘Go, Donald, go!!’

The National Front’s position toward Trump is evolving quickly. While Le Pen bristled at being compared to the Republican candidate in December, saying that she was “not American” and that she defended all French people “regardless of their religion,” her party’s tune changed as Trump racked up primary wins.

In February, Vice President Florian Philippot praised Trump for “questioning the establishment.” Another Front executive, Louis Aliot, told Le Monde newspaper that he agreed with Trump’s calls for a “more moderate United States in terms of foreign policy.”

And Robert Menard, a far-right mayor who is close to the National Front, said of Trump: “His views and his sensibility are very close to that of the [French] patriotic right.”

Outside of France, politicians are less bashful about their admiration for the real estate mogul. Matteo Salvini, head of Italy’s Euroskeptic Northern League, posted in February on his Facebook page: “Go, Donald, go!!” reaping some 2,000 comments.

Geert Wilders, head of the Freedom Party in the Netherlands, showed similar enthusiasm on Twitter, writing: “I hope Donald Trump will be the next U.S. President. Good for America, Good for Europe. We need brave leaders.”

A representative for Wilders’ party did not respond to a request for comment.

A Salvini representative said a meeting with Trump was in the cards.

“We are working on a meeting between Salvini and Trump, I’ll make no secret of it,” spokeswoman Iva Garibaldi told POLITICO. “I can’t say when with certainty, but soon. I am positive it will happen.”

Marco Dugnani, an Italian MEP from the Northern League, was less sure but confirmed the “work was in progress” to make a meeting with Trump happen. The Northern League is hoping to get a photo opportunity with the Republican candidate ahead of local elections in Italy, which take place between May and June.

Salvini shares Trump’s admiration for Russian President Vladimir Putin. In October 2014, Salvini flew to Moscow for a 20-minute sitdown with Putin during which they talked Europe, immigration and Italy-Russia connections. A photo of the meeting posted by Salvini on his Facebook page received 27,000 likes.

But so far, Trump seems not to have noticed.

Article Link to Politico EU:

America’s Secret Boots on the Ground

By Max Boot
April 7, 2016

Ever since President Obama sent U.S. forces back to Iraq in August, 2014 to fight ISIS — a terrorist group that grew up in the vacuum that he left by pulling U.S. troops out at the end of 2011 — the president has repeatedly promised that U.S. troops would not go into combat. By last fall, he had uttered some variation of the phrase “no boots on the ground” at least sixteen times. On September 10, 2014, for example, he said: “I want the American people to understand how this effort will be different from the wars in Iraq and Afghanistan. It will not involve American combat troops fighting on foreign soil.”

Perhaps the president would like to — as they say in Congress — go back to “revise and extend” his remarks? Because it sure looks by any reasonable standard that the U.S. has “boots on the ground” and, indeed, in combat.

Last fall, the Defense Department moved a Joint Special Operations Task Force to Iraq to begin targeting ISIS leaders. Last month, the commandos captured a man described as head of ISIS’s chemical weapons program. It goes without saying that when the “operators” — whether Delta Force or SEAL Team Six or some other unit — go onto the “objective,” they are in combat: they are likely to be inflicting and risking casualties.

More recently, a U.S. Marine Corps staff sergeant was killed in Iraq. Only his death prompted the Pentagon to announce that the Marine Corps had now established a fire base in northern Iraq, now known as the Kara Soar Counter Fire Complex. The stated rationale for this fire base is to provide artillery fire in support of U.S. advisers. In reality, it is providing artillery fire in support of an Iraqi army advance on Mosul. The Marine artillery can provide all-weather targeting even when aircraft are grounded. Providing fire support is definitely a combat mission, and the Marines are definitely at risk of retaliatory action by ISIS.

This is only the combat action that we know about, of course. The odds are that there are more Special Operations Forces and CIA paramilitaries on the front-lines, with the military personnel possibly “sheep dipped” (i.e., temporarily transferred) into the CIA so that they can operate under the spy agency’s secret authorities.

Just how many U.S. troops are in Iraq? The official story is that the number is limited to 3,870. But the Washington Post reported that the real figure is around 5,000. Apparently the U.S. command has played some cute arithmetic with “temporary” and “permanent” deployments to limit the number that is publicly divulged.

In short, there is a substantial and growing U.S. combat commitment on the ground in Iraq, to say nothing of all the aircraft flying an average of 14 strike sorties a day. This is not President Bush’s deployment of more than 100,000 troops to Iraq, but it’s a lot more than Obama initially promised.

Apparently President Obama has quietly decided to ramp up the U.S. commitment against ISIS by relaxing the rules limiting how many U.S. personnel can be in Iraq and what they can do. That’s a good thing. He should show more flexibility by sending even more troops to accelerate the anti-ISIS campaign. But it’s unfortunate that he is doing so in secret because there is no good reason for secrecy unless he is simply afraid of the political blowback at home.

If Obama were to come clean about what he’s doing, he would have to admit that the Iraq War didn’t end when he pulled U.S. troops out in 2011. In fact, that decision restarted the war and, as critics of the pullout warned, led U.S. forces back into combat in Iraq under less advantageous circumstances. The president would have to admit, moreover, that all of his previous assurances about U.S. troops not engaging in ground combat are — in in the Nixonian formulation — “inoperative.” And that is something very hard to imagine the cocksure president doing.

But Obama should swallow his pride and level with the American people. Most Americans would, I think, support this war effort, but it needs to be explained to them rather than hidden from view like an ugly stain on the president’s antiwar record.

Article Link to Commentary:

‘Panama Papers’ bigwigs should’ve had Apple hide their riches

By Seth Lipsky
The New York Post
April 6, 2016

Maybe all the rich people and government big shots who were hiding their business affairs in Panama should’ve kept their secret records on an iPhone. Then maybe The New York Times would’ve defended them.

It certainly defended Apple when the iPhone maker refused to help the FBI break into the iPhone that had been used by the Islamist terrorists who slew 14 innocent people in San Bernardino. It even praised Apple for refusing to help.

Yet it’s joining in the feeding frenzy over what are coming to be known as the Panama Papers. They involve millions of private documents that were filched from a Panama law firm and leaked to the press.

The Times is now calling for major investigations into money laundering and tax evasion. It’s alarmed at the prospect of “vast wealth hidden by politicians and powerful figures across the globe.”

Already the prime minister of Iceland has quit. Apparently the leaked documents suggest he and his wife had an interest in a Virgin Islands-based company (Iceland’s own banking system collapsed in 2008).

Friends of Vladimir Putin are reportedly mentioned in the Panama Papers. So, apparently, are members of the Communist Chinese politburo. Soccer federation FIFA’s new chief, too.

Who knows what might be next? Investigations — or calls for them — are erupting in France, China, Germany, Austria, South Korea and England, among other places. The North Koreans could be sweating.

No charges have yet been filed against anyone as a result of these leaks. Yet the Financial Times is already issuing a column calling for the European Union to impose US-style “big stick” tax-withholding on certain payments.

Odd, though. Where were most of the do-gooders (the FT excepted) when the FBI was frantically trying to gain access to the infamous iPhone? It might be able to tell us to whom the killers had been talking and whether they were planning more attacks.

Yet Apple head Tim Cook wouldn’t bestir himself. He dug in even against a court order that Apple help. Some of the best legal minds insisted the government lacks constitutional authority to compel Apple to comply.

Maybe they’re right. But the Constitution doesn’t forbid Apple from springing-to and pitching in voluntarily. That’s what any American hero — Audie Murphy, one can imagine, or Sergeant York — would have done.

Not Apple. It fretted about devaluing its brand, and got cheered by all the right people.

The Gray Lady editorialized that the FBI’s eagerness to find out what was on the phone was “understandable,” but praised Apple for refusing to help. How sweet it was that the FBI managed to crack the secrecy of the terrorists’ iPhone anyhow.

I carry no brief for those using offshore companies and bank accounts to skirt tax laws. I’m all for using the duly constituted courts to go after them when laws are broken. But for years I’ve argued that tax havens can serve a benign purpose.

They put pressure on law-abiding governments to keep taxation within non-abusive limits, something that is increasingly rare in the age of socialism. I’ve covered this for decades, in Europe and Asia.

So why are the do-gooders who are so protective of iPhone data when it belongs — or relates — to terrorists nonetheless so delighted about the disclosure of data when the data belong to the rich? Or relates to their property?

Property rights, it seems, just don’t interest the do-gooders. They don’t believe individuals have a right to property or to due process before their stuff is taken. They want to outlaw all cash so it’s easy to levy taxes.

They don’t give a fig about our battlefield military secrets. The Times even went into a journalistic partnership with WikiLeaks. It just doesn’t want to look at the enemy’s secrets if they’re on an iPhone in San Bernardino.

Maybe the Panama Papers will prompt someone to set up an entire bank on a cellphone (a whole bank in your back pocket). G-men wanting to look at your offshore bank account will have to pry your iPhone out of your cold dead hand.

Thursday, April 7, Morning Global Market Roundup: Dollar sinks again after Fed remains cautious

London | By Patrick Graham

April 7, 2016

The dollar's fall against the yen deepened on Thursday after minutes of the U.S. Federal Reserve's most recent policy meeting offered little optimism over the state of global growth and the prospect of a rise in interest rates in June.

The U.S. currency .DXY, hammered since late March by the latest retreat in expectations for any further rises in U.S. rates, fell 1 percent to less than 109 yen, its weakest in 17 months. JPY=

With oil up 1 percent and the prospect of any tightening of U.S. monetary policy receding, European stock markets scraped together some initial gains, but the mood remained fragile.

Chinese shares fell more than 1 percent .SSEC and the broad Eurofirst index of Europe's leading companies .FTEU3 is in its fourth consecutive week of falls, down almost 10 percent since the start of January.

A flood of money into the traditional safety of the yen has seen the Japanese currency gain 9.5 percent in the same period.

"We are in a broad-based soft dollar environment, and given the yen is cheap in relation to its long-term fundamentals, it is not surprising it is outperforming," said Petr Krpata, FX strategist at ING.

"The rise is leading to speculation of intervention by the Japanese. But we think the bar for that is pretty high."

The euro has also been gaining steadily. But its gains - at $1.1450 overnight it was up more than 8 percent since December - undermine one of the main pillars of the European Central Bank's push to refloat the economy, raising the question of whether policymakers will respond aggressively.

Four of the bank's governing council are due to speak at conferences on Thursday, with President Mario Draghi due to give a presentation to Portuguese leaders. The minutes of the bank's March meeting are also due at 1130 GMT.

"The main focus will be on speeches," analysts from French bank Credit Agricole said in a morning note.

"We see limited scope of the ECB sounding less dovish. This is especially true as Eurozone growth momentum remains broadly unchanged while medium-term inflation expectations stay close to historic lows."

By 8:14 GMT, the single currency had retreated and was flat on the day at $1.1390.

The profit-eroding rise in the yen kept the Nikkei .N225 to a slight 0.2 percent gain despite a big bounce in the energy and healthcare sectors. The MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was also in positive territory - eking out a 0.5 percent rise on the day.

A senior Japanese finance ministry official warned the move in the yen had been one-sided and that the ministry would take steps in the market as needed.

Bank of Japan Governor Haruhiko Kuroda also repeated that the central bank would ease policy further if needed, but the market seems to doubt he can do much more.

The drop in the dollar drove a 5 percent jump in oil prices overnight as U.S. inventories unexpectedly fell and investors gauged the possibility of an output freeze.

By 0853 GMT, Brent crude futures LCOc1 were up 18 cents at $40.02. U.S. crude CLc1 rose 8 cents to $37.83. [O/R]

Article Link to Reuters:

How Bad Is China's Debt Problem, Really?

By Christopher Balding
The Bloomberg View
April 7, 2016

For months now, China's regulators have been warning about the dangers of rapidly expanding credit and the need to deleverage. With new plans to clean up bad loans at the country's banks, you might conclude that the government is getting serious about the risks it faces.

But there's reason to doubt the effectiveness of China's approach. In fact, it's running a serious risk of making its debt problems worse.

After the financial crisis, China embarked on a credit binge of historical proportions. In 2009, new loans grew by 95 percent. The government offered cheap credit to build apartments for urban migrants, airports for the newly affluent and roads to accommodate a fleet of new cars.

Yet as lending grew at twice the rate of gross domestic product, problems started bubbling up. Companies gained billion-dollar valuations, then collapsed when they couldn't profit. Enormous surplus capacity drove down prices. Excessive real-estate lending led to the construction of "ghost cities." Asset bubbles popped and bad loans mounted.

China's policy makers say they recognize these problems. The government's most recent five-year plan, released in December, notes the need for deleveraging. The People's Bank of China has talked up the party line about slowing credit growth and making high-quality loans.

Yet officials still say that only about 1.6 percent of commercial-banking loans are nonperforming. Some analysts put the real figure closer to 20 percent. And Beijing's primary plan to address the problem -- allowing companies to swap their debt with banks in exchange for equity -- actually creates new risks.

For one thing, while a debt-for-equity swap may help excessively indebted firms, it will wreak havoc with banks. Directly, a given bank will no longer receive the cash flow from interest and principal payments. Indirectly, it won't be able to sell equity to the PBOC or to other banks as it could with a loan.

Valuing the equity could present a bigger problem. In China, banks must count 100 percent of loans made to non-financial companies against their reserve requirements. When they invest in equity, however, they must set aside 400 percent of the value of the investment. If the debt isn't worth face value to the bank, it seems unlikely that the equity is worth far more -- suggesting that large write-downs will be required.

The swaps program also creates a number of big-picture problems. Consider the tight relationship between banks and large government-linked companies. If banks were under pressure to roll over loans when they were creditors hoping to get repaid, what will their incentive be when they own the firm and have essentially unlimited lending capacity?

Another problem is that Chinese industry exists in a deflationary debt spiral: Prices have been falling for years, raising the real cost of repaying loans. If companies are relieved of their debt, they'll have an incentive to reduce prices to gain market share, thus worsening one of the primary causes of the current malaise.

All this leads one to think that the government doesn't recognize the severity of the problem. Debt-for-equity swaps and loan rollovers simply aren't long-term solutions for ailing companies on the scale China faces.

While the government will probably approve a 1 trillion yuan plan to address bad debts, for instance, this should only be considered a down payment: Solving the problem will likely require recapitalizing the banks. Likewise, if failing firms are relieved of their debts but allowed to stay in business, it will only perpetuate the problems of excess capacity and moral hazard. Until firms are allowed to fail, they'll keep coming back, hats in hand, asking for more bailouts -- thus increasing the debt and ultimately the cost of restructuring.

In short, China needs to face up to its debt addiction. It was able to outgrow a similar problem a decade ago. It's unlikely to catch lightning in a bottle twice.

Article Link to the Bloomberg View:

NATO After America

Trump talks of ditching Europe—but how would Europe respond if we do?

By Stefan Soesanto
The National Interest
April 7, 2016

Donald Trump’s dismissive comments about NATO being obsolete, and that it might be fine if the alliance breaks up, have ruffled feathers on both sides of the Atlantic. Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, was the first U.S. government official to outright rebuke the Republican front-runner by noting that “in my mind, the relevance of NATO is not at all in question.” On Monday, President Obama followed suit by reassuring NATO Secretary-General Jens Stoltenberg that the alliance “continues to be a linchpin, a cornerstone of U.S. security policy.” While European leaders have largely refused to comment on questions relating to the U.S. presidential election, Polish President Andrzej Duda observed that a stable Europe is in the best interest of the United States.

But let us for a moment entertain Trump’s radical idea, and assume in a hypothetical scenario that the United States breaks away from NATO, because the next U.S. president is fed up with protecting and paying for those free-riding Europeans while not getting anything in return.

(According to Article 13 of the Washington Treaty, “any Party may cease to be a Party [of NATO] one year after its notice of denunciation.” For the sake of argument, let us ignore this part as a simple pro forma step).

The ripple effect of Washington’s unilateral decision to leave NATO will most likely prompt the other twenty-seven member states to reevaluate the alliance’s overall purpose and sustainability.

Canada will probably be the second nation to exit NATO, given Ottawa’s limitations on projecting military power across the Atlantic, and possible fears of becoming entangled in burdensome European conflicts far away from its shores. Turkey, depending on how far its EU membership talks have progressed at this point, might be tempted to remain in the alliance. However, the majority of European nations will most likely want a buffer state vis-à-vis the Middle East, and consequently push Ankara out of any post-NATO alliance arrangement.

Without the United States, Canada and Turkey involved, five factors are most likely to influence Europe’s geopolitical trajectory:

(1) The extent of political dismay and the degree of public anger across the continent regarding Washington’s decision to unilaterally leave NATO,

(2) The ability of the EU’s Common Security and Defense Policy (CSDP) to serve as an institutional framework that can mirror NATO’s operationalization process,

(3) The feasibility of Article 42 (7) of the Maastricht Treaty to support and cement alliance cohesion, analogous to NATO’s Article 5,

(4) The ability of NATO’s European members to find common ground on nuclear weapons policies in the absence of the U.S. nuclear umbrella,

(5) And Russia’s foreign and defense policy changes in reaction to the new geopolitical realities in Europe.

The best-case scenario would see NATO’s remaining European members continue to consolidate a “European” alliance, by striving for greater interoperability and increased defense spending, to compensate for the absence of U.S. armed forces, capabilities and forward-based equipment in Europe. This new alliance framework—let’s call it the European Treaty Organization (ETO)—will probably maintain an ever closer relationship with the European Union until both organizations merge over time. Meanwhile, an isolationist Washington will be condemned to watch from the sidelines while the Europeans set out to coordinate their own defense policies, which might diametrically oppose U.S. national interests abroad. The “Europeanization” of defense will most notably result in the decline of U.S. arms exports to the continent, and the rise of the European defense industry as the main supplier of the ETO forces.

One major challenge the ETO will have to face from the outset is devising a workable nuclear weapons policy. If the ETO is committed to the cause of nuclear nonproliferation, France will have to decide whether it will leave the alliance and revert to Gaullist sentiments, or spur ETO integration in a desire to develop a comprehensive European defense force. Britain, on the other hand, if it has not already left the European Union, will have to make a decision on whether to refrain from modernizing its Trident nuclear program, or leave the ETO in an effort to find shelter in an Anglo-Saxon defense arrangement, which might include the United States, Canada, Australia and New Zealand, synonymous with the Five Eyes intelligence-sharing agreement.

Internally, the ETO will either be fractured across several foreign policy vault lines, which will either force the alliance to remain neutral on most defense issues outside the continent (noninterventionism), or else the ETO will overcome national animosities at home and establish itself as a democratic peer competitor to the United States (great-power competition). Neither outcome would be in the interest of policymakers in Washington.

The worst-case scenario would be if NATO simply dissolves itself and the European Union is unable to fill the institutional void. The result would be a mixture of bilateral and multilateral military alliances, based not on economic interdependence, but formed according to geographic proximity, cultural affinity, threat perception, relative military power and existing defense arrangements on the continent.

Germany will probably take on a balancing role, given the nation’s history and geographic location in the heart of Europe. Berlin will most likely aim to ally itself, first and foremost, to France, Poland and the Benelux states, in an attempt to hedge against any counterbalancing behavior and bloc building in Europe. German defense policies will most notably clash with those of former communist states, which will seek to expand on theVisegrad Group, for example, to guard against possible Russian aggression. A desire for nuclear proliferation within the eastern European bloc will be the most likely consequence if France, Britain and the United States are unwilling to serve as offshore balancers. The Scandinavian countries will probably either veer toward neutrality or find common ground with the Visegrad Group, if threat perceptions vis-à-vis Russia are producing significant policy overlaps.

The Balkans will most likely revert to becoming the most volatile region in Europe. With NATO undone, and the EU unable to hold the former Yugoslavian states together with dwindling economic incentives, the continent might experience a repeat of growing nationalism and violence that could seek to undo, for example, the independence of Kosovo. Turkey, under an increasingly authoritarian president, might also feel compelled to assert itself and unify Cyprus by force, if left unchecked.

In contrast, western Europe will most likely remain peaceful, in accordance with constructivist theory. The sole exception might be a dispute between Britain and Spain over the sovereignty of Gibraltar and the strategic control of the strait leading into the Mediterranean.

However, if the United States, Russia and possibly even China decide to actively meddle in European affairs by signing bilateral military alliances with European states, the consequences and political fallout would be difficult to contemplate. Imagine a world where, democratic institutions notwithstanding, France would form an alliance with Russia in a repeat of pre–World War I sentiments, Poland would become a junior partner to the United States to safeguard its independence and Germany would engage in a military alliance with China out of pure economic interest. A network of cascading alliance across the continent might be the end result, and possibly serve as a precursor for another global catastrophe.

While all these scenarios are hypothetical, and some might be more realistic than others, NATO’s contribution to the stability of Europe and the security of the United States should not be underestimated. If NATO were to dissolve, the unintended consequences could be far-reaching. My advice to Mr. Trump is to not take NATO for granted. Cherish it, and reform it—but never abandon it.

Article Link to the National Interest: