Thursday, June 2, 2016

Thursday, June 2, Night Wall Street Roundup: Healthcare Helps Wall St. To Slight Gains; Jobs Report Next

By Lewis Krauskopf
June 2, 2016

Wall Street closed slightly higher on Thursday as fresh data gave a rosier view of the economy and further gains for healthcare shares countered declines in energy names.

The S&P 500 ended at its highest closing level in seven months, while the Nasdaq minted its seventh straight day of gains.

Investors now await Friday's payrolls report as they evaluate economic data to determine whether the Federal Reserve will hike interest rates as soon as its June 14-15 meeting.

Data on Thursday showed U.S. private employers increased hiring in May and new applications for jobless benefits fell last week, further boosting the economic outlook for the second quarter.

"The issue for the market for really the last several weeks has been whether there is enough top-line growth at companies and growth in the economy to support what looks like a higher interest rate from the Fed," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

"Numbers today made people a little more confident," Meckler said.

The Dow Jones industrial average .DJI rose 48.89 points, or 0.27 percent, to 17,838.56, the S&P 500 .SPX gained 5.93 points, or 0.28 percent, to 2,105.26 and the Nasdaq Composite .IXIC added 19.11 points, or 0.39 percent, to 4,971.36.

The S&P 500 is up 3 percent in 2016 after a gloomy start to the year amid jitters about the global economy and a volatile oil market. It now only needs to rise about 1 percent to set a closing record, which would be its first in more than a year.

On Thursday, the healthcare sector .SPXHC gained 1.3 percent, making it the best-performing group and tallying its seventh straight day of gains. Johnson & Johnson (JNJ.N) added 1.5 percent after saying it would acquire hair care products maker Vogue International for $3.3 billion.

After a rough start for 2016, healthcare has rebounded 5 percent since mid-May and is now in positive territory for 2016.

Seven of 10 sectors ended higher. Energy shares .SPNY were the worst performers, falling 0.3 percent.

Joy Global (JOY.N) surged 21.9 percent after the mining equipment maker reported a surprise adjusted quarterly profit. Larger rival Caterpillar (CAT.N) rose 1.9 percent.

Apple (AAPL.O) shares fell 0.8 percent as Goldman Sachs analysts cut their price target on the iPhone maker, citing lower growth expectations for the smartphone industry.

About 6.4 billion shares changed hands on U.S. exchanges, below the roughly 7 billion daily average for the past 20 trading days, according to Thomson Reuters data.

NYSE advancing issues outnumbered decliners 1,960 to 1,039, for a 1.89-to-1 ratio on the upside; on the Nasdaq, 1,750 issues rose and 1,075 fell for a 1.63-to-1 ratio favoring advancers.

The S&P 500 posted 36 new 52-week highs and 1 new low; the Nasdaq recorded 81 new highs and 17 new lows.

Paul Ryan Backs Trump After Long Courtship

By Steve Holland and Susan Cornwell
June 2, 2016

Paul Ryan, the top elected Republican, ended a long period of soul-searching and endorsed Donald Trump for president on Thursday, a step toward unifying party loyalists behind the insurgent candidate despite concerns about his candidacy.

Ryan had been a high-profile holdout to supporting Trump for the Nov. 8 presidential election out of concern about the presumptive Republican nominee's bellicose rhetoric and break with party orthodoxy on issues including trade and immigration.

The House of Representatives speaker announced his support in a column for the Janesville Gazette newspaper in his home state of Wisconsin. It surfaced in the middle of a speech by Democratic front-runner Hillary Clinton in which she launched a far-reaching attack on Trump's foreign policy credentials.

Ryan did not specifically use the word "endorse" in his column, but his spokesman, Brendan Buck, made clear that Ryan's move should be seen as an endorsement.

The speaker had criticized the Republican candidate several times, including Trump's proposal in December to temporarily ban all Muslims from entering the United States because of national security concerns.

The 46-year-old Ryan was the only member of the Republican congressional leadership who had not formally embraced Trump.

In a tweet, Trump responded: "So great to have the endorsement and support of Paul Ryan. We will both be working very hard to Make America Great Again!"

Ryan's backing of Trump could give cover to more reluctant Republicans to get behind the billionaire businessman as their best chance to win the White House.

"I think the endorsement is significant because it shows the falling in line of the establishment Republicans from the top," said Republican strategist Ron Bonjean.

It should also help Trump make the case that he can bring the party together as he girds for a Republican nominating convention in July that many party leaders plan to skip.

It also represents a blow to Republicans who have been trying to organize a third-party bid to give party loyalists who cannot abide Trump someone else to support. The "never Trump" crowd includes 2012 nominee Mitt Romney. Ryan was Romney's vice presidential running mate.

While Ryan's decision could push some Republican leaders off the fence, many holdouts remained, such as two former rivals, former Florida Governor Jeb Bush and U.S. Senator Lindsey Graham of South Carolina. Aides to both said their positions had not changed.

Democratic Senate leader Harry Reid described Ryan's move as "abject surrender," adding: "The GOP is Trump's party now."

'Heal The Fissures'

Ryan met Trump in a high-profile meeting last month and they have since had a number of telephone calls.

"It’s no secret that he and I have our differences. I won’t pretend otherwise," Ryan wrote. "And when I feel the need to, I’ll continue to speak my mind. But the reality is, on the issues that make up our agenda, we have more common ground than disagreement."

Ryan said he and Trump had spoken many times in recent weeks about how, "by focusing on issues that unite Republicans, we can work together to heal the fissures developed through the primary."

"Through these conversations, I feel confident he would help us turn the ideas in this agenda into laws to help improve people's lives. That’s why I’ll be voting for him this fall," Ryan said.

Announcing he will vote for Trump should make it a bit more comfortable for Ryan to chair the party's nominating convention in Cleveland.

While Ryan's endorsement was significant for Trump, there remain many concerns about him within the party.

Longtime Republican financier Fred Malek drew attention to worries about Trump in a column in the Washington Post on Thursday. He cited Trump's criticism last week of New Mexico's Republican governor, Susana Martinez, considered a rising star in the party with the ability to appeal to Hispanics.

"These attacks on fellow Republicans must stop as we move closer to the general election," Malek wrote.

Article Link to Reuters:

Pre-Market Wall Street Roundup: Futures Hold Lower Amid Data

By CNBC Staff
June 2, 2016

U.S. stock index futures pointed to a lower open on Thursday as Wall Street amid the release of ADP payroll data, OPEC's meeting in Vienna, as well as comments from European Central Bank (ECB) President Mario Draghi.

The private sector ADP payroll report was 173,000 in May, a touch below Reuters expectations for 175,000 jobs. The April report was revised up to 166,000 from 156,000.

Treasury yields were mixed, with the 2-year yield off lows around 0.91 percent and the 10-year yield steady around 1.84 percent as of 8:19 a.m. ET.

The U.S. dollar index trimmed losses to trade mildly lower, with the euro around $1.119 and the yen near 109 yen against the greenback.

The ADP report is not widely seen as a reliable indicator for the government's jobs report, expected Friday, but last month it reported just 156,000 jobs. Two days later, April nonfarm payrolls came in at just 160,000, 40,000 shy of expectations.

162,000 nonfarm payrolls are expected in the government report Friday.

Traders will also be watching Federal Reserve Governor Jerome Powell, who speaks on regulation at 8:35 a.m. ET, and Dallas Fed President Rob Kaplan, who speaks at 1 p.m. ET at a conference at Boston College.

Britain's possible exit from the European Union will be a factor in the Fed's decision on rates later this month, Fed Board Governor Daniel Tarullo said Thursday.

"In the short term it is more a question of the immediate impact on markets," Tarullo said in a Bloomberg TV interview, Reuters reported. "If there are implications for growth over time, to the degree it's a factor (in the June rate decision) it's taking into account what will happen in financial markets and the immediate aftermath of the vote."

Traders will also be keeping a keen eye on OPEC's meeting in Vienna, which could impact the price of oil. The 13-member producer group is not expected to cut or freeze oil production at its meeting Thursday – ideas that failed at its last meeting in April. Brent crude traded at $49.75 a barrel on Thursday, while U.S. crude held at $49.02.

In Europe, the central bank kept interest rates unchanged. ECB President Mario Draghi is scheduled to speak later in the morning. The pan European Stoxx 600 Index was up slightly.

In Asia, Japan's Nikkei closed 2.32 percent lower on Thursday. In China, the Shanghai Composite closed 0.40 percent higher.

On the earnings front, Joy Global is set to report before the bell. Broadcom and Five Below are among companies set to report after the bell.

Article Link to CNBC:

Bernie’s Superdelegate Moon Shot

There’s a remote chance Sanders could still win the Democratic nomination. But it would require an astonishing feat of political engineering.

By Daniel Strauss
June 2, 2016

Bernie Sanders’ case for why he will be the Democratic nominee goes something like this: He will end the campaign close to even with Hillary Clinton in pledged delegates, and then make a persuasive argument to the party’s superdelegates, flipping enough of them to his side to get him over the threshold.

But a POLITICO analysis of the Democratic delegate math reveals that even under a best case scenario where Sanders sweeps the nine remaining contests and picks up every undecided superdelegate still on the board, the Vermont senator would still need to convince nearly 200 Hillary Clinton superdelegates to bolt from her camp — a feat of political engineering that would make the moon landing look like a walk in the park.

Sanders himself has said on multiple occasions that the more contests he's won, the more pro-Clinton superdelegates would rethink their allegiance. In a late March interview on CNN, after winning Democratic contests in Alaska, Hawaii, and Washington, Sanders said "a lot of these superdelegates may rethink their positions with Secretary Clinton."

But so far, her superdelegates have shown no indication of going wobbly: Not a single one of them has changed sides this year, despite significant pressure to do so in the states Sanders has won.

In 2008, less than three dozen Democratic superdelegates ultimately switched sides.

“There’s really no history of superdelegates changing their candidate commitment,” said said a veteran delegate allocation expert who requested anonymity to speak freely. “Maybe a handful of switchers in a whole presidential cycle. We certainly haven’t seen any this year and it’s unreasonable to expect it now.”

A different consultant involved in delegate operations for multiple presidential campaigns explained the heavy pressures weighing against flipping.

"It's a) a big personal engagement, usually involving the candidate directly and b) you've got to get somebody to say, 'you know what? I know I committed here and I'm going to burn a bridge that I'm never going to repair.' Because when you're a super delegate and you move it's not something that people easily forgive," the operative said.

According to the Associated Press, Clinton had 1,769 pledged delegates and 543 superdelegates through Wednesday, for a total of 2,312 delegates. That puts her 71 short out of the 2,383 she needs to claim the nomination.

Sanders, meanwhile, had 1501 pledged delegates and 44 superdelegates for a total of 1,545 — 838 delegates short of the threshold for nomination.

Even under a highly optimistic scenario where Sanders claims two-thirds of the 781 pledged delegates still available in the remaining nine contests — and picks up every one of the 133 superdelegates who are undeclared — he’d still need to convince at least 185 Clinton superdelegates to jump ship.

The Sanders campaign argues that they can make up substantial ground among superdelegates hailing from the 20 states he won — at present, Sanders has the support of just 26 superdelegates from those places, compared to 108 for Clinton. Between convincing superdelegates to follow their state’s popular vote and pointing to the fact that Sanders has a considerable lead over presumptive GOP nominee Donald Trump in most head-to-head polling match-ups, the campaign believes it has a persuasive case to make.

"We believe that we can make substantial progress between now and the end of voting. Right now the percentage of pledged delegates is 54-46, that we would get it to 50-50," Sanders chief strategist Tad Devine said Tuesday. "If we come a little bit short I still think we're going to be in a very strong position to argue that -- if you look at the progress that Bernie made, if you look at the standing that he has, particularly versus Trump in the polls, if you look at where we started and where we finished. It's a very, very strong argument that he would be the best choice to be the nominee. I think we've all resolved 'why don't we let the voters have their say first' and our goal is to tie this thing up."

While Sanders is correct when he says that many of the Clinton superdelegates lined up with her before voting started — and before the strength of his campaign was apparent — the fact that not one superdelegate has flipped over the course of the primary season suggests that many of them still view Clinton as the strongest possible Democratic nominee.

"I can't see it happening," said Marianne Stevens, a Maine superdelegate in 2008 who backed Obama after he racked up 10 wins in a row.

"I think most of the people that are the superdelegates, and this is even taking out the elected officials, the senators, the congressmen. If you just look at the DNC members...they want to win in November. So they're going to look at the stronger candidate and I cannot see that any of them would look at Bernie Sanders as a stronger candidate against a Trump."

Article Link to Politico:

Bernie’s Superdelegate Moon Shot

How A Trump Presidency Would Threaten Democracy

By Jonathan Bernstein
The Bloomberg View
June 2, 2016

I don’t know whether a President Donald Trump would be able to destroy U.S. democracy by crushing the institutions that share power with the executive. I tend to agree with Brian Beutler that the institutions Trump might go after would fight back effectively -- though I’m not eager to test that proposition.

Nonetheless, I think Trump is dangerous to democracy in a different way, and even if he doesn't win: He would damage the political system's ability to offer healthy representation.

Representation is the process by which politicians make promises as they run for election, then interpret those promises once they are elected, govern with those promises in mind and explain their actions in terms of those promises (and eventually run for re-election with a new set of promises).

Those promises are not only specific commitments on public policy (such as building a border wall), but include how a candidate will act in office, and even who the candidate will be. So a politician may run as an expert on policy, as “one of us,” or as a member of a particular group within the district.

This matters because promises appear to significantly constrain politicians in office. Presidents try to keep their policy promises. Politicians also try to keep other types of promises. Bill Clinton ran on a promise to stay in touch with rank-and-file voters (and criticizing President George H.W. Bush for not doing so), and then once in office he staged events to demonstrate that he was keeping that commitment.

Politicians can suffer consequences if they break their promises. Clinton said during his 1992 campaign that he would “focus like a laser beam” on the economy. When controversies about other issues erupted at the beginning of his presidency, he probably was hit harder because it appeared that the uproars meant he was breaking the “laser beam” promise.

So what exactly is Trump promising?

We know he isn't particularly focused on specific policy proposals; even his much-touted wall appears to be more a symbol of anti-immigrant sentiment than a real effort to solve a public policy problem.

Perhaps his real promise simply involves designating his enemies. Prominent among those are Mexican immigrants and Muslims, which has led to a perception that his campaign relies on appeals to bigotry. And yet his enemies list is a lot longer than simple bigotry could explain, and it changes constantly -- he hates the media, and publications pop on and off his list.

His only consistent promise is “winning” -- that he will reverse a perceived string of losses endured by the the U.S.

And yet this sounds empty, promising more than anything real political leaders in a democracy can offer. Does anyone hear Trump and believe that, yes, we’ll have nothing but winning if he is elected? Do his supporters just appreciate someone striving to “win” (whatever that means)? Or do they just enjoy being entertained?

Trump does appear to be promising something about who he would be if he won. After all, a significant portion of his stump speeches is devoted to talking about himself. But even that promise is murky. Is he promising to be a real estate dealmaker? Is he promising to be the character he played on reality television? Certainly not the the guy behind the shady dealings of Trump University, right?

It matters. Because if there are no promises, there’s no representation. And representation, as James Madison realized, is the only way for large-scale democracy to work. Democracy needs ways for constituents to influence the promises politicians make and how those are interpreted, and it needs politicians to take those promises seriously.

In large part, the political parties are supposed to ensure that happens, and Trump is running without one. If he wins, he would be the least constrained president in U.S. history.

Or, to put it another way, if all he’s promised is to be Trump, he can do pretty much whatever he wants and still claim to be keeping his core campaign promise.

And if he gets away with it, others will follow him. Healthy representation will be the victim. Along with meaningful democracy.

Article Link to The Bloomberg View:

The ‘Superbug’ Is Here — And America’s Not Ready For It

By Betsy McCaughey
The New York Post
June 2, 2016

Federal officials are predicting doom because a Pennsylvania woman became infected with a germ that can’t be controlled by most antibiotics.

“The medicine cabinet is empty for some patients,” warned Centers for Disease Control and Prevention Director Thomas Frieden last week. You’d think this dire proclamation meant the CDC was finally ready to get serious about drug-resistant infections.

Think again. The CDC watched “super-bugs” spread across the nation, and dawdled. Centers for Denial and Confusion is more like it.

The Pennsylvania woman’s infection is resistant to a last-resort antibiotic called colistin. This is the first case, as far as we know, of an infection resistant to colistin in the United States, but thousands of patients die every year from infections resistant to more commonly used antibiotics.

As antibiotics lose their punch, medical care becomes riskier, especially in hospitals. Patients who need chemotherapy or surgery rely on antibiotics. Without them, even a routine procedure — bypass surgery, or C-section — could turn deadly.

The medical community has struggled with drug resistance for half a century. There’s no avoiding it. Bacteria naturally evolve to resist the weapons we use to fight them.

CRE — carbapenem-resistant infections — have plagued New York-area hospitals for 15 years. CRE bloodstream infections have a 50 percent death rate. In 2011, a New York patient transferred to the National Institutes of Health in Bethesda, Md., carried the germ with her, starting an outbreak that killed several patients, including a 16-year-old boy.

Yet the CDC waited until 2013 to sound the alarm about this “nightmare bacteria.” And has done little since.

Three aggressive steps are needed to protect patients, but the CDC has gotten serious about only one: curbing the overuse of antibiotics. The agency is MIA on the need for rigorous cleaning and for screening incoming patients for superbugs.

Reducing antibiotic use can only do so much, because the problem is global. In countries like India, antibiotics are as easy to buy as candy. No prescription needed. Patients then come to American hospitals bringing the drug-resistant bacteria with them.

Plus, simply curbing antibiotic use doesn’t stop patients from getting most infections in the first place and has barely made a dent in hospital death rates. Nearly 75,000 patients die from infections in US hospitals each year. To stop this carnage, hospitals need to clean up.

Shockingly, your risk of getting an infection often depends on your hospital room number. If a previous patient in that room had a superbug, you’re in danger. The previous patient’s germs are still lurking on the bedrail and privacy curtain.

Half the surfaces in a hospital room are overlooked by cleaning staff. There are technologies to overcome this human error — robotic hydrogen-peroxide misters, UV light machines and newer devices that operate 24/7 to disinfect a room with no risk to patients.

But the CDC drags its feet about recommending them. So, if you’re visiting someone in the hospital, skip the flowers. Instead, bring bleach wipes and clean the surfaces around their bed for them. You could save a life.

The CDC’s failure to call for screening incoming patients defies reason. During the AIDS crisis, the CDC recommended testing all patients for AIDS. Why not superbugs? Hospital infections kill four times as many people. And contracting AIDS is difficult, but picking up a hospital germ is as easy as touching the call button.

New screening tools can detect superbugs in minutes, instead of old-fashioned cultures that take three days. As a result, patients who test positive for a superbug can be whisked into a single room to stop their germs from spreading.

Using a new, rapid test, Washington, DC-area hospitals screened patients and found more than 5 percent unknowingly carry deadly CRE germs. That shows the urgent need to make screening routine.

The intractable infection in Pennsylvania is a wake-up call. Patients and advocates need to demand aggressive infection prevention in hospitals. We have the tools to eradicate these infections. What’s lacking is the will.

Article Link to the New York Post:

The 'Mexican' Judge Trump Slimed Is Really Making America Great Again

How the Curiel family arrived in America, worked harder than Trump will ever work, and produced one veteran and two lawyers, one of whom became a judge who took on a cartel—and Trump U.

By Michael Daly
The Daily Beast
June 2, 2016

The steel mills of northwest Indiana had no harder worker than Salvador Curiel.

“He was one of these guys who never missed a day’s work,” his oldest son, Raul Curiel, told The Daily Beast this weekend.

Salvador Curiel originally arrived on his own from the small town of Moscota in Jalisco, Mexico. He joined a cousin in working in the mills, starting with the most difficult and dangerous tasks, but counting himself lucky.

“It was a very good job for any immigrant to have,” the son said.

The father went from U.S. Steel in Gary to Youngstown Sheet and Tub in East Chicago, where he settled down with a woman he had married on a return trip to his native town. Salvador and Francisca had four children, first a daughter, then three sons.

The neighborhood was a mix of seemingly every kind of ethnic group. Raul recalled, “It was blacks, Mexicans, Puerto Ricans, Greek, Polish, and Irish. We all kind of enjoyed each other’s company.”

The father had only gone to the sixth grade before leaving Mexico. He now taught himself to read and write English. The children approached their school studies with the same spirit.

“Nobody ever forced us to do homework,” Raul reported. “We always wanted to do it. We kind enjoyed doing it.”

On two or three occasions, the father paused in his otherwise ceaseless working, and the family drove down to Mexico. The children enjoyed the luxury of spending time with him in the land of their parents’ birth, briefly away from the demands of the life they were all striving as a family to build in America

“Bonding,” Raul said.

After years of grunt-level dangers on the job, the father was promoted to working the controls in the coke-making process, selecting particular coals to be mixed and pulverized and laced with oil so as to achieve an ideal density before it is fed into the ovens. He returned home from work one day in 1964, well on the way to achieving the American dream, when he suffered a massive fatal heart attack.

The mother went to work in local factories and kept the dream going along with the household. Raul noted to the Beast, “She was a very strong woman.”

Raul proceeded from high school to Purdue University but was drafted into the Army when he took a brief leave. He was sent to Vietnam in 1970 while his widowed mother and siblings worried at home. He often wrote to his mother and his youngest brother, Gonzalo, who was just entering high school.

In 1971, Raul returned safely home. The family had another reason to celebrate, as the middle brother, Antonio, received an undergraduate degree from Indiana University and proceeded on to the law school. He was just three months from receiving his law degree when his mother suffered a stroke and died in 1975.

She was just 58. She and her husband were cheated of witnessing what all their hard work had enabled the next generation to achieve.

“They never saw the end result,” Raul said.

The youngest brother, Gonzalo, received an undergraduate degree from Indiana University the following year. He was a notably talented guitarist, but he also continued on to the law school, graduating in 1979.

Gonzalo entered private practice in Dyer, Indiana, for several years before heading west. He became an assistant U.S. attorney in San Diego and in Los Angeles, eventually heading the narcotics division.

The middle brother, Antonio, served as a U.S. attorney in Chicago and then embarked on a career in private practice, only to suffer the first of three strokes in 1990. He was forced to retire but continued to volunteer for a legal clinic that assisted the disabled. He suffered a third and fatal stroke in 1996. A scholarship at Indiana University was established in his memory.

Gonzalo was in the midst of becoming the first prosecutor to take down a major Mexican drug cartel, the Arellano-Felix Organization. A cartel hit man was recorded saying in 1997 that he had been authorized to murder Gonzalo, and the prosecutor moved for a time to Washington, D.C. Gonzalo continued prosecuting, making more than 300 cases, widely respected as one of the nation’s most effective and fearless cartel busters.

In 2006, then California Gov. Arnold Schwarzenegger named Gonzalo a Superior Court judge in San Diego County. President Obama nominated him to become a federal judge in the Southern District of California in 2012. Raul was among the family members who attended the swearing-in.

“Things worked out,” Raul said.

Raul understood that Gonzalo would approach each and every case with the same guiding principle.

“The letter of the law,” Raul said. “He doesn’t show any favorites.”

As for himself, the oldest of the Curiel brothers had gone from Vietnam to the steel mill where his father worked, the company now named LTV. He was retiring after 30 years when LTV went bankrupt and he was left without a pension.

He still had bills to pay, and he went to work in construction at 59. He found himself, age 65, shoveling beside men nearly a half-century younger than himself.

“It took its toll,” Raul allowed.

Raul might have been the very kind of working-class vet in tough times who is targeted by Donald Trump.

But along with being someone who does not like to talk badly about people, Raul is of Mexican heritage. He is also the brother of the judge against whom Trump had directed bigotry such as the Curiel family never suffered in East Chicago.

And Trump’s bigotry was of the worst kind. His was not the bigotry born of ignorance such as the Curiel's were liable to encounter it they ventured into southern Indiana. Trump’s bigotry was purposeful.

In this instance, Trump‘s immediate intent was to slander Gonzalo Curiel for having the temerity to follow the law and order the release of documents from the class action lawsuit against Trump University that The Donald did not want the public to see.

Trump also sought to rouse the bigotry in his followers so as to make them dismiss not only the judge but also the truth that the documents make so manifest: Trump had been operating a shameful hustle.

On Friday, with the document release due following Memorial Day, Trump complained at a rally in San Diego that he was being “railroaded.”

“I have a judge who is a hater of Donald Trump, a hater,” Trump said. “He’s a hater.”

Trump then sought to summon the worst in the true haters.

“The judge, who happens to be, we believe, Mexican...” Trump went on.

Trump added in the very same breath, “...which is great. I think that’s fine”—pretending he had not engaged in purposeful bigotry when that was exactly what he had just done.

Trump lacked the courage to own up to his sliming even as he directed it at a judge who had in earlier years shown the courage to take on a cartel. Trump then actually said:

“I think Judge Curiel should be ashamed of himself. I think it’s a disgrace that he’s doing this.”

On Memorial Day, Raul Curiel was at home in East Chicago, not saying much about Trump because he figured that whatever he did say would not make much difference.

Raul is 67 now and finally retired, as is his sister, Maria Rybicki, who is 69. He has two sons of his own, one a cancer drug researcher, the other in the accounting department of a major company.

Raul had made it back from a long-ago war and was keeping himself busy on this day of remembrance by pouring a small cement pad beside the shed in his yard. He figured it would be good for a barbecue grill or some such.

“It’s only 4 foot by 4 foot,” he told The Daily Beast.

He said his surviving brother usually comes back to East Chicago in November, when this family that embodies what makes America truly great gets together for a uniquely American holiday.

“For Thanksgiving,” Raul said.

Article Link To The Daily Beast:

Animal Activists Go Apesh*t On Bernie

While Bernie Sanders found himself ducking animal rights activists earlier this week, Hillary Clinton had quietly released an animal rights platform weeks ago, pleasing activists of all stripes.

By Betsy Woodruff
The Daily Beast
June 2, 2016

Radical animal rights activists’ who crashed a Bernie Sanders’ rally on Monday and want to ban meat have found hope in an unlikely place: Hillary Clinton’s presidential platform.

They say they’re heartened by her new animal welfare position paper, which she rolled out in early May with zero fanfare and after getting advice from other activists she met backstage at a Mary J. Blige show.

Sanders’ antagonists say they think this is evidence that animal rights are finally getting attention from national politicians—and that their controversial tactics can bear fruit.

The group, which targeted Sanders’ Oakland rally on Monday night, is called Direct Action Everywhere, and claims chapters in more than 150 cities and 30 countries. It encourages its members to refuse to eat with people who are eating meat and to support “a system of global citizenship” for animals. Group leaders believe meat, milk, cheese, and eggs should all be illegal. And even though Bernie Sanders is a progressive’s progressive when it comes to immigration, campaign finance reform, college costs, and a host of other issues, they think he’s a big ol’ squish on animal rights.

They aren’t alone in that view. In fact, animal rights activist Russell Simmons rescinded his endorsement of Sanders in March because he said the candidate isn’t as tough on agribusiness as he is on big banks and fossil fuel companies. In early May, he hosted a fundraiser with Mary J. Blige for Clinton’s campaign.

There animal activists from another Social Compassion in Legislation—met her backstage—and the group urged her to add a page to her site calling for more legal protections for animals.

“We told her she needed to have a page up on her presidential website about animal rights,” Simone Reyes, a board member, said. “She took our card and her policy advisor called us within a week. We helped her policy advisor craft a page for the site and will continue to expand on these issues as the campaign grows.”

A Clinton aide confirmed that her team spoke with Reyes’ group about the platform page, as well as other animal welfare groups.

Meanwhile, Direct Action Everywhere has been harassing Sanders due to his failure to roll out an animal rights platform.

The Sanders campaign did not respond to a request for comment on this story.

Fourteen of the group’s activists attended his Oakland rally on May 30, and five jumped a barrier fence to try to get on stage with the candidate, according to Matt Johnson, one of the activists involved.

Johnson told The Daily Beast that a Secret Service agent hit him with a baton, making his hand bleed. The activists were detained for about an hour and then released without facing charges.

He added it’s the fifth Sanders event that the group has targeted—they’ve disrupted two of his events in Wisconsin, and two in New York. Johnson also disrupted a campaign speech Bill Clinton gave for Hillary Clinton in October in Des Moines—and several months later, she made a play for the animal rights vote.

Johnson said he thinks his group’s activism informed Clinton’s decision to roll out an animal welfare platform. And even though it doesn’t go remotely far enough for the group, they’re chalking it up as a win.

“I certainly think our actions play a role,” he said, of Clinton’s addition to the platform. “It’s certainly not acceptable, but it indicates to us that we are gaining momentum as a political force.

Members of Johnson’s group oppose any consumption of animals or their byproducts (think wool, honey, and leather) on moral grounds. They see themselves as righteous crusaders on the cutting edge of an animal rights revolution. Clinton is not a fellow traveler. Though the former secretary of state’s husband eats a mostly vegan diet (he made the change after a heart attack), she’s never hinted at any latent vegetarianism.

But the animal rights platform she rolled out earlier in May seemed cast to appeal to progressive animal welfare activists—though it’s much more of a draw for more moderate groups, like Reyes’, than for radical organizations like Direct Action Everywhere.

In the platform, Clinton calls for an end to the use of antibiotics in factory-farmed animals, for tougher laws against wildlife-trafficking, and for tighter regulations on puppy mills. And she promises to bar the practice of slaughtering horses for human consumption, and to encourage farmers “to raise animals humanely.”

Over the course of her political career, Clinton has made elephant advocacy a top cause, and the Clinton Foundation set aside $80 million for anti-poaching efforts in September of 2013. She also prioritized elephant protection at the State Department, arguing that profits from poaching funded terrorist groups.

As far as Direct Action Everywhere is concerned, her platform and record are shadows of what they ought to be.

“To me, it enforces the mythology that there’s a kind way to kill animals,” said Wayne Hsiung, one of its co-founders.

But he added that he and fellow members find it heartening any time a candidate talks about animals or makes overtures of courting the animal rights community.

For now, the group’s immediate priorities are more locally-focused; they’re encouraging activists to move to Berkeley so there will be enough political support there for a citywide ban on meat and other animal food products. Several dozen have already made the move, Johnson said, and many more plan to join their ranks in the next two years.

“We will ban meat in Berkeley, and when we win in Berkeley, we will win around the world, and we will never stop fighting until every animal is free,” he said.

Ultimately, Johnson and his fellow activists say they hope to dramatically expand animal rights. The group’s site calls for legislation to “[c]reate a system of global citizenship to give animals representation in trans-national, trans-ecological governance.” Hsiung said this wouldn’t give animals the right to vote, but would give them similar legal protections as human children.

Johnson said these kind of legal protections should include bees.

“Insects are sentient,” he said.

Clinton doesn’t go quite that far—but she goes further than any other presidential candidate.

“The way our society treats animals is a reflection of our humanity,” her platform page reads.

“Hillary has a strong record of standing up for animal rights,” it also says.

Her use of the phrase “animal rights” delighted Reyes.

“The fact it says ‘animal rights’ on her site is huge,” Reyes said. “Fate had us there at the right time for the animals. We were beyond thrilled.”

The Secret Of Putin’s Survival

By Andrei Kolesnikov
Project Syndicate
June 2, 2016

MOSCOW – Two years ago, a long process of growing authoritarianism and isolationism under President Vladimir Putin culminated in Russia’s annexation of Crimea. But even as much of the international community condemned the move, Russians seemed to welcome it. Indeed, the peninsula’s “return” to Russian control had a profound effect on public sentiment – one that seems to have strengthened Putin’s grip on power, even as Russia faces deepening political and economic challenges.

In March 2016, 83% of Russians supported the annexation of Crimea, while only 13% opposed it. Even progressives – including some who protested against the regime in Moscow’s Bolotnaya Square in 2011-2013 – have found in Crimea a reason to support Putin, albeit with some reservations. Indeed, Putin now enjoys an 80% approval rating, reflecting how closely he and Crimea are linked in Russians’ minds.

The reason why the annexation has attracted such wide support is simple. For most Russians, Crimea remains part of the “empire,” both culturally and geographically. To be sure, Russia does not possess the power and resources to recreate an empire, even within the confines of the abstract “Russian world.” But by focusing on Crimea, Putin’s regime was able to create a sense of restored historical justice and revive expectations of a return to “great power” status.

Of course, not everyone in Russia supports the annexation. And, in fact, opponents of the move are intractable, describing Crimea as occupied territory. Nonetheless, they comprise just a small minority and lack any real influence (the regime has seen to that). They are literally surrounded by people who unquestioningly support the authorities – and especially Putin.

That response may be surprising, given the tangible consequences of the annexation – in particular, the economic impact of Western sanctions, the effects of which have been compounded by plummeting oil prices since June 2014. The emotional element certainly plays a role. But this is not simply a matter of manipulation by propaganda.

In fact, the main reason the majority of Russians support the annexation of Crimea seems to be precisely that: the majority of Russians support it. For the average post-Soviet Russian, who regained Crimea from their couch, remote control in hand, falling into line with the majority is far more appealing than rocking the boat – so much so that Russians are outright refusing to think critically about what is happening. It is typical crowd psychology.

This unflinching support has carried over to the “just,” “defensive,” and “preventive” military operations that Crimea catalyzed, from Donbas to Syria, and even the trade war with Turkey. Despite the obvious risks associated with such moves, Russians have accepted the narrative that they are necessary to preserve stability, not to mention Russia’s newly reacquired status as a “great power.”

As if that were not counter-intuitive enough, Russians also seem to be supporting the Putin regime’s economic mismanagement precisely because their economic situation is so dire. The average Russian has been quick to revert to habits associated with the culture of scarcity of the recent past. Their attention is focused on obtaining basic necessities like food and clothing; few are interested in analyzing the causes of their declining living standards.

And who can blame them? After all, those Russians who do consider the political context are immediately confronted with grim reality: The regime has gutted all opposition, not least by stoking fear of being labeled an “extremist.” More than one vocal critic of the regime has met an untimely end.

That is why even demonstrations opposing some government policy or outcome are not so much “protests against” as “appeals to” the regime. Without fundamental change in the political system, it is unlikely that such demonstrations, even if they become more frequent, will become overtly oppositional. And, without oppositional protest, systemic change seems unlikely.

In the absence of open political competition, Putin has built a system of checks and balances within the elite. A group of loyalist liberals hold key financial and economic posts, balancing the hawks in the military and special services, including structures like the Security Council, which frequently serves as an incubator for elegant conspiracy theories about Western plots. Of course, all members of the elite must continuously demonstrate their loyalty to Putin.

This system keeps Russia’s elites from pushing for change (unlike in the past, when those elites did attempt to initiate reforms), as it precludes the possibility of anti-Putin intrigue. And the regime does seem relatively stable, at least for now. Indeed, it has only gained strength since 2012, and now, with post-Crimea popular support having bought it some time, the regime is trying to adapt to the protracted economic, political, and social malaise Russia is facing.

But that time is, of course, limited. That is why, in advance of the September parliamentary elections, the regime is increasingly directing citizens’ attention toward internal “threats” – that is, political opponents and supposed “traitors.” One prominent example is former Yukos Oil Company Chairman Mikhail Khodorkovsky, whose expressions of doubt about Putin’s leadership landed him in jail and, later, exile.

In 1970, the Soviet dissident Andrei Amalrik asked, in a prophetic essay, “Will the Soviet Union Survive Until 1984?” We must now ask how long Putin’s regime will survive. It seems likely that it will last until the next presidential election, in 2018. Whether it will endure through the subsequent election, in 2024, is a question that Kremlinologists – a quickly recovering species – will soon be debating.

Article Link to Project Syndicate:

The Mediterranean Is Its Own Region. Time to Treat It That Way.

It's more than just a border zone.

By Shay Hershkovitz
The National Interest
June 1, 2016

Previously viewed as a “border zone” between different regions, the Mediterranean Basin is again taking center stage. It is a primary crossroads through which people and goods, terrorists and smugglers, ideas and worldviews pass—and ground zero for the challenges facing the West today.

The post–Arab Spring breakdown of the traditional political order behooves the West to redefine the area as a distinct geopolitical matrix of its own, with reciprocal consequences emanating from each of its complex problems, each of which expresses a lateral challenge shared by several players.

The starting point of this crossroads is ISIS. Its seizure of vast territories and its ability to replicate itself by creating new branches or co-opting local organizations make it the major player in the region. The organization’s need to vary its sources of income generates massive monetary activity in the region, especially in terms of illegal smuggling. Its criminal activities and territorial conquests feed off one another: after ISIS conquers an area and loots it, it must expand elsewhere in order to ensure a continued flow of income. Expanding the borders of ISIS is therefore not only ideologically motivated—it is an operational necessity.

At the same time, the more ISIS loses its hold in Iraq and Syria, the more it must grow to resemble “classical” terrorism. It is therefore reasonable to assume that ISIS will soon make a more prominent showing in the Mediterranean Basin (specifically in Turkey, Libya and the Sinai Peninsula, where it is already operating with relative success) and before long will conduct substantive operations in Italy, the Balkans, France and Spain. This process will affect other organizations in the region, namely Al Qaeda, which will have to choose whether to try to compete with ISIS or become marginal and unattractive to potential recruits.

ISIS’s key geographical hub in the region is Libya, an area lacking a central government. From here, ISIS and similar organizations can destabilize North Africa and even parts of the Sahel. From Libya, terrorist organizations can push their smuggling routes to southern Europe and beyond, as well as threaten shipping routes in the Mediterranean. Libya may even become a training center capable of buttressing the network of terror operating in Europe. Egypt and Tunisia are also at risk, given their limited ability to seal their borders.

In the Levant (another hub), Egypt will struggle to impose its sovereignty on the Sinai Peninsula, where an ISIS affiliate is becoming entrenched and able to threaten shipping through the Suez Canal—activity that risks causing a global economic crisis. In Gaza, Hamas is facing an increasing ISIS presence, which threatens the fragile cease-fire with Israel. In Lebanon, Hezbollah views preserving tensions with Israel as a buffer against the setbacks it has suffered in Syria and growing domestic criticism of its conduct. Syria’s ports are facilitating the Russian presence in the country, while Damascus and Hezbollah themselves are allied with Iran, which is also striving to consolidate its grasp on the region.

West of the Levant, Turkey, Greece and Cyprus are not only at odds with one another, but are also struggling with the problem of refugees fleeing Syria. Turkey is facing a growing ISIS threat and is worried about the Kurds’ desire for independence and Russia’s presence in the region, thus forcing it to demonstrate greater cooperation with the West. Then there is the potential for a regional struggle over the gas reserves discovered off the coasts of Israel, Lebanon and Cyprus. Hezbollah, Turkey and Russia are also keenly interested in this issue, each for their own reasons.

The Balkan hub, already split among various national, ethnic and religious groups, could become the next front of radical Islam. The growth of terrorist and smuggling groups there could revive conflict and make the region a global crossroads for illicit trafficking and exporting jihadists.

Climate and demographics, too, play an important role in reshaping the Mediterranean Basin. Climate change (e.g., desertification, diminishing water and food sources, and the rapid population growth of North and sub-Saharan Africa) has weakened governmental control over territories and encouraged migration to Europe. These stresses serve as fertile ground for terrorist organizations making use of these lawless frontiers and exploiting local distress for recruitment purposes.

In the last hub, European nations are threatened by overlapping class, religious, political and generational polarization, the latter fueled by unemployed and frustrated millennials. To this we may add returning ISIS fighters from among Europe’s Muslim population intent on continuing jihad on European soil. Trained and equipped with weapons coming from the Balkans, they exploit the weaknesses of European democracy and the inexperience of security forces. Furthermore, the combustible mix of anti-Muslim sentiment with right-wing nationalism and racism could also provide a tailwind to those seeking to leave the EU and to groups demanding the right to self-determination (e.g., the Basques and the Corsicans).

The aforementioned hubs may have already superseded the previous model of the Mediterranean Basin as a transitional zone. But it seems that the West has yet to adjust to this change. Take, for example, the U.S. military’s unified combatant commands, which treat the Mediterranean Basin as a border between European Command, Central Command and African Command. What is instead required is cooperation among all regional players sharing the same fundamental problems, as well as an action plan treating each problem laterally rather than geographically, linking the various components as a single problem with different dimensions.

The United States, NATO and the EU must bear this responsibility, as they are the only ones with the capacity to bridge tensions among the various players—and indeed have a stake in doing so. Only they can create a network of alliances that can comprehensively confront the most burning geopolitical challenges which the Mediterranean Basin faces.

Article Link to The National Interest:

How Will Baghdad Plan For A Liberated Fallujah?

The Iraqi government needs to plan for the post-liberation phase in Fallujah in order to prevent the city's seizure by terrorist organizations.

June 2, 2016

NAJAF, Iraq — On May 23, Iraqi Prime Minister Haider al-Abadi announced the beginning of military operations to retake the city of Fallujah. Operations have been successful so far, as several parts of the city’s outskirts were liberated. Iraqi forces settled at the gates of Fallujah after liberating Saqlawiyah in northern Fallujah on May 28.

Operations to liberate the city are expected to be completed in the coming days. The biggest challenge, however, is to plan the post-liberation phase, which will point at the government's power to take full control over the city and secure it from terrorist organizations in the future. The anti-terrorism forces that were assigned to enter the city began their infiltration from the north and south May 31. They cleansed a few suburbs around the city June 1 and are gradually advancing toward the center.

Fallujah has been one of the areas most resistant to political change in Iraq since the fall of the Baathist Regime in 2003. It was a main stronghold of the Baathist Party; a large number of the party’s officers hailed from there. Several clashes between jihadi factions and US forces occurred in the city from 2003 to 2008. Based on that, Fallujah is very symbolic for these factions.

It was the first city seized by al-Qaeda in 2004 and the first to be held by the Islamic State (IS) in 2014. IS had taped several video segments in Fallujah showing elderly tribal leaders pledging allegiance to the organization, and showing IS militants killing and crucifying Iraqi soldiers they had detained. Based on this history, it would be no exaggeration to say that Fallujah is Iraq's jihadi capital.

The city is of twofold significance due to its strategic location. It is less than 70 kilometers (43 miles) from Baghdad, and the majority of the inhabitants of the nearby areas in the capital are Sunnis. This has made it a central location from which to disseminate chaos in Baghdad and provide support to the ongoing suicide bombings and car bombs in the capital. In addition, it is near important Shiite cities, such as Karbala and Hillah, allowing Salafi jihadis to provoke Shiites and pose a threat to their holy sites.

Given its location and the aforementioned factors, the Iraqi military command developed a masterful plan to liberate Fallujah quickly and without major losses. After IS suffered attrition due to the almost yearlong siege on the city, various government-backed forces — the army, the Popular Mobilization Units and Sunni tribes — were mobilized. The issue seems perfect from a military point of view. Yet the government has not prepared itself for the post-liberation phase, which is much more important than the liberation itself for some considerations.

The city was liberated in 2007 from extremist organizations, and then it fell into extremist hands again. Based on that, the government needs to prepare an integrated project to guarantee its control over the city and fortify it in the face of extremist organizations through the following procedures.

First, local government forces must be formed to manage the city’s security. Parliament was supposed to enact a law governing the National Guard, which allows each province to have its own local forces that are affiliated with the Iraqi security forces. The bill was strongly opposed by Shiite parliamentary blocs that viewed it as a prelude to the partition of Iraq. The government must find an acceptable version of this bill to be agreed upon by parliament. This bill would prevent sectarian sensitivities in Sunni hot areas like Fallujah toward the security forces coming in from the Shiite provinces.

The sit-ins staged continuously since April 2012 against the central government in Sunni provinces such as Fallujah demanded that troops affiliated with the central government leave — calling them the Safavid army or the Maliki forces in reference to former Prime Minister Nouri al-Maliki. As a result of these sensitivities, Hadi al-Amiri, a prominent leader of the Popular Mobilization Units, announced May 24 that those forces will not enter Fallujah and will only provide support to military forces from the outskirts of the city.

Second, the government must draw up a comprehensive and fast reconstruction plan for the city, including rebuilding the destroyed buildings, establishing strategic projects, providing job opportunities for local residents and bringing back the displaced to their cities as soon as possible. Reassuring the residents that their future is with the Iraqi state and that they will not face any acts of revenge is a proven method to rebuild trust between the government and the city residents. The government has failed so far to provide adequate support to the previously liberated areas and complete reconstruction projects.

For instance, Salahuddin province Deputy Gov. Amar Hikmat complained May 29 about international organizations' and the government’s failure to fulfill their financial promises to provide support for reconstruction projects in Salahuddin province, most of which was liberated in March 2015.

Third, the Salafi jihadi ideology must be confronted through the support for moderate clerics in the city, such as the head of the Sunni Endowment Department, Sheikh Abdul Latif Al-Hamim, who enjoys relative popularity in Anbar province. It is worth mentioning that Sufism has a historical presence in the city and may be a peaceful alternative for radicalism. On May 30, Abdul Latif al-Hamim met the imams of Fallujah, demanding that they “confront the radical ideology of IS and promote moderate Islam.”

Even though the liberation of the city will be accomplished quickly, preserving this achievement will not be fast.

Nothing shows that the Iraqi government has taken into consideration the post-liberation phase in Fallujah, even if it has paved the way for such steps. Based on that, the post IS-era is not expected to be easy for the Iraqi government in areas such as Fallujah.

Article Link to Al-Monitor:

How Will Baghdad Plan For A Liberated Fallujah?

Tensions Between Trump, Cameron Go Back Years

By Rebecca Berg
Real Clear Politics
June 2, 2016

If the U.K. and the U.S. are said to share a “special relationship,” Donald Trump’s relationship with Prime Minister David Cameron is actively challenging that trope.

The two men have tangled from across an ocean, with Cameron characterizing Trump’s proposal to ban Muslims coming to the U.S. as “stupid,” and the presumptive Republican presidential nominee predicting recently that "it looks like we're not going to have a very good relationship" if he wins the White House.

Now, their strained ties might be put to a new test when Trump visits the Great Britain later this month for the relaunch of his renovated Turnberry hotel and golf resort in Scotland. Indeed, another Trump property in that nation is at the root of some tension between the two men, which has spilled into public view intermittently for years.

Roughly 200 miles from Turnberry, on the northeast coast of Scotland near Aberdeen, Trump International Golf Links & Hotel was until last year at the center of a legal and public relations battle between the real estate mogul and British officials. When the Scottish government planned to erect a wind farm offshore from Trump’s property, he took his objections to court.

But, rarely one to hold his fire pending a legal decision, Trump also took the controversy to the court of public opinion. Although Cameron had not been directly responsible for the decision, Trump slammed him and the U.K. government for subsidizing wind farms, including the one planned near Aberdeen.

“British PM Cameron is making a fool of himself by wasting billions of pounds on unwanted & environment destroying Scottish windmills,” Trump tweeted in 2012.

Nearly two years later, in 2014, Trump continued to knock the British leader: “PM @David_Cameron should be run out of office for spending so much of England’s money to subsidize windfarms in Scotland.”

This past December, Britain’s highest court dismissed Trump’s final attempt to block the wind farm, exhausting his legal options. Alex Salmond, a former first minister of Scotland who had previously supported Trump, said afterward that the court’s decision made him a “three-time loser.” In response, Trump called Salmond “a has-been and totally irrelevant” in a statement to the Wall Street Journal.

Cameron, for his part, attempted to steer clear of that fray. But he has more recently decided to remark publicly on Trump after the GOP candidate last year proposed a ban on Muslims traveling or immigrating to the U.S.

In remarks to Parliament following that announcement, Cameron called the proposal “divisive, stupid and wrong.”

“If he came to visit our country, I think he would unite us all against him,” Cameron said.

Now, that prediction will be put to the test. Trump’s campaign has not confirmed whether there will be any political events on the celebrity businessman’s schedule, nor is it known whether he will meet with Cameron.

Adding to the tension, in an interview with the Hollywood Reporter published Wednesday, Trump endorsed "Brexit,” the proposed U.K. departure from the European Union.

“I think they should leave,” he said.

Cameron has argued passionately for his nation to remain part of the EU, saying in a speech last month that “isolationism has never served this country well. Whenever we turn our back on Europe, sooner or later we come to regret it. We've always had to go back in and always at a much higher cost."

Voters in the commonwealth will decide the issue on June 23, the day before Trump arrives in Scotland.

Trump recently remarked that the prime minister had invited him for a meeting, although 10 Downing Street rebutted that claim.

"It's long-standing practice for the prime minister to meet with the Republican and Democrat presidential nominees if they visit the UK,” Cameron’s office said in a statement last week. “Given the parties have yet to choose their nominees, there are no confirmed dates for this.”

Cameron later said he would be “happy to” meet with Trump, but reiterated that he thinks the presumptive GOP standard-bearer’s remarks on banning Muslims are “a very dangerous thing to say.”

Article Link to Real Clear Politics:

Greece, Don't Just Sit There. Undo Something.

By Phyllis Papadavid
The Bloomberg View
June 2, 2016

Earlier this month Greece's government announced the formation of a privatization "superfund" to sell off state-owned assets, including the Greek railways, postal service and a number of utilities. Its scope – the sale of 50 billion euros in state assets – comes a close second in scale to the privatizations of the 1980s in Britain under Margaret Thatcher.

The comparison is apt: If the government goes through with its plans, the effects could be as far-reaching as any of Thatcher's reforms. Unlike previous privatization funds, the new fund -- called the Hellenic Company for Assets and Participation -- will plow 50 percent of its revenues back into Greece, delivering a much-needed boost to investment. Its lifespan of 99 years suggests that this is a long-term project. And the fact that the fund includes two representatives from the European Stability Mechanism on its supervisory board -- one of whom will be its president -- says much about where the impetus is coming from.

As important as the privatizations are, though, they cannot succeed without progress on cutting through the red-tape that binds the Greek economy, long home to one of Europe's most labyrinthine regulatory environments.

Privatizations succeed best in an efficient domestic economy where competition exerts pressure on managers to improve their businesses. When the Thatcher government prioritized the privatization of public transport to improve passenger experience, there was an implicit understanding that privatization of the National Bus Company in itself was not going to increase competition. The Transport Acts of 1980 and 1985 reduced bus subsidies, scaled back government planning of bus systems and introduced trial license-free areas. New operators could effectively run services on any route they wished, choosing them at the council level. They responded by reducing fares, increasing service and adjusting schedules to meet demand.

That environment doesn't exist today in Greece. Of the 189 rankings in the World Bank’s Ease of Doing Business Index, it languishes at 144th for property registration and 132nd for contract enforcement. It is 54th in the rankings for starting a new business, below Ukraine, Mongolia and Cote D’Ivoire – countries with a fraction of Greece’s GDP.

In 2014, the OECD made 329 recommendations to help Greece increase competition. Seventy-six of them focused on tourism and travel. They ranged from allowing hotels to offer discounts, to abolishing the 48-hour minimum for cruises, to changing the rule that only new buses could be licensed for tourism. A scant few were put in place.

The adage "don’t just sit there, undo something" was used by reformers in the Thatcher era to emphasize the importance of rolling back regulation alongside privatization. Greece has a lot of "undoing" ahead of it.

The experience of the U.K. and others tells us that in addition to getting deregulation right, it's important that Greece not delay key privatizations. The Institute for Government notes that despite the recession of 1980-1981 the de-nationalization of British Telecom was a catalyst for the country's privatization process.

So where should Greece start? Since tourism is such an important of the country's economy, the fund could do worse than to begin by selling off Hellinikon airport in Athens, Greece’s largest single piece of real estate.

According to the government, which favors the sale, privatizing the airport could bring in revenues of around 2 billion euros ($2.2 billion) bolster travel, generating 10,000 jobs in construction and a long-term employment gain of an estimated 70,000 in business activity created by the new infrastructure.

There is no single policy that will on its own revive the Greek economy. But privatization and deregulation together can reshape the country's supply side, opening up new competitive opportunities and creating jobs. With government debt at over 180 percent of gross domestic product, and little progress to date on debt forgiveness, this isn't just the best option for Greece; it’s the only one.

Article Link to The Bloomberg View:

Global-Warming Alarmists, You're Doing It Wrong

By Megan McArdle
The Bloomberg View
June 2, 2016

Ask a Washington dinner party full of moderately well informed people what will happen with Iran over the next five years, and you’ll end up with a consensus that gee, that’s tough. Ask them what GDP growth will be in fall 2019, and they’ll probably converge on a hesitant “2 or 3 percent, I guess?” On the other hand, ask them what’s going to happen to the climate over the next 100 years, and what you’re likely to hear is angry.

How can one be certain about outcomes in a complex system that we’re not really all that good at modeling? Anyone who’s familiar with the history of macroeconomic modeling in the 1960s and 1970s will be tempted to answer “Umm, we can’t.” Economists thought that the explosion of data and increasingly sophisticated theory was going to allow them to produce reasonably precise forecasts of what would happen in the economy. Enormous mental effort and not a few careers were invested in building out these models. And then the whole effort was basically abandoned, because the models failed to outperform mindless trend extrapolation -- or as Kevin Hassett once put it, “a ruler and a pencil.”

Computers are better now, but the problem was not really the computers; it was that the variables were too many, and the underlying processes not understood nearly as well as economists had hoped. Economists can't run experiments in which they change one variable at a time. Indeed, they don't even know what all the variables are.

This meant that they were stuck guessing from observational data of a system that was constantly changing. They could make some pretty good guesses from that data, but when you built a model based on those guesses, it didn’t work. So economists tweaked the models, and they still didn’t work. More tweaking, more not working.

Eventually it became clear that there was no way to make them work given the current state of knowledge. In some sense the "data" being modeled was not pure economic data, but rather the opinions of the tweaking economists about what was going to happen in the future. It was more efficient just to ask them what they thought was going to happen. People still use models, of course, but only the unflappable true believers place great weight on their predictive ability.

This lesson from economics is essentially what the "lukewarmists" bring to discussions about climate change. They concede that all else equal, more carbon dioxide will cause the climate to warm. But, they say that warming is likely to be mild unless you use a model which assumes large positive feedback effects. Because climate scientists, like the macroeconomists, can’t run experiments where they test one variable at a time, predictions of feedback effects involve a lot of theory and guesswork. I do not denigrate theory and guesswork; they are a vital part of advancing the sum of human knowledge. But when you’re relying on theory and guesswork, you always want to leave plenty of room for the possibility that your model's output is (how shall I put this?) … wrong.

Naturally, proponents of climate-change models have welcomed the lukewarmists' constructive input by carefully considering their points and by advancing counterarguments firmly couched in the scientific method.

No, of course I’m just kidding. The reaction to these mild assertions is often to brand the lukewarmists “deniers” and treat them as if what they were saying was morally and logically equivalent to suggesting that the Holocaust never happened.

If you’re not familiar with the lukewarmist case, I urge you to read the nine-part series by Warren Meyer has written at Coyote Blog. I am not urging you to read it because I agree with every part. (In particular, I’m much more eager to ensure against even a small chance of climate catastrophe, just as I would support even a very expensive system to detect and deflect massive asteroids that might hit our planet. We’ve only got the one planet so far, and it would be a shame if something happened to it.)

But I urge you to read it because it is a calm, measured, very thoughtful laying out of the lukewarmist case by a very smart person who has put a lot of time and effort into thinking about the subject -- much more time and effort than 99 percent of the angry people on both sides who shout over dinner tables and type in all caps.

The series is also a model of how to talk about the subject. Meyer says “this is what I think, and this is why I think it.” People can certainly disagree with his conclusions, and I would be very interested to see climate bloggers engage with Meyer's series in like manner: refraining from calling names or questioning motives, and instead calmly laying out the reasons that they think warming is likely to be catastrophic.

But vanishingly little of the debate is conducted in those sorts of terms. Skeptics are accused of being ideologues, or in the pay of the fossil fuel industry, or simply selfish monsters who care nothing for future generations. The other side -- who expect big temperature jumps and catastrophic consequences -- are accused of being ideologues, or interested in making an alarmist case in order to further their own careers as climate change activists, or authoritarian monsters who are less interested in saving the planet than in forcing their own left-wing economic order on the rest of the world.

Many of these claims about motives are probably not entirely false -- it’s difficult to change your mind when you’ve built a career around a certain set of theories -- but they’re certainly not entirely true, and they’re largely beside the point. If Joseph Stalin tells you that the sky is blue, he’s right, even if he’s wrong about nearly everything else, and an authoritarian monster to boot.

The arguments about global warming too often sound more like theology than science. Oh, the word “science” gets thrown around a great deal, but it's cited as a sacred authority, not a fallible process that staggers only awkwardly and unevenly toward the truth, with frequent lurches in the wrong direction. I cannot count the number of times someone has told me that they believe in “the science,” as if that were the name of some omniscient god who had delivered us final answers written in stone. For those people, there can be only two categories in the debate: believers and unbelievers. Apostles and heretics.

This is, of course, not how science works, and people who treat it this way are not showing their scientific bona fides; they are violating the very thing in which they profess such deep belief. One does not believe in “science” as an answer; science is a way of asking questions. At any given time, that method produces a lot of ideas, some of which are correct, and many of which are false, in part or in whole.

There is a huge range of possible beliefs that go into assessing the various complicated theories about how the climate works, and the global-warming predictions generated by those theories range from “could well be catastrophic” to “probably not a big deal.” I know very smart, well-informed, decent people who fall at either end of the spectrum, and others who are somewhere in between. Then there are folks like me who aren’t sure enough to make a prediction, but are very sure we wouldn’t like to find out, too late, that the answer is “oops, catastrophic.”

These are not differences that can be resolved by name calling. Nor has the presumed object of this name calling -- to delegitimize thoughtful opposition, and thereby increase the consensus in favor of desired policy proposals -- been a notable political success, at least in the U.S. It has certainly rallied the tribe, and produced a lot of patronizing talk about science by people who aren’t actually all that familiar with the underlying scientific questions. Other than that, we remain pretty much where we were 25 years ago: holding summits, followed by the dismayed realization that we haven’t, you know, really done all that much except burn a lot of hydrocarbons flying people to summits. Maybe last year's Paris talks will turn out to be the actual moment when things started to change -- but having spent the last 15 years as a reporter listening to people tell me that no, really, we’re about to turn the corner, I retain a bit of skepticism.

Unfortunately, when you rally your own side with these sorts of tactics, you also rally the other tribe, and if they’re as numerous as you are, this can lead to defeat as easily as victory. It would be a lot better for everyone -- including the planet -- if we left off the tribalism and the excommunications and went back to actually talking about the science: messy, imprecise and always open for well-grounded debate.

Article Link to Reuters:

Thursday, June 2, Morning Global Market Roundup: Asian Stocks Struggle On Growth Concerns, Yen Hits Japan Stocks

By Saikat Chatterjee
June 2, 2016

Asian stocks eased on Thursday after surveys showed global manufacturing activity and demand remain weak, while a jump in the yen sent Japan's Nikkei reeling more than 2 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan struggled to keep its head above water after rising more than 3 percent over the last seven days.

Shares were seen opening mixed in Europe with futures on the Euro STOXX 50, the French CAC and the German DAX all down by around 0.1 percent, while futures on the British FTSE 100 were up by around 0.2 percent.

Factory surveys over the past 24 hours highlighted a sluggish global economy, even as the U.S. Federal Reserve appears to be preparing jittery financial markets for a possible interest rate hike in coming months.

The global economy is stuck in a "low growth trap", the Organisation for Economic Co-operation and Development (OECD) said on Wednesday, urging governments to boost spending.

"Headline PMIs were broadly disappointing," Frederic Neumann, co-head of Asian economics at HSBC, said in a note.

"New orders point to little upside in the coming months. If anything, for most countries, it suggests an equally soggy summer."

Japan's Nikkei fell 2.3 percent after the dollar sunk to a two-week low against the yen overnight following Japanese Prime Minister Shinzo Abe's official announcement of a widely expected delay in a sales tax increase next year.

A spate of decent U.S. economic data on Wednesday failed to lift Asian markets or reveal any fresh clues as to when the U.S. Federal Reserve might opt to raise interest rates, after officials hinted such an increase could come as early as June.

Market turnover has trended lower in recent days as investors stayed on the sidelines awaiting more clues on the future trend of U.S. monetary policy. Friday's key U.S. nonfarm payrolls report will be watched for the latest clues on the strength of the labor market recovery.

The disappointment over Tokyo's decision to delay a sales tax increase reverberated in the currency markets with the Japanese yen falling one big figure overnight to 109.480 from an overnight high of 110.830.

"There are three factors behind the dollar/yen tumble. First was the deterioration in risk appetite. The second was that the dollar was vulnerable after having risen too sharply," said Shin Kadota, chief Japan FX strategist at Barclays in Tokyo.

"Lastly, some participants appeared let down that the prime minister did not accompany the tax hike delay announcement with clear stimulus plans."

The euro edged down 0.3 percent to 122.15 yen, nursing its losses after dropping to lows of 121.91 overnight, its weakest since May 6.

Against the dollar, the euro edged 0.24 percent higher to $1.1208 ahead of the European Central Bank's policy meeting later in the session. The ECB is widely anticipated to hold steady on monetary policy.

Crude oil futures slipped after a choppy session on Wednesday, as investors awaited this week's OPEC meeting.

Reuters cited four sources from the Organization of the Petroleum Exporting Countries as saying the industry group was likely to discuss an output ceiling at its meeting in Vienna on Thursday. But later, Iran's Oil Minister Bijan Zanganeh disagreed.

U.S. crude was flat at $49 a barrel, but remained above its overnight session low of $47.75.

The Thomson Reuters Core Commodity Index rose 0.4 percent taking its gains to 14 percent since the start of April.

Article Link to Reuters:

How Long Before North Korea Can Nuke A U.S. City?

By Peter Apps
June 2, 2016

It’s the near future, and North Korea’s regime is on the brink of collapse. As rumors swirl of palace coups, forces on both sides of the world’s most militarized border are on heightened alert. The U.S. military faces a much bigger problem. Somewhere in the Pacific, a North Korean submarine is believed to be carrying nuclear warheads and the missiles to deliver them. And nobody knows where it is.

It sounds like the plot of a “Hunt for Red October”-style technothriller. But if Pyongyang’s technicians continue at their current pace, experts say it is becoming ever more likely.

One thing is certain: North Korea is plowing considerable resources into building its nuclear capability. And it is clearly making progress – even if Tuesday’s failed missile test shows it still has a long way to go.

Japanese officials said what appeared to be a conventional Musudan rocket, which theoretically has the ability to reach Japan and the U.S. territory and military base of Guam, exploded either as or shortly after it left its launcher. North Korea is estimated to have some 20 to 30 of the missiles – first deployed in 2007, but yet to be launched successfully.

What North Korean leader Kim Jong Un wants, most analysts believe, is simple – a rocket that can fire a nuclear warhead at least to regional targets. His ultimate ambition, however, is to be able to hit U.S. cities on the West Coast, most likely from a submarine that could hide itself at sea.

North Korea has been steadily improving its rockets – which can also carry conventional explosives – for decades. It detonated its first nuclear device in 2006 but most experts believe it has yet to build one small enough to be placed on a missile. Having the credible ability to do all of that and get the missiles to sea could take well over a decade, perhaps considerably more.

Once it happens, however, it will be a strategic game changer. At worst, U.S. cities on the West Coast would have to deal with the prospect, however remote, that they might be struck by a North Korean atomic weapon. At the very least, a North Korea armed with nuclear submarines would hugely complicate the calculus for any U.S. president handling a crisis on the Korean peninsula itself.

That, of course, is exactly the plan.

The fact that Pyongyang has conducted so many tests this year, some experts believe, suggests Kim is pushing his scientists harder than ever to deliver working rockets and warheads. North Korea is believed to have tagged the expertise of Russian Cold War-era scientists, and while its capabilities on both fronts lag well behind established nuclear states such as Russia and China, it is already believed to be well ahead of Iran.

In April, South Korean and U.S. officials said a North Korean submarine successfully launched a ballistic missile that traveled some 18 miles -- a major step forward.

Technical experts say TV footage appeared to show a solid fuel rocket successfully launching from underwater, essentially the same system used by Western forces to achieve the same goal.

When she testified before the Senate Armed Services Committee in April, the incoming head of the U.S. Northern Command – responsible for defending the mainland United States – delivered a stark warning.

"The North Korean threat is real," U.S. Air Force General Lori Robinson – previously head of U.S. air forces in the Pacific – told lawmakers. "For now, it's a medium range but they are trying very hard to be able to hit the homeland."

It’s impossible to know exactly how much money and expertise the North Koreans are expending. The scale of the effort, however, is seen as large – in many ways, the same level of commitment the United States gave to the Manhattan Project to build the world’s first atomic bomb during World War Two. Pyongyang’s reason is clear: building that kind of credible ability to strike is seen as central to the long-term survival of the Kim dynasty and its ruling party.

Earlier this month, at the first meeting of its ruling party in 36 years, Kim said North Korea was a responsible nuclear weapons state and would never use its weapons – unless it were threatened. That seemed a clear warning to outside powers, particularly Washington, to steer clear of any attempts to destabilize or attack the regime.

Getting a submarine-based deterrent would be a very big deal – and not just because it might allow the North Koreans to move the launch point much closer to the target. Submarines are central to what nuclear weapons states call a “second strike” capability, the ability to launch missiles even in the aftermath of an overwhelming and perhaps surprise preemptive attack.

The United States, Russia, Britain and France all retain what they call a “continuous at sea deterrent,” at least one submarine offshore at all times ready to fight back even if the homeland and all other military forces are completely taken out. Israel is also believed to have the ability to mount nuclear cruise missiles on its Dolphin-class conventional submarines, while China is now moving quickly towards new ballistic missile submarines for its own at sea deterrent.

This technology isn’t new – the United States and Russia developed it in the late 1950s based in part on plans originally developed to hit Nazi German U-boats in the dying days of World War Two. There is no good reason it should not eventually work for North Korea, too.

If and when it does, Pyongyang is likely to try to keep its submarines very close to its coasts—and its home defenses--at first. Still, once the first nuclear-armed submarine exists, Japan and the United States might feel political pressure to destroy it.

That would come with considerable risks. The North is known to have huge volumes of conventional artillery based along the South Korean border, much of it in range of Seoul and its 10 million residents. The risk of those weapons inflicting massive casualties is one of the key factors that has deterred multiple U.S. administrations from considering the kind of preemptive strike on Pyongyang’s weapons programs that the United States has threatened against Iran.

The Korean War – frozen by its 1953 cease-fire but never otherwise resolved – may not be over yet.

Article Link to Reuters: