Wednesday, June 22, 2016

Projected Results For The 'Brexit' Referendum

Remain: 49.5%; +/- 3%

Leave: 46.4; +/- 2.75%

Wednesday, June 22, Night Wall Street Roundup: Wall St. Dips, All Eyes On British Referendum

By Rodrigo Campos
June 22, 2016

U.S. stocks dipped in low trading volume on Wednesday, with traders focusing on Thursday's referendum on whether Britain will remain part of the European Union.

Stocks rose early after data showed U.S. home resales rose in May to a more than nine-year high, adding to retail sales and international trade data that painted an upbeat picture of the economy in the second quarter.

But the S&P 500 once more hit a ceiling at the 2,100 level, which has been an area where sellers cluster.

Attention remained on Britain's Thursday vote. A poll published on Wednesday showed a statistical tie, with the 'Leave' camp with 45 percent, just one point ahead of 'Remain,' and 9 percent undecided. Oddsmakers, however, showed a clear advantage for the 'Remain' camp.

"I go with the betting odds, that’s the better indicator," said Paul Zemsky, chief investment officer, Multi-Asset Strategies and Solutions at Voya Investment Management in New York.

He said despite not holding "a huge amount of risk" heading into the vote he is slightly overweight U.S. stocks.

"Earnings revisions are up, oil prices are at a sweet spot, retail sales have been strong; once you get past this unforecastable event (the referendum), people will put cash to work in the U.S. equity market," Zemsky said.

Investors also kept an eye on U.S. Federal Reserve Chair Janet Yellen's second day of testimony to Congress. She repeated her speech from Tuesday, in which she played down the risk of a recession, but warned that the British vote and a U.S. hiring slowdown posed risks to the economic outlook.

The Dow Jones industrial average .DJI fell 48.9 points, or 0.27 percent, to 17,780.83, the S&P 500 .SPX lost 3.45 points, or 0.17 percent, to 2,085.45 and the Nasdaq Composite.IXIC dropped 10.44 points, or 0.22 percent, to 4,833.32.

The CBOE Volatility Index .VIX closed at 21.17, its highest in four months, indicating traders are more willing to pay for protection against a decline in the S&P 500.

About 6.3 billion shares changed hands in U.S. exchanges, compared with the 6.8 billion average over the last 20 sessions.

Tesla Motors (TSLA.O) was down 10.5 percent at $196.66 after the Elon Musk-owned electric car maker made an offer to buy his solar installation firm SolarCity (SCTY.O) in a deal worth as much as $2.8 billion. SolarCity was up 3.3 percent at $21.88

FedEx (FDX.N) fell 4.5 percent to $156.51 a day after it reported a quarterly loss.

Adobe Systems (ADBE.O) was down 5.7 percent at $94.01 after its second-quarter revenue and full-year revenue forecast just about met analysts' estimates.

Declining issues outnumbered advancing ones on the NYSE with a 1.44-to-1 ratio and on the Nasdaq, a 1.45-to-1 ratio favored decliners.

The S&P 500 posted 26 new 52-week highs and 3 new lows; the Nasdaq recorded 55 new highs and 56 new lows.

Article Link to Reuters:

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Today's Stock In Play Is EXCO Resources (Symbol #XCO)

Pre-Market Wall Street Roundup: Futures Near Flatline As Yellen, Brexit Vote Eyed

By Kalyeena Makortoff
June 22, 2016

U.S. stock index futures were indicating a mildly higher start for stocks as investors started the countdown to Thursday's U.K. referendum on EU membership and awaited further testimony from Federal Reserve Chair Janet Yellen.

Yellen will appear before politicians for a second day Wednesday, testifying in front of the House Committee on Financial Services from 10:00 a.m. ET.

That's after the Fed chair testified to a Senate panel Tuesday, where she warned that a Brexit could usher in an era of uncertainty and suggested that an interest rate hike may wait for a boost in hiring numbers.

Investors are now counting down the hours to Britain's referendum, with polls set to open Thursday morning.

The International Monetary Fund is also set to hold a press conference on the state of the U.S. economy following their consultation mission, at 9:30 a.m. ET.

Major company earnings today include Red Hat, which is expected to release earnings results after the bell at approximately 4:05 p.m. ET, followed by Bed Bath & Beyond at 4:15 p.m. ET.

Article Link to CNBC:

Trump's Stumbles Fuel Convention Delegate Revolt

Staff shakeups and fundraising shortfalls have emboldened Trump's GOP critics to pursue a bid to block his nomination.

By Kyle Cheney and Alex Isenstadt
June 22, 2016

They’re leaderless, cash-poor and facing an impossibly tight deadline. But Republican activists clamoring to block Donald Trump from the GOP nomination say they’re suddenly in the midst of a Dump-Trump bump.

News of the mogul’s dismal fundraising and skeletal campaign staff has energized the ragtag band of delegates looking to unseat Trump as the party’s nominee at next month’s national convention. A handful of Republican Party insiders, long dismissive of attempts to block Trump, are now more convinced that there will be a substantive effort to stop him.

“It’s implausible but not impossible given the unrest,” said Randy Evans, a Republican National Committeeman from Georgia.

Throughout Tuesday, as Trump’s campaign sought to quash concerns about his anemic fundraising and decision to fire campaign manager Corey Lewandowski, anti-Trump delegates seized on glimmers of hope.

First, they snagged the endorsement of former U.S. Sen. Gordon Humphrey, who told POLITICO he’ll work full-time to help encourage New England delegates to rebel against Trump and to connect his allies with mid-level GOP fundraisers who can sustain their push through the convention. Later, Wisconsin Gov. Scott Walker endorsed one of their preferred methods for stopping Trump: freeing all 2,472 Republican National Convention delegates to vote their conscience, rather than abiding by rules and state laws that bind them to support Trump.

“Delegates are and should be able to vote the way they see fit,” Walker said, according to an Associated Press account.

At the same time, Saul Anuzis, a top adviser to Ted Cruz’s former presidential campaign who has long dismissed attempts to unhorse Trump, floated the notion that a Walker/Cruz ticket would provide the only political mix to tempt conservative delegates away from Trump at the convention.

Delegates leading the stop-Trump efforts have largely been coordinated by New Jersey’s Steve Lonegan — a former Cruz adviser — and Colorado’s Kendal Unruh, a delegate serving on the convention’s rules committee, a 112-member body that will set the terms of convention’s nomination process. They’ve arranged two conference calls in the past week, including one on Sunday in which organizers claimed nearly 400 convention delegates and alternates participated. Another is scheduled for this weekend.

“If a candidate was going into a convention, they have their votes counted — making sure that their supporters are staying strong,” said Unruh. “[Trump] doesn’t have the infrastructure to do that. He has no clue how many delegates he has. We’re getting his soft support.”

Like Trump, the Republican National Committee has written off efforts by anti-Trump delegates. “There is no organized effort, strategy or leader of this so-called movement,” said RNC spokesman Sean Spicer in a Friday tweet. “It is nothing more than a media creation and a series of tweets."

Spicer said Tuesday that his assessment of the group hasn’t changed, despite their recent conference call and claims of momentum. And a slew of RNC leaders agree with his assessment.

“I believe it’s empty talk. I don’t think they have the numbers,” said Solomon Yue, and RNC committeeman from Oregon and a member of the convention Rules Committee. “It’s noise. Talk is cheap … Show me your name."

So far, only a few handfuls of anti-Trump delegates have volunteered to publicly advocate for stopping Trump at the convention. And they haven’t snagged the endorsements of any big-name elected officials or Republican donors that would inject momentum into their cause.

“We have no big donors at all. There’s no big money people,” said Lonegan.

But perhaps the greatest hole in their plan is the inability to agree on who should lead the Republican Party instead of Trump.

“A lot of people who are making noise don’t have any answers,” said Jonathan Barnett, an RNC committeeman from Arkansas. “They don’t have a white knight. They say there’s a problem, but they don’t have a solution.”

Humphrey, for example, said he’s hopeful that the effort results in John Kasich claiming the nomination, even though many of the drivers of the push backed Cruz during the primary.

“The first thing, obviously, the sine qua non, is to stop Trump on the first ballot,” he said. “Then, I intend to split off lickety-split.”

Humphrey, who calls Trump a “sociopath,” said he doesn’t believe the effort requires a settled alternative to succeed. Rather, he said, continued struggles by Trump’s campaign will coalesce support around stopping him.

“To my knowledge, there is no heavy-hitter as yet involved. My opinion is, if this effort becomes more credible –and it has grown in credibility by leaps and bounds – … it will become an easier sell and hopefully will attract one or more of these major donors who spent a lot of money during the primary season contributing to various pro-Cruz, pro-Rubio, pro- Kasich people.”

Their efforts are centered around multiple strategies that will require a complex level of organization the group hasn’t yet shown. One would require recruiting at least half of the 112-member convention rules committee to approve a “conscience clause,” permitting delegates bound to Trump to invoke a moral objection to free themselves and support another candidate. Unruh is spearheading this effort.

If she succeed on the committee — an enormously uphill battle — the measure would still need to win approval on the convention floor from a majority if the 2,472 delegates present.

But Even if Unruh fails to mobilize enough support on the rules committee, she can still create a headache for Trump by pushing for a “minority report.” Just a quarter of the rules committee – 28 members – can ask the full convention to vote on her proposal. Evans, the Georgia committeeman, suggested that there are already at least 22 anti-Trump members on the rules committee, so reaching the threshold for a minority report seems achievable.

“All of the campaigns – Trump, the RNC, Cruz, the Never Trumpers – are making their respective arguments,” he said.

Another method would require individual delegates to challenge existing party rules that purport to bind them to the results of state primaries and caucuses. That effort has been championed by North Dakota RNC Committeeman Curly Haugland, who’s argued for years that delegates can’t be bound to any particular candidate.

Bill Bruch, a Washington state delegate who is part of the anti-Trump drive, said he called Haugland earlier this month to learn more about the nuances of his argument. Now, he says, at least seven of Washington state’s 44 delegates have signed on – names he said would be publicly released soon – to the effort.

Bruch said he’s prepared to challenge any attempt by Washington GOP leaders to declare the delegation’s full support for Trump at the convention. But during nomination roll call votes, states are called alphabetically, he noted, so it may already be clear whether Trump will be the nominee by the time it’s his state’s turn. He said states like California and Colorado will clarify the situation first.

“If for some reason we can’t get a nominee other than Trump, we might abstain,” he said.

Article Link to The Daily Beast:

Trump's Stumbles Fuel Convention Delegate Revolt

You'll Pay For Trump's Campaign. Literally.

Could the American taxpayer end up footing the bill for Trump’s terribly run campaign? It’s certainly not beyond the realm of possibility.

By Tim Mak
The Daily Beast
June 22, 2016

Donald Trump has made money selling himself and his lifestyle for years. Steaksvitamins, and questionable education schemes -- he’s shown he can sell anything -- even his troubled run for the presidency.

The Trump campaign’s most recent financial disclosures show that the self-proclaimed business mogul has a sketchy habit of steering political funds towards his own companies. Through the end of May, The Associated Press noted, Trump's campaign spent approximately $6 million on Trump products and services: nearly 10 percent of all campaign spending.

But the intertwining interests of the Trump campaign and his businesses raise some disconcerting ethical and legal questions as the race for the White House continues. This financial morass is alienating Republican donors and lawmakers who already have their doubts about the presumptive GOP presidential nominee -- and raises questions about just how far Trump could theoretically go if he wanted to profit from his campaign.

"Presidential campaigns generally try to separate themselves from their businesses. What he is doing is unprecedented,” said Larry Noble, general counsel of the Campaign Legal Center. "Using all of your companies to provide services to your campaign -- whether it's illegal or not, that's questionable… if he's doing this to enrich himself, it is illegal."

And there are other potential legal hazards: If a Trump-owned business provides a product at above-market cost, it would enrich Trump, which is illegal; but if that business provides a product at below-market cost, it would be an illegal in-kind corporate donation to the Trump campaign.

Between June 2015 and the end of that year, Trump's campaign spent $2.2 million on Trump-owned businesses, including on Tag Air Inc., an airline where Trump is the CEO.

Most recently, in May, Trump’s campaign paid more than $400,000 to Mar-a-Lago, his Florida club. He spent money on water with the Trump brand. He snatched up a bunch of Trump wine too.

"If he's overpaying for that, he's helping subsidize the company. If he's underpaying for that, the company is subsidizing him,” Noble said. “That's why most campaigns stay away from doing this."

The use of campaign funds to funnel money back to his own operations may also give Republican donors pause. Trump's campaign started June with just $1.3 million in cash, compared to $42.5 million for presumptive Democratic nominee Hillary Clinton.

"Clearly money matters in politics at some point. I don't think he needs to outspend Hillary Clinton, but he needs to be competitive," said Sen. Lindsey Graham, a Republican who has declined to support Trump, in the U.S. Capitol Tuesday.

“Hillary’s got many times what he’s got on hand. That shows his personal fortune better go into the campaign,” added Sen. Mark Kirk, another Republican who has said he cannot support his party’s presumptive presidential nominee. Trump has said he will not be self-funding his general election campaign.

Yet, his party’s biggest dollar donors have already been rather passive: now, with news that Trump’s campaign is spending considerable amounts of money on Trump’s businesses, they have even more reason to be.

“It's certainly not the sort of thing a Republican donor would be impressed by… It would be improper to take people's money and use it to profit the candidate,” said Richard Skinner, the Money-In-Politics policy analyst at the Sunlight Foundation, a transparency group. "It's worth investigating.”

Government watchdogs suggested that there were a number of legal ways that Trump could profit on his campaign going forward, and some others that stepped into legal gray areas -- all of which they are on the lookout for.

If Trump were to loan his campaign more money going forward, he can charge the campaign a exorbitantly high interest rate on the loans. The Federal Election Commission allows “a commercially reasonable rate,” but that can be open to interpretation.

“The majority of interest-bearing personal campaign loans we found were in the five to six percent range, but there were also a decent amount in the eight to ten percent range,” said Jordan Libowitz, a spokesman at Citizens for Responsibility and Ethics in Washington

The most notorious case of this is when Rep. Grace Napolitano, a Democrat from California, lent her own campaign $150,000 at a whopping 18 percent interest rate. She later reduced the rate, but also collected more than $221,000 in interest, paid from her campaign account, between 1998 and 2009.

The real money, suggested Skinner, was if Trump got involved in advertising. It's an enormous market: it's estimated that federal campaigns will spent $4.4 billion on television ads in 2016.

"Say he hired, as consultants, a firm that was controlled by him, so that the profits for making and booking ads would go into one of his businesses. That would net him a whole lot more money," he told The Daily Beast.There is no evidence that Trump currently owns such a company.

Trump’s campaign is also employing a number of individuals who also have roles in the Trump Organization, the umbrella group for the likely GOP nominee’s businesses. This could profit Trump if these employees are being paid with political funds while spending time working on the business side.

If he overpays for these employees with campaign funds, he’s helping subsidize the company; if he pays them below-market rates, the company is subsidizing his campaign. This legal mess is the reason campaigns steer clear of personal businesses.

Trump could also use public financing to fund his general election campaign, something that hasn't been done since McCain accepted it in the 2008 presidential campaign. Taxpayers would be on the hook for up to $96 million in Trump campaign spending -- removing the need for Trump to spend time fundraising for his White House run.

He has previously left the door open to the idea, he now appears to be leaning against. But for a candidate who has seemingly taken

Taking $96 million in public financing would mean that his campaign would be closely audited by the Federal Election Commission and limit his ability to loan his campaign money to just $50,000 -- something he's unlikely to do.

"Because of the $96 million cap, going that route is almost a concession of defeat - Hillary will certainly raise and spend $500 million plus," said Charlie Spies, a Republican lawyer who supported Jeb Bush earlier in the election cycle. "It would also be humiliating for someone who claims to be worth $10 billion and able to self fund, to settle for such a low amount."

Ultimately, whether the campaign decides to involve itself in get-rich-quick schemes in the future, even the campaign spending Trump has engaged in up until now has been questionable.

"There are rules about the use of campaign funds for businesses and the use of business funds for campaigns, and this involves all those rules,” Noble said. “It raises the question of whether the campaign really exists to benefit the Trump brand and Trump businesses. And when he's making decisions, whether he is more concerned about his brands or his campaign."

Article Link to the Daily Beast:

Hillary Clinton Is No Centrist

By Noah Rothman
June 22, 2016

The extremes to Clinton’s left and right have led otherwise reasonable people to trick themselves into thinking she is something she isn’t and never was. Pro-Bernie Sanders Democrats have emerged from the grueling internecine contest with the bizarre notion that Clinton is, at the very least, a centrist. There are a few Trump-skeptical conservatives, desperate for reassurance, who are also inclined toward this view. This is, to be charitable, deluded nonsense. As if any more evidence were needed that Hillary Clinton is not, in fact, a conservative, her Tuesday address on economic issues should suffice.

Clinton’s speech was, like her foreign policy address the other week, directed squarely at Donald Trump. It was so myopically focused on her likely Republican opponent that it again ran the risk of ceding to the reality television star more influence than he may deserve. Though she retains a solid lead in almost every public poll—one that appears to be expanding—Clinton has declined to campaign as the unperturbable frontrunner, Olympian and above the fray.

Perhaps because she believes he strikes such a favorable contrast to her, Clinton seems uncharacteristically eager to take Trump to the mattresses. And that is what she did on Tuesday. Clinton attacked Trump’s business record, accused him of stiffing his contractors, and tried to bait him into releasing his taxes by suggesting the only reason they remain secret is because he has something to hide. Clinton also noted that a Moody’s analysis indicated that Trump’s economic prescriptions represent a genuine threat to the global economy.

Those comments will drive the news cycle 12 to 24 hours, as will Trump’s response. But it should be Clinton’s economic liberalism and her defense of the unpopular status quo that should be making headlines.

In her speech, Clinton teased “transformational investments” in infrastructure spending, a plan to introduce “corporate profit sharing,” whatever that means, and noted she will force “Wall Street corporations and the super-rich” to pay for it all. She insisted that she would aggressively renegotiate global free trade arrangements and attacked the Trans-Pacific Partnership, which she once called the “gold standard in trade agreements.”

Twice, Clinton approvingly name-checked Sen. Elizabeth Warren and defended the creation of the consumer protection agency Warren helped create. The former secretary of state pledged to strengthen regulations on the financial services industry. She promised to make college a “debt free” proposition. She denounced “giveaways for the super rich” and “painful austerity” to address America’s debt crisis.

It would take the addled mind of a confused progressive ill-advisedly seduced by the siren song of a septuagenarian socialist to think any of this counts as fiscally conservative. In fact, only on matters related to national security and the defense of objectively defined American interests abroad has Clinton even made a modest effort to appeal to American voters who could be considered centrists, and even in that area she’s much more John Kennedy than Ronald Reagan. It is less a commentary on Clinton and more one on the radical left-wing orientation of the Democratic Party’s base that the former first lady has been dubbed a moderate.

Article Link to Commentary:

Obama Is Gutting Medicare

By Betsy McCaughey
The New York Post
June 22, 2016

Under the guise of “reform,” President Obama is dismantling Medicare — dooming seniors to needless pain and disability and shortening their lives.

The stakes are high, because Medicare and the access it gives patients to medical innovations have transformed aging. Before Medicare, older folks languished in nursing homes or wheelchairs with crippling illnesses. Now, seniors dodge that fate, thanks to hip and knee replacements, cataract operations and heart procedures — all paid for by Medicare.

The American Journal of Public Health reports that a man turning 65 can expect to live almost five years longer than he would have in 1970 — and almost all of it in good health. What a priceless gift.

A gift Obama is snatching away.

The president’s Medicare reforms make it harder for seniors to get joint replacements. His new payment rules shortchange doctors, discouraging them from accepting Medicare in the first place. New ER rules clobber seniors with bills for “observation care.” Under ObamaCare, hospitals get bonuses for spending less per senior, despite having higher death rates and infection rates.

Expect the Medicare Trustees’ annual report, due out Wednesday, to ignore these problems.

Obama’s latest assault is a 962-page regulation dictating how doctors treat patients. Precious minutes with your doctor are wasted completing mandatory reports for the federal government, and your ailment gets short shrift.

Physicians are glued to computer screens, following prompts, seldom making eye contact with patients. Renowned New York cardiologist Jeffrey Borer’s fed up: “I need to interact with my patients.”

“Doctors who want to provide individualized care” will have to “either opt out of Medicare or simply not comply,” explains Richard Amerling, past president of the American Association of Physicians and Surgeons.

Obama’s rules are “far too complex and burdensome to be workable for most physicians,” warns John Halamka, a Harvard medical professor.

The new rules also make seeing Medicare patients a money loser. Annual fee increases for doctors are capped at a fraction of one percent — even though rents and other costs go up every year.

No wonder nine out of 10 solo practitioners admit they’ll avoid Medicare patients — right when 10,000 new baby boomers are joining each day.

Obama’s rules spell trouble for seniors with cancer. Doctors administering chemotherapy are getting a pay cut and being prodded to choose the cheapest drug, regardless of which medication is best for their patient. Dr. Debra Patt warned Congress this’ll hinder access to drugs like the immunotherapy that subdued former President Jimmy Carter’s cancer.

Another Obama rule penalizes hospitals for doing hip and knee replacements on patients likely to need rehab after surgery, causing hospitals to shun older patients with complex conditions. Grandma will have to settle for the painkiller as candidate Obama notoriously suggested.

Obama claims his rules reward quality instead of quantity. Don’t believe it. Adirondack Medical Center in Saranac Lake has one of the worst scores in New York on patient outcomes, indicating its patients get more infections and die sooner from heart problems and pneumonia than at other hospitals. Yet Adirondack got a Medicare bonus because it’s a low spender.

Same is true of Massena Memorial Hospital in Massena, NY, and Kaiser Foundation Hospitals in Redwood City, Vacaville and Antioch, Calif. Sickening.

During Obama’s 2012 re-election campaign, the president accused Republicans of plotting to “end Medicare as we know it.” A pro-Obama ad depicted a Republican pushing Granny’s wheelchair off a cliff.

Who’s really pushing Granny off the cliff? Obama himself, with Hillary’s helping hand.

Clinton proposes opening Medicare to people in their 50s. That would force seniors to compete with younger patients for resources — like in Britain and Canada, where seniors are labeled “bed blockers,” and certain treatments are reserved for younger patients with more life ahead.

Seniors beware.

Article Link to The New York Post:

NRA Corpses Pile Up

The votes were pure election-year political theater. But the NRA’s day of reckoning will come, and maybe sooner than we all think.

By Michael Tomasky
The Daily Beast
June 22, 2016

Can the National Rifle Association ever be defeated?

I can’t blame you if you’re thinking “no.” It won again this week, as everyone knew it would. But someday, this dam will break.

I admit that these last few days give us little basis for hope, but I do think Connecticut Senator Chris Murphy’s filibuster had some impact in forcing a vote, albeit an unsuccessful one. Majority Leader Mitch McConnell controls the calendar, decides what gets to the floor. He didn’t have to schedule these votes. Granted, his real motivation was undoubtedly to give that small number of Republican incumbents from purple or blue states a chance to cast a reasonable-seeming vote on guns.

But public pressure exists, and polling is through the roof on support for banning the purchase of guns by people on terror-watch and no-fly lists. Murphy’s stand galvanized gun-control forces.

After the Newtown shooting in December of 2012, it took five months for the Senate to hold a vote. This time it took a week. That may not seem like much, especially given that both efforts came to the same bleak end, but this is progress of a sort. These things take a long time.

It was mildly encouraging, too, to see some red-state Democrats vote for gun legislation sponsored by Dianne Feinstein. To NRA hard-liners, she is Satan. There are four red-state Democrats who risk political suicide if they’re not careful on guns: Joe Donnelly of Indiana, Heidi Heitkamp of South Dakota, Joe Manchin of West Virginia, and Jon Tester of Montana. All but Heitkamp voted for Feinstein’s amendment to prevent gun purchases by anyone who’s been on a terror watch list for the last five years.

It should be noted that only Donnelly voted for the other Democratic measure, introduced by Murphy and Chuck Schumer, which sought to close the gun-show loophole. And all four of these Democrats opposed a weak amendment from Republican Chuck Grassley.

But ultimately, yes, the votes were election-year theater. Here’s how ridiculous the whole thing is. Maine Republican Susan Collins has this “compromise” bill that would ban purchases of guns by people on the no-fly list. That’s to get Democratic support. Then it allows people to appeal such a decision, which is supposed to lure Republicans, who’ve said they don’t like the ban because some people have been incorrectly put on those lists.

You might think that that would mean that enough senators from both parties could vote yes. But as of Tuesday afternoon, a Senate source explained to me, no other Republican had yet signed on to Collins’s bill. A small number presumably would—Mark Kirk of Illinois, who’s facing a tough reelection fight in a very blue state, maybe a few others. But Collins would need 15 or 16 Republicans to back her to get the 60 votes needed to end cloture. That’s as close to impossible as anything can be.

Now it gets even more baroque: Despite this lack of Republican enthusiasm, Senate Majority Leader Mitch McConnell may well give Collins a vote anyway. McConnell, of course, has no personal interest in compromise on this issue. He’s NRA all the way.

However, he probably wants a vote for the sake of Kirk, New Hampshire’s Kelly Ayotte, Pennsylvania’s Pat Toomey, Wisconsin’s Ron Johnson—that is, all the Republicans up for reelection in blue states. It’ll look nice to voters back home that they cast a bipartisan gun vote.

But of course Democratic leader Harry Reid knows this, and so he might respond to such a move by McConnell by encouraging his caucus to vote against the Collins measure, thereby denying Kirk and the rest the desired bipartisan cover. Capische?

So the bill that is an actual compromise, the one bill on which both sides might actually have been able to agree, at least in theory, is the very bill that might lose by something like 95-5.

It’s not just ridiculous. It’s immoral. How high do the carcasses need to pile?

I sense we’re starting to reach the point where we’re going to learn the answer to that question. This just can’t go on forever. For starters, if Hillary Clinton maintains her lead and is elected president, one of the first things she’s going to do is put a liberal on the Supreme Court, making for a 5-4 liberal majority. Even if she settles for Merrick Garland, signs are he’d back gun control measures (the NRA already came out against him).

That could lead to an overturning of District of Columbia v. Heller, which vastly expanded individual gun-ownership rights. Given enough time, and maybe an Anthony Kennedy or a Clarence Thomas retirement and thus a 6-3 liberal majority, it could lead to still bigger changes in gun-law jurisprudence.

That would lead a defensive NRA to try to tighten its grip on Congress even more. And that will probably work, for a time. But it will embolden the anti-NRA forces too. Momentum will then be on their side.

And the mass killings will continue, and the bodies will pile up, and public outrage will grow. And one of these days, there’ll be a tragedy that will make everyone, even the number of Republicans who’d be needed to break a filibuster, say “enough.” It would have to be just the right kind of thing, click all the demographic boxes just right—a white man who bought an assault weapon with no background check and went on a rampage and killed many white people in a heavily Republican part of the country. I’m not wishing this on anyone, but then, I don’t need to. As we continue to do nothing, the odds increase daily that it will happen.

Things look awful until, one day, they suddenly don’t. The day Rosa Parks sat down on that bus, I bet not that many people would have predicted that a president would sign a civil rights bill just nine years later. The evil that is the NRA is so thoroughgoing and so repulsive to most Americans that it just can’t last forever. Newtown and Orlando energized millions of people. The LGBT community, I gather, is going to embrace gun-control as an issue. They’re organized, and they have money and clout. The old saying that pro-gun people vote on that issue while anti-gun people don’t isn’t as true as it once was.

So be angry about what happened. But Wayne LaPierre’s day will come, and maybe sooner than we think. And what a day it will be.

Article Link to The Daily Beast:

Wednesday, June 22, Morning Global Market Roundup: Asian Stocks Up As Investors Hopeful Britain Will Vote To Stay In EU

By Nichola Saminather and Hideyuki Sano
June 22, 2016

Asian stocks edged up on Wednesday as investors were guardedly optimistic about a "Remain" vote in Britain's make-or-break European Union referendum, while Federal Reserve Chair Janet Yellen's cautious tone virtually ruled out a July rate hike.

European markets were also poised for a positive start, with financial spreadbetter CMC Markets expecting Britain's FTSE to gain 0.4 percent, France's CAC 0.5 percent and Germany's DAX 0.7 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent. Japan's Nikkei trimmed its losses to 0.6 percent.

China's CSI 300 index and the Shanghai Composite both advanced about 0.4 percent, while Hong Kong's Hang Seng reversed earlier losses to climb 0.5 percent.

On Wall Street, U.S. S&P 500 Index gained 0.27 percent but was still below an 11-month high touched earlier this month.

Fed chief Yellen said on Tuesday the central bank's ability to raise interest rates this year may hinge on a rebound in hiring that would convince policymakers the U.S. economy isn't faltering.

"A couple of months ago, Yellen was cautiously optimistic. Now she appears cautious while trying to be optimistic," said Tohru Yamamoto, chief fixed income strategist at Daiwa Securities.

"Judging from her comments, a rate hike in July is completely off the table. It is questionable whether the Fed can have enough solid economic data to back up a rate hike even by September," he said.

The dollar slipped 0.2 percent against the yen to 104.57 yen, after a brief rally to 105.065 overnight as Yellen expressed general optimism about the U.S. economy.

Yellen's more circumspect view on the future path of U.S. rates comes as many investors remain on the sidelines ahead of Thursday's British referendum on its European Union membership.

Polls in recent days showing rising momentum for the "Remain" camp helped boost risk appetite in global markets and have weighed on safe-haven assets such as German bonds and the Japanese yen since Friday.

But many investors are shunning trading as the vote remains too close to call, with an opinion poll published on Tuesday showing the "Remain" campaign's lead had shrunk.

"We still have three polls on the U.K. referendum before the vote, and another shift back to Brexit will see risk appetite disappear in a jiffy," Bernard Aw, market strategist at IG in Singapore, wrote in a note.

The British pound edged back to $1.4681 after climbing to as high as $1.4788 on Tuesday, its loftiest level since January 4.

The implied volatilities of the pound have also pushed up from lows on Tuesday, reflecting investor anxiety over a sharp fall in the currency in the event of Brexit.

The euro also slid to $1.12555 from this week's high of $1.1383 hit on Monday, turning negative on the week.

European Central Bank President Mario Draghi said on Tuesday that Britain's referendum was adding uncertainty to markets, and that the ECB was ready to act with all instruments if necessary.

As investors grew more hopeful of a "Remain" vote, spot gold languished, falling 0.5 percent to a near-two-week low of $1,261.80 an ounce.

On the other hand, oil prices extended their recovery after news of a larger-than-expected draw in U.S. crude stockpiles.

Crude inventories fell by 5.2 million barrels for the week ended June 17, the American Petroleum Institute (API) said. The trade group's figures were triple the draw of 1.7 million barrels forecast by analysts in a Reuters poll.

Brent crude futures advanced 0.5 percent to $50.88 per barrel, after rising high as $51.10 on Tuesday, its highest level since June 10.

U.S. crude futures' new benchmark August contract rose 0.6 percent to $50.14.

Article Link to Reuters:

Oil Prices Above $50, Buoyed By U.S. Stock Draw

By Aaron Sheldrick
June 22, 2016

Oil prices rose in Asian trading on Wednesday, with U.S. crude joining Brent above $50 a barrel after data from the American Petroleum Institute (API) showed a larger than expected draw on stocks.

U.S. crude futures' August contract, the new front month from Wednesday, climbed 35 cents to $50.20 a barrel by 0604 GMT, marking its first rise above $50 since June 10.

Brent crude futures were up 32 cents at $50.94 a barrel.

U.S. crude inventories fell by 5.2 million barrels for the week ended June 17, the API said. The trade group's figures were triple the draw of 1.7 million barrels forecast by analysts in a Reuters poll.

The U.S. government's Energy Information Administration will issue official stockpile data on Wednesday.

Markets remain jumpy over the possibility the United Kingdom will vote to leave the European Union on Thursday in a referendum, with polls showing little difference between the "remain" and "leave" camps.

The dollar erased early modest gains on Wednesday with sterling near a six-month high on the eve of the referendum. [FRX/]

Japan's Nikkei closed nearly 0.6 percent lower, while gold prices were down 0.4 percent.

"Strengthening in the dollar and weakness in other currencies would ... be directionally short-term bearish for crude oil" in the event of a British exit, Societe Generale said in a research note.

A stronger dollar makes oil more expensive because it raises the cost for imports for most of the world's countries.

Still, fundamentals could come into play once the dust settles from the vote.

"Global demand growth is quite robust, driven by the U.S., China, India and other emerging markets," Societe Generale said. "On the supply side, declining U.S. crude production is expected to underpin a trend of lower non-OPEC production."

Article Link to Reuters:

U.S. Officials: Gains Against Islamic State Not Yet Enough, Could Backfire

By John Walcott
June 22, 2016

President Barack Obama and some administration officials have hailed recent military gains against Islamic State in Iraq and Syria, but other U.S. officials and outside experts warn that the U.S.-backed air and ground campaign is far from eradicating the radical Islamic group, and could even backfire.

While Islamic State’s defeats in Iraq and Syria have erased its image of invincibility, they threaten to give it greater legitimacy in the eyes of disaffected Sunni Muslims because Shi'ite and Kurdish fighters are a major part of the campaign, some U.S. intelligence officials argue.

A second danger, some U.S. officials said, is that as the group loses ground in the Iraqi city of Falluja and elsewhere, it will turn increasingly to less conventional military tactics and to directing and inspiring more attacks against "soft" targets in Europe, the United States and elsewhere.

One U.S. intelligence official, who spoke on condition of anonymity, warned that in response to losing Falluja and other cities the group likely would turn more to guerrilla tactics to disrupt efforts to restore government services.

"We can expect ISIL to harass local forces that are holding cities it previously controlled, thereby drawing out battles into protracted campaigns,” he said.

The territory held by ISIL has enabled it to build up revenues through oil and taxes, provided it a base to launch attacks on Baghdad, and acted as a recruiting tool for foreign fighters drawn to the self-proclaimed Islamic caliphate.

President Barack Obama said on June 14 -- two days after a gunman pledging allegiance to Islamic State killed 49 people in Orlando -- that the militant group was losing "the money that is its lifeblood" as it continues to lose territory.

Brett McGurk, the presidential envoy for the Global Coalition to Counter ISIL, told a White House briefing on June 10 that the group has lost half the territory it had seized in Iraq, about 20 percent of its self-proclaimed caliphate in Syria, and at least 30 percent of its oil production, which accounts for half its revenue.

But Islamic State fighters in Iraq are already showing signs of adapting a guerrilla war-style strategy, Seth Jones, an analyst with the RAND Corp, told Reuters.

“It looks like the areas that the Islamic State has lost, they are generally abandoning, and that would mean preparing to fight another day,” he said.

Despite the progress against ISIL on the battlefield and in the financial realm, CIA Director John Brennan told the Senate Intelligence Committee last week: "Our efforts have not reduced the group’s terrorism capability and global reach."

"The resources needed for terrorism are very modest, and the group would have to suffer even heavier losses of territory, manpower, and money for its terrorist capacity to decline significantly,” he said.

Encouraging Lone Wolves

Hassan Hassan, a terrorism expert at the Royal Institute of International Affairs in London, told the U.S. Senate Homeland Security committee on Tuesday that the Orlando attack showed the group's territorial losses hadn't diminished its broader appeal.

"The Islamic State’s international appeal has become untethered from its military performance on the ground,” he said.

Sunnis in Iraq no longer view the ISIL radicals as liberators, and the Shi'ite role in the fighting is less important than it was a year ago, officials in Baghdad told Reuters. As a result, they said, the Iraqi army has gained Sunni acceptance and is seen less as a Shi'ite-led sectarian force than it was under former Prime Minister Nouri al-Maliki.

But the risk that offensives against ISIL involving Shi'ite forces could foment sectarian tensions and help the group have been underscored by allegations that 49 Sunni men were executed after surrendering to a Shi'ite militia supporting the army offensive to retake Falluja.

Such reports "feed into ISIL's narrative," the U.S. intelligence official said.

Former U.S. ambassador to Iraq Ryan Crocker, who visited the country in March, wrote last week in the Cipher Brief, an online intelligence publication, that extremist Shi'ite militias are on the scene in Fallujah. Iranian Quds Force commander Qassem Soleimani has underscored Iran’s role in the conflict by appearing publicly on the battlefield.

As ISIL has faced military setbacks, the flow of foreign fighters traveling to Iraq and Syria has dropped significantly, according to the Global Coalition to Counter ISIL.

European counter terrorism officials said some 300-400 already have returned to Britain, raising concerns about what they called an increasing convergence of IS ideology and mentally unstable individuals.

So called "lone wolf" attackers like the Orlando shooter are Islamic State's way of "overwhelming their enemies with threats that have to be run to ground," Bruce Hoffman, a terrorism expert at Georgetown University in Washington, told Reuters.

"That is the true intention beyond the lone wolf attacks -- to distract and overwhelm the attention of law enforcement and intelligence.”

Eliminating the threat ISIL poses will require coupling the military gains in Iraq and Syria with political and economic reforms, say U.S. officials and outside experts.

“They became a strong organization because of the political failure,” Hassan said. “My fear is that there’s so much focus on the military component, rather than on the political, and social and religious dimensions.”

Article Link to Reuters:

U.S. Officials: Gains Against Islamic State Not Yet Enough, Could Backfire

Clinton, Obama, Trump And The Abuse of Power

The media effort to label Donald Trump as an authoritarian is absurd.

By James Freeman
The Wall Street Journal
June 22, 2016

The authors of a widely quoted study finding that political conservatism is correlated with an authoritarian personality have announced a correction. Turns out their article in the American Journal of Political Science reported their findings exactly backward. The academics now tell us that views on the left side of the political spectrum correlate with authoritarian traits. Political pundits should consider running similar corrections regarding Donald Trump.

It has been this year’s most popular media cliché: casting the likely Republican presidential nominee as an aspiring tyrant who will trash constitutional norms in his unending quest for power. Political seers from Georgetown to Manhattan claim to hear in Mr. Trump’s words disturbing echoes of the 1930s. Columnists forecast a dark chapter of authoritarian rule in the U.S. should he be elected.

But Mr. Trump isn’t that bad. America isn’t that fragile. And for anyone concerned about Washington tyranny, there are larger threats— Hillary Clinton, for one—that deserve attention.

Mr. Trump has been under fire lately for the temporary ban on Muslim immigrants that he proposed last year. Last week he seemed to refine the proposal, saying the U.S. should screen for terrorist links and also promising, “I will suspend immigration from areas of the world when there is a proven history of terrorism against the United States, Europe or our allies, until we understand how to end these threats.” Like many Americans, I think the better course is to destroy Islamic State while also welcoming newcomers. But there’s nothing authoritarian about trying to persuade voters that the country should amend its immigration policies.

President Obama clearly knows this, because he spent much of his anti-Trump rant last week criticizing—not the temporary ban advanced by Mr. Trump—but abuses against American citizens that Mr. Obama imagines will result from the Trump agenda.

Yet Americans don’t have to imagine the abuses of the Obama administration. Mr. Obama falsely claimed the power to determine when Congress is in recess. He asserted the ability to waive immigration law for millions of people. Does using the IRS against philosophical opponents count as authoritarian?

No evidence has been uncovered tying Mr. Obama to the IRS targeting scandal. But since he proclaimed that it involved “not even a smidgen of corruption” long before his government had finished investigating, and has made no serious effort to reform the agency, he now bears some responsibility.

Mr. Trump has made inappropriate or mean-spirited remarks about all kinds of people. But does this mean he’s marching the U.S. toward Nuremberg? For the pundits who claim to worry, let’s hunt for similarities between Donald Trump and the dictators so much on the minds of media folk.

One trait that ties Donald Trump to some of recent history’s most significant authoritarians is that they achieved many of their goals as relatively young men. While in their 30s, Hitler took over what would become known as the Nazi party, Fidel Castro overthrew the Cuban government, Mussolini created the Fascist movement in Italy and Mr. Trump purchased the property on Fifth Avenue between 56th and 57th that would become Trump Tower, a mix of luxury retail, office space and residential condos.

By his early 60s Stalin had killed millions of his countrymen. At the same age, Mr. Trump had already offered a signature collection of shirts, ties, cuff links, eyewear and leather goods. He has also peddled furniture, mattresses, bedding, lighting, home décor and more. Did Stalin ever have his own fragrance?

Mr. Trump has produced plenty of failures, but they occurred in the world of commerce, where customers get to decide whether a venture and its leader succeed. Authoritarians wouldn’t know much about that.

The rule of law and the honest, open government that Americans cherish, and that allow them to make their own choices, are always threatened by those who seek dominion over free people. But the U.S. has more than two centuries of constitutional order on its side. Despite differences and evolving views on many issues, Americans still love freedom. And thanks to its liberal political leanings, the free press will be a much more reliable check on a President Trump than it has been on Mr. Obama or would be on another President Clinton.

The facts suggest that Mrs. Clinton is more likely to abuse liberties than Mr. Trump. Only one candidate in this election cycle has run for president while refusing to cooperate with a federal investigation into her conduct in a previous office. Only one candidate is on record opposing the First Amendment’s guarantee of free speech. Only one candidate condemns the Supreme Court for allowing a movie critical of her to be distributed and advertised.

Besides seeking to silence critics, another hallmark of authoritarians is that they abhor honest, fair elections. Mr. Trump, unlike the Democratic National Committee of the Bill Clinton era, has never had to return more than $1 million in donations because they were tied to foreign sources and likely illegal.

America managed to survive Mr. Clinton’s two terms, so it can stand the far less vulgar Mr. Trump. The question is how long it can survive if it elects presidents with a record of opposing constitutional rule of law.

Article Link to The Wall Street Journal:

Trumponomics Gets Scarier When You Actually Study It

By Paula Dwyer
The Bloomberg View
June 22, 2016

Hillary Clinton is trying to scare the heck out of voters who think Donald Trump's business record qualifies him to be president. He has no real economic strategy beyond over-the-top promises, she said on Tuesday, and the few ideas he offers would cause millions of Americans to lose their jobs. "Just like he shouldn't have his finger on the button, he shouldn't have his hands on our economy," Clinton said.

Well, OK, what did you expect her to say? There's a campaign going on! What happens when you ask some politically neutral economists to look at the U.S. economy under a President Trump? You get something titled "Macroeconomic Consequences of Mr. Trump's Economic Policies." Laid side-by-side with Clinton's partisan assessment, it's even scarier.

The appraisal, from Moody's Analytics, is neither a liberal nor a conservative take, but a straightforward look at what might happen if Trump's tax-cut, immigration and trade policies became law. Using economic models similar to those the Federal Reserve and the Congressional Budget Office use, the analysis estimates how Trump's proposals would affect interest rates, jobs, the budget deficit, markets and growth.

Trump's proposals would probably give the economy a short-term boost before wrecking it soon afterward, said Mark Zandi, a co-author who advised Republican nominee John McCain's campaign in 2008 and has contributed to Clinton's this year.

In year one of a Trump presidency, for example, the study predicts that gross domestic product would rise by 3.7 percent and employers would add 4 million jobs to bring the unemployment rate down to 3.5 percent. But like a sugar high, the initial boom would swing quickly to bust, and a long, deep recession would hit.

It all begins with Trump's tax cuts, which are so massive they would result in $9.5 trillion in revenue losses over a decade. Because Trump wants to spend more on the military and for veterans' health care, plus protect Medicare and Social Security from cuts as well, the federal deficit would jump -- and require substantial borrowing to finance. For a year, the government spending combined with the tax cuts would act like a huge stimulus.

It would wear off quickly. By year two, Trump's immigration and trade policies would start to kick in. He wants to send some 11 million undocumented immigrants back home, impose 45 percent tariffs on imports from China and 35 percent tariffs on the goods of any U.S. company that moved jobs offshore.

With the job market already near full employment, labor shortages would result once undocumented workers who make up 5 percent of the labor force begin leaving the country. (The study assumes most would self-deport and that workplace raids would be minimal). Employers would have no choice but to raise wages to attract and keep workers.

Next, the borrowing needed to finance the deficit -- by the end of 2020 the shortfall would be about $1 trillion higher than under current law -- would drive up interest rates. Consumer prices would also rise once higher tariffs took effect and the Chinese retaliated with levies of their own. China and Mexico account for 35 percent of non-oil imports. Higher tariffs, the analysis says, would raise U.S. consumer prices by almost 3 percent.

The combination of higher wages, consumer prices and interest rates would send inflation soaring. The consumer price index, which was at 1 percent in May, would rise to 4.2 percent by the end of 2019, the analysis says. The Fed would move quickly to tamp down inflation expectations by raising interest rates. The result would be a recession in Trump's second and third years in office.

By the end of four years, unemployment would hit 7 percent, more than two points higher than it was in May. If President Barack Obama's policies continued, the Moody's economists say, employment would rise by 6 million, versus a 3.4 million decline under four years of Trump.

President Trump would send the nation's total debt ballooning -- from 75 percent of GDP at the end of 2016 to more than 130 percent a decade later. Over the same period, 10-year Treasury yields would jump to 6.7 percent from about 2.4 percent. The S&P 500 would plummet and not recover its 2016 level until 2021.

Lower- and middle-income households would bear most of the recessionary burden, the authors claim. Inequality would worsen because Trump's tax cuts would mostly help the wealthy. "It would be a difficult four years for the typical American family," the analysis says.

Trump's camp complains that the Moody's analysis doesn't credit him enough for the stimulative effect of tax cuts and deregulation. To that, Zandi says, "But I do." He even gives Trump the benefit of the doubt in many cases. The analysis, for example, assumes domestic spending would be cut by $2 trillion over 10 years, even though cuts of that magnitude would be politically difficult to make. It doesn't take into account some of Trump's more preposterous ideas, such as negotiating repayments with investors in Treasury securities and bringing back the gold standard.

The analysis also assumes the shrunken labor force from his immigration plan would take eight years to complete, rather than the two years Trump claims. And it assumes that China and Mexico would retaliate with higher tariffs of their own but that a broader trade war wouldn't erupt. That's pretty optimistic.

The Moody's team considers other scenarios, including one in which Congress greatly waters down Trump's proposals. Even then, the economy would be smaller, the U.S. would be isolated from global trade and its attractiveness to immigrants and foreign investors would be diminished. Perhaps that's the way Trump likes it.

Article Link to The Bloomberg View:

Losing A Nuclear Weapon Against Climate Change

By Editorial Board
The Bloomberg View
June 22, 2016

Some environmentalists are thrilled at Tuesday’s announcement of the planned closing of California’s Diablo Canyon nuclear power plant. They might want to reconsider: Fighting climate change requires more nuclear power, not less.

The losers in this plan, which is pending regulatory approval, are all those who will suffer the consequences of climate change. That Diablo Canyon’s two reactors could be allowed to shut down is alarming evidence that too little effort is being made to reduce greenhouse-gas emissions. The climate-friendly electricity that the Diablo Canyon plant generates, which amounts to about 9 percent of California’s power, would be lost.

Yes, a deal reached among the plant’s operator, labor unions and a few environmental groups stipulates that greater energy efficiency and more renewable power -- solar, wind and the like -- will pick up the slack. But to the extent that these strategies are used to replace clean nuclear power, they make zero progress toward lowering carbon emissions. Diablo Canyon prevents the emission of 6.8 million tons of carbon dioxide annually.

It’s true that Diablo Canyon stands close to a geological fault line. But the plant has operated safely since it opened in the mid-1980s. And it has been built to withstand an earthquake much stronger than anything that fault could be expected to unleash.

Diablo Canyon now joins the list, already too long, of nuclear plants across the country that are slated to close (or already have) because they can’t compete with record-low natural gas prices. Nuclear power is also expensive because reactors require a relatively large work force.

The plants should be given full credit for the climate protection they provide -- via a carbon tax or through inclusion in state energy portfolio standards -- so that they can keep generating clean power for many more decades.

Once the plants shut down, relicensing and restarting them will be prohibitively difficult. Allowing them simply to close may be satisfying to some environmentalists. But it is a wrong turn in the fight against climate change.

Article Link to the Bloomberg View:

The Brits Have No Good Options On Europe Vote

By Clive Crook
The Bloomberg View
June 22, 2016

U.K. voters face a momentous choice on June 23, when they’ll vote on whether to remain in the European Union. A decision to leave might badly hurt the economy, which relies on Europe for trade and investment -- but the repercussions would go wider than that.

The larger European project would also be in danger. An enterprise that secured peace on the continent after World War II, moved hundreds of millions of people toward greater prosperity, and helped entrench liberal democracy in Eastern Europe after the Soviet collapse would be gravely damaged.

The risks are huge -- yet recent polls show the Leave campaign is leading. Europe’s governments are waking up to the fact that Brexit might actually happen.

Britain faces an unsolvable dilemma. Its economic interests tell it to stay, especially since the U.K. has negotiated an advantageous status within the union: full access to Europe’s integrated markets, but without the single European currency, which has proved so detrimental to the economies of many other EU members.

Yet Britain won’t ever be comfortable with the EU’s larger political ambition to create an “ever closer union.” If they choose to stay, Brits will resent the steady erosion of their power of self-government, which voters see as the hollowing out of their democracy.

Whatever Britain decides on June 23, it’s sure to regret it.

Article Link to The Bloomberg View:

To Be Fixed, Europe Needs A Wrecking Ball

By David Ignatius
Real Clear Politics
June 22, 2016

WASHINGTON -- Imagine a young Margaret Thatcher, a politician who deeply mistrusts the political establishment and identifies on a gut level with the frustrations of the middle class. That's shorthand for what Britain will need as it picks up the pieces after Thursday's "Brexit" referendum.

Friends of Britain (and Europe, too) need to stop pretending that support for withdrawal from the European Union is simply a product of xenophobic right-wing nationalism. Nearly half the country supports a British exit, according to pre-referendum polls, and these people are not all deluded reactionaries.

The European Union is unpopular in Britain for the same reason it is in many other parts of Europe: It's seen as the project of a financial and political elite that often operates without regard for public sentiment. Nationalism may be a tarnished, retrograde sentiment, but the fact remains that many people feel deeply attached to their countries.

This patriotic feeling can't be expunged. But it should be modernized. And that's where a modern Maggie could do wonders. Think of a restless, mildly rebellious British politician who could find common cause with like-minded Europeans who are tired of being lectured by Brussels.

Thatcher took a wrecking ball to an earlier generation of entrenched, elite opinion in Britain. When she became prime minister in 1979, Britain was still encased in a class system that maintained the conservative status quo at both ends -- the power of the aristocratic Tory elite and the Labour Party trade-union bosses, who in tandem resisted any reforms that might challenge their power.

Thatcher, a grocer's daughter, despised this status quo. She defied a bitter 1983-84 strike by the National Union of Mineworkers where previous prime ministers, Labour and Tory, had caved. She deregulated the financial sector, in what was called the "Big Bang," restoring the City of London to global primacy.

Britain in recent years has seemed to be slipping backward. David Cameron, the conservative leader, is an Old Etonian who, in form and function, is a latter-day embodiment of the Tory elite. Labour leader Jeremy Corbyn, similarly, is a throwback to the left-wing, union-cosseted yesterday of his party.

The most hopeful aspect of the Brexit debate is that most young British people seem to be instinctively European. They have grown up in a global economy where people move from job to job and country to country. A June 13 poll by ICM for the Guardian found that 56 percent of voters aged 18 to 34 want to remain in the EU, while just 39 percent favor leaving. By contrast, 55 percent of those over 65 favor withdrawal.

Other surveys make the same point: The older people get in Britain, the more they mistrust the EU. That's the biggest danger of the pro-Brexit campaign, beyond the economic damage it has risked. It would tie the country's future to the oldest, most conservative cohort of its population.

The EU leadership in Brussels deserves its bad reputation. Lacking the instruments of real governance, the Eurocrats have nibbled around the edges with rules and regulations that imply a common destiny but leave to others the hard questions, such as border security and fiscal discipline.

Germany sits uneasily atop this shaky enterprise. The Germans are lucky to have a chancellor who, no matter how wealthy and privileged her country may be, still acts like the Lutheran pastor's daughter who was raised in East Germany. Asked once what was distinctive about Germany, she gave this sturdy, if unlikely, answer: "No other country can build such airtight and beautiful windows." Her power comes in part from her ability to appear ordinary.

Europe is only beginning its process of change. A senior German official told me a few months ago that the strange thing about the Brexit vote was that "the best case and the worst case are so close together." What he meant was that Germany understands that Europe's institutions must change, regardless of whether Britain is in or out.

EU purists may still dream of a tighter federalism, but that would involve a surrender of national power that nobody, least of all the Germans or French, really wants. What's more likely is a core EU that runs at German speed, and allows the periphery some of the leeway that Cameron won for Britain in the negotiation that preceded the wretched Brexit campaign.

Rather than crying crocodile tears for the old version of the EU, modernizing politicians in Britain and on the continent should be thinking about change. It's time for "Maggie redux." Bring on the wrecking ball.

Article Link to Real Clear Politics:

Turkish-EU Ties In Throes Of A Slow Death

The EU’s demand for a revision of Turkey’s anti-terrorism law as a precondition for allowing Turks visa-free travel in Europe has turned into the Achilles’ heel of ties between Ankara and Brussels.

June 22, 2016

Ankara’s bid for European Union membership used to underlie Turkey’s appeal for many of the Middle East’s progressive elements in the past. The Arab Spring enhanced Turkey’s importance as a “model country” for other Islamic countries. With the Arab Spring gone sour and the EU battling its own crises, while Turkey becomes more authoritarian under President Recep Tayyip Erdogan, these hopes have all but faded.

It was a negative issue, the refugee crises, which appeared momentarily to inject fresh life into ties between Ankara and Brussels recently. Following the highly controversial migrant agreement concluded by the sides in March, then-Prime Minister Ahmet Davutoglu announced “a new era” in relations with Europe.

“Today we realized that Turkey and the EU have the same destiny, the same challenges and the same future," he said over-optimistically.

Davutoglu also came back from Brussels with a “bonus” he hoped would mollify domestic critics of the migrant agreement; these critics said the pact would turn Turkey into Europe’s refugee camp.

Turks would be given the privilege of visa-free travel to Europe by the end of June, provided Ankara met 72 criteria for this.

Erdogan has since fired Davutoglu, and the general impression is not one of deeper engagement between Turkey and the EU, but what appears to be a continuing process of disengagement.

Ironically, it is the “bonus” Davutoglu brought from Brussels in March that has become the Achilles’ heel in this respect. It is clear that Turks will not gain the right of free travel in Europe by the end of June. That has been already deferred to October and many doubt it will happen then.

At issue is Turkey’s refusal to fulfill a specific EU demand, even though Ankara has met most of the 72 criteria required. Turkey is being called on to change its anti-terrorism law so that journalists, academics, activists and ordinary citizens are not charged under it for merely expressing their views — something that is happening with increasing frequency.

Ankara is currently embroiled in a bloody war against the outlawed Kurdistan Workers Party (PKK), which the United States and the EU have also designated as a terrorist group. Erdogan, who is clearly displeased with the way Davutoglu negotiated the migrant deal, reacted to the EU demand with his familiar abrasive manner.

Early in May he made it clear that Ankara would not comply with the deal, indicating that if the EU is not pleased with that, it can go its way while Turkey goes its. In a separate address in May, he said, “Asking for the definition of terrorism to change is to call for a stop to fighting terrorism. This amounts to supporting terrorism.”

Erdogan also recalled that PKK supporters were allowed by Belgium to open a publicity tent outside the European Commission building in Brussels in March, while Davutoglu was negotiating the migrant deal inside.

“They give them euros and tell them to go and divide Turkey. They give them weapons. Do they think we don’t know all of this?” he said angrily.

Prime Minister Binali Yildirim, who replaced Davutoglu in May, also indicated recently that Turkey would forgo the visa privilege for the sake of fighting terrorism. In an address to his parliamentary group, Yildirim said the EU’s demand regarding Turkey’s anti-terrorism law was “unfriendly,” adding that Ankara would never bow to this.

“Even if it is the visa waiver that is in question, this will not happen. Let [that waiver] stay where it is,” Yildirim said defiantly.

Turkish government officials have also suggested that Ankara will refuse to fulfill its obligations under the migrant agreement if the visa waiver does not go through as promised.

Already under intense criticism for allegedly caving into “Turkish blackmail” with the migrant agreement, top EU officials are adamant with regard to their demand, despite concerns that this might undermine the migrant deal.

Regardless of the controversy surrounding it, this agreement — which is being silently implemented even though the Turkish parliament has not ratified it yet — has reduced the number of illegal crossings to Greece from Turkey.

Analysts argue, however, that Turkey can’t afford to scuttle the migrant deal over the visa issue because the refugee crises and the related threat from Islamic terrorism cut both ways. The fact that the final decision on the visa issue has been deferred to October buys time for the sides to try to overcome the impasse.

The current state of affairs also vindicates those who argued that it was a fatal mistake to lump the refugee question with Turkey’s EU bid, and the visa issue. The result, they point out, has left Turkish-EU ties in a worse state.

Retired Ambassador Osman Koruturk, whose past posts included Paris and Berlin, says that using refugees to advance unrelated political needs was unethical on the part of both sides to start with.

“Both sides acted dishonestly with regard to their promises, so it was not hard to see then that the whole business would have negative results for Turkish-EU ties,” Koruturk, who is currently a deputy from the main opposition Republican People's Party, told Al-Monitor.

He recalled that German Chancellor Angela Merkel had started the campaign against Turkey’s EU membership while he was ambassador in Berlin and she was then in the opposition; Koruturk indicated that it was less than honorable for her to give the impression now that she was supporting this bid purely for the sake of the migrant deal.

The negative results of this deal were also seen in the UK’s Brexit campaign. Anti-EU campaigners used the visa question to argue that Turkey will eventually be given "free EU membership” even if it doesn’t fulfill the democratic prerequisites for this, and flood Britain with Turks.

Opinion polls show that most Turks believe that the EU will never admit Turkey as a member. This also makes Erdogan’s life easier, enabling him to continually lambaste Europe for its “perfidy.”

Koruturk also believes that the current situation plays into Erdogan’s hands. “When he said Turkey would go its own way if the EU insists on its demands, he was probably expressing his true desire,” Koruturk said. “He considers the West to be degenerate and believes its values are not suitable for Turkey.”

Erdogan’s continuing railings against Europe seem to confirm this assessment.

Meanwhile, the recent resignation of Hansjoerg Haber, the EU’s ambassador to Ankara — for “reasons to do with Turkey,” according to EU officials — also shows where Turkish-EU ties stand.

Given this general situation, the impression that these ties are in the throes of a slow death appears unavoidable.

Article Link to Al-Monitor:

Turkish-EU ties in throes of a slow death

After ISIS: A Smarter Way To Fight Radicalization

Terrorist recruitment is chemistry, not physics.

The National Interest
June 22, 2016

Last week’s tragic attack in an Orlando nightclub once again underscores the resonance of Islamic State’s message for seemingly unaffiliated individuals around the world. However, it also brings to light the real challenge of measuring and dealing with the influence of jihadist ideas—a challenge that both predates and will outlive today’s issue of defeating Islamic State.

For the last two years, the Obama administration has declared the defeat of ISIS to be a top foreign-policy priority. Congress and a large majority of the American public strongly support this idea. But it’s precisely the wrong objective.

While defeating Islamic State should be on the counterterrorism agenda for the next administration, the real objective should be to adequately meet the challenge of twenty-first-century global jihadism. Air campaigns, multinational coalition building and political solutions in Iraq and Syria, all integral to significantly downgrading ISIS, are only means towards defeating the group territorially. However, ISIS remains a symptom of a larger cause, and defeating it should be seen as a means towards an end, not as an end in and of itself. Being prepared and agile in the face of the new global jihadist threat requires a fundamental reorientation of our analytical, operational and bureaucratic resources.

To effectively address today’s terrorist threat, we must begin by acknowledging the unique ways in which jihadism propels violence, and proceed by assessing where Western states have real strengths and real vulnerabilities in their approaches. With the hindsight of the decade and a half since September 11, 2001, it is clear that our war is not just against terror but principally against the jihadist ideas that inspire it. With the hindsight of the last five years, and in particular the last two years since Islamic State announced its caliphate, we can also safely say that jihadism is far from static—indeed, its various strains have a tendency to adapt and evolve.

The string of recent attacks in Paris, Brussels, San Bernardino and Orlando indicate that the policy community has not taken the power of jihadist ideas seriously. Indeed, this is clear from the U.S. government’s floundering Countering Violent Extremism (CVE) programs and reinforced in a recent Department of Homeland Security Advisory Council report recommending not using words such as “jihad” and “sharia” for fear of fomenting an “us versus them” narrative. The jihadist threat can only be addressed honestly and thoroughly if we care to understand the power that jihadist ideas wield in propelling violent actions. Jihadism repackages traditional concepts to exploit political circumstances in the Middle East. It is when jihadist ideas do so convincingly that they quickly transform into a kinetic physical threat.

To defeat ISIS and to prepare for the jihadist threat that comes next, we need to change from a counter-ISIS to a pro-regional approach that eliminates validating scenarios in the Middle East for jihadist ideas. The key ingredient is our unique arsenal, and our success in defeating ISIS both at home and on the battlefield will depend on how effectively we communicate the fact that our military is not only a force for waging war but also for waging stability. As Henry Kissinger wrote prophetically in 1954, “It is true that ours is an attempt to exhibit Western values, but less by what we say than by what we do.” Our military successes today are the key to undoing the appeal of Islamic State. It is these victories that we can market in our messaging, and it is these depictions of defeat that make Islamic State most vulnerable. Indeed, the group admitted as much in its messaging over the last few months, where it counseled followers to wage “media jihad,” explaining that “half the battle is media.”

The Power (and Problem) of Ideas

Jihadism as we know it today is an intellectual tradition that developed over decades, explicated in scores of texts, cassettes and videos, and adapted to suit local and geopolitical grievances. Al Qaeda has for decades monopolized this tradition through building a sophisticated and secretive organizational hierarchy and staging a series of high-profile attacks that branded its legacy. Islamic State has taken shape through similar tactics, with the addition of exploiting regional instability to realize territorial claims as a caliphate and apocalyptic state.

Why is this important? Seeing the development of jihadism not as a sequence of terrorist acts but as an evolution of a cause informed by both the use of classical Islamic concepts and their application to contemporary circumstances can help us take stock of where our assessments were shortsighted. One can point a finger at any number of missed opportunities that we might have had to stop these groups from taking shape. These include the wisdom of arming Afghan mujahideen, efforts to prevent the tragedy of 9/11 or the failure to pay attention to the rise of Islamic State before they declared their caliphate in June 2014. However, the single consistent dynamic we have failed to appreciate as far as our counterterrorism optic goes is the power of ideas—specifically, how widely, deeply and permanently they can be distributed. In the age of social media, we have a much wider landscape of where ideas are transmitted and by whom.

Our long-term strategic thinking about the challenge of jihadist terrorism must begin by accepting two premises. First, we will never be able to completely stamp out terrorist activity or the occurrence of terrorist acts (indeed, terrorist acts had been committed long before Al Qaeda appeared). Second, we will never be able to completely prevent all individuals from being attracted to jihadist ideas. So long as the means for destruction and the justifications for it exist, so will the possibility of someone committing violence in the name of those ideas. In describing the threat of nuclear weapons, Thomas Schelling reminds us that “One of the lamentable principles of human productivity is that it is easier to destroy than to create. . . . The harm that people can do, or that nations can do, is impressive. And it is often used to impress.”

With these two assumptions in order, we can now hold up a magnifying glass to our current policy conversation on how to stop self-radicalized jihadist terrorism.

Our Counterintuitive “Counter” Culture

Ideas are not Newtonian physics, for which every action has an equal and opposite reaction. The insistence by some communities in government operating within the CVE or “counter-radicalization” space that this is the case is, at best, the result of naïve altruism and, at worst, of hubristic ignorance. Whatever the reason, our budget and national security cannot afford to invest resources into mere bureaucratic back-patting as things currently stand. Once we move away from this action/reaction approach, we can begin to understand the truly distinguishing feature of how ideas can influence individuals to independently radicalize.

At its core, the policy conversation on CVE is informed by flawed assumptions that understate the power of ideas. Examples of this include the talking points of consulting clinicians; “off-ramping” or slowly taking individuals off the proverbial highway towards radicalization, as is established practice with weaning individuals away from substance abuse; and “trust building” with local communities, through initiatives such as interfaith events and community-oriented activities.

Make no mistake: these are all important initiatives as ends in and of themselves. However, they all imply that jihadist ideas are not an explanation. Moreover, because of their Newtonian assumptions about how to influence ideas, there are two reasons why these are ineffective in curbing the appeal of ISIS and other jihadist groups. The first is that the deeper we go into investigating these various factors, the more we realize they are mere catalysts and not causes. In other words, we must remain focused on fighting the pull towards radical Islamic ideology rather than treating the much more elusive personal and social push factors.

The second, and more critical, oversight is that none of these initiatives takes into account the foreign-fighter phenomenon unique to ISIS’s growth: the promise of a Sunni utopia in Iraq and Syria that exists as an actual territorial entity. The longer some analysts and policy communities bizarrely leave out the fight against ISIS in Iraq and Syria from the conversation on countering domestic violent extremism, the farther we go from actually addressing the single root cause of the unique face of jihadist radicalization today—the promise of heroism in the battlefields of Islam. These delusions of military grandeur will exist so long as theaters for apocalyptic sectarian war exist. In policy parlance, these spaces are created in the tumultuous political conditions of the Middle East. Islamic State will remain a temptation so long as not only their cause for fighting, but also their appearance of success, remains. Therefore, to stop jihadist radicalization, we need to be mindful of how events in the Middle East inspire activism abroad.

By understanding the impact of Iraq and Syria on homegrown violent extremism, we can more productively think of ideas not as physics but as chemistry. Iraq and Syria are solvents for enabling theological argumentation to justify violence. Our task should not be to linearly reverse the process of radicalization, but rather to isolate the elements that would make it a particularly lethal chemical cocktail. In terms of policy, then, we need to focus our sights on those spaces in which deadly compounds of ideas come together and to control the conditions that would prevent them from becoming a threat. To do so, we must take a sober look at what the global jihadist threat of the twenty-first century will look like.

Jihadism of the Twenty-First Century and What to Do about It

Let us return to two assumptions we made earlier. First, Islamic State is a symptom rather than a cause. Second, where both the means for inflicting violence and the justifications for it exist, violence committed in the name of ideas will exist as well.

Jihadists are no exception to these premises, and in fact the entire story of Islamic State is just that. Whereas the particulars of its project are distinct (the claim to a territory and caliphate and an apocalyptic narrative), it has also followed the trajectory of jihadism during the last century of redefining and rebranding traditional concepts as solutions to political crises. This rebranding of jihadism will take place on any media available and will become infinitely more effective when validated on the ground.

A number of the distinguishing features of jihadism in the twenty-first century:

Social media mobility. The use of social media by jihadist groups has been well documented and discussed. Besides the messages promoted on these platforms, these will be used as mobility ladders for lower-level (perhaps less sophisticated, less pedigreed) jihadist aspirants to brand themselves and emerge as jihadist authorities, whether because of mastery of certain texts or for certain documentary abilities or, still, for their journalistic qualities. In short, social media will not only be the stage on which jihadist screenplays are acted out, but also where new jihadist playwrights and directors will emerge.

Territorial causes. No longer will jihadists be able to only make a case to their followers through mere terrorizing. Rather, the most successful groups to take shape will somehow marry their jihadist ideas with territorial causes—whether to sectarian causes in Iraq and Syria, as ISIS and Syrian groups like Ahrar al-Sham and Jabhat al-Nusra do, or potentially to ethnic divisions (such as the Amazigh in North Africa) or tribal affiliations. In short, increasingly the attacks on the far enemy (the United States, Europe) will be justified in the name of localized and territorially bound causes.

Appeal to youth and provision of non-fighting opportunities. One unique feature of ISIS is its appeal among a distinctly young demographic. Indeed, it is the promise of not only battlefield victory and martyrdom but also, ironically, a case for a better and more “Islamic” life in the territories under their control that they promise to new recruits. We need to be mindful of the unique ways in which ideas are not only married to causes, but also packaged for a specific consumer base: youth seeking opportunities for advancement.

Technological terrorism. Because of the distinctly young demographic of future fighters, the terrorist threats they will pose will take place on technological platforms and spaces that they master. These include not only hacking, but also cyber warfare and nefarious uses of mobile apps, among others. Cyber security will increasingly be the first line of defense in preserving national security.

While our counter-ISIS strategy may end up being the final nail in ISIS’s coffin, it is only a first step in a pro-regional strategy that can curb the threat of twenty-first-century jihadism—a policy that addresses how jihadist ideas exploit political vulnerabilities in the Middle East to inspire vigilante violence at home. Unlike our current conversations on CVE, “community resilience” and other euphemistic turns of phrase, a pro-regional strategy to counterterrorism would link our conversation on domestic radicalization to planning for political stability in Iraq, Syria and elsewhere, and would better prepare us for the day-after scenario once ISIS is ultimately downsized to being just another militia. With the earlier assumptions about the adaptability of jihadist ideas, such a pro-regional strategy to counterterrorism makes the United States more agile in fluid political, physical and media landscapes by anticipating how groups exploit political conflicts.

In the twilight months of the Obama presidency, and with an eye towards a new administration moving into the White House in January, it may be a good time to maneuver our bureaucracy and arsenal to consider a pro-regional strategy aimed at not only political stability in the Middle East for its own sake, but also as a means towards meeting the jihadist challenge after Islamic State.

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