Monday, August 1, 2016

Monday, August 1, Morning Global Market Roundup: Asian Shares Hit One-Year Peak As Chances Of U.S. Rate Hike Recede

By Hideyuki Sano
August 1, 2016

Asian shares hit a one-year high on Monday after disappointing U.S. economic growth data reduced expectations that the U.S. Federal Reserve will raise interest rates in the next few months.

U.S. gross domestic product increased at a 1.2 percent annual rate in the April-June period, less than a half of a 2.6 percent growth rate economists had expected.

"Investors have been shifting money to Asia, which is likely to be least affected by Brexit and as the U.S. Fed appears to be in no hurry to raise interest rates," said Yukino Yamada, senior strategist at Daiwa Securities.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1.3 percent, hitting its highest level in about a year.

European shares are expected to rise, with spread betters looking at rise of 0.7 percent in Germany's DAX .GDAXI and 0.4 percent in Britain's FTSE .FTSE.

Asian markets showed limited reaction to a better-than-expected private survey on China's factory sector.

The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) rose to a 1 1/2-year high of 50.6, beating market expectations of 48.7 and up from 48.6 in June.

An official survey, however, showed factory activity weakened in July.

Japan's Nikkei .N225 was up 0.2 percent, having erased early losses of 1.5 percent triggered by the yen's jump after the Bank of Japan’s stimulus plans left investors underwhelmed.

Analysts reckoned the weak U.S. economic growth in the second quarter left the Fed nowhere close to tightening policy, even after it had appeared last week to have opened the door to raising interest rates later this year by saying near-term risks to the economy had diminished.

"I suspect the Federal Reserve was hoping for a rebound in the second quarter after slowdown in the first quarter. The data suggests the economy is still flying low at best," said Hiroko Iwaki, senior bond strategist at Mizuho Securities.

The 10-year U.S. Treasuries yield US10YT=RR as a result fell to a three-week low of 1.450 percent on Friday and last stood at 1.480 percent.

Fed funds rate futures are pricing in only around 30 percent chance of a rate hike by December, compared to about 50 percent early last week.

New York Fed President William Dudley indeed said on Monday the Fed should be cautious in considering an interest rate increase due to lingering risks to the U.S. economy.

Easing expectations of near-term U.S. rate hikes undermined the attraction of the U.S. dollar.

The euro EUR= hit a one-month high of $1.11975 on Friday and last traded at $1.1177.

The dollar stood near a three-week low against the yen, which got a lift on Friday after the Bank of Japan's stimulus fell short of markets' expectations.

The yen JPY=, which had surged about three percent to 101.97 to the dollar on Friday, changed hands at 102.37 per dollar.

"Given that U.S. economic growth is not that strong, we could see some selling in the dollar/yen. On the other hand, speculation that the BOJ will take additional easing steps in September could prompt fresh yen-selling from speculators. So the yen is likely to remain volatile," said Yoshinori Shigemi, global market strategist at J.P. Morgan Asset Management.

Gold XAU= also hit a near three-week high of $1,355.1 per ounce on Friday and last traded at $1,350.1.

Investors will be watching how European financial markets will react to the results of the European Union bank stress test, which showed some banks are still vulnerable.

Moments before that announcement, Italy's Monte dei Paschi bank (BMPS.MI), which fared the worst in the stress test, unveiled a privately funded rescue plan consisting of 9.2 billion euro sales of bad debt and 5 billion euro recapitalization.

The poor health of the world's oldest bank has been seen as a grave weakness in the euro zone economy, posing a threat to the wider Italian banking system and also to the increasingly shaky political standing of Italian Prime Minister Matteo Renzi.

Pressure on oil prices also cast a shadow over markets.

They touched three-month lows on Friday to end July on a monthly decline of nearly 15 percent, the biggest monthly loss in a year for U.S. crude, undoing some of the strong recovery seen in the first half of the year from 12 year lows.

Brent's October crude futures LCOc1 LCOV6 rose 0.4 percent in Asia to $43.78 per barrel, compared to Friday's low of $42.52. The September contract LCOU6, which expired on Friday, fell to as low as $41.80.

U.S. crude futures CLc1 ticked up 0.4 percent to $41.76 per barrel.

Article Link to Reuters:

Oil Rises After Month Of Steady Decline But Oversupply Still Weighs

By Henning Gloystein
August 1, 2016

Oil rose on Monday, driven by new orders as traders staked out positions at the start of the new month, but the market remains dogged by plentiful crude supplies, a flood of refined products, and a weakening economic outlook.

Brent crude was at $43.72 per barrel at 0440 GMT (12:40 a.m. ET), up 19 cents from its last close in July, when it lost 12 percent over the month.

U.S. West Texas intermediate was at 41.76 per barrel, up 16 cents from July's last close. WTI shed 13 percent in July.

"Oil prices rose on the day but appear vulnerable to concerns of oversupply," ANZ bank said, with traders pointing to an influx of new orders with the start of August.

Overproduction of crude and a wave of refined products were the main factors weighing on oil.

"Last week's crude build in the U.S. and the return of production in both Canada and Nigeria was a rude awakening that rebalancing (of oil markets) is probably further away than the market thought," Singapore Exchange (SGX) said.

Responding to an expected drop in demand, top exporter Saudi Arabia on Sunday slashed the September price for its light crude for Asian customers by $1.30 a barrel.

This is the largest cut in nearly a year, ahead of an expected fall in demand in October when about 1 million barrels per day (bpd) of refining capacity in Asia will be shut for maintenance.

Output from the Organization of the Petroleum Exporting Countries (OPEC) in July likely reached its highest in recent history, at 33.41 million bpd from a revised 33.31 million bpd in June.

In Libya, the state oil company said it welcomed the reopening of oil ports following a deal between the U.N.-backed government and an armed force, saying it would begin work to restart disrupted exports soon. The country is aiming to boost exports to 900,000 bpd by the end of the year.

In the United States, drillers last week added oil rigs for a fifth consecutive week as part of the biggest monthly rig count increase in over two years, adding three oil rigs to a total of 374.

Just as oil supplies rise, new economic concerns have emerged.

Japanese manufacturing activity shrank in July and new export orders contracted the fastest in more than 3-1/2 years, a survey showed on Monday.

In South Korea, July exports fell at the fastest pace in three months, far worse than expectations, contracting 10.2 percent on-year to $41.05 billion.

Its July crude imports fell 5.8 percent from a year earlier to 88 million barrels, official data showed on Monday.

Article Link to Reuters:

Tesla, SolarCity Set To Announce Merger

By Liana B. Baker and Greg Roumeliotis
August 1, 2016

Tesla Motors Inc (TSLA.O) and SolarCity Corp (SCTY.O) could announce they have agreed to merge as early as Monday, people familiar with the matter said, setting the stage for a campaign to convince the two companies' shareholders to back the deal.

Combining the clean energy car maker with the solar panel installer is a major part of billionaire Elon Musk's strategy, who earlier in July unveiled his master plan "part deux" that calls for the combined company to offer consumers a single source of hardware to power a low-carbon lifestyle.

While Musk is chief executive of Tesla, chairman of SolarCity and the biggest shareholder in both companies, a merger agreement was not certain because SolarCity had formed a special committee to review Tesla's offer independent of the influence of Musk and other executives close to him.

The merger agreement is likely to include a so-called go-shop provision that will allow SolarCity to continue to solicit offers from other potential buyers for a short period of time following its signing, the people said on Sunday.

The exact terms of the deal could not be learned. Tesla had previously said it offered 0.122 to 0.131 of its shares for each SolarCity share.

The sources asked not to be identified because the negotiations are confidential. Tesla and SolarCity, which have market capitalizations of $34.6 billion and $2.6 billion respectively, declined to comment.

Musk has argued that combining Tesla with SolarCity will allow the combined company to reach consumers more effectively, installing solar panels on their roofs, sending power to Tesla storage batteries in their homes, and Tesla cars in their garages. Batteries from Tesla's $5 billion Gigafactory outside Sparks, Nevada, will be central to the combined enterprises.

Tesla shareholders have gradually warmed up to the deal with SolarCity following initial apprehension after Tesla announced its offer on June 21. After dropping to below $190 per share following the offer, Tesla shares have recovered and ended trading on Friday at $234.79. SolarCity shares closed at $26.70 Friday.

Reuters first reported last week that Tesla and SolarCity were close to a merger agreement.

Besides Musk, several Tesla and SolarCity executives, including Musk's cousins, SolarCity CEO Lyndon Rive and SolarCity board member Peter Rive, have recused themselves from voting their shares when the deal comes to a vote.

Tesla is scheduled to release its second-quarter results on Aug. 3.

The company said earlier this month that its deliveries for the quarter fell short of its forecasts. Analysts will be looking for signs that the company is containing its costs and slowing its cash burn.

Tesla took a hit on June 30 when the U.S. National Highway Traffic Safety Administration disclosed it was investigating a fatal accident that killed the driver of a Tesla Model S while he was using the car's 'Autopilot' system, which takes partial control of steering and braking.

Since then, Musk has both defended the Autopilot technology, and moved aggressively to change the subject.

Article Link to Reuters:

The Bernie Sanders Left Has Problems With Tim Kaine? Oh, Grow Up, People!

Yes, the Virginia senator is moderate on some things. But why does taking on the banks gain one more progressive cred than fighting racial discrimination? Hmmm…

By Barrett Holmes Pitner
The Daily Beast
August 1, 2016

Following a successful convention for Hillary Clinton and the Democrats, which included many members of the Democratic establishment celebrating the campaign of Bernie Sanders, you’d be surprised to learn that Tim Kaine—yes, that “awe-shucks” guy from Virginia with the bad Trump impression—has become the new source of contention between Sanders supporters and the DNC.

Leading up to the convention, most of the talk between Sanders people and the DNC revolved around their dislike of Debbie Wasserman Schultz and the leaked DNC emails, but these issues essentially solved themselves via Wasserman Schultz’s resignation, and the revelation that Russia most likely was responsible for the leak. Donald Trump’s additional encouragement for Russia to hack into more Clinton emails showed that the likely alternative to a Hillary presidency would be an unstable, bigoted, and quasi-treasonous fear monger, and this only further solidified the importance of the #NeverTrump/#ImWithHer movement.

Segments of Sanders’s supporters have never warmed to the idea of Kaine being Clinton’s running mate. To them, Kaine is an establishment, moderate Democrat, and therefore his choice represents a rejection by Clinton of their progressive ideals and the revolution they intend to foment. Kaine’s support for the Trans-Pacific Partnership and his unorthodox position on abortion (personally against abortion but supportive of law) has also drawn the ire of Sanders supporters.

All that, one can kind of understand. But here’s where it gets weird. Sanders’s supporters appear totally uninterested in both Kaine’s celebrated civil rights record as a public servant and as an attorney, and his documented liberal track record. In 2014, Kaine scored a respectable 90 percent (PDF) on the liberal Americans for Democratic Action rating, which was not far behind Sanders’s 95 percent.

So he is far from a moderate in general terms. But it’s on race that Kaine has been a genuine leader and taken real chances. In the 1980s after graduating from Harvard Law, Kaine was at the forefront of combating discriminatory housing practices in Virginia, and he’s been a staunch defender of the Voting Rights Act, which enfranchised African Americans in his state and across the South. In light of the discriminatory voting practices being implemented in many states, and in light of, well, Donald Trump, Kaine’s ideals are desperately needed, yet some Sanders supporters prefer to overlook these progressive credentials, while wondering why they lost the black vote to Clinton.

Why do the Sanders people get to decide that taking on the big banks and opposing trade agreements count as more “progressive” than what Kaine has done on civil rights? There is also an irony in some Sanders supporters’ disregard for Kaine’s track record because earlier in the campaign, Sanders’s camp became frustrated that Sanders’s history of civil rights advocacy failed to resonate with African American voters. It was illogical for his long and documented track record to be ignored and derided, they argued then. Yet now they are doing what they once bemoaned. And the truth is that while Bernie did get arrested during a protest when he was a student at the University of Chicago, and has championed civil liberties from the safe, homogenous confines of Vermont, Kaine has chosen to place himself far more directly on the front lines of racial battles in the heavily African American, and racially confrontational capital of the old Confederacy. (Sanders inveighs against the banks, by the way, from the safety of a state that doesn’t have any.)

In the Bernie people’s eyes, some of Kaine’s recent positions could have been more progressive, and this equates to Clinton and the DNC thumbing their nose at Sanders’s progressive revolution.

“It’s a form of Hillary Clinton saying to the Bernie Sanders constituency, ‘Screw you,’ because we think we have enough of you,” said Norman Solomon, the Marin County, California-based leader of an informal group of Sanders delegates known as the Bernie Delegates Network, to Politico.

Solomon’s criticism speaks to the central divide between the Clinton and Sanders camp: Clinton is trying to win an election and Sanders is trying to launch a revolution. And to a small segment of supporters the progress of the revolution is not necessarily contingent on a Clinton victory.

The contempt some Sanders supporters display toward Kaine (and, of course, Clinton) reflects their overestimation of the impact of their revolution—and, importantly, a neglect of the other “revolutions” happening at the same time within the Democratic electorate, and this is a trait that has remained throughout his campaign.

The Black Lives Matter movement has energized and mobilized African American voters across the nation, and has made criminal justice, race relations and inequality a vital issue in the eyes of black voters. The rapid growth of the Latino population has also changed the face of Democratic politics. Blacks and Latinos will make up over a quarter of the electorate in many swing states and could potentially decide this election. Additionally, Trump’s demonization of minorities including blacks, Mexicans and Muslims has further mobilized these communities and required that the Democrats demonstrate how they truly have evolved into an inclusive, equity focused multicultural party that can adequately address the vital issues of these interconnected communities.

Despite the importance of Sanders’s revolution, it is only one within a sea of seismic revolutions/movements that are reshaping the Democratic Party and American politics. The hubris displayed by some Sanders supporters to feel untowardly aggrieved by the selection of Kaine not only shows how out of touch they are with the rapidly changing face of American politics, but also the necessity to defeat Trump.

Kaine’s selection has caught many people off guard because most Americans do not know him. Kaine will have to prove that he is up to the task nationally. He’s going to have to prove his bonafides to many segments of the Democratic electorate. His fluency in Spanish may help with Clinton’s outreach to the Latino community, but that is far from guaranteed.

However, choosing Kaine virtually guarantees winning Virginia, which voted twice for George W. Bush, and gives Trump a narrower path to victory. Experts speculate that Trump may need to sweep Florida, Ohio, Pennsylvania and North Carolina to have a chance of winning, and Kaine’s moderate appeal and civil rights record will help win voters in Ohio, North Carolina, and Pennsylvania. A progressive, Sanders-approved VP would not bring in voters that Sanders could not attract himself, and probably would not help much in these vital states. Remember that Clinton beat Sanders in all of them, and by double digits in all four.

These disgruntled Sanders supporters need to recognize that their revolution is not more important than the other revolutions consuming the Democratic party and it certainly is not more important than defeating Trump in November. Their revolution will be in much better shape under a Clinton presidency than a Trump one. Sparking division, and using Kaine as an outlet for their frustrations forged from unrealistic expectations, will help no one, and only undermine their credibility.

Revolutions do not have deadlines or due dates, but elections do. If they care about their revolution they should devote their energy over the next 100 days to helping Clinton—and Kaine, who is plenty progressive, just not in their preferred ways—win.

Article Link to The Daily Beast:

Venezuela Is On The Brink Of Total Collapse

By Post Editorial Board
The New York Post
August 1, 2016

The Marxist “paradise” once worshipped by such Hollywood naifs as Sean Penn, Oliver Stone, Danny Glover and Michael Moore is now forcing its citizens to work on neglected farms.

The celebs haven’t been singing the praises of Venezuela quite as loudly as they did when Hugo Chavez led the country until his death in 2013. For good reason — under his handpicked successor, Nicolas Maduro, things have grown far worse.

Home to the world’s worst economy, Venezuela is beset by severe food shortages, riots in the streets and hyperinflation that’s closing in on 700 percent. World oil prices have plummeted — and Venezuela relies on oil for 95 percent of its income.

Agriculture was neglected as Chavez and Maduro placed all their economic chips on crude and elected to import goods from abroad while spending on social programs that rallied the poor behind the government.

But now Venezuela has no cash to import food or other essentials. And because Chavez nationalized so much industry, it has no private sector to compensate.

So Maduro has now issued an executive decree that subjects all workers to being forced to work for 60 days (or more, “if circumstances merit”) in the fields, growing badly needed food.
Economically, the move makes no sense. Morally, it’s barely one step up from government-sanctioned slavery.

Venezuela is on the brink of total collapse. Whatever happens next won’t be pretty — and not even the country’s Hollywood fans can still sing its socialist praises.

Article Link to The New York Post:

South Korea Must Learn To Defend Itself - Without America

They're a burden to America, full stop.

By Doug Bandow
The National Interest
August 1, 2016

Despite the success of America’s post–World War II policy, its advocates act as if it is an abysmal failure. Consider analyst Khang Vu’s argument for continuing to treat the Republic of Korea as a helpless dependent. No matter that the Seoul took advantage of Washington’s defense shield to develop into one of the world’s most important, largest and advanced economies. The United States must continue to protect South Korea from the latter’s decrepit northern neighbor.

Notably, Vu offers no argument that South Korea is vital for America. He refers to another Korean war posing “an adverse prospect for future U.S. administrations.” That’s about right. It would be a human tragedy, source of instability and all-around inconvenience. But it wouldn’t matter much for American security. The next step would not be a North Korean task force sailing on Hawaii and conquering the West Coast (despite the hysterical plot of the movie reboot Red Dawn). Frankly, most Americans wouldn’t even notice the Republic of Korea’s fall.

But why would South Korea lose? Indeed, why couldn’t it deter a North Korean attack? Vu does not deny that South Korea is capable of defending itself. After all, South Korea possesses an economy around forty times as large and population about twice as large, and has neutralized North Korea’s two traditional military allies, China and Russia. Unless the peninsula has a special gravitational field which prevents South Korea from building as many tanks and fielding as many soldiers as the northern nation, Seoul could easily match, indeed overmatch, the so-called Democratic People’s Republic of Korea.

Yet Vu worries about a “vacuum of power,” apparently fearing that South Korea would not bother to build up its own forces. Like the Europeans who, though possessing far more military potential, don’t see any need to spend more on their own defense. Rather, they want to rely on the United States, apparently forever. America therefore must spend more, deploy more troops and repeatedly “reassure” its helpless allies.

Ohm Tae-am of the Korea Institute for Defense Analyses recently defended South Korea inadequate spending as having increased six times since 1991. So what? The objective should not be “cost-sharing” with America, as he argued, but “cost-bearing” by South Korea. Seoul is poorer than America, but far richer than the DPRK. So South Korea has no excuse for claiming it cannot defend itself. If Pyongyang can afford to threaten the Republic of Korea, South Korea can more than afford to respond appropriately.

Still, maybe the Republic of Korea would not expand its forces while the United States was withdrawing its units. Heck, maybe South Korea Koreans would preemptively surrender. Probably not, but even that would be Seoul’s decision. It makes no sense to force the American people to defend the South Korean people if the latter aren’t willing to defend themselves. Washington should not treat security guarantees as international welfare.

However, Vu warns that South Korea might irresponsibly respond “militarily to avoid losing face” to a DPRK provocation. Thus, American troops must remain on station to prevent Seoul from doing something stupid. Seriously? More than six decades after the end of the Korean War the U.S. must occupy the ROK to prevent it from starting a new war? Surely that is a poor reason for Washington to continue to occupy a prosperous, populous nation that is far stronger than its chief antagonist. If Seoul is truly that irresponsible, Washington should disengage immediately. Americans shouldn’t risk dying because South Koreans might gamble away the peace.

Of course, Vu says, don’t worry, “the presence of American troops has effectively thwarted North Korean attacks in the first place.” However, deterrence frequently has failed. In both World Wars I and II alliances turned into transmission belts of war rather than acting as firebreaks to war. Moreover, the chief danger on the Korean peninsula is not aggression but mistake. Kim Jong-un appears to be less responsible, more impulsive and less experienced than his father and grandfather. It is impossible to deter misjudgment. If something goes wrong, the United States will find itself automatically involved in someone else’s war.

Vu also makes the curious claim that defending the world costs America nothing. Indeed, in his view Washington saves money every time it protects another wealthy nation because other states help pay basing costs. However, the U.S. does not raise military units for pleasure. Rather, they exist to achieve specific ends. Foreign policy drives force structure. If Washington did not promise to defend South Korea—as well as Japan, Europe and a multitude of other states—it could shrink the armed forces. So the cost of protecting the Republic of Korea is not just the expense of basing units overseas, but of creating them in the first place.

Finally, Vu authoritatively asserts that withdrawal “will not result in any breakthroughs in negotiations with North Korea.” Unless he has been conducting secret talks with Kim, however, it is impossible to know what the impact of U.S. disengagement would be. It seems highly unlikely that Pyongyang would yield its existing nuclear arsenal under any circumstances, but there are other potentially useful deals that could be struck, including limiting future nuclear developments and reducing conventional force deployments.

Of course, positive results remain unlikely. But Vu simply illustrates the old saw that the best definition of insanity is doing the same thing and expecting a different result. His solution to the “North Korea Problem”? Enforce sanctions. Yup, those have brought the North to heel. Get China on board. Yup, U.S. pleading, begging and whining have moved Beijing to, well, tears. Just keep trying and maybe, miraculously, something eventually will change for the better.

Not likely.

Ultimately, North Korea threatens America only because America threatens North Korea. If U.S. troops weren’t stationed on the peninsula, Kim would find other targets for his abundant venom and threats. Moreover, as noted earlier, South Korea is fully capable of containing the DPRK. There’s no need for America to be, as argued by Vu, an “offshore balancer” against a country which isn’t a threat and can be contained by someone else.

The Pentagon once focused on defending the United States. Today the military is a vast fount of international charity. South Korea is one of America’s many foreign welfare dependents. The U.S. military is overstretched. The U.S. government is effectively broke. The American people are overwhelmed with debt. It’s time for Washington to pare back unnecessary security commitments. Allowing South Korea to defend itself would be a good place to start.

Article Link to The National Interest:

A Troika For Our Insane Era

In a bizarre mind-meld that could only happen today, the WikiLeaks founder is refusing to say whether he got the hacked DNC emails from Russia, and Trump is defending Putin.

By Michael Weiss
The Daily Beast
August 1, 2016

It would almost be heart-warming that one media-obsessed megalomaniac has finally found his equal were it not for the fact that one is now within six percentage points of the American presidency and the other is Julian Assange.

The WikiLeaks founder and “editor in chief” took to CNN and NBC’s Meet the Press this weekend to explain his reason for releasing the Democratic National Committee’s hacked emails and to answer questions about whether they were obtained through the Russian intelligence services. In answer to the first question, Assange told Anderson Cooper on Friday evening that he felt an obligation to WikiLeaks’ “readers” and that the decision to publish the emails just hours before Hillary Clinton accepted her party’s nomination was indeed opportunistic. “If we published after, you can just imagine how outraged the Democratic voting population would have been,” Assange said. “It had to have been before.”

Very well, then. On the question of how his organization came into possession of this privileged correspondence, Assange told Cooper that he “can’t comment on anything that might reflect on sourcing to rule things in or rule things out.” So he won’t say if Vladimir Putin’s domestic and military intelligence agencies hacked the DNC, as a growing list of U.S. officials, independent cybersecurity analysts, and now Clinton herself believe, and—as is farther from being proven—handed everything they found to a digital collective ostensibly committed to total “transparency,” for the purpose of influencing a foreign election.

Assange has made his contempt for Clinton explicit. In a recent interview with British ITV’s Robert Peston, he said he believed the former secretary of state was trying to have him indicted for publishing U.S. diplomatic cables and military documents five years ago. He also chided Clinton for her support of the Libya intervention and her record as a “liberal war hawk.” On the WikiLeaks website, he described her as the candidate for “endless, stupid war,” writing that Clinton “shouldn’t be let near a gun shop, let alone an army. And she certainly should not become president of the United States.”

When Peston asked about Trump, however, Assange was cagier, declining to say whether he prefers the Manhattan real estate developer as the next commander in chief. Trump, he merely submitted, is “completely unpredictable” against the known quantity that is Clinton.

There has been a surfeit of discussion and debate in the press lately about Trump’s financial and political closeness to the Putin regime, much of it centered on whether the GOP nominee is a “Manchurian candidate”—a navel-gazing and pointless exercise, as Mikhail Zygar, one of Russia’s top Kremlinologists, more or less showed in Politico last week. Trump is the ideal candidate for Putin because he is, in the Kremlin’s opinion, “extremely pragmatic, extremely unprincipled and extremely cynical—which makes him easier to reach an understanding with. Not to mention that Trump, unlike Clinton and just about the entire rest of the Washington foreign policy class, has explicitly expressed admiration and sympathy for Putin.”

Trump certainly campaigns increasingly as if he holds dearer Putin’s national security interests than he does America’s.

Leave aside the now-ancient scandal about defending Article V of the Atlantic Charter in the event that Baltic NATO allies are invaded by Russia. Trump has schizophrenically characterized a prior invasion as both no cause for bilateral discomfort and ontologically void.

At a press conference on July 27, following his own nominating convention, Trump claimed that he will be “looking into” whether the United States should end sanctions on the Russian government for its invasion of a neighboring country and perhaps also recognize Crimea as Russian Federation territory, a position that not even Beijing has brought itself to espouse owing to its own fears of Russian meddling in the Far East.

In a separate interview just days later with ABC’s George Stephanopoulos, Trump actually denied that Russian soldiers are currently in Ukraine, against the logic of his prior statement and all evidence to the contrary—including Putin’s own belated admission about the seizure of Crimea through force two years ago. Moreover, Trump vowed that Putin is “not gonna go into Ukraine, all right. You can mark it down.”

Assange’s curious relationship with the Russian government is both older and more fully ventilated, although it’s worth reviewing in light of his return to the prime-time spotlight and refusal to disclaim that Putin’s spooks gave him his latest scoop.

Where WikiLeaks may have once advertised itself as a categorical enemy of government atrocities, hypocrisies, and lies—and once did indeed do a public service—it now behaves as if it honors this noble raison d’etre selectively. It had little regard for the massive “Panama Papers” disclosures of offshore asset-keeping, much of it belonging to Kremlin insiders. It tweeted, without evidence, was funded by the U.S. government through USAID as an “attack story on Putin.” (Assange is widely believed to personally man the organization’s social media account.)

Assange also had a short-lived talk show that is broadcast on the Kremlin-funded propaganda network RT, which has assiduously pushed Trump’s candidacy. The first guest was Hezbollah Secretary-General Hassan Nasrallah, a U.S.-designated terrorist who many sympathetic TV presenters in Middle East have not been granted access to but RT’s producers managed to reach in his hideaway bunker in Lebanon and beam his chubby visage into the Ecuadorian embassy in London, where Assange has been holed up since 2012, evading extradition to Sweden on sexual assault allegations.

Not that the Ecuadorian government is terribly indulgent of its “guest.” According to the journal Focus Ecuador, within months of Assange’s asylum being issued by Quito, the country’s intelligence agency SENAIN started spying on him in the Knightsbridge embassy in an operation dubbed “Hotel.” According to Focus Ecuador, “In some instances, [Assange] requested that he be able to choose his own Security Service inside the embassy, suggesting the use of Russians. For the SENAIN agents, such choice would have meant, among other problems, the loss of control of the Embassy itself leaving the ‘guest’ free access to control and manage the flow of information. The report even asserts that it would have been the equivalent of ‘a coup in the embassy.’”

The periodical did not further speculate about why a self-described “privacy” crusader was seeking the protection of a security service known for surveilling, kidnapping, and killing its own citizens, both at home and abroad.

Assange has also said it was his idea for Edward Snowden to seek asylum not in Ecuador but in Russia. “He preferred Latin America,” the Australian said in August 2015, “but my advice was that he should take asylum in Russia despite the negative PR consequences, because my assessment is that he had a significant risk he could be kidnapped from Latin America on CIA orders. Kidnapped or possibly killed.”

As proof that WikiLeaks played a role in orchestrating Snowden’s asylum case, Assange dispatched one of the organization’s representatives, the British journalist Sarah Harrison, to accompany the former NSA spy on his journey to Sheremetyevo Airport in Moscow. Harrison also turned up a press conference with him there.

It remains a mystery how Harrison was granted a visa to Moscow when her employer boasts of its mission of stealing state secrets for publication and when investigative journalists on foreign passports who do far less than that are denied entry to Russia or get expelled or, in extreme cases, murdered.

We also have WikiLeaks’s one-time content aggregator in Putin-land, Israel Shamir, whose name was conspicuously absent on CNN until I mentioned it on Saturday.

As the organization’s former enlistee James Ball put in the Guardian, “a self-styled Russian ‘peace campaigner’ with a long history of antisemitic writing, Shamir was introduced to the team under the pseudonym Adam, and it was only several weeks after he had left—with a huge cache of unredacted [U.S. State Department] cables—that most of us started to find out who he was.”

This was a Google search’s worth of work, really. Shamir’s views seem to both anticipate and underscore those of the “alt-right” Trump support wing on social media. Daily Beast contributor Michael Moynihan ably catalogued his fascism in Reason magazine. Shamir believes that Auschwitz was not a Nazi death camp but rather a Red Cross-overseen “internment facility”; that all Muslims and Christians are duty-bound to deny that the Shoah ever took place; that The Protocols of the Elders of Zion is not a debunked tsarist fabrication but actually a Jewish manual for world domination; and that Jews themselves are a “virus in human form.”

Shamir’s son, the fabulist hack Johannes Wahlström, has also been identified as WikiLeaks’ spokesman in Sweden.

Father and son appear to have found a boss who has himself floated perilously close into the same orbit of bigoted lunacy. According to Ian Hislop, the editor of Britain’s Private Eye, Assange accused that venerable satirical weekly of being “part of a conspiracy led by the Guardian which included journalist David Leigh, [former] editor Alan Rusbridger and John Kampfner from Index on Censorship—all of whom ‘are Jewish.’” (In fact, Rusbridger is not Jewish, but Assange explained that he nevertheless qualifies as a member of the tribe by being the brother-in-law of David Leigh, another Guardianista, who is.) Assange denied saying any such things, but the Guardian had already learned that its erstwhile media partner has a rather cavalier attitude about protecting innocents mentioned in classified texts he disseminates. Afghans who risked Taliban reprisals by working with U.S. and NATO forces were “informants,” Assange has said, according to Leigh and Luke Harding (one of the British reporters who was chucked out of Russia for reporting truthfully about Putin). “So, if they get killed, they’ve got it coming to them. They deserve it.”

Which makes it rather adorable that Assange insisted to Brian Stelter that WikiLeaks had a “10-year record of presenting totally accurate information to the public.” Some members of the “public” have even got advance copies.

In December 2010, the odious Shamir went to Belarus with the bundle of unredacted cables Ball mentioned, all of which were drafted in Minsk. According to journalist Kapil Komireddi, Shamir then met with Vladimir Makei, the chief of staff of Belarusian dictator Alexander Lukashenko, and turned over everything he had, featuring the names of prominent Belarusian dissidents and opposition figures who had met with U.S. diplomats over the years. Then Shamir hung around to monitor the country’s forthcoming presidential election, which was as free and fair as you’d expect in a country whose secret police are still known as the KGB. Lukashenko of course “won,” with 80 percent of the vote, and imprisoned his closest rival, my friend Andrei Sannikov, who was subsequently tortured in jail.

As Komireddi noted, Shamir’s hand-delivery of cables to what was then an uncomplicated pro-Putin satellite regime was more to bolster a crackdown on political freedom after the fact rather than furnish an enemies’ list. “Soviet Belarus, a state-run newspaper,” Komireddi wrote, “began serializing what it claimed to be extracts from the cables gifted to Lukashenko by Shamir. Among the figures ‘exposed’ as recipients of foreign cash were Sannikov, the defeated opposition presidential candidate; Oleg Bebenin, Sannikov’s press secretary, who was found dead in suspicious circumstances months before the elections; and Vladimir Neklyayev, the writer and former president of Belarus PEN, who also ran against Lukashenko and is now under house arrest.”

Shamir, unsurprisingly, has nothing but praise for Putin. Ukraine’s Euromaidan revolution he calls a “Neocon-led conspiracy in Kiev” led by “Brown storm-troopers.” He also joyously presents the sham “referendum” held in occupied Crimea as almost unanimously in favor of joining Russia.

The true, contradictory result of that stage-managed plebiscite were posted to the website of Putin’s own Human Rights Council before the vote took place. And since Russian occupation, Crimea has become a mafia statelet where activists are arrested and tortured, and Russia’s satrapy has banned the indigenous Tatar majlis (or legislature) and incarcerated several of that antique Muslim community’s most prominent figures—on the eve of the anniversary of Stalin’s 1944 deportation and genocide of Crimean Tatars, no less.

In our era of ideological insanity, I suppose we shouldn’t be surprised that a bizarre mind-meld has taken place among three world-historical solipsists: one in charge of 11 time zones and many nuclear weapons; one confined to a Third World mission and still hungry for press clippings; and one who thinks that wars only exist depending on the time of day and his own particular mood. Now we find Trump surrogates on CNN denying that Russia ever seized Crimea in the first place, which exculpates the Kremlin from any unpleasantness visited upon the peninsula, while Paul Manafort smiles and says he knows nothing about Russian hackers or any money trail leading from the campaign he manages back to Moscow. And don’t expect to find one, Manafort adds, as Trump won’t be releasing his tax returns, after all.

Article Link to The Daily Beast:

Twitter Needs To Start Protecting Its Users

By Karol Markowicz
The New York Post
August 1, 2016

A few days ago, conservative radio producer Elisha Krauss updated her Facebook page to say she’d no longer be posting pictures of her daughter.

She asked friends not to post pictures of her daughter, either, and that they refrain from tagging her in pictures that give away her location. She explained that she’d been targeted on Twitter by someone saying vile things about her child while talking about where she lived and wondering if Elisha could defend herself.

Several days later, liberal writer Jessica Valenti announced a Twitter break after receiving a rape and death threat to her 5-year-old daughter.

While social media in general gets blamed for heated rhetoric, Twitter’s problem far exceeds its competitors. Facebook is strict about fake names and will ban people from its service who they suspect of using aliases. On Twitter, pseudonyms are the norm, and the identity-less use their anonymity in frightening ways.

On Instagram, anyone violating their guidelines, which include posting “content that targets private individuals to degrade or shame them,” is quickly deleted. Meanwhile, when you report a Twitter threat to the company it takes days to respond — and often, in the end, decides the offender broke no rules.

It’s well past the time for Twitter to protect its users.

Recently, Twitter made a show of taking harassment seriously by tossing high-profile tweeter Milo Yiannopoulos from the service. Yiannopoulos, part of the “alt-right” movement that props up Donald Trump online through racism, trolling and name-calling, had targeted Hollywood actress Leslie Jones. And in May, Twitter banned singer Azealia Banks for racist and homophobic comments toward One Direction singer Zayn Malik.

Look, Twitter is a private company and can choose to ban users as it sees fit. It doesn’t owe anybody a platform. But when it focuses on banning people like Yiannopoulos and Azealia Banks instead of the anonymous tweeters sending actual death threats, it sends the message that it wants the appearance of “doing something” without doing much at all.

While Milo and Banks are obnoxious, they hadn’t threatened anyone’s life nor seem likely to do so. Actually, Yiannopoulos had reported receiving death threats himself — after he posted vile anti-Islam tweets. There’s a difference, though, between insults and death threats.

Twitter knows it has a problem. In February, it shut down an astounding 125,000 ISIS-related accounts. That Twitter had let it get that bad was telling. But without ongoing vigilance, the clean-up doesn’t matter — it’ll get right back to that number and pass it. Just a few weeks ago, a pro-ISIS account threatened airports in London and New York.

In 2015, Twitter posted a “policy and product updates aimed at combating abuse” to its blog. In it, the company focused on the need for people to “feel safe on Twitter in order to fully express themselves” and the “need to ensure that voices are not silenced because people are afraid to speak up.”

While making sure that people don’t go silent because they’re being harassed is a worthwhile goal, the real concern should be on real-world threats.

Part of what made Twitter a giant success is the ability to have an open, ongoing conversation with people you know and people you don’t. It has a water-cooler vibe to it, and everyone is welcome.

The issue with that is if you’re hanging out at a water-cooler talking about the latest “Game of Thrones” episode and Bill from accounting comes by, kicks over the water-cooler and threatens to kill you, Bill doesn’t get to quietly go back to his desk and get on with his work.

But on Twitter, Bill can say virtually anything he wants. If Twitter doesn’t want to go the way of now-defunct social-media sites, it has to decide what speech it will and won’t tolerate and find a way to enforce a consistent standard. The solution might be visible IP addresses or some kind of registration process so people don’t get to threaten other people’s kids without worrying about being exposed themselves.

There’s some legitimate concern, especially from conservatives, that if Twitter starts shutting down accounts due to “hate speech,” it’ll end up including any speech liberals don’t like. Think a baker should have the right not to make a cake for a gay wedding? Find some other social-media outlet, hater! After all, most of the high-profile people who have been banned from Twitter so far are at least nominally on the right.

And yet the problem of too much oversight doesn’t seem like one Twitter users have to fear in the near future. Twitter needs to start with accounts that threaten violence first instead of waiting for an off-line problem to develop.

Article Link to the New York Post:

A $15 Minimum Wage Will Crush The Retail Industry

By Nicole Gelinas
The New York Post
August 1, 2016

Last week, Hillary Clinton’s Democratic Party officially adopted a $15 minimum wage as party of the 2016 platform.

If Clinton succeeds in getting this past Congress, it would disproportionately affect retail trade at a time when retail giants and small-business owners alike already have enough reasons to slash costs.

The federal minimum wage is $7.25. Most retail workers make above that — but they don’t make anywhere close to $15.

Of America’s nearly 16 million retail workers, the biggest group — 4.6 million — are salespeople. Their average wage is $10.47 an hour. After that, the country has another 3.4 million cashiers, and their average wage is $9.28 an hour.

Only a quarter of salespeople earn more than $14 — and only 10 percent earn more than $19. The figures are worse for cashiers.

Besides salespeople and cashiers, retail shops hire stockpickers and the like. None, on average, makes close to $15. Only the 1.2 million supervisors in the industry make an average $18.50.

Increasing the minimum wage to $15, then, would transform the retail industry in a way we haven’t seen since after World War II, when middle-class America made the nation into an economy that depends on consumption, not production.

This is an industry that has always relied on cheap, unskilled, transient labor. If cheap labor doesn’t exist anymore — pretty much the definition of the government hiking your front-line wage costs by half in one move — the industry will have to change.


The retail industry was among the hardest hit after 2008 — because Americans, with less or no equity in their houses, stopped spending. Today, America has 5.3 percent more private-sector workers than it did before the crash. The retail industry has gained only 2.8 percent more workers.

People have also turned to the Internet. They now do nearly 8 percent of their shopping online — more than double the figure in 2008.

And retail-store managers and owners are stuck with high rent costs, theft costs, tax costs and other bills that come with having a storefront even as they compete against Amazon.

It’s hard to overstate the stress a $15 wage would add to this pressure.

Remember, if you’re paying a supervisor $18, you can’t hike the wages you pay your lower-level staff from $10 to $15, and then expect your supervisors not to demand a big hike, too.

Predicting things is always dangerous, but one can predict this with near certainty: The result of impossible labor costs will be more automation.

An evolution from human to automated work in retail might happen over time, anyway. But vastly higher wages for the majority of the industry’s workers would speed it up.

What’s needed here is a truly small-c conservative approach. That is: hike the minimum wage by $1 or so, and see what happens for a few years. If nothing bad happens, try it again.

In fact, that was Hillary’s approach up until a few months ago — when pressure from Bernie Sanders forced her to be more aggressive.

But it’s the very definition of radical to take an industry that’s already struggling to remain relevant to consumers — and make its decades-old business model obsolete.

At last week’s convention, New York’s other two prominent Democrats — Mayor de Blasio and Gov. Cuomo — spent their time in Philly boasting about their role in taking the “Fight for $15” to the national stage. (New York state and city are raising their minimum wage, already at $9, to $15, more or less, over the next half-decade, on a complicated schedule.)

Cuomo and de Blasio shouldn’t crow over the victory yet. In fact, New York City has lost 6,200 retail jobs in the past year — after years of gains, and even as the tourism industry still thrives.

Those job losses may not be because the state raised its minimum wage by $1 between 2014 and 2015 — and business owners and managers can see much bigger hikes coming. But those facts certainly don’t help.

Article Link to The New York Post:

A Law That Makes Wall Street Panic More Likely

By Robert Samuelson
The Washington Post
August 1, 2016

The hostility toward Wall Street remains so great that both political parties say, in their platforms, that they'd like to break up America's biggest banks. But before engaging in this drastic economic surgery, it's worth examining whether Dodd-Frank is working. Recall that the law, named after its congressional sponsors, former senator Christopher J. Dodd (D-Conn.) and former representative Barney Frank (D-Mass.), overhauled the financial system to make it more panic proof. Is it? The answer may surprise.

The Obama administration's position is clear: "We can say without question that Wall Street reform has made our financial system safer and sounder," Treasury Secretary Jacob Lew said recently on the sixth anniversary of the law's signing. Up to a point, this is true. Banks are required to have more capital than before the 2008-09 financial crisis, which creates a larger buffer against losses.

Capital typically - but not always - consists of shareholders' investments in banks. In 2016, the ratio of the biggest bank-holding companies' common stock to risk-weighted assets (loans, securities) was 12.2 percent, more than double its level in early 2009, the Federal Reserve says.

This means that banks can better survive severe economic shocks - deep recessions or speculative excesses. Since 2009, the Fed regularly subjects major banks to a computer-driven "stress test." It simulates a deep slump and examines how banks would fare. In the latest stress test, unemployment was assumed to double to 10 percent, the stock market to lose half its value, and the economy's output to drop nearly 8 percent, larger than the decline in the Great Recession.

Under these conditions, estimated bank losses were huge: $385 billion, says the Fed. Borrowers defaulted; bonds lost value. Still, sufficient capital remained that all 33 bank holding companies - those with assets exceeding $50 billion, representing about four-fifths of the banking sector - continued to meet regulatory capital requirements. The capital ratio dropped from 12.3 percent to 8.4 percent. But that was well above the 4.5 percent required minimum (for large banks, the minimum can be higher).

This is good news. The essence of the 2008-09 financial crisis was a panic among large depositors (hedge funds, pension funds, corporations) - a bank "run." They withdrew their money from banks, because they didn't know whether the banks were solvent. If banks' capital cushions had been larger, these fears might have been allayed and the withdrawals limited. In reality, the outflows threatened a second Great Depression, as banks cut lending and dumped bonds to meet depositor demands.

What averted another depression was the quick response of the Federal Reserve, which - acting in its role as "lender of last resort" - supplied trillions of dollars of credit to banks and other financial institutions to offset the loss of private credit. Without these infusions, who knows what would have happened.

Now, the bad news. In Dodd-Frank, Congress makes it much harder for the Fed to act as lender of last resort, says Hal Scott, a professor at Harvard Law School and a respected expert on financial regulation, in his book "Connectedness and Contagion: Protecting the Financial System from Panics." The consequences, Scott says, could be catastrophic. A U.S. depression would "pose challenges to our political system,"and could spread abroad and undermine the United States' global role.

During the financial crisis, the Fed relied on section 13(3) of the Federal Reserve Act. This provision gave the Fed wide discretion in making loans when "unusual and exigent" circumstances prevailed. Now, Dodd-Frank has imposed restrictions on 13(3). As Scott shows, these include: The treasury secretary must approve all nonbank loans, there can be no nonbank programs for a single borrower, collateral requirements are toughened and loans must be disclosed within a year. Some of these may be sensible alone; together, they create an obstacle course for crisis lending.

Scott estimates that $7 trillion is potentially vulnerable to panicky investor runs. Breaking up the big banks is no solution if, say, the investor run strikes money-market mutual funds.

There is a real issue here. The Fed has enormous powers; democratically elected officials think they should exercise some control over those powers. But a financial crisis - a panic - is by its very nature a rapidly moving and usually unpredicted event. (If anticipated, it could likely be defused.) Unless the crisis is dealt with decisively, it could become a monster that cannot be contained.

The verdict on Dodd-Frank is mixed. One goal was to improve short-term financial stability. That has been achieved. The other goal was political: to handcuff those who engineered the financial "bailout," which - though necessary - was immensely unpopular. That explains why Congress restricted the Fed. Ironically, legislation designed to protect us from financial panic may make some future panic more likely.

Article Link to The Washington Post:

Jean-Claude Juncker’s Next Big Thing

No longer held back by the Brexit debate, the Commission president has plans to add a ‘social’ dimension to EU policymaking.

Politico EU
August 1, 2016

The European Commission is quietly preparing to unleash a flood of policy initiatives to boost workers’ rights across the EU, rebooting plans by Jean-Claude Juncker that were kept mostly out of sight during the Brexit debate.

With the U.K. preparing to leave, Juncker wants to give a new push to the “European pillar of social rights” — a proposal he first mentioned nearly a year ago. The measures, aimed primarily at the eurozone but with non-euro countries able to opt-in if they wish, include rules on the minimum wage and to protect gender equality — policies long considered out-of-bounds for Brussels.

As he fights for free trade deals and measures to boost economic growth and competitiveness, the Commission president also wants to add a “social” dimension to EU policy. Introducing the idea in his State of the Union address to the European Parliament last September, Juncker said he wanted to build a new EU social policy that “takes account of the changing realities of the world of work.”

Juncker backed Belgium’s Marianne Thyssen, the European commissioner in charge of employment, social affairs and labor mobility, to push the initiative, and she’s spent the past few months gauging support for the possible changes in EU countries with NGOs, business groups and trade unions.

One Door Closes, Another Opens

The idea of boosting social protections got a mention in a 2015 report from the “Five Presidents” of the EU institutions on the future of the eurozone, with the leaders calling for the Union to aim for a “social triple A” rating in parallel with efforts to boost economic growth. The largest center-left and center-right political groups in the European Parliament also back elements of the initiative.

But apart from that, little has been done on the plan since Juncker first raised it. During the months-long debate ahead of the U.K. referendum on June 23, the idea was kept under wraps for fear it would be seen as EU regulatory meddling in Britain. Meanwhile, European trade unions grew increasingly frustrated at the lack of action.

Oliver Roethig, regional secretary of the service workers’ union UNI Europa, said some have wondered “to what extent this is all just talk.” As for the idea that Europe could earn “a social triple A” rating, Roethig said that right now “it is probably junk status.”

"The U.K. has long led opposition to attempts to introduce new social rights or employment legislation, such as on remuneration, parental leave, anti-discrimination and pension reform."

Peter Scherrer, deputy secretary-general of the European Trade Union Confederation, said that while Juncker is “personally committed to a social Europe,” the Commission has “so far … not delivered.”

While some may dismiss Juncker and Thyssen’s plans as a pipe dream, others say Brexit offers proponents of more EU action on social policy a unique political opening. The U.K. has long led opposition to attempts by the Commission to introduce new social rights or employment legislation, such as on remuneration, parental leave, anti-discrimination and pension reform. British Conservatives in particular have argued that the EU is not allowed to dictate to its member countries how they should run their social welfare systems.

Thyssen persevered anyway. In March, the Commission released a “preliminary outline” of the plan, proposing initiatives that include the introduction of eurozone rules on the minimum wage, new rights on “quality education and training” and measures to ensure gender quality and protection from discrimination.

The outline argued that much of the legislation would be justified not only by provisions in the EU’s Lisbon Treaty, but also in the European Charter of Fundamental Rights, to which the EU is a signatory. Although that charter has been anathema to British Conservatives, who say it would make U.K. judges subservient to a court in Strasbourg, other countries are less concerned.

With discussion of the topic taboo ahead of the referendum vote, the Commission did almost nothing to push it. But now Thyssen has seen her chance, telling a Cypriot newspaper in a July interview that she will put forward a “revision of the current rules on social security coordination in the coming months.”

Wage War

There’s a risk the Commission could push too far. It is seeking a role for itself on sensitive policy areas such as wages, pensions and unemployment benefits. Although the EU’s governing treaty expressly limits the ability of the Commission to act in these areas, it can “assist” governments should they wish to align social policy. Whether governments will take the Commission up on this offer remains to be seen.

A Commission spokesperson suggested that a key aim of Thyssen’s consultation process, which will close at the end of the year, is to identify the appropriate legal form for any EU action. The official pointed out that rules on the minimum wage, for example, could be introduced via a so-called Council decision, whereby governments agree on a policy action without the Commission taking the central role that it does on most other legislation. In some ways, such an agreement is easier to reach, given that it keeps the European Parliament out of the equation, but on controversial areas such as social security, the likelihood of finding consensus is in doubt.

Proponents of the social pillar saw a positive sign that the political climate may be shifting in their favor after an agreement was signed in the days immediately following the U.K. referendum by business organizations, trade unions and, crucially, governments themselves. The statement called for “the promotion of dialogue between management and labor,” as well as “a strengthened involvement of social partners in EU policy and lawmaking.”

Scherrer from the ETUC described the agreement as a “historic moment,” given that never before had governments recognized the role of “social dialogue” so clearly.

More importantly, it was seen as a departure for the Commission and for many European governments, whose dominant narrative for years had focused on boosting growth and competitiveness of EU businesses — what Scherrer calls “dangerous austerity.”

Coupled with a Continent-wide decline in the fortunes of left-wing parties, the time for centralized wage bargaining, stronger protections for workers and guarantees for access to public services seemed to many to have passed.

But this fails to take into account broader political trends in Europe. Populist parties across the Continent (on the Left and Right) are adopting economic and social policies that seem more at home in mainstream social democratic parties.

"Supporters say that with the U.K. no longer able to block it, the EU is about to start legislating far more extensively in social policy than ever before."

One example is wages. In July, Thyssen batted away criticism from East European parliaments that her reform of EU rules on cross-border workers interfered too much with national wage policy. Her proposals seek to limit “social dumping” — the shipping of temporary, cheap East European labor westwards — on the grounds that this undercuts wage levels in the host country.

But the same countries who reacted so angrily to the proposal, such as Slovakia, Poland and the Czech Republic, are simultaneously demanding that Germany change its new minimum wage law, which they argue is destroying their trucking businesses.

That’s why the Commission is optimistic about its broader social agenda, with a spokesperson confirming that governments both in and outside the eurozone have signaled their support for the initiative. Supporters say that with the U.K. no longer able to block it, and a renewed commitment to the “social dialogue” between employers and trade unions, the EU is about to start legislating far more extensively in social policy than ever before.

Article Link to Politico EU:

EU: Relaunch Or Die

It would be fatal for Europe to waste this crisis.

Politico EU
August 1, 2016

If the European Union does not undertake a concrete and effective relaunch within the next few months, it will begin an irreversible decline. There is little time to avoid it. The reaction must be rapid and courageous.

Brexit was a shock, but its aftermath is even more serious. The British decision — a consequence first and foremost of a British problem — has come to be seen as a widespread rejection of Europe, with all the unfair and extremely damaging side-effects that brings.

Continental Europeans reacted with divisiveness, followed by excessive passivity — as if a business-as-usual approach would be sufficient to manage an event of such historic importance.

On September 16, an EU summit will be held in Bratislava. We are moving toward it in the dark and with our headlights off, as though we could permit the meeting to end with the usual formulations: “The European Council welcomes …,” “The European leaders encourage …”

"The divorce will be complex, exhausting and unsatisfactory from almost every point of view…. It must be managed with professionalism and dispassion."

The truth is that a profound revision of the process of European integration would have been necessary even if Britain had not voted for Brexit. The decision only offers more compelling reasons for the undertaking.

We are dealing with the consequences of the worst possible decision that the British could have taken — for themselves and for the rest of Europe. But we must acknowledge that Brexit could help the EU recognize the impossibility of continuing to do business as usual.

It is often said that you should never waste a crisis, and never has that been truer than now. Any reaction must make a clear distinction between divorce and a fresh start. For the remaining 27 countries of the EU — and especially the 19 members of the eurozone — the focus must be on the latter.

The divorce will be complex, exhausting and unsatisfactory from almost every point of view, but it must not be allowed to condition the relaunch of the EU. It must be managed with professionalism and dispassion. It should, in short, be reduced to a legal question.

The fresh start, on the other hand, must be infused with the fullest possible political and emotional investment. The objective of Europe’s leaders must be to guarantee that the EU is better able to protect its citizens, economically and socially, as well as ensure their security.

The effort must start with the euro itself, whose full realization is the most important goal. Achieving this will improve prosperity and well-being across the eurozone. It will make the currency union more stable and prevent new crises.

* * *

The rupture that is dividing European society has its origins in the rift between globalization’s winners and losers.

Before the financial crisis of 2008, the winners were in the majority, and this gave rise to the mistaken idea that the rest of the population — the losers — were just an unfortunate side-effect.

Events since have overturned this received wisdom. Fear prevailed, and the many who missed the boat on globalization found ways to express their desire for the “good old days.”

"It would be a mistake to gloss over the fractures of today, and not to address the growth in inequality."

They found parties that amplified their fears, and they expressed those fears in a progressively more vocal and determined manner. In Britain, they were able to take that most tumultuous of backward steps: Brexit.

The idea of returning to the good old days is pure delusion. The world has moved on. When the U.K. joined the then European Economic Community, China was 1 percent of the world’s economy; now it accounts for one-fifth of global GDP — equivalent to all of Europe.

Likewise, it would be a mistake to gloss over the fractures of today, and not to address the growth in inequality.

For EU leaders, failing to heed the lessons of recent events would be the worst possible reaction. Europe cannot be only for globalization’s winners. It must protect all its citizens.

A relaunch of the EU must rekindle popular enthusiasm at a time when crisis and uncertainty have destroyed the perception of gradual but inevitable and universal progress.

This offers us the opportunity to return to the origins of the European ideal that has, in recent years, lost its way and ended up in bureaucratization.

This is the moment for statecraft to replace bureaucracy. Our citizens are turning to their representatives because they are looking for certainty and asking for security and protection.

Our political system in Old Europe, crisis ridden though it is in other ways, has a unique and unrepeatable opportunity to regenerate itself. We must not permit ourselves to waste it.

Article Link to Politico EU:

Turkey’s Hamas Hypocrisy

By Michael Rubin
August 1, 2016

One of the defining characteristics of Recep Tayyip Erdoğan’s Turkey is its complete obliviousness to the precedent its leadership creates. Five years ago, for example, Erdoğan visited the Former Yugoslav Republic of Macedonia and said, “It is a natural and constitutional right for Macedonia to use that name [Macedonia]...Macedonia’s decision to use its name should be respected.” On this, I happen to agree with Erdoğan, but does Erdoğan extend the same right to Kurds to call their homeland Kurdistan? Precedent dictates he should, but Erdoğan is a hypocrite: Good luck to any Kurd who refers to Diyarbakir as a city in Kurdistan.

Then, of course, there is the issue of Hamas. Erdoğan has openly embraced the Palestinian terrorist group for a decade, feting their most militant leaders in Ankara and pushing back on U.S. and European criticism by saying Hamas deserved legitimacy: It won an election, had popular support, and sought national liberation. He encouraged Turks to bypass the lawful blockade of Gaza to provide humanitarian assistance. Put aside the irony that Gaza surpasses Turkey in key demographic and health indicators. Bring up the plight of the Kurds, though, and the Turkish response is bluster and hypocrisy. If any foreign power sought to deliver even humanitarian supplies direct to the Kurdistan Workers Party (PKK) or its civilian political proxies, Turkey would consider it an act of war. At the very least, Erdoğan’s Hamas precedent means that no Western government should consider the PKK to be a terrorist group.

The latest bit of hypocrisy courtesy of Turkey’s leadership is that the United States must be responsible for the July 15 coup attempt because Fethullah Gülen, the man fingered by Erdoğan as responsible, lives in exile in Pennsylvania. Put aside the fact that the Erdoğan regime has provided no evidence: the logic is simply bizarre. In the United States judicial context, suspicion and political animosity are not synonymous with guilt. Still, the logic behind the statement of Prime Minister Binali Yıldırım today is worth considering: If the United States is culpable for the attempted coup in Turkey because an ailing 75-year-old cleric lives isolated in the Poconos, then is Turkey legally responsible for Hamas attacks against Israelis and Americans because Hamas now calls Turkey home? If so, perhaps it’s time for victims of real terrorism to lawyer up and go after Turkish assets. Should they do so, their best witnesses might be Erdoğan and his proxy Binali Yıldırım.

Article Link to Commentary:

Why Russia Keeps Getting Away With Hacking America

By Eli Lake
The Bloomberg View
August 1, 2016

Since 2014, President Barack Obama's administration has punished three of the four states considered the top cyber threats to U.S. computer networks: China, Iran and North Korea. The curious exception is Russia, the country experts and Hillary Clinton's campaign say was behind the hack of the Democratic National Committee.

While senior U.S. officials have called out Russia in broad terms for its increasingly aggressive behavior in U.S. cyberspace, the U.S. has only once tied Russia to a specific attack. That was in 2015 when Secretary of Defense Ash Carter accused Moscow of probing a Pentagon system.

Compare that to recent actions the administration has taken against other states for cyberattacks. In 2014, the Justice Department charged five members of China's People's Liberation Army for stealing trade secrets from U.S. industries in cyberspace. This year, the Justice Department charged seven Iranian hackers it said were linked to the country's Revolutionary Guard Corps with hacking into U.S. banks and a Rye, New York, dam between 2011 and 2013. At the beginning of 2015, Obama sanctioned North Korea for the 2014 Sony hack.

Russia has yet to face any consequences like that. But with the growing consensus among experts inside and outside the U.S. government that Russia was behind at least the hack of the Democratic National Committee (if not the public disclosure of the stolen documents through WikiLeaks) there is mounting pressure on the White House to try to deter Russia's cyber aggression.

Speaking this week at the Aspen Security Forum, John Carlin, the U.S. assistant attorney general for national security, issued a warning. "You haven't seen yet a public action against Russia," he said. "But it would be a mistake for them to assume that we are not going to apply this deterrence model when it comes to their action if they continue to intrude."

Earlier this week at a speech at Fordham University in New York, FBI Director James Comey sounded a similar note. He said cyberattacks from states and non-state actors "needs to be called out, it needs to be sanctioned, it needs to whenever possible be prosecuted."

All of this raises the question why Russia has gotten off the hook when other countries haven’t. After all, this isn't the first time the Russians have done this kind of thing. U.S. officials have alleged that Russia was also responsible for hacking the State Department's unclassified email system in 2015 and other unclassified White House computer networks. In 2014, the Russians were widely viewed as having intercepted and leaked a phone conversation between Assistant Secretary of State Victoria Nuland and the U.S. ambassador to Ukraine, Geoffrey Pyatt.

There are a few explanations. To start, U.S. intelligence agencies traditionally have seen cyberattacks by other nations as a window to collect intelligence on the attackers’ own sources and methods. In this sense, the less said about an intrusion the better. The National Security Agency often chooses to respond to foreign government hacking with hacking of its own.

There are also diplomatic considerations. While the U.S. has sanctioned sectors of Russia's economy for the annexation of Ukrainian territory, Secretary of State John Kerry has also tried unsuccessfully now for a year to entice Russia to use its leverage with the Syrian regime to end the civil war there. A public response to Russian cyber-aggression could invite a diplomatic response from Russia in Syria.

A senior administration official told me Saturday that there was no "across-the-board policy regarding Russia when it comes to prosecution or attribution." Lisa Monaco, the president's adviser on homeland security on Saturday told an audience at Aspen that the administration approaches each cyberattack on a "case by case basis," depending on the quality and preponderance of evidence linking the hack to a state actor.

But one explanation for the lack of punishment is that, until recently, most of Russia's cyber-attacks were aimed at probing networks and not destroying them or leaking the pilfered data onto the internet. Jason Healy, a senior researcher at Columbia University, told me Saturday, "Up until the annexation of Crimea, their aggression was largely espionage. So it doesn't surprise me we have not done indictments on Russian actors to date. Now that Russian actions are becoming much more disruptive, not just in the U.S., but in Ukraine and Western Europe, I expect the administration will feel the need to be more vocal and more aggressive in their response options."

So far, the Obama administration has not publicly pinned the DNC hack on the Russians, despite the growing consensus among experts that Russia was responsible. In public talks at Aspen, CIA director John Brennan, Director of National Intelligence James Clapper and Monaco all declined to say Russia was behind the hacks when asked.

U.S. officials say this is because the FBI is just beginning its formal investigation into the matter. These investigations can take time. Nonetheless, the president's own party wants Obama to go public. Senator Dianne Feinstein and Representative Adam Schiff, the ranking Democrats on the Senate and House intelligence committees, asked the White House in a public letter this week to release and declassify any intelligence assessments of the DNC hack. "Given the grave nature of this breach and the fact that it may ultimately be found to be a state-sponsored attempt to manipulate our presidential election, we believe a heightened measure of transparency is warranted," they wrote.

It presents a dilemma for Obama. Accusing a powerful foe like Russia of such an attack without all the evidence can of course backfire. But there is also a consequence for keeping quiet. It might give Russian hackers the impression that the U.S. is uninterested in deterring them. Indeed, it appears they are under that impression already.

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The Clinton Foundation, State And Kremlin Connections

Why did Hillary’s State Department urge U.S. investors to fund Russian research for military uses?

By Peter Schweizer
The Wall Street Journal
August 1, 2016

Hillary Clinton touts her tenure as secretary of state as a time of hardheaded realism and “commercial diplomacy” that advanced American national and commercial interests. But her handling of a major technology transfer initiative at the heart of Washington’s effort to “reset” relations with Russia raises serious questions about her record. Far from enhancing American national interests, Mrs. Clinton’s efforts in this area may have substantially undermined U.S. national security.

Consider Skolkovo, an “innovation city” of 30,000 people on the outskirts of Moscow, billed as Russia’s version of Silicon Valley—and a core piece of Mrs. Clinton’s quarterbacking of the Russian reset.

Following his 2009 visit to Moscow, President Obama announced the creation of the U.S.-Russia Bilateral Presidential Commission. Mrs. Clinton as secretary of state directed the American side, and Foreign Minister Sergei Lavrov represented the Russians. The stated goal at the time: “identifying areas of cooperation and pursuing joint projects and actions that strengthen strategic stability, international security, economic well-being, and the development of ties between the Russian and American people.”

The Kremlin committed $5 billion over three years to fund Skolkovo. Mrs. Clinton’s State Department worked aggressively to attract U.S. investment partners and helped the Russian State Investment Fund, Rusnano, identify American tech companies worthy of Russian investment. Rusnano, which a scientific adviser to President Vladimir Putin called “Putin’s child,” was created in 2007 and relies entirely on Russian state funding.

What could possibly go wrong?

Soon, dozens of U.S. tech firms, including top Clinton Foundation donors like Google, Intel and Cisco, made major financial contributions to Skolkovo, with Cisco committing a cool $1 billion. In May 2010, the State Department facilitated a Moscow visit by 22 of the biggest names in U.S. venture capital—and weeks later the first memorandums of understanding were signed by Skolkovo and American companies.

By 2012 the vice president of the Skolkovo Foundation, Conor Lenihan—who had previously partnered with the Clinton Foundation—recorded that Skolkovo had assembled 28 Russian, American and European “Key Partners.” Of the 28 “partners,” 17, or 60%, have made financial commitments to the Clinton Foundation, totaling tens of millions of dollars, or sponsored speeches by Bill Clinton.

Russians tied to Skolkovo also flowed funds to the Clinton Foundation. Andrey Vavilov, the chairman of SuperOx, which is part of Skolkovo’s nuclear-research cluster, donated between $10,000 and $25,000 (donations are reported in ranges, not exact amounts) to the Clinton’s family charity. Skolkovo Foundation chief and billionaire Putin confidant Viktor Vekselberg also gave to the Clinton Foundation through his company, Renova Group.

Amid all the sloshing of Russia rubles and American dollars, however, the state-of-the-art technological research coming out of Skolkovo raised alarms among U.S. military experts and federal law-enforcement officials. Research conducted in 2012 on Skolkovo by the U.S. Army Foreign Military Studies Program at Fort Leavenworth declared that the purpose of Skolkovo was to serve as a “vehicle for world-wide technology transfer to Russia in the areas of information technology, biomedicine, energy, satellite and space technology, and nuclear technology.”

Moreover, the report said: “the Skolkovo Foundation has, in fact, been involved in defense-related activities since December 2011, when it approved the first weapons-related project—the development of a hypersonic cruise missile engine. . . . Not all of the center’s efforts are civilian in nature.”

Technology can have multiple uses—civilian and military. But in 2014 the Boston Business Journal ran an op-ed placed by the FBI, and noted that the agency had sent warnings to technology and other companies approached by Russian venture-capital firms. The op-ed—under the byline of Lucia Ziobro, an assistant special agent at the FBI’s Boston office—said that “The FBI believes the true motives of the Russian partners, who are often funded by their government, is to gain access to classified, sensitive, and emerging technology from the companies.”

Ms. Ziobro also wrote that “The [Skolkovo] foundation may be a means for the Russian government to access our nation’s sensitive or classified research development facilities and dual-use technologies with military and commercial application.”

To anyone who was paying attention, the FBI’s warnings should have come as little surprise. A State Department cable sent to then-Secretary Clinton (and obtained via WikiLeaks) mentioned possible “dual use and export control concerns” related to research and development technology ventures with Moscow. And in its own promotional literature Skolkovo heralded the success of its development of the Atlant hybrid airship.

“Particularly noteworthy is Atlant’s ability to deliver military cargoes,” boasts the Made in Skolkovo publication: “The introduction of this unique vehicle is fully consistent with the concept of creating a mobile army and opens up new possibilities for mobile use of the means of radar surveillance, air and missile defense, and delivery of airborne troops.”

Even if it could be proven that these tens of millions of dollars in Clinton Foundation donations by Skolkovo’s key partners played no role in the Clinton State Department’s missing or ignoring obvious red flags about the Russian enterprise, the perception would still be problematic. (Neither the Clinton campaign nor the Clinton Foundation responded to requests for comment.) What is known is that the State Department recruited and facilitated the commitment of billions of American dollars in the creation of a Russian “Silicon Valley” whose technological innovations include Russian hypersonic cruise-missile engines, radar surveillance equipment, and vehicles capable of delivering airborne Russian troops.

A Russian reset, indeed.

Article Link to The Wall Street Journal: