Friday, August 5, 2016

Friday, August 5, Morning Global Market Roundup: Asia Stocks Gain, Pound Weaker After BoE Easing, U.S. Job Data Awaited

By Nichola Saminather and Shinichi Saoshiro
August 5, 2016

Most Asian stock markets rose on Friday after the Bank of England launched a larger-than-expected post-Brexit stimulus package that sent the pound reeling.

An overnight rally in crude oil prices also sharpened investors' risk appetite, but caution before the July U.S. non-farm payrolls report later on Friday kept gains in check.

European markets also looked set to rise, with financial spreadbetter CMC Markets predicting Britain's FTSE 100 .FTSE will open about 0.4 percent higher, and Germany's DAX .GDAXI and France's CAC 40 .FCHI will start the day up 0.3 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS extended gains to 1.1 percent, and were headed for a 0.8 percent weekly gain. MSCI's world stocks index .MIWD00000PUS rose 0.2 percent on Friday.

But Japan's Nikkei .N225 surrendered earlier gains to close flat. It fell 1.9 percent in a week marked by investor disappointment over new stimulus measures announced by the central bank and the government.

China's CSI 300 index .CSI300 climbed 0.4 percent and looked set to end the week 0.3 percent higher. The Shanghai Composite .SSEC was little changed, poised for a 0.1 percent weekly gain. China will release a flurry of data over the coming week.

The BoE's quarter-point rate cut to a record low 0.25 percent boosted shares in Europe while sending already low global bond yields even further down with British yields hitting record lows as gilt prices rose.

The BoE said it would take "whatever action is necessary" to achieve stability in the wake of Britain's vote to leave the European Union.

"BoE Governor Mark Carney's assessment of the post-Brexit U.K. economy was very negative, predicting the unemployment rate will rise from 4.9 percent to 5.5 percent over the next two years despite the new stimulus," Angus Nicholson, market analyst at IG in Melbourne, wrote in a note.

"That makes it very likely that further cuts to the policy rate and expansions of the BoE's other easing measures will be forthcoming over the coming months, providing further downside risks to the pound," he said.

The British pound GBP=D4 crawled up 0.2 percent to $1.3126 GBP=D4 after retreating 1.7 percent overnight.

The U.S. Treasury 10-year note yield US10YT=RR was little changed at 1.4972 percent after dropping 25 basis points overnight during a broad post-BoE rally in bond markets, which took the 10-year gilt yield GB10YT=RR to a record low of 0.639 percent.

Yields on euro zone bonds such as German bunds also tumbled on Thursday as bond prices rose after the BoE news.

The declines in yields was "probably on speculation that the deterioration in the pound could well see policymakers at the (European Central Bank) and the Federal Reserve push back on the appreciation of their currencies as the race for a competitive currency continues," Michael Hewson, chief market analyst at CMC Markets in London, wrote in a note.

Wall Street ended Thursday little changed ahead of the jobs report, which will be scoured for clues as to whether it is strong enough to support a Federal Reserve rate hike as early as September.

Economists polled by Reuters expect U.S. employers to have added 180,000 jobs, compared with 287,000 in June. ECONUS

"Based on our analysis, the payroll growth in July is likely to be pretty strong," said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank. "I expect a figure above 200,000. That should be positive for the dollar."

The dollar slipped 0.1 percent to 101.07 yen JPY=, on track to fall 1 percent for the week. The euro gained 0.1 percent to $1.1143 EUR=EBS, set to end the week 0.2 percent lower.

The dollar index .DXY inched down 0.1 percent to 95.665 after gaining 0.2 percent on Thursday.

Gold XAU= was up 0.2 percent at $1,364.20 an ounce ahead of the payrolls report, heading for a 1 percent gain for the week.

Oil extended losses after soaring overnight following a modest stockpile drop at the U.S. delivery hub for crude futures, which also triggered some short-covering.

While the rally fizzled out on Friday, prices remained well above 3-1/2-month lows hit earlier this week.

U.S. crude CLc1 fell 0.9 percent to $41.57 a barrel after surging 2.7 percent overnight. It's on track for a 0.1 percent decline for the week.

Global benchmark Brent crude futures LCOc1 also slipped 0.9 percent to $43.89, heading for a weekly rise of 3.3 percent.

The Australian dollar hovered near a 3-week high, after the Reserve Bank of Australia said core inflation is likely to remain below target until 2018, leaving the door open to more policy easing following the cut in its benchmark rate to an all-time low of 1.5 percent this week.

The futures market is pricing in a 50-50 chance of another cut by year end.

The Aussie AUD=D4 climbed 0.4 percent to $0.7659, and Australian shares also closed up 0.4 percent.

Article Link to Reuters:

The World's Best Cyber Army Doesn’t Belong To Russia

By James Bamford
August 5, 2016

National attention is focused on Russian eavesdroppers’ possible targeting of U.S. presidential candidates and the Democratic Congressional Campaign Committee. Yet, leaked top-secret National Security Agency documents show that the Obama administration has long been involved in major bugging operations against the election campaigns -- and the presidents -- of even its closest allies.

The United States is, by far, the world’s most aggressive nation when it comes to cyberspying and cyberwarfare. The National Security Agency has been eavesdropping on foreign cities, politicians, elections and entire countries since it first turned on its receivers in 1952. Just as other countries, including Russia, attempt to do to the United States. What is new is a country leaking the intercepts back to the public of the target nation through a middleperson.

There is a strange irony in this. Russia, if it is actually involved in the hacking of the computers of the Democratic National Committee, could be attempting to influence a U.S. election by leaking to the American public the falsehoods of its leaders. This is a tactic Washington used against the Soviet Union and other countries during the Cold War.

In the 1950s, for example, President Harry S Truman created the Campaign of Truth to reveal to the Russian people the “Big Lies” of their government. Washington had often discovered these lies through eavesdropping and other espionage.

Today, the United States has morphed from a Cold War, and in some cases a hot war, into a cyberwar, with computer coding replacing bullets and bombs. Yet the American public manages to be “shocked, shocked” that a foreign country would attempt to conduct cyberespionage on the United States.

NSA operations have, for example, recently delved into elections in Mexico, targeting its last presidential campaign. According to a top-secret PowerPoint presentation leaked by former NSA contract employee Edward Snowden, the operation involved a “surge effort against one of Mexico’s leading presidential candidates, Enrique Peña Nieto, and nine of his close associates.” Peña won that election and is now Mexico’s president.

The NSA identified Peña’s cellphone and those of his associates using advanced software that can filter out specific phones from the swarm around the candidate. These lines were then targeted. The technology, one NSA analyst noted, “might find a needle in a haystack.” The analyst described it as "a repeatable and efficient" process.

The eavesdroppers also succeeded in intercepting 85,489 text messages, a Der Spiegel article noted.

Another NSA operation, begun in May 2010 and codenamed FLATLIQUID, targeted Pena’s predecessor, President Felipe Calderon. The NSA, the documents revealed, was able “to gain first-ever access to President Felipe Calderon's public email account.”

At the same time, members of a highly secret joint NSA/CIA organization, called the Special Collection Service, are based in the U.S. embassy in Mexico City and other U.S. embassies around the world. It targets local government communications, as well as foreign embassies nearby. For Mexico, additional eavesdropping, and much of the analysis, is conducted by NSA Texas, a large listening post in San Antonio that focuses on the Caribbean, Central America and South America.

Unlike the Defense Department’s Pentagon, the headquarters of the cyberspies fills an entire secret city. Located in Fort Meade, Maryland, halfway between Washington and Baltimore, Maryland, NSA’s headquarters consists of scores of heavily guarded buildings. The site even boasts its own police force and post office.

And it is about to grow considerably bigger, now that the NSA cyberspies have merged with the cyberwarriors of U.S. Cyber Command, which controls its own Cyber Army, Cyber Navy, Cyber Air Force and Cyber Marine Corps, all armed with state-of-the-art cyberweapons. In charge of it all is a four-star admiral, Michael S. Rogers.

Now under construction inside NSA’s secret city, Cyber Command’s new $3.2- billion headquarters is to include 14 buildings, 11 parking garages and an enormous cyberbrain — a 600,000-square-foot, $896.5-million supercomputer facility that will eat up an enormous amount of power, about 60 megawatts. This is enough electricity to power a city of more than 40,000 homes.

In 2014, for a cover story in Wired and a PBS documentary, I spent three days in Moscow with Snowden, whose last NSA job was as a contract cyberwarrior. I was also granted rare access to his archive of documents. “Cyber Command itself has always been branded in a sort of misleading way from its very inception,” Snowden told me. “It’s an attack agency. … It’s all about computer-network attack and computer-network exploitation at Cyber Command.”

The idea is to turn the Internet from a worldwide web of information into a global battlefield for war. "The next major conflict will start in cyberspace," says one of the secret NSA documents. One key phrase within Cyber Command documents is “Information Dominance.”

The Cyber Navy, for example, calls itself the Information Dominance Corps. The Cyber Army is providing frontline troops with the option of requesting “cyberfire support” from Cyber Command, in much the same way it requests air and artillery support. And the Cyber Air Force is pledged to “dominate cyberspace” just as “today we dominate air and space.”

Among the tools at their disposal is one called Passionatepolka, designed to “remotely brick network cards.” “Bricking” a computer means destroying it – turning it into a brick.

One such situation took place in war-torn Syria in 2012, according to Snowden, when the NSA attempted to remotely and secretly install an “exploit,” or bug, into the computer system of a major Internet provider. This was expected to provide access to email and other Internet traffic across much of Syria. But something went wrong. Instead, the computers were bricked. It took down the Internet across the country for a period of time.

While Cyber Command executes attacks, the National Security Agency seems more interested in tracking virtually everyone connected to the Internet, according to the documents.

One top-secret operation, code-named TreasureMap, is designed to have a “capability for building a near real-time interactive map of the global Internet. … Any device, anywhere, all the time.” Another operation, codenamed Turbine, involves secretly placing “millions of implants” — malware — in computer systems worldwide for either spying or cyberattacks.

Yet, even as the U.S. government continues building robust eavesdropping and attack systems, it looks like there has been far less focus on security at home. One benefit of the cyber-theft of the Democratic National Committee emails might be that it helps open a public dialogue about the dangerous potential of cyberwarfare. This is long overdue. The possible security problems for the U.S. presidential election in November are already being discussed.

Yet there can never be a useful discussion on the topic if the Obama administration continues to point fingers at other countries without admitting that Washington is engaged heavily in cyberspying and cyberwarfare.

In fact, the United States is the only country ever to launch an actual cyberwar -- when the Obama administration used a cyberattack to destroy thousands of centrifuges, used for nuclear enrichment, in Iran. This was an illegal act of war, according to the Defense Department’s own definition.

Given the news reports that many more DNC emails are waiting to be leaked as the presidential election draws closer, there will likely be many more reminders of the need for a public dialogue on cybersecurity and cyberwarfare before November.

Article Link to Reuters:

Why Election Year Fed Bashing Sometimes Has Merit

By Aaron Klein
Real Clear Markets
August 5, 2016

Election year often means it is time to bash the Federal Reserve. After all, Congress created an independent central bank in order to allow it to make politically unpopular -- but economically prudent -- decisions. Because the Fed becomes a convenient political punching bag during election time, it can easy to disregard political criticisms of the central bank emerging from party platforms. Reflexively defending the Fed's independence from politics is usually a good heuristic to employ to make sure that serious permanent damage is not inflicted on a critical government agency. However, there is a new and growing criticism of the Federal Reserve, embraced in the Democratic Party's platform, that does merit serious attention: the lack of diversity among leadership at the Federal Reserve's twelve Regional Banks.

Diversity matters. Bank Presidents vote on monetary policy, regulate banks, operate the nation's payment systems, and direct large economic research operations. Diverse leadership can improve decision making, highlight different areas to focus, direct research into new fields, and raise new thoughts and issues before the Fed and the general public. Diversity strengthens the institution's legitimacy, which is necessary for the Federal Reserve System, given its inherent need to take politically unpopular actions. Ensuring diversity of background was a main goal of creating the Fed system in the first place, so that monetary policy and bank regulation would not be set only by politically appointed officials in Washington, but rather that voices across the country would be heard.

First the facts. There are 12 regional Federal Reserve Banks, each headed by a Bank president who is selected by a subset of that Bank's board of directors and approved by the Federal Reserve's Board of Governors. Unlike the Bank presidents, the Governors are appointed by the President and confirmed by the Senate. Since the Fed's founding in 1913, there have been 134 regional Bank presidents. None have been African American. None have been Latino. In fact, until 2009, there had never been any non-white Federal Reserve regional Bank presidents. Since then, there have been two, both Asian Americans, and both Presidents of the Minneapolis Federal Reserve. That means the other 11 regional banks have never had a non-white president.

There have only been six women to ever serve as President of a regional bank. The first woman, Karen Horn, was appointed in 1982 as president of the Cleveland Fed. In fact, half of the women to ever head a regional Fed have been from the Cleveland Fed. Eight of the 12 regional banks have never had a woman serve as president in their history.

The Fed's Board of Governors has had a better track record on diversity. The first African American to serve as a Governor of the Fed was appointed in 1966. The number two job as Vice-Chairman has been held by an African American who was appointed to that position by a Democratic President (Clinton) and reappointed by a Republican (George W. Bush), evidence that support for qualified diverse individuals are bipartisan values. There have been nine women to serve as Fed Governors, out of the 94 Governors we've had. But at one point a few years ago, the majority of sitting Governors were women.

Now the hard part, how do we fix this?

We need to focus on the selection process of regional bank presidents -- selected by their own bank's board of directors. GAO studied Federal Reserve Regional Bank Boards and concluded that they themselves lack diversity. The Dodd-Frank Act made one small change trying to improve the regional bank selection process: it prohibited bankers who serve on regional bank boards from being involved in the president's selection process. Instead the Regional Bank Boards non-bank directors are in charge.

However, the law still allows sitting bank board members to select themselves. This was the case in the selection process in Philadelphia when the bank selected its own Board member, even after that board member served on the search committee and interviewed other candidates. One simple suggestion is to prohibit the selection of existing search committee members from selecting themselves. Congress could do this by law, or the Fed's Board of Governors could do this by practice as they have veto authority over any final selection.

Making the selection process itself more transparent, with clear selection criteria, greater public input, and enhanced oversight by the Fed's Board of Governors are steps in the right direction that could be taken without a new law. The last time Congress changed the rules for who serves on the Fed, it did so to ensure greater banking representation by instituting a quota for someone with small bank experience. It is somewhat ironic to see a quota-based solution for industry representation while the problem of diversity goes unsolved.

Article Link To Real Clear Markets:

How Hitler Invented The Olympic Torch

On Friday night, the Olympic torch arrives in Rio in an opening ceremony that features samba bands and Gisele on the catwalk. But the relay’s secret history is dark and disturbing.

By Gabrielle Glaser
The Daily Beast
August 5, 2016

You can say a lot of things about Brazil’s failings in the upcoming Olympics, from the putrid, garbage-strewn Guanabara Bay to the widely forecast traffic apocalypse on Rio’s streets. But for all their shortfalls, there’s one thing Brazilians have in abundance: the ability to laugh at themselves.

In a rather striking contrast to the London Games in 2012, which opened with a mock shot of the Queen as a Bond Girl doing a skydive, the Rio Games, which begin tonight, will kick off with the fake mugging of Brazilian supermodel Gisele Bundchen as she struts down the catwalk to the accompaniment of the nation’s iconic song, “The Girl from Ipanema.” (There’s been much fevered reporting on the athletes and spectators at the Games being victimized by street crime.)

Take that, haters.

The agenda for tonight’s show has been held under wraps, but secrets are hard to keep, and reports of rehearsals leaked on social media and elsewhere say that each of the 206 countries will enter the arena accompanied by its own mini samba band. Some of Brazil’s biggest superstars will make appearances: Musical titans Gilberto Gil and Caetano Veloso will sing, and Oscar-nominated actress Fernanda Montenegro and the Oscar-winning, decidedly not Brazilian, Dame Judi Dench are set to recite poems.

One of the ceremonies’ masterminds, Fernando Meirelles, director of the 2002 Oscar-nominated “City of God,” which depicts the explosion of urban violence in Rio’s slums in unflinching detail, told reporters last year that the show would be “a synthesis of our popular culture.” That’s apparently an understatement: after Gisele’s fake mugging, police officers leap to her rescue, and chase the robber around the stadium until he’s caught.

Another of the show’s directors, Leonardo Caetano, told the BBC that the ceremony “will show... the Brazilian way of receiving people.” Sure, there have been the unfinished athlete’s quarters and subway delays, but Brazilian warmth is remarkable: Brazilians have a multitude of different verbs for “to relax”, and aren’t shy about telling others just which way they should be trying. They’re affectionate, calling strangers “son” and “daughter”—and it’s not uncommon for business acquaintances who’ve never met to sign off their emails with kisses and hugs. Every year, the country welcomes millions of visitors for Carnival, often described as the world’s biggest party. Friday’s ceremony, to which 900 million will tune in, may rival that: it reportedly features 6,600 pounds of fireworks, 2,000 light guns, and more than 100 projectors.

You’ll never guess, though, who invented all this glitz and glamour: Nazi propagandists. (Sort of dampens the heartbreaking surprise of Muhammed Ali descending from a giant cherry picker onto the opening ceremony’s stage in Atlanta in 1996. Ali accepted the torch from swimmer Janet Evans, his hands shaking from Parkinson’s, and lit a flame that traveled to a giant cauldron above the stadium. The camera panned to roaring fans and a teary-eyed President Bill Clinton as Bob Costas intoned: “Look at him—still a great, great presence, still exuding nobility and stature.”)

Even the Olympic torch might seem like a link to the earliest democracy, but it’s not: The modern torch relay, which now begins with a hokey ceremony in Olympia, the birthplace of the original games around 776 B.C., and travels the globe to the hosting cities, was the brainchild of Carl Diem in the early 1930s. Diem, a German long-distance runner and sports historian, became the chief organizer of the Berlin Games.

“Diem was aware of the use of the lit torch in the ancient games, though nothing exactly like the torch run relay existed,” said Susan Bachrach, a historian at the U.S. Holocaust Memorial Museum and the author of “The Nazi Olympics: Berlin 1936.”

Creepily, even the newly minted ritual’s equipment hinted at the mass destruction that was about to unfold. The bulky Berlin torch holders were made by the Krupp company, an arms manufacturer that produced weapons for Germans in World War II, and Krupp’s artillery production would become an essential element in decisive Nazi battles. As Max Fisher wrote in a 2012 Atlantic piece, the company trucked in Jewish women from Auschwitz to a nearby plant as slave laborers.

Nazi propagandists and pageantry suggested that Hitler’s Aryans were the direct heirs of ancient Greek civilization, said David Wallechinsky, president of the International Society of Olympic Historians and who has written extensively about the games for decades. Leni Riefenstahl helped immortalize the imagery by capturing the torch run relay through Bulgaria, Yugoslavia, Hungary, Austria, and Czechoslovakia for "Olympia," her 1938 film on the games.

But opening ceremony ignominy didn’t start in Berlin: Consider the 1904 games in St. Louis, which kicked off with crowds of athletes milling around some public buildings in what looks like barely controlled chaos. Only about a dozen countries bothered to show up for Games in minor U.S. city, which was also hosting the World’s Fair. (Not even the thrilling new temptations of cotton candy, peanut butter, and waffle cones could persuade most athletes to make the trip, Slate reported in 2008.)

The ceremony kicked off nearly five months of competition, and, lest today’s Games followers think only recent athletes have tried to gain an illicit edge through doping, reflect on gold-medal cheater Fred Lorz. He was the first to cross the marathon finish line, but was disqualified when officials discovered he’d hopped into a car for almost half the race.

That fraud seems like a mild scandal compared to what organizers called “Anthropology Days,” in which groups of Pygmies, Sioux, and Igorot Filipinos and others in the fair’s “human zoo” exhibits were paid to participate in competitions that included mud slinging, a greased-pole climb, and archery. Baron Pierre de Coubertin, a Parisian aristocrat who founded the first modern games in Athens in 1896, was appalled: “As for that outrageous charade, it will of course lose its appeal when black men, red men and yellow men learn to run, jump and throw, and leave the white men behind them.”

The Rio Olympics, held in a country where more than half the population identifies as mixed race or black, are sure to have a far more inclusive air. Organizers say they’ve kept their budget low, in contrast to lavish shows in Sochi and London. London’s 2012 ceremony cost a reported $42 million, crafted by “Slumdog Millionaire” director Danny Boyle, with actors and dancers rocketing through momentous periods of British history. “I’d be ashamed to waste what London spent in a country where we need sanitation, where education needs money,” Meirelles has said.

London spent $14.8 billion total on its opening ceremonies and games, downright cheap compared to the 2014 Winter Games in Sochi, which cost a reported $51 billion. Rio is trying to keep its costs to 7.4 billion reais ($1.8 billion) for the 16 days of competition and the opening ceremony. Brazil’s economy, which has sunk in recent years in large part due to the collapse of the oil industry, is in its biggest crisis since the 1930s.

Caetano said the ceremony—held amidst epic global political divisiveness—will emphasize the importance of preserving the planet, and how modern Brazilians have come together to create their multiracial society. "For the world, it will be an updated view of what …being a Brazilian is. An opportunity for the world to see the current results of our history and of our miscegenation.”

“It will show,” he said, “Brazilians’ ability to do more with less.”

Article Link To The Daily Beast:

Is Rio Ready? Deadly Shooting Says ‘No’

On the eve of the Games, a man en route to the athletes’ village grabbed the gun away from a would-be robber and shot him dead on the spot.

By Nico Hines
The Daily Beast
August 5, 2016

The hope that Olympic security fears might prove overblown were shattered in spectacular fashion on the eve of the games when a man claiming to be a Russian diplomat shot dead a carjacker on a busy street close to the Olympic park.

Tackling the violence that mars one of the world’s most beautiful cities was one of the legacies that the 2016 Olympic organizers pledged to bequeath to Rio’s residents. Like almost every other legacy pledge, organizers and the state government have fallen well-short of what they promised.

The road that leads from central Rio to the athletes’ villages and main Olympic hub to the west of the city is a near-permanent crush of traffic exacerbated by dedicated Olympic lanes and a new “rapid” bus service. In the midst of that traffic on Thursday, it was reported by local media that two men on motorcycles attempted to rob a family at gun-point.

The family inside the luxury car were Marcos Cesar Feres Braga, who said he was the vice-consul to the Russian consulate, 60, and his wife and daughter. said he was a Brazilian. The man, who is trained in jiu-jitsu, grabbed the weapon from his attacker and shot him dead on the spot.

The robber’s body lay at the side of the road for five hours as Rio’s overworked homicide division investigated the crime scene. A Russian embassy spokesman denied that a member of staff had been involved, but photographs of the scene appeared to confirm that a fatal incident had taken place on the road to the main Olympic venues.

Police in Rio apparently told local reporters that the man was Russia's vice-consul, but Folha de Sao Paulo, Brazil’s largest newspaper, reported that Braga was using false papers and pretending to be a member of staff at the Russian consulate.

The deadly shooting one day before the Opening Ceremony, would be exactly the sort of high-profile outbreak of violence that Brazilian officials have dreaded as the eyes of the world settled on Rio.

Uneven attempts to “pacify” the most violent sections of Rio’s population have come to symbolize the difficulty in meeting the legacy goals outlined when Rio bid to host the games last decade. [

In 2009, when Brazil was awarded the Olympics, the country’s economy was booming and a mood of optimism persuaded Brazilians to believe the unlikely pledges that hosting the World Cup in 2014 and the Olympics this summer would prove to be the catalyst for Brazil to be transformed.

With the Opening Ceremony just hours away, those dreams are in tatters.

On Thursday night, the rhythmic clank, clank, clank of a hammer rang out across the iconic Copacabana beach.

Construction was still underway on the beach volleyball arena. Three men—two of whom were wearing hard hats—were working into the night amid the tangle of rusted metal scaffolding that makes up the temporary arena.

Four languid members of the Australian women’s team towered above the men as they passed along the half-finished walkway after a final warm up on the Olympic volleyball court. They had none of the protection the construction workers were enjoying.

Despite the last-minute work, the arena will be finished on time. Perhaps not to the standards that were originally envisioned but it will be just enough to get by.

That has become a common refrain across the Olympic projects: just enough to get by.

Like the beach volleyball arena on the Copacabana, however, the foundations for many of the projects seem to be built on sand.

Is the promised comprehensive overhaul of the city’s transport infrastructure ready? No, not really. But they’ve done just enough to get by.

Bus projects and subway extensions that would help the whole city, including the poorest districts, have not materialized. Instead we have Linha 4—a new line on the metro system that links Copacabana and Ipanema with the Barra da Tijuca. Rio’s first new subway line in 30 years was supposed to stretch much further but it was cut back amid delays and overspends.

It was scheduled to open to the public last year, but it didn’t begin running until last Saturday and even then it is only for Olympic athletes, officials and people with tickets for the games. It will close again after the Paralympics to be finished off and apparently to undergo full safety checks, which begs the question of exactly how safe it is for the duration of the Games.

Cynical “Cariocas” (residents of Rio) have noticed that the new line will go far enough to benefit the wealthy property developers in Barra da Tijuca but not far enough to connect ordinary workers with the bus network that takes them home.

Still, it should be just enough to get by.

One of the venues which has attracted the most scrutiny and concern in the build-up to the games is the sailing facility at the Marina da Glória. Guanabara Bay, where it is found east of Copacabana, is polluted with the raw sewage from many of the city’s favelas.

Torrents of human feces, a fridge and even a dead body are among the unwelcome items to be spotted floating in the water in the weeks before sailors and windsurfers will compete.

Cleaning up the bay was another legacy pledge, but it has been long-since abandoned.

Willie McBride, coach of the U.S. women’s skiff team, was in the boat yard making final adjustments to the competition boat on Thursday night.

He said the sailing team had been making repeated trips to the bay since 2012 and they were there every month this year. He hasn’t seen much evidence of the supposed rush to improve the conditions. “There have been these eco-boats out in the water to clean up but I have never seen one in action,” he said.

McBride said the U.S. team were taking some special measures like carrying antibacterial wash on the boats, but he said he didn’t know of a single U.S. sailor that had been forced to miss training due to illness in all the months of sailing in Guanabara Bay.

“It’s one of those sports where you roll with the punches,” he said.

Competitive sailors are used to getting by.

Article Link To The Daily Beast:

Is Rio Ready? Deadly Shooting Says ‘No’

It’s Too Early For Liberals To Gloat About Trump

Trump could calm down, Hillary could stumble, and who knows what nasty surprise Putin could uncork in October. In this election, all we know is that there is no sure thing.

By Michael Tomasky
The Daily Beast
August 5, 2016

As I commit these words to screen, Nate Silver has Hillary Clinton at 77 percent likely to win the White House. She’s cruising toward 330-plus electoral votes. And as for Donald Trump, they haven’t invented a word for how bad his week has been. And that was before we learned he’s married to an illegal immigrant.

It’s a good week to gloat if you’re a liberal, but gloat weeks are exactly the weeks that make me a little nervous. Three reasons:

First, every week isn’t going to be like this week. Life just doesn’t work that way. Trump will have weeks when he’ll calm down a little. He’ll always be obnoxious, of course, but he won’t always launch gratuitous attacks on the infant-American community. I know we all agree now that Trump can’t help himself. But I continue to suspect that there may come a time when he can help himself, and he’ll spend October comporting himself like Atticus Finch. In addition to this, Clinton will surely have her own bad weeks. She’ll say something off-key, make a big blunder. Maybe someone will find an email from her saying, “Hey, here’s an idea, let’s pay Iran ransom money!” (More seriously, given her generally tough-minded foreign-policy posture, it seems to me just as likely that they’ll find an email in which she raised concerns about paying Iran this 40-year-old debt.) And finally, who knows what Putin is holding back for an October Surprise? I’m not really joking about that, alas.

Second, even with Clinton’s convention bounce and Khan bounce, this thing is still closer than it should be, reflecting the reality that one-third of America thinks she belongs behind bars and a significant portion of the middle third kinda-sorta agrees (the third third, of course, is in Clinton’s corner). And there isn’t much Clinton can do to change that unless she rescues a falling baby or something. In addition, Clinton hatred will really rev up by October, and I assume that the TV ads from the anti-Clinton PACs will be numerous and brutal.

Third, there’s one way at least in which the Trump campaign has finally normalized. It raised more than $80 million in July, almost as much as Clinton. Now, the question is, what in the world is he going to spend it on? He doesn’t really need to buy television ads. He gets 50 of those every day for free.

He should invest it in a ground game, but as Trump would tell us, he knows far more than those get-out-the-vote people, folks, believe me, they’re a disaster. But at least he’s raising it, and it give his campaign one glancing aspect of legitimacy.

No, it’s closer than it ought to be, and it will remain so. So if the Clinton team can’t bust this thing open, which I doubt they can, the fallback question becomes, how do they try to make sure they keep this seven-or-so point lead steady? As the old saying goes, timing is everything.

Timing always matters in politics, obviously—when you trot out a big endorsement, say. But it matters even more against Trump because he is a complete and total creature of the news cycle. He cleared the field in the GOP primary by owning every news cycle. None of them could do anything to take him off his game, get under his skin. Marco Rubio did a little, once he became a stand-up comedian, but he cut and ran shortly thereafter.

I think we’ve learned now, though, that that’s how to beat Trump: get under his skin. Tick him off. Unnerve him. Bait him, goad him, see what he’ll say. Right now, I’ll be watching with interest to see what the Clinton people do with this Melania-immigration story (if you haven’t read it, the gist is that she may have been here in 1995 performing work as a model on a visa that didn’t allow her to work). Hillary should not get into this herself, of course, but some well-chosen surrogate might raise some questions to which Donald feels he just has to respond.

That might be risky—a man defending his wife’s honor is usually a sympathetic figure. But the point is the need to keep Trump off balance. Trump starts talking about national security? Perfect time for Clinton to schedule that Colin Powell endorsement. Trump starts banging on about NAFTA? She should head to upstate New York and have an event at some factory she helped keep from moving to Mexico. The news cycle is this leech’s blood. Remove the blood supply and he perishes.

We like to think campaigns are battles of ideas, and they usually are to a surprising extent. This one isn’t that, since one candidate doesn’t actually have any ideas. He has grudges and resentments and a constant need to be seen as dominating. The ways to beat that candidate are 1) to feed his grudges in the hope that he’ll say something offensive, and 2) just prevent him from dominating. Clinton may never shake completely loose of Trump, but if her team is on the ball, they can try to make sure he never gets up a head of steam.

Article Link To The Daily Beast:

Does America Really Need To Spend More On Defense?

America can’t buy perfect security.

By Lawrence J. Korb and Eric M. Goepel
The National Interest
August 5, 2016

There is little consensus about the details of President Barack Obama’s fiscal year 2017 defense budget request, and there are few challenges of the underlying assumptions upon which the request is built. Congress, pundits and thought leaders argue over the makeup of the request and question whether the U.S. Department of Defense should fund a strategy of posture or presence, capability or capacity, readiness or investment, nuclear or conventional. The debate has also questioned whether President Obama’s budget request is too small, or if it makes smart choices. For example, the Pentagon civilian leadership claims it needs at least $11 billion more in FY 2017 to execute the president's national security strategy. Eighty-four defense hawks in Congress seek a $50 billion increase in the base defense budget. The Heritage Foundation is calling for a $75 billion increase in the baseline, while the Rand Corporation wants to add $50 billion and the Brookings Institution seeks $30 billion to $40 billion more. Only Third Way seems happy with the size of the FY 2017 defense budget.

Proponents of spending increases above the requested levels, from both the Pentagon and the U.S. foreign-policy establishment, generally criticize the budget based on two major premises. First, they claim the defense budget does not provide enough funding to support the United States’ current military strategy for dealing with today’s threats. Second, to deal with the threats facing the country, they argue that the defense budget does not receive an appropriate portion of the U.S. economy or the total federal budget.

For FY 2017 the Pentagon is requesting $528 billion in its base budget, an amount agreed to by the administration and the Republican-controlled Congress in December 2015 which gives the Pentagon about $30 billion in relief from the budget caps. In addition, the Pentagon is asking for another $59 billion in the Overseas Contingency Operations, or OCO, account—not because that amount is needed to fight the nation's wars in the Middle East and Afghanistan, but because the budget deal negotiated with Congress in 2015 specified that the OCO account must never fall below that level, whether such funds are needed for the wars or not. In FY 2017, as in previous years, at least half of the $59 billion is not related to the war. The 2015 budget agreement, however, has essentially turned the OCO account into a slush fund to pay for routine defense programs and get around the budget caps, which impact all federal agencies.

In addition, the administration requested another $20 billion in the budget for defense-related activities in the Department of Energy. This amount will enable the National Nuclear Security Agency, or NNSA, to begin the trillion-dollar modernization of America’s nuclear arsenal. In addition there is another $8 billion for defense-related activities in other federal agencies thus bringing the total defense budget for FY 2017 to about $610 billion.

In spite of DOD’s significant funding request, critics of the budget point to the relatively low percentage of gross domestic product, or GDP, that defense will consume in FY 2017—which has fallen from a recent high of 4.7 percent in 2010 to the current level of 3.3 percent—as a reason for increased defense spending in FY 2017. This reasoning is not new for advocates of ever-increasing budgets: the military establishment has long fantasized about tying defense spending to GDP because it would mean an increase in funding every year there is not a recession. Data on the raw, constant (or inflation-adjusted) defense dollars prove such arguments to be little more than sleight-of-hand. When President Ronald Reagan spent more than 6 percent of the GDP in 1986 on defense, for example, the GDP stood at $4.9 trillion; in 2015, when the Obama administration spent 3.3 percent on defense, the GDP totaled nearly $18 trillion in 2016 constant dollars.

There are obvious issues with chaining any type of discretionary spending to an arbitrary fraction of some debatable measure of economic growth, such as GDP. Such efforts have created an incentive to produce justifications for ever-expanding requests, regardless of the threat or strategy. The fact is that defense spending, adjusted to 2011 constant dollars, had a post–World War II historical peak in 2010, when President Obama budgeted $720 billion for such costs. This financing amounted to more than President Harry Truman spent at the height of the Korean War in 1953—$415 billion—and more than President Lyndon Johnson spent at the height of the Vietnam War, $522 billion in 1968. Even after the Budget Control Act of 2011 and the sequestration cuts in 2011, the United States has a larger defense budget than the next seven nations combined. Moreover, the United States alone accounts for more than 35 percent of the world’s defense expenditure.

In 2014, three years after withdrawing from Iraq and ending the International Security Assistance Force in Afghanistan, the United States actually spent more on defense than President Reagan did during the peak of the Cold War in 1986. These administrations spent a comparative $557 billion and $556 billion, respectively, when adjusted for inflation. It is important to note that the Reagan administration was simultaneously overseeing the modernization of the nuclear triad and competing in an arms race with the Soviet Union at the time.

Finally, President Obama has also collectively spent more on defense—$5.6 trillion, including the FY 2017 budget request—than the $4.5 trillion that President George W. Bush spent on defense during the entirety of his administration. The United States has spent roughly $10 trillion on defense in the last fifteen years—not counting the U.S. Department of Homeland Security’s budget, which will be another $40 billion this year, or the $80 billion we spend on intelligence; the ballooning costs of veteran’s benefits, which this year will reach $182 billion or the cost to the Treasury of amortizing the unfunded liabilities for military retirement benefits, which will total nearly $80 billion in FY 2017. Additionally, the U.S. Department of the Treasury calculates the total veterans’ benefits payable at $4.5 trillion.

With defense spending at historic highs in the absence of a major declared war, there has been a plethora of fallacious arguments to increase the size of the national security budget. The guiding documents that seek to define just what role U.S. military power should play in the current global environment—which primarily are DOD’s “2014 Defense Quadrennial Review,” or QDR and the White House’s 2015 “National Security Strategy”. These documents consistently characterize the threats to U.S. interests as increasingly serious challenges. Yet, these threats are only becoming more serious if one has a truncated view of history. Each of the identified threats has been a part of the U.S. strategic calculus for as far back as seventy years: Russia, which has been included since the beginning of the Cold War in 1947; China, since the end of the Chinese Civil War in 1950; North Korea, since the end of the Korean War in 1953; Iran, since the Islamic Revolution in 1979; and global terror networks, since the September 11, 2001 terrorist attacks. National security strategy, and in particular the defense budget, paints these entities as having the intent and capacity to undermine the international order and threaten vital U.S. interests—which are always ill-defined—and allies.

There is a certain amount of truth to these arguments. However, such a military-dominant strategy works against the United States’ own interests by heightening tensions and mistrust, provoking arms races and diminishing other options—such as diplomacy, which receives far too little funding, economic engagement and institution building. The United States has a finite set of resources that need to be spent wisely. The DOD has historically been a terrible steward of taxpayer money—which is evidenced by seemingly guaranteed cost and time overruns on its weapon systems, as well as the fact that the DOD has not passed a full audit in years. The Pentagon does not need a blank check, but rather clear, smart, well-managed and achievable policies that work in conjunction with the array of other tools U.S. policymakers have at their disposal. As we pointed out several times, the country needs an integrated national security budget to make this happen.

This report looks in detail at a major area that the FY 2017 budget request only deals with superficially: the current threat environment facing the United States.

Threat Environment In Context

It is useful to contextualize the following threats in order to analyze the DOD’s rationale for such historically high funding requests.


Both the 2014 Defense Quadrennial Review and the current budget proposal place Russia in the quintet of threats. Without a doubt, the Russo-Georgian War of 2008, Russia’s annexation of Crimea in 2014, its continuing support of separatists in the Donbass area of Ukraine and its military campaign in Syria are all cause for concern. However, it is troubling that supporters of increasing defense spending have hyped these Russian actions into some kind of existential threat to the United States and its allies—especially in light of Russia’s behavior under the leadership of President Vladimir Putin. The Russian president went to war against Georgia after a breakdown in diplomatic ties over the status of Abkhazia and Ossetia—two contested territories with Russian-backed separatist governments that lacked international recognition—and the push by the Bush administration to grant NATO membership to Georgia. Fearing closer European–Ukrainian ties following a popular revolution that ousted the pro-Russian president Viktor Yanukovych, Russia annexed Crimea and sent military support to separatists in the Donbass area of eastern Ukraine. Previous pro-Western Ukrainian presidents had also expressed the desire to join NATO, a desire also supported by the George W. Bush administration. There is a common thread here that should not be discounted: Putin has targeted weak, former Soviet satellite states that are both on the West’s periphery and Russia’s borders that have declared their intention of joining a military alliance that Russia has always seen as encroaching and hostile.

NATO countries have decried Russian aggression, going so far as to impose a variety of economic and diplomatic sanctions. But there has been a demonstrated lack of will within the alliance to either formulate a coherent defense plan, increase the size of member state militaries or pool resources to meet the agreed upon defense spending goals, something the last three secretaries of defense have criticized publicly. The United States has long struggled with what President Obama calls the free-rider problem within NATO, spending an immense amount of U.S. taxpayer money to underwrite the security of nations who do not see the need to invest sufficiently and effectively in their own armed forces. While President Obama has publicly expressed concerns about this free-rider problem, the DOD budget does not. In fact, the FY 2017 defense budget has quadrupled the European Reassurance Initiative, or ERI, to $3.4 billion. The idea that an extra five thousand troops on rotation in Europe will somehow deter Putin—when the existing fifty thousand have not—is preposterous, and suggests that the ERI is more about halfhearted signaling than affecting a substantive change in European security. Additionally, by placing the ERI in the Overseas Contingency Operation fund and not making it part of the base defense budget, the DOD is sending a clear signal that this is not a long-term priority and therefore should not be implemented in FY 2017. It is obvious that President Obama and the U.S. allies in European both recognize that sanctions and low oil prices have made more of an impact on constraining Russia’s adventurism than any amount of posturing or any number of joint exercises.

In Syria, Russia has committed significant economic and military resources for a seemingly limited period of time to secure their bases and prop up their client, President Bashar al-Assad. In this endeavor, Russia has been successful in the short term. They have also essentially bought themselves a seat at the table when the time comes for a political settlement. However, just as the United States found itself spending hundreds of billions of dollars to support the fragile governments of Iraq and Afghanistan, Russia is faced with the long term prospect of sinking large amounts of political capital and money into an open-ended conflict in order to support an unpopular government. Putin’s decision to withdraw some of the Russian forces indicates that he believes he has achieved enough—the security of Russian bases and the continued survival of Assad. Putin’s strategy is ultimately reactionary and opportunistic: strike where the West has little to no interest, where the opponent is weak and unaligned and where there is either a significant chance of success or where there is a perceived existential security concern. Western defense planners speak of deterrence, but a state without leverage or overriding concern cannot deter a military-capable state. Yet, even as the rhetoric on both sides of the old East–West divide has ratcheted up, Putin has shown a willingness to cooperate when it suits him—particularly in Syria, where the United States and Russia have “deconflicted” the battle space, jointly worked to destroy Assad’s chemical stockpiles and worked to arrange a ceasefire.

In short, Russia is not the Soviet Union, nor is Putin the next Stalin. In fact, he is someone with whom we can work as we have done in Iran and are now doing in Syria. He is a strongman and authoritarian, but he still derives legitimacy from popular support—which his military actions have generated—at least in the short term. After the deterioration in the post-Soviet years, most Russians greatly desire to return their nation to a great power status. In the face of a struggling economy, corrupt governance and the general decline in the prospects of the average Russian. Putin has found a means to keep that dream of Russian power alive. But his military engagements have been inconclusive, and he faces a bevy of other constraints that are outside of his power to circumvent. Russia today is tied into the international system in a way the Soviet Union never was, and it remains dependent on keeping within the good graces of the liberal order. To do otherwise would invite collapse. There would be no winner in a U.S.–NATO war with Russia, and no meaningful way to stop it from escalating to a nuclear exchange if one broke out. So, it is incumbent on the United States, as the leader of the free world, to continue to find nonmilitary solutions to the situation in Eastern Europe. Just as Iran was brought to the bargaining table through a combination of engagement, international sanctions and isolation, so might Russia.


Historic state behavior, military options and economic concerns make war with China even more inconceivable than war with Russia. After nearly a century of imperialism, war and disastrous reforms, Chinese party leaders have cemented their position through a combination of authoritarian controls and making the country more prosperous. China today is arguably freer than at any time since the end of the Chinese Civil War, though civil, social and political rights have lagged far behind economic freedom and development. It was never a matter of if China would resume its position as a great power, but when. That time seems to be now—after years of spending on nondefense investment, Chinese leaders are nowintent on creating a military on par with its world position. Here, though, is the line the Chinese Communist Party finds itself walking: spending on defense and pursuing a more muscular foreign policy, while ensuring the health of a national economy facing significant challenges and also answering demands for further liberalization and reforms.

In the South China Sea, China seems intent on using its military and economic power to shoulder aside competing territorial claims. The South China Sea represents one of the most important sea lanes in the world and sits on billions of dollars of proven oil and natural gas reserves. There are currently nine states—China, Vietnam, Indonesia, the Philippines, Taiwan, Singapore, Cambodia and Brunei—that dispute ownership of some area of the sea. Despite occasional naval clashes between the parties, particularly Vietnam and China, the Association of Southeast Asian Nations, or ASEAN—of which seven claimants are members—has worked to prevent a military escalation in the area and settle disputes. There is still a lack of an overarching treaty framework, however, and China has exploited that lack of cohesion. While China’s actions are provocative they do not represent clear and present danger to U.S. allies and interests. Continuing to maintain a strong naval presence in the area, by means of the pivot to Asia, is undoubtedly an important policy, but so is building allied capability, by policies such as lifting the arms embargo against Vietnam, while also working toward a diplomatic settlement, such as finally ratifying the U.N. Convention on the Law of the Sea, which our military has recommended for thirty years.

China also holds the key to any kind of peaceful resolution on the Korean peninsula. As North Korea’s sole patron, China has the most leverage over Kim Jong-un’s dictatorship and only through their cooperation can the United States hope to finally achieve the end of nuclear proliferation in the area. It is apparent the administration understands China’s important role in ensuring security for the United States and our allies. Thus, trade agreements and military events such as the Rim of Pacific Exercise, or RIMPAC, continue to be prime drivers in maintaining and strengthening bilateral ties. Growth of military technology and doctrine that seeks to counter traditional areas of U.S. superiority, such as the much-discussed Anti-Access/Area-Denial, or A2/AD, cyber and space capabilities, should act as a guide for future research and development rather than a justification for even more money than is in the FY 2017 budget.

China does not want a war, particularly over territory like the South China Sea. Its actions have already led to a multinational coalition to balance against it, renewing and reinforcing ties between the United States and partners such as Japan and the Philippines. China also happens to have major investments in and trade relationships with all interested parties in the area. To an even greater degree than Russia, China is constrained by its place within the world economy and the need to keep positive trade balances to avoid slowing its economic growth.

Open conflict would be devastating to every nation in the region—in both economic and human terms—which makes the likelihood of such an event incredibly slim. This means that military posturing alone will not deter China’s aim to establish itself as a power to be reckoned with; based on its size and its economy, that outcome is a foregone conclusion. The degree to which China feels the need to invest in its military and behave aggressively against its neighbors will be determined by many factors, both foreign and domestic, that are outside of U.S. control. China has had to slash 300,000 people from its armed forces because rising wages have made maintaining the world’s largest standing army prohibitively expensive. But it is within the power and in keeping with the interests of the United States to not further escalate the situation and instead continue to help the region work toward a peaceful solution that ensures freedom of trade and movement.

How Iran Spent Its $400M ‘Ransom’ Windfall

By Post Editorial Board
The New York Post
August 5, 2016

Now that we know President Obama paid Iran $1.7 billion — $400 million in cold hard cash loaded on a secret flight — to ransom four American captives, comes an obvious question: What did Tehran do with all that money?

To hear Team Obama tell it, Iran’s windfall went for strictly benign purposes.

Just last week, CIA Director John Brennan claimed the money Iran is getting under Obama’s nuclear deal “is being used to support its currency” and “build up its infrastructure.”

We doubt that’s true of all the hundred-billion-plus in sanctions relief — and we know it’s not true of the ransom payout.

As Bloomberg’s Eli Lake reported in June, the money — a settlement of Iranian legal claims dating back to 1981 — is going straight to the military.

The Foundation for the Defense of Democracies uncovered an item in Iran’s 2017 national budget ordering the Central Bank “to give the money from the legal settlement . . . of up to $1.7 billion to the defense budget” — which then rose 90 percent over the prior year’s.

In other words, the cash is being used to arm Iran’s terrorist clients, like Hezbollah, and to fund its war for Syria’s Bashar al-Assad.

And that won’t be the last of it. Iran has already taken several more US hostages since releasing the last batch. Expect fresh ransom demands to follow.

Article Link To The New York Post:

How Iran Spent Its $400M ‘Ransom’ Windfall

What Obama Must Do To Get It Right In Libya This Time

By Benny Avni
The New York Post
August 5, 2016

With his renewed determination to fight ISIS in Libya, President Obama can do some good — but can he go beyond more of the same half-hearted measures?

This week, Obama announced that, at the behest of the Libyan government, American planes will bomb targets in Sirte, helping local fighters in their attempt to drive out ISIS terrorists. Italy then said that it would allow US planes to use its airspace and military bases near Libya’s shores.

And not a moment too soon.

In early 2015, as Libya descended into chaos, ISIS fighters took over the coastal city of Sirte, the birthplace of Moammar Khadafy and his favorite place to do business during his long rule. The area around Sirte is home to Libya’s main oil fields, and its port serves as the country’s main oil terminal. Control it, and you’ll be rich.

No wonder ISIS turned Sirte into the caliphate’s largest home base outside of Syria and Iraq. Refugees from the battle-scarred Mideast and impoverished African would-be migrants sail from Sirte to Europe daily in whatever floating vessel they can find. Many don’t make it alive.

How did Libya become a terrorist hub — and a humanitarian blight to boot?

Back in April, Fox News’ Chris Wallace asked Obama to name his worst foreign-policy mistake. “Probably failing to plan for the day after, what I think was the right thing to do, in intervening in Libya,” he said, referring to the 2011 US-backed removal of Khadafy from power.

Of course, Democrats like Hillary Clinton, who had initially supported the 2003 Iraq war, heaped mountains of scorn on President George W. Bush for failing to follow-up after ousting Saddam Hussein. Now that Obama admits making the same mistake in Libya, they go quiet.

So this week Obama has opted for a course correction. Is he doing it for political reasons? After all, then-Secretary of State Clinton urged him to undertake regime-changing military action, and now Libya is home to jihadis. Victory over ISIS could blunt such criticism of Hillary on the campaign trail.

Even so, that wouldn’t make stronger action against ISIS any less of a good idea. And ousting ISIS from Sirte isn’t such a formidable task. Local militias are already eating away at the areas the jihadis control.

ISIS terrorists counter with sniper fire and other urban guerrilla tactics. But aided by precision US air attacks, those US-allied locals can hopefully beat ISIS back fairly quickly.

And defeating ISIS in its second-largest home base could put a dent in the group’s aura of invincibility. Terrorist recruitment could suffer. All good.

Then again, success can be fleeting.

Libya is a big country. Terrorists in North Africa are well versed in the practice of retreating from urban centers into vast deserts, hoping to tire out their pursuers. ISIS fighters could wait America out and then return, bigger and stronger, to Sirte.

More importantly, Libya’s still a mess. The UN-recognized “unity government” that invited America to fight ISIS clumsily masks the country’s deep political divisions. And the Libyan army, commanded by General Khalifa Haftar, is far from the only fighting force in the country.

In fact, it isn’t even the one we’re backing.

As Libyan UN Ambassador Ibrahim Dabbashi notes, the militias the United States is supporting in Sirte call themselves revolutionaries. “I hope we can fight ISIS without [further] strengthening those militias,” Dabbashi told me, reflecting concerns that in the future, the militias will challenge the country’s only well-structured army.

Jihadist movements thrive in politically divided Arab countries. They flourish where multiple militias (as opposed to a single army) compete for control.

As Obama astutely noted, a failure to follow-up can turn each military success into a disaster. In Libya’s case, his limited remaining time in office means any follow-up will be left to his successor.

So, at best, expect an election-eve “mission accomplished” banner. Hopefully our Sirte effort will temporarily dent ISIS’s advances. But Obama will never get beyond the first part of his vow to “degrade and ultimately destroy” ISIS; he won’t have time.

A more comprehensive strategy must include sustained military effort, with some boots on the ground and, yes, a bit of nation-building, too. All these, regrettably, have become dirty words in our current political discourse — except to criticize others who have made the same mistakes.

Article Link To The New York Post:

Apple Will Pay Hackers For Security Vulnerabilities

By Elias Groll
Foreign Policy
August 5, 2016

Every day, cyber criminals and security firms buy and sell exploits to gain illicit access to computer systems. Now Apple is getting into the game.

Speaking at the annual Black Hat security conference, Ivan Krstic, head of security engineering and architecture for Apple, announced that the company will launch a so-called “bug bounty” program that will pay developers who discover flaws in the company’s mobile operating system. In a departure from its previous practice, Apple will now offer up to $200,000 for the most critical flaws. The program will launch in September and will initially be invitation-only to a select group of researchers.

But even that figure falls short of what researchers can get paid by other players in the marketplace for security vulnerabilities. Last year, the start-up Zerodium offered a $1 million bounty to the first hacker to remotely install an app on an iPhone and offer the solution to the firm. The reward was claimed in a few weeks.

And when the FBI wanted to gain access to the encrypted contents of an iPhone belonging to one of the gunmen who killed 14 people in San Bernardino in December, the bureau reportedly paid at least $1.3 million to a mysterious hacker or firm to break into the phone.

The prized nature of the data stored on phones, and Apple’s increasingly sophisticated security measures to keep hackers out, has made security vulnerabilities in its iOS operating system among the most prized material on the black market.

Krstic’s presentation at the tail end of Black Hat conference — billed as an inside look at the security features of the company’s new mobile operating system — focused on the byzantine measures the company has put in place to keep out hackers and keep its customers’ data secure. The company has implemented advanced encryption schemes to lock down phones, Krstic said, and has built in structures designed to thwart sophisticated attacks.

Asked whether the bug bounty was a response to the very public fight Apple waged with the FBI over accessing the locked contents of an encrypted phone, Krstic refused to answer. But that conflict clearly hangs over the policy.

Matt Tait, a former security specialist at GCHQ, the British equivalent of the NSA, wrote on Twitter that the structure of the Apple Bug bounty appears specifically geared toward blocking FBI access to its products. The company is offering its largest bounties for vulnerabilities of particular interest to the FBI and is offering smaller sums for vulnerabilities typically of interest to criminal hackers working for financial gain.

The fight with the FBI presented enormous reputational risks to Apple, and its resolution — the FBI paid an unnamed entity to hack into the phone — left a stain on Apple’s claims to have instituted ironclad security measures.

As the FBI sought to secure the company’s help in breaking into San Bernardino shooter Syed Rizwan Farook’s iPhone, Apple executives told reporters during regular conference calls that the company was playing a cat-and-mouse game with hackers trying to break into its products. As soon as the company patched its products, new vulnerabilities emerged, executives said.

That argument doesn’t quite square with the justification offered by Krstic on Thursday for launching a bounty, which are used by many of Apple’s competitors but which the company has long resisted. Krstic said it has become increasingly hard for researchers to find the most critical security flaws in the company’s products. As a result, the company has concluded that it makes sense to offer a monetary incentive to researchers trying to break into its products, Krstic said.

The new policy will certainly funnel some cash to well-intentioned security researchers looking to inform Apple of its security flaws and protect user privacy. Less scrupulous hackers, however, will be able to get far more for selling the fruits of their work on the black market or to security companies.

Article Link To Foreign Policy:

Could This Be The Last Battle For Aleppo?

Opposition factions in southern Aleppo have made significant advances after launching attacks in response to the one-month-long siege imposed by the regime on Aleppo’s eastern neighborhood.

August 5, 2016

On July 31, Syrian opposition factions launched a fierce attack on Aleppo in northern Syria. In a first of its kind, the attack involved all of the opposition factions and groups.

Inside opposition-controlled neighborhoods, which have been besieged for almost a month by the Syrian regime, the scene changed completely when the battles erupted July 31. The residents’ moods shifted from confusion and anxiety to a state of optimism that their suffering under the siege was coming to an end. In the meantime, clouds of black smoke billow in the sky as a result of the residents’ burning of tires to prevent regime warplanes from identifying targets.

The residents of Aleppo try to get on with their lives in the early morning hours as warplanes hover in the sky. At times, the regime fires its mortar and artillery shells on Aleppo’s neighborhoods when battles start a few hours before sunset. While these battles raise the fears of citizens, the fighting also gives the residents hope that the siege will end soon.

Britta Haji Hassan, board chairman of the Free Aleppo Council, told Al-Monitor that than 320,000 people are besieged within the opposition-controlled neighborhoods of Aleppo. Extremely difficult and inhumane conditions could be in store for the residents should the blockade continue amid the lack of fuel and the gradual depletion of food stocks.

Yusuf al-Muhajir, spokesman for the Ahrar al-Sham movement, one of the factions taking part in the Aleppo attack, told Al Jazeera channel Aug. 2 that the attack aims to end the siege plaguing the residents of the city of Aleppo; he said the achievement of this goal is imminent.

However, Abu Bashir Maara, the military commander of the Aleppo Liberation operations room, which is affiliated with the Free Syrian Army (FSA), said Aug. 2 that the battle will not stop until the entire city of Aleppo is under opposition control, and that the first phase of the battle aims to break the siege imposed by the regime on opposition-controlled neighborhoods.

Ever since the FSA entered Aleppo, the economic capital of Syria, in July 2012, the city has been divided into districts under the control of the opposition and others under the control of the regime.

The opposition’s preparations and the huge potential employed in the attack suggest that the action is not only aimed at lifting the siege, but also at seizing the regime-controlled western neighborhoods.

The attack involves 22 opposition factions, most notably the Sham Legion (Failaq al-Sham), Jaish al-Fatah (Army of Conquest), which includes several groups such as Ahrar al-Sham and Jabhat Fatah al-Sham (Jabhat al-Nusra), along with the Aleppo Liberation operations room, which includes the FSA factions in Aleppo.

On the first day of the battle, which was called “The grand epic of Aleppo,” the opposition made significant progress in south Aleppo and gained control of two hills — Moota and Ohod — as well as the 1070 apartment complex in the Hamdania neighborhood. On the second day, the opposition seized al-Shurfa village and moved into parts of Ramouseh, south of Aleppo.

On the third day, however, this progress subsided as opposition forces started defending the areas they had gained control of. Meanwhile, the opposition-affiliated Jaish al-Fatah announced that it had repelled a regime attack on the 1070 apartment complex amid pro-regime media reports saying the regime had rolled back rebel gains in areas such as Telat al-Mahroukat, al-Amriyeh village and al-Jamiat region. The opposition provided some confirmation of this when it announced Aug. 4 the start of an attack to retake the latter region.

It does not seem that the aim of the Aleppo battle is to reopen the Castello Road, in northern Aleppo, that was cut by regime forces July 7; rather, it aims to secure a new supply route for the opposition that crosses Ramouseh.

This battle is a life or death battle for both parties. Not only would the opposition forces’ seizure of Ramouseh break the siege of the eastern neighborhoods, but it would also cut the main supply route leading to regime-controlled areas. While this supply route is still passable, the FSA released a video Aug. 3 showing a military vehicle belonging to Lebanese Hezbollah being targeted on this route.

Just a few days ago, President Bashar al-Assad's regime forces seemed victorious in Aleppo, especially after they took control of the Bani Zeid and Leiramon neighborhoods in north Aleppo, and imposed a siege on the opposition-held eastern neighborhoods. This siege was what pushed the opposition forces to launch this massive attack on the city of Aleppo, and Jaish al-Fatah and Sham Legion’s joining of the battle of Aleppo seems to have changed the equation, especially considering that both factions were the main forces that managed to take control of the province of Idlib in March 2015.

The Aleppo battles are now raging between the opposition and the regime more fiercely than ever before, and they seem to be headed toward a fast conclusion.

Article Link To Al-Monitor:

Could This Be The Last Battle For Aleppo?

Krauthammer: Donald Trump And The Fitness Threshold

Trump’s latest gaffe shows clearly how unfit he is for the presidency.

By Charles Krauthammer 
The National Review
August 5, 2016

Donald Trump, the man who defied every political rule and prevailed to win his party’s nomination, last week took on perhaps the most sacred political rule of all: Never attack a Gold Star family. Not just because it alienates a vital constituency but because it reveals a shocking absence of elementary decency and of natural empathy for the most profound of human sorrows — parental grief.

Why did Trump do it? It wasn’t a mistake. It was a revelation. It’s that he can’t help himself. His governing rule in life is to strike back when attacked, disrespected, or even slighted. To understand Trump, you have to grasp the General Theory: He judges every action, every pronouncement, every person by a single criterion — whether or not it/he is “nice” to Trump.

Vladimir Putin called him brilliant (in fact, he didn’t, but that’s another matter) and a bromance is born. A “Mexican” judge rules against Trump, which makes him a bad person governed by prejudiced racial instincts.

House Speaker Paul Ryan criticizes Trump’s attack on the Gold Star mother — so Trump mocks Ryan and praises his primary opponent. On what grounds? That the opponent is an experienced legislator? Is a tested leader?

Not at all. He’s “a big fan of what I’m saying, big fan,” attests Trump.

You’re a fan of his, he’s a fan of yours. And vice versa. Treat him “unfairly” and you will pay. House speaker, Gold Star mother, it matters not.

Of course we all try to protect our own dignity and command respect. But Trump’s hypersensitivity and unedited, untempered Pavlovian responses are, shall we say, unusual in both ferocity and predictability.

This is beyond narcissism. I used to think Trump was an eleven-year-old, an undeveloped schoolyard bully. I was off by about ten years. His needs are more primitive, an infantile hunger for approval and praise, a craving that can never be satisfied. He lives in a cocoon of solipsism where the world outside himself has value — indeed exists — only insofar as it sustains and inflates him.

Most politicians seek approval. But Trump lives for the adoration. He doesn’t even try to hide it, boasting incessantly about his crowds, his standing ovations, his TV ratings, his poll numbers, his primary victories. The latter are most prized because they offer empirical evidence of how loved and admired he is.

Prized also because, in our politics, success is self-validating. A candidacy that started out as a joke, as a self-aggrandizing exercise in xenophobia, struck a chord in a certain constituency and took off. The joke was on those who believed that he was not a serious man and therefore would not be taken seriously. They — myself emphatically included — were wrong.

Winning — in ratings, polls, and primaries — validated him. Which brought further validation in the form of endorsements from respected and popular Republicans. Chris Christie was first to cross the Rubicon. Ben Carson then offered his blessings, such as they are. Newt Gingrich came aboard to provide intellectual ballast.

Although tepid, the endorsements by Ryan and Senate Majority Leader Mitch McConnell were further milestones in the normalization of Trump.

But this may all now be jeopardized by the Gold Star gaffe. (Remember: A gaffe in Washington is when a politician inadvertently reveals the truth, especially about himself.) It has put a severe strain on the patched-over relationship between the candidate and both Republican leadership and Republican regulars.

Trump’s greatest success — normalizing the abnormal — is beginning to dissipate. When a Pulitzer Prize–winning liberal columnist (Eugene Robinson) and a major conservative foreign-policy thinker and former speechwriter for George Shultz under Ronald Reagan (Robert Kagan) simultaneously question Trump’s psychological stability, indeed sanity, there’s something going on (as Trump would say).

The dynamic of this election is obvious. As in 1980, the status quo candidate for a failed administration is running against an outsider. The stay-the-course candidate plays his/her only available card — charging that the outsider is dangerously out of the mainstream and temperamentally unfit to command the nation.

In 1980, Reagan had to do just one thing: pass the threshold test for acceptability. He won that election because he did, especially in the debate with Jimmy Carter in which Reagan showed himself to be genial, self-assured, and, above all, nonthreatening. You may not like all his policies, but you could safely entrust the nation to him.

Trump badly needs to pass that threshold. If character is destiny, he won’t.

Article Link to The National Review:

Rove: Victory Is Slipping Away For Trump

He can still win—but only if he quits being self-destructive and chooses discipline.

By Karl Rove
The Wall Street Journal
August 5, 2016

Last month’s Republican and Democratic national conventions showed that both parties are deeply split internally over ideology and personalities. Not only that, but their presidential nominees remain highly unpopular.

The GOP gathering in Cleveland was poorly produced and featured the presidential primary’s runner-up, Texas Sen. Ted Cruz, in a prime-time appearance pointedly refusing to endorse Donald Trump.

The Democratic convention in Philadelphia was marred by supporters of Sen. Bernie Sanders, enraged by hacked emails from the Democratic National Committee showing that the party establishment favored Hillary Clinton. They booed the party’s chairwoman out of office and chanted “no more war” when Democratic leaders spoke of fighting Islamic State and al Qaeda.

Donald Trump and Hillary Clinton polished their flawed images, but the Democrat did a better job. Between July 17 and this Wednesday, Mrs. Clinton’s favorable rating rose to 40.6% from 38.4% in the Real Clear Politics average. Her unfavorable rating dropped to 53.9% from 56.2%. That’s a total swing of four and a half points.

During the same period Mr. Trump’s favorable rating moved to 35.3% from 33.6% and his unfavorable rating to 57.9% from 60.1%, a total swing of 3.9 points.

The general-election campaign has hardly begun, and data from Gallup shows that both candidates are more widely disliked than any presidential hopeful since at least the 1960s. Even in October 1964, Barry Goldwater’s unfavorability rating was 47%, while in October of 1972 George McGovern’s was 41%.

Mrs. Clinton appears to have received the bigger convention bounce. The day before the GOP gathering, she led Mr. Trump 43.8% to 40.6% in the Real Clear Politics average. By July 25, the Republican was in front, 44.3% to 44.1%. On Wednesday Mrs. Clinton was back ahead with 46.5% to his 42%.

Whether this boost is temporary or durable won’t be known for a few days. But Mr. Trump’s self-destructive actions in the past few weeks have given her the advantage.

He began the morning after his convention by devoting his news conference to again trashing Mr. Cruz, including reviving the crazy theory that the Texas senator’s father was implicated in JFK’s assassination. Mr. Trump then returned to his Manhattan penthouse for the weekend, going silent until “Meet the Press” that Sunday, where he proposed a 15% to 35% tax on imported goods.

Then the next week, amid charges that Russian hackers were behind the Democratic National Committee email dump, Mr. Trump suggested that maybe the Russians could help find Mrs. Clinton’s missing 30,000 emails.

Most damaging, Mr. Trump has for the past week battled with Khizr and Ghazala Khan, the Gold Star parents of a fallen war hero. He even mocked the grieving mother. This is unprecedented cruelty.

But that isn’t all. On Sunday Mr. Trump suggested that the election is “rigged” because debates this fall were scheduled months ago on nights with NFL football games. He attacked fire marshals in Colorado and Ohio for enforcing the fire codes that limited how many people could cram into his rallies.

On Tuesday he refused to endorse two prominent Republicans up for re-election, House Speaker Paul Ryan and Sen. John McCain, in their primaries. Then he belittled Sen. Kelly Ayotte, a New Hampshire Republican facing a tough race that could determine whether the GOP keeps the Senate.

How does any of this advance Mr. Trump’s agenda or reassure Americans that he is worthy of support? The nominee’s defenders say that he “tells it like it is” and refuses to be “politically correct.” They are only enabling his worst instincts.

Imagine if Mr. Trump had opened his post-convention news conference with a bold rallying cry on the issues and then spent three days barnstorming battleground states, appearing with workers, small-business owners and first responders.

Rather than fighting with the Khans, he could have seized on Friday’s lousy GDP report to explain how a Trump White House would result in more jobs, bigger paychecks and greater prosperity. Instead of grousing about debate schedules Sunday and attacking fire marshals, Mr. Trump could have responded to Mrs. Clinton’s interview with Chris Wallace on Fox News, where she continued lying about her private email server.

No one on Team Trump—especially not the principal—appears to have a plan for what messages to emphasize and when. No one seems charged with watching what Mrs. Clinton says so the candidate can quickly volley back. No one restrains Mr. Trump before he activates his Twitter account. Ad hoc may be freewheeling and fun, but it often leads to defeat.

The White House is not out of reach for Mr. Trump, who now trails by 4.5% in the Real Clear average. But victory is slipping away. If he has more weeks like the dreadful past two, the gap between him and Mrs. Clinton is likely to widen and never close again.

Article Link To The Wall Street Journal: