Thursday, August 11, 2016

Oil Prices Dip On U.S. Crude Inventory Build, Record Saudi Output

By Henning Gloystein
August 11, 2016

Oil prices fell on Thursday as a build in U.S. crude inventories and record Saudi Arabian production reinforced fears of a persistent supply overhang that will last well into next year and keep weighing on markets.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading at $41.59 per barrel at 0650 GMT, down 12 cents from their last settlement.

International Brent crude futures LCOc1 were at $43.95 a barrel, down 10 cents.

Oil fell sharply after data from the U.S. Energy Information Administration showed crude inventories rose 1.1 million barrels in the week ended Aug. 5. Analysts polled by Reuters had expected a 1.0 million-barrel crude draw instead. [EIA/S]

"Crude oil stocks rose 1.06 million barrels to 523.6 million barrels. The unexpected rise was driven by reduced operating rates at refineries, which fell 1.1 percent to 92.2 percent of capacity," ANZ bank said on Thursday.

"Bearish supply-side news also weighed on the market, with Saudi Arabia reporting a record 10.67 million barrels per day (bpd) production in July," it added.

Overall production from the Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader, also increased, boosted by producers such as Iraq and Iran, who offset the impact of militant attacks in Nigeria.

Based on figures OPEC collects from secondary sources, the organization pumped 33.11 million bpd in July, up 46,000 bpd from June.

OPEC expects demand for its crude in 2017 to average 33.01 million bpd, suggesting a supply surplus of 100,000 bpd if OPEC keeps output steady.

Matt Stanley, a fuel broker at Freight Investor Services in Dubai, said he expected crude prices to "be stuck in a range between $40 and $45 (per barrel) for a while."

Article Link To Reuters:

IBM's Watson Won Jeopardy, But Can It Win Business From Banks?

By Olivia Oran
August 11, 2016

International Business Machines Corp is in an unusual fix in telling big U.S. banks they can use its Watson software of Jeopardy-winning fame as a cost-saving solution: bankers say they like it, but cannot afford it.

IBM is in a good company. Banks are in the fifth year of their belt-tightening campaigns that began in 2011, chasing billions of dollars' worth of savings, and vendors that offer everything from technology to janitorial services are getting squeezed.

With persistently low interest rates hurting revenue and businesses like bond trading hemmed in by new regulations, few on Wall Street expect the austerity to end any time soon.

For IBM the irony lies in the fact that senior bank executives say they believe its artificial intelligence software could help them achieve cost-cutting goals in coming years, but are not ready to pay for Watson today.

Several technology executives from large banks told Reuters that while the software may have enormous potential, they would struggle to convince top managers, laser-focused on quarterly results, to sign off on investments that do not offer an immediate payoff.

"It requires a lot of trust that you'll get the right outcome in a few years," said a technology executive at a large Wall Street bank.

People familiar with the matter say IBM has offered presentations of its software to banks including Bank of America Corp, Barclays PLC and Morgan Stanley. The software, known as Watson, got attention in 2011 for winning the game show Jeopardy. IBM says it can "learn" and process human language, and can analyze large amounts of unstructured data, like social media posts and digital photos.


IBM's pitch to banks is that Watson can do everything from answering customers' questions in retail branches to detecting credit card fraud to helping wealth managers make better investment recommendations for their clients.

Bank technology executives said the minimum cost of using software like Watson, including due diligence and training, could reach a few million dollars. It is not uncommon for a full-scale implementation to cost in the tens of millions of dollars, said the executives, who were not authorized to talk to the media.

An IBM spokeswoman noted companies can develop their own applications using Watson's underlying code if they do not want to pay for a full-scale implementation. The company declined to give details of the software's costs.

IBM does not break out revenue for Watson, but Chief Executive Virginia Rometty said in June it is "still growing" and industries, such as healthcare, have adopted the software with some success. On its website, IBM said a large health insurance provider was saving more than $11 million per year by using Watson to improve its call center.

Yet convincing bankers to commit to the software today is a challenge, said Ed Harbour, vice president of implementations at IBM Watson.

"A lot of the U.S. banks acknowledge that the technology is real and it works, but they have so many things on their plate competing for investments," he told Reuters. "They want to get an immediate return and they see that coming more from ways to take costs out, rather than growing the top line."

Altogether, U.S. banks spent $62 billion on technology in 2015, up 5 percent from the prior year, according to consulting firm Accenture.

Most of the industry's tech spending goes toward basics like computers, servers and IT staff, with just a fifth dedicated to "innovation," or to projects that can grow revenue. Out of that fifth, the majority is dedicated to regulatory compliance, consultants say.

Grainne McNamara, a principal with auditing and consulting firm PwC who has worked with big banks for years, said the singular focus on short-term savings could backfire in the long run.

"Banks need alternative revenue sources and there are tons of new avenues for investment," McNamara said. "They need to be paying attention."

Because of the sheer size of their operating budgets, big U.S. banks once represented a huge opportunity for vendors. However, the industry has collectively cut those budgets by more than $8 billion since 2010 when they spent $176 billion, according to Boston Consulting Group. With profits under pressure, banks are putting vendor contracts into competitive bidding, demanding more products and services to renew them or canceling them outright.

JPMorgan Chase & Co, for instance, has reduced the number of vendors it uses in its retail operation by a fifth.

Watson also has competition. Palantir Technologies and Digital Reasoning offer rival artificial intelligence software that some banks already use for compliance tasks, such as identifying rogue traders.

So far, Citigroup Inc is the only major U.S. bank to announce publicly it has entered into an "exploratory agreement" to use Watson, which it announced in 2012. Citi spokesman Kamran Mumtaz declined to provide an update on its status.

Meanwhile, IBM executives are trying to woo banks outside the United States. IBM told Reuters Banco Bradesco in Brazil and Mexico's Banorte have both signed on to use the software.

Article Link To Reuters:

U.S. Mutual Funds Boost Own Performance With Unicorn Mark-Ups

By Tim McLaughlin and Heather Somerville
August 11, 2016

Some U.S. mutual funds are boosting their performance with relatively big bets on private companies such as Uber and Pinterest, which they have been marking up at a rate far greater than the broad stock market.

Relied upon by millions of Americans to save for their retirement, mutual funds emphasize that their investments in young tech companies ahead of their initial public offerings are relatively small.

A Reuters analysis of fund filings and other data shows, though, that some have taken a more aggressive approach, boosting the share of these companies to more than 5 percent of assets and awarding them rich valuations that in some cases have helped them beat their benchmarks and peers by a wider margin.

Mutual funds' involvement also helped boost the number of so-called unicorns - private companies valued at $1 billion or more.

These private investments come at a risk, though. Many are young companies that have yet to make a profit. They are also harder to price and to sell than publicly traded stocks.

That could hurt investors in a downturn because fund managers forced to meet investor redemptions may have to sell liquid public companies while marking down the unlisted ones, said Larry Swedroe, director of research at Buckingham Asset Management in St. Louis.

"Private companies typically trade at significant discounts for that reason," Swedroe said.

In a rising market, though, they help shore up performance. Bets on Uber Technologies Uber.UL and other unlisted companies, for example, helped the Hartford Growth Opportunities Fund (HGORX.O) deliver a 12.7 percent return in 12 months to Oct. 31 compared with a peer fund average of 5.2 percent, according to Lipper Inc.

The $4.5 billion fund cited Uber among top contributors to performance in its report for fiscal 2015, alongside Inc (AMZN.O) and Netflix Inc (NFLX.O). The ride-services company's valuation in the fund surged 156 percent to $82.5 million, Hartford disclosures show. (Graphic:

Its pre-IPO stakes accounted for nearly 6 percent of net assets while most of its peers have kept their exposure below 1 percent, fund holdings show. Hartford declined to comment.

Pre-IPO investments can amplify a fund's relative performance because they are not included in a comparison benchmark index and some have far outpaced the stock market.

Fidelity Investments' valuation of Contrafund’s Series E stake in content sharing company Pinterest has tripled to $480 million since an initial investment in October 2013, compared to the S&P 500’s 25 percent rise.

In a statement, Fidelity said such investments were “very small positions in the relatively few Fidelity funds that make such investments.” (Graphic:

Over the long term, the impact of those stakes on performance may be less significant in a fund as large as the $109 billion Contrafund, than in some smaller peers.

Outsized Effect

Mutual fund investments, however, have measurable effect on companies' valuations. Those that received such financing last year saw their valuations more than double over their previous funding round. In contrast, valuations of companies that raised cash without mutual fund investors grew 1.5 times, according to PitchBook, a private equity, M&A and venture capital database.

The Securities and Exchange Commission (SEC) has been asking mutual fund companies how they value their stakes in companies like Uber, Pinterest Inc and Airbnb.

The regulator is worried investors could get hurt in case of a sharp tech downturn, according to two people familiar with the SEC's queries. They were not authorized to speak publicly about the matter.

Pre-IPO investments can have an outsized negative impact when marked down, which happened to startups such as cloud storage firm Dropbox or software startup Zenefits.

Facing a tough challenge from index-tracking funds, actively-managed mutual funds led by Fidelity Investments, BlackRock, T. Rowe Price and Wellington Management, began piling into pre-IPO tech companies in 2014, according to venture capital database CB Insights.

Their investments helped boost inflows that year to $51 billion, a 14-year high, according to Thomson Reuters data. Since then mutual funds have dialed down their pre-IPO deals after several Silicon Valley companies missed growth targets, even though they took part in a $1.3 billion funding of messaging app Snapchat earlier this year and are buying shares from employees and founders to raise their stakes in companies.

Some funds count Uber, Pinterest and WeWork Companies Inc, among their largest holdings, filings show. For example, Uber is a top 15 holding in the $19 billion Fidelity Blue Chip Growth fund.

At T. Rowe Price, private investments made up about 4 percent of assets of its $16 billion New Horizons Fund (PRNHX.O) at the end of 2015. The asset management firm's spokesman Bill Weeks said individual securities typically represented less than 1 percent of any fund's portfolio, but acknowledged such investments could still pack a punch.

"If, for example, you have 2 percent of a fund in private companies and those holdings go up 50 percent in a flat market, that would add 1 percent of relative performance. It works the same way on the way down."

Pre-IPO investments are assessed by mutual funds valuation committees which look at revenue growth, competition, barriers to entry and what others paid in subsequent funding rounds. Fund managers are excluded from the discussion, but like other employees stand to benefit from mark-ups because management fees tend to rise with the value of assets.

Glenn Booraem, treasurer for Vanguard funds, said outside auditors reviewed valuations of the funds' relatively small private investments.

“It’s more art than science, but our objective every day is to strike a net asset value that represents the fair value of all the assets in the fund.”

Fidelity said its process was “rigorous and thorough" but it declined to comment on individual valuations. Mutual funds must determine a value for their private investments every trading day so a portfolio's overall net asset value can be calculated.

Venture capital firms typically value tech holdings quarterly, but share those valuations only with their limited partners - institutional investors with a greater understanding of the risks involved.

“Who doesn’t think Uber has a great thing going?” said David Kudla, CEO of Mainstay Capital Management, which has $2 billion under management. But many got caught off guard when valuations of firms such as Dropbox or Zenefits get slashed, he said. "There is a lot of risk in these pre IPO investments.”

Article Link To Reuters;

Afghanistan's Long Road To Peace

How much sway does Pakistan hold over the Afghan Taliban?

By Anatol Lieven
The National Interest
August 11, 2016

THE FIRST significant round of negotiations between the Afghan state and the Taliban essentially came to an end on May 21, with the killing by an American drone strike of Mullah Akhtar Muhammad Mansour on the Pakistani border with Afghanistan. The Obama administration, it appeared, had abandoned hopes of successful talks with the Taliban in favor of a military-led strategy of decapitating the movement and provoking its fragmentation as a result. Leading figures in the Afghan government and security forces have urged Washington to adopt this strategy.

The death of Mullah Mansour did not fracture the Taliban, as hoped. Its leadership has come together to choose a new titular head, Maulavi Haibatullah Akhunzada, a respected religious figure, with an enhanced role for his deputy, Sirajuddin Haqqani, successor to his father Jalaluddin as effective leader of the formidable Haqqani network. This leadership would seem to be, if anything, even less pragmatic than that of Mullah Mansour. Meanwhile, Washington has emphasized the Haqqani network’s links to Al Qaeda and other terrorist groups.

Afghanistan will likely endure years more of conflict, and the United States will have to retain air power and special-operations forces to prop up the faltering Afghan National Army and to prevent the country from succumbing to its fissiparous tendencies. America will also almost certainly have to intervene repeatedly in Afghan politics in order to prevent political and ethnic rivalries from tearing the state apart, as they have done so often in the past, and—judging by what I saw and heard during recent visits to Afghanistan—as they are quite capable of doing again, even without the Taliban’s help.

The collapse of the peace process has led to further deterioration of relations between Afghanistan and Pakistan, and between Pakistan and the United States. The Afghan government, and most U.S. officials, are convinced that Pakistan was never sincere about the peace process, and that its strategy is based on supporting the Taliban. The Pakistani establishment is convinced that Washington and Kabul were never sincere about the peace process, and that their strategy was to use peace talks to dismember the Taliban and provoke Pakistan into launching a new war against those remnants on its own soil. There is a good deal of truth to both propositions—but not the whole truth. Enough nuances remain in all sides’ positions to accommodate a renewed peace process, though probably not for several years.

Before peace talks can resume, the basic negotiating positions of the Taliban and the Afghan government will have to move a great deal closer together. Given the distance between them at present, there was never a chance of an early agreement; President Ashraf Ghani was foolish to give an impression otherwise. His mismanagement of expectations has led to increased disillusionment and bitterness on the Afghan side. Almost all peace processes have lasted a very long time and have been accompanied by continued fighting as even the more pragmatic elements on both sides seek to improve their bargaining positions.

This does not, however, make such initial talks (and the “track two” informal discussions between nonofficial elements that often run in parallel) pointless. Without them, it is impossible to establish the credibility of the negotiating partners, build basic mutual trust and learn the irreducible “red lines” of both sides. Without this, one cannot know whether there is anything to talk about, or whether the basic aims of the two sides are so utterly opposed that the only outcome can be complete victory for one, or—in deeply ethnically divided societies—partition and the exchange of ethnic populations.

In the case of the Afghan peace process over the past two years, unrealistic expectations of early progress were closely linked to unrealistic expectations in the United States and Pakistan that the other country is willing and able to push its respective clients towards a settlement, and will abandon them or (in the case of Pakistan) turn on them if they fail to obey. In the case of U.S. and Afghan government approaches to Pakistan, these hopes were not accompanied by either pressure or incentives on anything like the scale that would have been necessary to get Islamabad to reverse its long-term strategy and to adopt a position that most Pakistanis would see as acutely unfavorable for Pakistan.

WHAT ARE the basic positions of the Afghan government and the Taliban when it comes to peace? It is not possible to speak with certainty in either case, for the simple reason that neither side has set out its peace terms. The Taliban is also, of course, extremely opaque and not in the habit of giving press conferences in which one can interact with its leaders. Nonetheless, from public statements and private meetings that I have conducted over the past three years with Afghan officials and with figures close to the Taliban, the following would seem to be a reasonably accurate representation of the present positions of President Ghani’s followers and of the more pragmatic elements in the Taliban.

The Afghan government has repeatedly stated its position that the Taliban must accept the constitution and lay down its arms, in return for which they would be accepted into politics and allowed to run for office. This would presumably be accompanied by an amnesty for Taliban members. The model appears to be the deal aimed at with Gulbuddin Hekmatyar and his Hezb-i-Islami party. A delegation from the Hezb visited Kabul during my stay there in May and conveyed its terms: Hezb would abandon its campaign against the state and join the political fray in exchange for government jobs and homes for its fighters. Though Hekmatyar has since retracted the offer (citing a lack of commitment to the eventual withdrawal of U.S. forces), Hezb representatives are already sitting in parliament.

The Taliban, however, sees Hezb’s approach as surrender. Everything I know of the Taliban, and have been told by people close to its members, indicates that surrender is not an option. Take the Haqqanis, who for almost forty years have fought with an iron resolve against two superpowers, their Afghan allies and any Afghan regime they regard as illegitimate. Is there anything in this record to suggest that they are going to give up now, when they think that they are gradually winning?

As to the Taliban’s own terms for peace, it is important to understand two things: the divisions among the Taliban concerning peace; and the distinction between points of principle and points of substance (or power) in their aims.

From interviews with figures close to the Taliban, I formed the impression that the key division among members over the peace talks does not jibe with what most Western analysts perceive. It is not simply a question of ideological “moderates” versus “hardliners.” On the one hand are those who believe that complete military victory is possible, leading to the restoration of the Islamic Emirate as it existed before its destruction in 2001; on the other hand are those who believe such a victory impossible, given the array of national and regional forces opposed to the Taliban and the changes in Afghan society that have taken place since 2001. People of the latter persuasion believe that sooner or later a peace settlement will have to be negotiated, if Afghanistan is to escape unending warfare and avoid de facto partition.

Even these Taliban adherents (whom Mullah Mansour was rumored to be among) are implacably opposed to anything that looks like surrender and are willing to go on fighting for a very long time in order to improve their position at the eventual negotiating table. Moreover, the boundary separating the two groups is not fixed but fluid because it is constantly being shaped by progress or the lack thereof on the battlefield and by perceptions of the fragility or durability of the government in Kabul. According to a Pakistani journalist who spent time with the Haqqani network earlier this year, whom I interviewed, the great majority of the commanders and fighters loyal to the Haqqanis are strongly opposed to peace talks and believe in fighting on to complete victory. If Sirajuddin Haqqani has a different view, he has not given any indication of it.

Nevertheless, from my own meetings, other published materials and the suggestions emanating from the Pugwash meetings with Taliban representatives, it is possible to cobble together the pragmatic Taliban’s minimal conditions. These can be divided into elements of principle and elements of power. Most Western analysis points to issues of principle as the main obstacles to an agreement. (Crucially, no one I have spoken with on the Taliban side has described the exclusion of international terrorists as an obstacle to peace, especially since ISIS appeared in eastern Afghanistan and began recruiting Taliban dissidents and launching murderous attacks.)

The chief points of principle for the pragmatic Taliban are the complete withdrawal of non-Afghan forces and a new constitution to be agreed by a national assembly (loya jirga) and premised on the notion that sovereignty comes from God.

Concerning the first point, the current U.S. basing agreement expires in 2024. So long as U.S. forces stick with that schedule—rather than retaining permanent bases as part of a strategic rivalry with China and Russia—the withdrawal question could be a moot point.

Concerning the second point, the constitution has already, in effect, been amended by the power-sharing agreement between President Ghani and Chief Executive Abdullah Abdullah. This is supposed to be ratified by a loya jirga. Moreover, this agreement creates a kind of prime ministerial position, which the pragmatic Taliban would clearly prefer since it allows the division of power between different forces represented in parliament. As to the supremacy of sharia law, this is recognized formally at least by a large number of Muslim states including some democracies; it should not be beyond the wit of man—or God—to devise a formula by which sovereignty comes from the divine but is exercised by the people.

Much more difficult are the issues of power—in the central government and, more importantly, in core Taliban strongholds. Chief among these issues is military force. The Taliban is not going to disarm. No one ever does in Afghanistan, unless they are defeated or dead. This has been emphatically true of the warlords and ethnic militias that Washington and the new Afghan state inherited in 2001. The Taliban would therefore have to be turned into an autonomous part of the Afghan security forces—as warlord forces have been in various parts of the country.

Territory subjected to these security forces would also see their elections fall under Taliban control. Leading supporters of the Afghan state in the core Taliban areas would be destroyed or forced to leave, possibly under the official banner of a new anti-heroin campaign, like that of 1999.

Central to the collapse of the latest peace process is the fact that the idea of accepting permanent armed forces and control of large parts of the country has been utterly unacceptable to the Afghan government and the great majority of its supporters. Such an arrangement, they said, would inevitably lead to a new war, with the government forces in a greatly weakened position. Surely, the Taliban would only pretend to accept such a compromise, would wait until U.S. forces had withdrawn and then launch a new attack to achieve total victory.

Analysts in Kabul told me that such a settlement could not be reached because it would radically change the terms of the patronage arrangements for the distribution of Western aid on which the present system is founded. A peace settlement would almost certainly lead to a reduction in existing levels of aid from the United States and Europe, thereby reducing the overall pool and increasing competition between groups. The introduction of the Taliban into a share of government would reduce the available patronage still further. In particular, it would greatly increase tensions over the issue of who represents the Pashtuns of Afghanistan, who enjoy a plurality of the population (most estimates put them between 40 and 45 percent, though almost all Pashtuns think they are an absolute majority).

Ghani has been heavily criticized by many Afghans and some Western observers for allotting too many jobs to Pashtuns (and in particular to Ghilzai Pashtuns, the loose tribal grouping from which he himself originates). He appears, however, to be merely following the logic of the power-sharing arrangement brokered by John Kerry in 2014, which involved a tacit assumption that the president must be Pashtun and that Abdullah (whose father was Pashtun and mother Tajik, but who was closely associated with the Tajik-dominated Northern Alliance) would be compensated with a quasi–prime ministerial position. It seems, therefore, to be President Ghani’s view that he will favor the Pashtuns with jobs, and Abdullah can look after the rest. Pashtun forces long accustomed to these benefits are not eager to share their patronage spoils with the Taliban.

Is A Crook Hiding In Donald Trump’s Taxes?

Jody Kriss may be no Boy Scout, but his contract with Trump called for him to get 10 percent on the Donald’s SoHo hotel. He says he hasn’t received a dime.

By David Cay Johnston
The Daily Beast
August 11, 2016

Donald Trump calls the Trump SoHo tower in lower Manhattan an architectural marvel. The real marvel is what happened to the profits, which vanished from America thanks to a deal with a corrupt Icelandic investment company with ties to Russian oligarchs—all under an arrangement that Trump himself approved.

The lawsuits say it was tax fraud, but the lawyer for the man behind the deal says it was perfectly legal tax planning.

It’s a story that should have voters asking hard questions about the Republican presidential nominee and his financial relationship with those oligarchs, whose fortunes depend on remaining in the good graces of the murderous Russian autocrat Vladimir Putin, whom Trump praises as a great leader.

These questions became even more important after Trump broke his earlier promise to make his tax returns public, as every other major party candidate has done for more than four decades, starting with President Richard Nixon when he was under audit.

Trump’s excuse – that he is being audited by the IRS — is as phony as the three-dollar bills Trump refers to in speeches. Besides which, Trump’s tax lawyers issued a letter saying audits of his returns for 2002 to 2008 were closed with no changes. So even by Trump’s own standard, no excuse exists for holding back those years or earlier ones, which would also be closed.

Trump says those returns will reveal nothing. That’s nonsense.

With a complete set of Trump income tax returns, I could calculate for readers the value of buildings he owns from the depreciation schedules; the deductions he has taken and what they mean; whether he makes charitable gifts (Trump says he is an “ardent philanthropist”) and to which charities; the income generated by each of his more than 600 entities; his gross income and taxable income, and how much income tax he has paid. (The average American pays 13.6 cents out of each dollar in federal income taxes, with those just below the 1 percent paying 18.4 percent and the top 1 percent paying 27 percent, IRS data show.)

But most importantly, the tax returns may also tell us about Trump’s involvement with Russian money. Trump wants you to believe he has no connections to Russia or Russian money. “I have nothing to do with Russia,” he said at a July 27 news conference.

Like many Trump statements, that simply is not true. For starters Trump says he was paid millions of dollars by Russians for holding the 2013 Miss Universe Pageant in Moscow. Trump owned the beauty contest, but sold it last year.

Trump boasted to Real Estate Weekly that in Moscow “almost all of the oligarchs were in the room” when he met with Putin’s rich friends while he was there for the pageant.

Trump has tried at least five times to build a Trump Tower in Moscow, including efforts he made during his 2013 trip there. His name is on a 47-story building in Georgia, formerly part of the Soviet empire.

We know that Russians are major buyers of Trump apartments because of public records. In addition, Donald Trump Jr. said in 2008 that “in terms of high-end product influx into the U.S., Russians make up a disproportionate cross-section of a lot of our assets. We see a lot of money pouring in from Russia.”

Russians are partners with Trump in a variety of American Trump projects. For some of these, Trump merely licensed the use of his name. But on others, he was an investment partner. Trump’s complete tax returns would show us to what extent Russians are a source of capital for projects with the Trump name on them and whether money was invested directly or funneled through others.

That brings us back to the Trump SoHo, and a man named Jody Kriss, who at the time was director of finance for Bayrock, the developer, and who has been accused in court proceedings from New York to the former Soviet republic of Georgia of running financial scams. Trump’s contract with Kriss, which the Beast has obtained, shows that Kriss was due 10 percent of the net profits in the deal.

Since its opening in 2010, the sleek high rise has generated a gross profit $227 million, according to accounting records on file in a Manhattan court. But Kriss claims he got nothing so he started asking Trump’s Russian partners for his share of the profits.

Kriss, in court papers, claimed in a Delaware court that when he started asking where his money was, he was threatened with being forced to return the $10,000 he had been paid each month for his financial administration and advice. Kriss, who under the terms of the contract says he was owed $7 million, said he was offered a settlement of $500,000, court records show. The Trump campaign did not respond to requests to tell Trump’s side of the story.

Those court papers show that Kriss says that was just the beginning of the efforts by Trump’s partners to intimidate him. Kriss identifies his antagonist in this as Felix Sater, a “senior adviser” to Trump who had a Trump Organization office and sometimes spells his name with two t’s. Kriss asserts that Sater and his partners never intended to honor his contract. Sater denies this.

In a sworn statement in the Delaware case, Kriss described what happened when he pressed for his money, which became tied up with a corrupt Icelandic financial organization known as FL Group, which had deep ties to Russian money before it collapsed in 2008. Others in the deal included Tevik Arif, a former Soviet official who made a fortune in business, and Alexander Mashkevich, a Kazakhstani billionaire who was accused by Belgian authorities of involvement in a long-running money laundering operation that he eventually settled with fines.

Kriss, in the Delaware case, gave his version of what happened when he asked that his Bayrock contract be honored:

“When I took it up with Bayrock, in the context of demanding my distributions from the $50 million, I was offered a small fraction (half a million) of the over $7 million I was entitled to and Felix Satter told me that the deal with FL prohibited me from getting the rest in that I could either take the money and shut up or risk being killed if I made trouble. I knew at that time Satter had served a prison sentence for first degree assault (stabbing someone in the face with a wine glass stem) and with learning what would soon become common knowledge, that Satter had had a decades-long involvement with the New York and Russian mafia and had just in 2007 been sued in a civil action in Phoenix.”

Bayrock has numerous ties to Russia as well and was involved in financing at least four Trump projects in which investors filed lawsuits alleging civil fraud. “Tax evasion and money-laundering are the core of Bayrock’s business model,” Kriss and others claim in an ongoing lawsuit recently unsealed in federal court in Manhattan that describes Bayrock as a firm that does legitimate real estate projects but also serves as a front for criminal activities.

Sater, in a statement about Kriss’s accusations, said, “I will not stoop to the level of this talentless coward and dignify his manufactured threats with a response.” Sater’s lawyer, Robert S. Wolf of the Moses & Singer law firm, called the Kriss claims “trash” and said they were “rejected by the court and his case was dismissed.”

The Delaware case Wolf referred to was dismissed, but only for lack of jurisdiction. A Delaware Chancery Court judge held that his court was not the proper forum for the case and also stated on the record that Kriss’s claims that he was due the money appeared to have merit.

Sallie Hofmeister, a spokesperson for Bayrock, said the firm regards Kriss’s claims as baseless and has asked a judge to dismiss a related lawsuit alleging that Bayrock is a racketeering enterprise.

Trump has said he wouldn’t recognize Sater if they were in the same room, yet photographs, video and newspaper interviews show them together in two Colorado cities as well as Phoenix, Ft. Lauderdale, and Manhattan. Public records show more, including a document in which Trump signed off on the deal that resulted in the Trump SoHo profits going to Iceland—and simultaneously vanishing as taxable profits by converting the tax nature of the capital from profits to a loan.

In an email I found among the court papers, Julius Schwarz, an executive vice president and lawyer for Bayrock, referred to the Icelandic deal. Schwarz wrote that on a number of dates “the deal could not have closed, among them because of the risk of discovering Felix’s past… as well as major tax issues.” The deal did eventually close.

That email, testimony and other documents raise the question of whether Trump knew of Sater’s past as a violent felon and stock swindler or, if he did not know, what that says about his competence. They also raise the question of why he approved the deal with FL Group and what benefits it may have provided to him or the Trump Organization.

The court documents, whatever their merits, make it clear that Trump has had long, deep and financially rewarding dealings with Sater, who orchestrated the Icelandic deal and has strong ties to Russian oligarchs.

That is just one of many reasons why voters should demand that Trump produce his complete tax returns going back many years (as Hillary Clinton has) or demand that Congress pass a law making public the tax returns of presidential nominees.

Article Link To The Daily Beast:

George Will: In Illinois, The Blue-State Model Rolls Toward Bankruptcy

Deficits and unfunded pension liabilities as far as the eye can see.

By George Will 
The National Review
August 11, 2016

Seated in his office here, wearing neither a necktie nor a frown, Republican governor Bruce Rauner is remarkably relaxed for someone at the epicenter of a crisis now in its second year and with no end in sight. But, then, stress is pointless when the situation is hopeless. Besides, if you can ignore the fact that self-government is failing in the nation’s fifth-most populous state, you can see real artistry in the self-dealing by the Democrats who, with veto-proof majorities in the state legislature, have reduced this state they control to insolvency.

Illinois’s government, says Rauner, “is run for the benefit of its employees.” Increasingly, it is run for their benefit when they retire. Pension promises, though unfunded by at least $113 billion, are one reason some government departments are not digitized at all.

What is misleadingly called the state’s constitution requires balanced budgets, of which there have been none for 25 years. This year, revenues are projected to be $32.5 billion, with spending of $38 billion. Illinois Democrats are, however, selective constitutionalists: They will die in the last ditch defending the constitution’s provision that says no government pension can be “diminished or impaired.”

The government is so thoroughly unionized (22 unions represent almost all government employees) that “I can’t,” Rauner says, “turn on a light switch without permission.” He exaggerates, somewhat, but the process of trying to fire someone is a career, not an option.

At last count, $7.6 billion was owed to many of the state’s vendors. But the law in its majesty requires that the state’s legislators — those who write the laws — get paid under any circumstances. This removes perhaps the most important potential pressure for compromise. If schools were unable to open this month, parents with pitchforks would march on Springfield, so a quasi-budget was cobbled together to keep government semi-funded for six months.

Under Rauner’s Democratic predecessor, the legislature passed a “temporary” tax increase, serenely expecting that when it expired they would enjoy the truth of Ronald Reagan’s axiom that there is nothing as immortal as a temporary government program. They did not count on the first Republican governor in twelve years.

Rauner let the tax lapse. To their demand for more tax increases, he sweetly says: Let’s talk. About pension reforms and tort reform. And about exempting local governments from paying on construction projects the “prevailing wage” — which Rauner says is, effectively, “whatever unions tell them they want it to be,” and which raises costs 30 to 40 percent.

Rauner favors term limits for state legislators. Democrats have job security, thanks in large part to the financial support of grateful public- and private-sector unions. Illinois voters overwhelmingly want term limits, which Democratic politicians oppose because, they say, such limits restrict voters’ ability to get what they want.

Illinois is a leading indicator of increasing national childishness — an unwillingness to will the means for the ends that it wills. Nationally, state and local governments’ pensions have somewhere between $1 trillion and $4 trillion in unfunded pension liabilities, depending on, among other things, assumptions about returns on pension funds’ investments. The Wall Street Journal reports that in 2001, the 20-year median return was 12.3 percent, and every percentage-point decline in returns increases liabilities by 12 percent. Last year, the largest fund, California Public Employees’ Retirement System, which assumes 7.5 percent returns, instead gained 0.6 percent. This, in the sixth year of the recovery from the 2008–09 crisis, was the worst performance since then — and another recession will surely happen.

Nationally, neither party is eager to talk about the rickety structure of the entitlement state, although the Democratic platform promises to make matters worse. Although scheduled Social Security benefits vastly exceed the value of worker and employer contributions plus interest, the platform, a case study in reactionary liberalism, opposes even raising the retirement age. This, even though benefits are available at 62, three years younger than when the system was created in 1935, when life expectancy at 65 was 12.5 years. Today, it is 19.3 years for men and 21.6 for women. If in 1935 Congress had indexed the age of Social Security eligibility to life expectancy, the age today would be 72.

The federal government can continue to print money. There are bankruptcy procedures for cities but not for states. So, high-tax Illinois will continue bleeding the population and businesses, but with one contented cohort — the Democratic political class, for whom the system is working quite well.

Article Link To The National Review:

Bernie Sanders’ Third Home Puts A New Spin On ‘Socialism’ In America

By Post Editorial Board
The New York Post
August 11, 2016

No, Bernie Sanders is not a sellout — but it is pretty amusing that the nation’s most prominent socialist just bought a third home.

There are no grounds for suspicion: Bernie is a kook, not a crook. It seems an inheritance for wife Jane allowed the Sanders family to buy a $600,000 summer house in North Hero, Vt., an area they’ve long loved.

The four-bedroom crib faces 500 feet of Lake Champlain beachfront; the couple will use it mainly in the summer, spending most of their time at their Capitol Hill rowhouse and another home in New North End, Vt.

The Sanders’ income from the Senate, Social Security and various small investments is a bit over $200,000, enough to put them in the top 4 percent — still safely out of 1 percent territory. Estimates of their wealth had been around $500,000 before Jane’s windfall.

Call it the result of a life of modest living, albeit in decades on the government payroll: It’s still proof that even a fervid socialist can do OK in a nation he insists is dominated by the super-rich.

For all that his own success belies his political views, here’s hoping Sanders enjoys the beach.

Article Link To The New York Post:

The Election Is A Choice Between Envy -- Or Economic Growth

By Betsy McCaughey
The New York Post
August 11, 2016

Donald Trump this week laid out a serious plan to jumpstart the nation’s limping economy. Hillary Clinton’s unserious response proves this election is a choice between economic growth and class-warfare politics.

Trump proposed tax cuts, regulatory relief, unfettered development of coal, oil and natural gas and fairer trade deals. One item in his plan would do more than all the others to get the nation working again: cutting corporate taxes. He pledged: “No American company will pay more than 15 percent of their business income in taxes.” Immediately, Clinton pounced on Trump’s “tax breaks for big corporations.”

Here are the facts: The US corporate-tax rate is 35 percent — highest in the developed world. Even with deductions, companies here pay on average 27 percent, which is more than in most other countries. Since 2000, nearly every industrialized country has cut corporate taxes to compete for business — but not the United States.

Consider Ireland. Money’s been pouring in from around the globe since Ireland slashed its corporate-tax rate to 12.5 percent, one of the lowest in Europe. In 2015, the country’s economy grew three times as fast as that of the United States. Companies from the United States and across Europe rushed to open operations there.

Closer to home, Canadians of all political stripes — Liberals, Conservatives and Progressives — put their ideological differences aside and agreed to lower the country’s corporate-tax rate from 42 percent to 26 percent. They figured fighting over a bigger economic pie beat arguing over how to divvy up a smaller one.

Now the Brits, rocked by the Brexit, are preparing to lower corporate taxes, knowing it’s the fastest, most effective way to compete with the European Union.

But Hillary is stuck in the past. American corporate-tax rates haven’t changed since her husband was president. Her business plan, which she will unveil in Detroit on Thursday, actually hikes business taxes.

She’s obsessed with making corporations pay “their fair share.”

As Trump pointed out Monday, “the one common feature of every Hillary Clinton idea is that it punishes you for working and doing business in the United States.”

Clinton advisor Neera Tanden says it’s unnecessary to reduce corporate taxes because “the US has been doing pretty well when it comes to competitiveness.” Huh? Indonesia, Spain, Poland, India and China, to name a few, are growing several times as fast as America’s anemic 1.2 percent growth.

Slashing the corporate-tax rate is the fastest way to boost American competitiveness. Corporate taxes produce about 10 percent of federal revenue but have an oversized impact on business investment.

The sooner the better. The United States could well be slipping into a business recession, warns economist Larry Kudlow. Business investment has dropped during each of the last three quarters, a dangerous sign.

Businesses that don’t invest in more trucks and computers can’t hire more drivers and office personnel. Though the jobs report announced last Friday was hailed as a positive, declining investment makes future job growth shaky.

In the “Fair Growth” plan Clinton is set to unveil, there’s no private-sector growth. Nothing in her plan will promote business investment, according to Moody’s. Instead, it amounts to a $275 billion public works program — a throwback to the 1930s — paid for by more business taxes.

As we learned then, and endured again with President Obama’s failed “shovel-ready” boondoggles, government can’t spend its way to prosperity.

Nothing demonstrates Clinton’s incapacity to produce economic growth more vividly than her sorry record as New York’s senator. Running in 2000 for that job, she boasted that she would bring 200,000 jobs to the economically destitute upstate region. In fact, during her tenure, upstate job growth stagnated and manufacturing jobs plummeted 24 percent.

It’s a grim warning of what the nation can expect from a Hillary Clinton presidency.

Article Link To The New York Post:

U.S. To Allow More Marijuana Research

By Eric M. Johnson
August 11, 2016

The U.S. government will announce on Thursday that it will allow more research into marijuana but has rejected requests to relax the classification of the substance as a dangerous, highly addictive drug with no medical use, sources with direct knowledge of the matter said.

The decision is the Drug Enforcement Administration's response to a 2011 petition by two former state governors who had urged federal agencies to re-classify marijuana as a drug with accepted medical uses, the two sources said on Wednesday. They requested anonymity because they were not authorized to discuss the matter publicly.

The DEA declined to comment. However earlier on Wednesday, the agency had sent emails, a copy of which was reviewed by Reuters, to parties that had expressed an interest in the matter, saying it would be making "important announcements regarding marijuana related topics" on Thursday.

The Food and Drug Administration did not respond immediately to requests for comment.

For decades, marijuana has been classified as a "Schedule I" drug with "no currently accepted medical use and a high potential for abuse," on par with heroin. The government has repeatedly rejected appeals over the years to reclassify marijuana. Loosening that definition could encourage scientific study of a drug that is being used to treat diseases in several U.S. states despite little proof of its effectiveness.

Twenty-five states have sanctioned some forms of marijuana use for medical purposes. Four states - Alaska, Washington, Oregon, and Colorado - and the District of Columbia have gone even further, allowing its recreational use for adults.

California and eight other states have recreational or medical marijuana proposals headed for their 2016 ballots.

A drug can be reclassified through congressional legislation or a formal scheduling petition process that involves medical and scientific evaluation by the FDA and DEA.

The DEA only allows marijuana for federally sanctioned research to be cultivated at a garden at the University of Mississippi, an operation overseen by the National Institute on Drug Abuse.

Cannabis advocates have long argued that this arrangement, and the labeling of marijuana as among "the most dangerous drugs" under the Controlled Substances Act, has sharply limited the supply available for research.

The sources said the federal government would pave the way on Thursday for increased research, possibly with marijuana supplies from outside the University of Mississippi.

"This is a good day for science," said Kevin Sabet, president of Smart Approaches to Marijuana, a group that opposes legalization. "This shows that the federal government is flexible on legitimate research but is nowhere near wanting to legalize marijuana."

Article Link to Reuters:

Is Student Debt Ruining The Recovery?

By Robert Samuelson
The Washington Post
August 11, 2016

Maybe the college student debt burden isn't so crushing after all. That's the surprising gist of a new study by economists at the president's Council of Economic Advisers (CEA).

It's surprising because burgeoning student debt has become a new economic worry and a political "cause celebre." It adds to the hurt of millennials, who already face a tough job market and are living with parents in record numbers. Defaults could go higher.

Strapped borrowers won't qualify for home loans. The recovery will suffer. Both Bernie Sanders and Hillary Clinton made proposals to lighten the debt load.

What are the facts?

Clearly, college student debt has exploded. Since 1996, outstanding loans have risen from $200 billion to $1.3 trillion, says the CEA. The number of borrowers has nearly doubled over a shorter period, from about 23 million in 2004 to more than 40 million now. Counting undergraduates at community colleges and four-year colleges, more than half (56%) borrow.

Almost all these loans are backed by the federal government. If borrowers default, taxpayers pick up the tab. The justification for federal support is that both individual borrowers and society benefit. College graduates earn about 70% more than high school graduates, a gap called "the college premium." Higher earnings make it easier to repay the loan, and the country benefits from a better-educated work force.

That's the theory. The reality, as the CEA discovered, is more complicated.

For starters, the college premium may be overstated. Some of the earnings advantage enjoyed by college graduates may stem from inherent talent or harder work. As the report says: "Students who attend college may (be) more skilled or more connected." They would do better even if no one went to college.

Similarly, debt burdens may be exaggerated. Although the average loan balance -- after correcting for inflation -- rose 25% to 30% from 2009 to 2015, the "debt owed by the typical student remains modest," the report asserts. For undergraduates who attended two- and four-year colleges, more than half of loans were less than $20,000, 42% were less than $10,000 and only 10% exceeded $40,000.

Graduate students incurred the largest debts; 43% of loans exceeded $40,000. But their repayment record was the best of any group, mainly because they took better-paying jobs and were "better equipped to manage (their) debt."

Still, default rates have risen. At five years out of school, about 70 percent of loans are being repaid or have been repaid. Of the rest, some are in officially sanctioned "deferment" or "forbearance" and will someday resume repayment.

The highest default rates occurred at community colleges (23% in 2012) and for- profit colleges (18%). Most hurt, the CEA says, were some low-income and minority students, who never graduated but have unpaid debts.

The good news about this bad news is that the debt levels aren't yet high enough to depress the overall economy, the CEA contends. As a share of the economy, student debt today is about one-ninth the size of mortgage debt in 2007, when the country was on the brink of the financial crisis. The smaller student debt today curbs the danger to disrupt the economy.

For example, student debt didn't cause home buying to collapse among the young. True, homeownership for those 24 to 32 dropped from 42% in 2005 to 33% in 2014. But the main reason, says the CEA, was an almost 20% decline in the earnings of recent graduates. A comparison of homeownership rates for college graduates with and without debt showed little difference -- and none by age 34.

The lesson of all this seems obvious. The young today don't need debt relief. They need good jobs. If those materialize, repayment rates will rise. So will homeownership rates. It's as simple and difficult as that.

Article Link To Washington Post:

Jingoism Is the Ugly Side Of Olympic Competition

By Leonid Bershidsky
The Bloomberg View
August 11, 2016

If the disqualification of a large part of the Russian Olympic team had less to do with politics than with the country's state-sponsored doping system, plenty of people both inside and outside Russia would like to turn the resulting tension into a jingoistic grudge match between Russia and the West.

Russian state television started on it during the opening ceremony. "In 2001, El Salvador fell into total dependence from the U.S., abolishing the national currency, the colon," commentator Anna Dmitrieva intoned as she watched the Salvadorean team march by, waving flags. "Nor does El Salvador have any precious Olympic medals."

There was probably nothing political about swimmer Lilly King's open dislike of her Russian competitor Yulia Yefimova: King wants all athletes who have ever been caught using forbidden substances to be banned from the Olympics, and that includes her teammate, runner Justin Gatlin, who, like Yefimova, has served a drug-related disqualification. Yet after King's defiant win, Russians and Americans alike rushed to politicize the conflict.

"I don’t really understand the foreign competitors," Yefimova said. "All athletes should be above politics, but they just watch TV and believe everything they read. I always thought the cold war was long in the past. Why start it again, by using sport?"

U.S. fans, for their part, crowed with pleasure on the social networks, making comments such as "The Olympics are more fun when we have beef with the Russians" and comparing King's triumph with Rocky Balboa's victory over Ivan Drago. "It’s a victory for American good over Russian evil," The Washington Post characterized, in an oped piece that went on to condemn the misplaced, aggressive patriotism. "King and Efimova are flat characters in an Olympic tale that borders on jingoism."

Russians are great at holding generalized grudges, but the geopolitical approach to commenting on the Olympics isn't limited to them. On Germany's public ARD channel, commentator Tom Bartels, known to some as "Black, Red and Gold Tommy," in notorious for seeking a German angle in anything he sees.

Commentators on NBC in the U.S. have been accused of sexism on rather flimsy grounds, but rarely of overzealous patriotism -- and the station is as guilty of it as it was in 2012. This year, NBC dwelled on the victorious U.S. women's gymnastics team, but dropped the men's team from prime time because they weren't expected to win a medal for the country. Nationalism and patriotism have always been part of the Olympics. Pierre de Coubertin, who started the modern tradition of the games, was motivated in part by a desire to raise the spirits and improve the combat readiness of young French men, demoralized by their country's defeat in the Franco-Prussian War of 1870-1871.

"Clothed in the rhetoric of international cosmopolitanism like the world’s fairs on which the Baron modelled much of the initial Olympic structure, the games, like world’s fairs, have historically provided opportunities for rabid displays of national chauvinism," Mark Dyreson wrote in his book about the U.S. at the Olympics. "The measurement of nations, as de Coubertin himself understood, resides at the center of the Olympic movement." The U.S., he continued, "has used the Olympic games to concoct national mythologies, shape national memories, fashion ethnic identities, encode racial typologies and Americanize global processes. Since 1896 Americans have understood the Olympics as a place to debate and celebrate the meanings of nationhood."

It's not the U.S. alone, though. During the 2012 Olympics, which gave a huge boost to the U.K.'s soft power, the rock singer Morrissey wrote a letter to his fans, saying, "I am unable to watch the Olympics due to the blustering jingoism that drenches the event. Has England ever been quite so foul with patriotism?"

The TV channels that win the rights to show the Olympics, whether public or private, pander to audience nationalism and perpetuate it by concentrating on events that feature home-grown athletes. It's difficult to follow the British team if you're in Germany or the Russian one in the U.S. -- and it's even more difficult to see, in real time, the events where a sporting miracle is happening or expected to happen unless the home nation's athletes are involved.

The rest of the media add fuel to the fire by incessantly toting up the medals by country. Is it any wonder then that a dispute over doping turns into a Rocky-style battle between Russia and the U.S.?

It's probably naive to demand change to a tradition as old as the Olympics themselves, but then Olympic sports have evolved a lot in recent decades. Today's intolerance for doping and for objectification are both relatively new. Why not apply them to the jingoistic threads too? A swimmer or long jumper represents herself and her coaching team as much as her country. Celebrating human achievement, regardless of nationality, makes more sense in a globalized world than turning an archery competition or a 100-meter race into a proxy war between countries.

While many athletes feel the highest honor is to represent their country in their sport, that doesn't change the fact that the goal of high achievement sports is ultimately to set records and celebrate individual mastery. There ought to be rules for TV companies requiring equal coverage for individual events (they can do whatever they want with team ones). There is even a good argument for removing the national flags from individual competition -- allowing the athletes to wear sponsored kit instead of the team kit -- so that only team events count in the final medals tally.

Nationalism won't disappear if broadcasters embrace the spirit of the games a bit more or the competition rules are changed to downplay the national element to some events, but the focus of the Olympics will at least be returned to its rightful place, on the feats of human athletic attainment, regardless of the flag. And it will be harder to misconstrue a contest like that of King and Yefimova in terms of geopolitics.

Article Link To The Bloomberg View:

Trump Doesn't Threaten Obama's Legacy -- Clinton Does

By Larry Elder
Investor's Business Daily
August 11, 2016

It's an article of faith that President Barack Obama needs Hillary Clinton to win to "preserve his legacy."

On the contrary, a Clinton election, essentially a third term for Barack Obama, would produce results no better -- and likely worse -- than that of her two-term predecessor. Obama's legacy is already here -- the worst economic recovery since 1949. The last quarter clocked in at 1.2 percent gross domestic product growth. That's pathetic.

Obama is the first president ever to preside over an economic recovery without a single year coming in at 3 percent GDP. And time has run out.

Why would four years under Clinton be no better -- and likely worse -- than under Obama? Simple. Throughout the campaign -- even after securing the nomination -- she's offered no criticism, whether major or minor, about Obama's economic agenda that is responsible for the poor recovery. Indeed, Clinton says, "I don't think (President Obama) gets the credit he deserves for saving our economy." How did Obama "save" our economy?

His crowning domestic achievement, of course, is Obamacare, which, among other promises, was supposed to give each household a health care savings of $2,500 per year. It hasn't. Yes, the rise in premiums slowed down at first -- a function not of Obamacare but of the poor economy. Copayments are now going up, as are deductibles and premiums.

During one of the Democratic debates, Clinton actually referred to these increases as "glitches" that she intended to repair when she takes over.

Like Sanders, Clinton pushes a so-called "public option." This is merely a fancy term for Obamacare's ultimate objective -- Medicare for all. Four more years of Clinton will take America closer to that objective, if not all the way there. The additional taxes Americans pay is merely white noise to people like Clinton. After all, if "health care is a right," who cares how much it costs? But these measures will impose additional restraint on the American economy, producing tepid job creation and GDP growth results.

Now assume Trump wins. He attempts to unwind or at least ratchet back Obamacare. Somebody in West Cupcake is worse off, her story heavily profiled on cable news. Blame Trump.

Trump would be the most protectionist Republican president this side of Herbert Hoover. And we know how that played out. Yes, the great President Ronald Reagan was all too often protectionist, as well. He famously restricted Japanese motorcycles to protect Harley Davidson. Reagan imposed "voluntary" import quotas on Japanese cars. That cost the American consumers as much as an additional $2,000 per Japanese import. Meanwhile, the domestic automakers followed suit and jacked up their prices, too. In 1984, according to the Heritage Foundation, Americans paid an additional $5 billion in that year alone over what they would have paid for cars -- foreign and domestic -- without the quotas.

Assume Trump is serious about his anti-free-trade rhetoric -- and succeeds in imposing tariffs and other trade barriers. When the "returned jobs" do not materialize -- and the think tanks tabulate how much more American consumers are then paying for foreign goods -- blame Trump.

This brings us to the Iran deal. The Obama administration likes to say that opponents were wrong, that the deal has, in fact, stopped Iran from acquiring a nuclear weapon. Has it? Iran certainly has not turned away from continuing to export terrorism. After the January release of four American hostages -- coinciding with a payment of $400 million in cash -- Iran kidnapped two more Americans. They continue to test long-range ballistic missiles capable of carrying nuclear warheads, in apparent violation of UN resolutions. And Iran still funds and supports terror organizations like Hezbollah and Hamas.

When -- and it is likely just a question of when -- Iran uses its newfound status as a nuclear power to threaten and intimidate neighbors, keepers of Obama's legacy can blame Trump. After all, Trump engaged in belligerency, they will argue. Sans Trump, they will say, Iran would likely have continued down their path toward entering the global community of peaceful nations.

Were Hillary Clinton to win, the economy will continue to underperform, and the Iran deal will be exposed as a sham that did nothing to deter that country. There goes Obama's "legacy."

But if Trump were to win, blame Trump.

Article Link To Investor's Business Daily:

WSJ: The Clinton Default Mistake

Her presidency will use the federal enforcement agencies to entrench political correctness.

By Daniel Henninger
The Wall Street Journal
August 11, 2016

The decision to default one’s vote to Hillary Clinton comes in many forms. She is the lesser of two evils. She is the devil we know.

By all accounts, hell is still hell. Before volunteering to spend four years in it, voters about to commit the sin of despair might consider the consequences of a default vote.

The greatest is the economy. Mrs. Clinton will contribute nothing to lift the flatlined aspirations of the eight Obama years.

There is also the matter of Clinton mores, revealed again Monday in a Washington Post story about the way former Sen. Clinton dealt with the economic plight of upstate New Yorkers. Most relevant was the account of Sen. Clinton pushing federal money to the Corning company on behalf of its emissions-reduction technology:

“Corning’s chief executive co-hosted a 2015 fundraiser for her. The company paid her $225,500 in 2014 to speak to Corning executives. Corning also has given more than $100,000 to the Clinton Foundation, its records show.”

Also worth reading are details of the $315,000 eBay gave her for a 20-minute speech last year, but we digress. Our subject is what surely will be the decline and final fall of the American higher-education system under a President Clinton.

The onslaught of political correctness that overwhelmed American campuses the past year may not come up in the presidential debates. But for many voters the campus pillaging of free speech symbolizes a country off the rails.

The New York Times recently ran a piece describing how colleges and universities are experiencing a pull back in alumni giving because of the PC madness. Donations at Amherst fell 6.5% in the last fiscal year. A small-college fundraising organization named Staff reports that giving in fiscal 2016 is down 29% from the year before.

Enraged alumni vent frustration throughout the piece, but one in particular asks, “Where did this super-correctness come from?” There is an answer to that question.

A Clinton victory will empower, for a very long time, the forces now putting at risk one of the country’s incomparable strengths, its system of higher education.

What happened can be explained in one word: diversity.

This is an idea that degraded into a set of destructive obsessions. Those obsessions then became official, destructive federal policy.

At its inception a few decades back, “diversity” described American social structures absorbing new immigrants, alongside blacks and women via affirmative-action commitments. Yes, the immigrant influx is part of the presidential debate, but it is not the subject of this column. Only one political mess a week.

When the schools’ presidents began to create offices of diversity affairs, alumni and trustees waved them in as the right thing to do. Bureaucratize an idea, though, and what do you get? More of it than any normal person could want. It is not an overstatement to say that diversity offices are now running American higher education.

Higher-ed’s trade newspaper, the Chronicle of Higher Education, publishes a yearly supplement called “Diversity in Academe.” Its May cover story was “Who Sets a College’s Diversity Agenda?” The most telling piece inside was: “Auditing Diversity: An interest in assessments is rising as officials strive to show they are committed.”

The National Center for Education Statistics reports the U.S. has more than 7,000 postsecondary Title IV institutions serving some 21 million students. All university administrators know their next job depends on showing evidence of achieving diversity metrics. So they push them, relentlessly. In 20 years, diversity went from an idea to an industry.

Enter the Obama presidency and the cultural left on steroids. In 2011 the Obama Department of Education sent a “Dear Colleague” letter to all higher-ed schools, providing “guidance” on creating sexual-abuse surveillance systems. This is the letter that shut down traditional due process for college students.

For the presidents of these institutions, the “guidance” notice had one key passage. It said that “if a recipient does not come into compliance,” the federal government may “withdraw federal funding.”

Readers of this newspaper do not need more dots connected to understand why nominally sensible college presidents are rolling over like trained puppies to the PC mobs. Resist and Washington will terminate their federal cash flow. None will. All comply. That is raw power.

A President Clinton won’t rein in any of this. Accommodating the ascendant anti-intellectual left across America’s campuses is easy, because the institutions’ own leadership—presidents and trustees—don’t care. So why should she?

In fact, using the full “guidance” powers of the federal enforcement agencies inside Justice, Education, Labor and the EPA against the states and private institutions will be a primary and unaccountable weapon of the Clinton presidency.

This administrative federal power is virtually beyond the reach of Congress. The idea that a President Cruz or Kasich will “roll it all back” in 2020 after 12 years of the federal cement drying is just not serious.

The Nov. 8 vote is the last hurdle of accountability for Hillary Clinton. The price of the Clinton default option looks much too high.

Article Link To The Wall Street Journal: