Thursday, August 25, 2016

The Battle To Be France’s Bernie Sanders

Arnaud Montebourg is the latest in a crowded field of presidential candidates on the Socialist party’s fringe.


Politico EU
August 25, 2016

Leftist firebrand Arnaud Montebourg is basing his bid for the French presidency on a simple bet: that François Hollande is so dismally weak in opinion polls a strong left-wing candidate could easily snuff out his chances of winning re-election next May.

“I ask him [Hollande] to think about his decision, to consider the facts, to take into account his historical and unprecedented weakness in the eyes of the French,” Montebourg said Sunday in a speech announcing his candidacy. “Our failure in front of France has everything to do with being resigned to our fate.”

It’s an argument that echoes the logic behind Bernie Sanders’ surprisingly successful primary campaign in the United States.

Like the Vermont senator, Montebourg, a former industry minister, sees a strain of resentment for the mainstream Left’s candidate that, if anything, is more widespread in France, for Hollande, than it was in the United States, for Hillary Clinton.

But even if the diagnosis is similar on both sides of the Atlantic, the political landscapes are very different. In the United States, Sanders enjoyed sublime isolation on a left fringe of the Democratic Party empty of serious competitors, leaving him free to fight the establishment on his own. In France, Montebourg faces the opposite situation: a far-left lane already choked with eager Bernie clones, all of whom are desperate to take down Hollande.

From Jean-Luc Mélenchon, a cantankerous far-left MEP who calls Germany a “poison” for Europe; to Benoît Hamon, a rising Socialist scrapper and wealth inequality crusader; to Gérard Filoche, an über-gruff ex-Trotskyite who has carved out a niche as Hollande’s most vicious left-wing critic; and others — the leftmost lane is now so clogged it will be difficult for Montebourg, or anyone, to break out ahead of Hollande.

Four months before Socialists vote to pick their presidential candidate in a primary, here is a close-up view of France’s Sanders clones along with how they score on a scale of Bernie-ness, from 1 to 10. Each candidate carries his or her own banner of leftism. All want to feed off the carcass of Hollande’s cautious, establishment socialism.

Arnaud Montebourg


Tall and tousle-haired, with a florid speaking style and rebellious streak, Montebourg exploded onto the political scene in 2012 when his anti-globalist current won 17 percent of the vote during a Socialist primary. His success forced Hollande to give him a cabinet seat, where he immediately created trouble for the president: As industry minister, Montebourg insulted foreign business tycoons (famously telling Arcelor-Mittal CEO Lakshmi Mittal he could “get out of France”) and intervened willy-nilly in private business, single-handedly reviving France’s reputation as a statist nightmare for foreign investors.

His run ended in 2014 after he was caught making a bawdy joke at Hollande’s expense, and ever since Montebourg has been anxiously toeing the sidelines, casting himself as the chief of Socialist rebel backbenchers as he prepared a comeback to politics.

Now that he is officially back, things are looking tricky for Montebourg. In his Sunday speech, he ran through a litany of familiar campaign themes: Hollande’s legacy of hopelessness; Germany’s unfair domination of fiscal and monetary policy in the EU; the need to reassert France’s voice in the bloc; and kickstarting France’s industrial sector via a protectionist “Made in France” trade and investment policy.

But what he left out was arguably the key practical consideration: exactly how he will run. If Montebourg signs up as a candidate in the Socialist primary next January, he faces a serious challenge from Hamon, his former sidekick in government who also styles himself as the chief of rebels, with both standing a good chance of getting knocked out by Hollande (the president is expected to run but has not declared his candidacy).

If Montebourg runs as an independent, with or without Hollande in the race, he has a slightly better chance of making it to the run-off round against a right-wing challenger, possibly National Front chief Marine Le Pen. But the second option includes several caveats. As an independent, Montebourg would be up against Mélenchon, whose anti-German agenda is remarkably similar to his own. Having both in the race could well split the left-wing vote, bury Hollande and any other left-winger, and all but guarantee a Right-only final battle.

Asked about his choice Monday on France 2, Montebourg said: “I have no decision to take, because we don’t know exactly how the primary will be organized.” That excuse will hold for a while longer, with candidates facing a December 15 deadline to join the primary. Until then, Montebourg will play the clock, probe his rivals’ weaknesses and hope for the best — that Hollande drops out of his own volition.

Bernie-ness score: 6 out of 10


Montebourg is a protectionist, a major critic of international finance and a big advocate of direct democracy. But he splits with Sanders on big corporations, which Montebourg defends fiercely as part of a statist, top-down vision of how the French economy should be run. Montebourg also cultivates ties with business leaders, like investment banker Matthieu Pigasse, that Sanders might denounce as corruption.

Jean-Luc Mélenchon


Twelve years older than Montebourg, Mélenchon at times seems to have been teleported from another era. His stump-thumping speeches are unapologetically Marxist in the way they embrace class struggle as a fact of life, and Mélenchon delivers them as if he were haranguing a crowd of striking miners in 1930s France.

Despite his gritty style, or perhaps because of it, Mélenchon has successfully positioned himself as France’s dominant hard-left politician at a time when Hollande’s Socialists are struggling to decide between their Marxist roots and a shift to social democracy. In the first round of a 2012 presidential election, Mélenchon won 11.1 percent of the vote, before rallying behind Hollande and ultimately handing him a victory.

Over the past four years Mélenchon has refashioned himself as a major scourge of Hollande, as well as France’s most outspoken critic of Germany. His book “Bismarck’s Herring,” a nakedly anti-German screed, sold more than 37,000 copies, making it one of the year’s best-selling political titles. In it, Mélenchon argues that Germany’s pursuit of economic self-interest is a “poison” that has infected the rest of Europe, relegating France to the status of a second-tier nation.

But there is competition on the anti-German market. Montebourg may be less fiery, but his critique of the European Central Bank is just as wary of German influence as Mélenchon’s attacks on the country’s export model. Last year, Montebourg touted a bromance with former Greek finance minister Yanis Varoufakis, whose main point of convergence was resentment for austerity policies originating in Berlin.

The overlap might explain why Montebourg is hesitating on how to run. Mélenchon, who is polling above Hollande, is set on challenging the president outside the Socialist party by running as an independent far-left candidate. If Montebourg chooses the same tactic, the two men will face off in a destructive battle of leftists that would have the effect of eliminating them both, with the former stronger among younger voters and Mélenchon heavily supported by trade unionists.

Bernie-ness score: 4


If Sanders shocked some Americans by calling himself a socialist, the question for Mélenchon is: Are you a communist? Formerly a member of the Socialist party, Mélenchon shares Sanders’ basic software when it comes to class struggle and income inequality. And he has explicitly tried to model some of his social media tactics to bolster his own following. But Mélenchon lacks the Vermont senator’s progressive vibe and anti-authoritarian appeal.

Benoît Hamon


Once upon a time, this fresh-faced 49-year-old was Montebourg’s sidekick in government. Residing two floors below the industry minister at the finance ministry, Hamon complemented his elder’s “Made in France” ethos with hip advocacy for collaborative economics, as secretary of state for the social economy. In 2014, having been promoted to education minister, he followed Montebourg out of Hollande’s government on a wave of disgust for its shift to supply-side economic policies — and has lived on as a rebel backbencher ever since, leading votes against the majority.

As such, Hamon became a competitor for Montebourg, and their friendship did not survive. In fact, it’s turned into a low-key sniping war ever since Hamon said he would run in the Socialist primary, and Montebourg’s team dismissed his candidacy as nothing to be afraid of. “Benoit will create a buzz for 48 hours; Arnaud will create a buzz for 48 weeks,” a Montebourg backer whispered to the Canard Enchainé. That prompted Hamon to invite Montebourg to join his campaign as a supporter.

In terms of voter recognition Montebourg is undoubtedly the bigger fish, but Hamon has an edge: As an MP with time on his hands, he’s worked much harder to win support from other elected officials, and claims to have the backing of 22 rebel backbenchers versus just nine for Montebourg. The latter’s lieutenants are not impressed. At some point, they argue, Hamon should see the light and rally behind his political big brother.

Bernie-ness score: 8

Heavily focused on wealth inequality, wary of big banks and corporations, obsessed with citizen initiatives and alternative economic models, Hamon falls short of a perfect Bernie score only in one area: the enthusiasm he generates among voters.

Gérard Filoche


Burly and gruff to the point of caricature, Filoche is often a punchline of jokes on the outdatedness of French leftist politics. The former labor inspector and militant communist joined the Socialist party late in life, but lost nothing of his disdain for establishment politicians. Announcing his intention to run in the Socialist primary, he dismissed Hollande as having zero chance of winning the presidency given the depth of anger against him among traditional Green party and left-wing voters. “Even a goat would win against Hollande,” he told Le Point magazine in June.

But Filoche is not to be dismissed. At 70, he is more plain-spoken and frank than his younger rivals, and there is no ambiguity about his political positioning. He is staunchly pro-union, anti-establishment and anti-capitalist. As such, he shares many traits with Sanders in the U.S. and Jeremy Corbyn of the Labour Party in Britain. Both men were dismissed as laughing stocks before they rose to prominence in their parties.

Bernie-ness score: 8.5


Filoche has in common with Sanders his white-hair, commitment to the working man and immaculate record of left-wing activism. Another shared trait: the fact that neither man has participated in a government or held executive office.

Marie-Noëlle Lienemann

Less well known than the other candidates, Lienemann is a career Socialist who has occupied a range of positions in government, from housing minister to deputy mayor and, currently, senator. Her name is sometimes cited derisively as proving that the Socialist primary consists of various “nobodies” sent to compete against Hollande and make him look good.

But it would be foolish to overlook Lienemann, who is one of the few women in the race, more qualified and tested in office than Mélenchon or Filoche, and largely in tune with the anti-Hollande feeling in the party. A backbencher rebel, she will run against Hollande by arguing that he betrayed leftist values and the voters who put him in office. Explaining her choice to run in the primary, she cited … guess who? “Everywhere in the world, globalization is starting to be rejected by the people,” she told Le Monde in March. “Even in the United States. On the Right, it’s the populism of Donald Trump; on the Left, it’s the search for a new path with Bernie Sanders.”

Bernie-ness score: 4

Lienemann may feel the Bern, but her career in government means that she lacks the ideological purity of the former Democratic candidate.


Article Link To Politico EU:

Diversity Is History’s Pathway To Chaos

Nations that reject a community are torn apart.


By Victor Davis Hanson 
The Washington Times
August 25, 2016

Emphasizing diversity has been the pitfall, not the strength, of nations throughout history.

The Roman Empire worked as long as Iberians, Greeks, Jews, Gauls and myriad other African, Asian and European communities spoke Latin, cherished habeas corpus and saw being Roman as preferable to identifying with their own particular tribe. By the fifth century, diversity had won out but would soon prove a fatal liability.

Rome disintegrated when it became unable to assimilate new influxes of northern European tribes. Newcomers had no intention of giving up their Gothic, Hunnish or Vandal identities.

The propaganda of history’s multicultural empires — the Ottoman, the Russian, the Austro-Hungarian, the British and the Soviet — was never the strength of their diversity. To avoid chaos, their governments bragged about the religious, ideological or royal advantages of unity, not diversity.

Nor did more modern quagmires like Iraq, Lebanon, Syria, Rwanda or Yugoslavia boast that they were “diverse.” Instead, their strongman leaders naturally claimed that they shared an all-encompassing commonality.

When such coerced harmony failed, these nations suffered the even worse consequences of diversity, as tribes and sects turned murderously upon each other.

For some reason, contemporary America believes that it can reject its uniquely successful melting pot to embrace a historically dangerous and discredited salad-bowl separatism.

Is there any evidence from the past that institutionalizing sects and ethnic grievances would ensure a nation’s security, prosperity and freedom?

America’s melting pot is history’s sole exception of E pluribus unum inclusivity: a successful multiracial society bound by a common culture, language and values. But this is a historic aberration with a future that is now in doubt.

Some students attending California’s Claremont College openly demand roommates of the same race. Racially segregated “safe spaces” are fixtures on college campuses.

We speak casually of bloc voting on the basis of skin color — as if a lockstep Asian, Latino, black or white vote is a good thing.

We are reverting to the nihilism of the old Confederacy. The South’s “one-drop rule” has often been copied to assure employers or universities that one qualifies as a minority.

Some public figures have sought to play up or invent diversity advantages. Sometimes, as in the cases of Elizabeth Warren, Rachel Dolezal and Ward Churchill, the result is farce.

Given our racial fixations, we may soon have to undergo computer scans of our skin colors to rank competing claims of grievance.

How does one mete out the relative reparations for various atrocities of the past, such as slavery, the Holocaust, the American Indian wars, the Asian or Catholic exclusion laws, indentured servitude, or the mid-18th-century belief that the Irish were not quite human?

Sanctuary cities, in the manner of 1850s Richmond or Charleston invoking nullification, now openly declare themselves immune from federal law. Does that defiance ensure every city the right to ignore whatever federal laws it finds inconvenient, from the filing of 1040s to voting laws?

The diversity industry hinges on U.S. citizens still envisioning a shrinking white population as the “majority.” Yet “white” is now not always easily definable, given intermarriage and constructed identities.

In California, those who check “white” on Orwellian racial boxes are now a minority. Will white Californians soon nightmarishly declare themselves aggrieved minorities and thus demand affirmative action, encourage Viking-like names such as Ragnar or Odin, insert umlauts and diereses into their names to hype their European bona fides, seek segregated European-American dorms and set up “Caucasian Studies” programs at universities?

Women now graduate from college at a higher rate than men. Will there be a male effort to ensure affirmative action for college admissions and graduation rates?

If the white vote reaches 70 percent for a particular candidate, is that really such a good thing, as it was considered to be when President Obama was praised for capturing 95 percent of the black vote?

It is time to step back from the apartheid brink.

Even onetime diversity advocate Oprah Winfrey has had second thoughts about the lack of commonality in America. She recently vowed to quit using the word “diversity” and now prefers “inclusion.”

A Latino-American undergraduate who is a student of Shakespeare is not “culturally appropriating” anyone’s white-European legacy, but instead seeking transcendence of ideas and a common humanity.

Asian-Americans are not “overrepresented” at premier campuses. Their high-profile presence should be praised as a model, not punished as aberrant by number-crunching bureaucrats.

African-Americans who excel in physics and engineering are not “acting white” but finding the proper pathways for their natural talents.

Being one-half Southeast Asian or three-quarters white is not the touchstone to one’s essence and is irrelevant to one’s character and conduct.

No one is impinging on anyone’s culture when blacks dye their hair blond, or when blondes prefer to wear cornrow braids.

Campuses desperately need unity czars, not diversity czars.

Otherwise, we will end up as 50 separate and rival nations — just like other failed states in history whose diverse tribes and races destroyed themselves in a Hobbesian dog-eat-dog war with one another.


Article Link To The Washington Times:

How Janet Yellen Can Justify Another Rate Increase

By John Crudele
The New York Post
August 25, 2016

Janet Yellen will be addressing the Kansas City Federal Reserve’s Economic Policy Symposium Friday in Jackson Hole, Wyo. I don’t know about you, but I can’t wait!

In fact, I’m so excited that I wrote a speech for the Fed chairwoman. She probably won’t like it, but it’s the thoughts (stet) that count:

Howdy, ya’ll. Welcome to cowboy country.

Let me start with a story about Jackson Hole. Back in 1908, there was a crisis here. Herds of elk, which come here for the winter, were starving because of particularly severe weather. The townspeople decided to do something about it.

They brought hay to the elk, which were trapped in the valley. And you know what? Despite that effort, many elk still died of starvation because the next winter in 1909 was no better.

Why do I bring this up? Because the Federal Reserve has been doing its best to fix the US economy. And you know what? Many people — like those elk — are still suffering.

Our economic winter, which started nearly 10 years ago, is still with us. And I’ll be honest with you, this cold spell has been caused in large part by misguided actions taken by the Federal Reserve when I was vice chairwoman under Ben Bernanke and even when I took over as its head.

This is the point in my speech where I would usually dazzle you with razzamatazz economics-speak. I would talk about how we at the Fed are puzzled because the productivity of the American work force is down.

And I’d normally tell you how bizarre demographics — particularly aging baby boomers — are causing a whole new view of the economy. I’d impress you with terms like the Phillips curve and the income elasticity of demand. Maybe I’d quote Adam Smith and John Maynard Keynes.

But today I’m going to be honest — maybe even to a fault.

The statistics we get from government agencies, especially the Labor Department and Census, make no sense. One month these numbers show an economy that’s picking up steam and the next they show weakness.

This pattern has been going on for years. And that causes me and all the people I work with at the Fed, as well as all the people on Wall Street who track us, to careen from optimism to pessimism in the time it takes us to book our next TV appearance.

But what’s really happening is simple: The US economy is bouncing along the bottom. Some months good. Some months bad. Most months nothing special.

All of you here and everyone listening to this speech on TV really want to know just one thing: What do we plan to do with interest rates? So I’m gonna tell you.

The Fed made a big mistake when it drove interest rates down to near zero. It worked at first. Banks, which we helped destabilize by keeping rates too low for too long and allowing many unworthy borrowers to get their hands on loans, benefited from that.

And so did people and companies who needed to borrow money. Or those who wanted to re-borrow money, namely the millions of people who refinanced their homes.

But the benefits ran their course a long time ago. The bad stuff is now happening. Millions of Americans who once lived off the interest on their savings can no longer do that. And since this interest income isn’t coming in, they can’t go out shopping.

Yes, people have made a lot of money in the stock market, thanks in large part to the Federal Reserve’s conscious effort to keep share prices up.

But the money made in the stock market is not the same as interest income. People are much less inclined to sell stock, which has transaction fees and taxes, when they want a new refrigerator.

So, in the end, economic growth is suffering from this shift away from savings to the much more risky stock market.

Bottom line: Interest rates need to rise, if for no other reason than we might have to bring them down again if the economy sinks.

But we at the Fed are afraid to push them higher. There are several fears. One is that the economy might not be strong enough to support more expensive borrowing. Another is that the stock market might reacted badly to a rate hike like it did to the one last December.

Sure, we rigged the stock market back then. But how often will we be able to get away with that trick?

We need an excuse that looks more or less solid before hiking rates. The good jobs reports in June and July helped. But if you have half a brain, you’d see that neither was particularly good.

Plus, the May jobs report was awful and economic growth in the first six months of 2016 made me sick to my stomach.

So what is the chance we will raise interest rates after our meeting on Sept. 20 and 21? Pretty good, I’d say.

Why isn’t a rate hike in September a certainty? Because there’s the employment report for August next week. And it might not be as good.

Lastly, I want to express one other concern, and his name is Donald Trump. If we raise interest rates and it slows the economy, or if the stock market crashes, it is almost certain that Trump will be elected president.

So we might change our mind about a rate hike, but maybe not, but maybe so, but maybe not. Oh, I hate this damned job!


Article Link To The New York Post:

The Next Round Of Hamas Vs. Israel

Rather than a ‘cycle of violence,’ it’s terrorism followed by counterterrorism


By Louis Rene Beres
The Washington Times
August 25, 2016

Words can bewitch. Soon, the seemingly benign phrase “cycle of violence,” will be applied once again to the Hamas-Israel conflict. The linguistic effect of this application will be to equate terrorism and counterterrorism, further blurring the always-essential distinction between international crime and international law enforcement.

In fact, there has never been any cycle of violence between Palestinians and Israelis. Rather, since May 1948 and the modern founding of Israel, the conflict has involved the deliberate Arab targeting of Jewish civilians, followed by obligatory forms of counterterrorism. Again and again, Hamas has chosen to violate even the most basic rules of humanitarian international law, or the law of armed conflict.

Now, yet again, by deliberately launching rockets upon Israeli soft targets from certain densely populated Gaza areas, Hamas (the Islamic Resistance Movement) is resorting to human shields. In law, there is a designated formal term that precisely applies to such egregious expressions of lawlessness. It is “perfidy.”

For all Arab terror organizations, not just Hamas, “Palestine” still includes all of Israel. On all official Palestinian maps, Israel is still described as “Occupied Palestine.” There are no references to Israel as such. None.

The more “moderate” Palestinian Authority now still calls for continuing terrorism to “liberate Occupied Palestine.” Regarding the doctrinally obligatory use of terror-violence against “the Jews,” absolutely nothing has changed.

In world politics and international law, there are always vital differences between criminality and law enforcement. The again-escalating “war” between Hamas and Israel is, in fact, a quintessential example of these critical differences.

Even if the incessant Palestinian refrain of an Israeli “occupation” were not repeated ad nauseam as if it were some sort of sacred incantation, and even if the related claims of “stolen Palestinian land” could ever make any real sense, there would still never be any defensible legal justification for Hamas policies of planned terror.

As long as Israel feels bound to accept some sort or other of asymmetrical peace process, Hamas terrorists will emerge and reemerge with expanding enthusiasm and with potentially growing destructiveness. These criminals will fight first for their own personal reputations, and, ultimately, for their own personal immortality. Although still generally unrecognized, Hamas terrorists typically fear death more intensely than ordinary human beings. The “suicide” they expect to suffer as “martyrs” threatens little more than a temporary inconvenience.

What matters most to them is that they will soon be rewarded by entrance into the eternal blessedness of a martyr’s paradise. For Hamas, all violence against Israel is necessarily sacred. For Hamas, the most compelling form of power is always the utterly sacred promise of immortality.

Palestinian terrorists are not militants. They are not revolutionaries. They are not freedom fighters. Their expected martyrdom is primarily a desperate strategy to defy personal death. Although any such strategy must appear irrational to both Americans and Israelis, it can still seem entirely rational and reasonable to the would-be perpetrators themselves.

When packing explosives with nails, screws and razor blades dipped in rat poison, Hamas operatives are cruel murderers. Moreover, when choosing to kill at much safer distances, when they fire barrage after barrage of rockets into Israeli nursery schools, summer camps, shelters and hospitals, they are also indisputable cowards. To wit, the latest Hamas attack on Sderot launched on Aug. 21 was directed at an Israeli kindergarten.

On some matters, international law is unambiguous. Terror groups have no right to “retaliate” under international law, no more so than would any individual criminal in domestic society maintain such a right against municipal police authorities. On the basis of their own current actions against Israeli noncombatants, moreover, Hamas is an organization that recognizes no civilizing boundaries in its employment of violence against Israel.

It takes this barbarous position in direct opposition to humanitarian international law, or the law of armed conflict.

Regarding Israel and Hamas, it is time to call things by their correct name. To begin, there has never been a genuine “cycle of violence” in the Middle East. It is a proper time, therefore, to unambiguously reject any purported equivalence between Palestinian terror and Israeli counterterror.


Article Link To The Washington Times:

Covering Up The $1.3 Billion Payoff To Iran

By Seth Lipsky
The New York Post
August 25, 2016

Call it judgment day. It looks like the Obama administration may yet face some kind of reckoning — in Congress, at least — over its payoff of a long-simmering claim to the Iranian regime.

That’s because to do so, the administration tapped a little-known account at the Treasury Department called the Judgment Fund. It is a special account used to pay out claims against the US government.

The details of how the administration did this, however, are being treated like a state secret. The State Department spokesman has clammed up tighter than a conch in a mudslide.

The topic erupted at the State Department’s daily briefing on Tuesday and Wednesday. That was after Claudia Rosett reported in the New York Sun that the administration made 13 transfers of $99,999,999.99 each.

Those payments add up to 13 cents shy of $1.3 billion. They were made Jan. 19, two days after President Obama announced he’d cut a deal with the mullahs for $1.7 billion to avoid an adverse judgment at a court in The Hague.

We know, thanks to the Wall Street Journal, that $400 million of that was made in foreign currency, loaded on wooden pallets and delivered in a special cargo plane and functioned as a ransom payment to the mullahs, who had been holding a group of Americans hostage.

The remaining $1.3 billion only started to come into focus when Rosett discovered the 13 transfers totaling $1.3 billion on a Treasury Department Web site related to the judgment fund.

She sees no other explanation than that the payments, which went from Treasury on behalf of the State Department, were to cover the Iran settlement.

State’s daily briefing Wednesday was opened by the dean of the Foggy Bottom press corps, Matt Lee of the Associated Press. He called the settlement payments “the story that doesn’t seem to want to go away.”

Persistent as Lee was in his questioning, he could get bupkis out of the department spokesman, Mark Toner. He conceded nothing except that the Treasury Department was even less transparent than State.

This window into the shenanigans the administration is using to implement its deal isn’t just about whether the latest move is legal. No one has yet said it broke the law.

One of the principles of newspapering, though, is that the scandal is often not about what’s illegal but what’s legal. How can the administration tap the taxpayers for $1.3 billion without the say-so of Congress?

This is one of the most basic prohibitions in the Constitution. “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law,” is the way the parchment puts it.

The government maintains the judgment fund is legit. It calls it an “indefinite, permanent appropriation.” The idea is that Congress didn’t want to be bothered with having to pass a law for every nickel-and-dime settlement.

Could it have intended to authorize a blank check to send $1.3 billion to a regime that calls us the Great Satan and threatens to wipe Israel off the map? What Congress in its right mind would do such a thing?

What makes it so galling is that the administration knows that had the Iran payments been submitted to Congress for approval, they would’ve been turned down. Majorities in both houses were against the entire Iran nuclear deal — which is why it was treated as an executive, unilateral action and never submitted to the Senate for ratification, as a treaty would have to be.

And this is why the State Department and the Treasury are playing dumb. On the line is the constitutional good faith of President Obama, Secretary of State John Kerry and Treasury Secretary Jacob Lew.

Not to mention Hillary Clinton. She seems to be hoping that she can get all the way to November without having to answer for the appeasement of Iran that started on her watch and that she’s endorsed.

I opposed even the initial talks with Iran, because history has taught that the talking itself begets the appeasement. Once it starts, the appeasing party — in this case the administration — keeps getting sucked in for more.

No wonder that within hours of Rosett’s story appearing on the Web, The Post, in an editorial, predicted that the matter would prove to be “a rich trove for congressional investigators.” You can be your last $99,999,999.99 on it.


Article Link To The New York Post:

How Trump's Immigration Trap Was Set

By W. James Antle III
The Washington Examiner
August 25, 2016

Is Donald Trump getting ready to flip-flop on his signature political issue? His message on immigration has become hopelessly muddled and some of his strongest supporters worry he's going soft.

At some point, a Trump immigration crack-up was inevitable. It's occurring at the moment because the Republican nominee is attempting to alter the perception that he is biased against large groups of American voters.

Trump's stepped up minority outreach is partly about bringing his black and Hispanic support out of the basement. He's polled at or near 0 percent among blacks in Ohio and Pennsylvania. How competitive he has been in Florida polling has varied widely, largely based on his Latino vote share.

But Trump is also underperforming among white voters, especially those with college degrees. One reason is that many believe he is a racist. From his talk of Mexican "rapists" in his announcement speech last year to his ill-fated fight with Judge Gonzalo Curiel, he's created concerns that he was criticizing Hispanics as a group. He is only now trying to allay them in any systematic way.

Second, his immigration position was always more malleable than his tough rhetoric before and during the primaries let on. He signed on to a restrictionist policy paper that talks about lowering immigration levels overall and increased enforcement, but does not commit to removing all 11 million illegal immigrants currently believed to be in the United States. But speaking on the stump, he has often said the opposite.

In debates, Trump declined to go after Sen. Marco Rubio on H-1B visas despite the official position taken in his immigration policy paper. He denied calling Rubio "Mark Zuckerberg's personal senator," even though the paper put out in his name clearly did. He said he was softening on high-skilled immigration — all of this was back in March.

Before Trump ran for president, he appeared to believe the conventional wisdom that Mitt Romney had been too hardline on immigration and that his talk of self-deportation cost Republicans votes in 2012.

Trump's motives in changing his position will be debated long after the election is over. Two factors seem to have influenced him, however. Sen. Jeff Sessions, R-Ala., had been making the case that conservative populists should try to boost wages and job prospects through stricter immigration policies tightening the labor market. Sessions' fingerprints are all over the formal Trump immigration plan and his senior aide Stephen Miller is now part of Trump's inner circle.

It's also been reported that Trump read conservative columnist Ann Coulter's restrictionist polemic Adios, America. Coulter's book fed into two of Trump's longstanding beliefs: that country was being run incompetently by the political class and that foreigners were wounding our national pride.

Scott Walker first tried to borrow Sessions' immigration populism but wasn't totally convincing and faced backlash from donors who regarded it as akin to trade protectionism. Rick Santorum proposed cutting immigration by 25 percent but there wasn't much appetite for a second presidential bid by the former Pennsylvania senator.

Trump didn't need major donors in the Republican primaries. He had long been protectionist on trade. And he was a fresher proponent of anti-establishment blue collar Republicanism than Santorum. So it was off to the races.

Third, there is a major disconnect between immigration hawks in conservative wonk circles, Congress and the GOP primary electorate. Restrictionist conservative policy analysts have opposed attempts to legalize the current illegal population, but generally regard the effectiveness of the enforcement regime — and overall immigration numbers — as being more important.

Immigration hardliners on Capitol Hill have the opposite emphasis. The congressional debate has focused on amnesty, defined as virtually any legalization of illegal immigrants, and since at least 2005 a large majority of Republicans in the House have been against it.

Even many of these Republican lawmakers reacted coolly to Trump's proposed Muslim ban (the details of which have shifted substantially throughout the campaign). But the reaction among GOP voters was the opposite.

In New Hampshire, Republican primary voters preferred offering undocumented immigrants a chance at legal status to deporting them to their home countries by a margin of 56 percent to 41 percent. Yet they backed "temporarily banning Muslims who are not U.S. citizens from entering the country" 65 percent to 32 percent.

Even in a state Trump lost as badly as Wisconsin, Republican primary voters supported a temporary Muslim ban by 40 points (69-29). Legal status beat deportation 61 percent to 34 percent in the same exit poll.

You can ask the question differently to get more support for enforcement than legalization. That nevertheless brings up a fourth point: rank-and-file Republican immigration hawks aren't committed to a legislative program the way gun rights activists oppose gun control and the way pro-life advocates support strengthening abortion restrictions and oppose weakening them.

Like Trump, many immigration hawk voters have an inchoate sense that the system is broken. They think illegal immigration is unfair and potentially dangerous. They assume immigration they disapprove is illegal and that which they favor is legal, but that may not always be the case.

The latest Gallup poll finds that only 11 percent of Republicans or Republican leaners and 12 percent of conservatives wants increased immigration. Sixty and 58 percent, respectively, want less immigration. Even Hispanics born in Mexico say they prefer decreasing immigration to increasing it by 20 points.

Do these voters still have a presidential candidate? It certainly isn't Hillary Clinton.


Article Link To The Washington Examiner:

Is 2016 Redrawing The Political Map?

By Michael Barone
The Washington Examiner
August 25, 2016

Is the political map, so familiar that even non-pundits offhandedly refer to red, blue and even purple states, changing before our eyes? Yes, at least to a limited extent — and it's probably about time.

For the political map has been pretty static for almost two decades, the longest since the 1880s. In the last four presidential elections 40 states and the District of Columbia with 422 electoral votes have voted for nominees of the same party each time. In only a few cases were the margins very close, as was the case with the five states with 41 electoral votes that voted for a second party just once (North Carolina, Indiana, Iowa, New Mexico and New Hampshire).

That leaves only five states with 75 electoral votes supporting the winning candidates George W. Bush and Barack Obama in all four elections. You will recognize them as the purplest of purple states: Florida, Ohio, Virginia, Colorado and Nevada.

Current polling, which shows Hillary Clinton leading Donald Trump by 4 points nationally, suggests it's possible that all 40 steadfast states will stay in the same column next November. Clinton is actually running stronger in 2012 target states than nationally, perhaps because her campaign has been running reams of television ads in most of them and Trump's hasn't.

But there's also something else going on, some significant though not overwhelming, and to some extent countervailing, trends among identifiable segments of the electorate.

Trump, as is widely appreciated, has tended to run better than earlier Republicans among non-college-graduate whites and weaker among college graduates, and better among the old than the young.

That explains why he's apparently running far behind in purple states Virginia and Colorado, with their young and high-education populations, to the point that the Clinton campaign has cancelled ad buys there. Actually this is an extension of the trend that shifted those two states from safe Republican in the Bush elections to national-average purple states in the Obama elections.

At the same time, Trump's comparative strength among non-college whites has left him competitive in Florida, Colorado and Iowa and well ahead in Indiana, with their older, less educated populations. And it's made him at least potentially competitive in the industrial swath from western Pennsylvania to eastern Iowa where, as New York Times Upshot writer Nate Cohn has explained, near-majorities of non-college whites, many who grew up in union households, voted for Obama over management scion Mitt Romney in 2012.

The map may also be changing as Georgia and Arizona polls show close races. In recent elections white college graduates there have been casting huge Republican percentages, overcoming Democratic margins among their growing black and Hispanic minorities. Trump's weakness among college grads may help Clinton carry their 27 electoral votes.

Will these shifts prove enduring, however this election turns out? Evidence from history suggests they might. Barry Goldwater and George McGovern, about as far out of line with their parties' previous nominees as Trump is of his, lost in 1964 and 1972 landslides. But the groups among which they made gains became part of their parties' bases in the future.

Goldwater carried the Deep South, running even better than Dwight Eisenhower had there. Though the process was delayed by the Deep South-based George Wallace and Jimmy Carter, that region became solidly Republican by 1984 and has been ever since.

McGovern ran relatively strongly in America's northern tier, especially in the Germano-Scandinavian Upper Midwest, and in Oregon and northern California. Walter Mondale and Michael Dukakis ran relatively strongly in the northern tier in the 1980s, and it's been more Democratic than the national average ever since.

Goldwater and McGovern lost the national popular vote by 23 percent margins, back in the years when most voters remembered the Depression and World War II and were willing to cross party lines to re-elect a president who seemed to produce prosperity and peace.

Today's polarized electorate, unfamiliar with such disasters, is less ready to cross party lines, and Trump is something like 23 points behind. But many voters seem willing to abandon their party: 21 percent say they're not voting for either major party nominee.

That suggests low turnout, as well as more states in play if the race tightens up. In the longer run, questions lurk. If Clinton wins with less than 50 percent, can her party hold onto college grads unable to stomach Trump? Can post-Trump Republicans hold onto non-college whites he's attracted?

My guess is that the answers will be no and yes. What's yours?


Article Link To The Washington Examiner:

Why Obama Let Iran's Green Revolution Fail

By Eli Lake
The Bloomberg View
August 25, 2016

One of the great hypotheticals of Barack Obama's presidency involves the Iranian uprising that began on June 12, 2009, after Mahmoud Ahmadinejad was announced the winner of contested presidential elections. What if the president had done more to help the protesters when the regime appeared to be teetering?

It's well known he was slow to react. Obama publicly downplayed the prospect of real change at first, saying the candidates whom hundreds of thousands of Iranians were risking their lives to support did not represent fundamental change. When he finally did speak out, he couldn't bring himself to say the election was stolen: "The world is watching and inspired by their participation, regardless of what the ultimate outcome of the election was."

But Obama wasn't just reluctant to show solidarity in 2009, he feared the demonstrations would sabotage his secret outreach to Iran. In his new book, "The Iran Wars," Wall Street Journal reporter Jay Solomon uncovers new details on how far Obama went to avoid helping Iran's green movement. Behind the scenes, Obama overruled advisers who wanted to do what America had done at similar transitions from dictatorship to democracy, and signal America's support.

Solomon reports that Obama ordered the CIA to sever contacts it had with the green movement's supporters. "The Agency has contingency plans for supporting democratic uprisings anywhere in the world. This includes providing dissidents with communications, money, and in extreme cases even arms," Solomon writes. "But in this case the White House ordered it to stand down."

At the time, Solomon reports, Obama's aides received mixed messages. Members of the Iranian diaspora wanted the president to support the uprisings. Dissident Iranians from inside the country said such support would be the kiss of death. In the end, Obama did nothing, and Iran's supreme leader blamed him anyway for fomenting the revolt.

It's worth contrasting Obama's response with how the U.S. has reacted to other democratic uprisings. The State Department, for example, ran a program in 2000 through the U.S. embassy in Hungary to train Serbian activists in nonviolent resistance against their dictator, Slobodan Milosevic. Milosevic, too, accused his opposition of being pawns of the U.S. government. But in the end his people forced the dictator from power.

Similarly, when Georgian President Eduard Shevardnadze met with popular protests in 2003 after rigged elections, George W. Bush dispatched James Baker to urge him to step down peacefully, which he did. Even the Obama administration provided diplomatic and moral support for popular uprisings in Egypt in 2011 and Ukraine in 2014.

Iran though is a very different story. Obama from the beginning of his presidency tried to turn the country's ruling clerics from foes to friends. It was an obsession. And even though the president would impose severe sanctions on the country's economy at the end of his first term and beginning of his second, from the start of his presidency, Obama made it clear the U.S. did not seek regime change for Iran.

It's debatable whether the U.S. ever did support such a policy. But it's striking the lengths to which Obama went to make good on his word. As Solomon reports, Obama ended U.S. programs to document Iranian human rights abuses. He wrote personal letters to Iranian Supreme Leader Ayatollah Ali Khamenei assuring him the U.S. was not trying to overthrow him. Obama repeatedly stressed his respect for the regime in his statements marking Iran's annual Nowruz celebration.

His quest to engage the mullahs seems to have influenced Obama's decision-making on other issues too. When he walked away from his red line against Syria's use of chemical weapons in 2013, Solomon reports, both U.S. and Iranian officials had told him that nuclear negotiations would be halted if he intervened against Bashar al-Assad.

Obama eventually did get a nuclear deal with Iran. Solomon's book shines in reporting the details of the diplomacy that led to the 2015 accord. American diplomats held two sets of negotiations with Iran -- one public channel with the British, Chinese, European Union, French, Germans, Russians and the United Nations -- and another, bilateral track established through the Sultanate of Oman. In 2013, U.S. officials shuttled on public busses between two hotels in Geneva to conduct the two tracks before telling their negotiating partners about the formerly secret channel to Iran.

Eventually, the Iranians wore down the U.S. delegation. At the beginning of the talks in 2013, the U.S. position was for Iran to dismantle much of its nuclear infrastructure. By the end of the talks in 2015, Secretary of State John Kerry and his team "agreed that Iran would then be allowed to build an industrial-scale nuclear program, with hundreds of thousands of machines, after a ten year period of restraint."

Other U.S. red lines were demolished too. The final deal would allow the U.N. ban on Iranian missile development to phase out after eight years, and the arms embargo against Iran to expire after five. Iran would not have to acknowledge that it had tried to develop a nuclear weapon, even though samples the Iranians collected at its Parchin facility found evidence of man-made uranium.

In one particularly revealing passage, Solomon captures the thinking of Kerry, who engaged in detailed negotiations over the deal in the final months of the talks. "So many wars have been fought over misunderstandings, misinterpretations, lack of effective diplomacy," Kerry told Solomon in a 2016 interview. "War is the failure of diplomacy."

Kerry's diplomacy succeeded. But the Middle East got war nonetheless. "The Revolutionary Guard continues to develop increasingly sophisticated weapons systems, including ballistic missiles inscribed with threats against Israel on their nose cones," Solomon writes in the book's concluding chapter. "Khamenei and other revolutionary leaders, meanwhile, fine-tune their rhetorical attacks against the United States, seeming to need the American threat to justify their existence."

There was a chance for a better outcome. There is no guarantee that an Obama intervention would have been able to topple Khamenei back in 2009, when his people flooded the streets to protest an election the American president wouldn't say was stolen. But it was worth a try. Imagine if that uprising had succeeded. Perhaps then a nuclear deal could have brought about a real peace. Instead, Obama spent his presidency misunderstanding Iran's dictator, assuring the supreme leader America wouldn't aid his citizens when they tried to change the regime that oppresses them to this day.


Article Link To The Bloomberg View:

Golf, Gulf Disasters, And The Presidential Double Standard

By Jonah Goldberg
The New York Post
August 25, 2016

One of the most exhausting things about politics is a mindset that says “scandal for thee, but not for me.”

Consider the perennial (alleged) scandal of presidential golf. When George W. Bush was commander in chief, he played a lot of golf, and his critics were outraged — or at least pretended to be.

Whether it was the political pressure or his own conscience, President Bush ultimately decided to stop golfing. “I don’t want some mom whose son may have recently died to see the commander in chief playing golf,” Bush told Politico in 2008. “I feel I owe it to the families to be in solidarity as best as I can with them.”

Now it’s President Obama who plays a lot of golf. According to the Web site Obamagolfcounter.com (yes, you read that right), he’d hit the links on 270 days of his presidency as of Jan. 1. In March, the number reached 281. That’s roughly 10 percent of his presidency.

But the left-wing crowd that denounced Bush for golfing has fallen silent, while the right-wing crowd that didn’t care a whit about how Bush let loose is incensed by Obama’s leisure activity.

One can play the same game with presidential vacations.

Whenever Obama chooses not to let a terrorist attack or other emergency cut short his time off, his supporters justify his absence by insisting that the president shouldn’t be held “hostage” to the news cycle, or that he shouldn’t get in the way of first responders.

That’s what they said last week when Obama stayed put in Martha’s Vineyard instead of surveying flood damage in Louisiana.

These are good excuses, but ones that never seemed to work for his predecessor.

Indeed, then-Sen. Obama pounced on Bush for not immediately visiting Louisiana after Hurricane Katrina.

“We can talk about levees that couldn’t hold, about a FEMA that seems not just incompetent but paralyzed and powerless. About a president who only saw the people from the window of an airplane instead of down here on the ground,” Obama preached in New Orleans in 2005.

In 2007, after the Bush administration had spent more than $100 billion on Katrina recovery efforts, Hillary Clinton was still saying the victims were “invisible” to Bush.

Perhaps Donald Trump had these criticisms in mind when, in a shrewd political move last week, he flew to Louisiana, shaming Obama into announcing he would also survey the damage in person.

Of course, politics is about more than simply making the best decisions on the merits. “Optics,” as the political consultants say, matter. Asked why he hadn’t been to Louisiana earlier, Trump explained helpfully, “I had nothing to gain before.”

But the fact remains that the standards of politics often move like a seesaw, with the weight of one side’s hypocrisy elevating the other. And that’s OK for partisans. They’re supposed to seek advantage over their opponents.

I’m much less forgiving of the media. Hurricane Katrina was undoubtedly a huge story, and investigating the federal response to it was squarely in the fourth estate’s wheelhouse. But there’s simply no denying that the news media used that disaster as a partisan cudgel against a Republican president it detested.

Worse, the media congratulated themselves endlessly for their Katrina coverage despite the fact that they collectively did a terrible job. Reports of roving rape gangs were broadcast uncritically. While the media employed heroic skepticism about Bush’s assurances, the New Orleans police chief’s claim of “little babies getting raped” in the Superdome sailed on through.

One activist at the Huffington Post reported that four days after the storm, black people had resorted to eating the flesh of the dead.

Eleven years later, Louisiana is suffering through another flood disaster. Where’s the outraged swarm coverage of Obama’s (non-)response?

Journalism students are famously taught, “If your mother says she loves you, check it out.” But they also seem to have been instructed that if a president you hate is on the ropes, let it fly; if a president you love is in the same spot, fall silent.


Article Link To The New York Post:

WSJ: The Federal Reserve Needs New Thinking

Its models are unreliable, its policies erratic and its guidance confusing. It is also politically vulnerable.


By Kevin Warsh
The Wall Street Journal
August 25, 2016

The conduct of monetary policy in recent years has been deeply flawed. U.S. economic growth lags prior recoveries, falling short of forecasts and deteriorating in the most recent quarters. This week in Jackson Hole, Wyo., the Federal Reserve Bank of Kansas City hosts the world’s leading central bankers and academics to consider monetary reform. The task is timely and consequential, but the Fed needs a broader reform agenda.

Policy makers around the world neither predicted nor can adequately explain the reasons for current inflation readings below their targets. So it is puzzling that so many academics are pushing to raise the current 2% inflation target to a higher target of 3% or 4%. In the telling of the economics guild, the Fed’s leaders should descend from the Grand Tetons with supreme assurance that their latest monetary policy invention will remedy the economy’s ills.

The Fed’s leaders should not take the bait. Raising the inflation target is a bad idea being considered at the wrong time for the wrong reasons.

A new inflation target would undermine the Fed’s commitment to any policy framework. It would please the denizens of Wall Street who pine for still-looser Fed policy. And households would be understandably miffed to receive a new lecture on unconventional monetary policy—this one on the benefits of higher prices.

A change in inflation targets would also add to the growing list of excuses that rationalize the economic malaise: the persistent headwinds from the crisis of the prior decade, the high-sounding slogan of “secular stagnation,” and the convenient recent alibi of Brexit.

A numeric change in the inflation target isn’t real reform. It serves more as subterfuge to distract from monetary, regulatory and fiscal errors. A robust reform agenda requires more rigorous review of recent policy choices and significant changes in the Fed’s tools, strategies, communications and governance.

Two major obstacles must be overcome: groupthink within the academic economics guild, and the reluctance of central bankers to cede their new power.

First, the economics guild pushed ill-considered new dogmas into the mainstream of monetary policy. The Fed’s mantra of data-dependence causes erratic policy lurches in response to noisy data. Its medium-term policy objectives are at odds with its compulsion to keep asset prices elevated. Its inflation objectives are far more precise than the residual measurement error. Its output-gap economic models are troublingly unreliable.

The Fed seeks to fix interest rates and control foreign-exchange rates simultaneously—an impossible task with the free flow of capital. Its “forward guidance,” promising low interest rates well into the future, offers ambiguity in the name of clarity. It licenses a cacophony of communications in the name of transparency. And it expresses grave concern about income inequality while refusing to acknowledge that its policies unfairly increased asset inequality.

The Fed often treats financial markets as a beast to be tamed, a cub to be coddled, or a market to be manipulated. It appears in thrall to financial markets, and financial markets are in thrall to the Fed, but only one will get the last word. A simple, troubling fact: From the beginning of 2008 to the present, more than half of the increase in the value of the S&P 500 occurred on the day of Federal Open Market Committee decisions.

The groupthink gathers adherents even as its successes become harder to find. The guild tightens its grip when it should open its mind to new data sources, new analytics, new economic models, new communication strategies, and a new paradigm for policy.

The second obstacle to real reform is no less challenging. Real reform should reverse the trend that makes the Fed a general purpose agency of government. Many guild members believe that central bankers—nonpartisan, high-minded experts—are particularly well-suited to expand their policy remit. They fail to recognize that central bank power is permissible in a democracy only when its scope is limited, its track record strong, and its accountability assured.

The Fed is suffering from a marked downturn in public support. Citizens are rightly concerned about the concentration of economic power at the central bank. Long after the financial crisis, the Fed holds trillions of dollars of assets that would otherwise be in private hands. And it appears to make monetary policy with the purpose of managing financial asset prices, including bolstering the share prices of public companies.

With the enactment of the Dodd-Frank Act, the Fed claims the mantle of reform. It now micromanages big banks and effectively caps their rate of return. The biggest banks’ growth in market share corresponds to that of their principal regulator. They are joint-venture partners with the Fed, serving as quasi-public utilities. As the dispenser of fault and favor, the Fed is contributing to the public perception of an unfair, inequitable economic system. Real reform this is not.

Most gathered in Jackson Hole will judge that the Fed’s aggressive actions are necessary and wise. Even if that were true, the Fed finds itself in an increasingly untenable position. Congress will tag the Fed for its failures, and the public will assail the Fed for favoritism for its ostensible successes.

In the best of circumstances, the U.S. economy will accelerate to “escape velocity.” In that event the Fed might get the benefit of the public doubt.

If, as is more likely, the economy is closer to recession than resurgence, the Fed is poorly positioned to respond with force, efficacy and credibility. The Fed is vulnerable. Its recent centennial as our nation’s central bank should not be confused with its permanent acceptance in the American political system.


Article Link To The Wall Street Journal:

WSJ: Big Oil Companies Binge On Debt

Exxon, Shell, BP and Chevron have combined debt of $184 billion amid two-year slump.


By Selina Williams and Bradley Olson
The Wall Street Journal
August 25, 2016

Some of the world’s largest energy companies are saddled with their highest debt levels ever as they struggle with low crude prices, raising worries about their ability to pay dividends and find new barrels.

Exxon Mobil Corp., Royal Dutch Shell PLC, BP PLC and Chevron Corp. hold a combined net debt of $184 billion—more than double their debt levels in 2014, when oil prices began a steep descent that eventually bottomed out at $27 a barrel earlier this year. Crude prices have rebounded since, but still hover near $50 a barrel.

The soaring debt levels are a fresh reminder of the toll the two-year price slump has taken on the oil industry. Just a decade ago, these four companies were hauled before Congress to explain “windfall profits” but now can’t cover expenses with normal cash flow.

Executives at BP, Shell, Exxon and Chevron have assured investors that they will generate enough cash in 2017 to pay for new investments and dividends, but some shareholders are skeptical. In the first half of 2016, the companies fell short of that goal by $40 billion, according to a Wall Street Journal analysis of their numbers.

“Eventually something will give,” said Michael Hulme, manager of the $550 million Carmignac Commodities Fund, which holds stakes in Shell and Exxon. “These companies won’t be able to maintain the current dividends at $50 to $60 oil—it’s unsustainable.”



The debt is piling up despite cuts of billions of dollars on new projects and current operations. Repaying the loans could weigh the companies down for years, crimping their ability to make investments elsewhere and keep pumping ever more oil and gas.

The companies spent more than 100% of their profits on dividends last year. This year, the problem got worse. In the April-to-June period, Exxon paid $3.1 billion in dividends and had just $1.7 billion in net income, according to S&P Global Market Intelligence. Shell paid $1.26 billion in interest in the first half of 2016, compared with $726 million in the same period a year earlier.

“They are just not spending enough to boost production,” said Jonathan Waghorn, co-portfolio manager in London at Guinness Atkinson Asset Management Inc. who helps oversee more than $400 million across a range of energy funds, including shares in Exxon, BP, Chevron and Shell.

The oil companies say they have many tools to deploy to help defray debt, including selling assets and offering shareholders more shares instead of a cash dividend, as well as continuing to cut costs. Record-low interest rates are helping ease some of the pain.

They also say the steep levels of debt are temporary as the companies restructure, and the debt will fall when oil prices rise.

‘These companies won’t be able to maintain the current dividends at $50 to $60 oil—it’s unsustainable.’—Michael Hulme, manager of the Carmignac Commodities Fund


“We are in a transitional stage in 2016,” said Shell Chief Executive Ben van Beurden during last month’s earnings disclosures. The company reported a rise in net debt to over $75 billion at the end of the second quarter, in large part because of its acquisition of BG Group PLC.

BP has said it expects to be able to pay for its operations, make new investments and meet its dividend at an oil price of between $50 and $55 a barrel next year.

But analysts and investors say the oil slump is making it harder than ever for companies to raise money with asset sales to pay off debt. Handing out more shares to shareholders is only storing up the dividend problem for the future when the companies will need to pay up. Even the boost many companies got from bumper profits from their refining divisions—which tend to do well when prices are low—looks to be coming to an end as a glut of gasoline erodes fuel prices, say investors and analysts.

Still, some funds see BP, Shell, Exxon and Chevron as big enough to weather problems for the next year and a half. Wilmington Trust has reduced its exposure to energy companies it deems more risky in favor of other corporate debt. But the firm remains invested in debt issued by BP, Chevron and Shell

“They’re so big, they can diversify, they have more levers to push and pull in terms of shoring up their creditworthiness,” said Wilmer Stith, senior fixed-income portfolio manager at Wilmington Trust, which has $73 billion in assets under management.

Only another long period of oil below $40 a barrel would pose a challenge that could prompt dividend cuts, said Iain Reid, senior oil analyst at Macquarie Capital. A Goldman Sachs report this week projected oil prices remaining between $45 and $50 a barrel for much of the next year.

“The question is, can they get through this year and next without doing something radical like cutting dividends?” said Iain Reid, senior oil analyst at Macquarie Capital.

The rise in net debt has helped push these companies’ ratio of net debt to equity to the highest level in years, which influences the ratings given by credit agencies. S&P has already downgraded Shell, Chevron, Exxon and BP, though they all remain highly rated.

Shell’s debt-to-equity ratio is at 28% and Chief Financial OfficerSimon Henry said last month it could even reach its targeted maximum of 30%. BP’s gearing is over 25%, while Chevron’s is 20% and Exxon’s is around 18%.

By comparison, in 2012, Shell’s gearing was around 10%, and Exxon’s was 1.2%. Back in 2005, when oil prices were climbing steadily, Exxon had no debt, and its profits were so high that its executives and those from other big oil companies were called to testify in front of the U.S. Senate about their so-called windfall profits.

Chevron’s Chief Financial Officer Patricia Yarrington said in April that the company’s higher levels of debt were expected. “We could handle that if it’s temporary,” she said.

Much of the new debt has been in corporate bonds. Exxon, for instance, issued $12 billion in debt in February. Two months later, the company was downgraded by S&P Global Ratings, losing the triple-A credit rating that it had held since 1930.

Exxon Chief Executive Rex Tillerson has assured investors that Exxon remains committed to paying its dividend.

The company has increased shareholder payments for 34 straight years, although those increases have been modest in the past two years. Mr. Tillerson and others have noted that Exxon has the ability to borrow further. If anything, the company has signaled a willingness to go further into debt for strategic opportunities, such as buying assets, including InterOil Corp., a small company focused on gas exports in Papua New Guinea that Exxon agreed to acquire for an estimated $2.5 billion in July

“We’re not going to forgo attractive opportunities,” said Jeff Woodbury, Exxon’s vice president of investor relations, on an investor call last month.


Article Link To The Wall Street Journal:

Assange Says WikiLeaks To Release 'Significant' Clinton Campaign Data

By Eric Walsh
Reuters
August 25, 2016

WikiLeaks founder and editor-in-chief Julian Assange said on Wednesday his organization planned to release "significant" information linked to the campaign of Democratic presidential nominee Hillary Clinton before the Nov. 8 election.

Asked if the data could be a game-changer in the election, the Australian told Fox News in an interview conducted by satellite: "I think it’s significant. You know, it depends on how it catches fire in the public and in the media.”

Assange has been living in the Ecuadorean Embassy in London for five years to avoid extradition to Sweden, where he faces sexual assault accusations. He denies the allegations.

WikiLeaks released files in July of what it said were audio recordings pulled from the emails of the Democratic National Committee that were obtained by hacking its servers.

That release, during the Democratic National Convention where Clinton was officially named the party's presidential nominee, was the second batch in a series that deeply rattled the party and prompted the committee's chairwoman, Debbie Wasserman Schultz, to step down.

"I don’t want to give the game away, but it’s a variety of documents, from different types of institutions that are associated with the election campaign, some quite unexpected angles, some quite interesting, some even entertaining," Assange said when asked how the next revelations would compare with those in July

WikiLeaks publishes leaked material, mostly from governments. In 2010, the organization published classified U.S. military and diplomatic documents in one of the largest information leaks in U.S. history.


Article Link To Reuters:

North Korea's Kim Declares Sub Missile Launch 'Greatest Success'

By Jack Kim 
Reuters
August 25, 2016

North Korean leader Kim Jong Un supervised the test-firing of a submarine-launched ballistic missile and declared it "the greatest success," which puts the country in the "front rank" of nuclear military powers, official media reported on Thursday.

North Korea fired a submarine-launched ballistic missile (SLBM) on Wednesday which flew about 500 km (300 miles) towards Japan. The South Korean government and experts said the launch showed technical progress in the North's SLBM program.

"A test-fire of strategic submarine-launched ballistic missile was successfully conducted under the guidance of supreme commander of the Korean People's Army Kim Jong Un," the North's official KCNA news agency said.

"He appreciated the test-fire as the greatest success and victory," KCNA said.

"He noted with pride that the results of the test-fire proved in actuality that the DPRK joined the front rank of the military powers fully equipped with nuclear attack capability."

DPRK, the Democratic People's Republic of Korea, is North Korea's formal name.

North Korea has conducted a spate of military technology tests this year, including a fourth nuclear test in January and numerous ballistic missile launches, in defiance of U.N. Security Council sanctions that were tightened in March.

North Korea said this year it had miniaturized a nuclear warhead to fit on a ballistic missile but outside experts have said there is yet no firm evidence to back up that claim or show it had mastered the technology to bring a live warhead back into the atmosphere and guide it to strike a target.

North Korean state television on Thursday showed video clips of the launch of a missile from underwater at dawn, and still photographs of Kim on the dock at a port as a large crane unloaded an object onto a submarine.

Kim is also seen jubilantly celebrating with military aides in photographs carried by the official Rodong Sinmun newspaper.

Reached Japan Defense Zone

The Washington-based 38 North project said in a report that the missile was launched from the North's sole experimental missile submarine and a satellite photograph taken on Monday showed final preparations, likely after the missile had already been loaded onto the submarine using a heavy construction crane.

The test showed the solid-fuel missile's control and guidance system as well as the atmospheric re-entry of the warhead all met operational requirements, KCNA said.

The South Korean and U.S. militaries said the missile was fired from near the coastal city of Sinpo, where a submarine base is located. Japan said the missile reached its air defense identification zone, the first time by a North Korean missile.

The UN Security Council met behind closed doors on Wednesday at the request of the United States and Japan to discuss the launch. Deputy Russian U.N. Ambassador Petr Iliichev said the United States would circulate a draft press statement.

The meeting comes after the Security Council was unable to condemn a missile launch by the North earlier this month that landed near Japan because China wanted the statement to also oppose the planned deployment of a U.S. missile defense system in South Korea.

China said on Wednesday that it opposes the North's nuclear and missile programs. It had been angered by what it views as provocative moves by the United States and South Korea on the decision to deploy the THAAD (Terminal High Altitude Area Defence) anti-missile system in South Korea.


Article Link To Reuters:

Thursday, August 25, Morning Global Market Roundup: Asia Stocks Hold Gains Before Yellen Speech, Dollar Firm

By Saikat Chatterjee
Reuters
August 25, 2016

Asian stocks edged higher on Thursday but clung to recent well-worn trading ranges while the dollar held firm against regional currencies ahead of a speech by Federal Reserve Chair Janet Yellen at a global central bankers' meeting.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged 0.3 percent higher. It is down 1.6 percent after hitting a one-year high last Tuesday.

Japan's Nikkei .N225 was down 0.3 percent, pressured by losses on Wall Street overnight and investor caution ahead of Yellen's speech in Jackson Hole, Wyoming, on Friday.

Market expectations have increased that Yellen might indicate a clearer timeframe for the next U.S. rate hike after strong housing data this week and hawkish comments by other Fed officials, but many analysts expect her to strike a more neutral stance.

"I don't think the Fed will want to introduce market volatility in the run-up to the G20 meeting and she might strike a more neutral stance on interest rate policy," said Gao Qi, an FX strategist at Bank of Nova Scotia in Singapore, referring to a summit of G20 leaders in China in early September.

A U.S. rate increase last December - the first in almost a decade - unleashed a selloff in global financial markets, sending emerging market currencies and debt falling sharply. A broad index of Asian shares fell more than 10 percent in the two months after the hike.

On Wednesday, futures markets were indicating just an 18 percent chance the Fed would hike rates at its policy meeting next month, and roughly 50 percent odds of a rate increase in December, according to CME Group's FedWatch tool.

Taiwan .TWII led regional gainers in Asian stock markets with a rise of 0.8 percent thanks to a bounce in financials. Chinese stocks .SSEC .SZSC were among the top losers, falling 1 percent to extend their slide this week as investors dumped property shares, while banks came under pressure ahead of earnings reports and a crackdown on riskier lending practices in the financial sector.

"The whole (property) sector had surged more than 20 percent at one point this month, and falls in share prices this morning were purely a result of investors' trading strategy as they want to lock in profits," said Joe Qiao, a Shanghai-based analyst at Xiangcai Securities.

Major U.S. indexes closed down on Wednesday, pulled lower by weakness in the materials and healthcare sectors. The Dow .DJI lost 0.4 percent and S&P 500 .SPX fell 0.5 percent. [.N] Stock futures ESc1 were broadly flat in Asian trade.

In currencies, the dollar was a shade firmer at 100.44 yen JPY=, inching away from the 100-yen level under which it has dipped in recent sessions.

The pair has traded in a narrow 99.55-102.83 band this month, and could move back toward the upper end of that range depending on Yellen's remarks, analysts say.

"With 40 hours to go before Janet Yellen's testimony at Jackson Hole, the dollar has finally caught a bid," Kathy Lien, managing director of FX strategy at BK Asset Management, said in a note.

Against a broad trade-weighted basket of its peers .DXY, the dollar was flat on the day at 94.72. Against the euro, it was changing hands at $1.12740 EUR=.

In commodities, crude oil prices remained under pressure after sliding sharply on Wednesday.

U.S. crude CLc1 was a touch firmer at $46.80 a barrel following a roughly 3 percent drop overnight after an unexpectedly large inventory build in the world's biggest oil consumer renewed worries about oversupply.


Article Link To Reuters:

Companies Made Deals That Could Run Afoul Of U.S. Whistleblower Rules

By Sarah N. Lynch
Reuters
August 25, 2016

Wells Fargo (WFC.N), Advanced Micro Devices (AMD.O) and Fifth Third Bank (FITB.O) have in recent years agreed to settlement deals that seek to muzzle former employees in ways that some lawyers said could violate U.S. whistleblower protection laws.

Five lawyers, including three who represent whistleblowers, said that the settlements appear aimed at blocking workers from airing their concerns and contain similarities to those used by other companies that ran afoul of government rules.

The deals by Wells Fargo, AMD, and Fifth Third Bank were among a dozen such corporate settlements reached between 2012 and 2015 that were reviewed by Reuters.

The companies each struck deals with departing workers that limit the employees' ability to receive money arising from any government investigations into their former employers.

Some language in the settlements could run afoul of rules adopted by the U.S. Securities and Exchange Commission (SEC) in 2011 that generally bar corporate attempts to muzzle whistleblowers, the lawyers.

A Wells Fargo spokeswoman declined to comment, as did a spokesman for Advanced Micro Devices. A spokesman for Fifth Third said the agreement "speaks for itself" and that the company “takes seriously" its obligation to comply with all “relevant laws.” A SEC spokeswoman declined to comment.

Since 2015, the SEC has brought four cases targeting specific types of so-called whistleblower gag orders, such as confidentiality agreements that bar employees from discussing internal wrongdoing.

That followed its adoption of rules designed to encourage people to come forward with tips about possible corporate wrongdoing. The rules protect whistleblowers from retaliation and ban companies from taking any action that could "impede an individual from communicating directly" with the SEC, including through confidentiality agreements. The SEC says the program has awarded more than $85 million to 32 whistleblowers.

This month, the agency announced civil charges against two companies that required outgoing employees to waive their rights to recover government whistleblower awards in severance agreements.

Those companies, Health Net, now part of Centene Corp (CNC.N) and BlueLinx Holdings, settled without admitting or denying liability and each paid six-figure fines.

Jordan Thomas, a lawyer at Labaton Sucharow who represents whistleblowers, said the language used in the Fifth Third, Wells Fargo and Advanced Micro Devices settlements is designed to discourage whistleblowers from reporting corporate misbehavior.

As in the Health Net and BlueLinx cases, all three settlements contain language restricting the employees from collecting any money resulting from a government investigation or legal proceeding.

"I believe the SEC would be troubled by this," Thomas said.

David Marshall, an attorney with Katz, Marshall & Banks who also represents whistleblowers, agreed. “It is a device that is intended to impede,” he said.

However, Jonathan Tuttle, an attorney at Debevoise & Plimpton who represents companies, said some of the settlements could pass legal muster as they can be interpreted to limit employees from receiving additional personal-injury damages, rather than whistleblower awards handed out by the SEC.

Settlement Sample 

The former employees who signed the settlements all claimed they were terminated or faced other actions after blowing the whistle about alleged securities fraud or other types of corporate misconduct. At least two of the employees had raised their concerns internally. The settlements came about after those employees filed complaints about company retaliation with the U.S. Department of Labor.

The agreements were obtained through Freedom of Information Act requests by Reuters and by University of Nebraska law professor and interim dean Richard Moberly.

About half of them, including the ones used by Wells Fargo, Advanced Micro Devices and Fifth Third Bank, contained restrictions on would-be whistleblowers that are similar to those cited in prior SEC enforcement actions.

Some of the other settlements did not contain such restrictions or did not involve publicly-traded companies covered by the SEC’s rules.

In the Fifth Third Bank case, the company settled in December 2014 with former employee Joseph Kremer, who claimed he was fired after informing the company of concerns that investors were being misled about the management of certain funds.

Fifth Third settled with Kremer for an undisclosed sum without admitting wrongdoing and Kremer's complaint was dismissed by the Department of Labor. Kremer could not be reached for comment.

The settlement states that while Kremer is permitted to participate in government investigations, he is prohibited "to the maximum extent permitted by law" from recovering "any individual monetary relief or other individual remedies."

The Health Net settlement ran afoul of SEC rules despite using the same phrase "to the maximum extent permitted by law" in waiving the employee's right to a financial award.

The Wells Fargo settlement, reached in September 2015, involved a former bank teller named Birinder Kaur Shankar who claimed she was harassed and fired after complaining internally about what she alleged was unethical behavior toward customers.

The deal stipulated that she could speak with the SEC, but she had to waive "the right, if any, to recover any monetary or other individual relief of any sort whatsoever" arising from an investigation "except for any individual relief that cannot be waived as a matter of law."

In the deal, Wells Fargo denied that it took improper action. The Labor Department dismissed Shankar's complaint. Shankar declined to comment, citing the confidentiality provisions in the settlement.

The AMD settlement, struck in December 2012 between the semiconductor company and whistleblower Hishaam Mahmood required him to waive relief awarded by "any governmental agency."

It also required him to affirm to AMD he has not filed a charge with any other agency besides the SEC.

This line, some attorneys said, could run afoul of the SEC’s rules because the regulator prohibits companies from forcing employees to notify company attorneys about their communications with the government.

The nature of Mahmood's complaint could not be determined. In the settlement, AMD denied wrongdoing, and the complaint was dismissed. Mahmood could not immediately be located for comment.

Tuttle said that employment agreements which require employees to disclose if they have filed complaints or claims with other government agencies could be problematic and probably should be tweaked to avoid any misunderstanding.

He added that most such settlements have traditionally been drafted by employment attorneys, rather than by securities attorneys who pay attention to “every syllable that is uttered by the SEC.”

"I think people are learning,” he said.


Article Link To Reuters:

Central Bankers Eye Public Spending To Plug $1 Trillion Investment Gap

By Howard Schneider 
Reuters
August 25, 2016

While markets wait for Janet Yellen's latest message about the direction of monetary policy, the Federal Reserve chief and her colleagues already have one for politicians: the U.S. economy needs more public spending to shift into higher gear.

In the past few weeks, Yellen and three of the Fed's other four Washington-based governors have called in speeches and Congressional hearings for government infrastructure spending and other efforts to counter weak growth, sagging productivity improvements, and lagging business investment.

The fifth member has supported the idea in the past.

The Fed has no direct influence over fiscal policy and its officials traditionally refrain from discussing it in detail. Having its top officials - from Yellen to former investment banker and Bush administration official Jerome Powell - speak in one voice sends a strong signal to the next president and Congress about the limits they face in setting monetary policy and what is needed to improve the economy's prospects.

The Fed's annual conference in Jackson Hole, Wyoming, where Yellen speaks on Friday, is due to focus on how to improve central banks' "toolkit," but the unanimous message from the Fed's top policymakers is that those tools are not enough.

"Monetary policy is not well equipped to address long-term issues like the slowdown in productivity growth," Fed vice chair Stanley Fischer said on Sunday. He said it was up to the administration to invest more in infrastructure and education.

Trillion Dollar Hole


Behind Fischer's statement lies a troubling feature of the recovery - business investment has fallen below levels in prior years and companies seem to have stopped responding to low borrowing costs.

As a share of gross domestic product, U.S. annual business investment since 2008 has averaged nearly a full percentage point below the previous decade's average, government data shows. Reuters calculations indicate the investment shortfall has blown a hole in annual GDP that has grown to as much as one trillion dollars a year compared with what it would have been if the previous trend continued. (Graphic: tmsnrt.rs/2bcisE2)

Little suggests a rebound any time soon. Fixed business investment has fallen in three successive quarters as a share of GDP. Researchers and analysts blame the slide on everything from doubts about future economic growth to distortions caused by Fed policy itself in helping boost the value of financial assets.

Companies have run up share buybacks to record levels of around half a trillion dollars a year, and held onto record amounts of cash, despite cheap financing that should in theory spur long-term investment. Research by Fed board economists Steven A. Sharpe and Gustavo Suarez suggest a reason: executives are putting little stock in interest rates when making investment decisions, and are not adjusting expected rates of return to fit the emerging low-growth world.

Based on data collected from chief financial officers, their study found the internal rate of return needed to justify capital projects has "hovered near 15 percent for decades," and barely budged even as global interest rates have fallen. Such targets made sense during spells of strong growth, but may be inconsistent with the current low-growth, low-interest rate environment, and hold back corporate spending, the Fed economists argue.

That challenges the core monetary policy notion that low short-term rates spur investment by making long-term returns more attractive.

"I have started to wonder, and many wonder, as rates stay at zero, whether that may not be true anymore,” former Fed Governor Jeremy Stein told Reuters.

The situation has perplexed analysts, with some suggesting executives may be out of synch with a low-growth world.

“I am not sure that people’s notion of an adequate return on equity has come down as much as the riskless rate,” said Thomas Mercein, global head of debt capital markets for Credit Suisse.

The Jackson Hole conference will likely take stock of several unconventional solutions proposed as a way of breaking out of the cycle of subdued demand, weak investment and low growth that has followed the 2007-2009 recession.

U.S. and global central bankers have brought into the mainstream such ideas as GDP targeting or "helicopter" cash injections to generate demand and inflation, and have been testing negative interest rates in Europe and Japan.

Fiscal policy is not on this year's agenda, which is dedicated to the details of monetary policy operations. But the idea that governments need to pick up the slack with infrastructure spending or other initiatives has been gaining traction among central bankers.

Well-targeted public investment, the argument goes, could in effect pay for itself through higher productivity and growth, and in doing so make any additional public debt comparatively less onerous.

Japan, which has been running sizeable fiscal deficits since 2009, has already announced another spending package to complement negative rates, while Britain's new finance minister has said he would look at whether new fiscal measures are needed in the wake of the country's vote to leave the European Union.

Rare Agreement

In the United States, the need for investing in the nation's aging infrastructure is a rare point where both presidential candidates seem to agree. Democrat Hillary Clinton is proposing a $275 billion package; Republican Donald Trump is calling for about twice that.

Not everyone agrees though, that more public spending is the best cure, or that an infrastructure program would pinpoint projects with a positive return.

“Economic policy should bolster private investment. Yet, it is striking that most academics and policymakers are pushing another big government spending stimulus package," said former Fed governor and Hoover Institution fellow Kevin Warsh.

However, there is broad agreement that, for now, private investment may remain in the doldrums - unless it is clear the economy is picking up.

Bill Lutz, chief financial officer of Illinois-based industrial services provider Advanced Technology Services, said the still low factory utilization and doubts about growth and demand have set a high bar for any private investment that was not necessary to maintain output or offered compelling savings.

"You'll find a way to finance if it is real and strategic," Lutz said. "Whether the interest rate is a percent higher or lower is secondary."


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