Wednesday, September 7, 2016

European Stocks Open Higher As Markets Discount September Rate Hike

By Arjun Kharpal and Holly Ellyatt
CNBC
September 7, 2016

European stocks opened slightly higher on Wednesday as weaker U.S. data lowered the chances of the U.S. Federal Reserve hiking interest rates later this month.

The pan-European STOXX 600 was up around 0.12 percent.

European investors are digesting the latest data out of the U.S. which, along with disappointing nonfarm payroll data last Friday, could appear to quash any chance of a rate hike when the Federal Open Market Committee (FOMC) meets later in September.

Data showed the U.S. Institute for Supply Management (ISM) non-manufacturing Purchasing Managers' Index (PMI) index fell to 51.4 last month from 55.5 in July. While a level above 50 still indicates expansion, it was the lowest reading since February 2010.

In Europe, German industrial output for July fell 1.5 percent month-on-month, according to data from the Economy Ministry, its steepest monthly drop since August 2014.

In the U.S., Democrat presidential candidate Hillary Clinton chided her Republican rival Donald Trump for commenting on the Federal Reserve's monetary policies after he said interest rates should change.

"You should not be commenting on Fed actions when you are either running for president or you are president," Clinton told reporters on her campaign plane, Reuters reported. "Words have consequences. Words move markets."

Meanwhile, oil markets are still in focus following news on Monday that Saudi Arabia and Russia have agreed to cooperate on stabilizing the energy market. Oil prices inched lower on Wednesday as market participants remained skeptical that producers will reach an agreement to freeze output to rein in a global supply glut, Reuters reported.

In business news, U.S. seed producer Monsanto shareholders have increased the pressure on Bayer to raise its already sweetened takeover offer but some of the German firm's own investors have warned the current offer is already too high, the Financial Times reported.

Full year preliminary results are due from Barratt Developments and Hargreaves Lansdown on Wednesday. There are no major European data releases.


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Why Hillary Clinton Can’t Close

By Rich Lowry
The New York Post
September 7, 2016

William McKinley would be proud. Hillary Clinton has been running the closest thing possible in the modern context to a front-porch campaign.

She’s happy to have the race all about her opponent, rather than herself. She avoids press conferences, although she has taken to visiting reporters at the back of her campaign plane for some questions. She hasn’t said anything truly memorable that isn’t a gaffe. Her best moment of the campaign, the Democratic convention, featured vivid performances by almost everyone in her party except her.

Hillary is relying on the strength of her organization to hoist her over the finish line, and wants to win the presidency by default.

It’s as if Michael Dukakis became the Democratic nominee and happened to luck into running against a radioactive candidate conducting a real-time experiment in whether it’s possible to win the presidency without building a presidential campaign.

And yet for all of Donald Trump’s weaknesses, Hillary is barely leading him and even trailing him in the new CNN poll. According to that poll, her voters are less enthusiastic than his are. Her unfavorable rating is just a tick below his when he has spent a year gleefully trampling every political piety and she is determinedly cautious and colorless.

It’s telling that at the height of her lead in August, she was almost entirely absent. She let Trump dictate the pace of the campaign, often to his own detriment. As he has become more disciplined, this approach may have reached its natural limit.

But Hillary herself lacks almost all the qualities that make for a compelling presidential candidate. She isn’t fresh. She has been prominent in our politics, and controversial, for 25 years.

She isn’t entertaining or inspiring. Her speeches never achieve rhetorical lift-off, and she has the most insincere laugh in American politics.

She isn’t associated with a cause. In the Democratic primaries, she bent to the energy of the Bernie Sanders phenomenon, and in the general she has found her voice only when attacking Donald Trump.

She isn’t ethical. The debris field from her private e-mail server and the shady dealings of the Clinton Foundation will stretch into November, and perhaps beyond.

Already wealthy by any reasonable standard and unbelievably famous, the Clintons only had to conduct themselves with some modicum of respectability the last several years to avoid creating further obstacles on Hillary Clinton’s path to the White House.

Instead, Hillary bent the rules and arguably violated laws to try to keep her State Department e-mails from prying eyes, and the couple mingled Clinton Foundation and State department business in, at the very least, a wildly inappropriate manner. They vacuumed up every loose dollar they could find, from Hillary’s Goldman Sachs speeches to Bill’s $17.6 million gig as “honorary chancellor” of a for-profit college.

Hillary wants to define political change as embodied by Donald Trump as unacceptable, but she has gone almost as far in rendering the status quo — as represented by her high-handed politics of cronyism and corner-cutting — intolerable.

The Clintons famously believe the rules don’t apply to them, and why not? First, the FBI conducted a check-the-box investigation into her e-mails and then, acting like an arm of the campaign, released documents related to the investigation on the Friday afternoon before Labor Day to limit their impact.

Who else can hope for such deference from the nation’s foremost law-enforcement agency?

In only one sense does Hillary Clinton perhaps match the political moment. She may be boring, unlikable and untrustworthy, but she is stolid. Her argument against Trump is based on character and temperament more than anything else, and she’s making a bet that if she can define Trump as dangerous, plodding and predictable she’ll look alluring by comparison. It’s a bold gambit to win a personality contest by having none.

As a candidate, Hillary is the emptiness at the center of her otherwise formidable campaign.


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The Lies Told By The Black Lives Matter Movement

By Heather Mac Donald
The New York Post
September 7, 2016

The Black Lives Matter movement has been feted repeatedly at the White House and honored at the Democratic National Convention. Hillary Clinton has incorporated its claims about racist, homicidal cops into her presidential campaign pitch.

This summer’s assassinations of police officers haven’t slowed the anti-cop demonstrations or diminished the virulent hatred directed at cops during those protests.

San Francisco 49ers quarterback Colin Kaepernick refuses to stand for the National Anthem to protest the alleged oppression of blacks, while pop singer Beyoncé has made the Black Lives Matter movement the focal point of her performances.

Yet the Black Lives Matter movement is based on a lie. The idea that the United States is experiencing an epidemic of racially-driven police shootings is false — and dangerously so.

The facts are these: Last year, the police shot 990 people, the vast majority armed or violently resisting arrest, according to The Washington Post’s database of fatal police shootings. Whites made up 49.9 percent of those victims, blacks, 26 percent. That proportion of black victims is lower than what the black violent crime rate would predict.

Blacks constituted 62 percent of all robbery defendants in America’s 75 largest counties in 2009, 57 percent of all murder defendants and 45 percent of all assault defendants, according to the Bureau of Justice Statistics, even though blacks comprise only 15 percent of the population in those counties.

In New York City, where blacks make up 23 percent of the city’s population, blacks commit three-quarters of all shootings and 70 percent of all robberies, according to victims and witnesses in their reports to the NYPD. Whites, by contrast, commit less than 2 percent of all shootings and 4 percent of all robberies, though they are nearly 34 percent of the city’s population.

In Chicago, 80 percent of all known murder suspects in 2015 were black, as were 80 percent of all known nonfatal shooting suspects, though they’re a little less than a third of the population. Whites made up 0.9 percent of known murder suspects in Chicago in 2015 and 1.4 percent of known nonfatal shooting suspects, though they are about a third of the city’s residents.

Gang shootings occur almost exclusively in minority areas. Police use of force is most likely in confrontations with violent and resisting criminals, and those confrontations happen disproportionately in minority communities.

But the Black Lives Matter narrative has nevertheless had an enormous effect on policing and public safety, despite its mendacity. Gun-related murders of officers are up 52 percent this year through Aug. 30 compared to last year. The cop assassinations are only a more extreme version of the Black Lives Matter-inspired hatred that officers working in urban areas encounter on a daily basis.

Officers are routinely surrounded by hostile, jeering crowds when they try to conduct a street investigation or make an arrest. Resistance to arrest is up, officers report. Cops have been repeatedly told by President Obama and the media that pedestrian stops and public order enforcement are racist. In consequence, they are doing less of those discretionary activities in high-crime minority communities.

The result? Violent crime is rising in cities with large black populations. Homicides in 2015 rose anywhere from 54 percent in Washington, DC, to 90 percent in Cleveland. In the nation’s 56 largest cities, homicides rose 17 percent in 2015, a nearly unprecedented one-year spike. In the first half of 2016, homicides in 51 large cities were up another 15 percent compared to the same period last year.

The carnage has continued this year. In Chicago alone, at least 15 children under the age of 12 have been shot in the first seven months of 2016, including a 3-year-old boy who is now paralyzed for life following a Father’s Day drive-by shooting. While the world knows Michael Brown, whose fatal police shooting in Ferguson, Mo., spurred Black Lives Matter, few people outside these children’s immediate communities know their names. Black Lives Matter activists have organized no protests to stigmatize their assailants.

For the past two decades, the country has been talking about phantom police racism in order to avoid talking about a more uncomfortable truth: black crime. But in the era of data-driven law enforcement, policing is simply a function of crime. The best way to lower police-civilian contacts in inner-city neighborhoods would be for children to be raised by their mother and their father in order to radically lower the crime rate there.


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WSJ: President Trump Isn’t Farfetched

Pundits treat Clinton like a shoo-in, but polls tell a different story. Victory is well within Trump’s reach.


By Douglas E. Schoen 
The Wall Street Journal
September 7, 2016

To listen to conventional wisdom, Hillary Clinton practically cannot lose the presidential election. The various forecasting services, from FiveThirtyEight to CNN to Predictwise, give the Democrat about a 70% chance of winning the White House in November. Few commentators are betting on Donald Trump. Yet the available evidence shows that the race is steadily trending toward Mr. Trump, whose victory remains quite possible.

Consider the polling trends. In a four-way race including Libertarian Gary Johnson and Green Party candidate Jill Stein, Mrs. Clinton’s lead is now only 2.4 points in the Real Clear Politics average. That’s down significantly from a month ago. In early August, following the Democratic Convention, Mrs. Clinton was up by six points in the YouGov/Economist survey, and eight points in the ABC/Washington Post poll.

When third parties are excluded, Mrs. Clinton does a bit better against Mr. Trump: She leads by 3.3 points in the Real Clear Politics average. Yet that figure has been cut by more than half in a month. In addition, the head-to-head match up loses relevance each day that public dissatisfaction with the two major-party nominees does not subside. Mr. Johnson, the Libertarian, has held steady for months at about 7% support in the polling average, and the Green Party’s Ms. Stein has stuck at about 3%.

The latest surveys look even more ominous for Mrs. Clinton. Virtually all of those taken in the past week show Mr. Trump ahead, tied, or trailing but within the margin of error. The new CNN/ORC poll, out Tuesday, puts Mr. Trump up by two. Rasmussen’s release last Thursday showed 40% for Mr. Trump and 39% for Mrs. Clinton. The Reuters/Ipsos tracking poll out Friday had the same figures. The L.A. Times/USC tracking survey shows a statistical tie. The latest Investors Business Daily/TIPP survey has Mrs. Clinton up by one, but the margin of error is 3.4 points.

What accounts for this tightening? On the most straightforward level, it seems that Mrs. Clinton is coming down from the bounce she received after the successful Democratic convention. But something else has changed as well. In the latest ABC/Washington Post poll, published at the end of August, her image hit a career low: 56% of Americans viewed her unfavorably and only 41% favorably. This is a significant slide from even early August, when the same poll had Mrs. Clinton at 52% unfavorable and 46% favorable.

The continuing revelations about her private email server and the business dealings of the Clinton Foundation obviously are taking a toll. The FBI’s notes from its interview with Mrs. Clinton, released Friday, reinforce director James Comey’s judgment that she was “extremely careless” with classified information. At least 15,000 more emails could be released before November. As for the Clinton Foundation, at this point it is clear that both Hillary and Bill should resign immediately from its board and any role in daily operations.

Meanwhile, Donald Trump has finally begun to focus. Instead of indulging in public spats with other Republicans or the media, he has given speeches on immigration, the economy and terrorism. His image has begun to improve. Barely a month ago Mr. Trump was 30 points underwater in a Bloomberg poll, with 33% of respondents viewing him favorably and 63% unfavorably. Last week’s release from Reuters/Ipsos showed 44% favorable and 56% unfavorable.

Still, Mr. Trump has failed to capitalize on two central themes: change and corruption. Fifty-six percent of Americans want to “take the country in a different direction,” according to a June poll by YouGov/Huffington Post. And a majority of Americans—56%—think that Mrs. Clinton broke the law by using a private email system, an Associated Press survey found in July. For Mr. Trump, these figures represent a great opportunity.

At the same time, Mrs. Clinton has been struggling to define her own message. Hiding from media scrutiny, she has focused almost exclusively on raising money, hauling in a record $143 million last month for her campaign and the Democratic Party. Her ads targeting Mr. Trump may have done him some damage on the margins. But there is no evidence that they have strengthened her position.

Mrs. Clinton has not offered any defining vision for why she should be elected. She needs an overarching message, beyond simply saying that she is a “change maker,” as her husband called her at the Democratic convention. If articulating a substantive vision proves too challenging, it wouldn’t be the worst fallback strategy to associate herself with the record of President Obama, whose poll numbers are up, or even her husband. But she’s got to do something more than she is currently doing, given her lack of any clear direction for the country and the public sense that she is not trustworthy and arguably corrupt.

So can Donald Trump win? Although he is at a clear disadvantage in the electoral college, evidence suggests that he can. Polls in the past week in Michigan, Wisconsin and Ohio show the race tightening. Florida is within the margin of error. North Carolina and even potentially Arizona, states that once seemed out of reach, remain in play.

In the Midwest, Mr. Trump is surging. The Washington Post/Survey Monkey poll published Tuesday shows him leading by four points in Iowa and three points in Ohio. His path to victory runs through these states, especially with Virginia and Colorado now seemingly safe for Mrs. Clinton. The Midwest is where Mr. Trump should devote the bulk of his time and money, focusing on the need for fundamental change, economic revitalization and empowerment for the disadvantaged—making his pitch broadly but not exclusively to white working-class voters.

Neither candidate has so far decisively answered the question of who can best lead America into a challenging future, while helping millions of hardworking people improve their lives. If Mr. Trump makes the better sales pitch over the next 60 days, he may very well find himself sitting in the big chair in the Oval Office.


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Another Billionaire Incurs Putin's Wrath

By Leonid Bershidsky
The Bloomberg View
September 7, 2016

Since Vladimir Putin came to power in Russia, people who had made billions in the murky first decade of Russian capitalism have been picked off one by one: jailed, pushed out of the country, forced to give up assets or take part in unprofitable projects. Now, apparently, it's Viktor Vekselberg's turn: An attack on some of his top managers means that repeated demonstrations of loyalty to the Kremlin are no safety guarantee.

The story goes back to July 28, 2000, when Putin held his first official meeting with the generals of Russian business. Media magnate Vladimir Gusinsky couldn't attend because he was in jail: Putin was in the process of taking away his TV station. Boris Berezovsky, whose diverse assets, including media ones, had helped Putin get elected, wasn't there either: Just a few months later, he would decide not to return to Russia from London to avoid imprisonment. Mikhail Khodorkovsky, who would later lose his oil company to the government and spend 10 years in jail, was there. So was banker Sergei Pugachev, who is now in France, having lost his Russian holdings.

Vekselberg, too, was there -- along with a number of other wealthy Russians who have fared better under Putin because they kept their heads down and paid their dues. He certainly did: The owner of a $14.2 billion fortune (according to Bloomberg Billionaires) has carefully built an image as a patriot by bringing back to Russia some of its lost treasures, such as the world's biggest collection of Fabergé imperial easter eggs and the archives of nationalist philosopher Ivan Ilyin, whom Putin likes to quote in speeches. Under President Dmitri Medvedev, Vekselberg took on the demanding volunteer job of running Medvedev's pet project, the Skolkovo Innovation Center, which the Kremlin wanted to turn into a Russian version of Silicon Valley. Vekselberg, in other words, was as loyal as they came.

On Monday, however, the government's investigative committee detained two of the billionaire's closest associates, Boris Vainzikher and Yevgeny Olkhovik, and placed a third man -- Mikhail Slobodin -- on its wanted list. Slobodin, who is chief executive officer of VimpelCom, one of Russia's three big mobile operators, and a board member in a Vekselberg company, energy provider T Plus, only avoided arrest because he was overseas. It's not clear whether he will return to Russia to face charges, but he resigned from VimpelCom immediately after news of the arrests broke.

All three managers are part of Russia's corporate elite. Olkhovik, a long-standing Vekselberg business associate, was managing director of the billionaire's diversified holding company Renova. Vainzikher ran T Plus, which controls 7 percent of Russia's power generation and 10 percent of the national heating market.

The charges against them seem to be direct consequences of Putin's anger. On August 8, Sergei Gaplikov, acting governor of the northern Komi region, wrote Putin a letter complaining that a heating plant in the city of Vokruta, supplying 80,000 people with heat, was at the point of going offline from under-investment. Gaplikov wrote that the plant's owner, T Plus, was trying to sell it off because the city's heating distribution network hadn't been paying it for months. The heating network, the acting governor pointed out, was "affiliated" with a certain offshore company.

Putin got the hint. A former governor of Komi, Vyacheslav Gaizer, was arrested a year ago, along with a number of his staffers, on charges of setting up a corrupt organization in the region. To someone as familiar as Putin with how the Russian system works, no explanation would be necessary: Since utility tariffs are regulated by the Russian regions, a heating company can get a corrupt governor to set high tariffs. If the regional leadership changes, though, extracting payments at the old price may become a problem.

Angrily, Putin wrote in large script across the governor's entire letter: "The crookery and irresponsibility must be cut short." The investigation was quick, and the three managers have been accused of bribing the Gaizer administration in Komi to set high heating tariffs. The bureaucrats allegedly siphoned off part of the margins to offshore companies. Aware of the investigators' feverish activity, T Plus said in late August that it was stepping up investment in the Vorkuta heating plant. But by then, it was too late.

Putin's approach to corruption is to blame both corrupt bureaucrats and the businessmen who bribe them. "The business community goes down this path, trying to gain an edge over competitors, including those vying for state contracts," Putin said in 2012, responding to a famous musician's open letter that criticized him for allowing corruption to flourish. "The whole society's mentality has to change."

So, in Putin's eyes, a governor with the power to regulate prices and a business executive who allegedly gives him a kickback are equally guilty of corruption. The executives won't get much sympathy from ordinary Russians: Fewer than half believe that big business plays a positive role in Russia. Ahead of parliamentary elections this month, the new developments in the Komi corruption scandal may play into the hands of the pro-Putin United Russia party -- even though Gaizer was a ranking member.

Vekselberg, for his part, has much to worry about. The arrest of close associates and searches at the head office are the usual warnings that the Kremlin wants something valuable from him. It may soon transpire, for example, that T Plus assets could be useful to some state company or one of Putin's billionaire friends.

A billionaire who can quickly understand what's needed usually keeps his wealth. It took a series of office searches for Mikhail Prokhorov, the owner of the Brooklyn Nets, to realize his media company, RBC, had taken its freedom to investigate Putin's family and cronies too far. He brought in new editors, and no further reprisals followed.

Like his peers, Vekselberg is but a hostage to the Kremlin, which can redistribute wealth as it sees fit. That's why Putin's view of corruption is hypocritical: In dealing with an all-powerful government apparatus, it's hardly an option not to pay people off.


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The G-20 Gets It, But Is Unlikely To Act

By Mohamed A. El-Erian
The Bloomberg View
September 7, 2016

The Group of 20 meeting last weekend received only light coverage from the press and market analysts. Imagine my surprise when I read the content-heavy 48-paragraph statement issued at the conclusion of the gathering by country leaders. Either few took the trouble to read the communique or, more likely, its contents were dismissed as wishful thinking that wouldn't be implemented any time soon.

Although it contains the obligatory reassuring words from global economic leaders, the communique makes clear that they are not satisfied with the recent pace of growth and the prospects for the future. They neatly identify the principles that would underpin better global economic performance, such as inclusiveness, integration, openness and a proper vision for growth. And they acknowledge the need to make globalization work better, and for a lot more people.

Cross-border partnerships and improved global policy coordination are rightly emphasized as critical to enhancing the world’s growth potential. They also correctly devote attention to institutional and governance issues. Indeed, unlike many such messages in the past, this communique goes into unusual detail about the measures that would be required for a more prosperous and inclusive global economy.

The communique gives the impression that world leaders recognize that they could be losing the battle against forces that would undermine longstanding drivers of growth and prosperity, including trade and investment openness. You also sense that the leaders representing countries that account for more than three-quarters of global gross domestic product are in broad agreement about how to restore growth, along with a willingness to cooperate better, especially on economic and financial issues.

Yet none of this has attracted broad attention; and probably for a good reason. Very few believe that the G-20 -- or any other global meeting -- can influence national agendas in a deterministic way.

Most advanced economies are dealing with anti-establishment movements that disrupt traditional political arrangements and make it harder to reach agreement on economic governance issues. In the U.S., Congress is returning from its summer recess, but is too polarized to take the necessary economic decisions; and the unusual presidential election campaign is not helping. In Germany, the ruling party of Chancellor Angela Merkel was dealt a humiliating loss in an election over the weekend. Spain has yet to form a durable new government, and a third national election appears increasingly likely. Italy is preparing for a tricky referendum that could determine the survival of Prime Minister Matteo Renzi's government. The consequences of the Brexit vote in the U.K. have yet to take shape. And the list goes on.

Although national issues are important, there is a common element. Frustrated by years of low growth whose meager benefits have accrued primarily to the best-off segments of society, anti-establishment movements are capitalizing on the vocal anger and dissatisfaction of the electorate. How better to fuel this anger then to also blame other countries and immigrants? The resulting dynamics add to the polarization of domestic politics, making any policy decision that much harder to reach and implement.

Watching this paralysis, very few emerging economies have the willingness and ability to move forward on their own -- and for good reasons. Many of the mentioned policy steps require coordinated action; and some of the measures that can be carried out without such coordination, individual action could end up being counterproductive.

Muted expectations about progress are amplified by concerns about the functioning of the G-20 itself. With the exception of a highly successful April 2009 London meeting that played an important role in helping to avert a costly global depression, most of the previous meetings were heavier on photo opportunities than on policy follow-through. The rotating presidency and the lack of a secretariat could also be hurdles to operational next steps by individual countries.

We should take comfort that the leaders of the global economy have signaled a good understanding of what’s holding back prosperity, and how to improve prospects for many and not just for some. However, in the absence of crisis conditions that focus minds and secure the cooperation of national politicians, such recognition will likely remain just words on a communique.


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Donald Trump Wants You To Trust Him, Blindly

By Dana Milbank 
The Washington Post
September 7, 2016

Donald Trump just renewed his vow of opacity.

Asked by ABC News’s David Muir on Monday afternoon whether he’d be releasing his income-tax returns, as every other major-party presidential nominee has done for 40 years, Trump brushed off the inquiry.

I think people don’t care,” the GOP nominee declared.

No? A Quinnipiac University poll two weeks ago found that 74 percent of likely voters, including 62 percent of Republicans, think Trump should release his tax returns.

And for those Americans who don’t care, there’s more evidence every day that they should. As Trump was again dismissing the tax-return matter, The Post that afternoon published an extensive report by Dana Priest, Ellen Nakashima and Tom Hamburger laying out what U.S. intelligence officials believe is “a broad covert Russian operation in the United States to sow public distrust in the upcoming presidential election and in U.S. political institutions.”

If Vladimir Putin’s government — widely believed to be behind cyberattacks on the Democratic National Committee and state election operations — has this “ambitious” plan to influence the election, it stands to reason that Putin would also like to influence the candidates. Trump and his advisers have taken a strikingly pro-Putin line, and Trump and his advisers also have had extensive financial ties to Russia. There’s one sure way to know how beholden Trump is to Putin’s regime: release his tax returns.

This doesn’t mean Trump is some sort of Manchurian Candidate in cahoots with Putin. But it’s bad enough if a President Trump were to feel pressure to tilt in Russia’s favor because he was indebted to Putin-allied investors. Trump dismisses the possibility as nonsense — so why won’t he come clean with his taxes?

The potential for such conflict is a big reason it’s routine for nominees to release their returns. Hillary Clinton has released almost 40 years’ worth, Tim Kaine has released 10, and Mike Pence said he’ll release his this week.

When Trump says nobody cares about the release of his tax returns, he’s forgetting a long list of Republicans — including Rep. Jason Chaffetz of Utah, chairman of the main House investigative panel, Senate Majority Leader Mitch McConnell, Sens. John Barrasso, Ted Cruz and Marco Rubio, and Reps. Sean Duffy and Mark Sanford — have called for Trump to disclose. Mitt Romney, the last Republican nominee, called Trump’s refusal “disqualifying” and speculated that the returns could contain a “bombshell.”

Much has been made of Clinton’s allergy to transparency, and I don’t excuse her obsessive secrecy over her emails and her nearly 280 days without a news conference. (She took questions aboard her plane Monday and Tuesday, a welcome change.) Clinton and Trump should both release more medical information.

But when it comes to transparency, Trump is by far the biggest offender. He’s still banning The Post and other news organizations he doesn’t like. Clinton released the names of her top money-raising “bundlers”; Trump refuses. Clinton has said the Clinton Foundation would stop taking foreign and corporate contributions if she were elected (she should go further, by severing all family ties with the foundation) while Trump has no plans to minimize such conflicts of interest — or even to disclose them.

Trump’s excuse, that he’s waiting for audits to end, has no legal justification. His own accountants have said his audits from 2002 to 2008 have been “closed,” yet his returns from those years remain unreleased.

Do the unreleased returns illustrate shady connections? The Wall Street Journal reported last week that Trump’s real estate investments “brought the GOP nominee into regular contact with people who had ties to organized crime.” Do they show (as earlier returns did) that he paid little or nothing in taxes? Do they confirm reporting by The Post’s David A. Fahrenthold that Trump has been stingy with charities?

Very likely, they would show that Trump has a great deal of debt owned by foreign interests that don’t necessarily share his America First views. The New York Times reported recently that companies directly owned by Trump hold at least $650 million in debt — twice the amount that could be found from his campaign disclosures — and much of Trump’s wealth is in three investments that owe an additional $2 billion.

Wealthy candidates running for high office typically promise to put their investments in a “blind trust” so they can avoid conflicts of interest by not controlling, or even knowing about, their financial interests. But Trump has no plan to do that; he says he’ll have his children run the business while he runs the country.

By refusing to disclose his financial obligations, and by declining to remove any potential conflicts of interest he has with Putin and other foreign entities, Trump has come up with a different notion of blind trust: He wants us to trust him, blindly.


Article Link To The Washington Post:

The Real Reason Hillary's Health Is An Issue

By Roger L. Simon
PJ Media
September 7, 2016

We live in age of medical miracles. Doctors often can ameliorate all but the most extreme diseases so people can function, at least for a while.

So why should we concern ourselves with Hillary Clinton's relatively minor (most probably) coughing fits?

For the most obvious reason: like virtually everything else, she lies about it!

As the age-old legal principle goes, Falsus in uno, falsus in omnibus. Her health is yet another example of Clinton's pathological tilt toward dishonesty. Her first response to anything almost always is to prevaricate.

On Monday at an event in Cleveland, Ohio, when confronted about her coughing fit, she blamed it on an allergy to Donald Trump. Besides being a mediocre joke at best, it was a reflex, a reach for the untrue response before any other, as if the truth would literally dissolve her in a puddle.

This fear of the truth is likely from childhood, but has morphed through years of political combat into a kind of domestic taqiyya. Hillary, though also obviously not Muslim, observes her version of that Islamic doctrine in which it is permissible, often even required, to lie to the enemy for the good of the cause--the cause, in this case and with regularity, being the maintenance of her power.

Clinton has indeed lived her life in a world of lies, where lying was for all intents and purposes the norm. Imagine the level of dishonesty in her communications with her husband over the years. Was there ever a time they were truly honest with each other? They probably even test out their lies at home, topping each other in their absurdity. Hillary's claim, during her FBI interview, that she thought the (c) for classified in her emails meant alphabetical order is as ludicrous -- John Schindler points out in his new article "EmailGate and the Mystery of the Missing GAMMA"- as Bill's legendary "it depends on what your definition of 'is' is." (BTW, if you don't recognize the GAMMA in Schindler's title, you should. Click on it.)

We saw this nearly automatic dishonesty writ large on a more important playing field in those responses to the FBI in its email investigation. Though highly disturbing to those of us concerned with the rule of law, the Bureau did not require Clinton to testify under oath. This allowed her to state that she "did not recall" on crucial matters relevant to her emails, including many on national security, no less than thirty-seven times.

Incredibly, the FBI never followed up on these assertions, although those non-responsive replies would have made Clinton either slightly senile or a serial liar. The latter is, of course, more likely.

The FBI in this case clearly did no favor to its reputation by elevating a presidential candidate above the law, but, ironically, it did no favor to Clinton either, especially in the long term. By permitting her this luxury of not testifying under oath, it kept her answers under a permanent cloud of doubt. If she does become president, her ability to govern will be severely, perhaps terminally, hampered. She will be under continual investigation by Judicial Watch and a host of others, not to mention an increasingly skeptical public, for the many still unanswered questions emerging from her emails and from the Clinton Foundation.

This is also the reason she is dropping in the polls with her honesty and trust numbers, for the first time falling below Donald Trump's. I wrote back in August 2015 that this was Trump's election to lose. I still believe that. But to maintain and grow his lead, Trump must be as scrupulous as possible from his end. This may mean finally revealing his taxes that could well contain the embarrassment that he has substantially padded his net worth or that his charitable donations are slim for a man of his wealth.

Still, those issues are minor compared to the national security risks inherent in Clinton's duplicity. Trump has everything to gain by keeping the pressure on Clinton for her prevarications and world-class lack of transparency.

Personal energy, the ability actually to do a job that is highly stressful physically and mentally, is also something that should be of concern to voters, despite what some like the WaPo's Chris Cillizza, all too willing to believe one Clinton-selected doctor, might say. That energy factor is another reason that Hillary's health really is an issue. Trump's offer of mutual blind medical examinations is a smart one.

But keep your eye on the ball. Falsus in uno, falsus in omnibus. False in one thing, false in everything. That legal principle has its roots, interestingly, in the Stuart Treason Trials of the late seventeenth century. As they say, everything old is new again.


Article Link To PJ Media:

The Battle Of The Burkini

By Ian Buruma
Project Syndicate
September 7, 2016

There has been a lot of fuss lately about the handful of Muslim women who choose to bathe on French beaches wearing a special garment that covers the head (not the face), and much of the body. That garment – the so-called burkini – was invented in 2004 by an Australian-Lebanese woman named Aheda Zanetti, with the goal of enabling even the strictest Muslim women to swim or play sports in public. Little did Zanetti know that her creation would generate a national controversy.

The imbroglio started when mayors in several southern French seaside towns banned burkinis on their beaches. A grotesque photograph soon appeared in newspapers around the world of three French policemen, one of them with a machine gun slung across his back, forcing a woman to undress on a beach in Nice. Though the ban has now been invalidated by France’s highest court, it is still enforced in several seaside resorts.

And, indeed, the controversy is far from over. Former French President Nicolas Sarkozy, who is now running for a new term, recently called the burkini a “provocation” and a sign of “rampant Islamization.” The equally outraged Prime Minister Manuel Valls has called bare breasts a symbol of French republican liberty. After all, he concluded, wasn’t Marianne, the female symbol of the French Republic, usually depicted with her breasts exposed?

There is little doubt that Sarkozy’s opposition to the burkini is entirely opportunistic. The controversy represents yet another opportunity to stoke prejudice against an unpopular minority, in the hope of siphoning votes from the far-right National Front’s Marine Le Pen in the 2017 election. But, in a tradition that spans centuries of European missionary zeal, his opportunism has been cloaked in moral terms: “We don’t imprison women behind fabric.”

Sarkozy would have us believe that the ban on burkinis is really meant to liberate Muslim women from primitive restrictions imposed by authoritarian Muslim men, just as British colonial rulers once liberated Indian Hindu widows from being burned alive to accompany their spouses in death. This reflects a broader tendency, which has been gaining traction since the end of the last century, to couch anti-Muslim rhetoric in the language of human rights, as though equal rights for women or gays were ancient Western customs that must be defended against alien religious bigotry.

In Valls’s version of history, public nudity is a cherished French tradition and a sign of freedom. To be fully French, it seems, women must, like Marianne, bare their breasts.

Yet, in the nineteenth century, when Marianne became a symbol of the French Republic, nudity was acceptable only in an idealized form, in paintings or sculptures of Greek deities and other mythical heroines. It was fine to gaze at the breasts of a painted nude Marianne or Venus; but for a real, living woman to expose even part of her ankle was considered highly improper.

Of course, nowadays, these attitudes are rare in the Western world. So even though Valls’s version of history is skewed, one might argue that European Muslims who insist that women of their faith should be covered up are out of step – especially given that women sometimes have little choice in the matter.

Indeed, in some immigrant areas, Muslim women feel obliged to cover their heads, lest Muslim men see them as prostitutes, who may be molested with impunity. But this is not always the case. Some Muslim women actually choose to wear a hijab and, in rare cases, a burkini.

The question is whether the state should be determining what citizens should or should not wear. The French republican answer is that people may wear whatever they like in private, but must conform to secular rules in public.

In recent years, however, those rules have been applied more strictly to Muslims than to members of any other faith. I have not heard of policemen forcing orthodox Jewish women to bare their heads by ripping off their wigs.

Well, some might argue, orthodox Jews are not responsible for massacres in the name of their religion. And that is true. But the assumption that women in burkinis are all potential terrorists is farfetched. A woman lying on a beach in a body-covering swimsuit is probably the least likely person to start shooting or bombing.

As for the argument that Muslim women need the state to free them from Muslim men who force them to wrap their heads in scarves or cover up their bodies, the question is whether this is worth depriving other women of their choice to appear in public in these ways.

I am inclined to doubt that it is. The best way to help women escape from domestic authoritarianism is to encourage them to lead public lives as well, in schools, in offices, and on beaches. It is better for a woman to be educated in a headscarf than not to be educated at all.

For certain public functions, it is perfectly legitimate to ask people to show their faces. Some jobs come with certain dress codes. Private companies can insist on their own rules; there is no need for national legislation. The excessive imposition of conformity by the state can actually have the opposite effect than what is intended. Forcing people to adhere to a common identity fosters a rebellious insistence on difference.

It is no good telling people named Fatima or Mohammed that they are French and must adhere to the norms laid down by Sarkozy or Valls, if they are not treated as equals by people called Nicolas or Marianne. Wearing a headscarf, beard, or bodysuit can be a harmless way for humiliated people to defend their pride. Take away that pride, and defensiveness can swiftly become less harmless.


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The Unfinished Legacy Of Obama’s Pivot To Asia

The gridlocked TPP trade deal. Reclaimed islands in the South China Sea. North Korean nukes. How will history judge President Obama’s rebalance to Asia?


By Victor Cha
Foreign Policy
September 7, 2016

President Barack Obama’s trip to Asia this week marks the final lap in his acclaimed “pivot” or “rebalance” to Asia. The narrative of this policy, as trumpeted by current and former administration officials, is predictably positive — expounding the bold but careful execution of a strategy from Day One in the Oval Office. However, the real story may cast a less shimmering glow across the Pacific. A combination of inattention, surprise, and mistakes characterized the early years of Asia policy under Obama. Despite this inauspicious beginning, the administration reacted well to each of these obstacles, and these mid-course adjustments culminated in the pivot. The legacy of the policy, however, may ultimately be out of the president’s control as it rests in the hands of Congress and the next president.

The Asia that Obama expected when he took office was not the Asia that he got. Confronted with a global financial crisis, two wars, and policy priorities of climate change and health care reform, America’s first president with roots in the Pacific did not exactly have the luxury of looking East. The priorities for Asia were not laid out in any formal “pivot” document largely because the goals, based on my many conversations with Obama’s Asia team, were modest: 1) deeply engage China; 2) balance this with a strong alliance with Japan; 3) address the North Korean problem; and 4) re-evaluate free-trade agreements. In each case, the White House got slapped down.

Obama wanted to implement a new cooperative strategy that offered strategic security reassurances to Beijing as it encouraged the country to partner with the United States in solving common global problems. The conciliatory language embedded in Obama’s November 2009 speech (i.e., that he did not seek to contain China and that Beijing was central to Washington’s global agenda) led journalists to write of a new “G2” strategy. As evidence, they pointed to the fact that the administration did not approve arms sales to Taiwan in its first year in office, and the president refused to meet with the Dalai Lama.

A new G2 relationship with China had to be balanced by strong alliance relations, however, and so Obama placed continued faith in the U.S.-Japan alliance. To strongly signal this, he sent his secretary of state to Tokyo for her first foreign mission and welcomed the Japanese prime minister as the first foreign head of state to the White House, all within one week in February 2009. Obama wanted to deal with one of the most vexing problems in the region by extending the unclenched fist to North Korea, penning a personal message through Special Representative for North Korea Policy Stephen Bosworth (the contents of which are still unknown) to move forward with high-level, bilateral denuclearization negotiations. Finally, the politics of his party compelled the president to call a timeout on all trade deals, most significantly for Asia, putting the Korea-U.S. FTA (KORUS) on hold, along with ratification of two other Latin American agreements (Panama and Colombia).

Events in the first 18 months of Obama’s presidency undermined each of these objectives. In the case of China, Beijing disappointed America’s G2 policy by not delivering on climate change at the 2009 Copenhagen summit (it would dobetter in Paris in 2015); moreover, it launched what would become an unprecedented set of territorial claims in the East and South China Seas. The president’s disillusionment with the policy was evident as early as November 2009, as his principal Asia advisor, Jeffrey Bader, later recounted, when Obama was reportedly angered by Beijing’s haughty attitude and its efforts to disrupt his online conversations with the Chinese people.

More than China, however, the biggest strategic surprise in Asia was domestic-political change in Japan. The displacement of six decades of pro-U.S., conservative Liberal Democratic Party rule with three progressive prime ministers (Yukio Hatoyama, Naoto Kan, and Yoshihiko Noda) not only undermined implementation of existing base agreements but also halted ongoing military cooperation in Afghanistan. Amid this domestic political churn, the country reverted inward following the March 2011 tsunami and nuclear crisis in Fukushima — effectively cutting Japan loose as the U.S. strategic anchor alliance in Asia. North Korea challenged Obama with an April 2009 ballistic missile launch and Memorial Day nuclear test the following month. Even after Obama’s personal letter to the North Korean leader at the end of 2009, the regime responded with submarine and artillery attacks on South Korea in 2010 and a nuclear test on the eve of the president’s State of the Union address in 2013. And while Asian leaders showered Obama with niceties during his first presidential trip to Singapore for the 2009 APEC Leaders summit, the Southeast Asians, Northeast Asians, Mexicans, Chinese, and Russians all pelted him with criticisms about the lack of a trade policy.

Rolling With The Punches


Presidencies are remembered not for their plans coming into the Oval Office, but for how they react to the surprises thrown their way. In this regard, Obama responded with worthy midcourse adjustments. The White House’s critical but unseen coordination with the Japanese government during the Fukushima meltdown, followed by the more public Operation Tomodachi recovery project and the return of the LDP to power under Prime Minister Shinzo Abe, helped to restore the reservoir of trust in the alliance. In North Korea, Obama transitioned from engagement to containment, helping to erect a comprehensive multilateral sanctions regime. And while unsuccessful with Pyongyang, he demonstrated positive and historic diplomatic advances with Myanmar, Vietnam, and Laos.

The White House elevated relations with other partners like South Korea and Australia, both of whom were willing to contribute on signature Obama projects like climate change, nuclear security, and global health. On trade, starting with the National Export Initiative in the 2010 State of the Union speech, Obama engineered an astounding turnaround on trade that linked the nation’s economic recovery and job creation to export promotion, eventually leading to the passage of KORUS and the championing of the 12-member Trans-Pacific Partnership (TPP). Perhaps most important from the Asian perch, Obama just gave more “face time” to Asia. He broke the tradition of one annual trip to Asia after the United States joined the East Asia Summit in 2011, and went beyond the typical Northeast Asia circuit to Indonesia, India, and Australia as part of a larger G20 strategy that incorporated Asia. The current (and last trip) to Asia for Obama was the 11th of his presidency, the same as Bill Clinton’s 11 and more than George W. Bush’s eight. These adjustments would eventually aggregate to the “pivot” as announced in a speech to the Australian Parliament in 2011.

As much as the administration would like to take a victory lap in Asia, the legacy of the pivot is only partially complete. And it is on the China account where there remains much work. On the one hand, the administration responded well to its initial disappointment with G2 by returning “normalcy” to its relations with China in Obama’s second year. The president stopped refusing to meet with the Dalai Lama, and it resumed authorizing arms sales to Taiwan. More generally, it implemented a nuanced strategy balancing pockets of competition and cooperation with Beijing that resulted in significant agreements on climate change in Paris, maritime risk reduction protocols, counter-proliferation (Iran and North Korea), and cybersecurity.

Any Obama official will recite the number of hours the president and National Security Advisor Susan Rice have spent with Chinese President Xi Jinping in Washington; Sunnylands, California; Beijing, and elsewhere to build the type of Kissingerian relationship with the Chinese that could lead to such deals. Yet these accomplishments are bookended by continued Chinese land reclamations and military infrastructure building in the South China Sea, and aggressive patrolling in the East China Sea despite international opprobrium and U.S. freedom of navigation operations. Thus what Americans see as a principled strategy, Beijing associates with a “new model of great power relations” that assigns Beijing a sphere of influence and military advantage in Asia in return for Chinese support of Washington’s key global issues.

The Pyongyang Problem

Moreover, North Korea remains a stain on the pivot legacy. Under Obama, North Korea has conducted an unprecedented three nuclear tests and 72 major kinetic and missile provocations. By comparison, there was one nuclear test and 19 provocations during Bush’s two terms. North Korea’s nuclear capabilities will have evolved during the span of the Obama presidency from a fledgling program to a stockpile of as many as 35 nuclear bombs and potentially a survivable deterrent. While the pivot’s defenders might argue that little more could have been done to stop China or North Korea, historians are often unkind, associating arguably unavoidable outcomes with negligent policy.

Under-resourcing the pivot remains one of the often-cited criticisms of the policy, as the United States operates in an era of budget sequestration. This extends not just to big-ticket military items such as the Navy’s 60-40 asset rebalance to Asia and the deployment of more capable weapons platforms to the Pacific, but also to inexpensive cultural and educational programs. The 100,000 Strong program (to reach that number of Americans studying in China) constitutes the pivot’s encouragement for young Americans to learn more about Asia. However, while recent polls show that over 70 percent of Americans in the 18- to 24-year-old demographic see Asia as important to their future, the U.S. Department of Education in the last grant cycle (2014-2017) cut in half the number of Title VI federal grants to American universities to teach about Asia.

Yet, the pivot’s legacy ultimately will be determined by ratification of the TPP. The 12-member free-trade pact, the first to include the world’s second- and third-largest economies, is not just important for business. As a high-standards agreement it has the potential to affect more than just tariffs, reaching deep into member countries to create conformity on labor, the environment, food safety, intellectual property, cybersecurity, the digital economy, development, and other standards. If China were to join the TPP, conformity with these clauses would have a transformative strategic effect on the nature of the Chinese state. Though a distant outcome at the moment, it is not implausible.

At her Georgetown speech on the pivot on Nov. 20, 2013, Rice invited China to join. Even Beijing’s mild interest in the TPP would go a long way toward undercutting the oft-stated criticism that the pivot’s primary accomplishments — exemplified by the Navy’s 60-40 re-balance to Asia, U.S. Marines in Darwin, and military agreements with the Philippines and Vietnam — amount to a thinly veiled containment strategy against China.

During Obama’s swing through Asia this week, he will get more questions about the TPP than he will care to answer. Unfortunately, the fate of Asia’s most significant new institution is beyond his control and now in the hands of an uncooperative Congress and two presidential candidates who oppose the deal. Historians undeniably will give Obama credit for the strategic priorities his presidency gave to Asia, but the president may indeed find himself in another campaign as a private citizen to ratify the TPP, and thus complete his unfinished legacy in Asia.


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There's Still Alot We Don't Know About The Iran Deal

The deal has been marked by lack of transparency from the beginning.


By Emily B. Landau
The National Interest
September 7, 2016

The latest report issued by the Institute for Science and International Security (ISIS) reveals confidential exemptions that Iran was granted by the Joint Commission in order to meet its requirements for implementing the Iran deal last January. The report has sparked a debate over whether there were in fact exemptions, and what they entailed. But the more serious issue raised by this report—and emphasized by its authors—regards the question of secrecy and confidentiality surrounding elements of the Joint Comprehensive Plan of Action and its implementation. From this perspective, the ISIS report is only the latest in a string of episodes over the past year in which issues involving secrecy (or lack of disclosure) have been exposed. Sometimes the issues have related directly to JCPOA provisions, and sometimes to the U.S. administration’s portrayal of events or policies related to the deal.

In their eagerness to block any criticism of the Iran deal, JCPOA supporters immediately denounced the ISIS report and attacked its credibility—not an easy task, considering David Albright is one of the most reputable voices on this topic. In a worrisome exchange with reporters, State Department spokesperson John Kirby denied any exemption for Iran, or that Iran had accumulated more than three hundred kilograms of “usable” low-enriched uranium—employing a new term that does not exist in the deal itself. On the question of secrecy, experts who support the deal have been arguing on social media that not only do they not view secrecy as a problem, but that it is a common element in arms-control agreements, citing U.S.-Soviet/Russian arms-control treaties as a case in point.

There are several problems with this line of argument. First, one cannot escape the irony that arms-control experts that have joined the camp of JCPOA supporters—and that now seem totally fine with secrecy—are the same people that for years hailed transparency as a key ingredient of successful arms control. But more substantively, the Iran deal was purposely devised as a very public arrangement (the full text is available online), and President Obama has stated on many occasions that he does not trust Iran, which is why its program must be transparent, and under constant scrutiny through an intrusive inspection regime. Finally, and most significantly, Iran is a known violator of the NPT—having worked on a secret and illicit nuclear-weapons program for decades while a member of the treaty. Because of its very troubling past record, openness and transparency—not only regarding all elements of Iran’s nuclear program, but including the terms of the deal and its implementation—are so essential. It makes little sense to grant a state like Iran confidentiality privileges—would anyone have thought to do so with Saddam Hussein after the extent of his illegal nuclear-weapons program was revealed in the wake of the 1991 war?

Those set on drawing a comparison between the JCPOA and U.S.-Soviet Cold War arms control are on particularly shaky ground. Beyond the fact that both agreements deal with nuclear-weapons capabilities, they have little in common. The latter experience involved two nuclear-armed powers that decided to introduce stability into their bilateral relationship through a political process where they called the shots. This is a fundamentally different situation than negotiating with a state that was caught cheating for decades on an international treaty that bans work on a nuclear-weapons capability. In the latter case, the P5+1 were actually negotiating on behalf of the nonproliferation regime that was violated by Iran. As such, the P5+1 and Iran were not on equal standing in the negotiation, and in light of its deceptive past behavior, there was no rationale for granting Iran confidentiality.

Over the past year, additional cases of secrecy, confidentiality and lack of disclosure have been revealed, each with its unique features, but all following a similar pattern: revelation of secrecy in the deal and/or lack of full disclosure by the U.S. administration, and then attempts by the administration to deny or cover up, bolstered by claims that everything was either already known, legitimately kept confidential or insignificant. Each additional case that has been exposed has had the effect of gnawing away at the Obama administration’s credibility regarding the nuclear deal, while eroding confidence that Iran will be firmly held to its commitments.

The first instance occurred already last summer, regarding the secret side deal between Iran and the IAEA for a one-time inspection of the military facility at Parchin. The question of whether, and under what conditions, Iran would in the future allow inspections of suspicious military facilities like Parchin was one of the more thorny issues negotiated by the parties. For the P5+1, the JCPOA satisfactorily resolved the issue by determining that any suspicion could be checked by the IAEA within twenty-four days. A close reading of the text of the agreement, however, reveals that the twenty-four-day time-frame could easily be stretched out by Iran—a true cause for concern, in light of emphatic statements issued by Khamenei and others that Iran would never allow inspection of its military facilities.

Against this backdrop, the terms of the Parchin inspection in September 2015 were an important test case, and yet the P5+1—who ran the negotiation—claimed to have no role in the arrangement reached between Iran and the IAEA. Was it possible that the critical issue of the Parchin inspection was outside the purview of the P5+1, when the entire JCPOA was negotiated and authored by these six powers? Not likely. And after it became clear that IAEA inspectors would only be monitoring from outside the facility, while Iranians collected soil samples from within, the problematic nature of the arrangement was exposed. The response to critics who pointed out that the P5+1 were in effect enabling Iran to inspect itself was to accuse the critics of distorting reality.

There have been additional attempts to obfuscate concessions that were made to Iran. Two cases in particular are worthy of mention. The first involves a report in the Associated Press from July 2016, revealing a document that laid out Iran’s enrichment plans for year eleven of the deal. According to the document, Iran plans to install and operate 2,500–3,500 advanced centrifuges, with the effect of bringing breakout time down to six months by year thirteen. Once again, this was portrayed as being between Iran and the IAEA. The administration’s reaction to the AP revelation was to deny any secret deals, while claiming that it was known that Iran’s breakout would come down after ten years. And yet, when Obama had said as much back in April 2015—namely, that breakout time could go down almost to zero in year thirteen, fourteen, or fifteen—the State Department immediately denied in a press conference that he had said this in relation to a prospective deal.

The second case involves the $400 million paid to Iran at the same time that American prisoners held on bogus charges in Iran were released in mid-January. At the time of the prisoner exchange, the Obama administration had hailed the release of Americans as a sign of easing of tensions with Iran—a direct result of the nuclear deal. But when the Wall Street Journal released its story in August, the revealed temporal proximity of the two events sparked accusations of ransom paying. The administration’s first response was to deny that the two events were in any way connected, but when a subsequent report presented evidence that they were, officials were forced to back away from this false claim and change their story. According to the new version, the money was to be transferred to Iran in any case, and it had thus “only” been used as “leverage” to ensure the prisoners’ release. The administration’s deception in this case was most likely driven by the perceived need to preserve its narrative of a more cooperative Iran post-deal; this had been a key selling point for the deal in the struggle for congressional approval in 2015.

These cases expose a hyper-defensive administration that is harshly silencing any criticism of the JCPOA or its implementation. The administration obfuscates important details (as seen at the State Department press conferences), defends problematic secrecy and lack of transparency, and acts as Iran’s advocate regarding problems that arise. But there is no justification for secrecy regarding the JCPOA, Iran’s arrangements with the IAEA or discussions regarding implementation of the deal in the Joint Commission. When dealing with a known violator, confidentiality has no place.

At the end of the day, the secrecy and the cover-ups are creating a sense that the U.S. administration is not being forthright about what the JCPOA is and what it entails—either to make us believe the deal is working, or that Iran is changing behavior for the better. The original sin in this regard was the abrupt closing of the PMD file last December, letting Iran off the hook regarding its past weaponization activities. Here too, Iran was provided an exemption from the requirement to answer all questions related to the PMD, to the satisfaction of the IAEA. Despite only partial cooperation with the IAEA investigation, and even though Secretary of State John Kerry had maintained that answering all questions was “fundamental for sanctions relief,” the file was nevertheless closed and everyone moved happily to Implementation Day.

The implication of closing the PMD file is that Iran has not been officially declared an NPT violator, and this creates the basis for its claims to confidentially. By not clarifying that the entire case against Iran turns on its deceptive behavior, the official narrative fails to underscore that Iran not only does not deserve “normal” treatment, but that its record of behavior demands an extra measure of scrutiny. Iran intends to significantly expand its enrichment program, to remain very close to breakout capability, and shows no indication of moving away from its nuclear ambitions. Indeed, Iran fought hard to hold on to its breakout capability, and its success finds expression in a deal that only extends breakout from two or three months to a year.

A year after introducing the JCPOA, the focus of debate has shifted from the problematic provisions of the deal itself to the attitude displayed by the Obama administration toward the deal. The ISIS report is simply one more case of unjustified lack of transparency, followed by unconvincing U.S. excuses and explanations, which leave one less and less confident about the deal and the United States’ intent to uphold it.

However we look at this, U.S.-Iran dynamics will be a key factor in the implementation of the deal, and in determining whether Iran is able to manipulate its way to nuclear weapons. U.S. passivity—not to mention acting as Iran’s defender—risks weakening America’s ability to keep Iran in line. The United States must wake up to the reality that the struggle with Iran continues, at least as far as Iran is concerned. Not responding to Iranian challenges risks losing the game.



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Harmonize This, Eurocrats

The tax attack on Apple serves the EU’s dream of never having to change.


By Holman W. Jenkins, Jr.
The Wall Street Journal
September 7, 2016

Everyone knows Europe feels bad because it can’t develop an Apple or Google or Facebook or Amazon. That’s why Europe has been fashioning multiple initiatives to punish American tech companies, including last week’s impertinent tax ruling by a European antitrust agency seeking $14.5 billion in back taxes from Apple.

This sum perhaps was not picked completely out of the air: $14.5 billion is approximately the market capitalization of Twitter. So how about we just give Europe Twitter so it will feel like it has a stake in the digital age?

I know, Margrethe Vestager, the Danish politician who heads the European Union’s competition commission, has said “there’s no U.S. bias.” A U.S. Treasury white paper begs to differ, claiming her agency is “targeting U.S. companies disproportionately.” The European parliament two years ago voted in favor of breaking up Google. Tweets from across the Continent praise Ms. Vestager for finally getting tough with those U.S. so-and-sos. Even Boris Johnson, the London politician who led the Brexit vote, says, “For many people it will be...the first time they have ever been tempted to side with Brussels over anything.”

No politics involved here. Never mind, too, the gloriously obvious fact that attacking Apple is a politically handy way of disguising a challenge to the tax policies of an EU member state, namely Ireland.

Of course, the real world, in which regulatory actions are not austerely objective and devoid of political incentive, prevails on both sides of the Atlantic. Volkswagen has a lot to answer for with U.S. customers but consider the lopsided $19.4 billion settlement for its diesel infractions. Consider the $1.2 billion fine laid on Toyota basically to validate a phony scare flogged by U.S. congressmen and their trial-lawyer benefactors.

Now compare these figures to GM’s $900 million fine for concealing a defect that GM acknowledges killed 124 customers. With great gymnastics, the Justice Department found a way to limit the U.S. company’s liability to just 800 of the 11.1 million cars containing the fatal defect.

Sen. Chuck Schumer calls the EU tax ruling a “cheap money grab,” and he’s an expert in such matters. The sight of Treasury Secretary Jack Lew leaping to the defense of an American company when in the grips of a bureaucratic shakedown, you will have no trouble guessing, is explained by the fact that it’s another government doing the shaking down.

America’s own loopy tax politics are central here, creating a chunk of Apple earnings accumulating offshore that have yet to be taxed by any jurisdiction. More for Europe necessarily means less for the U.S. because Apple is entitled to domestic tax credits for any taxes paid overseas. That’s why politicians everywhere have been de-lethargized by this fight.

Ms. Vestager, as she never tires of affirming, was a model for the highbrow Danish political soap “ Borgen,” which one reviewer calls “ ‘House of Cards’ for smart people.”

In her current, real-world plot, Ms. Vestager hitches popular anti-Americanism to an abiding agenda of Europe’s leadership class. Tax harmonization is a final refuge of those committed to defending Europe’s stagnant social model. Even Ms. Vestager’s antitrust agency is jumping in, though the goal here oddly is to eliminate competition among jurisdictions in tax policy, so governments everywhere can impose inefficient, costly tax regimes without the check and balance that comes from businesses being able to pick up and move to another jurisdiction.

In a harmonized world, of course, a check would remain in the form of jobs not created, incomes not generated, investment not made. But Europe has been wiling to live with the harmony of permanent recession. When Ireland (which has been booming) can no longer promote its own growth with policies friendly to business, it will be that much easier for other leaders to blame their own social decline on a black cat passing under a ladder, or astrological events, or the unfair practices of Silicon Valley.

What about the undoubted problem of companies like Apple shielding their globally earned profits behind a small country’s friendly tax regime? There’s a remarkably sanitary solution: Get rid of the corporate income tax.

Companies receive their revenues from their customers and distribute them to their suppliers, investors and employees. Thus corporate taxes can be eliminated in complete comfort that the revenue will pop up elsewhere as taxable personal income or taxable consumption expenditure.

The only real function of a corporate income tax is non-transparency. Taxing a company is a way for politicians to pretend they are not taxing any actual voter to pay for programs that voters find desirable as long as they seem not to come with a price tag.

Drop the pretense that citizens don’t have to pay for the amenities they want, and real harmonization becomes possible: The harmonization of tax and spending priorities in the direction of efficiently fostering the clean, peaceful, orderly and civilized countries that productive citizens enjoy living in.


Article Link To The Wall Street Journal:

Wednesday, September 7, Morning Global Market Roundup: Asia Stocks Hit One-Year High As Soft U.S. Data Quells Fed Hike Talk

By Hideyuki Sano 
Reuters
September 7, 2016

The dollar took a tumble and Asian stocks rose to one-year highs on Wednesday after surprisingly weak U.S. services sector activity put paid to already slim chances of an interest rate hike by the Federal Reserve as early as this month.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.4 percent, extending its chunky gains of 2.7 percent over the last two days, to claim a level last seen in July last year.

"When people think there's no immediate rate hike from the Fed, then Asia and emerging markets are the place to go to, as investors seek yields," said Toru Nishihama, senior economist at Dai-ichi Life Research.

Japan's Nikkei .N225 slid 0.7 percent, however, as the yen gained sharply versus the dollar, putting more pressure on exporters in the world's third-largest economy.

The Institute for Supply Management's index of non-manufacturing activity fell to 51.4, its lowest level since February 2010, from 55.5 the month before and well shy of the 55 estimate.

Given the strength in the service sector has been making up for softness in the manufacturing in the past year or so, the data was a blow to the case for the Fed to raise interest rates as soon as this month.

"The Fed now looks certain to keep rates on hold this month," said Shuji Shirota, head of macro economics strategy group at HSBC in Tokyo.

Comments from several Fed officials in recent weeks had boosted bets on a rate hike in coming months, but investors have had to scale back their expectations since Friday's weaker-than-expected U.S. payrolls report.

San Francisco Fed president John Williams, speaking after the ISM data, also said he expects the Fed will raise rates gradually over the next few years.

"Recent hawkish comments from Fed officials were probably intended to warn markets against being too complacent about the chance of a rate hike, rather than to make markets fully price in a rate hike," Shirota said.

U.S. bond yields fell, with policy-sensitive two-year notes yield US2YT=RR falling to 0.730 percent, its lowest since Aug. 19, down from 0.853 percent marked on Aug. 29.

U.S. interest rate futures price <0> gained to indicate only about 15 percent chance of a rate hike this month and just over 50 percent even by December, compared to above 20 and 60 percent, respectively, before the data were released.

Declining U.S. yields undermined the dollar against other currencies and precious metals.The dollar, which had slumped 1.38 percent on the yen on Tuesday, shed another 0.5 percent to 101.48 yen.

The yen gained additional support from a media report that the Bank of Japan's board is struggling to agree on a common front in its planned policy review.

The euro EUR= maintained Tuesday's 0.96 percent rise against the dollar, the biggest daily gain in three months on Tuesday and last stood at $1.1247.

A resurgent British pound rose to near eight-week high of $1.3445 GBP=D4 on Tuesday and held firm at $1.3416.

Gold XAU= rallied to $1,352.4 per ounce to near three-week highs on Tuesday, and last stood at $1,350.0.

The Australian dollar took a breather. It was last down 0.2 percent at $0.7668 AUD=D4 after GDP data largely met expectations, with Australia's annual growth clocking its fastest pace in four years last quarter, clinching a remarkable run of 25 years without recession.

Oil prices kept some distance from three-week lows touched last week, maintaining a part of gains made after Saudi Arabia and Russia agreed on Monday to cooperate in world oil markets, saying they will not act immediately but could limit output in the future.

Brent crude futures stood at $47.49 per barrel LCOc1, up 0.5 percent on the day and above its low last week of $45.32.


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What The U.S. Economy Needs To Get Out Of Its Rut

By Jim Millstein 
The Washington Post
September 7, 2016

Our major political parties don’t agree on much these days, but the 2016 Republican and Democratic platforms both include prominent planks calling for the federal government to address the sorry state of America’s infrastructure. The question is: Can the parties resolve their differences on fiscal policy to find the necessary federal funding to address this urgent need?

They can — if the next administration and Congress keep in mind two basic principles.

First, infrastructure spending generates a range of productivity gains that augment long-term economic activity and thereby increase tax revenue.

Second, in an economy where, since the start of this century, productivity and income growth have been well below the trend of the previous “American century,” a well-designed program of new infrastructure spending can be just the catalyst the U.S. economy needs to get out of its rut.

After World War II, America’s periods of greatest economic growth coincided with a much higher level of public investment in infrastructure and research and development than has been made over the past 16 years. The persistent shorting of funds for infrastructure modernization and repair has left us with a huge hole to fill: The American Society of Civil Engineersestimates that the federal government needs to spend an additional $140 billion a year for the next 10 years to fill the gap.

The problem is that any program involving such a dramatic increase in spending will inevitably get bogged down in legitimate concerns about the trajectory of budget deficits and the already dramatic, relatively recent increase in the size of the federal debt as a percentage of gross domestic product. Given the parlous state of America’s infrastructure, a solution cannot await some “grand bargain” that brings all aspects of the federal budget into long-term balance. Debt financing is not only needed but appropriate.

At the historically low interest rates at which the federal government can now borrow, there is no better time to incur long-term debt for the construction of long-term assets. And because of the positive effects on productivity and economic growth that public infrastructure creates, we need not worry about the implications of this spending for debt sustainability in the long run. A well-designed program of infrastructure modernization can pay for itself in economic activity and the tax revenue that results from that activity.

We must, however, take three steps to ensure that outcome.

First, infrastructure spending needs to be divorced from annual discretionary appropriations, categorically escaping the “pay for” rules that have frozen federal budget priorities and tax policy for six years. It must become a “mandatory” part of the federal budget, placed into a planning cycle and funded on a time horizon stretching beyond the next election.

Second, federal infrastructure spending needs to be centrally coordinated and optimized over a period of years, not balkanized across agencies that manage annual budgets. This could be achieved through the Commerce Department’s Bureau of Economic Analysis, for example, which could coordinate spending across relevant agencies on a 10-year budget authorization, subject to congressional oversight.

Third, the Treasury Department’s Federal Financing Bank should facilitate the necessary debt financing. For projects that generate revenue — for example, toll roads — the bank should encourage private investment to leverage, if not replace, debt incurred on the federal government’s full faith and credit. And, to promote accountability and oversight, the bank should publish separate accounting for its new infrastructure financing, ideally by project or at least by major category of project. However, federal financing for infrastructure projects should be done via U.S. Treasury securities to maintain a single, highly liquid market for federal borrowing and to minimize the cost of that borrowing.

While potentially increasing the federal deficit and debt in the short term, over the long term a well-tailored program of sustained infrastructure spending can reduce federal budget deficits.

In this sense, all federal debt is not created equal. Federal debt incurred to fund current consumption (whether on defense, health care, Social Security or transfer payments to the less fortunate among us) is in effect a tax on future generations, foisting on them the burden of servicing debt used to fund the expenditures that today’s taxpayers refuse to tax themselves to support.

But debt incurred to finance infrastructure modernization and repair is different. It creates not only a long-term liability (the debt incurred to finance the spending), but also a long-term asset (the highway, railroad, energy transmission grid or airport such spending buys). It’s perfectly fair to spread the financing costs of those assets across the generations of taxpayers who will enjoy their use.


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