Friday, September 9, 2016

15 Years Of Donald Trump’s 9/11 Lies, Insults, And Slights

The New Yorker has a huge history of indifference and contempt for the darkest day in his city’s history.


The Daily Beast
September 9, 2016

Six months after Donald Trump claimed to have lost “hundreds of friends” on 9/11, his campaign continues to ignore a request from The Daily Beast that he name even one.

His silence becomes all the more shameful as we come to the 15th anniversary of the day 2,983 innocents were murdered in downtown Manhattan.

“If he has hundreds of friends, he should be able to tell us about them,” remarked a Port Authority police officer who has felt a duty to learn as much as he can about as many of the victims as possible. “If he can tell us about the hundreds of friends he lost, who they were, what kind of (people) they were, I might have some respect for him.”

The only time anybody can remember Trump being down at the September 11 Memorial and Museum was this April, when he made what seemed more like a campaign stop. Those who escorted him noted that he did not seem to pay particular attention to any of the names around the memorial pools or pictures of the victims displayed in the museum. His own math would say that at least a tenth of these people were his friends.

Trump’s then campaign manager, Corey Lewandowski, reacted as might be expected of anybody who had lost even one friend. A museum staffer later reported that Lewandowski had seemed greatly moved as he paused before a picture of Brian Kinney, who had been a passenger aboard the ill-fated United Airlines Flight 175. Kinney had been one of Lewandowski’s best friends and had married a young woman named Alison Hardy whom Lewandowski had dated in high school. Lewandowski and Hardy had subsequently become one of the many post-9/11 romances in which shared loss became love. They are now married.

Trump proceeded past the faces with no manifest interest. He breezed by a haunting photo of a woman standing at the edge of the monstrous charred hole that an airliner had punched in the uptown side of the North Tower. That is the same façade that faced Trump’s penthouse apartment four miles uptown.

Along with saying he lost hundreds of friends and that he saw news footage of “thousands and thousands” of Muslims in New Jersey cheering the attack (he was the only one to see that footage if so) Trump had spoken of standing at his apartment window and possessing such remarkable eyesight that he could see the jumpers four miles south. The woman in the photo – identified as Edna Contron, an administrative assistant who had been working there to augment the income of her family flower shop in Harlem — is believed to have become one of those forced by the flames to leap.

To look at that photo of her in her final moments at the abyss is to know that telling lies about her or about those who perished with her are far more heinous lies than such a standard politician’s fib as saying you were always against the Iraq war when you started out saying on the Howard Stern show that you supported it.

Trump did present the museum on his first and only visit there with his very first recorded charitable donation in connection with 9/11. The check for was $100,000, but it was drawn on his foundation, to which he has not contributed a penny in more than six years. He therefore continued a perfect record of not giving a penny of his own money to the memorial, not even the admission price, which the museum said was waived for him and his entourage, a saving of $24 for the adults, $18 in the case of a senior citizen such as Trump.

Trump then returned to his tower just up Fifth Avenue from Saint Patrick’s Cathedral, where so many 9/11 funerals were held. Trump is not known to have gone to any 9/11 funerals, even though the FDNY lost so many — 343 members — that it worried it might not be able to fill services and so asked the public to attend.

The 9/11 funerals at the cathedral a few moments’ amble from Trump’s home included the one for FDNY Captain Terence Hatton, who was married to then Mayor Rudolph Giuliani’s executive assistant. Giuliani gave a tender eulogy, terming the loss a death in the family and calling Hatton the kind of man he would want his son to become.

“He was what real courage was all about,” Giuliani rightly said.

Anybody who listened to Giuliani that day could not have imagined that he would ever countenance, much less support someone who sought to elevate himself by telling lies about 9/11.

Let us hope that Giuliani believes that Trump really did lose hundreds of friends on 9/11 and really was able to see jumpers from four away and really did see footage of cheering Muslims.

And let us hope that Giuliani is being completely truthful when he seeks to explain why there are no documented donations by Trump in the immediate aftermath of 9/11, when Americans gave more than $1.2 billion.

On record, the self-proclaimed billionaire Trump gave less than the impoverished septuagenarian widow who arrived at a Ground Zero checkpoint on West Street with a small bag of ice, saying it was all she had to give the first responders.

Giuliani told the Republican National Convention that this man who works harder than anybody not to be anonymous and likes to put TRUMP on everything from buildings to steaks to doggie sweaters prefers to go unnamed when he gives to the families of fallen first responders and the victims of terrorism.

"Every time New York City suffered a tragedy, Donald Trump was there to help,” Giuliani said, ”He's not going to like my telling you this, but he did it anonymously.”

Giuliani called Trump a “man with a big heart” and went on, “When police officers were shot, when firefighters were hurt, when people were in trouble, he came forward and he helped, and he asked not to be mentioned. Well, I'm going to break my promise to him. I am going to mention it."

Giuliani continued, "I am telling you this because I am sick and tired of the defamation of Donald Trump by the media and by the [Hillary] Clinton campaign. This is a good man and America should be sick and tired of their vicious nasty campaign. You deserve to know this about your next president."

In the immediate aftermath of the attacks, Donald Trump reportedly called The Howard Stern Show and pledged to donate $10,000 to the Twin Towers Fund. That is the charity that Giuliani set up to benefit the families of first responders who perished on 9/11.

In his contribution this year to the memorial, his one documented 9/11-related donation, Trump used funds from he foundation that bears his name, if none his money of late. The same is true of all his other significant charitable donations that are not a failed real estate venture made via a donation into a tax deduction.

Despite his pledge, the Trump Foundation shows no donations at all to the Twin Tower Fund..

Giuliani would have us believe that Trump would make a very public $10,000 pledge on the Howard Stern show, but ask that any donations he actually made to first responders remain anonymous.

On Sunday, Giuliani is expected to be at Ground Zero for the observance of the 15h anniversary of 9/11, just as he has been present for all the previous anniversaries.

Also expected is another Trump booster, New Jersey Gov. Chris Christie, who has attended every anniversary observance while in office. Christie prompted frowns at the 13th anniversary, when he stood laughing at Ground Zero with his then aide, David Wildstein, two days into the five-day lane shutdown at the George Washington Bridge that led to the present trial in New Jersey federal court.

The frowns turned to grumbles at the 14th anniversary, when Christie sat chatting on his cell phone in his SUV while it blocked two busloads of families of fallen NYPD officers, keeping them from reaching their prearranged arrival point at Ground Zero.

As of Thursday night, Trump was not on the list of those expected to attend. The Port Authority cop who has tried to learn all he can about as many victims as possible and who really does prefer to remain anonymous says that he hopes Trump will stay away as the names of the dead are read once more.

“It would only serve as a distraction from the people and the families that day is about,” the cop said.


Article Link To The Daily Beast:

Europe Must Rediscover Fiscal Policy

By Editorial Board
The Bloomberg View
September 9, 2016

Investors weren’t expecting anything from European Central Bank President Mario Draghi on Thursday, and he delivered in full. The ECB’s policy is working just fine and doesn’t need to change, he told assembled reporters. Thank you for coming.

Draghi’s right: Things would be much worse in the euro zone if the ECB hadn’t tested the limits of monetary policy with its super-low interest rates and huge, ongoing purchases of bonds. Yet despite the ECB’s efforts, demand is still too low, growth is still too slow, inflation is close to zero, and Europe’s governments are doing too little about it.

Draghi has rightly and repeatedly called on governments to adopt more growth-friendly fiscal policies. At the same time, for understandable reasons, he tends to downplay the urgency of the situation. To reassure investors, he insists the ECB can use plenty more ammunition, if necessary, in its fight against deflation. And to avoid offending EU leaders, he also insists that any tweaks to fiscal policy should conform to the rules of Europe’s Stability and Growth Pact, which limits government borrowing.

In fact, the ECB no longer has good options for delivering additional monetary stimulus. Ramping up quantitative easing and making interest rates more negative might, in the longer term, do more harm than good by distorting financial markets. Fiscal policy therefore needs to do more -- but it’s hemmed in by rules that are absurdly complex and erratically enforced.

Ideally, there’d be budget action on three fronts. First, change the fiscal mix to promote growth, for instance by prioritizing investment in infrastructure. This is allowed by the rules and is what Draghi recommends. Second, increase national budget deficits where this can be safely done, even if it violates the fiscal rules. Third, design an EU-wide fiscal policy that involves strong economies (such as Germany) giving temporary economic support to weaker ones (many of the rest).

The first approach is too limited to be much use, and the third won’t happen because Germany won’t stand for it. The best feasible course is the second -- soften and simplify the Stability and Growth Pact so that it promotes additional fiscal stimulus in more EU economies. It’s encouraging that European Commission President Jean-Claude Juncker is said to be considering an initiative of this kind.

If Juncker comes forward with a good proposal, EU governments should open their minds to the idea. It won’t be too soon. Draghi may be reluctant to admit it, but he needs all the help he can get.


Article Link To The Bloomberg View:

Stocks Stumble After North Korea Nuclear Test Rattles Markets

By Nichola Saminather and Hideyuki Sano
Reuters
September 9, 2016

Asian shares extended losses after North Korea conducted its fifth and most powerful nuclear test on Friday, heightening geopolitical tensions in the region at a time when investors are grappling with slowing global growth.

Stocks were already on the back foot when the North Korean news rattled markets, with uncertainty over the prospect of further easing from the European Central Bank pressuring global equities and bonds.

European shares look set to follow Asia lower, with financial spreadbetters expecting Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC 40 .FCHI to all open down 0.1 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.5 percent after touching a 13-month high on Thursday. The decline shrank gains for the week to 2.5 percent.

Japan's Nikkei .N225 closed flat after pulling back earlier on reports of the North Korean nuclear test. It up 0.2 percent for the week.

North Korea's nuclear test set off a blast that was more powerful than the bomb dropped on Hiroshima, with the nation saying it had mastered the ability to mount a warhead on a ballistic missile.

South Korea's KOSPI .KS11 also extended losses on its neighbor's nuclear activity. After opening 0.7 percent lower, it was last trading down 1.3 percent from Thursday's close.

China's CSI 300 index .CSI300 was 0.25 percent lower, and the Shanghai Composite was down 0.2 percent. They are set for gains of 0.7 percent and 1 percent, respectively, for the week.

China's consumer price inflation slowed to its weakest pace in almost a year in August, missing expectations.

Still, moderating declines in the producer price index added to recent evidence of a steadying economy.

That evidence included data on Thursday showing China's imports rose unexpectedly in August for the first time in nearly two years, suggesting domestic demand may be picking up. Exports also showed signs of improvement, falling less than expected.

Hong Kong .HSI was the sole gainer among major Asia ex-Japan markets, with shares up 1.4 percent, extending their weekly advance to 4.2 percent, the most in almost two months. The market has been buoyed by inflows from China as investors bet on gains ahead of the launch of a new cross-border share link.

On Thursday, ECB President Mario Draghi, speaking after the central bank kept its policy on hold as expected, said the ECB was looking at options to continue its money-printing program, but maintained the March end-date for asset purchases.

That disappointed investors who were looking for more immediate action, including an extension or expansion of the current plan, or at least clearer hints of future actions.

"President Draghi's comment that an extension of the current quantitative easing program was not discussed led to a hawkish market interpretation of the meeting," Shane Oliver, head of investment strategy at AMP Capital in Sydney, wrote in a note.

However, inflation levels that remain below target and various other dovish comments from Draghi "indicate that an extension of the quantitative easing program beyond its March 2017 expiry at its December meeting is likely," Oliver added.

Overnight on Wall Street, the S&P 500 .SPX lost 0.22 percent, weighed down by a 2.6 percent fall in Apple (AAPL.O) on disappointment over its latest iPhone, though gains in energy shares .SPNY offset losses in most other sectors.

German shares bore the brunt of the ECB's let-down, and France also retreated, but shares in Britain and Southern Europe .FTMIB .IBEX gained.

Global bond markets also took a hit with the 10-year German Bund yield DE10YT=RR rising to minus 0.055 percent from minus 0.118 percent on Wednesday.

U.S. bond yields also jumped, with the 30-year bond yield US30YT=RR rising to one-month highs of 2.328 percent on Thursday. They pulled back slightly to trade at 2.3102 on Friday.

The euro EUR= climbed to $1.1328, its highest since Aug. 26, following the ECB meeting before giving up most of its gains to stabilize around $1.1282. It is set for a 1.1 percent rise this week.

The dollar retreated 0.3 percent to 102.145 yen JPY=, surrendering some of Thursday's gains resulting from the wider gap between U.S. and Japanese bond yields. It is poised to end the week 1.8 percent weaker.

With the ECB meeting out of the way, the focus now shifts back to the Fed's policy meeting later this month.

"A rate hike in September is highly unlikely," said Hiroko Iwaki, senior bond strategist at Mizuho Securities.

"But unless the Fed sends a message, it will be difficult for them to make the markets price in a rate hike by the end of the year. So they could say something like they will consider a hike in coming months," she said.

Oil prices pulled back after surging more than 4 percent on Thursday to two-week highs on a slump in U.S. Gulf Coast imports to a record low led to a surprisingly large drawdown in U.S. crude stocks.

Brent LCOc1 rose to as high as $50.14 per barrel on Thursday. It pulled back 0.9 percent to $49.54, still up 5.8 percent this week.

U.S. crude CLC1 climbed as high as $47.75 on Thursday. It retreated 0.8 percent to $47.22, but remained on track for a 6.3 percent advance for the week.

The weakness in the U.S. dollar this week has offered gold a boost. Spot gold has risen 1 percent to $1,337.95 this week, the biggest weekly gain in six weeks.


Article Link To Reuters:

The Cleric, The Coup And The Conspiracy

The lobbying war to extradite Fethullah Gülen to Turkey could irreparably damage Washington-Ankara relations.


Politico EU
September 9, 2016

At a spacious retreat in Pennsylvania’s Pocono Mountains, an elderly Muslim scholar named Fethullah Gülen spends much of his day at rest, in prayer or receiving well-wishers. It would be a peaceful existence, were it not for the international battle raging over what to do with him.

Gülen, a native of Turkey in his 70s, said he is an advocate for peace, democracy and religious tolerance. In a written interview with POLITICO, he stressed that these are values he has spent decades preaching to millions of followers in Turkey and around the world.

But the Turkish government sees in Gülen something quite different: the leader of a terrorist cult, the mastermind of the recent attempted coup in their country and a fugitive trying to take advantage of the U.S. legal system. Turkish officials accuse Gülen and his followers of having spent years building a “parallel state” that the government is now bent on eradicating. Turkish President Recep Tayyip Erdoğan, who once saw Gülen as a partner, is now demanding that the U.S. extradite him, even though Gülen insists he had nothing to do with the coup attempt.

“My teaching has always been to act within [the] law and in an ethical way,” Gülen said in his written responses to POLITICO, delivered through his aides. “If anybody who follows my works acts illegally or unethically, or if they disobey the lawful orders of their superiors, that is a betrayal of my teachings and I fully support their being investigated and facing the consequences.”

Despite Gülen’s protests of innocence, a lobbying war has heated up over what to do with the imam. His presence in Pennsylvania is putting U.S.-Turkish relations under pressure at an especially sensitive time, as U.S. officials struggle to balance a desire to keep a NATO ally onboard in the fight against Islamic State (ISIL) with mounting worries about Erdoğan’s increasingly autocratic tendencies.

"This is not the first time that Gülen has been accused of trying to overthrow Turkey’s political leaders. Back in the late 1990s, he faced similar accusations under what was then a secular government."


Meanwhile, American officials’ unwillingness to simply hand over Gülen is feeding Turkish skepticism about the longstanding geopolitical relationship, with many in the country openly speculating that the U.S. government was behind the attempted coup. “Stirring up anti-American sentiment has the potential to significantly harm the relationship, the potential to make strategic cooperation more difficult,” said a senior Obama administration official.

Respected Teacher

Fethullah Gülen, known as hocaefendi, or ‘respected teacher,’ to his followers, was born between 1938 and 1941 in the Turkish village of Korucuk. Aides say the reason for the discrepancy in the dates is that his father wasn’t allowed at first by Turkish officials to register his son’s birth because his first name sounded too Arabic.

Gülen grew up studying Sunni Islam and soon began preaching, obtaining a passionate following in Turkey, where strict secularism was the law of the land for much of the 20th century. Gülen’s brand of Islam is believed to be influenced in part by the teachings of Said Nursi, a Turkish-Kurdish spiritual leader who died in 1960.

Gülen’s followers call their movement Hizmet or ‘service,’ and they have focused largely on education. Gülenists have opened schools, charities and other institutions around the world, including in the United States, while also promoting interfaith harmony. Although some of his early sermons are reported to have contained some anti-Semitic tones, Gülen said his views have evolved, and that some of his words were taken out of context. Readers responding to a 2008 survey by Foreign Policy and Prospect named him the world’s No. 1 public intellectual.

Gülen said he doesn’t personally run the many institutions his followers have built, even if he is their inspiration. His movement is funded through donations from its members and by the profits from a range of businesses. Gülen himself is also believed to have a number of financial holdings and makes money through sales of his books. He firmly denies that he ordered, or even inspired, the July 15-16 coup attempt in Turkey, which left some 270 people dead and many more wounded.

This is not the first time that Gülen has been accused of trying to overthrow Turkey’s political leaders. Back in the late 1990s, he faced similar accusations under what was then a secular government. As an Islamist, albeit a relatively moderate one, Gülen’s teachings had long drawn the suspicions of Turkey’s secular elite.

In 1999, amid growing accusations against him in Turkey, Gülen moved to the United States, ostensibly to receive medical treatment. U.S. officials were suspicious of his desire to stay at first, but they eventually granted him permanent residency. Graham Fuller, a former CIA official who has researched Islamic movements, wrote a letter of support in 2006 for Gülen’s application for permanent residency, fueling rumors in Turkey that Gülen is a U.S. intelligence asset.

Since 1999, Gülenists have watched their fortunes rise and fall in Turkey. When Erdoğan, whose political party has Islamist leanings, came to power in 2002, he at first found an ally in Gülen. During much of the 2000s, Gülenists rose high in many of Turkey’s institutions. It was under Erdoğan’s rule that Gülen was acquitted of charges of trying to overthrow the state.

In recent years, however, tensions grew between the two men, as Erdoğan became convinced Gülenists were slowly taking over key institutions in Turkey — including the police, the media, universities and the judiciary — in an attempt to undermine the elected government and deliver real authority to the imam in Pennsylvania.

In his exchange with POLITICO, Gülen downplayed his relationship with Erdoğan, saying the two “were never very close” and only met “two or three times.” He said he and his followers supported Erdoğan’s early promises to pursue European Union membership, implement democratic reforms and respect human rights.

The rupture came, Gülen said, in recent years, as Erdoğan began pushing to transform Turkey’s parliamentary democracy into a presidential system that would give his office far more power. The Muslim scholar said he couldn’t support the idea because Erdoğan’s “proposal was akin to a sultan regime” that lacked the checks and balances of similar systems in the United States or France.

“Mr Erdoğan put pressure on me and Hizmet sympathizers to publicly support his idea of a presidential system,” Gülen told POLITICO. “If we complied by his demand and became loyalists, we would be enjoying the Turkish government’s favors now. But we declined and we have been facing their wrath for the last three years.”

Some analysts describe this explanation as spin, noting that tensions between Gülen and Erdoğan appeared well before public discussion of a strong presidency. The analysts say Gülen, or at least his followers, and Erdoğan appeared to differ on an array of issues, including how to deal with Kurdish separatists and how to react to the tumult in a region following the Arab Spring revolutionary movements. “I’ve heard them complain about Erdoğan’s accumulation of power, and you can see it in Gülenist news coverage,” said Steven Cook of the Council on Foreign Relations. “But has it been a longstanding position? Nope.”

After prominent Gülenists pushed a series of anti-corruption probes involving members of Erdoğan’s government in 2013, Erdoğan moved to sideline the elderly scholar’s movement. The crackdown, which included arrests of Turkish journalists, disturbed U.S. President Barack Obama, whose opinion of Erdoğan is said to have tumbled dramatically over the past eight years.

At the same time, however, documents unveiled by WikiLeaks indicated that U.S. officials have had their own suspicions about Gülen’s goals. In a classified 2009 cable, then-U.S. ambassador to Turkey James Jeffrey noted that even other Islamists viewed the Gülen movement as “murky.”

“Gülen’s purported main goal is to bolster interfaith dialogue and tolerance, but the notion is widespread among many circles in Turkey that his agenda is deeper and more insidious,” Jeffrey wrote. He added: “Most discussions in Turkey which touch on Gülen tend to be somewhat delicate and deliberately artful. Our interlocutors often seem reluctant to express their views, seemingly uncertain if it will rebound on them to their detriment.”

The Gülen movement’s activities in the U.S. have also drawn the government’s scrutiny. The well-funded organization has set up an estimated 150 charter schools in the U.S., many of which emphasize science, and the FBI has been looking into an array of allegations against the schools, including claims that they abused the U.S. visa system. Separately, USA Today and other media outlets found that Gülen’s followers spent large sums on questionable donations to an array of U.S. politicians and may have improperly funded travel for some Members of Congress. But little has resulted from any of the federal or media investigations so far, and nothing that directly implicates Gülen.

Realm Of The Unthinkable

When elements of the Turkish military took to the airwaves on the evening of July 15 to announce they had taken over the government “to restore constitutional order,” Washington was caught by surprise. “One initially thought this must be some kind of spoof,” the senior administration official said. “It was kind of outside the realm of the thinkable. In this day and age a democratic NATO ally doesn’t experience a military coup.”

The reality sank in fast, brought home by images of tanks on Turkey’s streets. U.S. agencies scrambled to ensure the safety of U.S. personnel, especially troops stationed at Turkey’s Incirlik airbase overseeing airstrikes on ISIL. For a few hours the outcome was unclear. Troops loyal to the coup plotters apparently missed Erdoğan by minutes, but managed to close key transportation links, damage the parliament building with airstrikes and take other top officials into custody.

But Erdoğan, who at one point used FaceTime to conduct an interview with CNN Turk, managed to rally his supporters to protest the coup attempt. Citizens poured onto Turkish streets to confront the putschists in the military. Elements in the Turkish security forces loyal to the government eventually put Erdoğan firmly back in control.

In Pennsylvania, Gülen and his aides scrambled to denounce the coup attempt as it unfolded. “As someone who suffered under multiple military coups during the past five decades, it is especially insulting to be accused of having any link to such an attempt,” Gülen said in a statement, referring to Turkey’s spotty democratic history.

The U.S. also was quick to condemn the coup attempt, but not quick enough for many in the Turkish government and media. Erdoğan immediately cast Gülen as the true mastermind and demanded the U.S. turn him over. And the Turkish media fanned speculation of American involvement, citing as evidence, among other things, Gülen’s residency in the U.S.

"U.S. officials privately question whether Gülen would be treated fairly in Turkey’s legal system, especially after the ongoing purge of state institutions."


Turkish officials say they have sent reams of material to the U.S. in support of an extradition request. The material (which fills at least 85 boxes, according to Erdoğan) does not reference the coup attempt. Instead, the officials told POLITICO, it revolves around long-standing allegations that Gülen and his followers have tried to create a parallel state in Turkey — claims of everything from illegal eavesdropping to fabricating evidence in court cases.

Turkish officials say they will soon send evidence of Gülen’s putsch links. But they also said they want U.S. officials, at least for now, simply to acknowledge that Gülen was behind the plot, even if they have yet to see the legal evidence to back that up. “Our allies should accept that this is what happened,” one Turkish official told POLITICO. “It’s like O.J. Simpson killed that woman, right? But then you have to prove it.”

The PR War

The Turkish government was disparaging Gülen’s activities in the United States well before soldiers took to the streets of Ankara and Istanbul. Last year, Turkey hired prominent attorney Robert Amsterdam’s firm at a rate of $50,000 a month to wage a legal and public relations war against the imam. In response, the Gülen-linked Alliance for Shared Values retained the services of the Podesta Group, a lobbying and PR firm in Washington for an undisclosed sum to fight back.

In the weeks since the coup attempt, the lobbying wars have escalated, as an array of other Turkish-linked groups in the U.S. stepped up their public outreach. Some, such as the Turkish Heritage Organization, are sympathetic to Erdoğan. Others, such as the Turkic American Alliance, support Gülen.

Turkish officials compare the coup attempt to the September 11, 2001 terrorist attacks in the United States. Some Turkish leaders say if the U.S. doesn’t hand over Gülen, it will risk its relationship with a country that has been a NATO ally for more than 60 years. Other Turkish officials emphasize that more than anything Turkey just wants to know that the U.S. is on its side. “What we seek from the United States is sympathy, empathy and solidarity,” a Turkish official said.

Gülen has turned to the law firm Steptoe & Johnson to represent him in the extradition process, which could take months if not years. The lawyers insist the odds of Gülen being forced back to Turkey are near-zero, partly because the extradition system requires ironclad evidence. They point to language in the 1981 extradition treaty between Washington and Ankara that suggests the crime in question has to be illegal in the United States as well as in Turkey. Gülen, they argue, cannot be extradited merely because he may have expressed a political belief.

The U.S. has tried to ease tensions with Turkey, sending a team of experts to talk through the extradition request and arranging a visit by U.S. Vice President Joe Biden, who expressed a “wish” that Gülen was in another country instead of the United States. Obama also met with Erdoğan in early September on the sidelines of the G20 summit.

U.S. officials privately question whether Gülen would be treated fairly in Turkey’s legal system, especially after the ongoing purge of state institutions. Since the mid-July coup attempt, Erdoğan has fired, and often imprisoned, tens of thousands of people — journalists, educators, judges, soldiers, even football referees — who allegedly sympathized with the putsch plotters. Although the American judicial system oversees much of the extradition process, Gülen can ultimately appeal his case to the U.S. secretary of state, arguing, for instance, that deporting him to Turkey could violate the U.N. Convention Against Torture.

‘I Will Buy My Own Ticket’

At Gülen’s idyllic retreat in the Poconos, anywhere from 50 to 100 people are usually with him — personal aides, students and visitors. In the days following the coup attempt, anti-Gülen protesters also showed up, shattering the typically tranquil atmosphere. Gülen’s aides say the white-haired cleric’s health is fragile and that he gets especially worried about the crackdown on his followers back in Turkey. “They’re detaining family members of people who’ve been charged,” said one of his aides, Alp Aslandogan. “They’re detaining them like hostages.”

Shortly after the attempted coup, Gülen said he was surprised he hadn’t died from the stress and sadness, according to Aslandogan. But he has since tried to resume his usual pattern of study: teaching and a minimum of nine prayer sessions a day.

Erdoğan has asked Obama to put Gülen in pre-trial detention so that he doesn’t try to flee to a third country, a request the U.S. is not likely to fulfill. Gülen’s lawyers, meanwhile, say they are worried that Turkish elements will try to assassinate the cleric.

Gülen, who says he would be “sad” to see the U.S.-Turkish relationship deteriorate, nonetheless insists he is confident that the American legal system will treat him fairly. “In the unlikely event that the extradition matter is decided on political grounds, I have already stated that they don’t need to force me out of the country,” he wrote to POLITICO. “I will buy my own ticket and go on my own will without blinking an eye.”


Article Link To Politico EU:

Why Kim Jong-un Tested A Nuclear Warhead Now

With China upset with South Korea, North Korea’s dictator is feeling free to do what he wants—and that includes carrying out a major nuclear test.


The Daily Beast
September 9, 2016

North Korea is hailing a “successful” fifth nuclear test, which it carried out Friday morning local time.

The device tested, which created a 5.3-magnitude tremor at its Punggye-ri test site, was reportedly in the 20- to 30-kiloton range, much more powerful than the North’s previous detonations. The last test, in January, yielded only about 7 to 9 kilotons.

The North Koreans have been ready to test this device since May. So why did they wait until now? Some are suggesting the detonation celebrated North Korea’s Foundation Day, marking the 68th anniversary of the establishment of the Democratic People’s Republic of Korea. But from all indications, the Kim regime tested at this time because it realized China would not impose costs for the detonation.

The test took place three days after Pyongyang’s nuclear envoy traveled to Beijing. Choe Son Hui, deputy director-general of the Foreign Ministry’s U.S. affairs bureau, arrived in the Chinese capital on Tuesday.

We don’t know what Choe—who was deputy chief envoy to the six-party denuclearization talks, which have been dormant since 2008—and her interlocutors said this week. Nonetheless, it was evident that the North Koreans were confident of the Chinese reaction.

At the moment, Beijing is far more upset with Seoul than Pyongyang.

In July, South Korea and the United States announced they would deploy the American-made Terminal High Altitude Area Defense system on South Korean soil. Beijing is worried that THAAD’s high-powered radars will reach into China and could help the U.S. shoot down Chinese missiles. Washington denies that is the case and has been willing to share technical information, but Beijing has not been mollified.

Since the announcement, Beijing has taken a number of steps to snub the South diplomatically and undermine its economy.

With Beijing upset at Seoul, the North Koreans evidently think they can do what they want. On Monday, the North launched three medium-range, nuclear-capable Nodong missiles. The tests, on the second day of the China-hosted G20 summit, were conducted right after Chinese ruler Xi Jinping met on the sidelines of the event with South Korea’s president, Park Geun-hye. Clearly, Kim Jong Un was not worried that China would react unfavorably to the launches.

It’s clear the North Koreans know that as a general matter they have Chinese support. Trade across the Sino-Korea border is booming at the moment, an indication that Beijing is not enforcing Security Council Resolution 2270, the fifth set of U.N. sanctions on the North’s weapons programs.

Moreover, some of the traded items are clearly destined for Kim’s military. China, according to David Albright of the Institute for Science and International Security, did not interrupt the flow of materials and components for Pyongyang’s nuclear weapons program, such as cylinders of uranium hexafluoride. Also allowed in, worryingly, were vacuum pumps, valves, and computers.

The North Koreans know that Xi sees the U.S. as China’s main adversary, blocking Beijing’s ambitions in almost every direction. That’s probably why President Obama and National Security Adviser Susan Rice got a rough reception on Saturday in Hanghzou as they arrived for the G20. Kim, seeing how Xi treated Obama, thought he could get away with delivering his own radioactive-laced snub.

Kim knows that Xi is not about to further goals, like the denuclearization of North Korea, that Washington promotes, and so Pyongyang thinks it has a big green light in its quest to possess the world’s most destructive weapons.

Pyongyang will make fast progress in developing nukes—until the U.S. and the rest of the international community realize they have a China problem as much as a North Korean one.


Article Link To The Daily Beast:

How The FBI Went Easy On Hillary Clinton

By Paul Sperry
The New York Post
September 9, 2016

It’s clear now the FBI conducted a sweetheart investigation into Hillary Clinton’s e-mail shenanigans that appears to have been fixed from the start to go nowhere.

Far from exonerating Clinton, the nearly 60 pages of documents expose both the systematic destruction of subpoenaed evidence by Clinton’s aides and the curious lack of interest by investigators in recovering it.

Agents also failed to resolve unanswered questions, reconcile contradictory testimony or sweat uncooperative witnesses.

Comey declared the investigation free of undue influence three days after his agents interviewed Clinton at FBI headquarters under special terms. Agents weren’t allowed to Mirandize Clinton or place her under oath, even though she was the subject of a criminal investigation possibly involving espionage. They weren’t even allowed to record her answers.

What’s more, Comey made the two FBI agents who interviewed Clinton — along with all agents and forensic analysts involved in the so-called investigation — sign non-disclosure agreements gagging them from talking about the case even with other employees.

Comey even let Clinton’s State Department aides Cheryl Mills and Heather Samuelson sit in on the interview with Clinton’s other lawyers, despite the glaring conflict of interest. FBI documents make clear Mills and Samuelson led the effort to search and destroy Clinton’s subpoenaed e-mails and should’ve been prime targets of the investigation.

Comey didn’t even attend her interview and, per his testimony, only read a “summary” of it.

The FBI failed to pursue even the most basic lines of questioning. When Clinton pleaded ignorance about basic classification symbols, agents could’ve produced the State documents she signed acknowledging she was briefed about how to ID and handle classified information at the highest levels.

When Clinton claimed she couldn’t recall “ever contacting” the government computer specialist who set up her unsecured home e-mail server, Comey could’ve produced the same evidence the State inspector general found showing Clinton had in fact paid the aide, Bryan Pagliano, “by check or wire transfer in varying amounts between 2009 and 2013.”

Pagliano was a critical witness. But instead of pressuring him to sing on Clinton and other higher-ups, Comey agreed to give him immunity from criminal prosecution.

Nor did Comey squeeze the Platte River Networks engineer who agents complained gave them “inconsistent statements over the course of three interviews regarding from where on the server he extracted Clinton’s e-mails.”

Comey also failed to push back against Mills’ claims of “attorney-client privilege” when she refused to divulge details about how she sifted through Hillary’s e-mails. Her name was on many of the e-mails containing classified information. At the time, she was Clinton’s chief of staff, not her lawyer. Agents agreed to drop the line of questioning when she threatened to walk out of the interview.

Ron Sievert, a a former assistant director at the Justice Department and member of DOJ’s National Security Working Group, said Comey easily could’ve gone to court to challenge Mills’ privilege claim. He didn’t.

There was also prima facie evidence of obstruction, yet Comey let that slide, too.

FBI investigators were denied two out of five Clinton iPads, 13 of her mobile devices (some of which were smashed with hammers) and even an Apple laptop and a thumb drive containing a 2013 archive of Hillary’s e-mails aides claimed got “lost” in the mail. The FBI accepted the story without even determining if the laptop was sent by UPS or USPS.

It’s plain Comey never planned to recommend charges. He didn’t even impanel a federal grand jury to hear the evidence investigators had gathered.

What’s more, Comey and his investigators came across e-mails that showed signs of a possible pay-for-play scheme between Clinton Foundation donors and the State Department. Yet Comey chose not to expand the e-mail investigation into a probe of public corruption.

“There seems universal agreement among those of us who know the law that no regular US government employee could get away with this,” Sievert said.

Unless Congress forces more public transparency on this Nixonian cover-up — demanding the release of not just the FBI case summaries in full, without redactions, but also the supporting documents and transcripts of statements from key witnesses, along with the computer forensics reports — Clinton could waltz into the White House with Mills as her general counsel, where they’ll have the power of executive privilege to cover up even worse scandals.


Article Link To The New York Post:

A Scary Obamacare Mystery

By Megan McArdle
The Bloomberg View
September 9, 2016

Pop quiz: Are the Obamacare exchanges a success? Your answer should take into account three recent pieces of news about the online marketplaces created by the Affordable Care Act:

-- The U.S. Centers for Disease Control's latest report on the uninsured shows that 8.6 percent of the population was uninsured in the first three months of 2016. This is a record low.

-- A survey of Blue Cross/Blue Shield companies, the backbone of the exchanges, indicates that about half their customers in the individual market are buying insurance without subsidies.

-- Arizona has managed to persuade its Blue to sell insurance in Pinal County. That was one of a handful of localities nationwide that faced the possibility of losing all the providers in their Obamacare marketplaces after insurance giants like Aetna announced in August that they were pulling out.

You may be wondering what these three seemingly disparate facts have to do with each other. The answer is, quite a lot. Let me explain.

Conservatives should acknowledge that the coverage expansion is real, it is large (though not as large as we were led to expect), and that while it is not necessarily going to make people much healthier, it is probably going to reduce financial hardship among at least some of the people who have gained coverage. That’s significant, though we can still argue about whether the benefit was worth the cost. (If Obamacare were being voted on today, I would still oppose it).

Liberals, however, should also acknowledge uncomfortable facts. The first is that most of the decrease in the uninsured population came in 2014 and 2015, and is now leveling off. Unless younger and healthier people start buying insurance in much larger numbers, we’re probably not going to see huge improvement. The fact that so few young, healthy people are buying insurance may not only mean that the number of uninsured people stops going down. It could mean that that figure starts going up again.

Why? Because outside of the near-poor, uptake of Obamacare policies is not as high as we’d like. As health insurance consultant Bob Laszewski has written, “Historically, insurers want to see a 75-percent participation rate.” In other words, they want to see three-fourths of the eligible people sign up.

That's because insurers can predict their costs when a representative cross-section of people buys their plans. But when too few sign up, the insurer has to ask, “Who’s declining to buy insurance?” and the most likely answer is, “Healthy people who don’t expect to use it much.” The remaining pool, then, will be sicker. The lower the participation rate, the more likely it is that you’ve got a small group of people who are going to make expensive claims.

This is a phenomenon known as “adverse selection.” And it tends to get worse as premiums rise to reflect the cost of covering this sicker pool, because more people start dropping the ever-costlier insurance, and usually the folks who drop out are the healthiest ones.

Obamacare’s individual mandate was supposed to prevent this death spiral by levying a tax penalty on those who refused to sign up. But the fine appears to be too small to get young folks to buy in.

And that brings us to our second point: the split between subsidized and unsubsidized patients. Because right now, the main thing standing between Obamacare and a death spiral is the fact that subsidies shield customers from the true cost of their plans. So the law’s supporters hope that the second, really vicious part of the death spiral, where rising premiums produce even more adverse selection, will never kick in.

Most of the exchange customers are subsidized; the off-exchange customers are not. But that doesn’t matter, because under Obamacare, insurers have to treat their exchange policies and their off-exchange policies as a single actuarial risk pool, rather than adjusting for the different risks in the different markets. If the exchanges have too many old, sick people on them, and not enough young, healthy ones, those costs will leak over to the unsubsidized off-exchange policies in the form of premium hikes.

That may explain why we’ve seen some insurers pull out of the exchanges while continuing to offer individual policies. That means the older, sicker exchange customers don’t show up in their pools. However, that obviously creates a problem when the number of plans available on the exchanges dwindles. Which brings us to our third data point.

Regulators have tools to combat this sort of strategic withdrawal. They can force all individual policies to be sold through the exchanges, for example, as my own home city has done. But that creates the risk that insurers will simply exit the individual market entirely. Alternatively, the regulators can beg insurers to do them a favor, possibly offering sweeteners in the form of leeway on premium-setting, or favorable treatment in other insurance markets.

But it’s questionable whether this is a viable long-term solution. How many favors can insurance regulators give companies to get them to keep taking losses, year after year? And if the favors come in the form of, “We’re not going to quibble over how much you want to charge people for the insurance you offer on the exchanges,” this will translate into big premium hikes that the subsidized buyers don’t see, but that deliver a nasty shock to the folks in the unsubsidized market. At some point, adverse selection seems likely to set in once again, threatening the gains that reduced the number of uninsured Americans.

The correct answer to the pop quiz, therefore, is “We don’t know yet.” While Obamacare’s grander claims about lowering health-care costs and rationalizing our crazy health-care system have mostly failed to come to pass, the one thing supporters have been able to point to is the falling number of uninsured people. If that number starts to rise again, that argument will become harder to make.


Article Link To The Bloomberg View:

The Brexit Bounce That’s Making Doom-Mongers Look Foolish

If you’ve declared imminent catastrophe to be certain, and it doesn’t happen, what can you do next?


By Ross Clark
The Spectator
September 9, 2016

Next time it comes to redesigning the PPE course at Oxford, I suggest a module beginning with a quotation from George Osborne. It’s something he said to the Treasury Select Committee in May, back when he was still Chancellor: ‘If you look at the sheer weight of opinion, it is overwhelmingly the case that people who look at the case for leaving the EU come to the conclusion it would make the country poorer, and it would make the individuals in the country poorer, too.’ There might be advantages to Brexit, he said, ‘but let’s not pretend we’d be economically better off’.

In other words: it wasn’t just George Osborne’s opinion that Britain would be worse off if we left the EU; it was objective fact. It wasn’t just that he thought he was winning the argument; there was no argument to be had, because the experts agreed beyond all reasonable doubt. Osborne was so sure that he published a draft of the emergency budget which would be needed in the post-Brexit meltdown, and made some startlingly exact predictions. Households, he said, would be £4,300 worse off by 2030 — after the inevitable surge in mortgage rates, property crash, and half a million job losses.

It has become a familiar trick in politics: try to claim ownership of the truth. Whether it be David Miliband as environment secretary in 2006 telling us that the science of climate change was ‘settled’, or a committee of MPs trying to claim, on the back of a few low-grade academic papers, that drugs policy had failed beyond all question, we are continually told that it is not possible to disagree with a consensus of experts. Do so, and you are a part of the ‘post-fact society’.

There is just one problem with this line of argument: if your experts turn out to be wrong, you end up looking pretty silly. That is exactly where George Osborne and many of his fellow Remainers stand now. We haven’t yet left the EU, of course, and there could well be other economic shocks before we do, but the talk of immediate financial meltdown stands exposed as bunkum. The Financial Times, whose hysteria over the issue has led it to run a weekly doom-o-meter of economic data, has found the figures reporting fairly robust economic health.

True, there was an initial wave of panic when the referendum result became clear on the morning of 24 June. The stock market and the pound plummeted. That much really was inevitable, given what the Chancellor and the Governor of the Bank of England had said about the dangers of Brexit, and how completely the result caught the markets — along with the pollsters and the bookies — by surprise. Yet by the next Monday the FTSE 100 was bouncing back and over the following week it rose above its pre-referendum level. The FTSE 250, less stuffed with giant global corporations, took longer to rebound — but by the end of July it, too, was trading higher than it had done on the eve of the vote. Investors seemed to have come to a consensus of their own — one that flew in the face of Osborne and his phalanx of economists.

Then there was that awful interregnum after David Cameron announced that he had no plan for Brexit, and that he was resigning, and it looked as if there would have to be a months-long Tory leadership contest before anyone began to take charge. Surveys during that 18-day period would have produced gloomy results. No one felt able to challenge Mark Carney when he said that some risks of Brexit had ‘begun to crystallise’. Everything that the Remain camp had warned us about appeared to be coming true. Even the Brexiteers, few of whom ever denied there would be turbulence, seemed to be bracing-themselves.

Things are looking very different now. The indexes of business and consumer confidence that plunged in July seemed to surge just as much in August — a Brexit bounce.

Take perhaps the most famous of these, the Purchasing Managers’ Index — a monthly survey which grills some of the best-informed people inside a panel of 650 companies on how their businesses are doing, and is often used as a proxy for the health of business as a whole.

It is produced by an outfit called IHS Markit, and as late as 22 July their chief economist, Chris Williamson, was warning of a ‘dramatic deterioration’. His index had fallen to 47.7; anything below 50 means that the economy is shrinking. The last occasions on which it had fallen like that, he said, had been during the global financial crisis, the bursting of the dotcom bubble and the 1998 Asian financial crisis — but he wouldn’t want us to be unduly reassured: ‘The difference this time is that it is entirely home-grown, which suggests the impact could be greater on the UK economy than before.’

Then, last month, the index bounced back up to 53.2. Suddenly Williamson sounded like a different man: ‘A record rise in the services PMI adds to the encouraging news seen in the manufacturing and construction sectors in August to suggest that an imminent recession will be avoided.’

Steadily, economists who rather lost their heads during the EU referendum campaign have been pulling themselves together. Credit Suisse this week doubled its growth forecast for the UK economy. Morgan Stanley has withdrawn a recession forecast, as has Chris Giles, economics editor of the Financial Times. Ian Stewart, Deloitte’s chief economist, pointed out what the more excitable economists should have realised: uncertainty is not the same thing as calamity. ‘Brexit is a political turning point whose long-term implications are unknown,’ he pointed out. ‘In that respect it has something in common with Labour’s election landslide in 1945 or Mrs Thatcher’s in 1979. But Brexit is not a global economic shock.’

Every day the business news reinforces this story. Spending in shops rose by 1.4 per cent in July, according to the Office for National Statistics, and unemployment fell by 8,600. In August, 3.3 per cent more new cars were registered than in the same month last year. And the warnings of the Remain camp that a vote for Brexit would harm investment in the UK? That was rather scotched in July when chip manufacturer Arm announced it had agreed to be taken over by Japan’s Softbank — a deal that appears only to have been proposed since the Brexit vote.

Consumers, meanwhile, seem thoroughly cheerful. Lloyds Bank’s spending power report for July suggested they were more confident of their finances than at any time since the survey began five years ago. Should we be surprised by that? Not really. The majority of the public did, after all, vote to leave the EU. Why would they have voted for Brexit if they thought that it would hurt them personally, and why should they now be frightened of a decision which they themselves made? The scare stories never hung together on this one — it’s quite possible that consumer confidence is strong not in spite of the vote for Brexit, but because of it. The majority judged, contrary to Osborne, Carney and co, that Britain might actually benefit from leaving the EU. They got what they wanted and now they feel good about the future.

This, needless to say, is not how diehard Remainers see it. Many who warned of economic Armageddon have switched to an alternative narrative: yes, the economy is doing OK, but only thanks to a drastic intervention by the Bank of England, which lowered rates to 0.25 per cent and printed another £40 billion through quantitative easing. Chris Williamson of Markit, for instance, acknowledges the slew of positive data, but adds: ‘You can’t say that everyone who was ringing the alarm bells over Brexit was scaremongering because really it was the warnings that triggered those strong policy actions.’ In other words, the economy is recovering but only because his index looked so scary that the Bank of England had to act.

These doom-mongering wise men, it seems, can’t be wrong: if the economy tanks, they told us so; if it doesn’t, that’s because they saw the crisis coming and rallied round to prevent it. Bravo, doom-mongers.

We will never know whether lower rates or quantitative easing made a difference — on this occasion or any other. The only scientific way to do that would be to construct two identical economies in parallel universes, then cut rates and pump up QE in one while leaving the other alone. If such an experiment could be done, it is far from certain that it would show the Bank of England’s actions had any effect at all.

But what we do know for sure is that the economy has failed to suffer the disaster predicted by Osborne, Carney and many others. Moreover, it has rebounded without the emergency budget that Osborne said would be necessary.

There is little to fear about the immediate future. One thing hasn’t fully rebounded: the pound. That is a massive stimulus for our exporters, helping to keep them competitive. And meanwhile, warnings about the EU’s inability to handle globalisation do seem to be borne out. The EU and US trade deal is said to be on the point of collapse, despite the EU’s supposed collective negotiating clout. Countries outside the EU, such as Switzerland, seem quite capable of doing trade deals with the like of China and Japan, while the EU has so often failed.

What Brexit, when it comes, will eventually mean for the UK economy is still, of course, highly uncertain. Turbulence is inevitable — but how much of it we will feel, and when it will come, is impossible to predict. But one thing is for sure: those who said that leaving the EU would lead to economic collapse, and who claimed that they couldn’t possibly be wrong because they had a consensus of experts behind them, are already looking a tad silly.


Article Link To The Spectator:

The Not-So-High Costs Of Brexit

By Daniel Gros
Project Syndicate
September 9, 2016

The United Kingdom’s vote to “Brexit” the European Union is on course to become the year’s biggest non-event. Beyond a weaker pound and lower UK interest rates, the referendum has not had much of a lasting impact. Financial markets wobbled for a few weeks after the referendum, but have since recovered. Consumer spending remains unmoved. More surprising, investment has remained consistent, despite uncertainty about Britain’s future trade relations with the EU. Have the costs of Brexit been overblown?

Not exactly. In fact, the UK may well end up losing the predicted 2-3% of GDP from Brexit. But it is the exit from the single market, not the initial vote to leave, that will bring those losses, and that may happen over a long period. If the exit turns out to be a ten-year process, the losses would be borne gradually over that period, costing the UK about 0.2-0.3% of GDP per year, on average.

This could be very good news for the UK. With a weaker currency, the country will benefit from an increase in export competitiveness that could offset those incremental losses and the transient investment weakness that is likely to arise.

Other factors will also cushion the blow of Brexit. Over the last two decades, the UK has transformed its economy to foster unprecedented specialization in services. In the mid-1990s, goods exports were three times as important as services exports, and the majority of British exports went to the EU. Nowadays, the UK exports mostly services – and mostly to non-EU markets.



As a result, the internal market for goods is far less important for the UK today than it is for other EU countries. The value-added contained in British goods exports to the EU accounts for only about 5% of GDP – several times less than for, say, Germany. Meanwhile, Britain’s non-EU exports account for about 7% of GDP.

The shift in UK goods exports away from the EU reflects a change in the sources of economic growth, with Asia, in particular, gaining primacy. To some extent, other EU member states have also shifted their goods exports away from Europe, but the effect has been most pronounced in the UK.

The fact that the UK now relies more heavily on access to world markets than on access to the EU’s internal market surely contributed to the Brexit vote, as it minimized the sacrifice that the UK would have to make to regain control over hot-button issues like immigration. The belief that the UK could secure superior access to world markets on its own than as part of the EU also helped.

This is where the Brexit bet becomes riskier. To be sure, approving trade deals will be much easier for the UK than it is for the EU, which requires agreement from 30 parliaments (including some regional ones). The political challenges that have impeded the approval of a relatively low-profile free-trade agreement with Canada exemplify this challenge. But the UK will also have less leverage in negotiations than the EU does, especially in dealing with large emerging economies.

Similarly, the UK does not have to fear huge changes in its ability to export services to the EU, which currently accounts for about 40% of the UK total, because the EU’s internal services market already is far from open. But there is one exception: financial services. And it is a big one.

As it stands, financial services account for about one-third of Britain’s total services exports and two-thirds of the overall services surplus that the UK needs to pay for its deficit on goods. The industry’s success is the result, at least partly, of the UK’s EU membership.

The specialization of the UK economy and its external accounts toward financial services (and services in general) began when capital movements were liberalized under the internal market program of the 1990s. It was accelerated with the introduction of the common currency, which, combined with the elimination of obstacles to cross-border capital flows and a global credit boom, fostered the concentration of many types of wholesale financial services in the City of London.

The financial sector has a natural tendency to form clusters, and London – where English is spoken, the legal system is efficient, labor markets are flexible, and the regulatory regime is relatively streamlined – offered substantial advantages. Add to that the EU’s “passporting” system, which enables London-based banks to sell their services directly throughout the EU, and the growth of the city’s financial-services sector makes perfect sense – as does the fact that citizens of London voted overwhelmingly against Brexit.

Yet the reality is that most of the advantages that have made London into a financial-services hub will remain even after Brexit. And the loss of passporting might be offset by the creation of subsidiaries or “bridgeheads” within the EU, such as Dublin, Frankfurt, or Paris. London’s financial-services industry could therefore survive Brexit, though it is unlikely that it will maintain its previous vigor.

Indeed, no matter what terms the UK negotiates with the EU, it will probably have to change its growth model, probably through a modest revival of manufacturing, among other things. Given decades of decline in British manufacturing, this would be easier said than done. But, if the country doesn’t manage such a rebalancing, the long-term cost of Brexit might turn out to be substantially higher than current estimates.

The expansion of the financial-services industry – which creates few, but very highly paid, jobs – has contributed to rising income inequality, which has been more pronounced in the UK than elsewhere in the EU. And inequality helped fuel the widespread frustration with globalization and the so-called “establishment elites” that carried the Brexit campaign to victory.

In this sense, one of the major economic benefits of the UK’s EU membership led the British to reject the project. The question is whether the economic changes that Brexit will necessitate will produce the benefits for British workers that the “Leave” campaign promised. The answer remains far from clear.


Article Link To Project Syndicate:

Trump Would Spend Billions More On Military, But For What? Experts Ask

By Jonathan Landay and Warren Strobel 
Reuters
September 9, 2016

Republican presidential nominee Donald Trump’s U.S. military buildup plan would cost hundreds of billions of dollars - but with no apparent strategy, defense experts from across the political spectrum said on Thursday.

“I haven’t seen any kind of strategy,” said William Hartung, director of the Arms and Security Project at the Center for International Policy. “He (Trump) says nobody is going to challenge us because we will be so strong. But that’s not a strategy. It’s just a kind of wish-fulfillment.”

U.S. Senator Jeff Sessions, a top Trump backer who sits on the Senate Armed Services Committee, said the proposal was based on recommendations from groups such as the National Defense Panel and served as a statement of Trump's commitment to build the military.

“I believe this lays out a framework for rebuilding the military, and it represents a commitment by Donald Trump to make this a priority,” Sessions said in an interview. “If you don’t have presidential leadership really defending the need for a robust national defense, you're not going to maintain the defense budget.”

Trump's proposal, unveiled in a speech on Wednesday, did not spell out how he would accommodate the additional manpower and hardware as the United States shutters military bases, or where and for what purposes the larger forces would be employed. There were no cost estimates and Trump proposed revenue-raising steps that budget experts called insufficient.

“He just called for higher defense spending without giving us a number and without telling us how he is going to pay for it,” said Lawrence Korb, a former Reagan administration Pentagon official and senior fellow at the Center for American Progress, a think tank aligned with the Obama administration.

Trump’s Democratic opponent in the Nov. 8 election, Hillary Clinton, advocates tough defense and foreign policies, but has yet to take a stand on the size of the Pentagon budget.

Stephen Miller, a Trump policy adviser, said Trump's proposal came in contrast to Clinton, who he said has "no military plan."

Trump pledged to expand the Army to 540,000 active-duty troops from its current 480,000, increase the Marine Corps from 23 to 36 battalions – or as many as 10,000 more Marines – boost the Navy from 276 to 350 ships and submarines, and raise Air Force tactical aircraft from 1,100 to 1,200.

Trump said those numbers were based on assessments by the conservative Heritage Foundation and other groups. Heritage said in a report that it looked at the capacity needed to handle two major wars to determine its force-size recommendations.

Trump said he would bolster the development of missile defenses and cyber capabilities. He made no mention of U.S. nuclear forces already in the midst of a modernization effort that will cost an estimated $1 trillion over 30 years.

To pay for the buildup, Trump said he would ask Congress to lift a Pentagon budget cap and “fully offset” the increased costs by collecting unpaid taxes, cutting appropriations for federal programs operating without congressional reauthorization, cracking down on social welfare fraud and other fraud, and collecting additional taxes and fees from increased energy production.

'Soft-Pedaling' The Cost


Writing in The Weekly Standard, a conservative magazine, Tom Donnelly, a defense scholar at the American Enterprise Institute think tank who opposes Trump’s election, praised Trump for embracing a buildup that many mainstream Republicans advocate.

“However, Trump undercut the power of his proposals by soft-pedaling the cost of such a buildup,” he wrote.

Independent cost estimates for Trump's plan range from $150 billion in additional spending over 10 years, according to the bipartisan Committee for a Responsible Federal Budget, to as much as $900 billion over the same period, as assessed by Todd Harrison, a defense budget analyst at the Center for Strategic and International Studies think tank.

Harrison said that increase could be achieved only by raising the federal budget deficit, raising taxes, or cutting other spending, such as benefits programs for seniors and the poor. “None of those things are politically popular,” he said.

The Committee for a Responsible Federal Budget estimated that lifting the cap would cost $450 billion over 10 years. The revenue-generating steps proposed by Trump would leave $150 billion of that amount uncovered, it said.

Another flaw in Trump's plan is the assumption that Republican members of the House of Representatives who belong to the deficit-fighting tea party movement would agree to end the budget cap.

In April, Army Chief of Staff General Mark Milley told a Senate committee that adding more soldiers without a sufficient budget would be disastrous for the country and the Army. Bases would close and programs that support troops and their families would have to be curtailed to make up the shortfall, he said.

The Navy already has launched a shipbuilding program to raise the number of vessels to more than 300 by 2021. Trump's plan fails to account for the country's limited shipbuilding capacity and the cost of manning, maintaining and basing the additional warships he proposes to build.

“The whole thing is unrealistic,” said Dov Zakheim, the Pentagon’s top financial official under former President George W. Bush. Zakheim, who opposes a Trump presidency, estimates that Trump’s plan would boost defense spending by roughly $300 billion over five years. “It’s a soundbite,” he said.


Article Link To Reuters:

Friday, September 9, Morning Global Market Roundup: Asian Shares Slip On North Korea Nuclear Test Reports, ECB Disappointment

By Nichola Saminather and Hideyuki Sano 
Reuters
September 9, 2016

Asian shares extended losses on Friday following reports North Korea had conducted a nuclear test, while global stocks and bonds slid on uncertainty over the prospect of further easing from the European Central Bank after it left policy unchanged.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.6 percent after touching a 13-month high on Thursday, mirroring the slide in the MSCI's all-country world index .MWD00000PUS. The declines shrank gains for the week to 2.3 percent.

ECB President Mario Draghi, speaking after the central bank kept its policy on hold as expected on Thursday, said the ECB was looking at options to continue its money-printing program, but maintained the March end-date for asset purchases.

That disappointed investors who were looking for more immediate action, including an extension or expansion of the current plan, or at least clearer hints of future actions.

"President Draghi's comment that an extension of the current quantitative easing program was not discussed led to a hawkish market interpretation of the meeting," Shane Oliver, head of investment strategy at AMP Capital in Sydney, wrote in a note.

However, inflation levels that remain below target and various other dovish comments from Draghi "indicate that an extension of the quantitative easing program beyond its March 2017 expiry at its December meeting is likely," Oliver added.

Japan's Nikkei .N225 erased gains to trade 0.2 percent lower, heading for a flat end to the week, after seismic activity triggered by the suspected North Korean nuclear test.

South Korea's KOSPI .KS11 also extended losses on the suspected activity. After opening 0.7 percent lower, it was last trading down 1.3 percent from Thursday's close.

China's CSI 300 index .CSI300 was 0.1 percent lower, and the Shanghai Composite was little changed. They are set for gains of 0.7 percent and 1 percent, respectively, for the week.

China's consumer price inflation slowed to its weakest pace in almost a year in August, missing expectations.

Still, moderating declines in the producer price index added to recent evidence of a steadying economy.

That evidence came from data on Thursday showing China's imports rose unexpectedly in August for the first time in nearly two years, suggesting domestic demand may be picking up. Exports also showed signs of improvement, falling less than expected.

Hong Kong .HSI was the sole gainer among major Asian markets, with shares up 0.9 percent, extending their weekly advance to 3.5 percent. The market has been buoyed by inflows from China as investors bet on gains ahead of the launch of a new cross-border share link.

Overnight on Wall Street, the S&P 500 .SPX lost 0.22 percent, weighed down by a 2.6 percent fall in Apple (AAPL.O) on disappointment over its latest iPhone, though gains in energy shares .SPNY offset losses in most other sectors.

German shares .GDAXI bore the brunt of that let-down but shares in Southern Europe.FTMIB .IBEX gained.

Global bond markets also took a hit with the 10-year German Bund yield DE10YT=RR rising to minus 0.055 percent from minus 0.118 percent on Wednesday.

U.S. bond yields also jumped, with the 30-year bond yield US30YT=RR rising to one-month highs of 2.328 percent on Thursday. They pulled back slightly to trade at 2.2985 on Friday.

The euro EUR= climbed to $1.1328, its highest since Aug. 26, following the ECB meeting before giving up most of its gains to stabilize around $1.1276. It is set for a 1.1 percent rise this week.

The dollar retreated 0.4 percent to 102.10 yen JPY=, surrendering some of Thursday's gains resulting from the wider gap between U.S. and Japanese bond yields. It is poised to end the week 1.8 percent weaker.

With the ECB meeting out of the way, the focus now shifts back to the Fed's policy meeting later this month.

"A rate hike in September is highly unlikely," said Hiroko Iwaki, senior bond strategist at Mizuho Securities.

"But unless the Fed sends a message, it will be difficult for them to make the markets price in a rate hike by the end of the year. So they could say something like they will consider a hike in coming months," she said.

Oil prices pulled back after surging more than 4 percent on Thursday to two-week highs, after a slump in U.S. Gulf Coast imports to a record low led to a surprisingly large drawdown in U.S. crude stocks.

Brent LCOc1 rose to as high as $50.14 per barrel on Thursday. It pulled back 0.9 percent to $49.53, still up 5.8 percent this week.

U.S. crude CLC1 climbed as high as $47.75 on Thursday. It retreated 0.9 percent to $47.21, but remained on track for a 6.3 percent advance for the week.

The weakness in the U.S. dollar this week has offered gold a boost. Spot gold has risen 1 percent to $1,338.47 this week.


Article Link To Reuters:

Iranian Oil Output Stagnates For Third Month Amid OPEC Bargaining

By Alex Lawler and Rania El Gamal 
Reuters
September 9, 2016

Iran's steep oil output growth has stalled in the past three months, new data showed, suggesting Tehran might be struggling to fulfill its plans to raise production to new highs while demanding to be excluded from any OPEC deals on supply curbs.

Iran's oil output soared to 3.64 million barrels per day in June from an average of 2.84 million bpd in 2015 following the easing of Western sanctions on Tehran in January, adding to a global crude glut which has slashed oil prices.

But since June, output has stagnated and reached just 3.63 million bpd in August, according to fresh OPEC data based on secondary sources, which include consultants and industry media, and seen by Reuters. Iran also told OPEC it produced 3.63 million bpd in August, according to an OPEC source.

Iran became the main stumbling block to an initiative by OPEC and non-OPEC Russia earlier this year to freeze output globally. Tehran said it needed to first regain market share lost while it was under sanctions.

OPEC's largest producer Saudi Arabia insisted all nations should join and the freeze deal collapsed in April.

As Russia and Saudi Arabia are trying to revive the effort to prop up prices again, Iran has signaled it was more willing to cooperate when OPEC and non-OPEC producers meet in Algiers on Sept. 26-28. But it stopped short of saying it would join the freeze.

"This (production levels) is a million-dollar question," said a source familiar with Iranian thinking. "The shuttle diplomacy is going on to clear which level is considered an aim for Iran."

Big Bargain

Iran has repeatedly said it needs to reach a level of output of at least 4 million bpd before it agrees to any deal, but one OPEC source said on Thursday the latest request from Iran was to set a target as high as 4.2-4.3 million bpd.

The difference between requested levels and current production would amount to over 0.5 million bpd or half a percent of global oil consumption.

And even if Iran were unable to produce it immediately, it would give Tehran an upper hand in dialogue with OPEC in the future - if and when Iran manages to bring onboard global oil companies to help it develop its massive oil fields.

Meanwhile, Gulf producers led by Saudi Arabia are insisting that for any deal OPEC members should stick to OPEC's secondary sources data to put everyone on a level playing field, the source added.

"If we could not do that and accept one system - which is to use secondary sources - it would complicate things further," the source said.

However, it might be a tough task as those figures show Iran has already returned to pre-sanctions output levels, pumping today as much as it was pumping back in late 2011.

That chimes with estimates from the International Energy Agency which believes Iran's production capacity is very close to what it is already producing.

For some in OPEC, the issue is settled. Saudi Energy Minister Khalid al-Falih said on Monday Iran's production has already reached pre-sanctions levels.


Article Link To Reuters:

Another Gusher In Cowboyistan

Apache’s ‘Alpine High’ oil field shows the power of unplanned markets.


By Review & Outlook
The Wall Street Journal
September 9, 2016

Governments draft white papers and formulate plans on future energy production. U.S. frackers produce energy. And a new discovery in West Texas might do more to improve the environment than a year’s worth of climate conferences.

In an area near the Davis Mountains that many experts concluded wasn’t worth fracking, Apache Corp. has found the equivalent of an estimated two billion barrels of oil, and possibly more.

We say “equivalent” because the field contains vast quantities of natural gas and oil. The Journal reports that some early wells are so prolific they can break even at a gas price of 10 cents per million British thermal units, compared to a recent $2.80. This suggests fat margins for Apache, but also continuing pressure on energy users to switch from coal to cleaner-burning gas. Even without the Obama-Clinton policy of throwing coal miners out of work, the market has been moving the U.S. to a new energy mix. Notice it’s not happening because politicians showered taxpayer funds on alternative energy sources, but because a company risked its own money and ignored conventional wisdom.

“This is a giant onion that is going to take us years to unveil and peel back,” Apache Chief Executive John Christmann IV says. “The industry dogma about this area, all the fundamental premises that most people had about it, were just wrong.” There’s a message here about the benefits of decentralized authority and the freedom to try ideas that seem crazy to others.


Article Link To The Wall Street Journal:

Oil Pulls Back After Big Jump On U.S. Crude Stock Draw

By Osamu Tsukimori
Reuters
September 9, 2016

Oil prices pulled back on profit-taking on Friday after settling more than 4 percent higher a day earlier after government data confirmed a surprisingly huge drawdown in U.S. crude inventories.

London Brent crude for November delivery LCOc1 was down 36 cents at $49.63 a barrel by 0023 GMT. It settled up $2.01, or 4.2 percent, at $49.99 on Thursday after touching a near two-week high of $50.14 earlier.

NYMEX crude for October delivery CLc1 was down 35 cents at $47.27, after settling up $2.12, or 4.7 percent, on Thursday.

U.S. crude stocks dropped 14.5 million barrels last week to 511.4 million barrels, the biggest weekly drop in stockpiles since January 1999, according to government data. [EIA/S]

Imports into the U.S. Gulf Coast fell to 2.5 million barrels per day, the lowest since data collection began in 1990.

Traders said the imports fell as ships delayed offloading cargoes in Texas and Louisiana due to Tropical Storm Hermine.

Gasoline futures RBc1 fell nearly 1 percent on Friday after jumping over 5 percent on Thursday after the data release, on higher than expected draws and rising refinery utilization in the Midwest.

Russian average oil production rose close to 11 million bpd during Sept. 1-7, industry sources told Reuters, from 10.71 million bpd in August.


Article Link To Reuters:

From Steaks To Furniture, Hanjin Shipping Collapse To Raise Freight Costs

By Karl Plume
Reuters
September 9, 2016

The collapse of Hanjin Shipping (117930.KS) will boost the cost to U.S. businesses and consumers of a wide range of imported goods, from furniture and clothing to fresh fruit and frozen meat, according to federal agencies, shippers and retailers.

With Hanjin's future in doubt, carriers have announced they will hike container freight rates by as much as 50 percent beginning next month as retailers scramble to secure shipping ahead of the peak year-end holiday season, industry sources said.

United Parcel Service Inc (UPS.N) said on Thursday it is seeing a bump in demand for its freight services and is working with customers in Asia to shift goods from Hanjin containers to other ocean freight operators or air freight services. About $14 billion worth of cargo was stranded by the collapse of the seventh largest container carrier in the world.

"Right now, there is much more (freight) demand than there is supply. People are scrambling to find a carrier with space," said Peter Friedmann, executive director of the Agriculture Transportation Coalition shipping industry group.

"But the biggest challenge right now is for people with cargo on Hanjin ships," he said.

Cargo shippers have been forced to pay thousands of dollars in fees to terminal owners and truckers to reclaim their goods from Hanjin ships to prevent perishable foods from spoiling and to avoid losing sales because goods are not available when customers want them.

Hanjin would normally pay the fees for port usage and container handling as part of its freight services. With the South Korean shipper in receivership, it is unclear if shippers would recoup any added costs they pay out of pocket to retrieve their goods.

Singapore-based crop shipper Agrocorp International said that DP World, terminal operator at Port Metro Vancouver, last week held 24 containers, or 600 tonnes, of its Canadian lentils that were bound for India and Bangladesh, demanding a release fee of $450 per container.

Industry analysts expect the freight increases to be short-lived as more shipping capacity comes on line.

"The Hanjin ships are going to be off the market for the holiday seasons. It will take several months to sort through the legalities, but any rate increase will be temporary," said David St. Amand, president of Navigistics Consulting.

In the short term, retailers are likely to take hits to their profit margins as they try to shield customers from any more price rises in a hyper-competitive retail market.

"We believe that (the Hanjin collapse) will likely increase our short to medium term ocean freight costs which will minimally impact product cost in all of our operating segments to varying degrees. However, inventory availability is good," Paul Toms, CEO of Hooker Furniture (HOFT.O), said on an earnings conference call on Thursday.

Joe Parsons, CFO for Michael Kors (KORS.K), said from the Goldman Sachs retail conference on Wednesday that the company does not expect a significant long-term impact on its business. But "there is going to be some pricing pressure. At this point, we are continuing to evaluate it," he said.

The American Apparel and Footwear Association said it expects gross margins to be pressured in the near term by the higher shipping prices and additional unloading fees.

Hanjin's collapse could wreak havoc on port operations and shipping lines over the next two to three months and could impact trade between the United States and South Korea, the U.S. Department of Agriculture said in a report published on Thursday.

Container freight charges have more than doubled since May and could appreciate further, the agency said. The average cost to move goods in 40-foot containers from the U.S. West Coast to Asia was quoted at $1,700 this month, up from $788 in May.


Article Link To Reuters: