Monday, September 19, 2016

Nicolas Sarkozy, End Of The Dream

The former president isn’t the man he once was.

Politico EU
September 19, 2016

A few days before Nicolas Sarkozy announced he would run for reelection as French president next year, he fielded an unusual question from a caller on a radio show: Could Sarkozy, the caller asked, ever make him dream again?

The man on the line, named Régis, said he had voted for Sarkozy for president in 2007 on the basis of his uplifting campaign, and was considering backing him in an coming right-wing primary. But he wanted a glimpse of the candidate’s old, positive persona.

Sarkozy’s response was blunt — and illustrates the deep change he has undergone since he burst onto the world stage nine years ago as the most original French leader in generations.

“The question, Régis,” said Sarkozy, “is not whether I can make you dream. Dreaming, what for? To put you to sleep? … The real question is to describe the reality lived by French people today. I don’t think it’s a happy reality, there are six million people who are unemployed.”

Meet Nicolas Sarkozy, the 2016 version.

After five years as president, and four more fighting his way back into the limelight, the former president is determined to return to the Elysée palace, despite legal troubles and polls showing that a majority of French people oppose his candidacy.

This version of Sarkozy no longer has time for “dreams” or inspirational talk. Politically speaking, he has slammed the door on his former self.

Gone is the man once teased at home as “Sarko, l’américain” (intended as a put-down, he took it as a compliment), who preached equal opportunity, called for an Affirmative Action-style program to combat hiring discrimination, professed his admiration for the United States and ranked climate change and protection of the environment as one of the top priorities for his presidency.

The 2016 Sarkozy — grayer, more brittle, still remarkably trim — now looks more favorably toward Moscow than he does toward Washington. On climate change, he has turned from crusader to naysayer, telling a group of business leaders this week that only “arrogant” people could believe it was caused by man.

Forget a new economic deal for France, or the soaring music and flapping birds of his2007 campaign ads. They are gone.

Of the eight contestants for the conservative Les Républicains party’s nomination for president, Sarkozy presents himself as the only one with the grit and experience to avert disaster in France. Two months before the November vote, his pitch boils down to “total war” on terrorism: banning the burkini across France and setting up camps to detain suspected terrorist sympathizers before they have committed any crime.

“If we are not careful, the risks of a disintegration of French society will grow until they become inevitable” — Nicolas Sarkozy

“If we are not careful, the risks of a disintegration of French society will grow until they become inevitable,” he said at a recent rally, commenting on an influx of refugees. “It will then be too late to shed crocodile tears on a situation that, due to cowardice, we refused to confront.”

Sarkozy’s hard-right push even has Marine Le Pen’s camp reeling.

“He is hunting on our ground, and often outflanking us on the right,” said Nicolas Bay, the National Front’s election strategist. “We had become used to this, but this time he seems to have lost any inhibition whatsoever.”

Pivot To Moscow

For Régis and many others who once admired Sarkozy, the changes prompt a question: What happened to the man who ran for president in 2007?

Back then, the “Bling Bling” president had already irritated the French with his abrasive personal style and habit of hobnobbing with rich moguls. But what he lacked in personal appeal, he made up for with a political offering that was unlike anything on the market at the time.

Breaking with the do-nothing years of Jacques Chirac’s presidency, Sarkozy called for a radical overhaul of France’s ultra-protective, “broken” welfare system (a no-no even for right-wingers); the end of the 35-hour work week; and a chance for workers to accrue wealth via hard work — an idea that was more radical than it appears.

On foreign policy, he struck out from Gaullist orthodoxy. Never embracing the doctrine of a “multipolar” world (one in which the United States is less dominant, and other players have more power) cherished by Chirac and Foreign Minister Dominique de Villepin, Sarkozy wanted closer ties to Washington and brought Paris back into NATO’s command structure — a move that helped earn him a reputation in the United States as the “most pro-American French President since the Second World War,” according to leaked diplomatic cables.

With regard to Moscow, he maintained a pointedly skeptical stance, criticizing the “brutality” of President Vladimir Putin’s administration.

Of that Sarkozy, little remains.

The candidate who once called for scrapping any legal limit on working time now wants a 37-hour week, saying that abandoning the law would be pointless. Instead of wanting to reboot a deeply indebted social welfare system, he embraces the state’s role as a “protector” of its citizens. In the place of upward mobility for immigrants through work, he now advocates slashing immigration, reforming the Schengen zone and administering language tests to newly arrived citizens.

“Crimea chose Russia, we cannot blame them for it” — Nicolas Sarkozy

On foreign policy, the shifts are no less remarkable. Once a Putin skeptic, Sarkozy has become one of the Russian president’s champions in France, visiting him twice over the past year and echoing his defense of the annexation of Crimea.

“Crimea chose Russia, we cannot blame them for it,” Sarkozy told a party rally last year.

As for “Sarko, l’américain,” he no longer exists.

Once a frequent visitor to the U.S. embassy in Paris, the ex-president stopped attending functions once he left power, according to a diplomatic source.

Forged By Failure

One take on Sarkozy’s new approach is that he is responding to troubled times. French society is traumatized after a series of terrorist attacks, and Sarkozy is merely riding a wave of harsher political discourse emanating from the Right and Left. A senior Sarkozy aide said the former president was “answering an acute need for authority that he has heard on the campaign trail everywhere in France.”

“His campaign is based on reality, and the reality is that the French are anxious about security and the economy,” added the aide, who asked not to be named.

But terrorism alone does not explain Sarkozy’s shift. Beyond his security proposals, it’s his entire outlook that has changed to a form of conservatism which acknowledges that major changes are not possible. Once proud to declare France a member of the Western order, Sarkozy is now closer to a traditional Gaullist viewpoint that positions Paris on the fulcrum between East and West‚ another concession to tradition.

Aides argue that being in power improved Sarkozy’s understanding of his country’s political instincts. His 2012 reelection campaign, piloted by Patrick Buisson, a controversial right-wing historian, was focused on the “French people” as an indistinct, eternal mass that Sarkozy claimed to understand.

But there is a less forgiving explanation: that Sarkozy’s outlook was colored by failure and timidity. Shortly after reaching power, he attempted to enact his vision for Affirmative Action in France, only to have it crushed by a Constitutional Council that ruled out any possibility of keeping tabs on ethnic statistics in France.

On the social front, he passed a law ensuring minimum service in public transportation during strikes, and stopped taxing overtime hours (President François Hollande undid the latter measure as soon as he took power). But he stopped short of rescinding the 35-hour law, and never dealt with the heart of the problem in the labor market, as he had diagnosed it himself — the excessively complex and cumbersome labor code, and the trade unions that defend it.

Who did take a crack at the almighty labor code, for better or worse? Sarkozy’s Socialist successor, Hollande.

When other initiatives, such as his “Union for the Mediterranean,” ran into trouble, Sarkozy simply abandoned them and moved on. And when it comes to Russia, Sarkozy appears to be following a trend of Russophilia that is sweeping across the French Right.

After trying to reform France, Sarkozy claims that he gained enough experience to know what works and what does not. Another explanation is that the failure to bring about the change he had promised in 2007 killed his appetite for risk, leaving only his desire to return to power.

Article Link To Politico EU:

The Shuttering Of Those Internet Kiosks Is Another Tale Of Two Cities

By Nicole Gelinas
The New York Post
September 19, 2016

As Mayor de Blasio enters his 34th month at City Hall, New York remains a tale of two cities. The denizens of the “1 percent,” cocooned in their shadow-casting luxury condos, are free to watch SpongeBob and online porn all day on their $134.99-a-month Internet.

Ah, but the city’s most vulnerable citizens must suffer. In de Blasio’s New York, the poorest residents can’t achieve the American dream of gorging on “Family Guy” — or the not-so-private parts of exactly-of-legal-age naked ladies and their suitors — for hours on end.

This spring, the city and a group of tech firms announced something cool: free Wi-Fi. The LinkNYC partnership would replace 7,500 of the city’s payphones with Internet kiosks.

You could charge your phone at the kiosks, or use their free Wi-Fi on your phone. And if you don’t have a phone, you could use a built-in tablet at each kiosk to browse the Internet or make calls.

After a summer of the kiosks on a few avenues, what have we learned? In a world where everyone has a smartphone, the people who actually need to use a free Internet tablet at a kiosk are vagrants.

In retrospect, this makes sense. People often use the Internet when they’re bored. And it’s boring to be a homeless older man, one suffering from mental illness or addiction.

It’s boring to be a man who has no place to shower or wash his clothes, a person whom everyone else — people with the Internet in their pocket — avoids because of the smell and the ravings.

What did the vagrants use the new free Internet for? Not for short, productive bursts, to look up when Queen Elizabeth II started her reign or how to knit a hat, and then go read a book.

Also, like the rest of us, they had no reason to talk on the actual phone. They used the Internet, like everyone else, to watch TV or listen to music. And, like many people who aren’t vagrants, they spent hours staring at small screens like zombies.

Most of what I saw, walking up and down Eighth Avenue at least twice a day, was PG-rated, although other New Yorkers saw people masturbating to porn.

The nice liberal people of New York didn’t like this. The same people who find broken-windows policing distasteful and racist called the police, who duly arrested one masturbator. (In six months, look for a liberal piece about how he’s unfairly caught up in the criminal-justice system for a crime that didn’t harm anyone.)

But most of the homeless weren’t doing anything illegal. They were doing what everyone was supposed to be doing: using the free Internet.

So New Yorkers couldn’t do much about it, except wonder why they didn’t like a smelly old crazy man watching “The Simpsons” when a little immigrant girl doing research for school would’ve been cute.

Except New Yorkers could do something about it! The city and the tech gods gave us the free Internet, and what they gaveth, they could taketh away.

So, they did last week — disabling browsers at the kiosks’ tablets.

The city says the shutdown is temporary while the tech people figure out something that no one has figured out: how to make people — or those people — use the Internet only for good things, and only for short times.

By late last week, the city’s vagrants were back where they were supposed to be, sitting on cardboard boxes on the sidewalk, muttering to themselves.

No, we still haven’t figured out what to do with homeless older men — the substance-addicted and mentally ill people who haunt our streets, with no place to bathe or change their clothes.

They can go to shelters at night. But shelters are dangerous.

The city could have drop-in centers during the day for vagrants to shower and pick up donated clothes. But such centers, too, would be dangerous, and no businessperson or resident would want one nearby.

But we did fix one problem: The people whom nobody wants around can’t have free Internet.

It’s just not . . . what the progressive city envisioned.

Free speech the way people actually use it — that is, to watch whatever they want, however long they want — is only for people who have the mental health to afford to put four walls around it.

Article Link To The New York Post:

Kasich Camp Bashes Priebus, Warns Of National GOP 'Wipeout'

They are at odds over the Ohio governor's continued refusal to endorse Trump.

By Kyle Cheney
September 19, 2016 

Ohio Gov. John Kasich's war with the national Republican Party exploded into the open Sunday night, when his top adviser thrashed GOP leader Reince Priebus and hinted that the presidential election may be out of reach for Donald Trump.

The statement, issued on official campaign letterhead, followed remarks by Priebus earlier Sunday suggesting the party might block the Ohio governor from running for president again because he has refused to support Trump.

"Thankfully, there are still leaders in this country who put principles before politics," said John Weaver, Kasich's adviser, adding, "The idea of a greater purpose beyond oneself may be alien to political party bosses like Reince Priebus, but it is at the center of everything Governor Kasich does."

Weaver derided Priebus as "a Kenosha political operative," referring to Priebus's Wisconsin home, and said the three-term Republican National Committee leader should be thanking Kasich for "an inclusive, conservative vision that can actually win a national election."

"The Governor is traveling the nation supporting down ballot Republicans and preventing a potential national wipeout from occurring on Reince's watch," Weaver said.

Kasich's statement was a stunning act of open hostility between the national Republican Party and the governor in perhaps the most crucial swing state — and at a sensitive moment in the election. Trump has risen in national polls and inched closer to Hillary Clinton in swing states. He's even passed her in Ohio, perhaps his strongest chance to capture a state that Mitt Romney lost in 2012.

RNC spokesman Sean Spicer shrugged off the Kasich camp's statement. "We are totally focused on winning back the White House and maintaining our majorities in the House and Senate," Spicer said.

But another national GOP strategist, who spoke on condition of anonymity, said Kasich may end up getting punished by Republican voters for breaking his word to support the party's nominee -- which he made along with other rivals last fall. In fact, the party also makes its lists and resources available to campaigns based on similar agreements, and Kasich was a beneficiary of those lists.

"Politicians who sign their names on pledges and agreements then not honor them, are only doing harm to themselves, as they do nothing but illustrate to prospective voters their word means nothing," the operative said.

Yet, Kasich has persistently refused to endorse Trump since dropping out of the presidential primary on May 4. In an interview that aired Sunday on "Meet the Press," Kasich ruled out voting for Clinton but said "it's very, very likely I will not" vote for Trump.

Endorsements are rarely critical in national elections, but Kasich defeated Trump in a March primary in Ohio and has deep ties with local GOP leaders, giving him outsized influence over the machinery of the party.

Throughout the race and especially since dropping out, Kasich has presented his sunnier brand of politics and ties to the GOP establishment as an alternative to Trumpism. And in the process, he's infuriated party officials and Trump backers for continuing to needle their nominee.

At the Republican National Convention in July — in Kasich's backyard in Cleveland — Kasich refused to attend but held a string of events on the margins to push his own version of Republicanism.

That steadfast refusal to fall in line prompted Priebus to hint Sunday that the party might not forgive its leaders who refused to back Trump in the home stretch of the campaign.

"Those people need to get on board. And if they're thinking they're going to run again someday, I think that we're going to evaluate the process — of the nomination process and I don't think it's going to be that easy for them," he said on "Face the Nation" on CBS, after he was specifically asked about Kasich.

"In order to be on the ballot in South Carolina, you actually have to pledge your support to the nominee, no matter who that person is. So what's the penalty for that? It's not a threat, but that's just the question that we have a process in place," Priebus continued.

Priebus worried that the lack of unity among Republicans was hurting Trump's electoral chances, even as signs of coalescing had begun.

"We need to do a couple more percentage points better and we're doing that as we move forward," he said.

Article Link To Politico:

Kasich Camp Bashes Priebus, Warns Of National GOP 'Wipeout'

George Will: A Look At The Most Important Senate Race In America

By George F. Will
The New York Post
September 19, 2016

From Erie in the west to Scranton in the east, Pennsylvania is flecked with casualties that stubborn economic sluggishness and relentless globalization have inflicted on industrial communities. But in this middle-class Philadelphia suburb, Tom Danzi knows that the economy is denting even his business repairing damaged cars.

His Suburban Collision Specialists once had 27 employees kept busy by drivers stimulating the economy by producing fender benders. Now he has only 17. Many cash-strapped motorists keep driving cars with unrepaired scars. So, US Sen. Pat Toomey, a Republican seeking a second term, recently came here to commiserate and to warn that if his Democratic opponent wins she will make matters worse.

Which she probably will if she gets to the Senate. There Katie McGinty, a creature of the public sector who began her government-centric life giving Sen. Al Gore environmental-policy tips, probably would be a reliable member of an unleashed, and perhaps unhinged, Democratic majority: As Toomey’s seat goes, so, probably, goes the Senate.

If he loses, Republicans probably will lose control of the Senate, and that body probably will lose its character: Senate Democrats, who are situational ethicists regarding Senate rules, might further dilute the ability of the minority to require a 60-vote majority for, among many other things, confirmation of Supreme Court justices.

Toomey recited for a smattering of supporters here McGinty’s policy enthusiasms, which encompass Democratic orthodoxy and have a cumulative price tag, he says, of $980 billion.

While Toomey talked, on the sidewalk in front of Danzi’s shop a small gaggle of McGinty supporters held signs to explain their prop, which needed an explanation: It was a large — the size of an ironing board — replica of the “friendship” bracelets children make at summer camps.

This was the gaggle’s labored way of saying that Toomey is Donald Trump’s friend. Not exactly. Toomey supported Marco Rubio for the GOP nomination, then Ted Cruz, and has not yet said he will vote for Trump. But the fiction could be fatal where this election probably will be decided — here among moderate voters in the “collar” counties surrounding Philadelphia.

Trump probably will carry some Pennsylvania counties with at least 75 percent, so Toomey must sail between the Scylla of endorsing Trump and thereby offending all non-Trumpkins, and the Charybdis of not endorsing and fueling the Trumpkins’ constant rage.

In June, Toomey had a high single-digit lead. Today he’s tied. He says that by Nov. 8 more money will have been spent against him than against any other senator. And for him, some Republican good news is problematic: In Ohio, the weakness of Ted Strickland, the Democratic challenger to Sen. Rob Portman, might cause Democrats to redirect money to McGinty.

And some bad Republican news elsewhere is bad for Toomey: Because two Republican incumbent senators — Missouri’s Roy Blunt and North Carolina’s Richard Burr — are having more difficult races than anticipated, Toomey faces intensified competition for Republican funds.

Toomey surfed into office on the Republican wave of 2010, which was largely a result of a recoil against the Affordable Care Act. But even in that favorable environment he won by only 51-49 percent.

He could, however, wind up owing two Senate terms to ObamaCare, which is unraveling in Pennsylvania, too: The Kaiser Family Foundation reports that by next year, only 28 counties will have three or more health insurers selling through the ACA exchanges, down from all 67 counties this year.

Toomey grew up in a union household in Rhode Island, earned a Harvard scholarship, did well on Wall Street, then joined his brothers in Allentown, Pa., to start what became a successful chain of restaurants.

He successfully ran for Congress in 1998, and in 2004 did something eccentric: He kept his promise not to run for a fourth term. After losing a Senate contest that year, he became head of the free-market advocacy group Club for Growth. Today he is among the most important Republicans regarding the most important issue, tax reform, relating to the nation’s most important challenge, the restoration of robust economic growth.

There’s no really happy ending for Republicans in 2016. If Trump wins, the party’s rupture with its past is complete and irreparable. If he loses narrowly, there’ll be an orgy of intramural recriminations, and the GOP’s 2016-2019 will be like Spain’s 1936-1939, an exceptionally uncivil civil war. If Trump loses emphatically, Democrats probably take the Senate. Unless Toomey wins this year’s most consequential Senate race.

Article Link To The New York Post:

Team Trump Spooked By Charity Probe

At times the Trump campaign can seem impervious to scandal, but the allegations swirling around his family’s foundation make them more than a little nervous.

By Tim Mak
The Daily Beast
September 19, 2016

Those in Donald Trump’s orbit appear to be nervous about the swirling scandal around the Trump Foundation—and they should be: the stakes are incredibly high.

The allegations of a quid pro quo between Trump and Florida Attorney General, improper use of the charity for personal benefit, and employment of the charity for political purposes have serious penalties beyond mere campaign optics—the possible consequences range from hefty fines to jail time.

The last seven days has been all bad news on the Trump Foundation front: House Democrats have publicly sought a Justice Department investigation into the charity, while left-leaning watchdog group Citizens for Responsibility and Ethics in Washington alleged that Trump appeared to have bribed Florida Attorney General Pam Bondi by giving her a $25,000 contribution so that she would not join a lawsuit against Trump University.

And a New York Times investigation this past week showed that Trump had personally signed the check that constituted the illegal campaign contribution from his charity to Bondi.

Add this to a dose of personal animosity: New York Attorney General Eric Schneiderman told CNN this week that “we have been looking into the Trump Foundation to make sure it’s complying with the laws governing charities in New York.”. The Trump camp already despises Schneiderman due to his legal crusade on the controversial Trump University business.

“This reaches above a distraction for them due to the legal implications of it and long litigation possibility,” a former senior aide to Trump said. “Look, Donald signed those checks… he’s on there. He’s liable.”

The Trump campaign appears spooked by these developments: an interview between Donald Trump Jr., who is listed as a director for the Trump Foundation, and a Pennsylvania TV station was abruptly cut off after he was asked about the charity.

“I don’t know anything about that,” Trump Jr. said.

There are a number of serious allegations against the Trump Foundation, including his use of the charity to further his campaign by handing out Trump Foundation checks to veterans’ charities at campaign rallies; and accusations of self-dealing, such as using the charity’s funds to buy a $20,000, six-foot-tall portrait of himself.

But the most damaging allegation (at least so far) surrounds an illegal $25,000 contribution that the Trump Foundation provided to a political action committee linked to Bondi.

On Sept. 13, 2013, the Orlando Sentinel reported that Bondi’s office was reviewing the legal action initiated by the state of New York against Trump University to see if Florida should join the case. Four days later, on Sept. 17. 2013, the Trump Foundation made a $25,000 contribution to a political committee associated with Bondi. Trump would also hold an extravagant fundraiser for Bondi six months later.

Soon after the $25,000 contribution to a Bondi-linked PAC, the attorney general decided not to pursue legal action against the controversial Trump University, which which many participants have likened to a scam.

Bondi’s office has acknowledged that the attorney general personally solicited a political contribution from Trump in the week surrounding her office’s internal deliberations over whether to join the Trump University lawsuit.

A New York Times investigation partly undercut the timeline by showing that the check from Trump had been signed four days before the Orlando Sentinel article appeared. But, the article continues, the check’s date does not rule out that Trump was trying to influence Bondi—the businessman has frequently bragged that he made campaign contributions to politicians in order to curry favor and gain an edge in business dealings.

Trump has already paid the IRS a $2,500 penalty this year for violating tax laws by giving a political contribution to Bondi’s PAC through his charity. The Trump Foundation had not listed the political donation in records filed to the IRS. Instead, it listed a donation to a Kansas charity with a similar-sounding name. Trump’s organization said that this had been an innocent mistake.

”This was simply a clerical error as has been widely reported. Mr. Trump voluntarily took corrective action, consistent with IRS procedures. He caused the Foundation to immediately file a Form 4720 and reimbursed the Foundation for the $25,000 payment and paid the full $2,500 excise tax due,” said Hope Hicks, a spokeswoman for the Trump campaign.

That the Trump Campaign is engaging on this issue at all can be interpreted as a sign that they take the allegations very seriously. This Daily Beast reporter has reached out to Trump spokeswoman Hope Hicks nearly two dozen times this calendar year on varying topics, and has received no response on any issue—even issues that may reflect well on Trump—except twice this week on the relationship between the Trump Foundation and Pam Bondi.

Hicks also recommended an article from, a blog run by legal commentator Dan Abrams. The blog post is titled, “Sorry Democrats, New Docs Pretty Much Collapse Entire Trump/Bondi (Non) ‘Bribery Scandal’”

“Over the years, Mr. Trump has made many contributions to politicians, but never quid pro quo,” Hicks added.

But not everyone is ready to drop the issue quite yet, least of all CREW, the left-leaning watchdog group, which has been leading the charge to investigate the Trump charity’s contribution to Bondi and has alleged that bribery apparently occurred.

“These are serious potential violations of the law. In the worst-case scenario for Trump and the Foundation, the IRS could take away the Foundation’s non-profit status—effectively ending it—and charge tax penalties for the political and private benefit of its actions for Trump. Trump and Bondi could face federal felony charges from the Department of Justice, the highest charges carrying up to ten years in prison,” said Jordan Libowitz, a spokesman for CREW, which filed a bribery complaint to the Justice Department last week.

Willfully making false statements on a tax return is punishable by up to five years in prison, while bribery carries a penalty of up to ten years in prison. Charging Trump or other individuals with criminal activity is the most extreme scenario, but one with an obviously catastrophic result. It could take years of legal action, and the Justice Department and IRS have not yet shown any willingness to take these steps.

“[The Justice Department] is hesitant to press bribery charges without concrete evidence of a quid pro quo, such as provided by a sting operation. The timing of a campaign contribution and Bondi’s decision not to investigate the charity is usually considered insufficient evidence,” said Craig Holman, a government affairs lobbyist at the left-leaning consumer rights group Public Citizen. “Nevertheless, the timing is bolstered by Trump’s own words that he often uses money to buy political favors from politicians. Trump not only brags about corruption, in this case, he appears to show us how it is done.”

But another entity that is empowered to act is the New York state attorney general’s office. If the feds don’t pursue further penalties against Trump’s charity and those associated with it, it’s possible that Attorney General Schneiderman’s office may do so.

The New York Attorney General’s Charities Bureau is currently undertaking an investigation into the Trump Foundation, and has reportedly been corresponding with the Trump Foundation since June. The Trump campaign has shot back by calling Schneiderman a “partisan hack” and pointing out that he has endorsed Hillary Clinton for president.

“They’re going to be absolutely furious that Schneiderman has opened up the investigation. He’s not public enemy number one, but he’s not well liked in the Trump orbit. They’re thinking he’s using the office for political purposes,” said a former senior aide to Trump. “He’ll litigate this to the end with Schneiderman. He’s not going to give an inch.”

The charity bureau’s investigative tools include the power to subpoena bank records, financial files, communications and individuals for interview, an official with the bureau explained, and its tools for punishing violations of rules include dissolving the charity, forcing reforms at the foundation, or in the most serious, rare cases, can charge individuals with filing false records, a misdemeanor that carries up to a year in jail.

“The NY AG may force governance changes and may well seek to remove Trump and his family members from the board or require a majority of independent board members. The AG may also uncover other issues,” said Marcus Owens, a lawyer who once served as the director of the IRS’ Exempt Organizations Divisions, which oversees the nation’s charities and foundations.

Ultimately, even if criminal charges are not brought, the Trump Foundation has become something of a case study—on how not to run a charity.

“The charges are very serious. This is a real abuse of philanthropy for personal and political gain,” said Aaron Dorfman, the president and CEO of the National Committee for Responsible Philanthropy. “And that’s not what a private foundation is supposed to be for.”

Article Link To The Daily Beast:

How To Get China To Use Its Leverage Against North Korea

Acknowledging China’s security equities and U.S. compromise might tip the balance.

The National Interest
September 19, 2016

The ever-exciting Kim Jong-Un—aka the “un-leader”—has done it again. Thrice in two weeks, actually. While American, South Korean and Japanese leaders were meeting in Tokyo late last month to discuss how best to deal with his serial misbehavior, he fired off another of his “forget me not” fusillades—this one a ballistic missile fired from a submarine. Then, to reinforce the message, he launched three medium-range ballistic missiles into Japanese waters during the G20 meeting in Beijing and for a grand finale, lit off his largest nuclear test to date.

As so often in the past, North Korean misbehavior has elicited the usual protests and promises. Japan’s Chief Cabinet Secretary, Yoshihide Suga, declared that “Japan will not tolerate such acts” by “an outlaw nation.” The South Korean government called the actions a “grave provocation that can never be overlooked.” U.S. Secretary of State John Kerry said that he is deeply concerned. And, of course, the U.N. Security Council met in an emergency session for more discussion. All this has become dangerously routine.

But no speechifying will count for much without action from China beyond formal protest and weak sanctions. The danger posed by North Korea’s arsenal goes far beyond the immediate and obvious challenge of nuclear proliferation. It also threatens the strategic relationship between China and the United States. North Korea’s weapons programs have already prompted the United States to establish (and more recently expand) a Ground Based Interceptor (GBI) system in Alaska and California. And it has prompted America’s Asian allies to buy or host a variety of missile defense systems, including interceptors and radars.

It is time for a bargain between Washington and Beijing on a new and tougher approach – one that will require China to use its leverage to change North Korean behavior. Barring that, those most directly threatened— South Korea, Japan, and the United States—will rightly adopt new defensive measures that will, ultimately, impinge on Beijing’s security interests. China should understand that, as bad as the consequences for its security interests have been to date, they could get significantly worse. The classic security dilemma in which we are now entangled threatens to undo decades of stable economic growth and political stability in the region.

Both Washington and Beijing have equities in play. China blames the United States and its allies for “adding oil to the flames.” It fears that U.S.-based and forward-deployed missile defense systems may be linked and that, in combination with U.S. offensive missile systems, these could threaten the viability of Beijing’s limited nuclear retaliatory power. In response, China has developed and deployed a wide range of offensive systems, including new classes of land-based mobile missiles, ballistic missile submarines, and multiple warheads for existing silo-based missiles. China’s nuclear force development has, in turn, undermined the U.S. commitment to pursue further nuclear arms reductions and encouraged it to instead modernize existing forces.

Concerns about the Asian strategic balance have now worked their way to center stage in the U.S. presidential election campaign—never a welcome development. Hillary Clinton has declared that the United States “will not allow” North Korea to pursue nuclear weapons, while Donald Trump has assumed a more insouciant posture. Both have called on China to do more to restrain North Korea.

They are on to something here, but have yet to flesh out important details. The North Korean economy is largely isolated, excluding trade with China. Weak sanctions imposed by the United States and others (with China’s support at the United Nations) have failed to dissuade the North from continuing with its weapons programs. It is unlikely—but not inconceivable—that the United States would undertake direct action against the North’s nuclear and missile programs. U.S. allies South Korea and Japan would face heavy retaliation, and a general war could follow. Neither U.S. nor Asian leaders and their publics are likely to have the stomach for such action.

Instead, at some point soon, the countries most directly threatened are likely to stop waving papers of moral indignation in North Korea’s general direction and will get back to the business of buttressing their defenses. Prior to these latest provocations, South Korea had already agreed to U.S. deployment of Terminal High Altitude Area Defense (THAAD) on the peninsula. Less widely recognized is that Japan’s missile defense and satellite-based surveillance programs were stood up in response to North Korea’s 1998 test flight of a Taepodong-1 missile directly over the Japanese archipelago.

Unsettled by these developments, Beijing has become less patient with North Korea over the last several years. Yet its trade with North Korea, which accounts for more than 85 percent of the North’s total and almost all of its oil, has remained extensive. Beijing’s reticence to impose more meaningful sanctions springs primarily from its fear of North Korean political and social instability—it already unenthusiastically hosts a significant number of refugees fleeing the North. Beijing is also not keen to see the reunification of the peninsula or the possibility that the U.S.-ROK alliance will extend northward.

The consequences of Chinese inaction, however, may be worse. Indeed, they might be described as a nightmare for Chinese defense planners: the deepening of U.S. alliances with Japan and Korea; increased military and intelligence cooperation between the ROK and Japan (they recently held their first combined missile defense exercises and have been discussing a formal intelligence pact); the joint U.S.-Japan development of new missile defense interceptors (including some that might be capable of intercepting intercontinental range missiles); the procurement and deployment of Japanese long-range strike capabilities (currently being studied in a new Japanese Air Self-Defense Force office); and increased U.S. investment in new defensive technologies (such as directed energy weapons and electromagnetic rail guns).

U.S. diplomats have made efforts to highlight these possibilities for China, but they may not have gone far enough. Such warnings do not constitute a U.S. threat or ultimatum. They are a simple statement of inexorable reality: the extant security dilemma drives everyone to an unhappy place.

But U.S. leaders should not only point out the downside of Chinese inaction. They should put an offer, or set of offers, on the table. If China agrees to impose a serious and graduated set of sanctions on North Korea– ones that the North cannot ignore – the United States might agree to freeze the deployment of GBI at their current number (and reduce the number as North Korea reaches milestones in dismantling its weapons programs). The United States might also agree, after consulting South Korea, to withdraw THAAD from the peninsula when North Korean nuclear weapons no longer pose a threat. Washington, together with Japan and South Korea, could assure Beijing that they will pay for (and potentially arrange) the resettlement of refugees from the North. Finally and perhaps most importantly, the United States could pledge that it will not station or exercise military forces north of the current DMZ if North Korea collapses and the peninsula is reunified.

As always, Washington will need to emphasize in its broader public diplomacy (as well as in its private discussions with Japan and South Korea) that its commitment to the defense of allies is unshakable – and that the United States will continue to deployed capabilities as needed to fulfill its obligations. But both GBI and the THAAD deployment to Korea have been justified exclusively on the basis of the North Korean nuclear and missile threat, and flexibility on the deployment of those systems would be well worth a verifiable end to the North’s WMD programs.

Beijing, which suspects that X-band radar associated with U.S. THAAD in South Korea might also track Chinese missiles, is unlikely to change course based solely on U.S. assurances about future moderation of U.S. strategic deployments. The bargain outlined above is not meant to change China’s perspective or its view of its own national interests. Rather, it presupposes that North Korea’s most recent provocations may bring Beijing to recalculate the costs of its inaction. We believe that a forthright U.S. acknowledgment of China’s own security equities and a willingness by Washington to compromise might help tip the balance in Beijing and pacify the Korean Peninsula.

Article Link To The National Interest:

The Secret Law For Wall Street

Banks and oil companies are in the crosshairs as regulators fire from blinds.

By Kevin D. Williamson 
The National Review
September 19, 2016

It is impossible to pity Wall Street for its current predicament. After doing so much to ensure the election of Barack Obama in 2008 and lavishly patronizing his congressional allies, the pinstripes-and-Adephagia set is suffering mightily under burdens partly of its own creation.

Which would all be good sport it if weren’t bad for the rest of the country.

In the wake of the 2008–09 financial crisis, major financial firms were in effect made subject to a set of secret regulations. Under the authority of the Federal Reserve, banks are subjected to “stress tests,” a kind of financial game — think Dungeons & Dragons as imagined by accountants. Regulators draw up test cases involving economic models used to project the effect of severe downturns, market crashes, and other nasty events on the solvency of large financial firms, of the sort we’re not supposed to call “too big to fail” any more — even though a decade’s worth of reforms has left them even bigger than they were back when they were only too big, instead of too-too big. Never mind, for the moment, whether the economic models behind those test cases are any good – what’s relevant to the question at hand is that they are secret.

It is easy to understand why the regulators want to keep the particulars of their stress tests a secret from the people who run the big Wall Street companies. The people who run the big Wall Street companies are – forgive the bluntness – a heck of a lot smarter than the people who would regulate them. If they know exactly what standards they will be required to meet, they’ll reverse-engineer a way to meet those standards, and the Fed may as well never do another stress test. We do not really have to guess about that: The entire field of structured finance exists almost exclusively as a response to various kinds of financial regulations and prohibitions. The people at Goldman Sachs and J.P. Morgan are intelligent enough to make their accounts say whatever they need to say to satisfy regulators. They may not be happy about it — they almost certainly will not be happy about it, because it eats into profit — but if they know the rules of the game, they will play the game by the rules.

But Washington is asking them to play by the rules — and then stapling the rulebook shut.

Banks’ stress-test performances have real, substantial effects on their businesses. If they do not satisfy the examiners, they are forced to reallocate their capital in ways that are more in keeping with regulators’ preferences but less profitable. Which is to say, banks are in effect being regulated, tightly, in accordance with an economic model that is kept intentionally opaque, not only to financial executives but also to the public, in whom the sovereignty of the federal government resides and to whom regulators acting under color of federal law are responsible.

A group of financial firms is so vexed by the situation that it is considering legal action against the federal government to relieve the industry of this burden — or at least to make the particulars of that burden known to those carrying it.

There is a kind of double bind at work here: Because of the 2008–09 financial crisis, Washington wants banks to engage in fewer different kinds of financial activities and to become more risk-averse than they were. (You know how you can make a bunch of banks really, really risk-averse? Let them fail when they make bad investments. One assumes that many of those Lehman Bros. veterans are very cautious ladies and gentlemen, indeed.) But there’s a problem with Washington’s trying to make banks more risk-averse: It is working. And that, combined with the ultra-low interest rates of recent years, has made financial firms less profitable. Perversely, that leaves them more vulnerable to financial shocks, rather than less vulnerable.

Banks are not the only firms subject to what amounts to secret law. Until their dreams came to a quick and ugly halt in a U.S. federal court, a cabal of lawyers and environmental activists with ties to the New York Democratic machine, the Obama administration, and progressive media outlets such as the Huffington Post had been (and, to a lesser extent, it still is) engaged in what is probably the largest single extortion attempt in modern history, trying to shake down Chevron for billions of dollars for environmental crimes with which the oil giant had nothing to do. A great many well-connected Democrats thought they were going to be paid behind that, and when it turned out that they (probably) weren’t, the Democrats, led by New York attorney general Eric Schneiderman, turned their attention to another oil giant, Exxon.

The case against Exxon started off as pure political harassment by a group of Democratic attorneys general representing New York, California, and a few other states, along with the U.S. Virgin Islands. Exxon and advocacy groups to which it had contributed (notably, the Competitive Enterprise Institute) were subjected to invasive subpoenas as part of a fanciful “fraud” investigation seeking to punish Exxon and free-market groups for refusing to toe the Democratic line on global warming. (Exxon, incidentally, does more or less toe that line so far as the question of the scientific consensus goes, though it prefers different policies — another illustration of the fact that if you are sitting on a large sum of money, you can never be progressive enough for the progressives who covet that money.) Now the jihad against Exxon is taking a new turn.

With oil and gas prices low due in no small part to the fact that the United States has been producing more oil than Saudi Arabia in recent years — thanks, fracking! — a great many oil and gas wells have been temporarily sidelined, because it costs too much to operate them with prices as low as they are. The energy business is remorselessly cyclical. Many oil companies have taken write-downs on their non-producing assets — for bookkeeping purposes, the value of those assets has been reduced to reflect lost production — but Exxon has not. Exxon has a few reasons for this, but the short version is that given the diversity and range of its holdings — by market capitalization, it has ranged over the past several years from being the world’s largest company to its fifth-largest — and the fact that its previous valuations were (so it says) very conservative, it has no need to write down assets that it regards as temporarily sidelined. Some analysts say Exxon is wrong to do this, others say the firm is on solid ground.Schneiderman has opened up an investigation under the Martin Act, a securities statute.

Is Exxon in the wrong? It is, in fact, impossible to say. There are highly technical questions in play, and, as in many such cases, it probably will come down to a matter of competing interpretations of a dozen or more different financial and non-financial issues. On the one hand, Exxon has a legal duty to make accurate public statements about its finances; it also has a legal duty to act as a fiduciary to its shareholders, which means not imposing unnecessary losses on them. The company also believes — it may be wrong about this, but it may not — that it is uniquely situated to wring profits out of certain assets even at prices that would have its competitors capping those wells. To call the law here “murky” and “contradictory” would be too generous.

But does anybody seriously believe that Eric Schneiderman is dispassionately considering the legal issues here? Or is it more likely that he has simply identified a new front in his campaign against a company, and an industry, that he intends to use as a political whipping boy and/or cash cow?

Whether they are banks facing stress tests or oil companies trying to figure out how much value their engineers and managers can actually derive from a certain asset, companies need legal and regulatory clarity and certainty. ExxonMobil is a $340 billion company — it needs to know whether it is breaking the law without bankrupting itself through excessive caution. The banks, for their part, are worried about the presidential election and what its outcome will mean for the regulation of their industry — and when the commanding heights of the economy are being held hostage to political worries, you have a deep and wide problem.

Sure, nobody weeps for investment banks or oil companies.

Article Link To The National Review:

Iran Can’t Whitewash Its Record Of Terror

Saudi Arabia would welcome better ties with Tehran—but first it must stop supporting terrorism.

By Adel Al-Jubeir
The Wall Street Journal
September 19, 2016

Ronald Reagan was fond of quoting John Adams, who famously said: “Facts are stubborn things.” So when Iranian Foreign Minister Javad Zarif made public pronouncements about fighting extremism, the facts show that his comments are ironic at best and little more than insincere propaganda.

The fact is that Iran is the leading state-sponsor of terrorism, with government officials directly responsible for numerous terrorist attacks since 1979. These include suicide bombings of the U.S. Embassy in Beirut and the Marine barracks at Beirut International Airport; the bombing of Khobar Towers in Saudi Arabia in 1996; attacks against more than a dozen embassies in Iran, including those of Britain, the U.S. and Saudi Arabia; and the assassination of diplomats around the world, to name a few examples.

Nor can one get around the fact that Iran uses terrorism to advance its aggressive policies. Iran cannot talk about fighting extremism while its leaders, Quds Force and Revolutionary Guard continue to fund, train, arm and facilitate acts of terrorism.

If Iran wants to demonstrate sincerity in contributing to the global war on terrorism, it could have begun by handing over al Qaeda leaders who have enjoyed sanctuary in Iran. These have included Osama bin Laden’s son, Saad, and al Qaeda’s chief of operations, Saif al-Adel, along with numerous other operatives guilty of attacks against Saudi Arabia, the U.S. and other targets. It is a fact that Saif al-Adel placed a call from Iran in May 2003 giving orders for the Riyadh bombings that claimed more than 30 lives, including eight Americans. Yet he still benefits from Iranian protection.

Iran could also stop funding terrorist organizations, including Hezbollah, whose secretary-general recently boasted that his organization gets 100% of its funding from Iran. Iran could stop producing and distributing improvised explosive devices, or IEDs, which have killed or injured thousands of U.S. troops in Iraq and Afghanistan. And Iran could halt supplying weapons to terrorists and sectarian militias in the region who seek to replace legitimate governments with Iranian puppets.

In Syria, the blood of the more than 500,000 people slaughtered by the regime of Bashar al-Assad stains the hands of Iran, which sent forces—both regular troops and nonstate actors—to prop up the Syrian regime. Iranian leaders have said publicly that if not for their efforts, Assad would have fallen from power.

Iranian officials sometimes lament sectarian strife and violence. But here again, the facts are stubborn. The region and the world were at peace with Iran until the Ayatollah Khomeini’s 1979 Islamic revolution, whose principal slogan remains, “Death to America!” Mullahs seized power and vowed—as written in their constitution—to export the revolution and spread their ideology through religious and sectarian conflict.

To export the revolution, Iran set up so-called Cultural Centers of the Revolutionary Guard in many countries, including Sudan, Nigeria, Syria, Lebanon, Yemen and the Comoros Islands. The aim was to spread their ideology through propaganda and violence. Iran went so far as to propagate that the Shiite Muslims living outside Iran belong to Iran and not the countries of which they are citizens. This is unacceptable interference in other countries and should be rejected by all nations.

It is this ideology of “Khomeinism”—driven by an appetite for expansion, fueled by anti-Western hatred and motivated by sectarianism—that has energized and empowered extremism. Only by ridding the world of this toxic and radical mind-set can sectarianism be contained, terrorism defeated and calm restored to the region. If Iran is serious about combating extremism, then it should refrain from policies and actions that give rise to extremism.

Since signing the nuclear deal with the U.S. last year, Iranian leaders have taken to pointing fingers at others to assign blame for the regional problems that they helped create. But before buying into their rhetoric, consider a few questions: Which country issues a fatwa for the execution of author Salman Rushdie, a death threat that is still in force today? (Iran.) What country has attacked more than a dozen embassies inside its own territory in violation of all international laws? (Iran.) What country managed, planned and executed the 1996 attack in Khobar Towers against the American Marines? (Iran.) Do these answers describe a country that is serious about combating terrorism and extremism?

The rest of the Islamic world has unanimously condemned Iran’s behavior. In Istanbul in April, the Organization of Islamic Cooperation formally rejected and deplored Iran’s policies of sectarianism, interference in the affairs of others and support for terrorism.

Saudi Arabia is a leader in the war against terrorism. My country brought the world together for an international conference in 2005 to align nations in the fight against terrorism. The kingdom contributed more than $100 million to create a global center for counterterrorism at the United Nations and established a 40-member Islamic Military Coalition to combat terrorism and extremism. It also is a member of the U.S.-led Global Coalition to Counter ISIL and is part of the coalition’s continuing military operations.

The kingdom has also foiled several attacks aimed at the U.S., and its leaders have been a target of suicide terror attacks. The kingdom’s record is clear, and attested to by our allies and the international community.

Iran’s record is one of death and destruction, as the situation in Syria and parts of Iraq clearly attests. Words will not change that; concrete action will.

Saudi Arabia’s position has remained constant with regard to Iran. The kingdom would welcome better relations with Iran, based on the principles of good neighborliness and noninterference in the affairs of others. That means Iran has to abandon its subversive and hostile activities and stop its support for terrorism. Thus far, Iran’s record has not been encouraging.

Article Link To The Wall Street Journal:

Is The Presidential Race Actually Between The IRS And Wikileaks?

The release of either Trump’s tax returns or Clinton’s destroyed e-mails could determine who enters the White House.

By John Fund 
The National Review
September 19, 2016

Of course, the presidential race is between Hillary Clinton and Donald Trump. But what if there’s another parallel race going on — a race to see how much scandalous material on both candidates will leak out before the election and who will be most damaged by it. Call it a contest between the IRS’s secrets (which Trump has reason to be nervous about) and Wikileaks (whose past leaks have already jolted Hillary’s campaign).

The past of both candidates might contain material that could tilt the direction of the presidential election. Donald Trump has steadfastly refused to release his tax returns despite early promises to do so and polls showing that 62 percent of Americans think it’s important for him to do. He has to worry about a potential leak of his IRS returns similar to the one Mitt Romney suffered in 2012.

In Hillary Clinton’s case, Wikileaks founder Julian Assange told the left-wing radio program Democracy Now in July that he has already released Hillary Clinton e-mails that “connect together with the cables that we have published of Hillary Clinton, creating a rich picture of how Hillary Clinton performs in office, but, more broadly, how the U.S. Department of State operates.” He has strongly hinted that further e-mails could shed light on the cozy relationship between State and the Clinton Foundation as well as on the State Department’s motivations for covering up details of the Benghazi terrorist attack in 2012.

Both sides are clearly nervous about possible revelations before the November election — or even before the first presidential debate on September 26. Donald Trump Jr., the candidate’s son, admitted to the Pittsburgh Tribune Review last week that the real reason for the non-release of the tax returns had to do with their political impact, rather than any ongoing IRS audit. Speaking to the paper’s editors, Trump Jr. said, “Because he’s got a 12,000-page tax return that would create . . . financial auditors out of every person in the country asking questions that would detract from [my father’s] main message.” In other words, the returns could reveal that his father’s wealth is substantially less than the $10 billion he claims, or that he makes fewer charitable contributions than he has stated, or that he takes advantages of tax loopholes and often pays zero or little in taxes.

Representative Steve King, an Iowa Republican, had his own explanation for why the campaign won’t release any tax returns. with any release. “There would be all kinds of misinterpretations of that and maybe some real interpretations of that between now and November,” he told CNN last Wednesday. “That would be the only discussion we’d have.”

So instead the Trump campaign will take its chances that the returns won’t leak. Mainstream media outlets are already sending out everything but engraved invites for someone to leak the returns. Last week, CNN reported that both Dean Baquet, the executive editor of the New York Times, and Bob Woodward, an associate editor at the Washington Post, told a Harvard symposium they would go to jail to protect any sources who gave them the tax returns.

As for Hillary Clinton, Democratic sources tell me that they are worried her infamous deleted e-mails (destroyed by something called BleachBit, of all things) could resurface in leaks from either the FBI or foreign-intelligence agencies — or even ordinary hackers. PJ Media cites congressional sources who say that portions of the Clinton e-mails were hacked by Guccifer (a Romanian blogger now in prison for intercepting the e-mails of Clinton confidant Sidney Blumenthal). Files containing the contents of additional e-mails from Hillary and Blumenthal might already be accessible in password-protected parts of the “deep Web,” a part of the Web that is not discoverable through standard search engines.

What could be in Hillary’s e-mails? In addition to embarrassing details of the hand-in-glove relationship some of her aides kept with the Clinton Foundation, there could be documents related to Benghazi, PJ Media reports. NRO’s Andrew McCarthy, a former federal prosecutor, has reported that many analysts and members of Congress believe that Hillary Clinton and the State Department were actively arming Islamic jihadists seeking to topple the Assad dictatorship in Syria in 2012 — and that they were having weapons shipped from Benghazi to the jihadists.

Some of the recipients could even have had links to the Islamic State in Syria (ISIS). Circumstantial evidence keeps piling up that Clinton and the State Department had a reason to obscure the truth about the Benghazi terrorist attack that killed four Americans. “What if just weeks before the 2012 election it had been revealed that the Obama administration was shipping arms through a third country to benefit Islamic radicals?” one congressman on the House Intelligence Committee asked me. “It would have been another version of the Reagan-era Iran-Contra scandal, and it would have led to a public uproar that could have affected Obama’s reelection. Clinton and the State Department have strenuously denied any involvement with the shipment of arms to Syrian jihadists.

Why is Assange so eager to boast that his future revelations will damage Hillary Clinton? He has repeatedly said he believes that the current failed state in Libya was caused by her aggressive support of the American role in overthrowing Libyan dictator Moammar Qaddafi. He has called her a “liberal war hawk” who would misuse American military power if she were president.

There’s another more ironic explanation for Assange’s antipathy to Hillary. The public justification for the existence of Wikileaks is that it supports “radical transparency” — a belief that decisions taken behind closed doors by government officials and elites should be revealed to the public as much as possible. And what candidate for high government office in a democratic country is less transparent than Hillary Clinton, who this month went so far as to conceal here diagnosis of pneumonia? It would be rich irony indeed if Hillary Clinton’s obsession with secrecy acted like a red flag in front of a bull and motivated people to strip away her protective layers right before the most crucial political moment of her life.

Article Link To The National Review:

For Yellen, A September Fed Surprise Could Close Confidence Gap

By Howard Schneider 
September 19, 2016

Market volatility is low, U.S. census data shows income gains have reached the middle class, and workers are clawing back a larger share of national income. For now, at least, no international risk stands out and inflation may even be picking up.

If Fed Chair Janet Yellen wants to prove that policymakers are not being pulled along by investors who for years have second-guessed them, this week may offer a rare moment of calm to do so.

The Fed is divided enough ahead of its Sept. 20-21 rate meeting that a nudge from its most influential policymaker could make the difference, and even some investors have begun to argue it is time for the central bank to stop worrying so much about what markets expect.

"Let's get on with it already," said Michael Arone, chief investment strategist at State Street Global Advisors.

"It will cause some challenges to the market but I think that is healthy in context of a normal business cycle," Arone said "It will increase the cost of capital, and flush out some riskier assets in the short term. But that is probably the right thing to do."

A Reuters poll last week suggested it is a very long shot.

The poll showed the median probability of a rate rise provided by economists was about one-in-four and only 6 percent of those surveyed expected the Fed to act, with the majority expecting the Fed to wait until December.

Fed funds futures trading shows that investors are even more skeptical than that, and expect the Fed to stay put until February - more than a year after the central bank raised rates and signaled more would come this year and next.

Instead the central bank has been stuck at the 0.25 to 0.5 percent range set last December when it lifted rates for the first time in a decade.

Doubts Over Economy, Or Yellen?

Many investors, economists, activists, and some policymakers say the economy is still not ready for higher rates.

The receding rate rise expectations may reflect such concerns about the U.S. economic recovery. They may also reflect doubts, however, about Yellen's message that the case for a rate increase is growing stronger.

Such skepticism about the Fed's plans to end policy calibrated to fight a financial crisis and recession forces officials to perform a difficult balancing act.

The deeper investors discount the likelihood of Fed action, the greater the risk any move will trigger an overreaction with unpredictable and negative economic fallout, making policymakers more hesitant to act.

It is a cycle that may require taking a calculated risk to break, officials say.

"We are in a minuet with markets and cannot ignore how markets are pricing," Atlanta Fed president Dennis Lockhart said last week, before the Fed's blackout period for public comments.

The Fed has been caught in that dance for five years now. While at the beginning of 2011 trading in euro-dollar futures was still foreseeing a return to typical interest rates over the next few years, that view has given way to expectations that rates will remain low for a decade to come. (

Those expectations have become deeply anchored and, some argue, encouraged by the Fed's reluctance to increase rates even as the economy has approached its employment and inflation targets.

Analysts who follow the Fed complain that its framework has become confusing: low unemployment and inflation close to the 2 percent target would not seem consistent with a policy rate more aligned to a recession.


The assorted views of regional bank presidents and board members in recent weeks muddy the waters further. They have ranged from warnings of runaway inflation to suggestions the Fed should increase its inflation target because prices are so weak.

Thrown into the mix as well have been calls for a full-blown policy overhaul, and a suspicion that the economy may be stuck in a rut with little anyone can do about it.

Among that chorus of voices, Lael Brainard, a former Obama administration official and since June 2014 a Fed governor, has become a central figure in shaping the image of a Fed that errs on the side of caution when interpreting data and events.

Since the rate debate intensified last year, Brainard has spoken ahead of five out of the six key policy meetings, laying out her view that the U.S. recovery could not be taken for granted in a world of potentially perpetual economic weakness. The quarterly meetings that end with a news conference are considered the most likely sessions for Fed action.

She repeated that line last week and called for "prudence," effectively stamping out any rate rise speculation..

Brainard's argument seemed prescient last summer when she presented it the first time. The following 12 months brought market volatility linked to China's economic weakness and later concerns about the fallout from Britain's vote to leave the European Union. The turmoil weighed on the Fed's outlook for the U.S. economy.

Things have since calmed, and through it all the U.S. economy has continued to generate jobs. Equity markets are up so far this year, while volatility in the U.S. bond market is near its lowest level since late 2014.

To be sure, a Bank of America Merrill Lynch measure on expected swings in the bond market in three months .MERMOVE3M did pick up after the European Central Bank refrained from extending its 1 trillion plus euro bond purchase program. Uncertainty about Bank of Japan policy, and possible swings in the dollar that could hurt U.S. manufacturers, remains a risk.

But to some, those risks have become less important than the uncertainty stemming from the Fed itself.

JP Morgan (JPM.N) chief executive Jamie Dimon said last week it was the right time for the Fed to move, a call echoed by the country's credit union sector.

"Folks in the credit union world - the majority want the Federal Reserve to raise interest rates," said Steve Rick, chief economist for CUNA Mutual Group, an insurer and financial company whose products are sold through credit unions.

"A quarter point is not going to kill the economy at all. But you would have banks more willing and credit unions more willing to lend if they believe interest rates were giving a clear signal," Rick said.

Article Link To Reuters:

Putin’s Lesson For Obama In Syria

By Jackson Diehl
The Washington Post
September 19, 2016

In the great American debate about Syria, there has been an intervention by Vladi­mir Putin — and it has made Barack Obama the loser.

Since 2012, Obama has been stubbornly arguing that there is no workable option for even a limited U.S. intervention in Syria’s civil war. John F. Kerry, Hillary Clinton, David Petraeus and Leon E. Panetta, among others, pushed the president to use U.S. air power or stepped-up support for rebels to tilt the balance of the war against the regime of Bashar al-Assad, thereby making possible a political settlement favorable to the United States and its allies.

Obama repeatedly refused. There was no way to get involved, he said, without starting the U.S. military down a slippery slope that would lead to another quagmire, like Iraq or Afghanistan. Anyway, he said, U.S. intervention would only worsen the war, encourage extremism and exacerbate the humanitarian crisis.

All those bad things happened in the absence of American action. And now Putin has proved that the concept Obama rejected — that a limited use of force could change the political outcome, without large costs — was right all along. The difference, of course, is that the result has been a victory for Russia, Iran and the Assad regime, at the expense of the United States and its Arab, Israeli and Turkish friends.

The deal that Kerry brokered with Russian Foreign Minister Sergei Lavrov this month offered Putin everything he sought in Syria. The Assad regime would be entrenched by a truce that leaves its forces in a commanding position around Aleppo, the country’s largest city. If it holds for seven days, U.S. commanders are mandated to join Russia in operations against anti-Assad forces deemed extremist, in Aleppo and elsewhere — satisfying Putin’s long-standing demand that the West join him in fighting “terrorists” rather than Assad. The Pentagon’s fierce objections to this capitulation were overruled.

Even if the cease-fire fails, as seemed possible Sunday, Putin will have won U.S. endorsement of the principle that rebels, not the regime, are the prime problem in Syria. While Kerry portrayed the deal as opening the way to humanitarian assistance to Syrian civilians, Assad is obstructing aid deliveries. If past is prologue, Kerry will respond to such violations by going back to Putin for a fix.

Remember: Putin ordered Russia’s intervention just a year ago, after Iran’s chief foreign military commander, Qassem Soleimani, warned Moscow that the Assad regime faced defeat. When Russian bombers suddenly began appearing in Syria — to the surprise of Washington — Obama quickly declared the Russians were stepping into a “quagmire.” That was predictable: After all, that is what the president insisted would be the result of a U.S. air intervention.

But there has been no quagmire for Russia. On the contrary, Putin, who made a show of withdrawing some of his planes six months ago, has suffered minimal losses. He turned the tide of the war in favor of Assad and as a result has gotten the political terms he wanted from the United States. Most remarkably, he has done so even while simultaneously staging an audacious and unprecedented intervention in the U.S. presidential campaign.

As Kerry was parlaying with Lavrov, Russian intelligence was leaking hacked emails from the Democratic National Committee. No matter: Kerry pressed on to finish a deal on Moscow’s terms. His defenders are reduced to arguing that Russia’s military action, and Obama’s refusal to commit the United States, left Kerry no alternative but to play a weak diplomatic hand.

Putin must feel a particular satisfaction at having turned the geopolitical tables on Washington. During the 1990s, he and his former KGB colleagues watched in dismay as the Clinton administration launched military actions in areas once considered part of Russia’s sphere of influence — such as Serbia and Bosnia — then imposed political solutions of U.S. design. The Russian government of Boris Yeltsin was forced to swallow fiats such as the independence of Kosovo. All the while, from Putin’s point of view, the United States was meddling in Russia’s domestic politics by funding civil society groups advocating human rights and democracy.

Now Putin is the one imposing political outcomes in regions the United States once dominated while brazenly seeking to disrupt the U.S. political system. The difference is that the United States, unlike Russia in the 1990s, is not weak; in fact it is far stronger than Putin’s Russia. U.S. fecklessness is a choice.

Obama, of course, doesn’t see it that way. His aides sometimes contrast his presidency with that of Bill Clinton’s: Those who served Clinton in foreign policy, they say, don’t understand how much U.S. capacity to impose its will internationally has diminished in the past 20 years. Maybe they are right. But that doesn’t explain Syria — where Vladi­mir Putin has just accomplished that which Obama deemed impossible.

Article Link To The Washington Post:

Another Terror Weekend

Three attacks remind Americans of the clear and present danger.

By Review & Outlook
The Wall Street Journal
September 19, 2016

The brief respite from terrorist attacks on American soil ended abruptly on the weekend, with a knife assault at a shopping mall in Minnesota and bombings in New Jersey and New York City. It’s a miracle no one was killed, but the timing and nature of the attacks rightly have investigators looking for evidence of Islamist or other terrorist links.

The explosion in New York’s Chelsea neighborhood that injured 29 was “obviously an act of terrorism,” said New York Gov. Andrew Cuomo on Sunday morning, though he added that so far there was no evidence of an international terrorist connection.

But police also found what had the look of another improvised-explosive device not far from the bombing site. The device contained a pressure cooker and a cellphone that might have served as a trigger. The Tsarnaev brothers used pressure cookers in their Boston marathon bombs, and Islamic State offers an online how-to guide to make the IEDs.

The episode comes as thousands are arriving in New York for this week’s annual United Nations General Assembly session. If a bomber’s goal was to inflict maximum casualties, there are many other Manhattan venues better than Chelsea. But the relatively few casualties was a matter of luck because Mr. Cuomo said it was “a very powerful explosion” and the damage was “much more extensive than I had anticipated” before he surveyed the site.

New York City Mayor Bill de Blasio, who couldn’t even muster the word “terrorism,” oddly preferring “intentional act,” nonetheless laid on another 1,000 police and security officers for duty during the U.N. session. Mr. de Blasio has been among those decrying the New York police antiterror surveillance that has helped to keep the city safe since 9/11, so New Yorkers will be watching closely to see who was responsible for the bombing and how it was executed.

The Chelsea blast occurred about 11 hours after three pipe bombs exploded in a plastic garbage can in Seaside Park, New Jersey shortly before thousands of runners were to participate in a 5K run to benefit Marines and Navy sailors. The race was cancelled, and no one was hurt, but many could have been if the explosion had occurred while the race was on.

The most harm was done across the country in St. Cloud, in central Minnesota, where a man stabbed nine people Saturday night before he was shot dead by an off-duty police officer. The FBI is investigating the background of the attacker whose name had not been publicly released by the time we went to press. But witnesses said the man referred to Allah, and an Islamic State news agency said Sunday the attacker was a “soldier of Islamic State.”

ISIS has sometimes claimed opportunistic credit for attacks undertaken by lone attackers with no formal connection to the group. But the example of the solo killer inspired by Islamic State propaganda over the internet is now familiar in the U.S.

No matter the motivations for these attacks, they show how the daily lives of Americans have been altered by the reality of modern terrorism. Americans know that anyone at anytime anywhere can become a target, and that is why they expect their political leaders to focus on preventing attacks, not merely deploring them after the fact.

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Trump Gets Skewered, Clinton Finds Support At TV's Emmy Awards

By Piya Sinha-Roy
September 19, 2016

As the U.S. presidential election draws near, television's stars didn't hold back on their opinions at Sunday's Emmy awards, some taking jabs at Republican nominee Donald Trump while others voiced support for Democratic hopeful Hillary Clinton.

During his opening monologue, Emmy host Jimmy Kimmel called out producer Mark Burnett, the producer of reality series "The Apprentice" and "Celebrity Apprentice" which Donald Trump hosted, saying "who is to blame for the Trump phenomenon? That guy."

"If Donald Trump gets elected and he builds that wall, the first person we are throwing over it is Mark Burnett," Kimmel said, setting the political tone of the show 50 days before America elects its next president.

Burnett, who later accepted the best reality series Emmy for "The Voice," joked on stage that he had just received a call from Clinton criticizing Kimmel for giving Trump "free publicity on ABC."

"I'm sure Donald was thrilled with him, I'm sure he's emailing Jimmy right now saying thanks for the free media," Burnett told reporters backstage.

Trump, known for his rapid-fire responses on Twitter, had nothing to say about the Emmys on Sunday night.

After winning best comedy actress for a fifth consecutive time for HBO's "Veep," Julia Louis-Dreyfus, who plays flawed U.S. president Selina Meyer on the show, said "I want to personally apologize for the current political climate."

"I think that 'Veep' has torn down the wall between comedy and politics; our show started out as a political satire but it now feels like a sobering documentary," she said on stage.

"Master of None" star Aziz Ansari, who penned an essay in June for the New York Times entitled "Why Trump Makes Me Scared for My Family," quipped on stage, "I've decided I'm going with Trump."

"I'm recommending that we get rid of all Muslim and Mexican people from the ceremony. This would be so much easier at the Oscars," the Muslim Indian-American actor joked, hinting at the controversy over the lack of diversity at film's Oscar awards.

"Mum, dad, you need to be escorted out immediately," he added.

Backstage, "Transparent" creator Jill Soloway, who won best directing for a comedy series, criticized Trump for "other-izing people."

"He blames Muslims and Mexicans for problems ... This is other-izing with a capital O. He needs to be called out every chance we get for being one of most dangerous monsters to ever approach our lifetimes," Soloway said.

"Saturday Night Live" star Kate McKinnon won best supporting comedy actress and thanked Clinton, one of the people she plays on the NBC sketch series, and got a loud cheer from the crowd.

In response, Clinton tweeted "Congratulations on your Emmy, Kate! Big fan of yours, too," with a photo of McKinnon in character as Clinton.

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U.S. Officials Eye Links Between Weekend Bombings

By Daniel Trotta and Dustin Volz
September 19, 2016

U.S. investigators on Sunday were studying possible links between a pair of bombs detonated in New York City and New Jersey over the weekend, although no evidence had yet emerged tying the devices to known extremist groups.

The country was shaken by a trio of attacks over the weekend including a Saturday night bombing that injured 29 in Manhattan and a stabbing attack at a Minnesota shopping mall that wounded nine.

While officials described all three as deliberate, criminal acts and were investigating them as potential "acts of terrorism," they stopped short of characterizing the motivation behind any of them until more evidence is uncovered.

A deafening roar and powerful shock rocked Manhattan's popular Chelsea neighborhood late on Saturday after a pressure-cooker bomb packed with shrapnel exploded. A similar, unexploded device, was found a few blocks away later that night.

No international militant group immediately claimed responsibility for the New York blast or a pipe bomb that went off earlier along the route of a Saturday road race in suburban New Jersey. But New York Governor Andrew Cuomo said the act of blowing up a bomb in a crowded area of Manhattan "is obviously an act of terrorism."

No suspects were immediately identified in the New York and New Jersey attacks.

But CNN reported on Sunday night that police had reviewed surveillance video showing a man, who was not identified, leaving both devices on Saturday.

The Islamic State militant group quickly claimed responsibility for the Minnesota attack by a man who made references to Allah and asked at least one person if he or she was Muslim before he assaulted the individual. An off-duty police officer fatally shot the assailant.

Police did not immediately identify the Minnesota attacker, citing an ongoing investigation, although some local media reports gave his name and said he was an African-born junior college student. Reuters could not immediately confirm his identity.

There were no immediate connections established between the Minnesota attack and the bombings in New York and New Jersey, which came days before the United Nations General Assembly opens on Tuesday. Some 135 heads of state or government are expected to attend the event, and city officials said they had bolstered an already heavy security force with 1,000 more uniformed police officers and National Guard members.

'Crude' Devices

Federal Bureau of Investigation experts were examining remnants of the two devices that went off in Chelsea and Seaside Park, New Jersey, some 80 miles (130 km) south of New York City, as well as the undetonated pressure-cooker bomb, the same sort of improvised explosive device that killed three people and wounded more than 260 in the 2013 Boston Marathon bombing.

"The crudity of the devices in all three cases certainly doesn't point to any group that's been developing (improvised explosive devices) for years," said a U.S. official involved in the investigation who requested anonymity to discuss the inquiry.

The official added that the crude nature of the devices and the apparent low level of planning had some investigators concerned that the blasts were just a test of New York's security.

"That's what worries us: Was this some kind of test run, not just of the devices, but also of the surveillance in New York and the response?" the official said.

The United States has experienced a series of deadly attacks over the past year by gunmen inspired by Islamic State, which has been fighting a long civil war in Syria. A man who claimed allegiance to the group fatally shot 50 people at an Orlando, Florida, nightclub in June, six months after a married couple massacred 14 in San Bernardino, California.

Investigators at the FBI's lab in Quantico, Virginia, were set to look to see if the three devices in the New York area had a common design, although a U.S. official familiar with the inquiry said that would not be proof in itself the attacks were linked.

"Almost anybody could have fabricated these bombs and used cellphones as timed detonators," said the official. "There are instructions all over the internet, and the crudity, positioning, and relative ineffectiveness of these does not suggest that a more sophisticated group played any role in this."

The bombs used in the Boston Marathon bombing were built using instructions that the pair of brothers behind the attack found in al Qaeda's "Inspire" online magazine.

The FBI considers the Minnesota episode a "potential act of terrorism," Richard Thornton, FBI special agent in charge of the agency's Minneapolis division, told a news conference on Sunday.

Amaq, the news agency affiliated with Islamic State, issued a statement on Sunday calling the attacker "a soldier of the Islamic State."

Reuters was not immediately able to verify the Amaq assertion.

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The Old Fed Is Dead

By Robert J. Samuelson
The Washington Post
September 19, 2016

The betting is that the Federal Reserve won’t raise interest rates at this week’s meeting of the Federal Open Market Committee, its key policy-making body. There are already complaints that the Fed, which cut short-term rates to near zero in late 2008, is waiting too long to reverse low rates. Last December, the Fed increased rates by a quarter of a percentage point. It hasn’t done anything since.

“The Fed will make a major mistake if it doesn’t raise rates,” says economist Mark Zandi of Moody’s Analytics. “The job market is strong and very close to full employment. Inflation is close to target [2 percent annually], and financial markets are in good shape.” Yet, Zandi doubts the Fed will raise rates by another quarter percentage point.

The case for standing pat was made by Lael Brainard, a Fed governor, in a recent speech. “Since 2012, inflation has tended to change relatively little . . . [while] the unemployment rate has fallen from 8.2 percent to 4.9 percent,” she said. Without accelerating inflationary pressures, policy should still favor job creation, she argued.

It’s a close call. Whatever happens, the mere existence of debate attests to a remarkable change. It wasn’t that long ago that the Fed was seen as almost all-powerful. It gave us (so it seemed) the “Great Moderation” — a quarter-century (1982 to 2007) of economic growth with only two mild recessions. A few flicks of its short-term interest rate, up or down, could contain inflation or sustain growth.

No more. Now the Fed and other major central banks seem deeply frustrated. They’ve flooded the world with cheap money. By Moody’s estimates, the amount is $13 trillion. That was used to buy bonds and other securities. It includes purchases by the Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England. For all their trouble, the central banks have got no more than a weak recovery that avoided a second Great Depression.

You can argue that this is itself a major achievement. It may be, but it falls well short of the prevailing view of the Fed and other central banks as economic powerhouses that could engineer strong recoveries. Central banks aren’t as influential as we supposed. Low interest rates — a product of both policy and wider economic forces — haven’t had the expected rejuvenating effect.


One explanation lies in the high and unsustainable debts that fueled the Great Recession. “Debt recoveries are not the same as ordinary business cycle recoveries,” Harvard economist Carmen Reinhart recently told a conference at the Peterson Institute. Consumers and companies cut debt loads and rebuild savings. Lenders are more restrained in their lending; borrowers are more restrained in their borrowing. All this curbs spending.

A variant — one often made by this reporter — is that the recession’s severity, almost entirely unanticipated by economists, business leaders and government officials, has made households and enterprises more precautionary and protective. They save more and spend less to shield themselves against future slumps and unpredicted calamities.

“People thought they were richer,” economist Jason Cummins of Brevan Howard, a hedge fund, said at the Peterson conference. “Businesses have stopped growing investment. You give businesses a lower cost of capital [lower interest rates], but they’re not investing.”

Central banks are searching for new ways to revive their economic power. One idea tried in Europe and Japan is “negative interest rates.” Former Fed chairman Ben Bernanke describes it this way: “Instead of receiving interest on the reserves they hold with the central bank, [commercial] banks are charged a fee on reserves.” The hope is that, to avoid the fee (in effect, a tax), banks will lend out the money. The modest use of negative interest rates in Europe and Japan so far has been inconclusive or disappointing. In the United States, Fed Chair Janet Yellen has suggested that negative rates would be used only as a last resort.

The old Fed is dead. The notion that it could orchestrate economic growth within narrow bounds was excessively optimistic and unrealistic. It may be, as economist Allan Meltzer of Carnegie Mellon University has long argued, that basic problems burdening the economy can’t be solved by increasingly large doses of easy money and credit. If too many rules and requirements thwart business start-ups, easy money is not a solution.

But the public may think it is. The Fed is now a prisoner of exaggerated expectations created in a friendlier era. If it fails to live up to those expectations, it may become the target of the public’s wrath. There are already signs of this. It will do no one any good to be angry at the Fed for things it can’t do.

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