Tuesday, September 20, 2016

Grab Raises $750 Million To Take On Uber In Southeast Asia

By Aradhana Aravindan
September 20, 2016

Grab, the biggest rival to ride-sharing service Uber Technologies Inc [UBER.UL] in Southeast Asia, has raised $750 million in a funding round, turning up the heat on the U.S. firm now seeking to expand in the region after exiting China.

The successful cash-injection just a month after Indonesian peer Go-Jek raised $550 million highlights the intensifying competition in the region, as Uber shifts its focus following a deal to sell its China operations into Didi Chuxing.

Four-year-old Grab said it planned to expand its services in Southeast Asia through the funding round, which was led by Japan's SoftBank Group with new and existing investors.

The region has become a key battleground for ride-hailing firms thanks to a burgeoning middle class as well as a youthful, internet-savvy demographic.

Since leaving China in August, Uber is even more focused on Southeast Asia, doubling down on resources, staffing and technology deployed there, a source familiar with Uber's plans has said.

Specifically, the company is refocusing more than 150 engineers to work on its Southeast Asian operations and hiring more engineers in India, the source said. It was also working on making sure its maps fit the region.

The latest funding values Grab at over $3 billion, a source familiar with the matter said.

It increases its total capital position to over $1 billion, the company said without naming other investors in the round. A Grab representative told Reuters institutional investors from the United States and China took part.

Uber had no comment on Grab's fund-raising.


Grab says it has 95 percent market share in third-party taxi-hailing services, while its private-car business has more than half of the Southeast Asian market.

In addition to expanded ride-hailing services, Grab said it planned to invest in mobile payments capabilities in a region with low banking and credit card penetration and limited cashless payment options.

"Grab is using this funding to try to diversify because the ride-hailing industry, in terms of profitability, is still a big question. Grab need to hedge risks and diversify," said Rushabh Doshi, an analyst with researcher Canalys.

"The additional funding and diversification will give Grab buffer to fend off Uber's attack," he said.

Since its launch in 2012, the company has expanded into motorbike hailing, carpooling and delivery. It also recently teamed up with Indonesian conglomerate Lippo Group to roll out a mobile payment platform in its biggest market, Indonesia.

"We are particularly excited about the growth opportunity in Indonesia, where we see an almost $15 billion market for ride-hailing services alone, as well as the potential to extend GrabPay's platform regionally," CEO and co-founder Anthony Tan said in the statement.

Grab said it will also invest in data science and machine learning capabilities to enable services like predictive demand and driver and user targeting.

The company operates in Singapore, Indonesia, the Philippines, Malaysia, Thailand and Vietnam.

Article Link To Reuters:

The Boys Who Beat The FDA

The agency approves a drug after an ugly bureaucratic brawl.

By Review & Outlook
The Wall Street Journal
September 20, 2016

Miracles happen. The Food and Drug Administration on Monday approved a drug for muscular dystrophy after months of delay and bureaucratic infighting. This is a triumph for scientific innovation, and for young men who will live better and more independently—if the bureaucracy doesn’t strike back.

FDA announced accelerated approval for eteplirsen by Sarepta Therapeutics more than 100 days after the agency’s legally mandated decision date. The therapy is the first for Duchenne muscular dystrophy patients, typically boys who lose the ability to walk around age 12 before heart or respiratory failure in their 20s. Ten of 12 boys in a clinical trial still walk after four years on eteplirsen—nearly two football fields farther than a control group.

Agency documents released Monday reveal a protracted fight over the drug between Janet Woodcock, head of FDA’s drug evaluation center, and various reviewers. As early as May 4 Dr. Woodcock planned to overrule the agency’s review, which Duchenne experts and clinicians had picked apart as error-ridden and scientifically questionable. But a division director filed a complaint under an FDA process for handling disputes, a proceeding we first reported. (“Heart of Bureaucratic Darkness,” Aug. 10)

The FDA decision paper is a tour of toxic bureaucratic politics: The complaint charged Dr. Woodcock with the mortal sin of meeting with patients and families too often and attending a contentious committee meeting. Another charge is that Dr. Woodcock once mentioned that destroying Sarepta might preclude later innovations, which is obvious and irrelevant to approval.

The criticism is even less believable given that the sticking point was whether the drug produced protein at a level that was “reasonably likely to predict a clinical benefit.” The drug has already produced reasonable results in some boys. Dr. Woodcock seems to be the only employee who noticed that a 2012 law directs FDA to exercise broad flexibility in approving first-in-class drugs for rare diseases.

Dr. Woodcock also deserves credit for political bravery because her boss, FDA Commissioner Robert Califf, announced that he would “defer to Dr. Woodcock’s judgment” without taking a position himself. There’s a profile in non-courage.

FDA’s report notes that members of the review team plan to leave the agency due to concerns about decision-making and “pressures exerted by outside forces,” presumably those meddlesome patients who dared to say the drug worked. The agency confirmed to us last week that the neurology division’s clinical team leader, Ronald Farkas, no longer works at FDA, and he will not be missed.

Even with “accelerated” approval, Sarepta must now conduct a double-blind, randomized trial to confirm its initial findings, or FDA could pull the drug. Some patients will receive the recommended dose and others will be infused with more. Yet it isn’t clear who would sign up for a clinical trial when the treatment is on the market, and this could be an opening for more FDA sabotage.

Sarepta is enrolling a placebo trial to certify later versions of the drug, which use the same “exon-skipping” technology to jump over different genetic code. Infusing a child’s muscles with saline is not ethical, but this protocol is the only way to move new iterations through a recalcitrant FDA.

A Duchenne boy’s veins often weaken so that a port must be inserted into his body, but we’ve heard the ports are banned in this study on ethical grounds. That means a child whose veins are deteriorating will be pricked as many times as it takes to start treatment—six, seven needles. How is this more moral?

If the grimness of placebo trials sounds abstract, ask Mitch and Mindy Leffler. In 2011 their then-8-year-old son Aidan started a trial for a drug called drisapersen, which FDA later rejected. The Lefflers, who have two other children, flew or drove from their home near Seattle to Vancouver, B.C. once a week for two years, the first 48 weeks of which Aidan received dummy treatment. Aidan is now 13 and in an eteplirsen trial. He still walks.

There will be more Duchenne drama, and some bubbled up Monday afternoon on the not-so-breaking news that drug innovation is expensive: Eteplirsen, now known as Exondys 51, will be priced based on a child’s weight and cost about $300,000 a year for the average patient. The drug is expensive to manufacture but years of government delay have no doubt added to the cost.

Congress allowed for accelerated approval precisely to advance treatments for patients with no other options. But FDA reviewers hate the process because it reduces their life-and-death political control. Sarepta’s victory is a sign that death by bureaucracy isn’t inevitable.

Article Link To The Wall Street Journal:

Can Iraq And Syria Be Fixed When The Fighting Stops?

By Sharif Nashashibi
The National
September 20, 2016

CIA director John Brennan was not being overly dramatic when he expressed doubts last week about whether Syria and Iraq "can be put back together again" after "so much bloodletting" and "destruction".

This is not just about territorial integrity, but also governance. "I question whether we’ll see, in my lifetime, the creation of a central government in both of those countries that’s going to have the ability to govern fairly," he added.

Neither Syria nor Iraq can be described today as unitary states, and their current borders are artificial products of colonial tampering by France and Britain. Large chunks of both countries, including strategically important territories, still make up the so-called "caliphate" of ISIL, despite it steadily losing ground to air and ground forces in both countries.

Iraqi Kurds have cultivated their autonomy since the 1991 Gulf war. In February, their president, Masoud Barzani, repeated a call for a referendum on independence that he initially made in July 2014. "It’s the right of Kurdistan to achieve independence," he said at the time. "From now on, we won’t hide that that’s our goal. Iraq is effectively partitioned now."

Mr Barzani may be counting on divisions among Iraqi Kurdistan’s neighbours, as well as the fight against ISIL, muting the backlash against a referendum. He may also be hoping that the region has come to accept a fait accompli, given that Iraqi Kurds have enjoyed autonomy for a quarter of a century.

Syrian Kurds in the oil-rich north-east have had de facto autonomy since the early days of the revolution against Bashar Al Assad. They declared autonomy in November 2013, and again in January 2014.

Governments supporting Kurdish forces, particularly against ISIL, insist on the territorial integrity of Syria and Iraq. However, that very support is emboldening separatist sentiments and actions among Kurds in both countries, who have expanded into hotly disputed territories and those beyond their traditional heartlands (though Turkey’s current intervention in northern Syria is rolling back some of those gains).

Iraq’s Kurds postponed their independence referendum in 2014 due to the war on ISIL. However, as the latter’s territory steadily shrinks, they may well resurrect plans to hold the referendum, which would overwhelmingly support independence. It would be a major domestic gamble for Mr Barzani to repeatedly insist on the right to independence while indefinitely postponing a vote on it.

Syria exists as a country in name only, its territory carved up between the regime, ISIL, the Kurds and various rebel groups (not to mention Israel’s occupation and annexation of the Golan Heights, which Benjamin Netanyahu has vowed never to return).

Given Mr Al Assad’s acknowledgement of manpower shortages in his army, and its increasing reliance on foreign forces and militias, even the territory under his control can be considered something of a patchwork.

The regime has shown itself unable to capture territory or keep hold of it without the help of foreign forces and militias. This highlights the fact that its recent battlefield gains – which are relatively modest considering the extent of Russian air power and reinforced Shiite ground forces – are somewhat transient and illusory.

As such, Mr Al Assad’s vows to retake the whole country, when he currently controls less than half of it, are laughable. It would require a full-fledged, long-term military occupation by his foreign allies – something they are as unlikely to accept as they are to achieve – and this would be fiercely resisted by his domestic and regional opponents.

There is no prospect of outright military victory by any of the warring sides. Nor is there hope for a negotiated solution, since the regime insists that Mr Al Assad’s position is not up for discussion.

Thus Syria will continue to be divided for the foreseeable future, not just geographically but also demographically. Continued population displacement and transfer have created distinct areas of sectarian and ethnic homogeneity, as happened in Iraq during and since its civil war following the US invasion. The longer that goes on, the harder it will be to undo.

The increasing influence of local sectarian militias in both Syria and Iraq poses serious long-term threats to the viability of both countries, as they behave as a law unto themselves and act with impunity (there is the added problem of some maintaining varying degrees of loyalty or affiliation to a foreign country, Iran).

As their role and power have increased, so too have their demands and expectations vis-à-vis increasingly dependent central authorities. Damascus and Baghdad have unleashed genies that will not easily be put back in their bottles.

Furthermore, widespread abuses by these Shiite militias have heightened alienation and anger from mainly Sunni communities (a majority in Syria and a sizeable minority in Iraq). This will fuel further conflict, heighten separatist sentiment, and nurture jihadist groups such as ISIL and Al Qaeda. In short, both countries are increasingly resembling Libya, which has a nominal government but is effectively ruled by myriad militias.

However, lawlessness in Libya has led to amnesia and whitewashing over the brutal and dictatorial rule of Muammar Qaddafi. Similarly, if militias are a major problem in Syria and Iraq, so too are the governments in Damascus and Baghdad. Both have appalling human rights records, both are sectarian and both are authoritarian (that Iraq’s governments are elected does not make them less so).

As long as Syrians and Iraqis are forced to live under such flawed, corrupt, repressive and unrepresentative systems of governance, neither country will have peace, stability or even a viable future as the states we recognise today.

Article Link To The National:

Putin's Win Is No Victory For Russia

By Editorial Board
The Bloomberg View
September 20, 2016

A new round of elections has handed all-but-complete control of Russia’s parliament to President Vladimir Putin. The result, however, can hardly be called a victory for Russia.

Putin’s United Russia party gained its largest-ever majority in the lower house of parliament -- enough to alter the country’s constitution. Genuine opposition parties didn’t win a single seat. In celebrating the outcome, Putin called it a repudiation of Western attempts to meddle in Russia’s affairs.

Yet this mandate is less than it seems: Surprisingly few people actually showed up to vote. Nationwide, turnout was just 48 percent of registered voters. In major cities such as Moscow and St. Petersburg, it was less than a third. Unlike the U.S., where turnout of less than 50 percent is common in midterm congressional elections, Russia hasn’t seen such low numbers in its post-Soviet history. In the last parliamentary vote in 2011, about 60 percent of voters participated.

The apathy stems from a lack of choice. Legitimate opposition candidates have been kept out of the process -- for example, through fabricated criminal charges and the government’s control of major media outlets. Taking grievances to the streets has also become more dangerous, thanks to Draconian laws and tougher enforcement introduced after a wave of protests in 2011 and 2012.

The shutting down of dissent means that Putin is increasingly disconnected from the people, at a time when a protracted economic slump is testing their patience. The odd world he inhabits can be glimpsed in the bizarre beliefs of his latest wave of high-level appointees, which include a chief of staff partial to the idea that the future can be predicted using a device inspired by the Russian nesting doll.

True, polls suggest that Putin remains extremely popular. Yet that rating is largely a function of the Kremlin’s propaganda machine. Free and fair elections are not only an end unto themselves, they offer the public a peaceful way to express any dissatisfaction -- and their winners a better claim on popular legitimacy. Both are points Putin should keep in mind as he contemplates the next presidential election, scheduled for early 2018.

Article Link To The Bloomberg View:

Fed Again Poised To Cut Longer-Run Interest Rate Forecast

By Ann Saphir and Jonathan Spicer
September 20, 2016

U.S. Federal Reserve policymakers are set this week to again cut their forecasts for how high interest rates will need to go in an economy where output, productivity and inflation are growing at a slower pace than in past decades.

It would be the fourth time in 15 months that the U.S. central bank has been forced to admit its estimate of this so-called neutral rate was too optimistic, raising questions about the health of the economy in the coming years.

The Fed, however, still insists low interest rates and its large balance sheet of bonds are sufficient to continue bolstering economic growth.

Conversations with Fed officials suggest some will cut their predictions for the longer-run rate at this week's monetary policy meeting, with the median forecast possibly falling to 2.75 percent. It was 3.75 percent in June 2015 and 4.25 percent four years ago.

The Fed is expected to leave its benchmark overnight interest rate unchanged following its two-day meeting on Wednesday, according to a Reuters poll of economists.

The Fed's policy rate has been about 0.38 percent since it was raised in December, the first increase in nearly a decade.

The expected reduction in the longer-run neutral rate forecast amounts to a lower speed limit on future rate hikes, and points to fewer increases with longer gaps between them than U.S. central bankers and investors had expected.

The lower the neutral rate forecast, the less anxious the Fed needs to be about tightening policy, which would justify its repeated decisions to defer rate increases.

The result, says San Francisco Fed President John Williams, will be the "shallowest" set of rate hikes ever; "much flatter," according to Dallas Fed President Robert Kaplan in a separate conversation, than anything in the past.

The Fed has not raised rates this year despite signaling in December that four rate hikes were coming in 2016. That number has since been scaled back to two hikes this year, with another three hikes in 2017, due to a global growth slowdown, financial market volatility and tepid U.S. inflation.

But given the new thinking on the neutral rate, that seems overly optimistic.

Fed policymakers say an aging U.S. population and decline in productivity growth is sapping economic potential, making them wary about raising rates too fast.

"They are not very far from being in a tightening mode," said Shehriyar Antia, founder of Macro Insight Group and a former senior analyst at the New York Fed. "That augers for more patience since the risk of you falling behind with inflation is less because it ain't going to take that much for rates to lean on inflation."

Fed Toolbox

Regardless of any reduction in the neutral rate estimate this week, Fed Chair Janet Yellen is likely to stick with her view that the central bank's so-called toolbox - its more than $4 trillion in Treasuries and mortgage-backed securities, low interest rates and planned gradual removal of stimulus - is appropriate for an economy that has consistently fallen short of growth forecasts.

During the global central banking conference last month in Jackson Hole, Wyoming, Yellen said that policy mix had served the Fed well and would likely be useful in the face of a future economic downturn.

But the Fed's constant walk-backs have served to undercut some of the market's faith in the central bank. Traders of short-term rate futures, for instance, are now betting the Fed will not hike rates until early next year.

Still, any cut to the Fed's neutral rate forecast does not mean it will never raise rates.

"They want to maintain market expectations for a rate hike in case they want to raise rates in December if conditions warrant one," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

The Fed is due to release its policy statement at 2 p.m. EDT (1800 GMT) on Wednesday and Yellen will hold a press conference shortly after. The Fed's rate-setting committee will meet again in early November and mid-December.

Article Link To Reuters:

Obama Led The World Downward Into Chaos

By Benny Avni
The New York Post
September 20, 2016

President Obama will surely put his best spin on his legacy Tuesday in his eighth and final speech to the United Nations General Assembly. But even his biggest fans must struggle to ignore the spread of mayhem on his watch, in the Mideast and beyond.

The president is likely to highlight his oh-so-historic diplomacy, from that (toothless) global climate agreement to the improvement, such as it is, in the world’s economy. Plus, of course, the nuke agreement with Iran and the opening to Cuba.

So how fitting that as Obama speaks in New York, Iranian President Hassan Rouhani will be completing a trip to Cuba and Venezuela, before giving his own UN speech Thursday. After all, these rogue nations have come together and, in Cuba’s and Iran’s cases, come in from the diplomatic cold thanks to Obama.

Similarly, the Obama-Hillary Clinton “reset” with Russia has left that nation far more aggressive than in 2008. China, too, is pushing hard in the Pacific, despite Obama’s much-announced “pivot to Asia.” In his UN speech eight years ago, Obama promised action on perennial UN priorities — including, of course, making peace between Israel and the Palestinians.

That unfulfilled goal proved to be a sideshow as the wider Mideast underwent tremendous changes through the Arab Spring — a brief surge of democracy, followed by chaos.

And as the Mideast (Israel excepted) became even more of a mess, America became a spectator.

Take the refugee crisis. During the last decade, according to the United Nations, the number of people fleeing wars around the world jumped from 37 million to 66 million — most of them from the Mideast, and many flooding Europe.

European policymakers are at a loss for answers, and Syria’s neighbors — Jordan, Lebanon and Turkey — are struggling to handle the inflow.

But not to worry. Obama’s on the case. While at the UN assembly, he’ll host world leaders in a conference on migration. They’ve already reached an understanding to talk about it further and may even, in two years or so, reach a global treaty (which will surely be too weak to make a dent in the growing problem).

It’s a problem, so they’ll talk about it, and talk about talking about it some more.

Meanwhile, in Syria, the eye of the refugee storm, America is losing its last trace of dignity. On Monday the Syrian army announced an end to that cease-fire declared just a week ago by Secretary of State John Kerry and his Russian counterpart, Sergey Lavrov.

The Kerry-Lavrov pact was doomed from the start, but the death blow came late last week when US planes bombed forces loyal to Syria’s butcher-in-chief, Bashar al-Assad. The Obama administration rushed to apologize, swearing it was a mistake.

Remember when Team Obama said Assad must go? That policy, we learned over the weekend, secretly became a dead letter two years ago: It was back then, Russian UN Ambassador Vitaly Churkin disclosed, that the United States “committed,” in an agreement with Damascus, that our airstrikes in Syria “would not affect” Assad’s army. We became, in effect, an accomplice of Assad, the world’s most prolific killer.

One chief reason: our desire to secure an agreement with his main regional backer, Iran.

That agreement was supposed to be the crown jewel in Obama’s attempt to promote a nuke-free world. Yet, eight years after he announced that goal at the United Nations, North Korea’s arsenal grows as it tests new nukes with added frequency. And under Obama’s deal, Pyongyang’s ally, Iran, is on the road to joining the growing club of nuclear-armed countries.

Meanwhile, Iran wages proxy wars with rival Saudi Arabia; consolidates its Syrian and Lebanese bases to assure a presence near the borders of the country it vows to annihilate, Israel; and stretches its tentacles as far as Africa and Latin America.

And America shies from confronting Iran for fear Tehran might walk away from the nuke deal. So instead, the West lifts sanctions and enriches Iran’s leaders.

A top promise of the Obama presidency was that, as a global child (African roots and Indonesian childhood), he’d unite the world and help nudge it toward the ideals the United Nations was originally meant to espouse.

Yet while America toiled these last eight years to strengthen global institutions like the United Nations, America’s global leadership has waned. The world is worse off, and so are we. But you won’t hear that part in Obama’s speech.

Article Link To The New York Post:

People Aren't Thinking Straight About Bayer And Monsanto

By Tyler Cowen
The Bloomberg View
September 20, 2016

Bayer’s proposed purchase of Monsanto, the biggest deal of the year so far, has led to a heated public debate over economic concentration. Unfortunately, both sides are failing to identify the key issues behind the potential transaction.

The good news is that the deal announced on Sept. 14 would not increase market concentration by much. Bayer is primarily a pharmaceutical and health care company whereas Monsanto deals in crop chemicals and seeds.

Since Bayer does make biotech products and agricultural chemicals, there is overlap in the markets for cottonseed and canola seeds. But what’s the actual problem from possibly limiting competition in those markets? There are many substitutes for cotton fabrics and canola oil (how many of us could pass a blind taste test for canola versus vegetable oil?).

Critics who dislike Monsanto for its leading role in developing genetically modified organisms and agricultural chemicals shouldn’t also be citing monopoly concerns as a reason to oppose the merger -- that combination of views doesn’t make sense. Let’s say for instance that the deal raised the price of GMOs due to monopoly power. Farmers would respond by using those seeds less, and presumably that should be welcome news to GMO opponents.

It appears that some of the opposition to the deal can be traced to a dislike of the companies involved, especially Monsanto. If that becomes a consideration for U.S. and European Union regulators, it will amount to a worrisome politicization of antitrust policy. Keep in mind that the proposed acquisition needs approval in about 30 different political jurisdictions, hardly a recipe for flexible adjustment to changing marketplace conditions. The shares of Monsanto have been trading well below the offer price, a sign that investors don’t expect the proposal to survive.

Social media has given many companies popular reputations that make it harder to evaluate antitrust deals on an appropriately technocratic basis. That makes it more likely that popular companies will receive favorable treatment from governments while unpopular ones face higher hurdles. Especially in Europe, which has far more anti-GMO sentiment than the U.S., Monsanto is often vilified. Yet running antitrust law by democratic opinion is hardly a good idea, given the complexity of the economic issues involved and the paucity of information before most voters. A significant portion of the electorate, for instance, fails to accept that GMOs have been adjudicated as safe by a wide variety of established experts.

There is a silver lining to this whole mess, however, namely that it may not matter much if the deal falls apart.

What does Bayer hope to get for its $66 billion, $128-a-share offer? The company has argued that it will be able to eliminate some duplicated jobs and expenses, negotiate better deals with suppliers and invest more funds in research and development. Maybe, but the broader reality is less cheery. There is a well-known academic literature, dating to the early 1990s, showing that acquiring firms usually decline in value after tender offers, especially after the biggest deals. Mergers do not seem to make companies more valuable or efficient.

Why then do so many mergers and acquisitions happen? Well, some of them do pay off (Google buying YouTube), but also many managers engage in empire-building by increasing the size of their companies, even at the expense of the shareholders. Another possibility is what economists call “winner’s curse,” namely that the winner of an auction or contest or bidding war tends to be the person or institution most optimistic, and in fact overly optimistic, about the value at stake. Consistent with this view, Bayer’s shares are down since the merger became a media rumor on May 11.

The whole Bayer-Monsanto case is a classic example of how a vociferous public debate can disguise or even reverse the true issues at stake. If Bayer fails to close the deal for Monsanto, Bayer shareholders may be the biggest winners. The biggest losers from a failed deal may be its opponents, who will spend the rest of their lives in a world where misguided judgments of corporate popularity have increasing sway over laws and regulations.

That wouldn’t be good for anybody. However the deal turns out, it’s hard to see in the process of considering it a society that is making decisions rationally.

Article Link To The Bloomberg View:

In Poland, A Preview Of What Trump Could Do To America

By Anne Applebaum 
The Washington Post
September 20, 2016

It’s important to acknowledge when you’ve been wrong, and I’ve probably never been so wrong as I was in an op-ed published on April 13, 2010. At the time, I was stunned by a terrible tragedy: the crash of a plane that had carried the Polish president, Lech Kaczynski. He had been flying to the Russian city of Smolensk to visit the memorial at Katyn, where Stalin murdered 20,000 Polish officers in 1940. Several dozen senior military figures and politicians were also on the plane, many of them friends of mine and colleagues of my husband, who was then the Polish foreign minister. Among them was his deputy, Andrzej Kremer, a wonderful man and brilliant diplomat.

In the sweep of emotion that followed the crash, comparing the event to Katyn, I wrote this sentence: “This time around, nobody suspects a conspiracy.” As an excuse, I offer the fact that the tragedy initially seemed to bring people together. Politicians of all parties, from right to left, had been on the plane. Widely attended funerals were held across the country. Even Vladimir Putin, then the Russian prime minister, seemed moved. He arranged for the broadcast of “Katyn” — an emotional and very anti-Soviet Polish film — on Russian state television as a kind of memorial. Nothing like it has ever been shown so widely in Russia, before or since.

But my optimism was premature. The president’s brother, Jaroslaw Kaczynski, then the unpopular leader of the parliamentary opposition, seems to have initially believed, as all the evidence has always shown, that the crash was an accident. Then he changed his mind. Perhaps he could not accept that his beloved twin had died randomly, in a pointless crash. Perhaps he was maddened by grief. Perhaps he felt guilty: He had helped plan the trip. Or perhaps, like Donald Trump, he saw that a conspiracy theory could help bring him to power.

Much as Trump used birtherism to inspire his core voters, Kaczynski, in the years that followed, used the Smolensk crash to motivate his supporters, that minority of the Polish population that remains convinced that unnamed secret forces control the country, that the “elite” is manipulated by foreigners and that everything that has happened in the country since 1989 is part of a sinister plot. And it worked. Last year, thanks to flukes of the electoral system, less than 40 percent of the vote — reflecting 18 percent of the adult population — proved sufficient for his nationalist-populist party, Law and Justice, to win a slim parliamentary majority.

Readers familiar with my recent op-eds will know that I am not shy about pointing out Russian plots when I see them. But there is just no evidence of one at Smolensk. Within hours of the crash, Polish forensic experts were on the ground. They immediately obtained the black boxes and transcribed them meticulously. The cockpit tape can be heard online, and it makes the circumstances painfully clear. The president was late; he had planned a live broadcast from Katyn. When Russian air traffic controllers wanted to divert the plane because of heavy fog, he did not agree. The chief of the air force sat in the cockpit during the final minutes of the flight and pushed the pilots to land: “Be bold, you’ll make it,” he told them. According to the official report, written by the country’s top aviation experts, the plane hit a tree, then the ground, and then broke up.

In the wake of Trump’s grudging renouncement of birtherism, the insidious, racist theory that gave rise to his political career, it’s worth pondering what happened when Law and Justice came to power. Within days of taking office, the new government removed the official report from its website. (It’s still available online.) More recently, police and prosecutors entered the homes of the aviation experts who testified in the original investigation, interrogated them and confiscated their computers.

A new (and well-paid) government commission was formed, containing a group of cranks and “experts” — including an ethnomusicologist, a retired pilot, a psychologist and other people with no knowledge of air crashes. The defense minister, Antoni Macierewicz, who is obsessed with conspiracies of all kinds — famously, he has given credence to the Protocols of the Elders of Zion, an infamous, Czarist-era anti-Semitic forgery — has floated multiple theories, many of which contradict one another. Sometimes the previous Polish government is blamed, sometimes Putin. Sometimes there has been an explosion, sometimes a deliberate controller error. Sometimes “the government,” which was of a different party than the president, is said to have sabotaged a trip that in fact was prepared by the president’s office. None of these theories has ever been accompanied by the slightest hint of genuine evidence.

Because they have been unable to disprove the original report, the ruling party instead ordered the creation of a fake version of reality in the form of a film. “Smolensk” came out two weeks ago and purports to show the “true story” of the crash and the “coverup.” The conclusion — it involves an onboard explosion — is so preposterous that some viewers have howled with laughter. Nevertheless, the film has been declared “true” by Kaczynski, and the education minister has suggested that schoolchildren ought to see it. As in communist Poland, a fictionalized version of history, one that suits those in power, could eventually be on the curriculum.

In due course, there may be other consequences. One of the first things Law and Justice officials did upon taking power was launch an open attack on Poland’s constitutional court, and to re-politicize the independent prosecutor’s office. At the same time, they have put all of the country’s secret services in the hands of a man who has been convicted of fabricating documents, and whom they then pardoned. They might have had many motives for making these changes. But if nothing else, they could use these tools to “prove” one of the ludicrous theories using faked evidence at public show trials, another communist innovation. That kind of drama might satisfy Kaczynski emotionally; he might also reckon it would help him politically.

I realize that there is far more detail here about Poland than most non-Polish readers care to know. But I’m offering it for a reason. Trump, like Kaczynski, pushed a patently false conspiracy theory hard for many years, despite the utter lack of evidence. Last week, he found it expedient to discard that theory, but once he is president, he might find it expedient to adopt it again — or perhaps to push one of the many others he has championed. As president, he can then use the state — the Justice Department, the security bureaucracy, the FBI — to pursue them. A Trump administration could make birtherism the excuse for fake investigations, hearings and even trials that would do terrible and irreversible damage to U.S. politics and the rule of law.

It all sounds unthinkable, of course. But if you’d asked me five years ago, or even one year ago, I would have told you that the transformation of the Smolensk conspiracy theory into state ideology was unthinkable, too. And yet it has come to pass.

Article Link To The Washington Post:

Trump’s Hitlerian Disregard For The Truth

By Richard Cohen
The Washington Post
September 20, 2016

The Economist, a fine British newsmagazine, is rarely wrong, but it was recently in strongly suggesting that the casual disregard for truth that is the very soul of Donald Trump’s campaign is something new under the sun. The technology — tweets and such — certainly is, but his cascade of immense lies certainly is not. I’d like to familiarize the Economist with Adolf Hitler.

I realize that the name Hitler has the distractive quality of pornography and so I cite it only with reluctance. Hitler, however, was not a fictional creation but a real man who was legally chosen to be Germany’s chancellor, and while Trump is neither an anti-Semite nor does he have designs on neighboring countries, he is Hitlerian in his thinking. He thinks the truth is what he says it is.

Soon after becoming chancellor, Hitler announced that the Jews had declared war on Germany. It was a preposterous statement because Jews were less than 1 percent of Germany’s population and had neither the numbers nor the power to make war on anything. In fact, in sheer preposterousness, it compares to Trump’s insistence that Barack Obama was not born in the United States — a position he tenaciously held even after Obama released his Hawaiian birth certificate.

At the time, people tried to make sense of Hitler’s statements by saying he was seeking a scapegoat and had settled on the Jews. Not so. From my readings, I know of no instance in which Hitler confided to an intimate that, of course, his statements about Jews were, as we might now say, over the top. In fact, he remained consistently deranged on the topic. He was not lying. For him, it was the truth.

Trump’s fixation on Obama’s birthplace is similar. It was not, as far as he’s concerned, a lie. It was a strongly felt truth that he abandoned only last week and then only under intense pressure — not out of conviction. To Trump, the lie was not what he had been saying about Obama’s birthplace; it was the one he had told when he finally was compelled to say that Obama was born in the U.S.A. The reason he did not apologize for having so long insisted otherwise is that an apology would have crossed his personal red line. Like a child, he had his fingers crossed.

Just as Hitler’s remarks about Jews were deeply rooted in German anti-Semitism, so was Trump’s birtherism rooted in American racism — with some anti-Muslim sentiment thrown in. Trump’s adamant insistence on it raised issues not, as some have so delicately put it, about his demeanor, but instead about his rationality. It made a joke out of the entire furor over revealing his medical records. I’m sure that Trump is fine physically. Mentally, it’s a different story.

In a purloined email, Colin Powell called Trump’s birther fixation “racist.” But the former secretary of state has never done so publicly, and his hesitation about Hillary Clinton — “for good reason she comes across as sleazy” — is no excuse for being AWOL in this fight. Like Henry Kissinger, George P. Shultz and some other GOP grandees, he has retreated to a neutral corner, as if the fight is not his, too. They all have their qualms with Clinton, but not a single one of them can possibly believe that the United States and its values will not survive her presidency. A Trump presidency is a different matter.

It’s a mistake to make the unreasonable compatible with the reasonable — to think, say, that Trump cannot be serious about this birther stuff or building a wall or likening the difficulties of becoming a billionaire to the loss of a son in Iraq. That was the authentic Trump, a man totally unburdened by concern for anyone else.

There is no lie that cannot be believed. Even after Germany had murdered most of Europe’s Jews, allied investigators at the end of World War II found that many Germans believed, as historian Nicholas Stargardt put it, that their country’s defeat only “confirmed the ‘power of world Jewry.’ ”

Germany was not some weird place. At the advent of the Hitler era, it was a democracy, an advanced nation, culturally rich and scientifically advanced. It had a unique history — its defeat in World War I, the hyperinflation of the 1920s — so it cannot easily be likened to the contemporary United States. But it was not all that different, either. In 1933, it chose a sociopathic liar as its leader. If the polls are to be believed, we may do the same.

Article Link To The Washington Post:

Life During Wartime

As terrorist attacks become more common, public tolerance for liberal pieties will wane.

By Bret Stephens
The Wall Street Journal
September 20, 2016

Long after I returned to the U.S. after living in Jerusalem I kept thinking about soft targets. The peak-hour commuter train that took me from Westchester to Grand Central. The snaking queue outside the security checkpoint at La Guardia Airport. The theater crowds near Times Square.

All of these places were vulnerable and most of them undefended. Why, I wondered, weren’t they being attacked?

This was in late 2004, when Jack Bauer was an American hero and memories of 9/11 were vivid. Yet friends who were nervous about boarding a flight seemed nonchalant about much more plausible threats. Maybe they expected the next attack would be on the same grand scale of 9/11. Maybe they thought the perpetrators would be super villains in the mold of Osama bin Laden, not fried-chicken vendors like Ahmad Khan Rahimi, the suspected 23rd Street bomber.

Life in Israel had taught me differently. Between January 2002, when I moved to the country, and October 2004, when I left, there were 85 suicide bombings, which took the lives of 543 Israelis. Palestinian gun attacks claimed hundreds of additional victims. In a small country it meant that most everyone knew one of those victims, or knew someone who knew someone.

To this day the bombings are landmarks in my life. March 2002: Cafe Moment, just down the street from my apartment, where my future wife had arranged to meet a friend who canceled at the last minute. Eleven dead. September 2003: Cafe Hillel, another neighborhood hangout, where seven people were murdered, including 20-year-old Nava Applebaum and her father, David, on the eve of her wedding. January 2004: Bus No. 19 on Gaza Street, which I witnessed close-up before the ambulances arrived. Another 11 dead and 13 seriously injured, including Jerusalem Post reporter Erik Schechter.

Living in those circumstances had a strange dichotomous quality. Things were absolutely fine until they absolutely weren’t. Memories of bombings mix with other memories: jogs around the walls of the old city, weekend outings to the beach, the daily grind of editing a newspaper. The sense of normality was achieved through an effort of will and a touch of fatalism. Past a certain point, fearing for your own safety becomes exhausting. You give it up.

But it wasn’t just psychological adjustment that made life livable. Israelis recoiled after each bombing, mourned every victim, then picked themselves up. Cafe Moment reopened weeks after it was destroyed. The army and police could not provide constant security, so every restaurant and supermarket hired an armed guard, every mall and hotel set up metal detectors, and people went out. More than a few attacks were stopped by lone Israeli civilians who prevented massacres through the expedient of a handgun.

As for the Israeli government, after much hesitation it did what governments are supposed to do: It fought. In April 2002 then-Prime Minister Ariel Sharon sent Israeli tanks into Jenin, Bethlehem and every other nest of Palestinian terror. He trapped Yasser Arafat in his little palace in Ramallah. He ordered the killing of Hamas’s leaders in Gaza.

All this was done in the teeth of overwhelming international condemnation and the tut-tutting of experts who insisted only a “political solution” could break the “cycle of violence.” Instead, the Israeli military broke that cycle by building a wall and crippling the Palestinians’ capacity to perpetrate violence. In 2002 there were 47 bombings. In 2007 the number had come down to one.

What’s the lesson here for Americans? This past weekend’s terrorist attacks hold at least two. One is that there is a benefit for a society that allows competent and responsible adults to carry guns, like the off-duty police officer who shot the knife-wielding jihadist in St. Cloud, Minn. Another is that there is an equal benefit in the surveillance methods that allowed police in New York and New Jersey to swiftly identify and arrest Mr. Rahimi before his bombing spree took any lives.

These are lessons the political left in this country doesn’t want to hear, lest they unsettle established convictions that weapons can only cause violence, not stop it, and that security is the antithesis of, not a precondition to, civil liberty.

But hear them they will. The eclipse of al Qaeda by Islamic State means the terrorist threat is evolving from elaborately planned spectaculars such as 9/11 or the 2004 Madrid train bombings to hastily improvised and executed blood orgies of the sort we saw this year in Nice and Orlando. As attacks become more frequent and closer to everyday life, public tolerance for liberal pieties will wane. Not least among the casualties of the Palestinian intifada was the Israeli left.

Living in Israel in those crowded years taught me that free people aren’t so easily cowed by terror, and that jihadists are no match for a determined democracy. But it also taught me that democracies rarely muster their full reserves of determination until they’ve been bloodied one time too many.

Article Link To The Wall Street Journal:

Globalization For Everyone

By Hernando de Soto
Project Syndicate
September 20, 2016

Nowadays, globalization’s opponents seem increasingly to be drowning out its defenders. If they get their way, the post-World War II international order – which aimed, often successfully, to advance peace and prosperity through exchange and connection – could well collapse. Can globalization be saved?

At first glance, the outlook appears grim. Every aspect of globalization – free trade, free movement of capital, and international migration – is under attack. Leading the charge are antagonistic forces – from populist political parties to separatist groups to terrorist organizations – whose actions tend to focus more on what they oppose than on what they support.

In Russia and Asia, anti-Western groups are at the forefront of the campaign against globalization. In Europe, populist parties have tended to emphasize their aversion to European integration, with those on the right often also condemning immigration, while the left denounces rising economic inequality. In Latin America, the enemy seems to be foreign interference of any kind. In Africa, tribal separatists oppose anyone standing in the way of independence. And in the Middle East, the Islamic State (ISIS) virulently rejects modernity – and targets societies that embrace it.

Despite their differences, these groups have one thing in common: a deep hostility toward international structures and interconnectedness (though, of course, a murderous group like ISIS is in a different category from, say, European populists). They do not care that the international order they want to tear down enabled the rapid post-1945 economic growth that liberated billions of developing-country citizens from poverty. All they see are massive, unbending institutions and intolerable inequalities in wealth and income, and they blame globalization.

There is some truth to these arguments. The world is a very unequal place, and inequality within societies has widened considerably in recent decades. But this is not because of international trade or movements of people; after all, cross-border trade and migration have been happening for thousands of years.

The anti-globalization movements’ proposed solution – closing national borders to trade, people, or anything else – thus makes little sense. In fact, such an approach would hurt virtually everyone, not just the wealthy elites who have benefited most from globalized markets.

So what is fueling inequality? To answer that question, we must consider what about globalization is generating returns for the wealthy.

A central aspect of globalization is the careful documentation of the knowledge and legal tools needed to combine the property rights of seemingly useless single assets (electronic parts, legal rights to production, and so on) into complex wholes (an iPhone), and appropriate the surplus value they generate. Clear and accessible ledgers that faithfully describe not only who controls what and where, but also the rules governing potential combinations – of, say, collateral, components, producers, entrepreneurs, and legal and property rights – are vital for the system to function.

The problem is that five billion people around the world are not documented in national ledgers in anything approaching an organized manner. Instead, their entrepreneurial talents and legal rights to assets are recorded in hundreds of scattered records and rules systems throughout their countries, making them internationally inaccessible.

Under these conditions, it is impossible for the majority of humanity to participate effectively in their national economies, much less the global one. Without any means of participating in the process of producing high-value combinations, people have no chance of seizing some of the surplus value created.

So it is a lack of consolidated, documented knowledge – not free trade – that is fueling inequality worldwide. But addressing this problem will not be easy. Just determining how many people are left out took my organization, the Institute for Liberty and Democracy (ILD), two decades of fieldwork, conducted by more than 1,000 researchers in some 20 countries.

The main problem is legal lag. The lawyers and corporate elites who draft and enact the legislation and regulations that govern globalization are disconnected from those who are supposed to implement the policies at the local level. In other words, the legal chain is missing a few crucial links.

Experience in Japan, the United States, and Europe shows that a straightforward legal approach to ensuring equal rights and opportunities can take a century or more. But there is a faster way: treating the missing links as a break not in a legal chain, but in a knowledge chain.

We at the ILD know something about knowledge chains. We spent 15 years adding millions of people to the globalized legal system, by bringing the knowledge contained in marginal ledgers into the legal mainstream – all without the help of computers. But we do not have decades more to spend on this process; we need to bring in billions more people, and fast. That will require automation.

Last year, ILD began, with pro bono support from Silicon Valley firms, to determine whether information technology, and specifically blockchain (the transparent, secure, and decentralized online ledger that underpins Bitcoin), could enable more of the world’s population to get in on globalization. The answer is a resounding yes.

By translating the language of the legal chain into a digital language – an achievement that required us to develop a set of 21 typologies – we have created a system that could locate and capture any ledger in the world and make it public. Moreover, we have been able to compress into 34 binary indicators the questions that computers have to ask captured ledgers to determine which provisions should be inserted in blockchain smart contracts between globalized firms and non-globalized collectives.

Information technology has democratized so many elements of our lives. By democratizing the law, perhaps it can save globalization – and the international order.

Article Link To Project Syndicate:

Milton Friedman’s Morals

As Trump and Clinton bang the drums for tariffs and renegotiated deals, where’s the popular voice for trade?

By William McGurn
The Wall Street Journal
September 20, 2016

Whether it’s Donald Trump complaining “we don’t win on trade” or Hillary Clinton vowing to appoint a “chief trade prosecutor,” our two main candidates for president are both campaigning on the idea that government needs to protect us from any foreigner who would sell us something at a better price than we could get at home.

Where’s Milton Friedman when you need him?

In 1980, the Nobel Prize-winning economist brought the message of free markets and free trade into the homes of ordinary Americans via an extraordinary public television series called “Free to Choose.” He did so without apology, without a prepared script and in plain language—moral as well as practical—that you didn’t have to be an economist to understand.

He also did it against the prevailing mood that while free markets might be nice in theory, in reality what America needed was a healthy shot of protectionism: e.g., “voluntary” restrictions on Japanese cars, stronger anti-dumping statutes and greater enforcement of state “buy American” laws.

Is it so much different today? In an age when the global economy has helped lift billions out of abject poverty and put in the pockets of our children iPhones with more processing power than the computers NASA used to put a man on the moon, trade has become a dirty word.

The negatives of trade seemed to be confirmed by a now-famous 2012 graphic by economist Branko Milanovic, which plots how much real income has grown between 1988 and 2008 by income percentiles of the global population. Called the “elephant chart” because of its shape, it appears to prove the Trump-Clinton critique: that the winners from trade are foreigners and our top 1%, while the losers are the working and middle class in the developed West, including the U.S.

But the London-based Resolution Foundation has now re-crunched the numbers to adjust for factors including population growth and the collapse of the U.S.S.R. When it did, it found that though income growth for the U.S. working and middle classes was smaller than for their peers in other Western economies, it was not stagnant.

In a recent Financial Times story, Resolution Foundation director Torsten Bell sounded a distinctly Friedmanite note: “Although globalisation brings a range of challenges for lower income families, we need to be clear that weak income growth generally is rooted in domestic policy, and blaming globalisation takes the pressure off governments.”

What might such pressure look like? Well, Harvard economist Edward Glaeser suggests we might, for example, consider the way well-intentioned government programs can boomerang by discouraging work—everything from minimum-wage hikes that make low-skilled young men more expensive to hire to the huge marginal tax rates that kick in when, say, a single mom using some government benefit gets a job.

No one denies that Americans can lose jobs when an industry abroad is selling a good or service at a better price. But the high-employment, mass-manufacturing economy of the postwar years is not coming back no matter how high tariffs are or what we do to countries who manipulate their currencies. Even more interesting, the Resolution Foundation study reports average real income growth for lower- and middle-class workers in the U.K. was much higher than for their American counterparts, even though the U.K. has an economy that is more, not less, dependent on trade.

For his part, Friedman would ask by what right should an American be prevented from buying a lawful good or service if he found a better price from someone overseas? Where’s the morality of keeping a worker from selling the product of his labor to someone who happens to live in another country? And the following was Friedman’s response on “Free to Choose” when a union official challenged him on his bid to eliminate all tariffs over five years:

“The social and moral issues are all on the side of free trade. And it is you, and people like you, who introduce protection who are the ones who are violating fundamental moral and social issues.

“Tell me, what trade union represents the workers who are displaced because high tariffs reduce exports from this country, because high tariffs make steel and other goods more expensive, and as a result, those industries that use steel have to charge higher prices, they have fewer employees, the export industries that would grow up to balance the imports, tell me what union represents them? What moral and ethical view do you have about their interests?”

It’s still a good question. Because here we are, seven weeks out from an election in which the Republican and the Democratic nominee are trying to outdo each other in their opposition to trade. And neither appreciates the irony that the very definition of a bad trade deal is one that inserts the heavy hand of government between a voluntary exchange that leaves both Citizen of Country A and Citizen of Country B better off.

Article Link To The Wall Street Journal:

U.S., China To Step Up Cooperation On North Korea

September 20, 2016

U.S. President Barack Obama and Chinese Premier Li Keqiang agreed on Monday to step up cooperation in the United Nations Security Council and in law-enforcement channels after North Korea's fifth nuclear test, the White House said.

China and the United States are also targeting the finances of Hongxiang Industrial, a Chinese company headed by a Communist Party cadre, that the Obama administration thinks has a role in assisting North Korea's nuclear program, the Wall Street Journal reported on Monday.

U.N. diplomats say the two countries have started discussions on a possible U.N. sanctions resolution in response to the nuclear test earlier this month, but Beijing has not said directly whether it will support tougher steps against North Korea.

Obama met Li on the sidelines of the annual United Nations General Assembly session in New York.

"Both leaders condemned North Korea’s September 9 nuclear test and resolved to strengthen coordination in achieving the denuclearization of the Korean Peninsula, including by invigorating cooperation in the United Nations Security Council and in law enforcement channels on North Korea," a White House statement said.

China is isolated North Korea's most important diplomatic backer and its biggest trading partner.

It has been angered by Pyongyang's repeated nuclear and missile tests and signed on to increasingly tough U.N. sanctions, but it has said it believes such steps are not the ultimate answer and called for a return to talks with North Korea.

Chinese Foreign Minister Wang Yi told his Japanese counterpart last week China opposes "unhelpful" unilateral sanctions on North Korea but will work within the United Nations to formulate a response.

Washington has pressed Beijing to do more to rein in North Korea. The United States has said it is willing to negotiate with the North if the country commits to get rid of its nuclear weapons, which Pyongyang has refused to do.

Hongxiang Probe

The U.S. Department of Justice (DoJ) is preparing as early as this week to announce legal action against Chinese firms suspected of providing financial assistance to Pyongyang, the Journal reported, citing officials familiar with the matter.

The report said DoJ prosecutors visited Beijing twice last month to make their Chinese counterparts aware of alleged criminal activities being committed by Hongxiang Industrial.

It said police in Liaoning, the northeastern border province of China, had started a probe into the firm's alleged long-term involvement in "serious economic crimes". (on.wsj.com/2cz8iu1)

Certain assets related to the company, its founder and top executive Ma Xiaohong, and some of her relatives and associates, have been frozen by the Chinese authorities in recent weeks, according to the government and corporate filings cited in the report.

Representatives of the U.S. Department of Justice, Chinese Government and Hongxiang Industrial were unavailable for immediate comment.

The White House said Obama and Li also discussed in New York the U.S.-China economic relationship and its importance to the global economy.

"The President encouraged China to accelerate its continuing efforts to address industrial excess capacity, foster an environment conducive to innovation, and advance an orderly transition to a market-determined exchange rate," the statement said.

It said Obama also urged Beijing to establish a level playing field for all firms to compete fairly in China and that he and Li discussed the importance of achieving progress in negotiation of a U.S.-China Bilateral Investment Treaty and of a World Trade Organization Environmental Goods Agreement.

The statement added that the two leaders discussed climate issues and pledged to continue working toward bringing the Paris agreement into force as early as possible and to reach a market-based measure to reduce international aviation emissions.

Article Link To Reuters:

Tuesday, September 20, Morning Global Market Roundup: Asia Stocks Waver As Investors Nervously Await Fed, BOJ

By Lisa Twaronite
September 20, 2016

Asian shares edged lower on Tuesday as investors nervously awaited the outcomes of two-day Federal Reserve and Bank of Japan policy meetings.

"The market is more nervous about the BOJ than the Fed as it may give the market a surprise," said Yutaka Miura, a senior technical analyst at Mizuho Securities.

Global markets have been blowing hot and cold in recent weeks over the Fed's intentions, which remain far from clarified after both hawkish and dovish comments from several Fed officials.

The consensus is that the Fed will leave interest rates unchanged at the end of its meeting on Wednesday, with investors focusing on the statement as well as Chair Janet Yellen's speech for clues on the timing of the central bank's next interest rate increase.

"It's a lot of uncertainty, leading into the Fed," said Jennifer Vail, head of fixed income research at U.S. Bank Wealth Management in Portland, Oregon.

While Vail, like most strategists and investors, expects the Fed to refrain from taking any new steps, she said its statement could include language that's been missing from its recent assessments, such as whether economic risks were "balanced" or "close to balanced."

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.2 percent, after major U.S. indexes ended a choppy session nearly flat.

Australian shares were 0.2 percent lower. The Australian Securities Exchange opened without incident on Tuesday after technical faults caused extensive disruptions on Monday.

Japan's Nikkei stock index erased earlier losses and added 0.1 percent, as trading resumed after a public holiday on Monday. Tokyo markets will be closed for another holiday on Thursday, with the highly-anticipated BOJ meeting sandwiched in between the market closures.

The BOJ could make negative interest rates the primary focus of its monetary policy at the conclusion of its meeting on Wednesday, when it conducts what it described as a "comprehensive" assessment of its policies.

Sources have said BOJ policymakers may consider deepening negative interest rates to show its determination to maintain an ultra-easy policy bias. It unveiled the controversial policy in late January.

"The resulting strength of the yen since then can't really give them a positive outlook on negative rates," said U.S. Bank Wealth Management's Vail, adding that "the risk is for lack of any action, given the lack of consensus" among BOJ members.

Rising speculation that the BOJ will stop short of the dramatic action needed to weaken its currency helped send the dollar to a six-day low against the yen of 101.56 yen on Monday. The dollar was last steady on the day at 101.90 yen.

Wary of a flattening Japanese government bond (JGB) yield curve, the BOJ also could seek ways to steepen the curve, such as making its bond buying more flexible.

Policymakers got a taste last week of how markets might react when investors dumped longer-dated bonds on fears the BOJ would slow its purchasing pace.

"We look for the BOJ to take a more flexible stance on the time horizon for reaching its price stability target and on the pace of its JGB purchases, but expect it to refrain from further easing at this meeting," strategists at Barclays said.

The euro was also steady at $1.1172, remaining well above Monday's nearly two-week low of $1.1149.

The dollar index, which tracks the greenback against a basket of six major rivals, was slightly higher at 95.874, though it was shy of Friday's two-week high of 96.108.

U.S. crude oil futures slipped 0.5 percent to $43.07 a barrel, moving further away from overnight highs. Brent edged 0.3 percent lower to $45.82.

Oil had rallied on Monday before settling off its highs on scepticism over Venezuela's bid to talk up a potential OPEC output freeze, and on indications U.S. crude stockpiles had risen last week.

Spot gold added 0.2 percent to $1,315.84 an ounce, on expectations that the Fed will stand pat on rates.

Article Link To Reuters:

GM Sets Bolt Electric Car Price At $37,495

By Joseph White 
September 20, 2016

General Motors Co (GM.N) on Tuesday announced its Chevrolet Bolt electric vehicle will cost under $30,000 after tax breaks, a price that makes it significantly cheaper than the average new U.S. vehicle and sets up a test of whether the technology can go mainstream in the United States.

The least expensive Bolt will start at $37,495 before a $7,500 federal tax credit, meaning it would sell for $29,995, GM said. The average U.S. price of a new car was $34,143 in August, according to Kelley Blue Book.

The Bolt will have a driving range of 238 miles on a full charge, substantially more than any currently available electric vehicle at a similar price.

However, analysts familiar with GM's plans say the Bolt will initially be a low-volume niche model with production of fewer than 30,000 cars per year. Fully electric cars currently account for less than 1 percent of U.S. car and light truck sales.

GM executives had signaled the Bolt's price would be close to $37,500, but with the price now set, GM will accelerate efforts to steal thunder from rival Tesla Motors Inc (TSLA.O), which has promised to deliver its new Model 3 next July with 215 miles of driving range on a full charge at a price of $35,000.

Steve Majoros, Chevrolet manager for car and crossover marketing, would not say in an interview Monday what GM's production volumes will be or how many orders the automaker has for the Bolt. He said interest in the vehicle is strong, including from corporate and government fleets. GM also plans to deliver Bolts to its ride-services partner Lyft.

GM has begun promoting the Bolt, launching a website that allows potential buyers to calculate how many miles they drive a day and what they could save by switching to an electric car. The brand has gotten a boost from positive early reviews of the vehicle, and an endorsement from Apple Inc (AAPL.O) co-founder Steve Wozniak, who told his Facebook followers he planned to buy one.

Tesla has said it received more than 370,000 reservations for the Model 3 since unveiling it March 31. The Silicon Valley automaker led by Elon Musk has said it needs to raise capital to fund production of the Model 3. GM has begun test production of Bolts at a factory near Detroit.

Article Link To Reuters:

Social Entrepreneurs Say They Face Tough Hurdles, But Making Headway

By Ellen Wulfhorst
September 20, 2016

Greater support from the public, governments and investors is needed to boost the work of entrepreneurs using business for social good, said industry activists and organizers after a Thomson Reuters Foundation poll highlighted these as key issues.

While progress overcoming those obstacles is healthy and growing, they said at SOCAP - the largest annual conference of social entrepreneurs and investors - that more could be done to support what is seen as a new way of doing business.

The Thomson Reuters Foundation poll of almost 900 social enterprise experts in the world's 45 biggest economies released this week found the vast majority - 85 percent - said the sector was growing.

But nearly 60 percent of experts cited a lack of public understanding, access to investment and selling to governments as the biggest challenges that could hamper growth.

"There's very limited awareness of what social entrepreneurship is," said Dr. Asher Hasan, whose Pakistani-based company Docthers works with corporations in Mexico and Chile to provide insurance to suppliers, factory workers and others in their supply chains.

"They understand traditional philanthropy. They understand capitalism. They don't understand the blend. There's a lot of market development that needs to be done to help the mainstream understand."

A social entrepreneur is typically someone who uses commercial strategies to tackle social and environmental problems, combining social good and financial gain.

Attendees at SOCAP said governments are promoting social entrepreneurship and schools are teaching it, while enterprises are finding fresh, creative ways to obtain credit and financing.

Jennifer Kushell, founder of Your Success Now (YSN), which connects youth with educational and career opportunities, said U.S. President Barack Obama had been supportive, promoting so-called entrepreneurship diplomacy, a strategy to find common goals in conflict areas.

YSN is designing a social entrepreneurship curriculum for business schools, she said.

"Don't Miss The Next Thomas Edison"

"You have a billion and a half young people, and they don't even realize they can be entrepreneurs or realize they can work for entrepreneurial companies," she said.

"It does need a lot more people to stand up and try to get the word out much more aggressively, like any movement."

Seeking to support social entrepreneurs, Autodesk, a maker of software for architecture, engineering and other industries, provides free software and licenses, said Pam Hochman, who manages the entrepreneur impact program at the San Rafael, California company.

"I definitely hear about finance and access to capital being a real problem," she said.

"We don't want the next Thomas Edison to walk by, and he didn't get the software that he needed because he didn't have enough money to buy a license."

Banks are training loan officers on the risks involved in lending to social entrepreneurs, said Marina Leytes, a consultant with Impact Alpha, an online media site covering social and environmental business.

"More and more local banks are entering this sector, providing loans to smaller enterprises," she said. "It's a way for them to gain more clients and expand their operations."

The Global Alliance for Clean Cookstoves recently worked with the government of Kenya to eliminate a tax on cookstoves going to women in poor regions, said Stevie Valdez, manager of the Washington-based group's impact investing and market development.

The Alliance aims to provide cleaner cookstoves and fuel to the 40 percent of the world's population that uses solid fuel and cooks over open fires, creating severe environmental and health problems, Valdez said.

"We need the entrepreneurs really getting out there with great products, and we need the governments really making an effort to say, 'You know what? We want healthier products," she said.

Representatives of YSN, Autodesk and the Alliance were among 2,500 people attending SOCAP this week in San Francisco. The conference brings together investors and entrepreneurs to address issues such as poverty, climate change, job creation and food supplies.

Article Link To Reuters:

Oil Slips As Venezuela Says Market Is 10 Percent Oversupplied

By Henning Gloystein 
September 20, 2016

Oil prices fell on Tuesday after Venezuela said that global supplies needed to fall by 10 percent in order to bring production down to consumption levels, and technical indicators also pointed to cheaper crude futures.

Global oil supply of 94 million barrels per day needs to fall by about a tenth if it is to match consumption, Venezuela's Oil Minister Eulogio Del Pino said on Monday.

International benchmark Brent crude oil futures LCOc1 were trading at $45.81 per barrel at 0139 GMT (09:39 p.m. EDT), down 17 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 22 cents at $43.08 a barrel.

"Global production is at 94 million barrels per day, of which we need to go down 9 million barrels per day to sustain the level of consumption," Del Pino said in an interview with state oil company PDVSA's internal TV station.

Del Pino is also president of PDVSA.

The statements came the same day as credit ratings agency Standard & Poor's said that a proposed bond swap by PDVSA was a "distressed exchange" that would be "tantamount to default" if completed, a blow to the cash-strapped firm's effort to seek a financial lifeline.

Technical market indicators were also weak, with WTI likely to test support at $42.78 per barrel soon, after which a fall toward $42 would be likely, according to Reuters analyst Wang Tao.

For Brent, he said that prices may test support at $45.63 per barrel and, failing to hold that level, could fall to just over $45 a barrel.

Despite the bearish market mood on Monday, hedge funds scaled back some of their short positions in crude oil futures and options after prices failed to fall further, suggesting the market was running out of negative momentum.

Along with other money managers they cut their combined short position in the three main Brent and WTI contracts by 36 million barrels in the week to Sept. 13.

Article Link To Reuters:

Why The Bank Of Japan May Overshadow The Federal Reserve On Super Wednesday

By Leslie Shaffer
September 20, 2016

In Super Wednesday's central bank double-header, the Federal Reserve's show may be an afterthought to the Bank of Japan's performance.

In a case of unusual timing, both the BOJ and the Fed will announce the outcomes of their monetary policy meetings on Wednesday. While the two major central banks frequently meet in the same week, a same-day announcement was unusual.

The BOJ statement is due around midday Japan time Wednesday and the Fed's statement is scheduled for later in the global day, around 2 p.m. Eastern time.

But while the Fed would usually be more closely watched by global markets, this time around, the BOJ will have financial players hanging on the edge of their seats. That's because analysts broadly expect the Fed to stand pat on policy while turning more hawkish in its statement, while the BOJ, which has promised a comprehensive assessment of its current quantitative easing and negative interest rate policies, can only surprise the wide-ranging predictions for its next moves.

"The greater uncertainty is on the BOJ and what they say. My sense is that there is a great deal of ambiguity on how the BOJ should proceed. Theirs is a much bigger meeting for markets than the Fed meeting, just because the Fed is not expected to surprise," Thomas Lam, chief G-3 economist at RHB Securities in Singapore, told CNBC on Monday.

Analyst predictions for the BOJ's next move varied widely, from expectations that the central bank would cut interest rates deeper into negative territory, to changing the size or make up of its quantitative easing asset purchases, to trying to steepen the yield curve or to doing nothing at all.

"The BOJ has a propensity to surprise, although most of the time, the surprises are negative," Lam said.

The market certainly took a negative view of the BOJ's late January surprise move to introduce a negative interest rate policy, when the central bank cut the rate it pays on certain deposits to negative 0.1 percent.

That counterintuitively sent the yen sharply higher, frustrating policymakers who had hoped a weaker currency would help the BOJ reach its long-delayed 2 percent inflation target by increasing the cost of imports and spurring more consumption.

Indeed, the yen may become the bellwether of how the markets view the twin central bank meetings.

"Dollar-yen has fallen pretty much every time we've had an FOMC and BOJ meeting week this year," David Forrester, a foreign-exchange strategist at Credit Agricole, told CNBC's "Street Signs" on Monday.

He expected that the BOJ would aim to steepen Japan's bond yield curve and if that move "impressed" the Nikkei stock index, then the yen might weaken. Forrester also noted that if the Fed sounded more hawkish in its statement, that would push up the dollar, and by extension, weaken the yen.

Some analysts didn't hold out much hope that the double-feature central bank meetings would affect the currency much.

"Do we think the Fed will be much more hawkish? Unlikely. Do we think the BOJ are going to be able to hit the right buttons to actually say we have a new policy framework that works to get the yen down as much as we did before? Pretty unlikely," Michael Every, head of financial markets research for Asia-Pacific at Rabobank, told CNBC's "Squawk Box" on Monday. "If they both misfire at the same time, then the yen is likely to strengthen."

But not everyone expected huge swings.

RHB's Lam said that markets were likely to be cautious, and he doubted many players would take big positions amid the uncertainty.

But he added that market reactions could come with a time lag between the BOJ's statement and the Fed's.

"If the BOJ communicates poorly, that's going to raise the caution in markets as you get into the Fed decision," he said.

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Wells Fargo CEO To Take 'Full Responsibility' In Senate Hearing

By Anet Josline Pinto
September 20, 2016

Wells Fargo & Co's (WFC.N) chief executive, John Stumpf, will tell U.S. senators on Tuesday that he is "deeply sorry" for selling customers unauthorized bank accounts and credit cards and that he would take "full responsibility" for the unethical activity, the New York Times reported on Monday.

Stumpf will strike a contrite tone in a testimony over the fake accounts at a Senate Banking Committee hearing on Tuesday morning, the New York Times said, citing a copy of his prepared remarks. (nyti.ms/2cUyZMP)

Wells Fargo, the country's third-largest bank by assets, is embroiled in a scandal over the opening of sham accounts and was sued on Friday by customers who accused the bank of fraud and recklessness for its behavior.

The bank said it has fired 5,300 people over the matter and would eliminate sales goals in its retail banking on Jan. 1, 2017.

Stumpf will tell lawmakers that the illegal activity carried out was not part of any "orchestrated effort, or scheme, as some have called it, by the company," New York Times wrote quoting the testimony.

"We never directed nor wanted our employees, whom we refer to as team members, to provide products and services to customers they did not want or need," the Times quoted Stumpf as saying.

Wells Fargo declined to comment.

Stumpf will also acknowledge that the bank failed to do enough to stop the behavior from continuing, the Times said.

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U.S. May Seek Power To Pre-Approve Self-Driving Car Technology

By David Shepardson
September 20, 2016

The Obama administration said Monday it was considering seeking the power to review and approve technology for self-driving cars before they hit the road and said U.S. states should not set separate rules.

The U.S. Transportation Department, in its most comprehensive statement yet on autonomous vehicles, also issued voluntary guidelines and urged automakers to certify that their highly automated vehicles were ready for public roads.

"If a self-driving car isn't safe, we have the authority to pull it off the road. We won't hesitate to protect the American public's safety," President Barack Obama wrote in a Pittsburgh Post-Gazette op-ed published Monday. "We have to get it right."

Automakers and technology companies are racing to develop vehicles that can drive themselves at least part of the time. They have complained that state and federal safety rules impede the process.

Obama wrote the administration is asking automakers "to sign a 15-point safety checklist showing not just the government, but every interested American, how they’re doing it."

The guidelines include testing, backup systems in the case of a self-driving computer failure, and recording and sharing data. Companies would also have to demonstrate how vehicles would comply with all traffic laws and fare in traffic crashes and how they would perform after a crash.

The government currently allows automakers to self-certify that vehicles comply with safety standards.

U.S. Transportation Secretary Anthony Foxx said on a conference call with reporters that a new premarket approval system overseen by the government would "would require a lot more upfront discussion, dialogue and staffing on our part."

The National Highway Traffic Safety Administration has been investigating Tesla Motors Inc's Autopilot system since June because of a May 7 fatal crash in Florida in which the system was in use. The Autopilot system, which allows drivers to keep their hands off the wheels for extended periods, did not require any pre approval by the agency for use by owners.

On another issue, the administration's guidance sides with Alphabet Inc's Google unit by calling for the federal government, not states, to set the rules governing vehicles driven by computers.

Google criticized California last year when the state proposed draft rules requiring steering wheels and a licensed driver in all self-driving cars.

A person briefed on the guidelines prior to their release on Tuesday said they urge states not to require the presence of a licensed driver in the driver seat when a highly automated vehicle is in operation. The person requested anonymity because the guidelines had not yet been made public.

"When a human being is operating that vehicle, the conventional rules of state law would apply," Foxx told reporters on a conference call on Monday. The goal is to "avoid a patchwork of state laws," he added.

The California Department of Motor Vehicles said in a statement on Monday that it would not comment until it saw the guidelines, but said it planned to release revised draft regulations in the coming weeks.

The state of Michigan, in contrast, is moving to adopt legislation to no longer require a licensed driver in a self-driving car while testing on public roads.

The Self-Driving Coalition for Safer Streets, whose members include Google, Ford Motor Co and ride-hailing service Uber, said in a statement they hoped policymakers could develop a framework that avoids a "patchwork of requirements that could inhibit self-driving vehicle development."

Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, a trade group representing major automakers, said in a statement that the government's goal should be to "avoid policies that become outdated and inadvertently limit progress in reducing the number of crashes and saving lives."

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