Thursday, September 29, 2016

China’s New Silk Road Hinges On A Small Pakistan Port

Mountains, disputed territory and armed rebels lie in the way of China's route to the Arabian Sea.

By Faseeh Mangi
September 29, 2016

“Doesn’t it just look like Mars?” says a Pakistan Army lieutenant colonel, as laborers toil under the blinding sun, building a road across the barren deserts of Balochistan.

Against a backdrop of scorched mountains, workers cut steel bars and prepare rock for crushing near a viaduct that crosses a dry river bed. In the distance, a truck kicks up dust, bringing materials to the site. Army vehicles patrol the road with signal jammers, while snipers scan the hills—the lair of armed separatists and bandits until a military campaign cleared most of them out a few years ago.

This is Chinese President Xi Jinping’s biggest gambit in his so-called One Belt, One Road project to rebuild the ancient Silk Road, a trading route connecting China to the Arabian Sea that slices through the Himalayas and crosses deserts and disputed territory to reach the ancient fishing port of Gwadar, about 500 miles by boat from Dubai.

The progress of the new trade route has been eyed with concern by India, which has forged a rival $20 billion plan with Iran to expand Iran’s Chabahar port, 100 kilometers along the coast. Tension between the two South Asian neighbors has been escalating, with both sides claiming some of their troops were killed by the other nation this month, the worst confrontations since 1999.

Xi’s plan envisages a network of ports, railways and highways snaking through Asia to Europe and Africa, that would lift China’s global standing and provide its companies with new markets and investment opportunities.

“The China-Pakistan Economic Corridor is the flagship project for China’s Belt and Road initiative, essentially the only fully-developed section of the entire scheme, and hence an important test case for Xi Jinping’s ambitious plans,” said Andrew Small, a research fellow at the Washington-based German Marshall Fund and author of “The China-Pakistan Axis: Asia’s New Geopolitics”.

Pakistan needs the boost. Despite agreeing on a plan with the International Monetary Fund in 2013 that helped stabilize the economy, its industry is hampered by crippling power shortages, poor infrastructure and a downturn in global demand. Exports in the year ended June fell to $21 billion, the lowest level since 2010, according to the Pakistan Bureau of Statistics.

Frequent power blackouts have driven traditional industries like textiles to countries such as Bangladesh and Vietnam. Of the $46 billion planned investment in the China-Pakistan Economic Corridor, $35 billion is earmarked for energy.

The project includes coal-fired, solar and wind power stations and a network of highways running 3,000 kilometers down the length of the country, from the freezing passes of the Karakoram Highway to the Arabian Sea. They will run through Kashmir, an area claimed by both India and Pakistan that is subject to frequent border clashes, and restive Balochistan, which Pakistan annexed in 1948.

“The energy policy was there for anyone to come and invest, but others were just looking at the political risk,” Planning Minister Ahsan Iqbal said in an interview in Islamabad on July 25. “China took a bet on Pakistan when others were shy.”

Pakistan is deploying 10,000 soldiers to the project, including a newly-created brigade of about 600 troops to guard workers and Chinese employees and escort trucks through Balochistan once the trade route is operating.

For China, CPEC offers a shorter route to the Indian Ocean, without going through the congested and strategically sensitive Strait of Malacca. It strengthens the bond with Pakistan, an ally that bridges South Asia and the Middle East. And it gives China a port in the Indian Ocean that could one day become a naval base.

For Pakistan, it brings soft loans to build power stations, roads and a deep-sea port and free-trade zone modeled on Shenzhen. It gives the nation a powerful ally in its never-ending squabble with India. And it brings the promise of private investment that will alleviate poverty in some of its least developed regions, helping curb the civil unrest that has bedeviled the country for decades.

“China sees Pakistan as an ‘iron brother’," said Du Youkang, director of the Center for South Asian Studies at Fudan University in Shanghai, and a former Chinese diplomat based in Islamabad and New Delhi. “China’s strategic priority in the region is to secure a trade route to the Indian Ocean which can bypass the overused Strait of Malacca and significantly reduce the travel time between China and the Middle East.”

The cornerstone of the project is Gwadar, 30 minutes from the border with Iran, or an eight-hour drive from Karachi along a two-lane coastal highway that twists through jagged weather-beaten hills and across arid dust-blown plains.

Bought from the Sultanate of Oman in the 1950s, Gwadar is not connected to Pakistan’s power grid, using electricity imported from Iran, also a major source of fuel and consumer goods, much of it smuggled across the border.

Kids here play soccer, rather than the cricket that is popular elsewhere in Pakistan, wearing jerseys of European stars like England captain Wayne Rooney and France’s Paul Pogba. For centuries, the city looked to the sea for its wealth. Wooden fishing boats clustered in the bay haul lobsters and jumbo shrimp that now find their way to China and other markets in East Asia.

Gwadar’s first attempt to change came almost a decade ago, when Pakistan decided to build a deep water port with the help of Singapore. While the first phase of the project was completed, security issues and the global downturn meant the new port failed to meet expectations. Singapore pulled out and China stepped in.

Now construction, and the Chinese flag, are everywhere. Trucks and tractors are building a six-lane road along the seafront and a promenade for food stalls and tourist attractions, said Rafiq Baloch, chief engineer of the Gwadar Development Authority. The hospital’s capacity will increase sixfold, and a new water treatment plant, coal-fired power station and airport are planned.

“Normally MoUs are signed and then they are dispatched to libraries and files in ministries so they can sit there for years and years,” said Planning Minister Iqbal. “So this is a quite remarkable success story and the first set of the projects will be completed by the end of 2017 or beginning of 2018.”

For 26-year-old Mohammad Younis, Chinese money has meant an escape from needing to find a job at sea. As a teenager he joined a gang of fuel smugglers, driving pickups from Iran. After the authorities clamped down, he landed a job as a driver at the Pearl Continental, a five-star hotel built in 2006 that hosts Chinese engineers.

The hotel plans to triple capacity within five years and add office and apartment blocks, said General Manager Salman Saeed Khan.

“Development is happening at a faster pace than ever before, now that the Chinese have come,” said Younis. “It’s good. We will get jobs.”

Not everyone is happy. India’s Prime Minister Narendra Modi launched a thinly veiled attack on CPEC during his recent national day speech, thanking supporters in Pakistan-occupied Kashmir and Balochistan—a direct provocation, since Pakistan has long accused India of backing rebels in the region.

Five weeks after Modi’s speech, 18 Indian soldiers were killed by unidentified gunmen in a predawn raid on an army camp in Kashmir, setting off a diplomatic crisis.

The saber-rattling between the nuclear-armed nations is one indication of the gamble China is making in the region. But for Pakistan, CPEC is a potential game changer.

“We can never forget that China showed confidence in Pakistan when it was isolated on the economic front,” Pakistan Prime Minister Nawaz Sharif told a gathering of businessmen from both countries in Islamabad on Aug. 30. “How can we ever forget this brotherly gesture?”

Article Link To Bloomberg:

Saving Europe By Reversing Brexit

By Anatole Kaletsky
Project Syndicate
September 30, 2016

“Never let a crisis go to waste” has always been one of the European Union’s guiding principles. But what about five simultaneous crises? Today, the EU faces what Frans Timmermans, European Commission Vice President, describes as a “multi-crisis”: Brexit, refugee flows, fiscal austerity, geopolitical threats from East and South, and “illiberal democracy” in central Europe. Rather than wasting its crises, the EU could be laid to waste by them.

If so, Brexit will be the detonator for that demolition. By legitimizing the concept of an EU breakup, and thus turning a fantasy among political extremists into a realistic option of mainstream politics throughout Europe, Brexit threatens to trigger an irresistible disintegration process. It will also transform economics, by paralyzing the European Central Bank in the next euro crisis: while the ECB can always defeat market speculation, it is powerless against breakup pressures from voters.

The EU therefore urgently needs to put the genie of disintegration back in its bottle. That means persuading Britain to change its mind about Europe, which, according to conventional wisdom on both sides of the English Channel, is impossible. But many “impossible” things are happening in politics nowadays.

The referendum majority on June 23 was much narrower than that in Scotland’s 2014 independence referendum, or the negative votes on EU treaties in Ireland, Denmark, and the Netherlands, all of which were subsequently reversed. More important, the 52% who voted for Brexit were sharply divided in their aims, with some prepared to accept economic sacrifice for a “hard Brexit” (total separation from Europe), and others hoping for a “soft Brexit” that would minimize the impact on the UK economy.

According to post-referendum polling, three-quarters of “Leave” voters expect Britain’s economy either to strengthen or to be unaffected by Brexit, and 80% believe the government will have more money to spend on public services as a result of their vote. Brexit voters are so optimistic because they were told (most prominently by current Foreign Secretary Boris Johnson) that Britain could “have our cake and eat it” – a new deal that would preserve all of the economic benefits of EU membership with none of the obligations or costs.

When these expectations are disappointed, public opinion will change. Already, 66% of voters say maintaining market access is more important than restricting immigration, if Britain cannot have both. This directly contradicts Prime Minister Theresa May’s stated priorities – and probably explains why she refuses to talk about her Brexit strategy.

Because public expectations of an economically innocuous soft Brexit will be impossible to reconcile with the rejection of all EU obligations demanded by the Conservative Party’s “hard Brexit” faction, May cannot win. Whichever course she chooses, she will antagonize half her party and a large proportion of Brexit supporters, not to mention the 48% of voters who want to stay in the EU.

Once this backlash starts, plenty of ambitious Conservative politicians whom May purged from government will be eager to exploit it. Already, George Osborne, immediately sacked as Chancellor of the Exchequer when May took office, has thrown down the gauntlet, challenging her democratic mandate: “Brexit won a majority. Hard Brexit did not.” Even the weakness of Britain’s opposition parties works against May, allowing opponents to plot against her, secure in the knowledge that they cannot lose power.

All this implies that British politics will become very fluid as economic conditions deteriorate and voters start to change their minds. The EU should encourage such second thoughts, which means that it must stop treating Brexit as inevitable and instead offer the possibility of a compromise that would meet British voters’ concerns, but only on the condition that Britain remains in the EU.

The obvious way to accomplish this would be to conclude an EU-wide agreement on greater national control over immigration and other symbolic issues related to national sovereignty. Such an agreement need not be seen as a concession to British blackmail if it were extended to all EU countries and presented as a response to public opinion throughout the Union.

By making a virtue of its response to democratic pressures, the EU could regain Europe-wide support. But to send a positive message to voters, European leaders will have to rediscover the knack for pragmatic compromise and inter-governmental bargaining that used to be the hallmark of EU diplomacy.

For starters, defusing both Brexit and the refugee crisis will require some modest changes in immigration and welfare rules. Such reforms, which would be popular in almost all member countries, need not conflict with the EU’s founding principles if they preserve the right to work throughout Europe, but return some control over non-economic migration and welfare payments to national governments.

Second, the interaction of the refugee and euro crises demands new fiscal rules. Dealing with immigrants is expensive and should ideally be funded by mutually guaranteed EU bonds. Alternatively, Mediterranean countries must be offered budgetary leeway, in exchange for assuming front-line responsibility for immigration controls.

Third, the need for immigration reform, combined with “illiberal democracy” in Central Europe, calls for changes in EU spending priorities and foreign policy. Poland and other countries will accept restrictions on their citizens’ mobility only if offered additional structural funds and stronger security cooperation. Such incentives, in turn, could provide more levers to ensure respect for human rights.

Finally, restoring the EU’s democratic legitimacy means ending the institutional tensions between the eurozone and the broader EU. The EU authorities must acknowledge that many member countries will never join the euro, which means abandoning their rhetoric about a “two-speed Europe,” with all heading – whether at high or low speed – toward the “ever closer union” that a single currency implies. Instead, the EU must reshape itself into two concentric circles: an inner core committed to deeper integration, and an outer ring whose voters have no interest in a single currency and a shared fiscal space.

Such reforms may seem impossible, but EU disintegration seemed impossible before the Brexit vote. In revolutionary periods, the impossible can become inevitable in a matter of months. This week, former French President Nicolas Sarkozy called unexpectedly for a new European treaty and a second British referendum on its EU membership. In Europe, a revolutionary period has begun.

Article Link To Project Syndicate:

Noonan: The Politics Of ‘The Shallows’

What ails American democracy? Too much information and too little thought.

By Peggy Noonan
The Wall Street Journal
September 30, 2016

What impact has the modern media environment had on the 2016 campaign? I know that’s a boring sentence, but journalists and politicians talk about it a lot, journalists uneasily and politicians with frustration. The 24/7 news cycle and the million multiplying platforms with their escalating demands—for pictures, video, sound, the immediate hot take—exhaust politicians and staff, and media people too. Everyone is tired, and chronically tired people live, perilously, on the Edge of Stupid. More important, modern media realities make everything intellectually thinner, shallower. Everything moves fast; we talk not of the scandal of the day but the scandal of the hour, reducing a great event, a presidential campaign, into an endless river of gaffes.

The need to say something becomes the tendency to say anything. It makes everything dumber, grosser, less important.

This year I am seeing something, especially among the young of politics and journalism. They have received most of what they know about political history through screens. They are college graduates, they’re in their 20s or 30s, they’re bright and ambitious, but they have seen the movie and not read the book. They’ve heard the sound bite but not read the speech. Their understanding of history, even recent history, is superficial. They grew up in the internet age and have filled their brainspace with information that came in the form of pictures and sounds. They learned through sensation, not through books, which demand something deeper from your brain. Reading forces you to imagine, question, ponder, reflect. It provides a deeper understanding of political figures and events.

Watching a movie about the Cuban Missile Crisis shows you a drama. Reading about it shows you a dilemma. The book makes you imagine the color, sound, tone and tension, the logic of events: It makes your brain do work. A movie is received passively: You sit back, see, hear. Books demand and reward. When you read them your knowledge base deepens and expands. In time that depth comes to inform your work, sometimes in ways of which you’re not fully conscious.

In the past 18 months I talked to three young presidential candidates—people running for president, real grown-ups—who, it was clear to me by the end of our conversations, had, in their understanding of modern American political history, seen the movie and not read the book. Two of them, I’ve come to know, can recite whole pages of dialogue from movies. (It is interesting to me that the movies our politicians have most memorized are “The Godfather” Parts I and II.)

Everyone in politics is getting much of what they know through the internet, through Google searches and Wikipedia. They can give you a certain sense of things but are by nature quick and shallow reads that link to other quick and shallow reads. Sometimes subjects are treated in a tendentious manner, reflecting the biases or limited knowledge of the writer.

If you get your information mostly through the Web, you’ll get stuck in “The Shallows,” which is the name of a book by Nicholas Carrabout what the internet is doing to our brains. Media, he reminds us, are not just channels of information: “They supply the stuff of thought, but they also shape the process of thought.” The internet is chipping away at our “capacity for concentration and contemplation.” “Once I was a scuba driver in the sea of words,” writes Mr. Carr. “Now I zip along the surface like a guy on a Jet Ski.”

If you can’t read deeply you will not be able to think deeply. If you can’t think deeply you will not be able to lead well, or report well.

There is another aspect of this year’s media environment, and it would be wrong not to speak it. It is that the mainstream media appear to have decided Donald Trump is so uniquely a threat to democracy, so appalling as a political figure, such a break with wholesome political tradition, that they are justified in showing, day by day, not only opposition but utter antagonism toward him. That surely has some impact on what Kellyanne Conway calls “undercover Trump voters.” They know what polite people think of them; they know their support carries a social stigma. Last week I saw a CNN daytime anchor fairly levitate with anger as she reported on Mr. Trump; I thought she was going to have an out-of-body experience and start floating over the shiny glass desk. She surely knew she’d pay no price for her shown disdain, and might gain Twitter followers.

Guys, this isn’t helping. Tell the story, ask the questions, trust the people, give it to them straight, report both sides. It’s the most constructive thing you could do right now, when any constructive act comes as a real relief.

In a country whose institutions are in such fragile shape, mainstream media very much among them, it does no good for its members to damage further their own reputations for fairness, probity, judgment. Books will be written about this, though I’m not sure they’ll read them.

As to Monday’s debate, Hillary Clinton won. The story leading up to it was that she was frail, her health bad. Instead she was vibrant, confident, smiling and present. Sometimes when Mrs. Clinton speaks you sense she’s operating at a level of distraction, reviewing her performance in real time or thinking about dinner. Here her mind was on the mission. She did not fall into the hectoring cadence that is a harassment to the ear. She said nothing remotely interesting.

Mr. Trump’s job was to leave you able to imagine him as president. You could have, but it would be a grumpy, grouchy president with thin skin.

Neither quite got across the idea that they were in it for America and not themselves.

When you are a politician leaving the debate stage you always know if you won. You can feel it. You know when it worked and when it didn’t. You ask everyone, “How’d I do?” but you know the answer. And you’re happy. What you get after such a victory is the whoosh. The whoosh is the wind at your back that gives the spring to your step. You get the jolly look and your laugh is a real laugh and not an enactment, and all this makes you better at the next stop, which makes the crowd cheer louder, and then you really know you’ve got the whoosh.

The whoosh can carry you for days or weeks, until there’s a reversal of some kind. Then you lose the sense of magical good fortune and peerless personal performance and the audience senses it, gets quieter, and suddenly the whoosh is gone.

But right now Mrs. Clinton has it.

She’ll probably overplay her hand. That’s what she does. Her sense of her own destiny blinds her to her tendency toward misjudgment. She’ll call Trump supporters a bucket of baneful baddies.

Since the debate Mr. Trump is angry and is going straight into junkyard dog mode, which won’t work well.

This tells me the next week or so she’s on the upalator and he’s on the downalator. After that, we’ll see.

Article Link To The Wall Street Journal:

Krauthammer: In 2016, Facts, Logic, And History Have Ceased To Matter

The suspension of disbelief among voters has become ubiquitous.

By Charles Krauthammer 
The National Review
September 30, 2016

And now, less than six weeks from the election, what is the main event of the day? A fight between the GOP presidential nominee and a former Miss Universe, whom he had 20 years ago called “Miss Piggy” and other choice pejoratives. Just a few weeks earlier, we were seized by a transient hysteria over a minor Hillary Clinton lung infection hyped to near-mortal status. The latest curiosity is Donald Trump’s 37 sniffles during the first presidential debate. (People count this sort of thing.) Dr. Howard Dean has suggested a possible cocaine addiction.

In a man who doesn’t even drink coffee? This campaign is sinking to somewhere between zany and totally insane. Is there a bottom?

Take the most striking — and overlooked — moment of Trump’s GOP convention speech. He actually promised that under him, “the crime and violence that today afflicts our nation will soon — and I mean very soon — come to an end.”

Not “be reduced.” End.

Humanity has been at this since, oh, Hammurabi. But the audience didn’t laugh. It applauded.

Nor was this mere spur-of-the-moment hyperbole. Trump was reading from a teleprompter. As he was a few weeks earlier when he told a conference in North Dakota, “Politicians have used you and stolen your votes. They have given you nothing. I will give you everything.”

Everything, mind you. “I will give you what you’ve been looking for for 50 years.” No laughter recorded.

In launching his African-American outreach at a speech in Charlotte, Trump catalogued the horrors that he believes define black life in America today. Then promised: “I will fix it.”

How primitive have our politics become? Fix what? Family structure? Social inheritance? Self-destructive habits? How? He doesn’t say. He’ll will it. Trust him, as he likes to say.

After 15 months, the suspension of disbelief has become so ubiquitous that we hardly notice anymore. We are operating in an alternate universe where the geometry is non-Euclidean, facts don’t matter, history and logic have disappeared.

Going into the first debate, Trump was in a virtual tie for the lead. The bar for him was set almost comically low. He had merely to (1) suffer no major meltdown and (2) produce just a few moments of coherence.

He cleared the bar. In the first half-hour, he established the entire premise of his campaign. Things are bad and she’s been around for 30 years. You like bad? Stick with her. You want change? I’m your man.

It can’t get more elemental than that. At one point, Clinton laughed and ridiculed Trump for trying to blame her for everything that’s ever happened. In fact, that’s exactly what he did. With some success.

By conventional measures — poise, logic, command of the facts — she won the debate handily. But when it comes to moving the needle, conventional measures don’t apply this year. What might, however, move the needle is not the debate itself but the time bomb Trump left behind.

His great weakness is his vanity. He is temperamentally incapable of allowing any attack on his person to go unavenged. He is particularly sensitive on the subject of his wealth. So central to his self-image is his business acumen that in the debate he couldn’t resist the temptation to tout his cleverness on taxes. To an audience of 86 million, he appeared to concede that he didn’t pay any. “That makes me smart,” he smugly interjected.

Big mistake. The next day, Clinton offered the obvious retort: “If not paying taxes makes him smart, what does that make all the rest of us?” Meanwhile, Trump has been going around telling Rust Belt workers, on whom his Electoral College strategy hinges and who might still believe that billionaires do have some obligation to pay taxes, that “I am your voice.”

When gaffes like this are committed, the candidate either doubles down (you might say that if you can legally pay nothing, why not, given how corrupt the tax code is) or simply denies he ever said anything of the sort. Indeed, one of the more remarkable features of this campaign is how brazenly candidates deny having said things that have been captured on tape, such as Clinton denying she ever said the Trans-Pacific Partnership was the gold standard of trade deals.

The only thing more amazing is how easily they get away with it.

Article Link To The National Review:

A Close, Crucial Race In North Carolina

By P.G.
The Economist
September 30, 2016

On September 28th, the day after her first presidential debate with Donald Trump, Hillary Clinton held a rally in Raleigh, the capital of North Carolina, where she ripped into Mr Trump’s “dangerously incoherent,” performance. Days earlier, the Democratic nominee had chosen Greensboro, one of the state’s largest cities, for another important appearance: Her first rally after a few days off the trail with pneumonia. As she faces a tightening race, Mrs Clinton is stepping up her efforts in North Carolina—where polls put her neck-and-neck with Mr Trump—in the hope that it will smooth her path to the White House in November.

For Mr Trump, the stakes in the Tar Heel state, are even higher. He has spent a lot of time in North Carolina and in recent weeks his daughter-in-law, Lara Trump, a native, has been helping open Trump offices here. Mrs Clinton’s campaign was up and running in the state early on in the campaign, opening dozens of field offices and airing adverts. Mr Trump’s campaign has downplayed his campaign’s relative bricks-and-mortar absence, claiming that the election will be won or lost in the final weeks.

Many pundits believe that Mr Trump must defeat Mrs Clinton in North Carolina, which has 15 electoral votes, or face almost certain defeat on November 8th. No Republican presidential candidate has lost North Carolina and won the White House since Dwight Eisenhower pulled off that feat in 1956. "I've studied just about every electoral path and if you take the margins of victories for each state in '08 and '12 and line them up, I don't see a path for Trump to win without North Carolina in his column," said Michael Bitzer, a political scientist at Catawba College.

Republicans control the legislature and the governorship of North Carolina, the nation's ninth most populous state, which has more than 10 million people and 6.7 million registered voters. Only twice in the past 10 presidential elections has it backed the Democratic presidential nominee. The last time was in 2008, when Barack Obama managed to win it after a hard fought local campaign, with his closest margin that year. When he lost it four years later to Mitt Romney, it was the closest of his losses.

But Mrs Clinton now appears to have a chance of taking North Carolina back again. Demographic shifts—in particular a surging young population in cities like Raleigh and Charlotte, and their suburbs, which are faring well economically—should benefit her. Many such newcomers are well educated and tend to be conservative on fiscal issues but more liberal socially. And some voters in these areas might be put off by controversial laws passed by the Republican legislature, including a voter ID requirement—which has since been struck down —and a bill which requires transgender individuals to use bathrooms corresponding with the gender on their birth certificates, rather than their gender identity, and also prohibits municipalities from enacting special protections for the LGBT community.

Mr Trump, meanwhile, will play to the other side of the state’s growing rural-urban divide. As some cities have boomed, many rural areas, battered by losses of manufacturing plants and textile mills, have been left behind. Republicans often win in small towns and rural areas, while Democrats roll up big margins in the cities, where Democratic and minority voters wield much power. If Mr Trump wins in North Carolina, it will largely be on the backs of conservative, rural voters, who often do not have a college education. In the presidential primary, held in North Carolina in March, Mr Trump held off Ted Cruz in part by doing so well in rural parts of the state. But he also needs to garner a good share of votes in the suburbs of large cities like Raleigh and Charlotte, where Mr Romney did well in 2012.

For Mrs Clinton, the biggest test will be trying to copy Mr Obama’s success in 2012 among African-American voters. It is not clear whether the killing of a black man, Keith Lamont Scott, by police earlier this month, which led to sometimes violent protests, will act to her advantage or that of Mr Trump, who casts himself as a law and order candidate. But the issue will be fresh in voters’ minds when early voting begins here on October 20th. Mrs Clinton would also greatly increase her chances by peeling off independent and Republican voters in the suburbs. Her campaign has also launched efforts to increase turnout among the state’s Latino population.

North Carolina also is the setting for two hotly contested races down the ballot, including among the most competitive gubernatorial and Senate races in the country. Pat McCrory, the Republican governor, is lagging behind his Democratic challenger, attorney general Roy Cooper. The Senate race also looks competitive, with Deborah Ross, a little known former state legislator, creeping up behind senator Richard Burr, the Republican incumbent.

"We've got a national race that's very tight and we're a microcosm of what's happening nationally," said Andrew Taylor, a political scientist at North Carolina State University in Raleigh. "And we've got 15 electoral votes."

Article Link To The Economist:

Rove: The Debate Was A Political Car Crash

Millions watched as Trump was rude and flip and Clinton failed to buck the status quo.

By Karl Rove
The Wall Street Journal
September 29, 2016

It was a record-breaker. The Nielsen ratings say 84 million Americans watched Monday’s presidential debate, and most stayed glued to their sets. There was no significant drop-off in viewership as the evening progressed.

Perhaps these viewers hoped to be impressed by what they heard. What they got, however, was a political car crash, with tires screeching, bumpers crumpling and glass breaking.

Donald Trump presented himself as the candidate who can bring change to America. He derided the current economy and the state of the nation, decried precarious world security and depicted Hillary Clinton as a 30-year Washington politician. But these moments were too few. For much of the evening he was on his heels.

Mrs. Clinton deftly and relentlessly attacked him as unqualified and unfit for office. She criticized his business practices and refusal to release his tax returns. She pointed to his multiple bankruptcies and failure to pay contractors. She dredged up old quotes about global warming, recounted a 1973 discrimination lawsuit against his company, and recalled his misogynistic comments—even pointing out one of his targets, a former Miss Universe, in the audience.

Mr. Trump’s retorts were flip and undisciplined. When Mrs. Clinton said that he got started in business by borrowing $14 million from his father, he dismissed it as “a very small loan.” When she alleged that “he’s paid nothing in federal taxes,” Mr. Trump responded: “That makes me smart.” When she brought up his 2006 statement that he hoped for a housing crisis, since it would be a moneymaking opportunity, he replied: “That’s called business.” She reminded viewers that nine million people lost jobs and five million lost homes when the catastrophe came in 2008. Mr. Trump’s glib moments provide ammunition for her future attack ads.

Neither candidate shored up any principal area of weakness. Mrs. Clinton failed to show why she represents significant change from President Barack Obama’s agenda and did little to counter Mr. Trump when he effectively painted her as more of the same.

Mr. Trump failed to reassure voters that he is up to the job. Offering instead tired sound bites, he was thin on substance and short on new detail. While he called out her dissembling about her past support for the Trans-Pacific Partnership trade deal, he missed opportunities to prosecute her over her email server, Benghazi, the Clinton Foundation, and her constant failure to tell the truth.

He must have realized he was losing, because Mr. Trump looked increasingly unhappy. It showed in his body language, demeanor and tone. He was rude and unlikable. Perhaps he had been put on edge by too many advisers hectoring him in the green room before he went on.

Still, the debate probably won’t change much. Mr. Trump’s status as the candidate of change compensates for many of his shortcomings. Mrs. Clinton’s skill at attacking him doesn’t offset that she represents the status quo, when an overwhelming majority of voters believe America is going in the wrong direction.

The race was close before Monday’s debate and remains so: Mrs. Clinton leads by 2.9% in the Real Clear Politics average. But more battleground states have come into play in recent weeks, giving Mr. Trump more paths to victory.

The next debate, an Oct. 9 town hall at Washington University in St. Louis, could provide surprises, especially if both candidates learn the wrong lesson from this week’s showdown.

Mr. Trump probably believes he must press Mrs. Clinton harder on her myriad scandals. But that will be more difficult in a town hall than it was standing behind a lectern. A better tactic would be to avoid overly harsh attacks and quickly pivot to how he would improve voters’ lives. The more presidential he sounds, the more that desire for change will grow.

Mrs. Clinton probably thinks that because she did so well keeping him off balance, she should continue in the same vein. She’s right up to a point. But her main goal ought to be portraying herself as more than an extension of the Obama presidency.

In a town-hall format, the candidates should focus less on engaging each other and more on personal conversation with the citizens asking questions. Warmth and empathy matter much more in this setting.

The next week is crucial. Because debates tend to confirm rather than change opinions, how the candidates set their campaigns’ focus, tone and expectations in coming days could well shape the town hall’s outcome—and perhaps the election’s.

Article Link To The Wall Street Journal:

Has Hong Kong's Economy Peaked?

The sun may be setting on Hong Kong's once indomitable economy.

By William T. Wilson
The National Interest
September 29, 2016

From 1981 to 2015, Hong Kong sustained an annual growth rate of almost 5 percent, despite numerous global recessions. It was a testament to the power of economic freedom.

For twenty-one consecutive years, The Heritage Foundation’s Index of Economic Freedom has ranked Hong Kong’s economy as the freest in the world—and for good reason. The overall tax burden is only 15.7 percent of GDP. The average tariff rate is 0 percent. The entrepreneurial environment remains one of the world’s most transparent and efficient. Hong Kong also serves as a very important banking and financial center in the Asia-Pacific region. And underpinning its free-wheeling business and trade environment are property rights rated among the strongest in the world.

In recent years, however, Hong Kong’s underlying economic statistics show clear signs of deterioration. Over the last five years, despite modest global economic expansion, Hong Kong’s economy has grown at an annualized rate of only 2.3 percent, roughly equivalent to that of the United States. The government forecasts that Hong Kong’s economic growth will drop to 1 or 2 percent this year, and exports are projected to decline by 4 percent.

Hong Kong’s gross national savings rate declined from 36 percent in 2008 to 25 percent in 2015, leaving fewer funds for domestic investment. The fertility rate (per 1,000 females aged 15 to 45), has fallen from 65.2 in 1981 to 35.9 in 2014, dramatically reducing the growth of the working-age population. More importantly, productivity growth, which ultimately determines living standards, faltered to a paltry 0.8 percent during the past four years.

A look at Hong Kong's real GDP growth in recent years is also quite revealing. According to John Tsang, Hong Kong’s financial secretary, the economy now faces the “worst time in 20 years.” The big question is: Why the pronounced slowdown in the world’s freest economy?

A number of reasons present themselves. First, there is Hong Kong’s increasing dependence on China’s economy and its external trade. Hong Kong is by far the most significant transporter of exports and imports to and from China. In 2015, 61 percent of reexports were Chinese in origin and 54 percent of Hong Kong’s exports were sent to the mainland. This is an extraordinary degree of economic interdependence.

Moreover, Hong Kong’s resentment toward mainlanders has increased, primarily due to Beijing’s political interference. Tourism from the mainland, an important engine for Hong Kong’s economy, has decreased as a result. In the first half of this year, tourism was down 12 percent. The rift has also affected home prices in Hong Kong. While still among the most expensive housing markets in the world, home prices have gone down 15 percent in the last year and a half.

Once the largest container port in the world, Hong Kong has fallen to fifth place as exporters have switched to Chinese mainland ports. Last year, Shanghai was the world’s busiest port.

Increasingly, China is allowing state-owned and private enterprises to fail. Chinese nonperforming loans are officially 1.8 percent but the actual rate is likely closer to 30 percent. Hong Kong banks invested in the mainland are starting to bleed.

Currency woes are another reason for increased pessimism. The Hong Kong dollar has been pegged to the U.S. dollar since 1983. Higher interest rates in the United State, at least over the near term, are now highly likely. To maintain its fixed peg, Hong Kong would have to raise domestic interest rates at a time when the economy is faltering.

Symbolizing the increasing connectivity between the mainland and Hong Kong is the construction of the most expensive (nearly $11 billion) high-speed rail ever built. In addition, a thirty-kilometer system of bridges and tunnels will connect Hong Kong, the casino center of Macau and the mainland city of Zhuhai.

Hong Kong remains the world’s freest and most dynamic economy. But its ties to the “mostly unfree” mainland are hurting it badly. As a result, Hong Kong’s economic performance is stumbling, tarnishing its reputation among those not looking deep enough beneath the surface.

Article Link To The National Interest:

Who’s The Systemic Risk Now?

Washington’s assault on Deutsche Bank imperils Europe’s economy.

By Review & Outlook
The Wall Street Journal
September 29, 2016

Regulators like to bray about the dangers of systemic financial risk, but they seem not to care when they’re the source of the risk. Consider the U.S. assault on Deutsche Bank that has tanked European bank shares this week.

The German bank’s share price has fallen as much as 20% since a Sept. 15 Journal report that the U.S. Justice Department is seeking a fine of up to $14 billion for selling mortgage-backed securities between 2005 and 2007. That is well beyond Deutsche Bank’s ability to pay, given its $18 billion market capitalization before the story broke.

Deutsche Bank says it “has no intent to settle these potential civil claims anywhere near the number cited.” Markets are spooked anyway. A fine much above $3 billion would strain an institution that faces potential payouts in other regulatory cases, and the bank has already settled claims for billions of dollars for the likes of alleged interest-rate rigging. That includes Deutsche’s Bank’s $1.9 billion share of the 2013 settlement of the bizarre U.S. claim that numerous banks somehow deceived the sharks at Fannie Mae and Freddie Mac.

So it’s not crazy to think this fiasco could become a systemic crisis. With a €1.8 trillion ($2.022 trillion) balance sheet often criticized for its opacity, Deutsche Bank would struggle to replenish capital at today’s share price. Trouble at one of the European Union’s largest banks could trigger a new round of market fears over counterparty risk and political uncertainty.

Chancellor Angela Merkel’s government insists no bailout will be forthcoming, and Berlin may even mean it. New European Union rules make bailouts harder to execute, and Berlin blocked Italy’s attempts to rescue its struggling large banks earlier this year.

Most of the risks now cited to explain Deutsche Bank’s woes are well-known, including its long struggle to reorganize to boost profitability amid ultralow interest rates and sluggish global growth. Markets concluded these risks are manageable, although at a large discount to the share price in 2014. The bank’s results in the recent European Banking Authority stress test were in line with other large banks, and it has been working to increase capital.

The new imponderable is the U.S. settlement raid that’s among the largest it has demanded. The huge fines rest on a dubious theory that government prosecutors know better than investors how assets ought to have been priced in a market mania 10 years ago. And with a handful of exceptions (none at Deutsche Bank), regulators haven’t found individual bank employees who committed prosecutable crimes in the mortgage mess. These bank robberies are political.

Some Europeans think the Deutsche Bank raid is American retaliation for the EU’s August ruling that Apple owes back taxes of €13 billion in Europe. But Washington doesn’t need that incentive. The Obama Administration has also been merrily plundering American banks to satisfy the retribution demands of the Bernie Sanders-Elizabeth Warren wing of the Democratic Party.

The evidence hardly matters because the cases never go to court because no bank can afford to resist the government’s orders in a post-Dodd-Frank regulatory world. This is the latest morality tale in modern systemic risk. Government caprice has become a major risk, and maybe the major risk, to the global financial system.

Article Link To The Wall Street Journal:

The Trump Mosh Pit

Only one of Monday’s debaters is still in sync with the country’s restless mood.

By Daniel Henninger
The Wall Street Journal
September 29, 2016

It’s past time that we all come to grips with the reality that the Trump candidacy has been carried forward to this unlikely moment by forces in the American population that transcend normal presidential politics. These are essentially the same forces that carried the equally improbable Bernie Sanders to 22 primary victories.

I’ve always found the Sanders phenomenon more interesting, because unlike the well-known reality TV host and brand manager, Sen. Sanders was a 74-year-old Vermont socialist with zero visibility. That this nobody contended with a woman whose political immensity scared off a sitting vice president means that some deep currents are roiling the American electorate.

An agog media class—I was certainly agog—has identified that “something” as anger, frustration, white rage or PC backlash. Call it whatever you want. It’s real, and I don’t think Monday night’s debate killed it. Which is why I don’t think Donald Trump “lost” the debate.

This week’s media meme—that Hillary Clinton wiped the floor with Mr. Trump—is undervaluing the realities of this unusual election.

We have been through this exercise so many times with Donald Trump. When in July last year he said of Sen. John McCain, “He’s not a war hero,” I, like others, thought, he’s done. You cannot run for president and say an American military man who was tortured in a North Vietnam prison camp is no hero. Everyone, including the umpteen GOP candidates, thought Mr. Trump’s early primary surge would collapse.

Of course the Trump contraption rattled forward, surviving one awful gaffe after another. The meme then (as now) was that the Trump supporters were basically idiots—now known as the deplorables. Well, it’s also true that you can pay a king’s ransom to watch the New York Yankees from the box seats with normal people or a lot less to sit in the upper deck with guys who will F-bomb your kids for nine innings. They’re all cheering for the same team. Welcome to America. Welcome to the Trump mosh pit.

Let us turn, then, to who said what in the debate for some understanding of the Trump paradox: How can a candidate get this far by seeming to say so little that we normally expect of a president?

The word “sound bite,” a term of usage originating in television, is now viewed with derision. Except for one thing: Sound bites work. They convey one idea and stick that idea in the mind. Recite, please, one memorable thing Hillary Clinton said in more than 90 minutes. OK, “trumped-up trickle down.” Her debate was well-constructed, but so is a paint-by-numbers picture.

At one point, Mrs. Clinton was talking about “investing in the middle class,” and “making college debt-free” and “broad-based inclusive growth.”

Trump: “Typical politician. All talk, no action. Sounds good, doesn’t work. Never going to happen. Our country is suffering because people like Secretary Clinton have made such bad decisions in terms of our jobs and in terms of what’s going on.”

Without question much of the Trump side of the debate was a discontinuous morass. But Donald Trump oozes contempt for the status quo. That visceral disdain offsets a lot of missteps and whatever Hillary’s fact-check drones are putting up on her website.

There was an exchange on urban violence. Mrs. Clinton said, “We have to restore trust. We have to work with the police” and “we have to tackle the plague of gun violence.” Who could disagree?

Donald Trump. “Secretary Clinton doesn’t want to use a couple of words. And that’s law and order. We need law and order. If we don’t have it, we’re not going to have a country.”

One of these two is catching the mood of the country, and the other just isn’t.

Are we demeaning a presidential election by saying it is reducible to sound bites? I once thought so. Until it became clear that Donald Trump, like Bernie Sanders, was somehow detecting the complex tectonic shifts inside American politics.

Some of these shifts are disturbing—blue-collar alienation, eroding civil order in some cities—but unlike his always-hedged opponent, Donald Trump slams into them.

This sort of populism is exciting, but often limited.

Bernie went down because he was too one-note. Inequality wasn’t enough. Donald Trump’s one-note is trade, but his overweighting of the issue could sink him. Millions of the suburban voters he needs in battleground states have jobs connected to a strong global trading system. They don’t want to vote for Hillary, but past some point, the “Nafta” rant may prove too much.

So it’s back to the mosh pit. Yankee fans, from the boxes to the bleachers, love their team. But if a guy underperforms or dogs it, they’ll boo him mercilessly. Donald Trump survived Monday night. But one more outing like that, and his phenomenal candidacy could get booed off the field.

Article Link To The Wall Street Journal:

The Real Reason So Many Americans Oppose Immigration

By Cass R. Sunstein
The Bloomberg View
September 29, 2016

Why do so many Americans oppose immigration, and why has it become a central issue in the presidential campaign? A growing body of research suggests that the answer isn’t economic anxiety, or concerns about public spending, or even general nationalism. It is more specific -- and more disturbing.

The question of what drives anti-immigrant sentiment is put in sharp relief by an extensive report released last week by the National Academies of Sciences, Engineering and Medicine. The report finds that immigration has positive effects on economic growth -- and doesn’t hurt the employment or wages of native-born workers.

As my Bloomberg View colleague Paula Dwyer wrote, the picture isn’t all rosy: Immigration seems to reduce the number of hours worked by native-born teens, and depress the wages of native-born workers who didn't finish high school. But the general lesson of the report is that immigration promotes and is even “integral to the nation’s economic growth.” What, then, explains widespread public opposition? Here are four possibilities:

1. Right or wrong, opponents are concerned about the risks of market competition. They want native-born Americans to keep their jobs, and they don’t want them to face wage cuts.

2. Right or wrong, opponents are concerned about the fiscal burdens imposed by first-generation immigrants.

3. Opponents are hostile to any group -- national, ethnic, racial or religious -- different from their own.

4. Opponents are hostile to certain groups -- Latinos and Muslims in particular.

The best available evidence suggests that the final explanation is the closest to correct. Some of that evidence has the advantage of having been compiled well before Donald Trump announced his candidacy for the presidency, and it explains why his proposal to “build a wall” between Mexico and the United States was a political masterstroke.

In 2008, the University of Michigan’s Nicholas Valentino, Ted Brader and Ashley Jardina asked respondents a series of questions about “several groups in society,” asking them to rate their attitude toward blacks, Asians, Hispanics and whites. They asked the same people a series of questions about immigration, such as “How likely is it that immigration will have a negative impact on jobs for American citizens?” Finally, they asked people questions about their economic situation (including household income) and their level of economic anxiety.

Their central finding was that whites’ attitudes toward other groups have a “statistically enormous effect on negative views of the cultural and economic impact of immigration.” Social scientists don’t ordinarily use the word “enormous,” so what we have here is a really dramatic effect: As whites show more negative attitudes toward blacks, Asians and Hispanics, their negative feelings toward immigration skyrocket.

You might not be amazed that nativists would tend not to like members of different racial groups. But there’s a kicker: Once the data are disaggregated, it emerges that essentially all of the movement came from negative attitudes toward Hispanics. Attitudes toward Asians and blacks didn’t correlate with views about immigration.

While negative attitudes toward Hispanics helped explain negative views about immigration, economic anxieties had a much weaker effect. True, people with serious concerns about their own economic situation were more likely to agree that immigration hurts the job prospects of the native-born. At the same time, low-income workers and the unemployed didn’t show more negative feelings about immigration than other groups in the population. “Material interests make only a small contribution to explaining” views on newcomers, the authors concluded.

Those findings are broadly consistent with numerous other studies, including recent ones, which also find that racial, religious and ethnic prejudices predict attitudes toward immigration -- and that anti-Latino attitudes are particularly important. (There is a separate question about why those attitudes exist and also about the possibility that some people associate Hispanic immigration with the distinctive problem of illegal immigration. But that’s a subject for another occasion.)

It follows that in highlighting immigration from Mexico, and in calling for a wall, Trump was targeting widespread sentiment. More than that, he was legitimating, activating and even amplifying it. The authors of the 2008 study forecast that phenomenon as well: “Bad news about Latino immigrants, but not immigrants of other groups, causes whites significant anxiety, and this anxiety is critical in triggering opposition to immigration.”

In 2016, of course, Muslim immigration has also become especially prominent in the public eye (and in Trump’s speeches). But it’s not the first time. Valentino and his coauthors find that after the Sept. 11 attacks, there was an upsurge in coverage of Muslim immigrants, corresponding to a period in which negative attitudes about Muslims were correlated with negative attitudes toward immigration. And a study released just last week finds that in Europe, anti-Muslim bias plays a big role in shaping attitudes toward asylum seekers.

An important clarification: I am outlining empirical findings, and none of them means that America’s borders should be opened, or that those who seek to tighten those borders are wrong to emphasize the risks (among others, from those who wish to do us harm); they might be right. And illegal immigration raises its own questions; some people welcome immigrants so long as they are here lawfully.

But some truths turn out to be unpleasant: Anti-immigration sentiment has become widespread, and if you’re looking to explain it, you’d do well to start with hostility to Latinos and to Muslims.

Article Link To The Bloomberg View:

When Dealing With Putin's Russia, Distrust And Verify

By Editorial Board
The Bloomberg View
September 29, 2016

Surprising no one, the official investigation of the downing of Malaysia Airlines Flight 17 over Ukraine in 2014 has concluded that Russia was behind the incident, which killed 298 people. In so doing, the report also highlights one of the most powerful weapons in holding Russia to account, whether in eastern Ukraine or Syria: the radical transparency made possible by social media and the internet.

In addition to forensic reports, interviews and classified intelligence, the team of investigators drew on material surfaced by civilian open-source sleuths into the plane's downing -- images from Twitter, traffic camera footage and the like. The report establishes that, Russian claims to the contrary, the jet was brought down by a missile launcher sent from Russia into Ukraine at the request of pro-Russian rebels.

Three years ago, these citizen journalists helped bring the Syrian regime's use of chemical weapons to wider public attention. In recent weeks, they have also delved into the attack on a United Nations-sponsored humanitarian aid convoy, using open-source information to counter Russia's claims that it was not closely tracking the convoy and to document that the trucks were the target of an airstrike.

The threat that this kind of information poses to Russia is exactly why it has worked so hard to control the internet within its borders, and to aggressively attack its critics and spread disinformation in the wider world through its version of "hybrid warfare." Russia's denials are so bald-faced they can take on a surreal quality, as when Russian officials claimed the humanitarian aid convoy spontaneously caught fire.

The best way to counter this kind of dissembling is to promote greater access to the internet and keep it as free as possible from meddling by autocratic governments. (This is a task that takes on new importance with the impending transition of internet governance away from what has, in effect, been U.S. trusteeship.) Lies may travel fast in the Information Age, but providing more people with the means to unearth and share accurate information will help ensure that, eventually, the truth will out.

In the meantime, the conclusions of the MH17 report offer a useful lesson about dealing with Russia under Vladimir Putin: Russia's version of the truth is whatever serves Russia's interests. So any agreement with Putin, whether on Ukraine or Syria, will always be worthless without some means to enforce it.

Article Link To The Bloomberg View:

The FBI’s Hillary Email Probe Is Looking Even More Like A Coverup

By Paul Sperry
The New York Post
September 29, 2016

It’s bad enough that FBI Director James Comey agreed to pass out immunity deals like candy to material witnesses and potential targets of his investigation into former Secretary of State Hillary Clinton’s illegal private e-mail server.

But now we learn that some of them were immunized despite lying to Comey’s investigators.

In the latest bombshell from Congress’ probe into what’s looking more and more like an FBI whitewash (or coverup) of criminal behavior by the Democratic nominee and her aides, the Denver-based tech who destroyed subpoenaed e-mails from Clinton’s server allegedly lied to FBI agents after he got an immunity deal.

That’s normally a felony. As a federal prosecutor, Comey tossed Martha Stewart in jail for it and helped convict Scooter Libby for it as well. Yet the key Clinton witness still maintained his protection from criminal prosecution.

With Comey’s blessing, Obama prosecutors cut the deal with the e-mail administrator, Paul Combetta, in 2015 in exchange for his full cooperation and honest testimony. But the House Judiciary Committee revealed Wednesday that he falsely told agents in a Feb. 18 interview that he had no knowledge that e-mails he bleached from the server were under congressional orders to be preserved as evidence.

In a second interview on May 3, Combetta admitted he, in fact, did know. But he still refused to reveal what he discussed with Clinton’s former aides and lawyer during a 2014 conference call about deleting the e-mails.

Instead of asking Attorney General Loretta Lynch to revoke his immunity deal and squeezing him, Comey let him go because he was a “low-level guy,” he testified at the House hearing. It’s yet another action by Comey that has left former prosecutors shaking their heads.

“When I was at the Department of Justice, your reward for lying to a federal agent was a potential obstruction of justice charge,” House Judiciary Committee member Rep. John Ratcliffe (R-Texas) said. “It wasn’t immunity.”

Ratcliffe argued Combetta violated the terms of his immunity agreement and therefore “shouldn’t have immunity anymore.”

Another panel member, Rep. Jason Chaffetz (R-Utah), established that former Clinton chief of staff Cheryl Mills also lied when she told agents she had no idea Clinton maintained a private e-mail server. She once sent the server administrator a message asking “is server ok” after e-mails she sent Clinton kept bouncing back. Yet Mills continued to get immunity as well.

Comey said he looked “very hard” but couldn’t make an obstruction case “against any of the subjects we looked at.” He claimed not to have the evidence.

But the case suffered from the fact that he was denied evidence by Clinton and her minions, including:

-- A personal Apple e-mail server used by Clinton in her first two months in office.
-- An Apple MacBook and thumb-drive that contained her e-mail archives, which was “lost” in the mail.
-- Two BlackBerry devices that were missing SIM cards and SD data cards.
-- 13 mobile devices either lost or smashed with hammers.
-- Two iPads.
-- Server backup files that were deleted.
-- Copies of e-mails located on the laptops of Mills and another aide who got immunity that were wiped clean with software called BleachBit after the Benghazi committee sought the documents.
-- Clinton’s server e-mail archive, which was deleted using BleachBit by Combetta after the e-mails were subpoenaed.
-- Backups of the server e-mail files, which were manually deleted.

This mass destruction of evidence was known to Comey. It’s in his investigative case summary. Yet he couldn’t make an obstruction case?

“Any one of those in that long list says obstruction of justice,” Ratcliffe said. “Collectively, they scream obstruction of justice.”

Ignoring such evidence leads “not just reasonable prosecutors but reasonable people to believe that maybe the decision on this was made a long time ago not to prosecute Hillary Clinton,” he added.

In other words, the fix was in.

Either that, or Comey led one of the shoddiest probes in FBI history. God help us if that’s the way he’s investigating the 1,000-plus ISIS terrorist cases now open in all 50 states.

Article Link To The New York Post:

Donald Trump Is Owning Hillary Clinton On Trade

Trump doesn't know what he's talking about, but his message is resonating in key states. Here's how Clinton can fight back.

By Alex Shephard
The New Republic
September 29, 2016

Ever since the first presidential debate ended on Monday, Donald Trump and his surrogates have done everything possible to obfuscate the truth because they know he got walloped. Immediately after the debate, Trump got Fox News’ Sean Hannity to cover for his repeated lies about opposing the Iraq war. Using Hannity, Alex Jones, and Matt Drudge, the campaign widely circulated highly unscientific online polls saying that Trump won the debate. His campaign manager, Kellyanne Conway, argued that his “restraint”—meaning the fact that he only alluded to Bill Clinton’s affairs without bringing them up outright—was a “presidential virtue” that would help win over women. And Trump blamed the microphone for capturing more than a few low-energy sniffles throughout the evening.

All debate performances result in spin, but bad ones lead to especially egregious spinning, hence the Trump campaign’s flailing on Tuesday. Nonetheless, they got one thing right: For the first 15 minutes of the debate, before he had an hourlong tantrum, Trump got the upper hand on trade. Surrogates seized on the silver lining in the spin room and beyond, and Trump, lampooned for most of his performance, was praised by a good deal of the press for the way he started the debate.

Trump did not “win” the trade portion of the debate so much as Clinton lost it. Trump’s understanding on trade is at best simplistic; at worst, it’s a total fantasy. Whenever he gets into specifics, he betrays his deep-seated ignorance of basic policy. Trump began the debate by saying, “Thank you, Lester. Our jobs are fleeing the country.” This is not true—we’ve added jobs for the last 78 months—but it set the (Millenarian) tone of the next ten minutes. During the portion on trade, Trump claimed that Ford Motor Company was rushing to get out of the country (it isn’t), that China is devaluing its currency (it’s propping it up), and that Mexico and China were thriving because of the jobs they had stolen from us (neither country is thriving).

Trump has been saying this for the last 15 months. It’s effective not because it’s true, or because it suggests a plausible plan of action, but because it speaks to the pain and anger felt in many of the former manufacturing areas of the country that have been particularly hard hit over the last 40 years. The North American Free Trade Agreement, which was negotiated by George H. W. Bush and signed into law by Clinton’s husband, may not be directly responsible for as much of that pain as it has been blamed for over the past three decades. But Trump’s bleak portrait of life in middle America suggests a knowledge of areas hard hit by the decline in manufacturing—blighted areas like my home town in central New York—that isn’t present in Clinton’s Reaganesque paeans to the goodness and greatness of America. Trump may not know what he’s talking about on trade, but his message is working.

Clinton had the upper-hand for most of the debate because she was able to bait Trump into proving her point for her: She got him to admit to housing discrimination when she accused him of racism, and to say Rosie O’Donnell had it coming when she accused him of sexism. But at the beginning of the debate, when the audience was at its largest, Trump was calling the shots: He argued that Clinton was just another politician who was saying things just to get elected. And then Clinton… said things that made her sound like just another politician who was just saying things to get elected.

Here, Trump does what every politician is supposed to do: Turn his opponent’s strength into a weakness. He baited Clinton into bringing up her decades of experience in government and then threw it back in her face: She’s had 30 years of experience in two branches of government and over that time Ohio and Michigan—swing states—have crumbled. That ultimately led to Clinton’s worst moment of the debate, her Big Lebowski-ish defense of NAFTA:

TRUMP: Your husband signed NAFTA, which was one of the worst things that ever happened to the manufacturing industry.

CLINTON: Well, that’s your opinion. That is your opinion.

TRUMP: You go to New England, you go to Ohio, Pennsylvania, you go anywhere you want, Secretary Clinton, and you will see devastation where manufacture is down 30, 40, sometimes 50 percent. NAFTA is the worst trade deal maybe ever signed anywhere, but certainly ever signed in this country.

And now you want to approve Trans-Pacific Partnership. You were totally in favor of it. Then you heard what I was saying, how bad it is, and you said, I can’t win that debate. But you know that if you did win, you would approve that, and that will be almost as bad as NAFTA. Nothing will ever top NAFTA.

CLINTON: Well, that is just not accurate. I was against it once it was finally negotiated and the terms were laid out. I wrote about that in...

This was a nightmare moment for Clinton. She painted herself into a corner: She can’t be seen as defending NAFTA, which was one of her husband’s signature accomplishments, because of its deep unpopularity, but speaking out against it would bolster the sense that she’s Machiavellian. Which left her with “That’s your opinion,” perhaps the weakest response one could give in a presidential debate, especially when it’s an opinion shared by millions of voters. That Trump was then able to tie NAFTA to TPP, an issue particularly important to the Bernie Sanders supporters whom Clinton needs to turn out, and to get Clinton to admit she was for it before she was against it a la John Kerry, was a rare moment of tactical ingenuity (or just dumb luck) from Trump.

Clinton should have been better prepared for this exchange. Not only has trade been one of Trump’s keystone issues for the past 15 months, it was one of Sanders’s as well. The fact that she stumbled here on a night where she was otherwise exceptionally well-prepared suggests that she and her campaign—despite having had a year to prepare, and with less than 50 days until the election—still haven’t figured out how to talk about free trade. That this is a crucial issue in Pennsylvania, Ohio, and Michigan—she’ll have to win two of three of these states—makes it crucially important for her.

Part of the problem for Clinton is that Trump is making fantastical political promises here. He has not only claimed that he can stop the flow of manufacturing jobs overseas, but that he can bring them back, which no credible economist believes. It’s not going to happen, and the fact that Trump is making an Edenic and deeply cynical promise should be used against him. But saying otherwise means telling the voters who find this promise appealing that they need to suck it up and accept their lot in life, something that would not be a good strategy from any politician, but especially not from the wife of the man who signed NAFTA.

In the next two debates, Clinton should do what she did best on Monday: Attack Trump for being a phony and a fraud. The idea that a businessman who stiffs his workers and doesn’t pay taxes has become the voice of blue-collar America is patently absurd. There’s plenty of evidence that Trump doesn’t actually care about the people he supposedly represents. Clinton brought up Trump’s decades-long history of not paying for completed work, but she didn’t tie that enough to Trump’s economic message. She should use his stiffing of blue-collar workers as a metaphor for his larger campaign: He gets what he wants, then sticks the people at the bottom with the bill.

Later in the evening, Clinton brought up Trump’s reliance on “bait and switch” as a debate tactic, after Trump tried to tie Clinton’s email scandal to his refusal to release his tax returns. This should also be her line on his economic policy. Trump talks a lot about crumbling infrastructure and bringing back manufacturing jobs, but his economic policies make that impossible: The Bush tax cuts lost trillions that could’ve gone to infrastructure repair, and Trump’s cuts will go even further. Moreover, by fighting for things like the estate tax, he’s shown that his biggest commitment is to the richest Americans: People like him. Trump may make it to the White House on the backs of people in Ohio and Michigan, but once he gets there he’ll set to work helping people like Donald Trump.

Most of all, Clinton needs to say something that makes it seem like she actually cares about people who blame NAFTA and free trade for the problems in their communities. “That’s just your opinion” doesn’t do that. Acknowledging that America needs to help the losers in free trade deals, even as the country benefits from it, is a politically risky but ultimately worthwhile strategy. At the same time, she needs to make it clear that there are good jobs that aren’t in manufacturing—most people in the country work in them!—and that she is not going to sell you a bunch of crap about bringing the 1950s back. Instead she should describe her plans for creating better, and better-paying, jobs for people in places like Ohio and Pennsylvania.

Clinton’s death-by-a-thousand-cuts strategy against Trump in the first debate exposed him as a monster: a racist, sexist abomination who is unqualified, temperamentally and intellectually, to be president. Now she needs to articulate her own vision for how to run the country, and she should start by disarming Trump of the lone policy advantage that threatens her path to the White House.

Article Link To The New Republic:

Thursday, September 29, Morning Global Market Roundup: Oil Shares Pull Asian Stocks Higher; Yen Slips

By Saikat Chatterjee
September 29, 2016

Oil shares pulled regional stock markets higher on Thursday after OPEC members agreed to curb output in a surprise deal, though investors were wary of chasing markets higher as the U.S. presidential election neared.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.9 percent by mid-morning, thanks to a bounce in energy shares, but other markets such as Hong Kong were trading near the day's lows after an early jump.

Stocks in Europe were expected to open higher following Asia.

"Despite the favorable oil deal, foreign institutional investors are sticking to their favorite counters before the U.S. elections results as there is simply too much market uncertainty," said Andrew Sullivan, managing director, sales trading at Halting International Securities Group in Hong Kong.

Japan's Nikkei climbed 1.5 percent, after losing 1.3 percent the previous day. In Hong Kong, the benchmark index was up 0.5 percent with energy-related shares the biggest gainers.

Oil futures retreated in Asian trade as the market grew more skeptical of the deal, pondering how the group agreed to limit production and how OPEC would implement such a plan. [O/R]

"Investors and traders are skeptical – with good reason. More cynical traders are questioning the complete lack of detail, including the potentially problematic question of which nations will curtail production," Michael McCarthy, chief market strategist at Sydney's CM Markets, told Reuters.

Though OPEC's first agreement to cut production since 2008 drove risky assets initially higher, the lack of detail made some investors wary.

Brent crude eased slightly after earlier climbing to a high of $49.09 when the market opened, its highest since Sept. 9. WTI crude edged lower to $46.99 a barrel, after first hitting $47.47, its highest since Sept. 8.

"I think the markets are still not fully convinced," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

Still, the jump in oil prices boosted risk assets and undermined the yen, which is often seen as a safe haven at times of economic stress.

The dollar rose 0.7 percent to 101.38 yen, extending its rebound from one-month low of 100.085 touched on Tuesday.

The euro was higher at $1.12305, recovering from Wednesday's low of $1.1182 helped in part by rebound in shares of Deutsche Bank.

($1 = 7.7538 Hong Kong dollars)

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InfoArmor Challenges Yahoo Claim Hack Was State-Sponsored

By Dustin Volz
September 29, 2016

A cyber security company on Wednesday asserted that the hack of 500 million account credentials from Yahoo was the work of an Eastern European criminal gang, adding another layer of intrigue to a murky investigation into the unprecedented data heist.

Arizona-based InfoArmor issued a report whose conclusion challenged Yahoo’s position that a nation-state actor orchestrated the heist, disclosed last week by the internet company. InfoArmor, which provides companies with protection against employee identify theft, said the hacked trove of user data was later sold to at least three clients, including one state-sponsored group.

Reuters was unable to verify the report's findings. Yahoo declined comment. The Federal Bureau of Investigation, which is investigating the hack, did not return a call seeking comment.

A U.S. government source familiar with the Yahoo investigation said there was no hard evidence yet on whether the hack was state-sponsored. Attribution for cyber attacks is widely considered difficult in both the intelligence and research communities.

The task is made especially challenging by the fact that criminal hackers sometimes provide information to government intelligence agencies or offer their services for hire, making it hard to know who the ultimate mastermind of a hack might be.

Yahoo said last week that it only recently discovered the intrusion, which it blamed on a state-sponsored actor without providing technical evidence. Nation-state hackers are widely viewed as possessing more advanced capabilities than criminal groups, a perception that could benefit Yahoo as it works to minimize fallout from the breach and complete its sale to Verizon Communications Inc. (VZ.N)

InfoArmor concluded the Yahoo hackers were criminal after reviewing a small sample of compromised accounts, Andrew Komarov, the firm's chief intelligence officer, said in an interview.

The hackers, dubbed Group E, have a track record of selling stolen personal data on the dark web, and have been previously linked to breaches at LinkedIn, Tumblr and MySpace, Komarov said.

“They have never been hired by anyone to hack Yahoo," Komarov, who is from Russia, said. "They were simply looking for well known sites that had many users."

In an illustration of the confusion about who carried out the hack and why, an NBC News report Wednesday interpreted Komarov's findings as pointing to the Russian government as the ultimate perpetrator.

A Wall Street Journal report, which said that InfoArmor was able to crack encrypted passwords for some Yahoo accounts provided by the newspaper, came to the opposite conclusion.

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Devil's In The Details Of OPEC Deal As Asia Buyers Remain Cautious

By Florence Tan and Jane Chung
September 29, 2016

Asian crude oil buyers remained cautious, eyeing details of an OPEC deal after the oil-producers group agreed for the first time since 2008 to reduce output in an oversupplied market.

Global oil prices held onto gains on Thursday after soaring 6 percent in the previous session as the Organization of the Petroleum Exporting Countries agreed on Wednesday to reduce output to a range of 32.5-33.0 million barrels per day.

However, how much each country will produce is to be decided at the next formal OPEC meeting in November, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia.

"We have to wait and see whether they will take real action and how long it would last," said Kim Woo-kyung, spokeswoman at SK Innovation, owner of South Korea's largest refiner.

The size of the proposed cut is not significantly huge, she said, but added that the deal could support prices, increase the value of refiners' crude inventories and margins by pushing up oil product prices.

OPEC's new target represents an implied cut of 0.5-1.0 million bpd, although the actual cut could easily be much smaller at 0-0.5 million bpd depending on whether Libya and Nigeria can recover from supply disruptions, Societe Generale's oil analyst Michael Wittner said.

The OPEC deal is unlikely to affect Middle East crude supplies to term customers in Asia for next year, but may crimp additional volumes that producers have been offering throughout 2016, traders said.

"They've been giving incremental volumes so maybe less for next year," said a trader with a North Asian refiner who declined to be named as he was not authorized to speak to media.

Still, robust oil demand in Asia has absorbed much of the increase in OPEC production and may provide little impetus for OPEC producers to cut output unless demand drops.

"It has historically taken a fall in oil demand to ensure quota compliance, as in that case, production is forced lower by a decline in refinery intake around the world. This is not the case today with resilient demand growth," Goldman Sachs analysts said.

Asian refiners' crude demand has been good this year and are expected to hold steady unless there are major changes in refining margins or crude prices set by producers, the trader said.

Higher oil prices could also encourage U.S. shale producers to increase output and fill in supply gaps left by OPEC, traders said.

"An amply supplied market will continue to allow these importers to pick and choose from a broader array of suppliers, though given current refinery configurations the dependence on Middle Eastern crudes will continue," BMI Research analyst Peter Lee said.

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Ship Shake: Hanjin Woes May Help Float Tech, Data Start-Ups

By Jeremy Wagstaff 
September 29, 2016

The global shipping industry, ravaged by collapsing revenues, defensive mergers and the failure of major player South Korea's Hanjin Shipping Co Ltd (117930.KS), is slowly waking up to the redeeming potential of technology.

While sensor-laden containers, smart ships and 3D printing have grabbed the headlines, the start-ups making the biggest inroads are those working on something more basic - streamlining the interaction between shippers, freight forwarders, and those actually transporting the goods.

"This is way up there on the list of insanely complex systems with enormous impact on the global economy," says Trae Stephens of Founders Fund, which this week led a $65 million investment round in Flexport, a start-up focusing on providing logistics services and data.

"We believe doing this in a more efficient way can really move the needle on every part of the economy," said Stephens, who will join Flexport's board as part of the investment round.

Container ocean trade is likely to grow no more than 3 percent over the next few years - at a compound annual growth rate - compared to 10 percent in 2000-05, and 5 percent in 2005-10, according to Seabury, a transportation consultancy, and McKinsey predicts shipping oversupply will stay above 20 percent this year and next.

Zvi Schreiber, CEO of Freightos, a Hong Kong start-up that offers Expedia-like quotes for end-to-end freight shipping, says the shipping industry is "manual, inefficient and opaque."

KPMG found that a quotation for shipping freight typically involved 20 associated fees and, according to the Journal of Commerce, shippers each lose up to $150,000 a year when price volatility and staffing cuts force invoicing errors.

"This industry is broken, there's no question we have a serious issue," Jesper Kjaedegaard, partner at shipping and logistics firm Mercator International, told a recent shipping conference in Singapore. "Without technology, this industry is not going to move much further."


Kjaedegaard pointed to start-ups like Xeneta, set up by two industry veterans after they failed to convince their employer, shipping giant Kuehne und Nagel (KNIN.S), to introduce greater transparency into rates charged.

"Transparency is viewed by a lot of people in the industry as destructive in that it would negatively affect margins," said co-founder Thomas Sorbo.

Xeneta's solution was drawn from the world of consumer start-ups: encourage all those in the industry to contribute rates, creating a crowdsourced database of some 17 million contracted sea-freight rates around the world.

By providing real-time data, shippers can see what they should be paying.

"Suddenly (they) can compare their contracts with others and find out if they're being ripped off," Sorbo said.

Venture capital interest in the broad supply chain and logistics industry has been growing, at least until last year. In 2015, consultancy CB Insights counted more than $1.7 billion of investment in start-ups, triple that in 2014. Another $500 million or so was invested in the first half of this year.

Start-ups range from those trying to Uber-ise the industry to those like Natilus, which plans a Boeing 777-size cargo drone which lands and takes off in water. CEO Aleksey Matyushev envisages a world where the cost of transporting goods by air could do away with a lot of the ocean-bound shipping, which accounts for around 98 percent of container freight, according to Seabury.

But, for now, it's start-ups like Xenetas, nibbling away at the industry's inefficiencies, that are making waves.

Freightos, for example, provides software that allows logistics firms to manage contracts and automate the quotation and sales process. Last month, it bought WebCargoNet, a Spanish network of air cargo rates.

GT Nexus, which allows shippers to manage their supply chain online, was bought last year by Infor, one of the world's largest software companies.

Not everyone in the industry is happy with the attention, and question whether such start-ups will be able to carve out much more than a niche.

"They think they've reinvented the wheel, and they haven't," said Nick Coverdale, a Hong Kong-based industry veteran. The industry "is not as backward as people claim."

But he acknowledged that technology could play a role, and pointed to a service he will launch next month which would enable freight buyers to choose a sailing online and agree a deal in seconds.

Others have noticed the benefits of embracing such services.

Eddie Soh of Singapore-based Global Air Cargo International, says using Freightos allows him to give a customer a quote quickly, even if he's on the road, just by pulling out his iPad.

Previously, he said, that involved going back to the office, and trawling through emails and Excel spreadsheets.

Article Link To Reuters:

The Drive To Kill Airbnb Is A War On The Future

By Post Editorial Board
The New York Post
September 29, 2016

The drive to put Airbnb out of business in New York is a classic example of vested interests trying to use state power to stop the future.

Behind the war on Airbnb is the Hotel and Motel Trades Council, a labor union that seems obsessed with the idea that the “sharing economy” is a threat to its members’ jobs.

Of course, that’s not the danger you hear of. No, the warnings are about “dangerous lodgings,” as in the recent study for the Senate Independent Democratic Conference — which flagged 91 Airbnb listings as possibly dangerous because the hosts said they could accommodate 13 or more guests.

That’s 91 listings out of 44,000 that Airbnb has for New York, or 0.21 percent. And for most of the 91, all you can tell about the offering is that it’s . . . a large house. Yes, the report had a few photos of beds jammed close together — but nothing to justify the title, “Tourist Tenements in the Making.”

Nor is the IDC’s proposed solution — more anti-Airbnb laws — a rational solution. The Airbnb folks are already looking into the listings the report flagged, and will doubtless remove any shady ones: They’ve already de-listed 3,000 offerings this year, because the would-be hosts don’t share the “values” of the Airbnb community.

You can tell the naysayers are out to kill Airbnb by the key feature of the bill they want Gov. Cuomo to sign right now: a fine of up to $7,500 a pop not on people who rent illegally, but on anyone who advertises as an Airbnb host without meeting specs written for hotel rooms.

Weirdest of all: The hotel union is obsessed with a phantom menace, because Airbnb isn’t remotely denting the hotel biz the way, say, Uber threatens the yellow-cab industry.

The typical Airbnb guest is entirely different from most folks who use hotels. And, in the city at least, the industry is booming, with new “boutique” hotels opening all the time.

Helping to drive that expansion is the Internet — which has made it far easier to search for and book hotel rooms, shop for bargains and so on. And it all keeps getting better: Just last week brought a new app, One Night, that lets you find and book a New York (or LA) hotel room at a bargain rate after 3 p.m. the day of your stay.

The future has more to offer all of us — as long as the fear-mongering special interests don’t stand in its way.

Article Link To The New York Post: