Wednesday, October 5, 2016

The Only Way To Keep The Internet Free

By Betsy McCaughey
The New York Post
October 5, 2016

In yet another blow to US global leadership, the Obama administration is abdicating control of the Internet.

Countries that loathe freedom will gain more influence over what you’re able to see on the Web. Wake up, America: You’ve had unlimited access to information, but you could lose it.

The United States started the Internet and served as its guardian for many years, assuring that virtually any person or group, no matter how controversial, could add a Web site to the worldwide network. But on Oct. 1, the Obama administration surrendered US oversight to a multinational organization, ICANN — the Internet Corporation for Assigned Names and Numbers.

ICANN will have sole power to grant Web addresses — or deny them, essentially banning sites from the Internet. If a site doesn’t have an address from ICANN, you won’t be able to find it.

Where are our presidential candidates on this? Donald Trump is warning that Obama’s policy threatens our freedom of expression and our national security. Hillary Clinton is falling in line with President Obama, just as she did with the Iran deal.

And the media are silent, distracting viewers with topics like green frogs, Skittles, birthers and beauty queens.

ICANN answers to a council that includes over 160 countries. The United States, no longer the referee, has only one vote. Just like China, which blocks tens of thousands of Web sites inimical to Communist Party dogma within its borders. And just like Iran, which censors political messages and photos of women not wearing mandatory Islamic dress.

The danger is that repressive regimes will outnumber free nations and impose censorship everywhere.

“Imagine an Internet run like many Middle Eastern countries that punish what they deem to be blasphemy,” warns Sen. Ted Cruz (R-Texas). It could become impossible to get a Web address that advocates for gay or women’s rights, displays sexy lingerie or criticizes Shariah law …

Under the new arrangement, the United States loses power. No surprise, there. That’s Obama’s legacy: globalization and a reduction in US influence.

Opponents of the Obama giveaway are going to court to reverse the move. Last Friday, four states — Texas, Arizona, Oklahoma and Nevada — failed to get a federal court judge to delay the transfer. But expect more litigation ahead. Challenges will question the constitutionality of Obama handing over US government property without getting Congress’ consent.

The Internet was created by the United States a half century ago as a Defense Department project. Within 20 years, its influence spread worldwide, and President Bill Clinton established and funded ICANN to administer the technical side — allocating Web addresses, keeping a “yellow pages” of them and ensuring smooth, unhampered access to Web sites. ICANN reported to the Department of Commerce.

In recent years, hostile governments have pushed to make ICANN part of the United Nations. ICANN executives argue that “fairness” dictates giving all nations an equal role.

Obama believes keeping US control of the Internet would “embolden authoritarian regimes.” It’s a repeat of his foolish argument that calling out Islamic terrorists will incite them to perpetrate more attacks.

Nonsense, says Sen. Chuck Grassley (R-Iowa). “These countries already fail to respect freedom of expression.”

In 2014, when Obama announced the deadline for the 2016 handover, Bill Clinton opposed it: “I just know that a lot of these so-called multi stakeholders are really governments that want to gag people and restrict access to the Internet.” Too bad Hillary doesn’t see that.

Disappointing yes, but not surprising coming from a former secretary of state who left her agency’s cybersecurity in shambles. Ceding control to ICANN will put all federal Web sites, even military and Homeland Security sites, under the thumb of this multinational organization — in that it has the power to rescind a .gov or .mil address. The only protection is a letter of agreement with ICANN that is not legally enforceable. Good luck with that.

Advocates for cybersecurity, strong national defense and First Amendment liberty all agree that ceding any control of the Internet to intolerant, anti-democratic nations is a dangerous leap into darkness.

Article Link To The New York Post:

McCain: Stop Assad Now - Or Expect Years Of War

Ground the regime’s air force, create safe zones for Syrian civilians, and arm the opposition.

By John McCain
The Wall Street Journal
October 5, 2016

“They make a desert and call it peace,” wrote the Roman historian Tacitus, quoting an enemy of Rome about its brutal conquests. The same could be said today of Bashar Assad and his ally Russian President Vladimir Putin in Syria.

At this moment, Syrian and Russian forces, together with Iranian and Hezbollah militia fighters, are preparing to finish their siege of Aleppo. The 275,000 people who reportedly remain in the city are being told to flee. Thousands will do so, choosing to become refugees. The poor souls who remain in Aleppo will suffer a surge in relentless, indiscriminate bombing. And when Mr. Assad, Mr. Putin and their allies have slaughtered all that stand in their way, they will proclaim peace in the bloody sands of the Syrian desert.

The collapse of the most recent cessation of hostilities is not surprising. It failed, as did the Obama administration’s previous efforts to work with Russia in Syria, because as former Secretary of State George Shultz once said, “diplomacy not backed by strength will always be ineffectual at best, dangerous at worst.”

America’s intrepid secretary of state has now taken the meaningless step of suspending talks with Russia over Syria. Meanwhile, Mr. Assad and Mr. Putin are creating military facts on the ground in Syria that will enable them to dictate the terms of a peace secured by carnage. They have decimated coalition-backed Syrian groups, slaughtered countless civilians, consolidated the Syrian regime’s hold on power, and even struck a United Nations humanitarian-aid convoy. And they have done all of this with no consequences. Thus the war grinds on.

While the U.S.-led coalition is making progress in the fight against Islamic State, we cannot forget this terrorist organization is a symptom of the Syrian civil war. The future of that conflict will have significant strategic impact on U.S. national security.

The war in Syria has claimed more than 400,000 lives, displaced half the country’s population, and inflamed sectarian tensions across the Middle East. But as bad as this conflict is now, it can get much worse—and likely will. It will produce millions more refugees, undermining regional stability and straining the social fabric of Western nations. It will strengthen an anti-American alliance of Russia and Iran. U.S. credibility with our closest security partners in the Middle East will further erode. And it will provide ISIS, or its successor groups, fertile ground to radicalize Muslims, recruit and inspire them to fight, and provide them with dangerous battlefield experience.

This is where the conflict in Syria is headed, and the administration still has no strategy to do anything about it. Its diplomacy is toothless. And there appears to be no Plan B.

An alternative plan would not come without costs and uncertainties. The administration likes to pretend that Congress is not prepared to support a more forceful approach because of its lack of support for military action to enforce President Obama’s red line in 2013. This is a myth. What many in Congress opposed was granting a reluctant president authority to conduct what Secretary of State John Kerry promised would be “unbelievably small” airstrikes in the absence of a broader strategy to achieve U.S. national interests in Syria. The U.S. needs that broader strategy now.

Any alternative approach must begin with grounding Mr. Assad’s air power. It is a strategic advantage that enables the Assad regime to perpetuate the conflict through the wanton slaughter of innocent Syrians. The U.S. and its coalition partners must issue an ultimatum to Mr. Assad—stop flying or lose your aircraft—and be prepared to follow through. If Russia continues its indiscriminate bombing, we should make clear that we will take steps to hold its aircraft at greater risk. And we must create safe zones for Syrian civilians and do what is necessary to protect them against violations by Mr. Assad, Mr. Putin and extremist forces.

At the same time, we must provide more robust military assistance to the vetted Syrian opposition groups that are fighting the regime. The only way to isolate and target extremists on the battlefield is to make moderate groups more capable of fighting successfully on their own.

The Obama administration’s approach to Syria has failed miserably. Now is the time for a new strategy—including the necessary military component—that can achieve this more realistic objective. This will undoubtedly entail greater costs. But the alternative is far from cost-free: It is the continuation, for years and years, of terror, tragedy, slaughter, refugees, and a war in the heart of the Middle East that will continue to threaten the U.S. and destabilize the world.

Article Link To The Wall Street Journal:

Why Even Bill Clinton’s Admitting That ObamaCare Doesn’t Work

By Post Editorial Board
The New York Post
October 5, 2016

Three years ago Saturday, the central part of the ObamaCare law took effect. But the odds are now overwhelming that President Obama’s signature achievement won’t make it to its fourth birthday.

Take it from Bill Clinton.

It’s “the craziest thing in the world,” the ex-prez told a Michigan rally for wife Hillary on Monday. “The people who are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half.”

Moreover, he noted, “the people getting killed in this are the small-business people and individuals who make just a little bit too much to get any of these subsidies.”

In short: “It doesn’t make any sense.”

All true — and what we and other critics of the misnamed Affordable Care Act have been saying since the bill was introduced.

Even Obama now admits his health-care law has “real problems” (though his fix is, surprise, even more taxpayer subsidies). And The New York Times this week reported the “emerging truth” that ObamaCare “will certainly have to change to survive.”

Donald Trump and most Republicans want to replace the whole law. But Hillary Clinton and other Dems want to double down — by moving toward a “public option,” i.e., insurance direct from Uncle Sam, eliminating the last vestiges of competition and further minimizing consumer choice.

As it stands, private insurers, facing millions in losses, are pulling out of the ObamaCare exchanges in state after state: The federal rules add up to (as Bill put it) an “insurance model” that just “doesn’t work.”

Health Republic of New Jersey pulled out this week after more than $59 million in losses, leaving just two companies on the Garden State’s health-care exchange.

Yes, the law boosted coverage — by spending tens of billions to goose Medicaid enrollment. It’s been a wash when it comes to private coverage.

Even as millions found that, no, you can’t keep your doctor or your old plan. And you’re probably paying more to get less.

Millennials — whose premiums are supposed to subsidize plans for older Americans — aren’t signing up. So prices keep rising, and more wheels keep coming off.

And the voters know it. That’s surely why Bill opted to tell the truth in Michigan — even though it was sure to infuriate Obama.

Which suggests to us that Bill Clinton, the most gifted politician of the last generation, thinks Hillary’s campaign is in deeper trouble than the polls are showing.

Article Link To The New York Post:

Is Russia Really Winning In Syria And Ukraine?

Moscow didn’t expect things would go this badly.

By Nikolas K. Gvosdev
The National Interest
October 5, 2016

Moscow just can’t catch a break. Last month, the Kremlin was shifting the discussion on Ukraine away from Russia’s involvement towards Ukraine’s noncompliance with the Minsk Accords, and preliminary discussions were underway among European Union ministers to examine whether the sanctions imposed on Russia might be open to modification or suspension. In Syria, Secretary of State John Kerry and Foreign Minister Sergei Lavrov were promoting the idea of a joint Russian-American effort to craft a political solution to Syria’s civil war and to increased intelligence sharing to target Al Qaeda and the Islamic State. It appeared that Vladimir Putin was succeeding in his efforts to highlight Russia’s role as a responsible state actor in the international system—and to put the unpleasantness of the last several years behind him.

There was a growing expectation that some sort of relaxation of European sanctions on Russia, particularly the financial restrictions, as well as the prohibitions on technology transfers for new energy projects, would be forthcoming, allowing for some of the major new projects that had been delayed to resume in 2017. Indeed, in mid-September U.S. vice president Joe Biden warned that European unity in maintaining the sanctions regime could be at risk.

Two developments have not only stopped this trend in its tracks, but are likely to reverse any diplomatic gains the Kremlin hoped it had achieved. The first was the release of the Dutch report assigning culpability for the missile that brought down Malaysia Airlines Flight 17 over eastern Ukraine to Russia directly—in that the system was determined to have been supplied by and subsequently returned to Russia. While the Kremlin continues to dispute those findings, the report put the whole question of Moscow’s role in the conflict in Ukraine back on center stage. Just as the initial shootdown two years ago proved to be the galvanizing factor in pushing the European Union to impose much harsher and stricter sanctions against Russia—overwhelming the previous opposition of important European business lobbies, as well as governments inclined to preserve good relations with Moscow—the timing of the release of these conclusions, and the reaction in the Netherlands, now makes it much harder for any European government to decide to take the first step in rolling back the sanctions regime.

Even before the report’s conclusions were released, behind-the-scenes assessments were indicating that although a number of European states were dissatisfied with continuing sanctions against Russia, no single government wanted to take the heat by threatening to veto the renewal of the sanctions package. Now, that likelihood has further diminished. Most likely, the European Union will again extend sanctions for another six months, to mid-2017.

If the timing of the Dutch report wasn’t bad enough, the Russian-Syrian decision to pursue Grozny-style tactics to overwhelm the Syrian opposition in Aleppo—and signal to other opposition-controlled areas in Syria that it may be a good time to start negotiating with the Assad regime rather than continue to hold out for Western assistance—has further complicated matters. With European leaders now beginning to mutter the phrase “war crimes” in conjunction with how the Russian air campaign in Syria is being conducted, there have been early proposals that EU sanctions against Russia need not only to be continued and expanded but now broadened, covering actions not only in Ukraine but in Syria as well.

With some of the most pointed criticism coming from the United Kingdom, it raises the possibility that Moscow may not end up benefiting from Brexit after all. If, as initially hoped, a British departure from the European Union would liberate the United Kingdom from having to abide by EU sanctions on Russia, then the City of London could again become a key financial intermediary for Russian companies seeking access to international financial markets while British firms could circumvent American and European restrictions on technology transfers. When Foreign Secretary Boris Johnson, previously labeled a Russophile, who only months ago was sounding the need for a more conciliatory approach to Moscow, now warns that Russia risks becoming a “pariah state” due to its campaign in Syria, this suggests the depths of the problem the Kremlin now faces in repairing its relations with Europe.

What does this mean going forward? For one, it may accelerate Russia’s efforts to repair relations with Turkey and to proceed with the so-called “Turkish Stream” pipeline project, if its preferred option of doubling the NordStream line linking Russia to Germany will now languish in European regulatory limbo. The second is that it may cause Putin to become more willing to entertain compromise options in settling the territorial dispute with Japan over the Kuril islands—in the hopes that, in return, Prime Minister Shinzo Abe will breach the sanctions regime and open up new prospects for Russia’s development, particularly in the Far East. Finally, Moscow may decide that it needs to adopt a much more conciliatory approach to Europe. The Putin administration, for instance, has already announced its willingness to resume talks on Ukraine within the so-called “Normandy format” (encompassing Russia, Ukraine, France and Germany), which it had suspended earlier this year after accusing Kiev of sponsoring “terrorist activity” in Crimea.

Russia was clearly banking on being able to gain some concessions from Europe before the new U.S. administration took office in January. But it appears that the pleas of the outgoing Obama administration to maintain the status quo on Russia will be honored. Russia now has to see whether a new Asian gambit will give it the maneuvering room it seeks.

Article Link To The National Interest:

Erdogan Must Avoid The Iran Trap

Ankara should look long and hard at the costs paid by the defiant rulers of Tehran.

The National Interest
October 5, 2016

“The world is bigger than five.” This phrase, referring to the permanent members of the UN Security Council, is among Turkish president Recep Tayyip Erdogan's favorite platitudes. But when he uttered them again at the General Assembly this September, his diatribe struck a different chord.

Turkey stands at a critical juncture: since this summer’s coup attempt, the president has consolidated unprecedented power—in no small part due to his rants against the West. With xenophobia and nationalism running rampant in Ankara, Erdogan is better positioned than ever to challenge the Western-led liberal world order. But before taking another step, the president would do well to heed the cautionary tale of his Persian neighbor.

For most of the twentieth century, Turkey and Iran experienced comparable trajectories under modernizing and Western-allied statesmen. Those paths diverged in 1979 with a single key decision: to embrace or defy the West. Turkey has prospered because it has chosen to work within the international system. Since its Islamic revolution, Iran has worked against it. The results for the Middle East’s largest non-Arab powers could not have been more disparate: today, one benefits from NATO’s security umbrella, the other is an international pariah.

The July 15 putsch has upset that dynamic. Erdogan, resentful of his Western counterparts for failing to promptly condemn the coup attempt, is cozying up to his fellow strongmen in Tehran and Moscow. To be sure, Turkey has practical reasons for such outreach—primarily over Syria—but it could also reveal a broader strategic shift. At home, a traumatized electorate has bolstered Erdogan’s “sultanism,” unleashing his latent contempt for the West. As one Turkey expert warned in the coup’s aftermath, Turkey is at its “1979 moment.”

An iconic slogan of Iran’s 1979 revolution was “Na sharghi, na gharbi—jomhuri Islami” or “neither East nor West, [but an] Islamic Republic.” Since then, Tehran has adamantly rejected the world’s prevailing ideologies, offering its own model. This ideological persistence came at the cost of a shrinking circle of allies abroad as well as economic and conventional military stagnation at home.

Tehran’s bitter experience offers Ankara two key lessons.

The first, which should be obvious, is that countries seeking to overturn the liberal world order are unlikely to reap its dividends. Iran has some of the world’s largest proven oil and gas reserves, but its revolutionary ideology has hampered its financial potential, leading to decades of brain drain and economic isolation. Crucially, in the words of one Iran watcher, Tehran “missed the real revolution”—that of emerging markets. Before last summer’s nuclear deal, Iranian officials blamed their country’s faltering economy on Western sanctions. Post-deal, however, Iran remains a minefield for Western business and investors, and those same officials are now blaming the West for failing to deliver sanctions relief. Ultimately, the real culprit has always been at home: an outdated banking sector and the domination of entities linked to the Islamic Revolutionary Guard Corps.

Turkey, meanwhile, has been able to continuously attract foreign direct investment—despite military coups, financial crises and corruption scandals galore. Unlike Iran, not only did Western-oriented Turkey catch the emerging markets revolution, it rode its way to the top. Despite having scarce energy resources of its own, Turkey’s GDP far outranks that of resource-abundant Iran—almost twofold (2015).

The second lesson is that rogue states do not enjoy the benefits of collective security. Prior to the 1979 revolution, the United States permitted the Shah’s Iran to become “guardian of the Gulf.” As a pillar of U.S. Cold War strategy, Iran developed the Middle East’s biggest army and became the largest purchaser of American arms. Under the ayatollahs, however, the Islamic Republic has faced a U.S. arms embargo since 1984 when it was labeled a state sponsor of terror.

But the sharpest lesson for Ankara lies in Tehran’s isolation during the 1980–88 Iran-Iraq War. During the war’s first two years, Iran struggled to hold the line against Iraqi offensives on its own. With the regime holding U.S. diplomats hostage for 444 days, Washington had little reason to take its side. Tehran further flouted international norms when it established the Lebanese terrorist group Hezbollah in 1982, which a year later carried out the largest terrorist attack on Americans—killing 241 U.S. servicemen at the Marine barracks in Beirut. In turn, the United States increasingly aided Saddam Hussein, overlooking his use of chemical weapons during the war. To add insult to injury, in 1991 Iran watched an international military coalition come to Kuwait’s defense and eject Iraq.

As a NATO ally, Turkey is far from facing the isolation that Iran felt in the 1980s. But it has already gotten a glimpse of it in the Syrian theater. For the last two years, the United States has supported Syrian Kurdish rebels affiliated with the Kurdistan Workers’ Party, a terrorist organization leading an insurgency in Turkey. Ankara is incensed, blaming the United States for supporting terror and undermining Turkish sovereignty.

America’s assistance to the Kurds is in part a symptom of waning Western confidence in Erdogan’s Turkey. Ankara’s recent authoritarian turn hasn’t won it any friends in the West, nor has its covert support for jihadist groups in Syria—some of which have ties to Al Qaeda. Alarmed by deteriorating democratic institutions and foreign adventurism of a crucial NATO state, the United States and EU are growing weary of the very Islamist they championed a decade ago as a Muslim democrat. Increasingly characterized by anti-Western invective, Turkey risks conjuring comparisons in Western capitals to revolutionary Iran.

Ankara can still change course, but it appears unlikely that Erdogan will have a sudden change of heart. Once labeled a rising pro-Western Muslim democracy, Turkey now has little international legitimacy left. Before risking its standing any further, Ankara should look long and hard at the costs paid by the defiant rulers of Tehran.

Article Link To The National Interest;

Mike Pence Starts His 2020 Run At VP Debate

Again and again, the Republican vice presidential candidate pivoted to his own competence and political skill—rather than the many flaws of the guy at the top of his ticket.

The Daily Beast
October 5, 2016

In the run-up to the vice presidential debate, Republican Mike Pence was subjected to tortuous debate prep: a series of mock debates that aides described as brutal gauntlets, where both a moderator and sparring partner Scott Walker teamed up against the Indiana governor and relentlessly peppering him with tough questions.

Apparently it worked.

At the debate Tuesday night, Pence proved totally unflappable, calmly reimagining Trump’s policy proposals on a host of issues and refusing to flinch through dozens of interruptions by Tim Kaine.

Kaine may have thrown the first punch—but Mike Pence repeatedly got the last word.

And while the debate was a proxy battle for the top of the ticket, Pence managed to both make it about his own competence and political skill——rather than Donald Trump’s many flaws.

Think Pence 2020, rather than Trump-Pence 2016.

The one and only vice presidential debate was supposed to be a genteel affair, set in bucolic Virginia farm country, in the aptly named Farmville. Kaine even brought his elderly parents to watch him on the big stage.

About six minutes into the debate, that was a distant memory as the two candidates repeatedly interrupted each other. Kaine threw plenty of punches, but most failed to land cleanly or missed entirely.

He was unconvincing on terrorism, he was peevish on Clinton’s obvious vulnerabilities, and even on 9/11, he managed to sound bad.

It started out okay. with a fired-up Kaine responded to the moderator’s first query——why don’t Americans trust Hillary Clinton?——by saying that, well,he trusts her, and then pivoting to why Trump is unfit.

“As a candidate, [Trump] started his campaign with a speech where he called Mexicans rapists and criminals and he has pursued the discredited and really outrageous lie that President Obama wasn’t born in the United States,” Kaine said. “I can’t imagine how Gov. Pence can defend the insult-driven, selfish, me-first style of Donald Trump.”

Moderator Elaine Quijano then asked a similar question to Pence, pressing him on Trump’s temperament and perceived “erratic” behavior.

Pence, in turn, chose to attack Kaine and his running mate—with a jab that given the tenor of the top of the Trump campaign’s ticket seemed to defy logic.

“Senator, you and Hillary Clinton would know a lot about an insult-driven campaign,” he said. “It really is remarkable.”

He then delved into a riff on why Clinton failed as Secretary of State blaming everything from unrest in the Middle East to Russian aggression on her. Kaine managed to stammer out, “You guys love Russia!”

Over and over again, Pence shut down Kaine’s best efforts to bring up Trump’s taxes, insults of women and coziness with Russia.

But he didn’t necessarily defend Trump in some cases—particularly on the Trump Foundation and his tax returns, instead Pence effectively changed the subject to avoid getting boxed in by the words of the guy at the top of his ticket.

One of Pence’s worst moments came as when he was faced with defending Trump’s decision to break tradition and keep his tax returns out of public view.

Asked whether it was “fair” that Trump may have avoided paying taxes legally for nearly two decades, as suggested by a 1995 return leaked to the New York Times in which Trump booked nearly $1 billion in losses he could set against future income, Pence launched into a rambling explanation about how that return showed “tough times.”

Kaine interjected, “But why won’t he release his tax returns?”

“Well, we’re answering the question about—about a business thing, is he…” Pence stammered.

“I do want to come back to that, but…” Kaine began.

“His tax returns—his tax returns showed he went through a very difficult time, but he used the tax code just the way it’s supposed to be used,” Pence said, before finishing the talking point like an Olymipic gymnast who just stuck the landing after a mistake-laden routine. “ And he did it brilliantly.”

“How do you know that? You haven’t seen his tax returns,” Kaine pressed.

“He created a runway—because he’s created a business that’s worth billions of dollars today,” Pence said

“How do you know that?” Kaine asked.

And then there was “that Mexican thing.”

As Kaine and Pence debated over whether Trump meant what he said when he told MSNBC’s Chris Matthews that women who have abortions should be punished if Roe v. Wade was repealed, Kaine again brought up the fact that Trump called Mexicans “rapists” during his announcement speech - as he had earlier in the debate.

Pence retorted, “Senator, you've whipped out that Mexican thing again.”

“Can you defend it?” Kaine asked.

Pence couldn’t and instead began talking about illegal aliens.

This wasn’t the only time Pence stretched the truth.

He seemed to imply that tough-talking Trump—who in fact has called for a return to so-called stop-and-frisk policing—would suddenly be all in for criminal justice reform like Pence had been in Indiana and Washington.

When Kaine said Trump says Putin is a better leader than Obama, Pence looked deeply affronted and called the comment “absolutely inaccurate.” But Trump frequently praises Putin, and has said he is a “stronger” leader than Obama.

As Kaine grew more frustrated with such answers, he frequently talked over Pence——rendering both men impossible to understand. Instead of sounding relentless, Kaine just came off as irritating.

Perhaps the most embarrassing exchange came when Kaine attempted to use a well-worn and hokey line from his stump speech to hit Trump on the economy.

“Hillary and I have a plan that’s on the table that’s a ‘you’re hired’ plan,” Kaine began, then proudly ticked off their five point plans for job creation that he contrasted to what he called Trump’s “you’re fired” plan.

This time Pence didn’t interrupt. And there was a reason.

“Well, first, let me say, I appreciated the ‘you’re hired,’ ‘you’re fired’ thing, Senator,” Pence said, smiling darkly. “You use that a whole lot. And I think your running mate used a lot of pre-done lines.”


Pence then launched into a spiel on how much the Clinton-Kaine economic plan would cost: $200 billion in additional debt, according to the Committee for a Responsible Budget. And he somehow avoided being having to explain why the Trump plan would add $5.3 trillion—26 times more.

One of Kaine’s worst moment came when he tried to one-up Pence over 9/11. The debaters went back-and-forth over national security, and Pence noted that he was in Congress that day and saw smoke rising from the Pentagon.

Kaine decided this called for an interruption.

“I was in Virginia!” he snapped.

Pence nodded solemnly and gave him a patient look.

“I know you were,” he said somberly. “We all lived through that day as a nation. It was heartbreaking.”

In the spin room after the debate, Kaine’s staff tried to argue that it didn’t matter if he sounded bad, since he put Pence on the defensive about Trump.

“Donald Trump was front and center in this debate. That was our goal,” said Karen Finney, a spokeswoman for Kaine.

“As we speculated going out on the front end, clearly Mike Pence was more interested in his 2020 prospects than actually defending his running mate,” she added.

If that was Pence’s goal, he will sleep well tonight.

Article Link To The Daily Beast:

Putin's Ultimatum To The Next U.S. President

By Leonid Bershidsky
The Bloomberg View
October 5, 2016

The next U.S. administration will inherit the worst relationship with Russia since Ronald Reagan called the Soviet Union an evil empire. Judging from the list of grievances that President Vladimir Putin has laid out, even a relatively Putin-friendly Donald Trump will have a hard time satisfying him.

Putin delivered his message to the future U.S. president Monday, just as the U.S. State Department announced it was suspending negotiations with Russia on a ceasefire in Syria and Russia-backed Syrian troops moved to take more ground in Aleppo. In a bill submitted to parliament, Putin threatened to end a joint U.S.-Russian disarmament program -- in which surplus weapons-grade plutonium is processed into fuel -- unless the U.S. meets certain conditions:

1. Roll back North Atlantic Treaty Organization infrastructure and reduce NATO personnel to September 2000 levels;

2. Repeal the Magnitsky Act, which imposed sanctions on Russian officials involved in human rights violations;

3. Repeal all U.S. sanctions against Russian individuals and businesses;

4. Compensate Russians for damages incurred by U.S. sanctions and by Russia’s “forced countersanctions”;

5. Present a “clear plan of irreversible destruction” of U.S. surplus plutonium. 

Putin might as well have said the program will resume when hell freezes over. “He asked for too little,” Leonid Volkov, an anti-Putin politician, wrote sarcastically on Facebook. “He should have asked for Alaska back, eternal youth, Elon Musk and a ticket to Disneyland.”

Even if a U.S. administration were suddenly prepared to lift sanctions introduced in response to the Russian aggression in Ukraine, not even President Trump would agree to the humiliating and nonsensical demand for compensation -- particularly for Russia’s spiteful decision to ban Western food imports, a move that primarily hurt domestic consumers. The NATO cuts, too, are a non-starter.

The plutonium deal was largely symbolic and on its last legs anyway. It applied to just 34 tons on each side, a small share of each country’s nuclear arsenal. The Obama administration put its side of the program "on cold standby” in 2014, after a series of disagreements over such issues as how to dispose of the plutonium and the high cost of converting it into fuel for nuclear plants. The move indicated that the U.S. was prepared to see Russia abandon its side of the bargain, too.

Putin’s choice of venue appears aimed at reminding the world that Russia remains a nuclear power with plutonium to spare, unlike most countries in its immediate neighborhood. Ukrainian President Petro Poroshenko bitterly regrets that his country gave up its nuclear arsenal in the mid-1990's in exchange for a now-worthless guarantee from Russia, the U.S. and the U.K. that it wouldn’t be attacked. Poroshenko wants to convince Washington that Ukraine deserves lethal U.S. weapons, having been duped into stripping itself of a powerful deterrent that probably would have kept it intact in 2014.

Putin’s message is that Russia will start acting as an equal, whether or not the U.S. wants to treat it as one. It’s a reminder to the presidential candidates that pacifying Russia will have a price tag, and that Russia’s starting position in any negotiations will be arrogantly high. Since the outgoing U.S. administration is unlikely to step up military activity in Syria, Russia is doing its best to make sure President Bashar al-Assad’s troops win a decisive victory at Aleppo before the next U.S. president is inaugurated. The U.S. decision to withdraw from talks means little to Putin, who has been playing for time rather than talking anyway.

Putin is aware that his belligerent stand will be costly. On Monday, the finance ministry suggested boosting the classified part of the budget -- which includes military and security expenditures -- by about 680 billion rubles ($10.9 billion), a move that will require cutting other expenditures and increasing the deficit. Putin knows from experience that Russians will put up with more economic hardship if they feel he is standing up to the U.S.

It’s hard to see how Barack Obama can respond seriously to Putin’s demands. The next U.S. president, though, will need to decide what to do with an intransigent Russia. One option is to ratchet up sanctions and wait for a weakening economy to undermine the Kremlin’s position, yet such an approach could have immediate and unpredictable consequences in the Middle East and elsewhere.

Article Link To The Bloomberg View:

Direct Democracy Strikes Again

By Nina L. Khrushcheva
Project Syndicate
October 5, 2016

Once again, a referendum has turned a country upside down. In June, British voters decided to take their country out of the European Union; now, a narrow majority of Colombians have rejected a peace agreement with the Revolutionary Armed Forces of Colombia (FARC). Colombians have taken a leap in the dark – and perhaps a leap back into the violent abyss of never-ending war.

Populists everywhere are no doubt celebrating the outcome as another clear rebuke to self-interested elites who have “rigged” their governments against the people. And the people, they say, should have a direct voice in the important decisions affecting their lives – apparently even decisions about war and peace.

But if there really is a “democracy deficit,” as populists claim, the increased use of referendums is no cure for it. On the contrary, referendums tend to make matters far worse, and can undermine democracy itself. It’s an old story: Napoleon III, for example, used such a vote to reconstitute his elected presidency into the imperial title his uncle, Napoleon Bonaparte, had held.

After the rise of fascism and during the Cold War, the world’s democracies seemed to recognize that referendums and plebiscites are the handmaidens of autocrats seeking to concentrate power. Adolf Hitler used plebiscites in the Sudetenland and Austria to consolidate the Third Reich. And, after Hitler, Joseph Stalin used referendums to incorporate Eastern Europe into the Soviet bloc.

More recently, Russian President Vladimir Putin organized a snap referendum in Crimea that supposedly justified his annexation of the territory. In the tradition of Napoleon III, Hitler, and Stalin, he used direct democracy to pursue dictatorial ends.

To be sure, not all recent referendums have been instruments of dictatorial power. But mendacity and deception worthy of the dictators of the 1930s was certainly on display in the United Kingdom’s “Leave” campaign, and in the opposition to a Dutch referendum in April to approve an EU-Ukraine free-trade and association agreement.

In the UK, Boris Johnson cynically helped lead the Leave campaign with an eye toward unseating, and potentially replacing, Prime Minister David Cameron. But, when Cameron resigned in July, Johnson’s fellow Brexiteers betrayed him, so he had to settle for becoming Foreign Secretary in Theresa May’s new government.

In the Dutch case, Euroskeptics, seeking to drive a wedge between the Netherlands and the EU, exploited the 2014 tragedy of Malaysia Airlines Flight 370, which departed from Amsterdam and was shot down over Ukraine by Russian-backed separatists, leaving a deep wound in the Dutch public psyche.

The British, Dutch, and Colombian referendums all required that complex issues be radically simplified, which played to populist leaders’ strengths. In the Netherlands, voters were asked to approve or reject an agreement that runs to more than 2,000 pages, which surely no more than a handful of voters have actually read. Instead, most voters relied on populist leader Geert Wilders’ glib talking points, which provided a less-than-candid assessment of the issue.

Similarly, the Brexit referendum posed a question with so many ramifications that no voter could possibly have considered them all. And in the Colombian plebiscite, voters would have needed a deep understanding of faraway South Africa’s truth-and-reconciliation process, and post-apartheid history, to assess the peace agreement properly.

Representative government was created to manage these types of complex issues. We vote for representatives – either individually or as part of a political party with a relatively predictable platform – to advocate public policies that we support. But, as Edmund Burke famously pointed out, “Your representative owes you, not his industry only, but his judgment, and he betrays, instead of serving you, if he sacrifices it to your opinion.”

The populist campaigns in the major referendums this year have differed in important respects. For example, Colombian opponents of the peace deal appealed to universal norms of justice for war crimes committed by the military and the FARC, not to national particularism, as in the UK and the Netherlands. Nonetheless, they have all been motivated by a desire to scuttle governments and institutions that they oppose. And they have all been willing to follow the tradition of dictators, and to resort to smears, distortions, and fantastical claims.

In the real world, messy compromises are a fact of democratic life; and the only thing messier than a negotiated peace is war itself. As long as compromises do not violate individual rights, citizens in democracies accept them as necessary for the sake of functioning governance. When we reduce a peace agreement, a trade treaty, or EU membership to a single sentence or sound bite, genuine democratic debate gives way to the political noise of opt-outs, logrolling, and side deals.

This is arguably a particularly ill-advised time to hold referendums, because democratic malaise has taken hold in many countries since the 2008 financial crisis. In the EU, mainstream politicians must accept some responsibility for expediently blaming “Brussels” for every problem, or for fudging the truth about what EU membership or association agreements with neighbors actually mean. Mainstream leaders, to some degree, set the stage for the populist demagogues who are now trumping reasoned argument with angry, nativist appeals.

Plebiscitary governance has little to recommend it. In the decades since California introduced statewide “ballot initiatives” – which can be proposed by any voter and require a simple majority to pass – the state became practically ungovernable. Current California Governor Jerry Brown has spent the last eight years cleaning up the fiscal mess the state’s voters created back in 1978, when they passed Proposition 13, lowering property taxes by 57%.

Europe could soon become as dysfunctional as California. This month, Hungary’s increasingly autocratic prime minister, Viktor Orb├ín, held a referendum to oppose a common EU migration policy. If more EU countries resort to such initiatives, European integration could be thrown into reverse. One need only listen to the politicians calling for referendums to know where direct democracy can lead.

Article Link To Project Syndicate:

OK, We Agree: Obamacare Needs Some Fixes. Now What?

By Megan McArdle
The Bloomberg View
October 5, 2016

For weeks, rumors have been flying that WikiLeaks would deliver an “October surprise” for Hillary Clinton’s campaign, a bombshell revelation that she would struggle to recover from in the short weeks remaining until the election. (So far, it's a dud -- surprise!)

But Clinton should be worried about a “November surprise” -- the wave of policy cancellations and rate hikes that will attend the debut of Obamacare’s fourth open-enrollment period, on Nov. 1. Just a week before Election Day.

Those rate hikes are going to be pretty hefty. Scroll through the spreadsheet assembled by Charles Gaba of, and you’ll see a lot of big numbers: Tennessee rates are going up 56 percent. Montana, 48 percent. Illinois, 45; Nebraska, 35; Georgia, 33.

That doesn’t include Minnesota, which just announced that insurers had been granted an average increase of 56.6 percent, along with, in most cases, a cap on new enrollments to control their risk. Those are just the states with the biggest problems. Most of the states he has tracked have granted healthy double-digit increases.

Only six exchanges managed to keep their increases in the single digits: the District of Columbia, Massachusetts, Rhode Island, North Dakota, Vermont and Arkansas (barely). By Gaba’s calculation, the average individual consumer -- not those who are covered through their employers -- can expect insurance premiums to rise by roughly a quarter next year. Though many people will be shielded from that by the subsidies, about 6 million more will not, and they will be mad. If they live in swing states, that anger will matter.

No wonder Clinton isn’t talking up Obamacare on the campaign trail.

Farther from the spotlight, Democrats seem to be coming around to the idea that the program is in serious trouble and needs to be fixed. Clinton’s own husband apparently suggested the system wasn’t working at a campaign event in Flint, Michigan, saying: “It doesn’t make any sense. The insurance model doesn’t work here.” Robert Pear of the New York Times channeled many of the issues that are concerning them into an article this weekend headlined “Ailing Obama Health Care Act May Have to Change to Survive.”

The issues will be well known to readers of this column: Too few young and healthy people have signed up, and there have been strong suggestions that both providers and patients have sought ways to game the system to maximize the amount of health care that insurers pay for, while minimizing the amount of premiums paid. This has raised the possibility that the markets are going into a “death spiral,” in which the premiums keep rising and the healthiest patients left in the insurance pool consequently keep dropping insurance, until the market collapses. That’s old news, although some of the eye-popping numbers are relatively recent.

The real question is what we do about it. Republicans’ responses often consist of looking at their shoes and mumbling about the healing powers of markets and health savings accounts. Democratic answers mostly amount to “Firehose money onto the markets until that burning sensation stops.”

The public option has long been bruited about as a solution to these market woes. The problem is, as I’ve discussed before, that the public option isn’t going to do any better than private insurers unless it takes one of two courses: using the majestic power of the law to force down provider reimbursements quite a lot (politically daunting, and likely to trigger severe financial problems among doctors and hospitals), or tapping heavy government subsidies to cover the losses that are driving insurers out of exchanges all over the country. I think a Democratic Congress would have a very hard time getting the latter option passed once the Congressional Budget Office had put a price tag on the idea; in the legislature we are likely to have, where Republicans will probably control at least the House of Representatives, it will never happen.

Alternatively, we could increase the subsidies. Heavily subsidized consumers seem to be willing to buy Obamacare policies; it’s the folks who get little or no subsidy who are balking at expensive plans with high deductibles and very narrow networks of doctors and hospitals. If we increased the subsidies to higher income levels, presumably some of those people would jump into the marketplace -- potentially enough to shift the insurance pools toward a healthier mix, and stabilize the system.

But this runs into the same problem as a subsidized public option: Which intrepid politician wants to tell the voters that the government needs tens of billions of dollars more every year in order to subsidize a program the majority of voters aren’t very fond of? How much more fond of it will they get when Democrats announce that they’re breaking their promise that Obamacare wouldn’t increase the budget deficit?

One possibility is that they could instead increase the penalty for failing to buy insurance. That counts as a tax, and it offers politicians a nice twofer: Either it raises more tax revenue for them to spend, or it forces younger and healthier folks to buy insurance, helping to stabilize the risk pools. There’s just one small problem, which is that if it’s hard to imagine lawmakers voting to spend large new sums on insurance subsidies, it’s impossible to imagine them voting to increase the penalty on an already unpopular insurance mandate.

That’s pretty much it. I’m out of plausible legal tweaks to the existing system that could stabilize this mess. And judging from Clinton’s silence on the stump, so are Democratic strategists.

That leaves two options: “repeal and replace” (or at least gut renovate the system so that it functions as originally promised), or tweak regulations and hope that’s enough. From a policy perspective, “repeal and replace” obviously seems to be the way to go; no one really likes the kludged-together system created by the Patient Protection and Affordable Care Act, and either Republicans or Democrats could design something that worked more rationally. However desirable this might be from a policy perspective, though, it’s even less plausible than legislative tweaks politically. Undoing what was done in 2010 would involve either repealing things that people like -- like the ban on lifetime caps, and exclusions for pre-existing conditions -- or moving toward something people don’t like, such as heftier mandates or government providing health care directly.

That leaves us regulatory tweaking. The good news about this is that it’s largely invisible to voters, which lowers the political barriers to change. The bad news is that there’s only so much tweaking regulators can do within the law (or even by skating outside it). This is the easiest option, but it’s also the weakest, and the least likely to work. Nonetheless, that’s what we’re going to end up doing, no matter who gets elected president.

To be clear, the Department of Health and Human Services has taken regulatory steps to reduce the problem of gaming, and it’s possible those steps will be enough. But those fixes won’t help Clinton this election year. And if they aren’t enough to stabilize the pools, we’ll get another November surprise in 2017 … and 2018 … and then Democrats will probably get some very ugly surprises on Election Days to come.

Article Link To The Bloomberg View:

Better Brexit, Greater Britain

Forget ‘hard’ or ‘soft.’ The U.K. should aim to be a free-trade mecca.

By Review & Outlook
The Wall Street Journal
October 5, 2016

Theresa May promised that “Brexit means Brexit” when she became Britain’s Prime Minister this summer, and she seems to have meant it. She said this weekend that by March she will formally begin negotiations with Brussels to leave the European Union, setting the stage for Brexit in 2019. Now Britain needs to live up to the other half of her famous dictum and “make a success of it.”

Doing that requires thinking big—much bigger than most British and European politicians are currently doing. London is consumed with debates about “hard Brexit” versus “soft Brexit,” meaning how much of its newfound independence Britain will surrender back to Brussels in exchange for how much access to the European market. The softees say Britain should preserve market access even at the cost of subjecting itself to most EU rules, as Norway and Switzerland do. The hard side says Britain should walk away from the EU so London can impose stringent immigration controls.

This debate is a trap. Attempts to cater to Brussels’s innate protectionism by bargaining Britain back into the unhappy circle will let the EU whittle away the advantages of Britain’s new freedom. But Britain also can’t afford to abandon Europe given the mutual economic ties that already exist.

Instead of hard or soft, Mrs. May and her colleagues should focus on creating a better Brexit to build a Greater Britain. That means radically expanding Britain’s trading relations abroad while boosting competitiveness at home. Thinking big this way would make the most of Britain’s new opportunity while helping Britain drive the right kind of exit with the EU.

Britain needn’t wait until it leaves the EU to start negotiating trade deals, and potential trade partners shouldn’t hold back either. Brussels insists Britain can’t open trade talks on its own while still formally an EU member. Plenty of London bureaucrats and lawyers may be tempted to agree. But why should Jean-Claude Juncker or Angela Merkel get a veto over Washington’s, Ottawa’s or Canberra’s ability to strike a trade deal with London?

Britain should aspire to have high-quality free-trade agreements in place with the U.S., Canada, Australia and New Zealand from the first post-Brexit day in 2019. Their historical ties are close, and all four countries of the Anglo-sphere have attempted to negotiate trade deals with the EU. Countries such as South Korea that already have EU deals could conclude new bilateral deals quickly. British Trade Secretary Liam Fox said last week he is also open to trade deals with developing countries. Brazil, China, India, Nigeria and others can jump at that invitation after years of trade difficulties with the EU.

This need not be done at the expense of the EU. New British bilateral trade deals might even prod Brussels to strike a more liberal deal with Britain to avoid being left behind. The stronger Britain looks economically, the more incentive Europe will have to think larger and give the U.K. better terms.

Mrs. May also seems to understand the crucial role of domestic economic reform in making Brexit successful, or at least some of her ministers do. Mr. Fox has criticized British businesses that grew complacent within the protectionist confines of the EU. Maybe it was in-artful to accuse CEO's of preferring Fridays on the golf course to putting in extra hours boosting competitiveness. But Mr. Fox is correct that Britain will need to invest more to increase productivity once the U.K. has to compete on its own for capital and markets.

One place to start would be tax reform. Former Chancellor George Osborne put Britain on track to cut corporate-tax rates to 17% by 2020 from 30% in 2008, which is a good start. New Chancellor Philip Hammond hasn’t embraced the Osborne timetable, but he will have to do more than fiddle to keep Britain competitive outside the EU. The spending plan he announced this week for better infrastructure is typical Euro-Keynesian small ball.

The May government is also revisiting laws that prevent much-needed new homes, and it should scrap such older Tory policies as Help-to-Buy that distort the housing market. These are small steps, but they represent a down payment on pro-growth reform if Mrs. May can build on them.

The economic harm from Brexit has been far less than advertised, but that is no cause for complacency. The pound has taken a hit this week on Mrs. May’s speech, and the sooner Britain can reduce uncertainty the better. The Tory goal should be to make post-Brexit Britain a mecca for investment and talent to build a prosperous example for Europe and the world.

Article Link To The Wall Street Journal:

Could The Bottom Fall Out Of This Oil Rally?

By Nick Cunningham
October 5, 2016

The oil markets will have to wait almost two more months before the uncertainty surrounding the pending OPEC deal is settled, so in the meantime a renewed focus on the fundamentals is in order.

The global oil production picture is still highly fluid, particularly with promises for a cut to OPEC production while some OPEC members (Nigeria, Libya, Iran) could actually ramp up output. But while output figures are more difficult to pin down, data on inventories is much clearer – and it still doesn’t look good for oil bulls.

As for crude oil inventories, they remain at extraordinary heights, despite having come down more recently. In the U.S., refineries are well into maintenance season, leading to a drop off in demand in September. Crude stocks are declining, but still remain high. For the week ending on September 23, U.S. oil inventories sat at 502.7 million barrels, which is up from 457.9 million barrels a year earlier. Softer demand from sidelined refineries could slow the drawdowns, leaving the U.S. very well supplied in the months ahead.

The landscape for refined products looks no better than crude oil. Inventories are extremely elevated, despite reasonably strong demand. In Europe, gasoline stocks in the Amsterdam-Rotterdam-Antwerp are more than a third higher than the five-year average. In the U.S., gasoline stocks have come down from their record highs seen earlier this year, but are still above the five-year average for this time of year. With summer driving season over, the sharpest drawdowns could also be behind us. For the week ending on September 23, gasoline inventories actually climbed by 2 million barrels, leaving them 6 percent higher than they were a year ago.

This comes despite strong demand from American motorists. Gasoline demand is up more than 4.5 percent from 2015 levels. But the buildup in products is just too high. "This year it is a big disappointment for gasoline -- demand is there, but stocks are just too high," a gasoline trading source told S&P Global Platts. The gasoline market has become "difficult to follow," the source added, as activity over the summer defied expectations.

On the refined products front, maintenance season is actually a positive thing. Fewer refineries churning out product means that margins will improve and stocks could come down. The flip side of that coin is weaker crude oil demand.

All in all, the elevated levels of oil and refined products sitting in storage will probably keep a lid on crude oil prices through the rest of this year and much of 2017. The IEA predicts that inventories won’t substantially come down until sometime next year. In its September Oil Market Report, the IEA revealed that total stocks of petroleum products in the OECD “smashed through the 3.1 billion barrel wall.”

The IEA warned about slowing demand, particularly in China, which could extend the oil price slump. In fact, China remains a very large question mark. The IEA said that China’s oil demand was “wobbling,” and indeed demand has slowed markedly as of late, hitting 10-month lows in July. But there is debate about what to expect next from China.

On the one hand, S&P Global Platts sees “brighter” days ahead for Chinese demand, which recovered by about 2 percent in August. "Demand in September and October will be better as harvest activity and the fishing season will increase demand for gasoil. The week-long National Day holiday in October will also stimulate gasoline demand as more traveling is expected," a refiner from Shandong said in an interview with S&P Global Platts.

On the other hand, China’s oil demand could drop off if it slows imports after filling up a big chunk of its strategic petroleum reserve. Oil demand was elevated earlier this year in part because of the rush to buy cheap oil and stockpile it into its strategic reserve. But with many storage tanks filling up, China might not need as much oil. JP Morgan predicts that Chinese oil demand could fall by about 15 percent.

Taken altogether, the oil market looks much the same as it did throughout 2016. Supply is still exceeding demand, inventories are still at exceptionally high levels, and demand is growing, but not fast enough to fix the imbalances. OPEC’s deal might have changed market sentiment, but the fundamentals do not look all that different than they did a few months ago.

Article Link To Oilprice:

How To Make Trade Work For Everyone

Open markets are essential for a sustained global recovery and equity for years to come.

By Christine Lagarde, Jim Yong Kim, and Roberto Azevedo
The Wall Street Journal
October 5, 2016

Many of the world’s economic leaders gathering this week in Washington for the International Monetary Fund/World Bank annual meetings may face discontent back home. Adding to a variety of worries, skepticism over trade has risen, protectionism has increased, trade itself has stagnated, and productivity growth has lagged. Particularly in the advanced economies, growth that has been too low and unequally distributed for too long is eroding support for the open trade policies that are essential for sustained recovery and boosting global growth and equity for years to come.

To avert a downward spiral of low growth and protectionism, we must make trade an engine of growth for all. Through international cooperation we must extend the benefits of openness and economic integration, including to small businesses, in developing countries. We must also mitigate the side effects for those individuals and communities being left behind.

Let’s be clear about what’s at stake: Trade is not an end in itself, but a tool for better jobs, increased prosperity and reduced global poverty. With open markets, more people benefit from access to goods and services, ideas spread, and firms access larger markets abroad.

In the decades before the 2008 global financial crisis, trade reforms—often on a multilateral basis through the World Trade Organization—contributed to high rates of global growth. Developing countries integrated into global value chains, bringing investment and creating new jobs that have helped hundreds of millions to escape poverty.

Recently, however, trade has not been playing its full role in lifting living standards, growing just 3% a year since 2012—less than half the rate in the decades before the crisis. Over the past year, merchandise trade has not grown at all.

Such prolonged weak trade growth is nearly unprecedented in modern history. Much of it reflects sustained low rates of global investment and growth. But recent research in our organizations shows that the “trade slowdown” is more pronounced than rates of investment and growth alone would suggest. The slow pace of trade reform and the gradual buildup of new tariff and non-tariff barriers to trade are additional key factors in the trade slowdown.

It’s clear what must be done. Restoring the role of trade in driving economic growth and development begins with sound macroeconomic policies, including support for aggregate demand, and with structural reforms.

National governments and international institutions should build public support for open trade policies. They need to emphasize how trade promotes innovation, employment and higher living standards, and make the opportunities, as well as the challenges, that globalization brings more clear.

We also need greater cooperation to reduce the barriers that still impede trade and stifle productivity growth in key areas of the modern global economy, such as services and electronic commerce. In an age when services comprise two-thirds of global economic activity, it is astonishing that barriers to services trade are often equivalent to tariffs of 30% to 50%. Ambitious WTO negotiations in such areas could go far toward boosting productivity and global economic growth.

Governments should also complete what they’ve begun. One key example is the WTO Trade Facilitation Agreement (TFA), which will cut trade costs by up to 15% for some countries and facilitate greater participation in global value chains. WTO members that have not yet ratified the agreement should do so before the end of the year.

The Trade Facilitation Agreement will especially benefit developing countries by helping them diversify their exports and crack into new markets, for instance. But additional steps are needed to help the poorest of them, which still face major obstacles to their goods and service exports. These countries also need support for enhanced trade infrastructure so that they can take full advantage of existing trade opportunities. More can be done to connect the poorest to the opportunities that trade creates, including overcoming gender-based barriers that inhibit the participation of women in trade and addressing the barriers faced by small- and medium-size enterprises.

Despite the tremendous benefits of trade, too many people feel it has left them behind. Other factors, including automation, may have a greater impact on dislocation. But whether adjustment is triggered by trade, by technology or by other factors, for those individuals and communities facing adjustment, the lost jobs and stagnant wages are painfully real.

With the correct supporting domestic policies, trade will work for all. Governments can step up investment in education, job training, temporary income support, job-search assistance, and targeted trade-adjustment assistance, using approaches crafted to best fit their national circumstances. Many countries, including Singapore, Denmark and South Korea, have implemented successful adjustment programs such as these. Our institutions can help others to develop effective programs and to share cross-country experiences.

Transforming trade into an engine of growth for all and meeting our objectives for global poverty reduction requires reinvigorating trade integration, not rolling it back. By marrying greater economic openness with supportive domestic policies, trade can play its full role in driving increased and widely shared prosperity.

Article Link To The Wall Street Journal:

Twitter Is Expected to Field Bids This Week

Salesforce CEO Marc Benioff wants Twitter’s data trove and brand; he called social-media pioneer an ‘unpolished jewel’

By Monica Langley
The Wall Street Journal
October 5, 2016

Twitter Inc. is expected to field bids this week, and Marc Benioff has been building a case to Inc. investors and others that his company should be the buyer, according to people familiar with the matter.

Mr. Benioff is looking to make a splashy acquisition that would secure for Salesforce a treasure trove of data as well as a prized consumer brand, according to the people.

Mr. Benioff, whose recent approach to Twitter set off the bidding process, sees the social-media pioneer as an “unpolished jewel” with untapped potential in advertising, e-commerce and other data-rich applications he regards as important to the cloud-software juggernaut’s next phase of growth, the people said.

But the brash CEO, who lost out to Microsoft Corp. in a bitter battle to buy LinkedIn Corp. this spring, faces formidable obstacles.Alphabet Inc.’s Google may bid also, the people said, while media giant Walt Disney Co. has been considering its own offer.

While Twitter could cost upward of $20 billion, or more than a third of Salesforce’s roughly $49 billion market value, it would be more bite-sized for Google, the search powerhouse whose parent sports a market value of more than $500 billion. Disney, meanwhile, has a market capitalization of almost $150 billion.

There is no guarantee any bid will come in high enough to entice Twitter to sell, and the company could remain independent.

Salesforce investors so far have been cool to the prospect of a deal with Twitter, which is beset with challenges. Owning it would also vault Salesforce outside its comfort zone as a provider of cloud-based services for businesses, which helped pioneer the concept of selling software as a service over the internet.

But Mr. Benioff clearly has a gleam in his eye for Twitter, which generates untold reams of data from its hundreds of millions of users and offers potential as a tantalizing turnaround opportunity.

“Data is the currency in software’s new world order,” he said in an interview this past weekend, though he wasn’t specifically speaking about Twitter. “I’m looking hard at unique data-rich companies and what I can do to make them more powerful and innovative if combined with Salesforce.”

At a private dinner recently, Mr. Benioff told a dozen tech CEOs that Twitter is an “unpolished jewel,” according to a person who attended. “Twitter is a great brand,” he told the CEOs, and he wants to “make it a great company,” according to the person.

Like LinkedIn, Twitter could bring Salesforce reams of data to create recommendations and insights for its corporate customers.
Twitter could complement Mr. Benioff’s goal of harnessing more data for artificial-intelligence-driven analysis, as well as allow Salesforce to offer additional services in sales, marketing and e-commerce for the company’s 150,000 customers.

Both Salesforce and its CEO already have ties to Twitter. Mr. Benioff and Twitter Chief Executive Jack Dorsey live in the same San Francisco neighborhood. Salesforce already incorporates Twitter in numerous cloud services for its corporate customers, from service complaints handled through tweets to analysis of tweets on products.

The exuberant Mr. Benioff, who became a billionaire as Salesforce’s stock rose ninefold in the past decade, sees numerous benefits from bringing the companies more closely together. According to a person familiar with his thinking, Mr. Benioff is convinced a strong partner could figure out how to better monetize Twitter’s big user base and fire hose of content, something the social-media company has struggled with.

At first blush, Twitter, a strong consumer brand, seems an unlikely fit for the corporate-focused Salesforce. In acquiring Twitter, Salesforce would take on a host of problems that have dogged the social-media company, including its struggles to reinvigorate user growth and combat some of its users’ abusive behavior.

Twitter would also be a much bigger acquisition than Mr. Benioff has ever done before.

Mr. Benioff’s M&A focus is “the single biggest overhang” on Salesforce stock, UBS Group AG software analyst Brent Thill said. After Salesforce failed to meet its billings forecast and revenue guidance in its most recent quarter, some investors worry about the health of its core business and want the company to focus on that.

Yet, “if Marc goes this big, the market might ultimately give him a pass because he changed the industry,” Mr. Thill said. “Marc has shown vision and backed it up with financial proof. Now he may tell investors that in return for short-term pain, prepare for long-term gain.”

Indeed, Mr. Benioff said in the interview that he would assure investors at the company’s Dreamforce customer conference in San Francisco Wednesday that, regardless of whether it makes a big purchase, Salesforce will continue to deliver “excellent operating results.” He added: “In reality, we’ve not altered our mindful approach to acquisitions.”

Salesforce has made a number of purchases lately. In July, it bought e-commerce specialist Demandware Inc. for $2.8 billion, Salesforce’s largest takeover to date. This week, it agreed to buy San Francisco startup Krux for about $700 million in a bid to bolster the artificial-intelligence capacity in Salesforce’s marketing cloud.

Mr. Benioff said he is spending about 25% of his time on M&A this year.

In addition to the bid for Twitter and the Krux deal, Salesforce is appealing to U.S. and European regulators to scuttle or revise Microsoft’s $26 billion planned acquisition of LinkedIn, another deep well of valuable data. He has complained about the LinkedIn sales process.

Mr. Benioff said his goal was to get Microsoft to open up LinkedIn’s huge repository of individual and company profiles, rather than allow the software giant to wield it as competitive advantage against Salesforce and other enterprise-software companies.

Article Link To The Wall Street Journal;

European Stocks Seen Lower As Markets Mull Fed Comments

By Holly Ellyatt
October 5, 2016

European stocks are expected to open lower on Wednesday as markets digest hawkish comments from U.S. Federal Reserve officials.

The London FTSE index is expected to open 9 points lower at 7,065, the German DAX 49 points lower at 10,570 and the French CAC 31 points lower at 4,472, according to IG.

European stocks look set to start the trading day in lackluster fashion, similarly to Asia, where stocks traded mixed on Wednesday as investors reacted to the latest remarks from Fed officials indicating a forthcoming hike in interest rates.

On Tuesday, Richmond Fed President Jeffrey Lacker said there was a strong case for raising interest rates, while on Wednesday, in a speech in New Zealand, Chicago Fed President Charles Evans said he would be "fine" with hiking rates by year-end if the data remained supportive, Reuters reported.

Meanwhile in Europe, a Bloomberg report on Tuesday said the European Central Bank (ECB) might taper bond purchases before the expected March end of its quantitative easing program. The ECB later denied it had discussed the subject, Reuters reported.

Elsewhere, concerns over Brexit continue to weigh on sterling, with the currency hitting a 31-year low against the dollar on Tuesday. U.K. Prime Minister Theresa May said she was not worried about the pound's decline, however, telling the BBC on Tuesday that "currencies of course go up and down."

In the commodity markets, gold prices edged higher early on Wednesday, after falling 3.3 percent in the prior session to their lowest in more than three months, as the dollar eased back and equities fell, Reuters reported.

Oil prices also rose in early trading on Wednesday after a report that U.S. fuel inventories may have fallen for a fifth straight week.

On the earnings and data front, Tesco releases interim results and final September services and manufacturing purchasing manager's index (PMI) data from the euro zone is released.

Article Link To CNBC:

Wednesday, October 5, Morning Global Market Roundup: Global Stocks, Gold, Bonds Slide On ECB Taper Talk

By Nichola Saminather
October 5, 2016

Asian shares and gold retreated on Wednesday and bond yields were near two-week highs as markets were rattled by a media report flagging the possible withdrawal of the European Central Bank's bond buying program.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.3 percent in early trading. Japan's Nikkei .N225 extended gains to 0.6 percent, aided by a weaker yen.

China markets are closed for the National Day holiday.

Bloomberg reported on Tuesday that the European Central Bank (ECB) would probably wind down its 80 billion euro ($90 billion) monthly bond purchases gradually before ending its quantitative easing program, citing unnamed officials at euro zone countries' central banks.

ECB media officer Michael Steen later tweeted that the central bank's decision-making body has not discussed reducing the pace of its monthly bond buying.

Rates will remain low until inflation gets up to the ECB's target, ECB chief economist Peter Praet told bankers on Tuesday.

Ric Spooner, chief market analyst at CMC Markets in Sydney, wrote that international bond markets "appear to be at a stage where nervousness about the prospect of central bank stimulus ultimately ending is outweighing the positive impacts of any near term moves to temporarily extend that stimulus."

"This is reflected by bond yields rising and gold crashing," he said.

Gold XAU= plunged 3.3 percent on Tuesday, its biggest tumble since January 2015. It recovered some of those losses on Wednesday, climbing 0.3 percent to $1,272 an ounce.

The yield on the benchmark 10-year U.S. Treasury notes US10YT=RR surged to a near two-week high of 1.6920. It was last at 1.6812 on Wednesday.

German 10-year government bonds DE10YT=RR also touched an almost two-week high of minus 0.043 percent on Tuesday before closing at minus 0.091 percent.

In a note, Citi analysts wrote that the Bloomberg report was a "remarkably hawkish surprise", given that a consensus "probably viewed an extension of the quantitative easing program as the more likely outcome".

"Following on from the Bank of Japan's policy maneuvers earlier, such a shift from the ECB would likely confirm the end of experimental and extreme monetary easing in the G3." they added. "Notably, in the U.S. too we have continued to receive a parade of hawkish guidance from Fed speakers."

Richmond Fed President Jeffrey Lacker argued on Tuesday that borrowing costs might need to rise significantly to keep inflation under control.

Lacker, one of seven policymakers who currently do not have a vote but who participate in policy discussions, made clear on Tuesday he would have been in the camp gunning for higher rates.

Traders have priced in a 63 percent chance of the Fed raising rates in December, according to the CME Group's FedWatch tool.

The dollar, which received a boost overnight from growing expectations for a rate hike this year, inched back on Wednesday.

The dollar index .DXY, which tracks the greenback against six major global peers, slipped 0.2 percent to 95.987 after advancing 0.5 percent on Tuesday. Earlier on Tuesday, it touched its highest point in almost two months.

The dollar was flat at 102.90 yen JPY=D4, after jumping 1.2 percent to its strongest level since Sept. 14 on Tuesday.

Sterling remained near its 31-year low hit on Tuesday on concerns about Britain's exit from the European Union, after British Prime Minister Theresa May said on Tuesday the country's separation from the EU will not be "plain sailing".

The British pound was last up 0.1 percent at $1.2742, after surrendering almost 2 percent over the past two days.

The euro EUR=EBS dropped as much as 0.7 percent on Tuesday, but recovered to end the day little changed. It was last trading up 0.2 percent at $1.12240.

Oil defied the stronger dollar to surge, thanks to a report suggesting U.S. fuel inventories may have fallen for a fifth straight week.

U.S. crude futures CLc1 advanced 1.1 percent to $49.22, after touching a three-month high earlier in the session.

Brent crude LCOc1 added 1 percent to $51.36. It hit a four-month high on Tuesday.

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Prepaid Card Users Get Protections, Clear Fee Info, Under New U.S. Rules

By Lisa Lambert
October 5, 2016

Prepaid cards, found on racks in nearly every U.S. grocery store, will soon come in packaging that clearly states the fees they may charge and will grant users new protections under final rules released on Wednesday by the federal financial watchdog for consumers.

The Consumer Financial Protection Bureau spent two years finishing rules for the growing industry, projected to reach $121 billion in 2018. It developed buyer-friendly fee disclosure rules to help customers avoid fees and charges that the CardHub service has estimated can cost up to $311 a year.

The bureau also addressed other issues raised in 65,000 comment letters.

Most of the rules become effective in October 2017, with issuers required to post detailed customer agreements on the CFPB site in 2018.

The rules largely put reloadable cards on the same level as debit cards or checking accounts, requiring providers to give customers monthly statements or other access to balance information; to resolve disputed charges quickly; and to limit customers' liability for charges on stolen cards.

They also curb fees and interest that providers charge when consumers spend more than the amounts loaded onto the cards.

"Our new rule closes loopholes and protects prepaid consumers when they swipe their card, shop online, or scan their smartphone," said CFPB Director Richard Cordray on a call with reporters on Tuesday.

The CFPB did not directly address outages, where a technological glitch stops a whole network of cards from working, but officials said the rules will help consumers affected by a massive malfunction resolve any problems quickly. In May, an outage blocked thousands of customers from accessing money on their Walmart-brand prepaid debit cards issued by the company GreenDot Corp.

The cards have become alternatives to banking for many, especially those with lower incomes, as places to store funds, receive paychecks or benefits disbursments and pay bills. The accounts are also moving onto phones with services such as Google Wallet.

According to CardHub, which tracks credit cards across the country, 23 million consumers used prepaid cards in 2014, loading a collective total of $76.7 billion onto them.

“The rules bring prepaid cards out of the shadows, with protections that in many ways are stronger than those for traditional bank accounts,” said Lauren Saunders, associate director of the National Consumer Law Center. “Consumers will have protection from fraud, costs will be more transparent, and dangerous overdraft fees will be curtailed, but unfortunately not eliminated."

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At Samsung, Strong Q3 Chip Sales To Ease Sting Of Note 7 Hangover

By Se Young Lee
October 5, 2016

Scarred by the global recall of its flagship smartphone, Samsung Electronics Co is set to report on Friday it still expects a small rise in third-quarter profit, analysts say, with healthy sales of memory chips and displays easing the pain.

Lost sales and expenses tied to the recall of at least 2.5 million Galaxy Note 7 handsets to fix battery problems could cost the firm nearly $5 billion this year, some analysts have said. That could sap momentum from a nascent recovery in Samsung's mobile business, an underperformer in recent years.

But a pickup in the memory chip market, led by demand from rival smartphone maker Apple Inc, will buttress earnings, company watchers say. A Thomson Reuters SmartEstimate, derived from a survey of 20 analysts, tips overall July-September operating profit to have edged up 0.7 percent from a year earlier to 7.4 trillion won ($6.65 billion).

Samsung will report its estimates for third-quarter revenue and operating profit, without further details, on Friday.

"So long as the operating profit number comes in at a low 7 trillion won level, the market will look at it and think some of noise surrounding the Note 7 recall issue has cleared," said HDC Asset Management fund manager Park Jung-hoon.

Analysts have lowered their expectations for Samsung's mobile division since the Sept. 2 recall made global headlines. Some have cut their mobile division profit forecast by 1 trillion won or more to reflect the lost sales and costs of recalling a smartphone that had won rave reviews and made a strong sales start since its launch in Aug. 19.

Korea Investment analyst Jay Yoo forecast Samsung's third-quarter mobile division operating profit at 2.6 trillion won, up from 2.4 trillion won a year earlier but down from 4.3 trillion won in April-June.

But analysts say Samsung's chips division - the firm is the world's biggest memory chip maker - will soothe the Note 7 woes as other smartphone makers filled chip order books and drove prices higher ahead of the peak year-end shopping season. Analysts estimate the division could report quarterly operating profit of 3 trillion won or more - its highest in four quarters.

Analysts said the semiconductors uptrend was more pronounced for NAND memory chips - used for long-term data storage - as demand started to outpace supply during the quarter due to orders from Apple and Chinese smartphone makers. Demand for solid-state drive storage chips for mobile devices also grew.

Samsung stands to benefit from the upswing - especially in the NAND market, where it dominates rivals such as Japan's Toshiba Corp and U.S. firm Micron Technology Inc in the market for high-end 3D products such as enterprise servers and storage.

Samsung's display business earnings also likely picked up some of the slack from the mobile division thanks to increasing adoption of its organic light-emitting diode displays (OLED) by rising Chinese smartphone makers such as OPPO and VIVO, analysts said.

"While the Galaxy Note 7 recall is a painful blow, the third quarter will show that components including DRAM, NAND and displays did better than expected," Dongbu Securities said in a report, tipping operating profit for the chips division to be at 3 trillion won.

($1 = 1,113.3000 won)

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