Tuesday, October 11, 2016

Welcome To The Republican Civil War

By Rich Lowry
The New York Post
October 11, 2016

Less than a month before the election, the Republican speaker of the House says he won’t defend or campaign with his party’s presidential nominee. The nominee has responded by slamming the speaker on Twitter, and his campaign manager is accusing some (unnamed) elected Republicans of sexual harassment against her.

The Donald Trump campaign and the Republican Party show every sign of entering into an ugly death spiral. The revelation of the Trump “Access Hollywood” tape last Friday occasioned a historic rupture, with elected Republicans around the country denouncing Trump and calling on him to step aside.

Any hope of Trump turning a corner with his relatively competent second debate was dashed when House Speaker Paul Ryan told his colleagues he’s concentrating on saving his House majority as a check on Hillary Clinton.

It’s a fact that one out of two major-party presidential campaigns fail. Some fail badly.

But the GOP may be about to experience an unprecedentedly wrenching debacle because its nominee is an ideological interloper with no impulse control or regard for political norms. No matter how bad or weird the campaign seems now, it could get worse and stranger still.

Bob Dole was a horrible presidential candidate and not a particularly conservative Republican. But he was an honorable man who had a loyalty to things bigger than himself, including his political party. When Republicans had to cut him loose in 1996 to try to save their congressional majorities, he was a good and loyal solider.

Does anyone expect that of Donald Trump? His investment in the party is nil, and he takes all slights personally, whether they’re from Alicia Machado or the speaker of the House.

The “Access Hollywood” tape was a tipping point. In isolation, perhaps Republicans could have looked beyond it. But after so many controversies and interventions and alleged pivots, the dam finally broke.

Trump depended on brute force more than on persuasion or personal relationships to unite the party. So many Republicans were tentatively and insincerely aboard the Trump Train to begin with. They went through the motions in public, while conceding in private Trump’s failings and their worries about the consequences of his candidacy.

None of them will ever be up for profile-in-courage awards. Not coincidentally, they broke with Trump as the polls began to slide the wrong way, with the latest NBC/WSJ poll showing him down by double digits. (Nothing pricks a politician’s conscience like bad poll numbers).

The split over the last few days creates the predicate for a GOP internal war until November and beyond. It will pit swing-state Republicans and those who want to save them, like Paul Ryan, against Trump’s hard-core base and the balance of ordinary partisan Republicans who want the party to fight even harder for Trump.

The disunity itself will be damaging and dispiriting.

There will be every incentive for Trump to exacerbate rather than try to smooth over, or at least look past, the divide. Hitting back at his party critics energizes his fans and, if he’s headed for a loss in November, it sets up a stabbed-in-the-back narrative after the election.

So his party detractors are insiders, quislings, and to believe his campaign manager Kellyanne Conway, sexual harassers.

The period before the first presidential debate when Trump pulled close to a tie with Clinton feels like an eon ago. He had come back with a month of relative discipline beginning in mid-August that now looks like a parenthesis in an otherwise recklessly selfish campaign.

That Trump would become a poisonous wedge issue within the GOP was always a plausible worst-case scenario. Now, it is upon us.

Trump supporters in the primaries wanted to “burn it down.” They may well be able to point to the wreckage of the post-November GOP as an indicator of their smashing success.

Article Link To The New York Post:

The New Cold War's Only Just Begun

From propaganda to missile deployments, Russian leader Vladimir Putin is testing Obama’s resolve—while claiming to be America’s victim.

By Michael Weiss
The Daily Beast
October 11, 2016

In one of the better studies of Putinology to appear in the last year, Mikhail Zygar’s All the Kremlin’s Men does much to upend the conventional wisdom about U.S.-Russian relations, particularly as offered by the American architects of those relations over the past eight years.

“Vladimir Putin,” Zygar writes, “did not like the new American president from the start. For him, Barack Obama was both soft and intractable… Paradoxically, Obama, the most idealistic and peace-loving U.S. president in living memory, became a symbol of war in Russia, a target for Russian state propaganda and racist jokes, and a hate figure for millions of patriotic Russians. He was caricatured as an ill-fated enemy doomed to be defeated by Vladimir Putin.”

Surveying some much-buried news over the last seven days, one begins to appreciate the weight of this grim appraisal.

On Friday, Secretary of State John Kerry called for Russia to be investigated for war crimes in Syria, following extensive documentation of Russian warplanes targeting civilian structures such as hospitals and schools with incendiary munitions and now heavy-duty bunker busting bombs.

Samantha Power, the U.S. ambassador to the United Nations, has accused Moscow of abetting “barbarism” in Syria; and Washington has also accused the Kremlin of purposefully bombing a UN aid convoy in northern Syria last month, a claim which open source investigation has corroborated.

Also, on Friday, Estonia’s security establishment reported that Russia is deploying Iskander-M ballistic missile systems to the Kaliningrad exclave, a long-bruited contingency that was first introduced by Russia’s then-placeholder president, Dmitry Medvedev, on Nov. 5, 2008—exactly a day after Obama’s election.

The Iskander-M, capable of carrying both conventional and nuclear warheads, poses a direct threat to U.S. allies in Eastern Europe, and will be arriving at a time when Russia’s deployed nuclear arsenal has now outstripped America’s by 429 warheads. As The Daily Beast reported, this is in violation of the 2011 New Strategic Arms Reduction Treaty, not so long ago considered one of the finer ornaments of U.S. diplomacy. (The Iskander intelligence coincided with the alleged violation of Estonian and Finnish airspace by Russian Su-27 jet fighters.

But Russia hasn’t only been amassing a new arsenal in Europe.

In the fortnight following a collapsed U.S. and Russian brokered “ceasefire” for Syria, Putin has doubled supply runs by air and sea of materiel intended to bolster the Assad regime, according to Reuters. In all likelihood, the supplied are intended to help it and its Iranian proxies retake rebel-held eastern Aleppo.

The cargo has included the revamped S-300VM antiaircraft missile system, which can (theoretically) take out U.S. warplanes should any come within range. The Kremlin’s chief media mouthpiece, the U.S.-sanctioned Dmitry Kiselyov, who hosts the tabloid propaganda show News of the Week, was straightforward: “We’ll shoot them down.”

Russian Defense Ministry spokesman Maj. Gen. Igor Konashenkov has all but threatened to do just that, amid recent disclosures that the Obama administration may be mulling a military confrontation with the Assad regime, as recommended by the Joint Chiefs of Staff and CIA, both of which fear that the fall of Aleppo would exacerbate U.S. terrorism threats.

In response to White House spokesman Joshua Earnest’s questioning Russia’s need for advance anti-aircraft deterrent when Russia’s year-long intervention in Syria was meant to target ISIS, whose aerial component has yet to announce itself, the Twitter account of the Russian embassy in the U.S. posted a mocking image responding, “Because you never really know what kind of assistance terrorists might get.”

After coalition aircraft accidentally bombed Syrian soldiers in Deir Ezzor, Russian officials have openly taken to accusing the United States of supporting ISIS in Syria, whereas this campaign of conspiratorial disinformation had previously been more characterized by whispers and nudges, principally in the Baghdad operations room where Russian army officers and spies work cheek-by-jowl with Iranian counterparts and with Iranian-built Shia militias.

Vladimir Putin either means business or wants to project the image of a man who does.

He suspended his country’s cooperation in a 16-year-old plutonium clean-up pact, as well as a 2013 nuclear research and development agreement and another bilateral program reconfiguring reactors to obviate their use of weapons-grade uranium.

Putin has demanded, as the price for restoring at least the first frozen accord, that Washington end all sanctions against Russian officials; pay reparations for any losses sustained from those sanctions as well as retaliatory ones imposed by Russia against U.S. entities; cancel the Magnitsky Act, a landmark human rights law passed in 2012 aimed at penalizing corrupt and murderous Russian officials; reduce NATO personnel forces to levels they were as of 2000; and essentially rewrite the original radioactive disposal deal so America bears the brunt of the responsibility for it.

In response to what was, even by Putin’s standards, a risible attempt at extortion, the Russian opposition’s Leonid Volkov wrote on Facebook: “He should have asked for Alaska back, eternal youth, Elon Musk and a ticket to Disneyland.”

Adding to this world-hum of Cold War paranoia and hyperbole, Putin’s state media organs, including TV Zvezda, a channel owned and operated by the Russian defense ministry, have begun speculating that the roiling conflict in the Middle East could lead to imminent nuclear war with the West.

Recently, a Russian weatherman on state-owned Rossiya-24 outlined ways in which a Russian nuclear strike in Nebraska could strategically cripple U.S., Canadian, and Mexican communications.

Russia’s Ministry of Emergency Situations has announced that 40 million citizens will take part in a “fire drill,” popularly and traditionally seen as precautionary measures (such as they are) in the event of a nuclear war, an event which Kiselyov, on News of the Week last night, said may well follow “impudent behavior.”

That would seem to constitute everything and anything America does or does not do of late. And what a turn for Obama, who has spent the last eight years insisting that the “Cold War is over” only to spend the eve of his departure witnessing its renascence.

Article Link To The Daily Beast:

OPEC Is In It's Death Throes

The latest bluster by Saudi Arabia won't scare America’s oil producers – or solve its own existential crisis.

Foreign Policy
October 11, 2016

Like the boy who cried wolf, 2016 might become the year of the oil producers’ cartel that cried “output cut.” If that’s right, and the U.S. shale industry becomes the oil market’s marginal producer, Middle Eastern petro-states and, above all, Saudi Arabia are in for lean and hard years ahead.

In February, OPEC called for an oil production “freeze” to raise crude prices in conjunction with Russia. But this effort collapsed at a meeting in Doha, Qatar, in April when Iran refused to join any freeze in order to regain the pre-2012 production levels of close to 4 mbpd it enjoyed before U.S. and European Union nuclear sanctions were imposed, following the removal of certain sanctions after the 2015 nuclear deal. A similar proposal failed at the OPEC meeting in June, again following Iran’s refusal, despite outreach by the Qataris.

Having dashed market hopes and crude prices in February, April, and June, OPEC again called for a form of output cut on Sept. 28 at an extraordinary meeting in Algiers. Markets bit on the news, with Brent prices rising sharply by about 15 percent in the following week, from $46 to $52 per barrel.

So should markets now take OPEC seriously? Can action by the cartel sustain higher crude prices over the long term? Probably not. Like a desert mirage, the image of an OPEC resurrection vanishes when approached.

OPEC, which has always been dominated by Saudi Arabia, went into hibernation in the summer of 2014. The massive fall in oil prices from over $100 per barrel in early 2014 to under $30 by January 2016 was caused primarily by then-Saudi Minister of Petroleum Ali al-Naimi’s strategy to gain market share for the kingdom and hurt the U.S. tight oil (or “shale”) industry by allowing the market, not OPEC interventions, to set prices.

The results have been mixed. While Riyadh has cranked up its production from mid-2014 to today by over a million barrels a day (to a peak of 10.7 mbpd in August this year), its fiscal position has taken a serious blow, with the budget deficit rising from 3 percent of GDP to 16 percent in 2015, given how about 90 percent of government revenue comes from oil.

As for U.S. shale, the industry has been more resilient than Saudi Arabia expected, as I suggested in my New Year’s prediction. The rig count is down, and only the most profitable new wells — for example in part of the Permian Basin in Texas — can boast of breaking even at less than $35 per barrel. However, U.S. oil production, of which shale accounts for about half, is on track to produce an average of 8.7 mbpd this year, down from a peak of 9.5 mbpd in 2015. Down, but by no means out.

The resilience of U.S. shale makes the argument that OPEC has experienced a resurrection a fragile claim. The cartel can probably raise prices in the short term through an output cut, but it will only be so long, perhaps already by mid-2017, before the U.S. shale industry revives and grabs any market share conceded by OPEC in a higher price environment. This will ultimately bring prices lower again, all else being equal.

The OPEC resurrection claim becomes more tenuous when one considers the Algiers announcement, which is only an “agreement to agree” to production cuts at the next OPEC meeting on Nov. 30. Inauspiciously, the specific cuts individual members must make haven’t been agreed upon, but kicked down the road for discussion by a “high-level committee.”

Moreover, to reach a provisional agreement in Algiers, Naimi’s successor, Saudi Arabian Energy Minister Khalid al-Falih, had to exempt Iran, Libya, and Nigeria from any participation in production cuts. This represents a major geopolitical concession by Riyadh to Tehran, arguably brokered by Moscow, which will not be an easy position to sustain, given Saudi-Iranian animosity.

The provisional deal in Algiers leaves Saudi Arabia having to do most of the heavy lifting. While the kingdom’s production will in any case fall from 10.7 mbpd by about 300,000 barrels per day over the coming months, as seasonal production winds down, it would need to cut substantially more to balance the market. The production target OPEC named in Algiers implies a cut of at least 700,000 barrels. (While officially, OPEC wants to cut from 33.2 mbpd in August 2015 to a range of 32.5 to 33 mbpd, unofficial data suggest actual OPEC production in September was 33.6 mbpd.)

Within OPEC, while other Gulf Co-Operation states, namely Kuwait and the United Arab Emirates, may be prepared to make a small cut to their production, key producers like Iraq and Venezuela are in too difficult a fiscal position to agree to any major cut. They will more likely agree to a freeze, given that they are already close to maximum production (4.4 and 2.1 mbpd, respectively).

Outside OPEC, Russia reached a production record of 11.1 mbpd in August, eclipsing Soviet levels. Being so close to the maximum anyway, Russia has little to lose by supporting the OPEC output cut and agreeing not to raise production further. Yet the Kremlin is unlikely to impose actual cuts on the range of oil companies that operate in the country.

So why did Saudi policymakers blink and commit themselves either to sponsoring another failed OPEC deal, or having to take the hit for the vast majority of the actual production-cutting to make the deal work?

In the short term, it seems Riyadh’s fiscal position was under such pressure from low oil prices that something had to give. While the kingdom has eased the fiscal pressure by starting to issue sovereign debt, the burn rate through its foreign reserves has been relentless (from about $740 billion in mid-2014 to $550 billion today) as it has attempted to defend the currency in the face of substantial capital flight from the country since the oil price crash in 2014.

In the long term, Saudi Arabia’s energetic and ambitious young deputy crown prince, Mohammed bin Salman, appears to see beyond the immediate threat of U.S. shale to the Saudi oil industry. He is focused on the broader need for major reform of the Saudi economy. As OPEC’s first secretary-general Ahmed Zaki Yamani said in the 1970s, “The Stone Age didn’t end because we ran out of stones.” Climate change will plainly be a major problem of the 21st century, and the world is moving away from fossil fuels: game over for an unreformed Saudi Arabia.

Algiers wasn’t a sign of life in OPEC, but a sign of desperation. In truth, there’s little the cartel can do beyond the short term to generate a durable rise in prices from a supply perspective, since shale technology can’t be un-invented. Saudi Arabia will face hard years ahead as the oil market increasingly looks to U.S. shale, not OPEC, as a handrail to oil prices on the supply side. However, this might well be the jolt that Salman needs to push through painful but necessary reforms. Good luck to him.

Article Link To Foreign Policy:

The Political Logic Of Hard Brexit

By Jacek Rostowski
Project Syndicate
October 11, 2016

Little more than three months after the United Kingdom’s decision in June to leave the European Union, Brexit politics are careening out of control in the UK. An almost revolutionary – and very un-British – dynamic has taken hold, and, as British Prime Minister Theresa May indicated in her “Little Englander” speech at the Conservative Party conference this month, the UK is heading for a “hard Brexit.”

That outcome would run counter to British public opinion, which remains moderate on the question of fully breaking with the EU. According to a July BBC/ComRes poll, 66% of respondents considered “maintaining access to the single market” to be more important than restricting freedom of movement. In an ICM poll the same month, only 10% of respondents said they would prioritize ending free movement over maintaining access to the single market, while 30% viewed the two as equally important and 38% considered maintaining full access to the single market the priority.

These findings will surprise only those who buy into the narrative that the West is confronting a large-scale xenophobic revolt against the elites. While the “Leave” camp certainly included many hard Brexiteers whose primary motivation was to end free movement, it also comprised people who believed Boris Johnson, the former London mayor and current foreign secretary, when he promised (as he still does) that the UK could have its cake and eat it.

In fact, despite Leave’s large faction of angry white working-class voters, middle-class trade-friendly Brexiteers, together with the “Remain” camp, constitute a clear majority of everyone who voted in the June referendum. Under normal circumstances, one would expect the government’s policy to reflect the majority’s preference, and to aim for a “soft Brexit.” Instead, a classic revolutionary pattern has emerged.

According to the Brexiteers, the people have spoken, and it is the government’s duty to deliver a “true” Brexit. But the government must overcome the spoilers, such as senior civil servants and the Remain majority in the House of Commons, who favor a Brexit in name only – a “false” version that could never deliver the benefits of the real thing.

In this revolutionary narrative, the worst elements of Europe’s political tradition have crowded out British pragmatism. What a majority of British voters want is considered irrelevant. With a hard Brexit, the Leave camp can avoid being seen by voters as the supplicant in negotiations with the EU – which it inevitably would be, no matter how often May denies it.

The EU will have the upper hand in negotiations for two simple reasons. First, the UK has more to lose economically. While other EU countries’ total exports to the UK are double what the UK exports to the rest of the bloc, its exports to the EU amount to three times more as a share of its GDP. Likewise, the UK has a services surplus, which matters far less to the rest of the EU than it does to Britain.

Second, just like the EU’s Comprehensive Economic and Trade Agreement with Canada, any negotiated arrangement between the EU and the UK will have to be unanimously accepted by all EU member states. Thus, the negotiation will not really be between the UK and the EU, but rather among EU members. The UK, without a presence at those talks, will simply have to accept or reject whatever the EU offers. This would be true even if the UK pursued a prepackaged arrangement such as membership in the European Economic Area or the EU Customs Union; it will be all the more true if the UK seeks a “bespoke” deal, as May has indicated she will.

If British voters recognized their country’s weak negotiating position, the Brexiteers, who won the referendum on their promise to “take back control,” would face a political disaster. Walking away from substantive negotiations is the simplest way to avoid such an embarrassing unmasking.

Thus, politically, a hard Brexit is actually the soft option for the government. Economically, however, hard Brexit will come at a high price, which the UK will have to pay for years to come.

The only consolation is that Brexit’s revolutionary momentum may not be sustainable. Shortly after the Leave camp labeled bureaucrats in her Her Majesty’s Civil Service “enemies of the people” – a typical statement in the early stages of a revolution – pro-Brexit Foreign Trade Minister Liam Fox derided British exporters, calling them “too lazy and too fat” to succeed in his brave new free-trading Britain.

Such rhetoric is a symptom of desperation. It carries echoes of the declining years of the Soviet Union under Leonid Brezhnev, when Marxist apologists insisted that there was nothing wrong with communism, except that humanity wasn’t yet mature enough for it. If developments continue at this pace, the revolutionary zeal we see among British politicians may burn itself out before “hard Brexit” is consummated.

Article Link To Reuters:

Nobel Economics Versus Social Democracy

By Avner Offer
Project Syndicate
October 11, 2016

Of the elites who manage modern society, only economists have a Nobel Prize, whose latest recipients, Oliver Hart and Bengt Holmström, have just been announced. Whatever the reason for economists’ unique status, the halo conferred by the prize can – and often has – lend credibility to policies that harm the public interest, for example by driving inequality and making financial crises more likely.

But economics does not have the field entirely to itself. A different view of the world guides the allocation of about 30% of GDP – for employment, health care, education, and pensions – in most developed countries. This view about how society should be managed – social democracy – is not only a political orientation; it is also a method of government.

Standard economics assumes that society is driven by self-seeking individuals trading in markets, whose choices scale up to an efficient state via the “invisible hand.” But this doctrine is not well founded in either theory or practice: its premises are unrealistic, the models it supports are inconsistent, and the predictions it produces are often wrong.

The Nobel Prize in economics was endowed by Sweden’s central bank, the Riksbank, in 1968. The timing was not an accident. The new prize arose from a longstanding conflict between the interests of the better off in stable prices and the interests of everybody else in reducing insecurity by means of taxation, social investment, and transfers. The Royal Swedish Academy of Sciences awarded the prize, but Sweden was also an advanced social democracy.

During the 1950s and 1960s, the Riksbank clashed with Sweden’s government over the management of credit. Governments gave priority to employment and housing; the Riksbank, led by an assertive governor, Per Åsbrink, worried about inflation. As recompense for restrictions on its authority, the Riksbank was eventually allowed to endow a Nobel Prize in economics as a vanity project for its tercentenary.

Within the Academy of Sciences, a group of center-right economists captured the process of selecting prizewinners. The laureates comprised a high-quality sample of economics scholarship. An analysis of their influence, inclinations, and biases indicates that the Nobel committee kept up an appearance of fairness through a rigid balance between right and left, formalists and empiricists, Chicago School and Keynesian. But our research indicates that professional economists, on the whole, are more broadly inclined toward the left.

The prize kingmaker was Stockholm University economist Assar Lindbeck, who had turned away from social democracy. During the 1970s and 1980s, Lindbeck intervened in Swedish elections, invoked microeconomic theory against social democracy, and warned that high taxation and full employment led to disaster. His interventions diverted attention from the grave policy error being made at the time: deregulation of credit, which led to a deep financial crisis in the 1990s and anticipated the global crisis that erupted in 2008.

Lindbeck’s concerns were similar to those of the International Monetary Fund, the World Bank, and the US Treasury. These actors’ insistence on privatization, deregulation, and liberalization of capital markets and trade – the so-called Washington Consensus – enriched business and financial elites, led to acute crises, and undermined emerging economies’ growth.

In the West, the priority accorded to the individualist self-regarding norms underlying the Washington Consensus created a nurturing environment for growth in corruption, inequality, and mistrust in governing elites – the unintended consequences of rational-choice, me-first premises. With the emergence in advanced economies of disorders previously associated with developing countries, Swedish political scientist Bo Rothstein has petitioned the Academy of Sciences (of which he is a member) to suspend the Nobel Prize in economics until such consequences are investigated.

Social democracy is not as deeply theorized as economics. It constitutes a pragmatic set of policies that has been enormously successful in keeping economic insecurity at bay. Despite coming under relentless attack for decades, it remains indispensable for providing the public goods that markets cannot supply efficiently, equitably, or in sufficient quantity. But the lack of formal intellectual support means that even nominally social-democratic parties do not entirely understand how well social democracy works.

Unlike markets, which reward the wealthy and successful, social democracy is premised on the principle of civic equality. This creates a bias for “one-size-fits-all” entitlements; but there have long been ways to manage this constraint. Because economics appears to be compelling, and because social democracy is indispensable, the two doctrines have mutated to accommodate each other – which is not to say that their marriage is a happy one.

As with many unhappy marriages, divorce is not an option. Many economists have responded to the failure of their discipline’s core premises by retreating into empirical investigation. But the resulting validity comes at the cost of generality: randomized controlled trials in the form of local experiments cannot replace an overarching vision of the social good. A good way to begin acknowledging this would be to select Nobel Prize recipients accordingly.

Article Link To Project Syndicate:

And The Winner Is...Bill Clinton

Trump is the consequence of the culture both Clintons created.

By William McGurn
The Wall Street Journal
October 11, 2016

Sunday night’s presidential debate did clarify one thing: Whatever happens on Election Day, Bill Clinton wins.

If Hillary Clinton is elected, he will return to the White House—this time as First Spouse, with all the perks and none of the responsibilities.

Yet Mr. Clinton wins even if his wife loses. Because a Trump victory would mean the American people have bought the argument Bill Clinton has been selling ever since that first bimbo eruption: So long as a man has never pretended he was a choirboy, his sexual life has nothing to do with his fitness for office.

Even perjury doesn’t matter under this standard. Throughout the 1990s America was constantly lectured that Mr. Clinton was guilty only of “lying about sex,” which apparently gives you a pass from that tell-the-truth-the-whole-truth-and-nothing-but-the-truth thing. Nina Burleigh, who once covered the Clinton White House for Time, was probably more candid about some of what was behind this when, in the midst of President Clinton’s sex travails she told a Washington Post reporter, “I would be happy to give him [oral sex] just to thank him for keeping abortion legal.”

Now it is Mr. Trump who invokes the Bill Clinton standard. Just before the weekend, in what may be the first of more to come, an NBC tape emerged in which Mr. Trump is bragging—in language more at home in Hustler than in the mouth of a GOP presidential nominee—about how he pushes himself on married women. In response, the national commentariat pronounces itself shocked.

But why should anyone be surprised? After all, in “Trump: The Art of the Deal” this same man wrote, “If I told the real stories of my experiences with women, often seemingly very happily married and important women, this book would be a guaranteed best seller.”

Even so, the Trump tape unleashed new waves of neo-Victorian indignation. Once again, it was not enough to denounce The Donald. While Trump critics didn’t quite call those who would still vote for him deplorable, they came awfully close. A number questioned Mike Pence’s decency in staying on the ticket.

In other words, now that we know how coarse Mr. Trump can be, the only proper course is to reject him. Never mind that in some ways this would be the ultimate phoniness, given that, like Mr. Clinton, Mr. Trump’s extramarital sex life has not been a secret—though Mr. Clinton has certainly lied about it more often.

It also misreads the argument for Mr. Trump. Notwithstanding some evangelical pronouncements about Mr. Trump’s relationship with Jesus, it’s not likely that the many decent Americans who support Mr. Trump will ever confuse him with St. Paul. To the contrary, their calculation is pretty basic: Given the reality that either Mrs. Clinton or Mr. Trump will sit in the Oval Office come January, they’d rather have the candidate who will not use the entire power of the federal government to ram through rules and policies hostile to their beliefs.

Here Mrs. Clinton, to her credit, is unusually frank about what these priorities might be. Plainly they will include an activist Supreme Court that she may get to shape for a generation to come, one that will continue to unearth hitherto hidden constitutional rights as it usurps the right of a free people to make these decisions through their elected representatives. These priorities will also mean more diktats such as the Health and Human Services mandate requiring Catholic nuns to provide contraceptives to employees.

Does anyone believe a Trump administration would be anywhere near as zealous as a Hillary Clinton administration in pursuing these issues? And given the alternative of a woman who has never told the truth when a lie will do, is it really obvious that it’s beyond all morality to opt for the vulgar man who might even help revive the economy and help opportunity for millions?

Today we forget how many times it looked as if Bill Clinton’s career would be ended by his sexual indiscretions. In 1992, when he was seeking the Democratic nomination for president, Mr. Clinton put the case for him this way when he found himself pressed about marital infidelity in that now-infamous “60 Minutes” interview:

“I know it’s an issue, but what does that mean? That means that 86% of the American people either don’t think it’s relevant to presidential performance or look at whether a person, looking at all the facts, is the best to serve.”

Six years later, Americans learned President Clinton had had a sexual relationship with an intern. Once again Mr. Clinton’s initial instinct was to lie about it, publicly and defiantly. The dominant mood was he would have to resign.

But he didn’t resign. Instead, he fought back. And he won, largely because he and his wife refused to abide by norms about the decent thing to do in such a circumstance.

In this sense, Donald Trump is the new Bill Clinton. And if he does pull off a win in November, it will be in good part because of a culture that Hillary Clinton did much to create.

Article Link To The Wall Street Journal:

5 Takeaways From Trump-Clinton Debate

From 2005 video to emails, rivals engage in fiery attacks in town-hall event.

By Aaron Zitner
The Wall Street Journal
October 15, 2016

Donald Trump and Hillary Clinton met onstage Sunday for the second presidential debate. Here are some top takeaways from the event.

1. Civility has crumbled.

The presidential primaries this year featured plenty of insults. But never in a presidential debate has one candidate promised to have a special prosecutor investigate his opponent over “lies and deception” if elected, as Mr. Trump did on Sunday. Mrs. Clinton, for her part, leveled an extended attack on her opponent as unfit for office.

“You’d be in jail,” Mr. Trump told Mrs. Clinton about the course he would take in office.

“Anything to avoid talking about your campaign,” Mrs. Clinton said at one point, “and the way it’s exploding and the way Republicans are leaving you.”

The bitter exchanges made past debate controversies seem like quaint artifacts of a distant era. When Democrat Al Gore sighed during his opponent’s comments in 2000, or when Republican George H.W. Bush checked his watch in 1992, it was considered a violation of courtesy. The continual interruptions, insults and accusations leveled on Sunday marked an entirely new type of political conversation.

The voters and future candidates will have to decide whether this is now how campaigns are conducted, or whether the unusual profiles of Mr. Trump and Mrs. Clinton mark 2016 as uniquely ugly.

2. Character was the top issue.

Remarkably, plans for the economy and job-creation took a back seat in the debate. Foreign policy was far more prominent. But character was the issue at the center of the discussion.

Mrs. Clinton sought to disqualify Mr. Trump, saying he had denigrated U.S. soldiers, immigrants, Muslims and women. “This is who Donald Trump is … The question our country must answer is that this is not who we are,” she said.

Mr. Trump worked with equal force to disqualify Mrs. Clinton, saying she showed “bad judgment’’ by backing the Affordable Health Act and the administrations immigration and foreign policies. “The thing that you should be apologizing for are the 33,000 emails that you deleted, and that you acid-washed,” he said, referring to messages on the private email server Mrs. Clinton used as secretary of state that she deemed to be personal, rather than official business that must be preserved.

3. Mrs. Clinton appealed to women, Mr. Trump to voters who want change.

Mrs. Clinton talked continually of women and children, drawing on the recording that surfaced on Friday of Mr. Trump making lewd comments.

“We have seen him insult women. We’ve seen him rate women on their appearance, ranking them from one to ten,” she said. Her remarks seemed geared to push suburban women and other important swing groups away from Mr. Trump.

One of Mr. Trump’s most consistent themes was that Mrs. Clinton had done little during her many years in public office. “She’s been there for 30 years,” he said, asserting that Mrs. Clinton hadn’t delivered on pledges to create jobs in upstate New York or to help African-Americans as a senator. “It’s just words, folks. It’s just words,” he said of her promises.

4. Mrs. Clinton talked about unity, Mr. Trump about security.

It wasn’t a subtle dig at Mr. Trump when Mrs. Clinton started the debate by promising the nation that “we are going to respect each other, lift each other up … I want us to heal our country and bring it together.” Mrs. Clinton was trying to cast herself as the candidate of unity and Mr. Trump as the agent of divisiveness.

Mr. Trump, asked to respond to his recently surfaced comments from 2005 about women, turned the subject quickly to national security. “I will knock the hell out of ISIS. We are going to defeat ISIS,” he said, casting himself as the candidate of strength.

5. The debate broke news.

We now know how Mr. Trump plans to handle the two recent controversies surrounding his campaign.

Mr. Trump acknowledged directly for the first time that the $916 million loss he declared on his 1995 tax return, revealed earlier this month, allowed him to avoid paying personal federal income taxes in some years. He said he wasn’t the only one to use the tax code this way.

“Of course I do,” he said of using losses to avoid taxes. “So do all of her donors, or most of her donors,” Mr. Trump said of Mrs. Clinton.

Asked about his newly disclosed vulgar comments about women, Mr. Trump again drew Mrs. Clinton into his response. Declaring his own comments “locker room talk,” Mr. Trump cited women who had accused Bill Clinton of sexual misconduct.

“If you look at Bill Clinton, far worse,” he said. “Mine are words, and his was action...Bill Clinton was abusive to women. Hillary Clinton attacked those same women and attacked them viciously.”

Mrs. Clinton, for her part, was forced again to defend herself from accusations that she had mishandled classified information in the course of using a private email server as secretary of state. “That was a mistake, and I take responsibility,’’ she said. But she said there was no evidence “that any classified material ended up in the wrong hands.”

Article Link To The Wall Street Journal:

'Clean Coal' Is Far From Real

By Editorial Board
The Bloomberg View
October 11, 2016

“There is a thing called clean coal,” Donald Trump said during Sunday night’s debate. But there isn’t -- and won’t be for a considerable time, if ever.

Presumably, Trump was referring to so-called carbon-capture technology, which is designed to collect and dispose of coal plants’ carbon-dioxide emissions before they escape into the atmosphere, where they trap heat. That technology may be on the drawing board and in a few small-scale demonstration projects, but it’s not close to being ready for widespread use at an affordable price.

The one U.S. plant that's being designed to use carbon capture, now under construction in Kemper County, Mississippi, is two years behind schedule and $4 billion over budget. A similar, heavily subsidized project in Saskatchewan has demonstrated that outfitting the world’s power stations with the technology could cost upward of $17 trillion.

In the near future, carbon capture promises to be of little help in the fight against climate change -- especially compared with natural gas, the increasing supply of renewable power, and the clean energy that nuclear plants produce.

By insisting otherwise, Trump betrays the coal miners.

Trump blames Democrats and the U.S. Environmental Protection Agency for putting miners out of work by shutting down coal-fired power plants. That charge is inflated: The decline in coal jobs in the U.S. has mainly to do with better mining technology (reducing the number of workers), the worldwide collapse in coal prices, and competition from cheaper, cleaner sources of energy such as solar, wind and natural gas.

It’s true that, to some extent, the shift away from coal also reflects tighter federal regulations -- first to limit emissions of nitrogen and sulfur oxides, mercury and other risks to public health, and more recently to limit greenhouse gases. Those rules have made coal-fired power more expensive, and if the EPA’s carbon-dioxide limits survive judicial review, they may push states to close some coal plants. This will cost some number of American jobs. But it will also save many more lives, reducing asthma and other respiratory diseases around the world.

It’s simply wrong to suggest that the regulations could be rolled back at no cost, because coal plants could suddenly operate in a way that emits no carbon dioxide. The way to help unemployed coal miners is with job training, local economic development and direct financial assistance, not with impossible promises.

Article Link To The Bloomberg View:

A New Worry For Clinton: Trump's Struggles May Depress Democratic Voter Turnout

By James Oliphant
October 11, 2016

Hillary Clinton's campaign is confronting an emerging risk to her presidential ambitions - if Donald Trump continues to trail her in opinion polls many Democrats may simply stay at home on Election Day.

Without enough popular support, Clinton would enter the White House lacking the political capital she would need to drive through her agenda. In the worst-case scenario it could cost her the presidency if Republicans turn out in big numbers on Nov. 8.

Clinton, the Democratic nominee, has spent much of her campaign sounding the alarm over the prospect of a President Trump. She has struggled to lay out a compelling vision for her presidency and has failed to excite key constituencies, including millennials, minority voters and liberal Democrats.

Opinion polls show that many voters are backing Clinton primarily to stop Trump, the Republican nominee, from getting into the White House. If they believe he has no hope of winning, then what would their motivation be to turn up at the polls?

In a recent Reuters/Ipsos poll about half of all Clinton supporters said they were backing her to keep Trump from winning. By contrast, just 36.5 percent said it was because of Clinton’s policies and just 12.6 percent said it was because they like her personally.

“Turnout is correlated with levels of competition,” said Michael McDonald, an elections expert at the University of Florida. “The higher the competition, the higher the turnout.”

The young Americans, blacks, Latinos, and low-income voters who make up much of the Democratic base often need to feel motivated by a particular candidate or issue to turn out, McDonald said, as was the case with President Barack Obama’s candidacy in 2008.

Clinton’s campaign has long worried about voter complacency and has at every turn pushed the notion that the race is close and that Trump is unfit to be president. With her lead growing, that task grows more difficult.

A Reuters/Ipsos 50-state survey (carried out before Friday's release of a video tape in which Trump makes vulgar remarks about women) gave the Democratic nominee a 95 percent chance of winning the election. An NBC/Wall Street Journal poll on Monday showed Clinton with an 11-point lead nationally over Trump.

Low Democratic voter turnout could leave Trump an opening in swing states. And should Clinton win the election, a slim margin of victory could compound the challenge she will face in trying to govern a deeply divided nation.

Clinton’s campaign, however, will be able rely on an extensive and well-funded voter mobilization effort, one that is expected to give her an edge over Trump’s smaller organization.

Moving Past Trump

The Clinton campaign insisted on Monday the race will remain tight. It sent out a new fundraising pitch to supporters, contending that Trump is “an authoritarian threat” for saying at Sunday's presidential debate that she would be in jail if he was president.

Clinton must also contend with anger among liberal Democrats over leaked excerpts of paid speeches she made to banks and big business. The excerpts appeared to confirm their fears about her support for global trade and tendency to cozy up to Wall Street.

Some liberals have also been waiting for Clinton to make a more positive case for her own presidency.

“This election cannot be just a referendum on Donald Trump,” said Arun Chaudhury, creative director of Revolution Messaging, a left-leaning consulting firm that oversaw the online media operation of former Clinton rival, Senator Bernie Sanders.

Clinton’s central message, he said, has been that “everyone has to step up and stop Donald Trump from being president, not step up and make Hillary Clinton president.”

“The best campaign messages are comparative in nature,” said Ben Turchin, a Democratic pollster who worked for Sanders’ campaign. “She can win by a bigger margin by giving a little more of an affirmative case for her presidency.”

While Clinton frequently goes on the attack against Trump, calling him racist, sexist and dangerous, her campaign insists it has been trying to get a positive, policy-oriented message out.

“It is hard in this campaign when you’re running against him and he generates so much controversy and therefore headlines," Jennifer Palmieri, Clinton’s communications director, told Reuters. “It’s hard to break through on any one day, and that’s why we just have to keep at it.”

The two candidates’ central campaign slogans reflect their differing appeals to the electorate. Where Trump’s is the change-oriented “Make America Great Again,” Clinton’s is a more stolid “Stronger Together,” which speaks to rallying existing Democratic voters around her candidacy - and is a harder sell.

Clinton’s campaign seems to have recognized the need for some adjustments to its message.

Since the presidential race intensified last month, Clinton has returned to the style of campaigning that helped her win early states in the Democratic nominating contests, holding smallish events focused on issues of most concern to core Democratic constituencies such as women and young voters.

Turchin, the former Sanders pollster, said Clinton’s efforts at fashioning a positive message were improving, although she is still having difficulty attracting the support of 18-to-34 year-old voters, among others.

"You’ve got to make the hard case over and over again,” he said. "She’s got to convince people she shares their values.”

Article Link To Reuters:

Clinton Weighed Reinstating Glass-Steagall, Wikileaks Emails Show

By Amanda Becker and Luciana Lopez
October 11, 2016

A longtime political adviser to Hillary Clinton last year urged her presidential campaign to support a new version of a law that separated commercial and investment banking to avoid antagonizing the Democratic Party's progressive wing, according to emails published by Wikileaks on Monday.

Mandy Grunwald, an outside adviser to Clinton, urged Clinton's policy team in October 2015, just days before a Wall Street policy rollout, to consider endorsing a new version of the Glass-Steagall Act, according to an email reviewed by Reuters.

The Glass-Steagall Act was a Depression-era law that prohibited commercial banks from engaging in risky trading activities. The 1933 law was repealed in 1999 during the presidency of Bill Clinton when he passed legislation removing barriers between commercial banks, investment banks and insurance companies.

Many Democratic activists believe that reinstating the Glass-Steagall law and breaking up large financial institutions would help prevent future financial crises such as the one that rocked the U.S. economy in 2008.

Grunwald said if Clinton did not back a new Glass-Steagall, she risked alienating liberal U.S. Senator Elizabeth Warren of Massachusetts, an outspoken critic of Wall Street who is popular in the left wing of the Democratic Party.

The Clinton campaign would neither confirm nor deny the authenticity of the latest batch of hacked emails of Clinton campaign Chairman John Podesta released by Wikileaks.

The U.S. government last week formally accused Russia of a campaign of cyber attacks against Democratic Party organizations, a charge Russia has denied. As a result, Clinton campaign officials and supporters have warned that such email releases could include fraudulent or misleading documents among genuine emails.

At the time of Grunwald's email, Clinton’s primary debates against her then-rival U.S. Senator Bernie Sanders of Vermont were fast approaching. Grunwald worried that if Clinton did not support a new Glass-Steagall law, it would make it more difficult to defend her plan to curb Wall Street risk.

It could also prompt Warren to endorse Sanders, Grunwald wrote in the email released by Wikileaks.

Grunwald said that in conversations with Clinton, the former secretary of state had indicated she was "leaning toward endorsing Glass Steagall," instead of or in addition to the risk-based approach she ultimately announced.

"I understand we face phoniness charges if we 'change' our position now - but we face risks this way too," Grunwald wrote, adding that Clinton's policy team told her it should be a political decision.

In the weeks after the email, Clinton announced that she would look to break up large banks based on the risk they posed to the economy, not based on size alone or type of investment activity. Clinton also proposed levying a "risk fee" on the liabilities of banks with more than $50 billion in assets, saying it was a more comprehensive approach.

Democratic Party sources told Reuters on Monday they believe that around 50,000 of Podesta's emails are in the possession of Wikileaks and they expect them to be dribbled out periodically between now and the Nov. 8 election between Clinton and Republican presidential nominee Donald Trump.

A previous dump of hacked emails from Podesta on Friday included what appear to be excerpts from paid speeches that Clinton made to Wall Street, which her campaign had refused to release.

Article Link To Reuters:

Tuesday, October 11, Morning Global Market Roundup: Asian Shares Mostly Lower, Oil Near One-Year High On Output Cut Views

By Nichola Saminather
October 11, 2016

Asian shares were mostly lower on Tuesday, while oil prices hovered near one-year highs on growing expectations of an output cut by OPEC producers.

Brent crude LCOc1, slipped 0.2 percent to $53.05 a barrel after surging as much as 3 percent on Monday. U.S. crude futures CLc1 dipped a similar amount to $51.26, after jumping to a four-month high in the previous session.

The overnight gains came after Russia said it was ready to join the Organization of Petroleum Exporting Countries in limiting crude output and Algeria called for similar commitments from other non-OPEC producers.

OPEC aims for agreements to cut about 700,000 barrels per day in its first reduction in eight years.

In equity markets, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS retreated 0.9 percent after creeping higher on Monday as investors saw less chance of Republican nominee Donald Trump winning next month's presidential election.

But Japan's Nikkei .N225 added 1.1 percent to hit the highest level in more than a month, thanks to a weaker yen.

In South Korea, Samsung Electronics (005930.KS) slumped more than 7 percent and was on track for its biggest one-day decline in more than four years as the company struggles to contain a deepening crisis over its Galaxy Note7 phone.

The company halted sales of the Note 7 phones on Tuesday and told owners to stop using them while it investigates the reports of fires in the devices.

The world's biggest smartphone maker has recalled 2.5 million Note 7s due to faulty batteries, and the latest reports of fires in replacement devices is raising fresh doubts about the firm's quality control procedures.

Samsung's woes pulled South Korea's KOSPI .KS11 down 1 percent.

China's CSI 300 index .CSI300 advanced 0.3 percent, while Hong Hong's Hang Seng index slipped 1 percent .HSI

Overnight, U.S. stock indexes closed up between 0.5 percent and 0.7 percent, after the pan-European FTSEurofirst 300 .FTEU3 index ended the day 0.9 percent higher.

"The oil market news proved immensely positive for equities," Angus Nicholson, market analyst at IG in Melbourne, wrote in a note.

The dollar retained overnight gains on growing expectations that the Federal Reserve will raise interest rates this year.

Traders have priced in a 70 percent chance that the Fed will hike at a Dec. 13-14 policymakers' meeting, up from 66 percent early Friday, according to CME Group's FedWatch tool.

Investors are looking to Wednesday's release of minutes of the latest Federal Reserve Open Market Committee meeting to see how close the Fed was to hiking rates last month.

The U.S. dollar strengthened 0.3 percent to 103.955 yen JPY=D4 on Tuesday, adding to its 0.7 percent gain on Monday.

The dollar index .DXY, which tracks the greenback against a basket of six global peers, added 0.15 percent to 97.074, after climbing 0.3 percent on Monday.

The euro EUR=EBS inched down 0.1 percent to at $1.1127.

The British pound GBP= continued its drop, falling 0.3 percent to $1.2309 on Tuesday, down 5.1 percent this month.

The Mexican peso MXN= held on to most of its 2 percent gain on Monday against the U.S. dollar on views that Trump's chances of winning the election were diminishing. Trump has been sharply critical of the country during the campaign.

Paul Ryan, the top Republican in the U.S. Congress, all but conceded on Monday that Hillary Clinton was likely to win the White House on Nov. 8, and said he would put his full energy into preserving Republican majorities in Congress so as not to give her a "blank check."

Ryan, speaker of the House of Representatives, said he would not defend Trump or campaign for him after the uproar over the New York businessman's sexually aggressive comments that surfaced on Friday.

"This is a strong signal that many of the Republican establishment believe Trump's campaign is so toxic that they are seeking to dissociate themselves from it," IG's Nicholson said.

Article Link To Reuters:

Asian Shares Mostly Lower, Oil Near One-Year High On Output Cut Views

U.S. Watchdog Expands Scrutiny To More Chinese Deals

By Greg Roumeliotis
October 11, 2016

Insurance mergers and acquisitions rarely raise red flags with U.S. national security watchdogs.

China's Fosun International Ltd (0656.HK) took that history to heart last year when it paid $1.84 billion for the remaining 80 percent stake of U.S. property and casualty insurer Ironshore Inc that it did not already own.

But in December 2015, one month after Fosun completed the acquisition, it was approached by officials at the Committee on Foreign Investment in the United States (CFIUS), a government panel that scrutinizes deals over national security concerns, according to people familiar with the matter who asked not to be identified because these details are not public.

CFIUS was concerned about how Fosun would operate Ironshore's Wright & Co, a provider of professional liability coverage to U.S. government employees such as law enforcement personnel and national security officials, including the Central Intelligence Agency, according to these sources.

Fosun, Ironshore and CFIUS all declined to comment on the process.

CFIUS operates a voluntary filing system for companies engaged in a deal. Such an instance of the panel approaching companies after they complete a deal is rare.

But the recent U.S. scrutiny of Fosun -- which did not seek CFIUS approval for the Ironshore deal -- is just one example of a new impetus by CFIUS to target what it refers to as "non-notified transactions" -- or deals that did not seek CFIUS approval in advance.

In the last twelve months CFIUS has stepped up its pursuit of these non-filers over concerns that some deals were falling through the cracks, according to sources with direct knowledge of the panel's inner workings. This previously unreported push by CFIUS has the potential to delay some deals and raises the risk of them being thwarted altogether.

While Wright accounted for a tiny fraction of Ironshore's business, the inquiry has forced Fosun to delay its initial public offering of Ironshore, which has been registered with the U.S. Securities and Exchange Commission since June, until CFIUS clears the original acquisition. Fosun will now likely miss a window for IPOs due to the expected market volatility around the Nov. 8 U.S. presidential election, according to the sources.

Chinese companies have been treated with suspicion by CFIUS because of the ties many of them have to the country's communist regime, reflecting the complicated diplomatic and commercial ties between China and the United States.

This has not stopped Premier Li Keqiang's "going out" policy, which encourages Chinese companies to buy foreign trophy assets. The push -- aided by CFIUS's history of rarely shooting down deals altogether -- contributed to Chinese M&A activity in the United States reaching a record high of $32 billion so far this year.

To be sure, CFIUS has approached companies in the past as well, and does not limit its review to only Chinese deals. In 2010, CFIUS contacted Russian internet company CMail.ru and AOL Inc over the latter's $188 million divestment of messaging service ICQ to Cmail.ru, which had already been completed. The CFIUS review in that instance did not require the deal to be unraveled.

On rare occasions, the panel has also vetoed deals, such as the $3.3 billion sale of Koninklijke Philips NV's (PHG.AS) lighting business to a consortium of Chinese investors, which it blocked last January.

But Ironshore and similar cases this year show that the U.S. watchdog is flexing its muscles in a more subtle, albeit disruptive, fashion.

"Companies may assume that there is no chance that CFIUS would have an interest in their transaction, but that runs the risk of possible miscalculation," said Eric Dinallo, a partner at law firm Debevoise & Plimpton LLP.

Rising Scrutiny

CFIUS, an agency made up of eight U.S. government departments and chaired by the Treasury Secretary, does not publicize the reasons for its decisions. The majority of transactions involve private companies with no SEC filings.

Recent regulatory filings and statements by publicly listed companies, however, offer glimpses of CFIUS catching some companies off guard. U.S. electronics distributor Ingram Micro Inc (IM.N) said in July it would seek CFIUS approval for its acquisition by Chinese shipping company Tianjin Tianhai Investment, despite saying in February it did not need to, following "consultation" with CFIUS.

As a result, in August Ingram Micro pushed back the deadline for the deal with Tianjin to close by three months to Nov. 13. CFIUS is interested in learning more about the company's supply of technology to the U.S. government, according to the sources. Ingram Micro and Tianjin Tianhai declined to comment.

CFIUS has added staff and resources in the last two years to identify non-notified transactions, the sources said, though the number of additional people recruited or the extra funding it was given could not be learned.

Among the CFIUS staffers playing a role in identifying non-filers, alongside CFIUS Staff Chairman Stephen Hanson and Treasury Deputy Assistant Secretary for Investment Security Aimen Mir, is Brian Reissaus, a former member of the Defense Security Service, an agency of the U.S. Department of Defense, according to the sources. Reissaus will often be the CFIUS staffer reaching out to companies, the sources said.

A Treasury spokesman declined to comment on behalf of CFIUS and the staffers. Chinese government officials declined to comment on CFIUS's new focus.

Caught Off-Guard

CFIUS's crackdown on these non-notified transactions shows how the agency's focus has expanded beyond traditional sectors of national security concern, such as aerospace and semiconductors, to less obvious areas ranging from commercial IT and agriculture to biomedical science and electronics.

Companies whose deals are reviewed by CFIUS without having made voluntary filings risk delays in completing them and uncertainty over their investment plans, lawyers say.

In the case of Fosun, to ensure CFIUS approval Ironshore agreed to sell Wright last month to former American International Group Inc (AIG.N) CEO Hank Greenberg's Starr Companies, according to the sources.

In light of this divestment and other conversations it had with CFIUS, the company has reset the CFIUS review process by making another filing with the panel, and an outcome is expected in the coming weeks, one of the sources added.

In the interim, Fosun has been exploring selling Ironshore outright as an alternative to an IPO, according to the sources.

Hell Or High Water

Some companies resist filing for a CFIUS review voluntarily because they fear that addressing this issue during their tough merger negotiations will add an extra layer of complexity to the talks, and some times risk complicating them to the point that a deal is not reached.

This is because, once the possibility of a CFIUS review is foreseen in a merger contract, companies have to haggle over who assumes the financial risk under various scenarios.

Sellers try to push for "hell-or-high-water" provisions in contracts requiring the buyers to do whatever it takes in terms of divestitures and other measures to obtain CFIUS approval. Buyers resist this and seek to negotiate in advance what CFIUS remedies would be acceptable to them.

A case in point is Zhongwang USA LLC, which is backed by Chinese aluminum magnate Liu Zhongtian, and its $2.33 billion deal last month to acquire U.S. aluminum company Aleris Corp (ALSD.PK). Zhongwang USA agreed to "undertake best efforts to obtain CFIUS clearance as soon as practicable," while also limiting any CFIUS-related divestitures it would be willing to accept to 5 percent of Aleris' 2015 U.S. net sales, a regulatory filing shows.

The heightened scrutiny is also jacking up CFIUS-related breakup fees that buyers have to agree to in order to get a deal done, with sellers often asking these to be deposited in escrow accounts for more security. In the case of Zhongwang, it placed its $100 million breakup fee in an escrow account when it signed its deal with Aleris.

Taken together, CFIUS lawyers and other consultants are advising their clients to proactively file with the agency to get out in front of the scrutiny.

"Go to CFIUS before you close a transaction," said Dinallo. "Our experience has been that, if there is no issue, CFIUS has been quick to respond."

Article Link To Reuters:

Samsung Halts Galaxy Note 7 Sales Over Fire Concerns, Tells Users To Switch Off

By Se Young Lee
October 11, 2016

Samsung Electronics Co Ltd (005930.KS) halted sales of its Galaxy Note 7 smartphones on Tuesday and told owners to stop using them while it investigates reports of fires, fueling expectations the tech giant will scrap the flagship device.

Top U.S. and Australian carriers on Monday suspended sales or exchanges of the Note 7s, while aviation authorities banned passengers using the phones, after smoke from a replacement device forced the evacuation of a passenger plane in the United States last week.

The world's top smartphone maker said it had asked all global carriers to stop sales of the Note 7s and the exchange of original devices for replacements, while it worked with regulators to investigate the problem.

"Consumers with either an original Galaxy Note 7 or replacement Galaxy Note 7 device should power down and stop using the device," the company said in statement.

Samsung's decision to pull Note 7s off the shelves for the second time in less than two months not only raises fresh doubts about the firm's quality control but could result in huge financial and reputational costs.

Investors wiped 14.7 trillion won ($13.2 billion) off Samsung Electronics' market value at mid-day trade on Tuesday as shares tumbled 7 percent to touch their 2-week low.

The premium device launched in August was supposed to compete with Apple Inc's (AAPL.O) latest iPhone for supremacy in the smartphone market. Well received by critics, its first problem was a shortage as pre-orders overwhelmed supply.

But within days of the launch images of charred Note 7s began appearing on social media, in the first sign that something was seriously amiss with the gadget. Samsung has since recalled 2.5 million Note 7s due to faulty batteries.

"This has probably killed the Note 7 brand name - who knows if they’ll even be allowed to re-release it," said Edward Snyder, managing director of Charter Equity Research.

"By the time they fix the problem they have to go through recertification and requalification and by the time that happens they’re going up against the (Galaxy) S8 launch."

Cause Unknown

Samsung did not immediately comment on whether it was considering ending Note 7 sales permanently or whether it had identified the cause for the fires in replacement devices. The company is offering to exchange Note 7s for other products or refund them.

A person familiar with the matter told Reuters on Monday Samsung had temporarily halted production of Note 7s and Samsung said it had adjusted shipments of the phones. It was not clear when production levels may be restored.

The Korean Agency for Technology and Standards met with Samsung Electronics and experts on Monday afternoon and "confirmed the possibility of defects in the new (Galaxy Note 7) product," the agency said in a statement on Tuesday.

"Samsung is investigating the case in various aspects," including the batteries and other possible causes, an official at the agency told Reuters.

"It is more difficult to analyze the cause of the accidents this time because of various patterns of the accidents."

The U.S. Consumer Product Safety Commission said Samsung was making the right decision by halting sales and exchanges of the device.

"No one should have to be concerned their phone will endanger them, their family or their property," CPSC Chairman Elliott Kaye said in a statement.

"While we continue our active investigation into reports of phones overheating and burning in multiple states, consumers should power down and stop using all Galaxy Note 7s. This is the safest course of action."

The U.S. Federal Aviation Administration and South Korea's transport ministry added their voices to concerns from the aviation industry, saying no Note 7s should be used or charged inside airplanes.

Verizon Communications Inc (VZ.N), the largest U.S. wireless carrier, said it may shift marketing away from the Note 7 heading into the critical holiday selling season.

"We have the new iPhone, we’re about to launch the new Google (GOOGL.O) Pixel, which is exclusive to us. We’ve got great phones from Motorola as well," Verizon spokeswoman Kelly Crummey said.

"I think you’ll see our marketing focused on those devices because there is certainty on those at this time."

Shares in Samsung were down 7 percent as of 0325 GMT, compared with a 1 percent fall for the broader market, after touching their lowest level since Sept. 28.

Apple shares, in contrast, hit their highest in 10 months on Monday on expectations the iPhone maker would benefit from its rival's woes.

($1 = 1,114.7500 won)

Article Link To Reuters:

Fed's Evans Sees Benefits To Overshooting Inflation Target

October 11, 2016

The U.S. Federal Reserve should engineer monetary policy to spur inflation to rise above its two-percent target because the costs of doing so are less than in past decades, Chicago Federal Reserve Bank President Charles Evans said on Tuesday.

"I see benefits to trying to engineer policy to allow for the strong possibility of inflation overshooting its target," Evans said at an event in Sydney, Australia.

"I also think it would help to indicate that policymakers would be willing to accept the increased inflationary risk that might accompany further declines in unemployment," he added, citing his view that the U.S. economy is not yet at full employment and is in unprecedented territory compared to past cycles.

Speaking to reporters after the speech, Evans said he "could be fine" with the Fed raising rates in December, but he wanted to see how the economy and inflation progressed before deciding.

Indeed, he cautioned that it might be better to wait for inflation to rise closer to the Fed's 2 percent target before moving.

Evans has repeatedly expressed concern on the U.S. central bank's preferred measure of inflation moving back to its target rate. It currently stands at 1.7 percent.

Evans in his speech said any rise in inflation above the current target would be minimal in the current environment so "if it became necessary, policy wouldn't have to do much work to lower inflation expectations back down to 2 percent."

The Chicago Fed president does not have a vote this year on Fed policy but will become a voting member in 2017. Still, currently he does participate fully in deliberations.

The U.S. central bank is still mulling another rate increase almost a year after raising rates from near zero last December.

The Fed looks increasingly likely to raise interest rates this December as long as job gains and inflation show further signs of strengthening.

The Fed also meets in early November but traders do not expect a move then given its proximity to the U.S. election.

Last Friday's monthly jobs report for September showed that while employment growth is slowing, it is still well above the level required to offset population growth. Fed Vice Chair Stanley Fischer described the numbers as "close" to ideal.

Traders currently predict a roughly 70 percent probability that the U.S. central bank will raise rates at its December meeting, according to data from the CME Group.

Article Link To Reuters:

Singapore Orders Falcon Bank Unit To Shut Down, Fines DBS And UBS

By Saeed Azhar and Anshuman Daga
October 11, 2016

Singapore directed Swiss wealth manager Falcon Private Bank Ltd to cease operations in the city-state and fined top local lender DBS Bank and UBS AG over lapses in its biggest crackdown on entities dealing with Malaysian sovereign fund 1MDB.

The moves come after the Monetary Authority of Singapore (MAS) announced the shutdown of Swiss private bank BSI's local unit in May. It subsequently charged people in connection with the probe and froze assets linked to 1MDB.

BSI was the first bank to be ordered shut in Singapore since 1984.

"Falcon Bank has demonstrated a persistent and severe lack of understanding of MAS' AML (anti money laundering) requirements and expectations," MAS said in a statement on Tuesday.

"Taking into account the totality of Falcon Bank's conduct, MAS' assessment is that the merchant bank will be unable to comply with these requirements and expectations going forward," MAS said.

In July, Singapore authorities said that as part of its 1MDB-related probe it found problems at DBS, UBS and Standard Chartered.

The investigations have cast an unwelcome spotlight on one of the world's leading wealth management centers.

The Singapore central bank said Falcon Private Bank, a branch of Falcon Private Bank in Switzerland, has the full support of its head office which is financially sound. It said MAS is working closely with financial watchdog FINMA to oversee an orderly closure of the merchant bank license in Singapore.

Malaysia's 1MDB, once a pet project of Prime Minister Najib Razak who chaired its advisory board, is the subject of money-laundering investigations in at least six countries, including Switzerland, Singapore and the United States.

Najib has denied any wrongdoing and said Malaysia will cooperate with the international investigations.

The MAS said it had completed its investigations of DBS and UBS and found several breaches of AML requirements and control lapses. It imposed a S$1 million ($728,067) penalty on DBS and S$1.3 million on UBS.

"MAS has admonished the two banks and instructed their management to investigate the lapses, promptly address the control deficiencies, and take appropriate disciplinary measures against the staff involved." it said.

A spokeswoman from UBS said in a statement: "We are further strengthening our controls and appropriate action will be taken on individuals responsible for the lapses."

The MAS said it is finalizing its assessment of the Singapore branch of Standard Chartered Bank and said it will make an announcement in due course.

($1 = 1.3735 Singapore dollars)

Article Link To Reuters:

Twitter Is The New Yahoo, So Expect A Long And Bumpy Ride

Board and CEO reportedly at odds about sale of once-hot property with growth issues — sound familiar?

By Therese Poletti
October 11, 2016

A service that originally found millions of fans as part of a new computing paradigm eventually hits a ceiling for the number of users it can attract, leading to a flagging stock, questions about its raison d’être, and larger companies considering a merger to add eyeballs or brand cachet.

Yep, that’s Twitter Inc. TWTR, -11.54% But it is also very similar to the story of Yahoo Inc. YHOO, +1.62% and investors who have jumped in on Twitter the past couple of weeks might want to consider how long (and how many failed efforts) it took to find a Yahoo deal that still isn’t quite done yet.

Like Yahoo, whose board was pressured by an activist hedge fund to sell its core business, Twitter’s board appears to have mixed feelings about the sale. Chief Executive and co-founder Jack Dorsey is said to not be 100% behind the move to sell the company, much as Yahoo CEO Marissa Mayer and Yahoo’s board appeared to have diverging interests when Mayer continued to work on and tour her plan to turn Yahoo’s core business around as the board pursued a sale.

“We think the CEO would like to see whether many of his recent initiatives can work in turning around Twitter user and engagement growth before seeking strategic alternatives,” SunTrust analyst Bob Peck wrote in a note last week, referring to Dorsey and the latest turns in the Twitter soap opera.

Dorsey faces board and investor skepticism about his turnaround plans for the company, just like Mayer. Dorsey’s dilemma is also parallel to that of Yahoo co-founder Jerry Yang, who, like Dorsey, returned to the CEO helm at his creation to reignite growth.

Yang returned to Yahoo in 2007, and was a key force inside the company rallying against an unsolicited $44.6 billion offer from Microsoft in 2008 for the internet pioneer. That deal, as we all know, never happened, with Yahoo seeking a higher price and Yang later stepping down under pressure from activist investors like Carl Icahn who wanted a deal with Microsoft.

Dorsey has said nothing publicly about acquisition interest, but he did reportedly write an internal memo rallying the troops that “we can do this” as an independent company. Meanwhile, reports that potential acquirers such as Walt Disney Co. DIS, +0.00% , Alphabet Inc. GOOGL, +1.68% GOOG, +1.40% and Salesforce.com Inc. CRM, +5.91% will not take the plunge have sent Twitter stock plunging in the past two sessions.

Yahoo’s ultimate deal to find a buyer happened roughly eight years after Microsoft’s first entreaty, with a $4.8 billion deal announced with Verizon Communications Inc. VZ, +0.54% in July. In between, several acquisition rumors raised investors’ hopes and caused Yahoo stock to swing.

The current hype surrounding Twitter’s possible acquisition feels as though it could end like Yahoo’s Microsoft moment, though Salesforce is an interesting wild card. While the deal makes no sense for his company, Chief Executive Marc Benioff has made public comments supporting Twitter, similar to Verizon’s CEO publicly discussing the possibility of buying Yahoo earlier this year. Fresh from a rejection by LinkedIn’s board, which preferred Microsoft’s all-cash $26 billion offer, Salesforce faces the same difficulties in finding cash for a Twitter deal, and many investors do not see Twitter’s hefty market cap as worth it.

Other media conglomerates could still have the idea under consideration, but it’s clear that for all its brand recognition and hundreds of millions of users, Twitter is not as hot a property as one might expect. One hope is for another parallel with Yahoo: Periscope, its live video service, would have to find breakout growth like Yahoo’s stake in Alibaba Group Holding Ltd. BABA, +2.27% which is not part of the Verizon deal.

That kind of growth for Periscope could take a while, though, and Twitter’s value could plummet similar to Yahoo’s core offering in the years between Microsoft’s failed bid and Verizon’s current effort. So, as this round of acquisition rumors winds down, Twitter investors should take note of Yahoo’s long and winding road as a hint to what could lie ahead if Dorsey and the board don’t make a deal now.

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Oil Prices Dip But Stay Near One-Year Highs On Expected Output Cut

By Henning Gloystein
October 11, 2016

Oil prices edged down on Tuesday but held near one-year highs touched on growing expectations of an output cut by OPEC producers, with traders saying the price outlook remains bullish as confidence in crude markets rises.

Oil prices jumped as much as 3 percent on Monday, with Brent hitting a one-year peak, after Russia and Saudi Arabia both said a deal between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members like Russia in curbing crude output was possible.

International Brent crude oil futures LCOc1 were trading at $53.04 per barrel, down 10 cents from their previous close, not far off Monday's $53.73 a barrel high.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $51.24 a barrel, down 11 cents from their last close, but also near Monday's high of $51.60 a barrel.

"Oil rose to a one-year high on optimism regarding a future agreement between OPEC and major producers to restrict output," ANZ bank said on Tuesday.

Carsten Fritsch of Germany's Commerzbank said "the expectations of an OPEC production cut surely played a role" in the recent price rises of the futures market, where large volumes of new long-positions have been built up as the market becomes increasingly confident about rising oil markets.

However, sounding a note of caution, Fritsch said he had "significant doubts whether they (production cut targets) will actually be fulfilled" as rivalry between OPEC members, who are fighting aggressively for global markets share, could prevent an effective deal.

Goldman Sachs said in a note to clients on Tuesday that despite a production cut becoming a "greater possibility", markets were unlikely to rebalance in 2017.

"Higher production from Libya, Nigeria and Iraq are reducing the odds of such a deal rebalancing the oil market in 2017," the U.S. bank said, and added that even if OPEC producers and Russia implemented strict cuts, higher prices would allow U.S. shale drillers to raise output.

Article Link To Reuters:

Goldman Sachs Sees Lower Chance Of Oil Market Rebalancing In 2017

By Nallur Sethuraman and Henning Gloystein
October 11, 2017

Goldman Sachs said a planned oil output cut by producer cartel OPEC and other exporters like Russia has become a "greater possibility", but warned that any reduction likely won't be deep enough to re-balance markets in 2017.

"Higher production from Libya, Nigeria and Iraq are reducing the odds of such a deal rebalancing the oil market in 2017," Goldman analysts said in a note to clients dated Oct. 10.

Any failure to reach such a deal, however, would push prices sharply lower to $43 per barrel as the global oil market will still have surplus crude in the fourth quarter.

OPEC's top producer Saudi Arabia said on Monday that a global deal to cut supplies could be reached at the group's next formal meeting in November, when non-OPEC nations such as Russia could be invited to join in the pact.

Russian President Vladimir Putin told an energy congress on Monday that Russia was ready to join a proposed cap on oil output by OPEC members.

Goldman said Saudi Arabia likely holds the reins to the production cut agreement, with signs of elevated funding stress potentially driving Saudi to commit to a cut when OPEC meets officially on November 30.

OPEC officials are embarking on a flurry of meetings to nail down details of the deal in Algiers, where modest oil output cuts were agreed in the first such deal since 2008.

"As usual, risks of a disagreement are not negligible with Iraq currently the most vocal opponent, aiming to grow production next year and disputing usual measures of its production as too low," Goldman analysts said.

The bank said it sees price-insensitive upside risks to global oil production from the countries outside OPEC and expects them to aggravate supply with 40 percent more new projects in 2017 from 2016.

Goldman said even if OPEC producers and Russia implemented strict cuts, higher prices would allow U.S. shale drillers to raise output.

"Demand growth will remain resilient in our view but the historical activity and price sensitivities suggest less growth at higher oil prices," the investment bank said.

Article Link To Reuters: