Wednesday, October 12, 2016

Top Bankers Warn Of Risk Of 2017 Exodus From Britain

By Andrew MacAskill and Anjuli Davies
Reuters
October 12, 2016

Top bankers warned on Tuesday they could start moving staff abroad as early as next year if there is no clarity on whether Britain will retain access to the European single market when it leaves the EU.

Senior executives from European divisions of some of the world's biggest financial institutions told a conference in London they felt the government's tougher rhetoric on immigration risked harming the economy. James Bardrick, the UK head of U.S. bank Citi (C.N), said the main dilemma facing the finance industry was how urgently it needed to act on contingency plans aimed at protecting their businesses, following Britain's vote in June to leave the European Union.

"How do we and when do we start making decisions ... knowing the plan is ready to go ... it could be in the first quarter of 2017," he told a conference in London.

British Prime Minister Theresa May has said she would trigger the two-year process to leave the EU by the end of March and last week appeared to prioritize capping immigration over retaining access to the single market.

The future of London as Europe's financial center is expected to be a major negotiating point in May's talks with EU partners, with banks keen to retain the "passporting" rights which allow them to sell financial services across the bloc.

Getting the best deal for the City of London will be an "absolute priority" in Brexit trade talks with the EU, financial services minister Simon Kirby told the conference.

Rob Rooney, CEO of Morgan Stanley international (MS.N) joined the chorus of bankers concerned about passporting, and said his bank would also have to move parts of their operations from London if Britain were shut out of the single market.

"It really isn't terribly complicated. If we are outside the EU and we don't have what would be a stable and long-term commitment to access the single market then a lot of the things we do today in London, we'd have to do inside the EU 27," he said.

Separately, Jacob Rees-Mogg, a Conservative lawmaker and member of the Treasury Select Committee who campaigned for Brexit, told Reuters that banks needed to take responsibility for their own affairs in line with their contingency plans.

"If the City has to do anything, it needs to do it now. I don't think it needs to do much but it needs to get on and do it," Rees-Mogg said, when asked about the threat of a major bank exodus from Britain.

"Bank lobbyists are going down the wrong route on Brexit. They just seem to be whingeing. I don't see what they're moaning about."

Culture Hit


Tim Roberts, managing director of consulting firm Promontory Financial Group, said London began to rival New York as a financial center in the 1980s because it welcomed people regardless of their nationality or gender.

"If we lose that, and we allow not Brexit itself, but some of the sentiments expressed nationally that led up to the referendum to erode that culture then I think it damages London as a financial center," Roberts said.

The government backtracked on a recent proposal to make companies list their foreign workers after an outcry from business groups, who said any initiative to "name and shame" employers would be divisive and discriminatory.

The chairman of the Lloyd's of London insurance market John Nelson criticized the tone of language used by government ministers, and said Britain risked turning its back on the global economy for the first time since World War Two."We have to be very clear that the rest of the world is looking very, very closely right now," Nelson said.

"We have to be careful that we keep the UK open... and making sure we are able to attract the right talent globally. If we don't do that we will not remain the financial sector that we are today."


Article Link To Reuters:

New Alaskan Oil Will Boost America's Energy Independence

Could this be the boost that U.S. energy needed?

The National Interest
October 12, 2016

“The Last Frontier” might have just become the newest frontier in America’s emerging energy independence.

The October 4 announcement by Dallas-based Caelus Energy of a “significant light oil discovery” in Alaska’s North Slope has breathed new life into the state’s struggling oil industry, which has suffered from falling prices.

Alaska Gov. Bill Walker welcomed the find, saying, “We look forward to the discovery being turned into oil in the pipeline.”

In a statement, Caelus Energy CEO Jim Musselman said, “This discovery could be really exciting for the state of Alaska. It has the size and scale to play a meaningful role in sustaining the Alaskan oil business over the next three or four decades.”

The privately owned explorer said that based on two wells drilled in 2016 and 126 square miles of existing 3D seismic, the find in its Smith Bay leases may encompass six billion barrels, or up to ten billion barrels including adjoining acreage. The company says it expects to recover around 30 to 40 percent of the find, with the development having the potential to provide two hundred thousand barrels per day of light oil.

Should initial estimates prove accurate, the discovery could boost the state’s oil reserves by as much as 80 percent, and extend the long-term viability of the Trans-Alaska Pipeline System.

The company said it planned to build an $800 million, 125-mile pipeline to connect with the existing Prudhoe Bay pipeline infrastructure, with production forecast to commence as early as 2022.

While Wood Mackenzie analyst Cody Rice told the Wall Street Journal it would be a “massively complex, massively expensive undertaking to get that [oil] to market,” the company expects support from the state of Alaska and could benefit from forecasted higher oil prices.

With Alaskan oil production declining from a peak of two million barrels a day in 1988 to fewer than half a million barrels in 2015, the Smith Bay find is a vital shot in the arm to a state that has seen its contributions dwarfed by output in other parts of the United States.

It is also expected to provide a boost to U.S. crude production, which, according to the U.S. Energy Information Administration’s (EIA) most recent annual outlook report, is expected to resume its upward momentum next year on the back of higher crude prices.

Yet, despite the predicted overall upswing, Alaska’s contribution was forecast to continue to diminish toward daily production of just two hundred thousand barrels by 2040. With Smith Bay forecast to produce that quantity alone, Alaska clearly figures playing a larger role than anticipated in U.S. oil production.

The EIA’s report presented five possible scenarios through to 2040, with the most optimistic seeing daily U.S. oil output increase from 9.4 million barrels in 2015 to 17.7 million in 2040, although its reference case forecasts a more modest increase to 11.3 million.

Nevertheless, should low crude prices persist, U.S. production is forecast to decline through to 2028 and, despite a modest climb until 2040, would still not reach 2015 levels.

Regardless of which scenario ultimately plays out, significantly there is clear potential for U.S. energy independence within the coming decades. In fact, should oil prices rebound, or production efficiencies and reserve discoveries improve, the EIA’s report predicts that the United States will become a net exporter of petroleum and other liquid fuels by as soon as 2022.

Whether the Smith Bay discovery is sufficient to meet this scenario remains to be seen. However, even in its modest reference case scenario, the EIA predicts the net import share of U.S. petroleum and other liquid fuel consumption will fall to 7.4 percent by 2040, compared with 23.8 percent in 2015.

The notion of U.S. energy independence seemed a farfetched dream only a decade ago, with 65 percent of domestic consumption met by imports in 2005. Although the majority of U.S. crude oil and products imports are now sourced from Canada, the remainder is predominantly sourced from the Middle East, Venezuela and Russia, whose persistently tense diplomatic relationships with Washington seem unlikely to improve in the foreseeable future. The lesser the energy reliance the United States has on its less predictable trading partners, the better, in terms of energy security and geopolitical leverage.

But despite the United States’ status as the world’s largest oil producer, and its growing influence as one of the largest exporters, it continues to import oil at a record rate that nearly hit seven hundred thousand barrels per day in late July, despite nearly reaching maximum storage capacity in some areas.

The explanation is in the mismatch between the quality of oil extracted from domestic reserves, and that which is most efficiently processed in U.S. refineries. The sweet light crude extracted from its large shale deposits is processed less efficiently in the United States, particularly in Gulf Coast and Midwest refineries, than the heavy sour varieties imported from Canada, Mexico, Venezuela and Saudi Arabia.

The Caelus light oil discovery will only further widen the divide between what is extracted and what can be economically processed domestically. Until there is more U.S. investment in light crude refineries, it will continue to be more economically sound for producers to import heavier sours, thereby preventing the United States from becoming truly oil independent despite likely becoming a net exporter within the next decade.

Still, striking black gold in Alaska, a state with the highest unemployment rate in the country, is welcome relief regardless of where it is refined. With the United States also expected to become one of the three biggest suppliers of liquefied natural gas by 2020, the nation’s surge toward energy-superpower status has received another welcome boost.


Article Link To The National Interest:

Cities Pay Dearly For Pro Sports, For Good Reason

By Conor Sen
The Bloomberg View
October 12, 2016

Sometimes you can't just follow the money.

Las Vegas's plan to commit $750 million of public funding toward building a football stadium for the Raiders -- a plan being debated in the legislature this week -- is bringing out the predictable critics. They argue that the economic benefits would not make up for the initial outlay, or that public money would be more productive if invested in infrastructure or education.

The trouble is that the desirability of cities is not dictated purely by fiscal measures. If it were, more business would leave California for Texas than actually happens. Culture, social capital and identity play a part -- supported by the economy, and supporting the economy, and valuable beyond easy calculations. They are worth some public investment.

In his book, "The Wealth of Humans," Ryan Avent recounts the collective suffering experienced by Washington Nationals fans during a heartbreaking loss in the 2012 postseason. Counterintuitively, he noted that while the loss was disappointing to fans, "the collective nature of the sadness was oddly thrilling" by creating a shared experience among those who went through it, bringing together people who might otherwise be disconnected.

He says: "Baseball is a good metaphor for most things in life, and the economy is no exception. As in baseball, value is fundamentally social in nature: it is the collective passion and interest that makes the sport such a valuable institution." As part of their efforts to recruit the former Montreal Expos to DC, the city of Washington ultimately spent $670 million helping to finance Nationals Stadium.

Cities that are rich economically tend to be rich culturally. Residents of Northern and coastal cities like Boston, New York, Chicago, San Francisco and Los Angeles might take this for granted, but newer, poorer, faster-growing cities in the Sun Belt do not. They aspire to be like their coastal peers one day. A city like Boston will always have its legacy as one of the birthplaces of this nation. It also has some of the world's finest educational institutions, geographical assets like the Charles River and Boston Harbor, and of course, the Red Sox.

The value of the Red Sox to Boston goes beyond the economic activity or tax dollars generated by the franchise. It gives people an activity to do on dates. A way for grandparents to connect with their grandchildren. A topic of conversation for two business people sharing space in a coffee shop or an airport lounge. Something to bring together people of different faiths or ethnicities. By putting on a Red Sox hat, an immigrant service worker has a way to signify that he or she is a part of the city, potentially easing tensions. In sum, the Red Sox serve as a powerful generator of social capital, and a unifying "civic church," a desirable asset for a city to have at any time, but especially in the fractured, polarized world we live in today.

At their best, pro sports teams not only help form social capital in a city, but also can take on the values and identities that cities have for themselves. Think of Magic Johnson's "Showtime Lakers" in Los Angeles, Cal Ripken's "Oriole Way" in Baltimore, or the grit and resilience of the Steelers in Pittsburgh. It's understandable that cities with weaker social ties and less of a sense of identity would aspire to have such a civic asset.

This isn't to say that such a public investment always pays off. Since forming the Miami Marlins, the owners have seemed more interested in bilking taxpayers and banking cash than investing in the franchise or the community. For cities that already have existing franchises, paying for a new stadium may indeed be little more than a handout to ownership. And cities already rich in cultural capital may experience diminishing returns from adding a new team. But they may still wisely choose to do so.

Would it be better if billionaire owners paid for their own stadiums? Of course. But as long as they have leverage in the matter, it's unsurprising that they'll take, or demand, public funding. Luring and keeping a pro sports franchise is one of the costs of being a successful big city, with an enduring identity. Public officials have shown time and time again that they'll pay up if they have to.


Article Link To The Bloomberg View:

Mayday In The UK

By Philippe Legrain
Project Syndicate
October 12, 2016

Conservative Brexiteers – who campaigned for the United Kingdom to vote to leave the European Union – continue to blather about building an open, outward-looking, free-trading Britain. But the UK is in fact turning inward. Prime Minister Theresa May, who styles herself as the UK’s answer to Angela Merkel, is turning out to have more in common with Marine Le Pen, the leader of France’s far-right National Front, than with Germany’s internationalist chancellor.

May set out her vision for Britain’s future at the Conservative Party conference this month. She pledged to trigger the UK’s formal exit process by the end of March 2017, and declared national control over immigration – not continued membership in the EU single market – to be her priority in the upcoming “Brexit” negotiations. That stance puts the UK on course for a “hard Brexit” by April 2019.

EU governments rightly insist on freedom of movement as a central pillar of the single market, and May’s nativist lurch has already prompted Merkel and other EU leaders, notably French President François Hollande, to take a tougher line with the UK.

The pound has duly plunged on currency markets, anticipating the economic harm of a hard Brexit: costly trade barriers – customs controls, rules-of-origin requirements, import duties, and discriminatory regulation – will divide UK and EU markets and affect nearly half of Britain’s trade.

But May has not only set the stage for a complete break with the EU; she has also adopted a deeply illiberal vision for the UK’s future, consisting of economic interventionism, political nationalism, and cultural xenophobia. This unelected prime minister is rejecting former Prime Minister David Cameron’s liberal Conservative manifesto (which won him a parliamentary majority last year), Margaret Thatcher’s embrace of globalization in the 1980s, and Britain’s much longer tradition of liberal openness.

After being a near-silent supporter of remaining in the EU during the Brexit campaign, May has now donned the mantle of Brexiteer populism, targeting both “international elites” and Britons with a cosmopolitan outlook. “Just listen to the way a lot of politicians and commentators talk about the public,” she said in her keynote conference speech. “They find your patriotism distasteful, your concerns about immigration parochial, your views about crime illiberal.”

Echoing nationalists such as Le Pen and Viktor Orbán, Hungary’s authoritarian prime minister, she asserted that, “If you believe you’re a citizen of the world, you’re a citizen of nowhere. You don’t understand what the very word ‘citizenship’ means.” Ironically, it is May’s notion that there is a single way of belonging to Britain’s political community that is un-British.

May demanded that UK-based businesses privilege British workers in the “spirit of citizenship” – another term for what Le Pen calls “national preference.” This is more than just rhetoric. The status of EU nationals in the UK is a bargaining chip in the upcoming Brexit negotiations. May wants to keep out future EU migrants, whom she wrongly blames for taking Britons’ jobs and depressing their wages. Home Secretary Amber Rudd would go even further. She recently called for UK-based businesses to list their foreign staff, in order to “name and shame” companies that do not recruit “enough” British workers. “British jobs for British workers” was a slogan used by the racist National Front party in the UK in the 1970s. Now it has backing in the cabinet.

This chauvinism is not just despicable; it is foolish. It has already prompted outrage and threats from other countries. At a time when many companies are reconsidering their post-Brexit investment plans, it makes a mockery of the government’s claim that the UK is open for business. Apparently, May’s government expects Citibank to operate in London without American staff, Nissan without Japanese managers, and global companies without their diverse talent.

Even foreign-born doctors who save British lives are no longer welcome; May wants the UK to be “self-sufficient” in health care by 2025. Since one in three physicians in the UK is an immigrant, the country would suffer if many now decided to practice elsewhere.

May’s government experience has been limited to command-and-control functions, overseeing internal security and immigration as Home Secretary in Cameron’s cabinet. She seems clueless about how an open market economy works, and unaware that international trade, investment, and migration are intertwined. She recently boasted that London is the world’s financial capital, without acknowledging that this is thanks mostly to foreign banks that employ foreign staff (those “citizens of the world”) to serve international markets, including the EU’s.

More fundamentally, May doesn’t seem to realize that immigration controls are trade barriers. It is called “trade” if a British company outsources computing work to Bangalore, and “migration” if Indian programmers do the same work in Birmingham – yet the transactions are analogous. If Poland specializes in construction, and the UK wants to procure its services, people have to move between countries to trade.

Officially, the British government remains gung-ho about free trade. In practice, its illiberal politics are taking precedence: Europhobia trumps free exchange with Britain’s neighbors and main trading partners, while xenophobia trumps the need for foreign workers. How long will the rest of its globalization agenda survive? Assuming that it can find willing partners, populism may preclude any trade deal that appears to serve “international elites.” Nationalism may lead Britain to slam the door on Chinese investment, too.

British voters chose to leave the EU, but they did not specify how; so May has no electoral mandate for her swing toward illiberalism. But her official opposition is a Labour Party that, taken over by the hard left, is not electorally viable. So, unless the Liberal Democrats can bounce back, Britain may need a new political party (or cross-party alliance) to fight for a country that is outward-looking, liberal, and tolerant.


Article Link To Project Syndicate:

EU Puts ‘Ever Closer Union’ On Hold

As the EU prepares to celebrate its 60th anniversary, the “ever closer union” principle that underpinned the European project is being put on hold as the bloc struggles to survive its annus horribilis.


By Jorge Valero
EurActiv
October 12, 2016

At a European Parliament plenary session in 2009, Czech President Vaclav Klaus was booed by MEPs because he dared to question the “ever closer union” principle enshrined in the EU treaties.

“Let us not allow a situation where citizens of member countries would live with a resigned feeling that the European project is not their own,” he said.

A few years later, the Eurosceptic president can partly claim victory, because the EU’s “uncritical acceptance of this dogma” is being dismantled.

Since the European Union was founded in 1957, its proponents have consistently championed “more Europe” in response to the challenges Europe faced after the Second World War.

Although it was an elite enterprise, citizens eventually came on board as the promises of peace and prosperity materialised.

Today, the Great Recession, and banking and debt crises, have broken the unwritten pact between leaders and voters.

As a result, member states and EU institutions are calling for a “better Europe” today, which means investment projects that matter to citizens.

But completing the Digital Single Market (a top priority in Brussels in Berlin), the end of roaming, free wifi, and free InterRail tickets are far from being Europeans’ top concerns.

“There is a decline in what member states and the institutions think they can achieve together,” said Guntram Wolff, director of the Bruegel think tank.

“The lack of ambition is very clear,” agrees Ignacio Molina, senior researcher at the Real Instituto Elcano.

In his view, the European project has become more difficult to manage as a result of increased accountability by citizens and national parliaments. “The cost for progressing is higher nowadays,” he said.

The future looks gloomy. EU institutions and national governments “will continue with this muddling, progressing step by step toward the lowest common denominator, with no clear vision”, Janis Emmanouilidis, Director of Studies at the EPC, commented.

“Frankly, I don’t know how the EU will look like in a decade, but I can imagine a less closely coordinated union, where Brussels plays rather a regulatory role,” Wolff added.

Existential Crisis

The EU is in an “existential crisis” European Commission Jean-Claude Juncker said during his state of the Union address in September. “We need solutions for Europe and we are in a critical situation,” German Chancellor Angela Merkel said in Bratislava few days after.

The crisis has many faces: low growth, high unemployment, a refugee crisis poorly managed, tensions with Russia, terrorism, an ailing support for the EU institutions, and the disintegration of the bloc after the UK referendum.

EU leaders’ response to this myriad of challenges, and in particular to Brexit was just the “spirit of Bratislava”. This is the “spirit of cooperation”, German Chancellor Angela Merkel described.

But restating that the now 27-member bloc is a union was not enough for some at the leaders’ table.

“I don’t know what Merkel is referring to when she talks about the ‘spirit of Bratislava’,” Italian Prime Minister Matteo Renzi said in an interview after the Bratislava summit.

“If things go on like this, instead of the spirit of Bratislava, we’ll be talking about the ghost of Europe,” the Italian premier said, as he was frustrated with the lack of action to reinvigorate industrial output and address the migration crisis.

Only The Elections?


A senior EU official explained that the lack of “commonality” is because national governments are “weak” due to the upcoming elections in 2017.

As France, Germany and The Netherlands will hold general elections next year, governing parties are reluctant to lose ground with far-reaching projects in Europe. The shared diagnosis is clear: these ideas further alienate their voters.

Alternative für Deutschland’s impact on Merkel’s CDU in her home state was the latest warning shot from Europe’s populists. France’s National Front, Germany’s AfD and the Netherlands’s Party for Freedom (PVV) have all gained voters by scapegoating the EU, and stigmatising minorities.

For analysts, the problem is more serious. “There is a more philosophical shift, not only in Germany but also in France,” said Bruegel’s Wolff.

“The problem is much deeper,” agreed Emmanouilidis. “Mainstream parties have lost not only room for maneuvering because of the populist parties. The biggest risk is the polarization between the winners and losers,” of the current system, he added.

In order to contain the damage, Juncker offered in his State of the Union address a “positive agenda” in few areas where “common solutions are most urgent”.

More than a “vision”, citizens need “someone (who) responds to the challenges of our time”, he said.

Juncker focused on completing the Digital Single Market, security and defense, and some eye-catching proposals such as free wifi in all urban areas by 2020.

“New common European projects should focus on the immediate concerns and needs of its people,” ECB President Mario Draghi told the European Parliament’s Economic and Monetary Affairs Committee a couple of weeks later.

In his view, the top concerns are migration, security and defense.

However, Europeans think otherwise. The economic situation and unemployment, together with immigration, are the main challenges, according to the latest Eurobarometer.

Some of the proposals to fuel economic growth and better protect the victims of the crisis were included in a roadmap drafted by the heads of the EU institutions in June 2015. The objective was to achieve a fiscal union and, ultimately, a political union.

One year later, the Five President’s Report reads like a science fiction novel. Even Draghi and Juncker, the main backers of deepening the economic and monetary union, have toned it down.

A Commission spokesperson said that Juncker “sticks to the ambition of deepening the Eurozone” and he will unveil his vision for the future of the EU in a white paper in 2017.

But for Wolff, “it is true that Draghi and Juncker are less for the fiscal integration now, there is certain disillusionment”.

“We will not have a fiscal capacity in this mandate, which is a mistake because we will continue having a sub-optimal monetary union,” he added.

“It is a vicious circle,” adds Emmanouilidis, because some of the measures that could help to narrow the gap between the winners and losers are getting sidelined.

Train Tickets As Lighthouses


In order to break the cycle, the EPP leader in the European Parliament, Manfred Weber, proposed giving free InterRail tickets to teens.

“This may not sound like much but sometimes it only takes a spark to light a fire that burns forever,” he said.

“I am convinced that the 18th birthday InterRail pass for Europe could become be a true lighthouse project for the development of a common European identity in diversity,” he stated.

When the EU faces its worst humanitarian crisis on its soil, and still struggles to deal with the collateral damage of the Great Recession, free InterRail tickets, the end of roaming ,or free wifi “of course is not enough”, emphasised Emmanouilidis.

But as Juncker once said, “We all know what to do, we just don’t know how to get re-elected after we’ve done it.”

For a longstanding EU official, had this way of thinking been as widespread as it is today, “the European Community would not have been created half a century ago”, he said on condition of anonymity.

Moonshots


Not so long ago, EU leaders advocated not only ambitious roadmaps towards an ever-closer union. Some even spoke about having Europe’s ‘Moon landing’ moment.

The green energy revolution could be our Apollo project, European Parliament President Martin Schulz said during his first mandate.

Could a European Apollo equivalent help? Or would a major shock be the turning point?

Banking union came in the aftermath of the financial crisis. However, the project remains unfinished, as the European Deposit Guarantee Scheme is still pending, and Germany is a staunch opponent to any risk mutualisation.

Meanwhile, the ‘Brexit’ shock triggered some calls for further integration in less controversial areas such as Security and Defense.

But member states needed two Council meetings to confirm their intention share intelligence information in the aftermath of the attacks, while defense proposals were raised in the past with little progress achieved.

“I have a sense of déjà vu when I read about a lot of them,” Emmanouilidis said.

Against the backdrop of an economic and morale crisis in the US in the 1960s, John Fitzgerald Kennedy said in May 1961 “it is time to take longer strides–time for a great new American enterprise”.

The American president announced that the US would land on the moon by the end of the decade, which “in many ways may hold the key to our future on earth”.

In times of social unrest, fiscal constraints and the USSR’s leadership in the space race, the Apollo programme was very unpopular. In the end, it not only became a source of national pride, but helped fuel US leadership in high technology.

Europe could also aim for the stars, but only if it fixes its backyard first. “The national narratives about Europe are in crisis,” Emmanouilidis stated.

Fixing the European narrative may appear to be a Moon landing to some. But it is better than considering the EU’s retirement on its 60th anniversary.


Article Link To EurActiv:

The New York Times Abandoned Its Integrity Just To Bash Donald Trump

By Michael Goodwin
The New York Post
October 12, 2016

There is apparently nothing wrong with America that can’t be blamed on Donald Trump. He is single-handedly destroying the Republican Party, trashing presidential debates and spoiling the reputation of locker-room talk.

And — breaking news alert! — Trump is even changing journalism. His habit of saying things that nobody ever said before is forcing reporters to unleash their partisan views instead of just giving the facts.

Some of these charges may be true, but the one about Trump changing journalism is demonstrably false. All the more so because it comes from the editor of The New York Times, who happens to be the actual guilty party.

Dean Baquet, the Gray Lady’s boss for two years, recently claimed that Trump’s campaign had forced the paper into a new way of covering politics.

“I think that he’s challenged our language,” Baquet told an interviewer. “He will have changed journalism, he really will have.”

The claim is presented as one of those chin-stroking insights about a new paradigm that liberals spot around every corner. In fact, it is just another example of the Times getting it all wrong.

Trump didn’t change the Times — Baquet did. He’s the one who authorized reporters to abandon the paper’s standards when covering Trump and express their personal political opinions.

Or, as Baquet said in the interview with Nieman Lab’s Ken Doctor, the struggle for fairness is over. “I think that Trump has ended that struggle,” Baquet boasted. “I think we now say stuff. We fact-check him. We write it more powerfully that it’s false.”

Fact-checking, of course, is often in the eye of the beholder, and quickly morphs into opinion when there is no restraint or neutral standard. The result is the paper’s relentless, daily assault on Trump, to the advantage of Hillary Clinton.

Opinions, all uniformly anti-Trump, now ooze from the paper’s every pore, with headlines on front-page “news” articles indistinguishable from daily denunciations on the editorial and Op-ed Pages.

This is not a mere continuation of the old liberal bias that infected the Times, The Washington Post and the broadcast networks for years. This is a malignant strain of conformity that strips away any pretense of fairness in favor of strident partisanship.

The signal that the Times abandoned its traditional church-state separation of news and opinion came in an article by the paper’s media reporter two months ago. In his August piece, Jim Rutenberg declared that most reporters saw Trump “as an abnormal and potentially dangerous candidate.” and concluded they had a duty to be “true to the facts, in a way that will stand up to history’s judgment.”

Baquet, in the interview, cited the Rutenberg piece, saying it “nailed” his thinking. He also said he started “down this track” years ago, during the dispute over weapons of mass destruction in Iraq, and made it clear he believed then-President George W. Bush and then-Secretary of State Colin Powell lied to take America to war. The Trump treatment, he said, was a logical extension:

“I think he gave us courage, if you will. I think he made us — forced us, because he does it so often, to get comfortable with saying something is false.”

‘This is not a mere continuation of the old liberal bias that infected the Times, The Washington Post and the broadcast networks for years. This is a malignant strain of conformity that strips away any pretense of fairness in favor of strident partisanship.’


Baquet offered another example that got him to this point. He accused Republicans of lying in their “swift-boat” charges against Democratic nominee John Kerry in the 2004 campaign.

It is not incidental that his examples all involve allegedly dishonest Republicans, and none involves dishonest Democrats. Nothing better explains why the Times fails to give Clinton the same scrutiny it gives Trump. More than 60 percent of voters regard her as fundamentally dishonest, but Baquet sees only Republicans as liars.

Simply put, his political bias precludes fair journalism. And once standards are gone, they are gone forever, meaning anyone wanting to work at the Times will face a political litmus test.

Baquet’s defense of slanted coverage is reflected in the trove of ­e-mails WikiLeaks released from Clinton campaign chairman John Podesta.

Times reporters and columnists repeatedly show up in partisan ways. Washington correspondent John Harwood sends Podesta his private approval of Hillary Clinton appearances, as if he’s on the team. Columnist Nicholas Kristof, in advance of an interview with Bill Clinton, ­e-mails his questions, which Podesta’s team passes around to staffers to shape Clinton’s answers.

A Washington reporter gives Hillary Clinton veto power over quotations he can use from an interview. Another reporter is praised as someone who has “never disappointed” in delivering stories the campaign wants “teed up” for public consumption.

As the editor, Baquet should be outraged that his staff secretly compromised the paper’s integrity.

But as the editor who eliminated the Times’ standards, he’s getting the biased paper he wanted.


Article Link To The New York Post:

Kompromat Takes Down Trump

His gross foibles are an easy target, but isn’t the election about more?


By Holman W. Jenkins, Jr.
The Wall Street Journal
October 12, 2016

Republican voters knew Donald Trump was a philandering playboy before they nominated him—one of the many reasons choosing him was a mistake.

Philandering is a standard part of the process by which a wife is traded in for a younger one, which Mr. Trump did twice. No secret tape is necessary. In one of his memoirs, Mr. Trump boasts of the “very happily married and important women” who supposedly succumbed to his improbable charms.

Still, talk about importing Russian methods (i.e., “kompromat”) into the U.S. election, with the tape leak, tax leak and the stagy cameo by the aggrieved beauty queen. Then came the Obama administration’s formal accusation on Friday of Russian meddling in the political process. This seemed less aimed at warning off Russia than at underscoring a Democratic talking point that Mr. Trump is a Russian agent.

For the sake of America, the election better be a blowout, because otherwise “rigged” will be the cry from Breitbart and the rest of the pro-Donald media.

Mr. Trump, with his glaring deficiencies and vulnerabilities, was always going to be the most stringent possible test of whether it’s plausible for anybody other than a career politician to get elected president. And yet the tape fuss is hard to grok from a certain perspective.

The American people twice elected Bill Clinton knowing he was a compulsive womanizer. His party put him up for re-election in 1996 despite the apparent knowledge of many senior members that he had conducted a sexual liaison with a 22-year-old White House intern. Even today, his presidency is remembered fondly by the American people. His wife who stuck by him through serial infidelities is now riding his long-term coattails to the White House.

The only difference is that Mr. Trump has not spent considerable private and public resources covering up his indiscretions, because he didn’t treat them as indiscretions. They were a selling point of his public persona.

To Trump voters and the undecided, nothing changed in the past week. If you supported Mr. Trump or were thinking about supporting Mr. Trump, you were already discounting his marital history, his flamboyant lifestyle (advertised repeatedly on Howard Stern’s radio show), his bankruptcies, his use of real-estate-friendly tax loopholes.

You supported him, presumably, because of his stance that the globalization megatrend has been managed with scant concern for its effect on American workers. Yet Trumpism may surprise us by turning out to be less a death cry of the working class than a harbinger of its reappreciation. Our guess is that computers will struggle to competently perform physical tasks long after many species of office drone have been put out of business. If so, grievance can rally a rising class as easily as a sinking one.

The kompromat attack on Mr. Trump clearly has its orchestrated elements—witness the readiness of Mrs. Clinton’s media allies to follow up her mention of the offended 1996 Miss Universe in the first debate. Witness the media’s seamless leap to treat the infantile sex banter of two man-babies on an upholstered bus as the equivalent of “sexual assault.”

A precedent for such orchestrated sandbagging naturally comes to mind. It was the Obama campaign and Chicago Tribune’s manufacture of divorce-related scandals to drive his two most formidable opponents, one Democrat and one Republican, out of the 2004 U.S. Senate race.

Mrs. Clinton spoke of having private and public stances on issues in one of her Goldman Sachs speeches. She should have mentioned a third principle: Democrats run on character assassination, as Mr. Obama also did against Mitt Romney, rather than frankly own up to a rent-seeking, social-engineering, Big Government agenda that voters reject when it’s presented plainly to them.

With his debate performance the real-estate developer didn’t revive his presidential hopes but showed he can remain a populist icon on which future media ambitions can be built. Mr. Trump, we’re likely to find, doesn’t actually plan to lose the $100 million he claims to have spent on the race. (He is not stupid.)

Mrs. Clinton deserves kudos for her jaunty aplomb under difficult circumstances. NBC is in an interesting position, having sat on a tape in its possession for 11 years on which Mr. Trump was unwittingly recorded mugging for an apparently appreciative NBC TV personality. The network claims it was victim of a leak. When do first-class news organizations leak their scoops to their competitors?

NBC was Mr. Trump’s partner in “The Apprentice.” It must have thousands of hours of outtakes. Let’s hear it all, NBC, the stuff that makes Mr. Trump look good, bad or indifferent, in the name of balance. Otherwise, perhaps the network would like to register as a pro-Clinton PAC.


Article Link To The Wall Street Journal:

Is Trump Taking the GOP Down With Him?

Republican officials are distancing themselves in droves, but it may be too late to save the party in Congress.


By Jason L. Riley
The Wall Street Journal
October 12, 2016

The exercise in GOP self-preservation prompted, ostensibly, by the leaked recording of Donald Trump’s lewd remarks was necessary and a long time coming. The question is whether Republicans in Congress have waited too long to part ways publicly with their party’s presidential nominee.

Mr. Trump’s second debate performance was better than his first one in some respects and good enough to keep running mate Mike Pence from abandoning the ticket. Other Republican officeholders, however, are unpersuaded. They’ve concluded that Mr. Trump is not only losing the presidential race but also seriously jeopardizing Republican control of the House and Senate. GOP leaders in Congress—including House Speaker Paul Ryan, who now says he will not campaign with Mr. Trump or otherwise defend him—are convinced that the billionaire is damaged goods. Senate Majority Leader Mitch McConnell is likewise telling his caucus members that they have no obligation to support the top of the ticket.

The GOP panic is warranted. If Mr. Trump hasn’t matured in the past 70 years, he’s unlikely to do so in the next 27 days. There’s “locker-room talk,” and then there’s telling Howard Stern that it’s OK to refer to your daughter as “a piece of ass.”

Mr. Trump’s debate performance shored up his base. That needed doing—which is the problem. A presidential candidate who is still playing primarily to his base less than a month before Election Day is a presidential candidate in trouble. Republican support for Mr. Trump has never been deep; pluralities carried him to the nomination. National polls that include Libertarian candidate Gary Johnson and Green Party candidate Jill Stein have seldom shown Mr. Trump winning more than 40% support, and he’s underperforming all previous GOP presidential candidates among college-educated whites, a group that his opponent is carrying by double-digits.

Mr. Trump and his surrogates continue to cite the size of his rallies as a reliable indicator of widespread GOP enthusiasm for his candidacy. And there he was in Pennsylvania on Tuesday relishing in the “Lock her up” chants from the crowd. But a new Wall Street Journal/NBC News survey is the latest in a string of polls that show Hillary Clinton with more support among Democratic voters (88%) than Mr. Trump enjoys among Republicans (83%). If Mr. Trump had an enthusiasm edge, it’s long gone. Fading support for Mr. Johnson and Ms. Stein has redounded to Democrats.

After Sunday’s debate, Mrs. Clinton released ads highlighting her growing support among independents and disaffected Republicans. Mr. Trump, meanwhile, took to feuding with Mr. Ryan and the GOP establishment on social media. When Mr. Trump isn’t reinforcing concerns about his view of women or his grasp of policy, he’s reinforcing concerns about his temperament.

The Real Clear Politics average of polls shows Mrs. Clinton ahead in every battleground state except Arizona and Iowa. The WSJ poll shows her leading him by nine points among likely voters in a four-way race that includes Mr. Johnson and Ms. Stein. Republicans are walking away from Mr. Trump because he’s become what Ronald Brownstein of the Atlantic calls “a political black hole” for the party.

According to the Pew Research Center, registered Democrats outnumber registered Republicans by 48% to 44%, so merely maximizing candidate Trump’s GOP support won’t produce a Republican president. Republicans need to expand their appeal to independents and Democrats, two groups that Mr. Trump went out of his way to alienate on Sunday night. Trying to turn the debate into a referendum on Mrs. Clinton’s marriage plays well with people who are almost certainly already voting for the businessman, but it’s a loser with most of the distaff voters that Mr. Trump can’t win without. If he wanted to run against Bill Clinton, he’s 20 years too late.

Anti-Trump Republican officials are now hoping that split-ticket voting—whereby a voter chooses candidates from different parties on the same ballot—will help them salvage their legislative majorities. If Mrs. Clinton wins next month, Democrats need to net four seats in the Senate and 30 in the House to gain control of both chambers. Republican strategist Whit Ayres has argued that although split-ticket voting is much less common today, both parties have benefited from it in the past and Mr. Trump’s unconventional candidacy could revive it.

“Let’s not forget that in the South in the 1970s and ’80s, Democratic senators frequently won overwhelming victories at the same time that George McGovern was cratering in 1972 and Walter Mondale was cratering in 1984 throughout the South,” Mr. Ayres said on the “Journal Editorial Report” on Fox News in August. “ Bob Dole lost to Bill Clinton [in 1996] by 8.5 percentage points. The average Republican House incumbent ran 16 points ahead of Bob Dole in that year and they lost only five seats. There’s a record of doing this in difficult environments.”

Difficult? Try surreal.


Article Link To The Wall Street Journal:

Is Trump Putin’s Useful Idiot?

By Noah Rothman
Commentary
October 12, 2016

With 28 days to go before Election Day, it’s fascinating to watch as Democrats discover Donald Trump is conspicuously supportive of Russian President Vladimir Putin. This allegedly shocking revelation that only now dawned on them has compelled the panicky left to demonstrate to the American public that the reviled Russian leader is pulling Trump’s strings. Their latest efforts are, however, not nearly as damning as are Donald Trump’s own statements.

Over at Newsweek, reporter Kurt Eichenwald thinks he might have stumbled on the smoking gun in the form of a leaked email exposed by the Russian intelligence laundering outfit WikiLeaks. In that email, he discovered two sentences he had written, which had been emailed to Clinton Campaign Chairman John Podesta by Clinton confidante and political hitman Sidney Blumenthal regarding the Benghazi attacks. The content implied that Blumenthal believed the deadly Libya attack was “preventable” and a result of State Department negligence. That Eichenwald quote was misattributed to Blumenthal in a report on the leaks published by the website Sputnik, a Kremlin-run web outlet described as the Buzzfeed of pro-Moscow misinformation. But here’s the rub: Trump himself repeated the misattributed quote just as Sputnik had reported it at a recent campaign rally in Pennsylvania.

“Who in the Trump campaign was feeding him falsehoods straight from the Kremlin?” Eichenwald asks. Good question. Sputnik—a pro-Moscow propaganda shop—peddles precisely the dreary stuff on which the Trump campaign is predicated: namely, negative news about the United States. It stands entirely to reason that the Trump campaign, which has a special affinity for outfits like RT (also Russian-owed) and InfoWars (a conspiracy site dedicated to exposing supposedly treasonous American elites) would find that Sputnik also has a special way of validating their prior convictions. As links between Trump and the Kremlin go, though, this is some weak sauce.

That does not mean that Donald Trump has not compromised himself in service to Russia’s interests. Trump denied that the United States had any concrete knowledge that Russia was behind the hacks of Democratic National Committee computers, infiltrations that turned up communications now coincidentally showing up in WikiLeaks document dumps. He insisted that China might be behind the attack or perhaps even hackers with knowledge of computer systems no more sophisticated than that of his pre-teen son Baron. According to intelligence community sources who spoke with NBC News, however, Trumps was specifically and personally briefed by U.S. intelligence officials who indicated that the Russian government and Vladimir Putin were behind the attack. Trump was privy to the same intelligence that led the White House to publicly blame the Moscow for the unprecedented intervention into American electoral politics.

At Sunday night’s debate, Trump went out of his way to distance himself from his own vice presidential candidate. Mike Pence had diverted from the celebrity candidate’s line when he said the U.S. had to respond forcefully to Russian “provocations” and should entertain strikes against its terror-supporting client in Damascus, Bashar al-Assad. “He and I haven’t spoken, and he and I disagree,” Trump said on Sunday when asked about his running mate’s comments. He went on to insist that Russia and Assad were forces for stability and counterterrorism in Syria. This assertion has come even amid a deluge of reports indicating that Moscow has used controlled weapons and struck humanitarian targets in Syria, including a United Nations aid convoy (which both the U.S. and the U.K. have accused Russia of attacking with credible evidence). These are only the latest developments in Russia’s campaign against Assad’s enemies in Syria, which opened with a brazen strike on U.S.-backed rebels and a CIA-provided weapons depot.

The evidence exposing Trump’s support for to Russian interests materialize almost daily, but this is a trend that anti-Trump Republicans had been observing for over a year. Trump has defended Putin who has presided at a time in which journalists and opposition figures conspicuously wind up dead. “I think our country does plenty of killing,” Trump told Joe Scarborough. He has said NATO is “obsolete,” and flirted with the prospect of ignoring Baltic nations if they invoke the treaty’s mutual defense provisions following a Russian attack. Trump has contended implicitly that Russia should have free reign in the Middle East and has said as much explicitly about Europe. Trump has given the appearance that he’s working on Moscow’s behalf for some time, but only after Moscow began to repay the favor did Democrats express their disfavor.

To Democrats just waking up to the threat posed by Moscow’s intervention in American politics with the aid of a willing accomplice, welcome to the party. This is a pattern of behavior anti-Trump Republicans have observed and condemned for well over a year. Democrats who thought this dynamic provided them with advantage played a dangerous game. Now that the Oval Office is within reach of the object of their terror, they’re pulling out all the stops. It is only through fortune and not their efforts, though, that Trump appears likely to fall short.


Article Link To Commentary:

I'm An Anti-Putin Russian And Clinton Makes Me Nervous

By Leonid Bershidsky
The Bloomberg View
October 12, 2016

Whoever wins the U.S. presidential election will have a hard time dealing with Russia: The relationship between the two countries is in tatters. Donald Trump obviously doesn't have any answers. Yet, like most of my fellow Russians who follow the race, I also have misgivings about Hillary Clinton -- even though, unlike most of them, I am an active opponent of President Vladimir Putin.

The last time an independent polling organization -- the Levada Center -- polled Russians on the U.S. presidential candidates was in August. Only 12 percent said they were following the election closely, and 73 percent said they'd heard something about it. Among the news junkies, 39 percent said Donald Trump would be a better U.S. president for Russia, while 15 percent said Clinton would be better. The state-owned pollster, VTsIOM, did its latest poll in July, finding about the same proportion of curious Russians. That survey revealed that 34 percent of those who'd heard of Trump thought Russia-U.S. relations would improve under him; only 6 percent of those who'd heard about Clinton believed that of her.

In part, that can be explained by the effect of Putin's propaganda machine, which has been giving Trump more favorable coverage than Clinton for two reasons. First, Russian state TV always backs populist rebels in any Western country on the theory that whatever weakens the Western establishment is good for Russia. Second, Putin and Clinton openly dislike each other. She says she sees in him a cold-blooded, self-enriching KGB agent and a bully; he remembers how she appeared to encourage protests against him in 2011.

Those reasons matter little to me. I believe Russia's place is in an open, free-thinking Western world, and that nationalist populists, including Trump, are destroying that vision of the West. I took part in the 2011 protests and I agree with Clinton's assessment of Putin. And yet I, too, think a Clinton presidency would be bad for Russia -- and that would ultimately hurt the U.S. as well.

Clinton's positions on Russia are based on simplistic ideological lines. In a campaign speech in late August, she branded Putin "the grand godfather of this global brand of extreme nationalism" -- the brand espoused by anti-immigrant political parties in Europe. Indeed, if one took at face value Putin's recent efforts to build a "conservative" ideology as an intellectual basis for its rule and his propaganda's backing of European nationalists, such a description would be justified. Nothing in Russia can be taken at face value, however.

Putin's domestic ideology, based on Orthodox Christianity and imperial patriotism, is skin-deep and inconsistent. Only 4 percent of Russians regularly attend church, even though 72 percent consider themselves Orthodox Christians. It's difficult to impose fundamentalist values on a society that is used to the Soviet Union's hostility to religion, has three times the abortion rate of the U.S. and contains large and autonomous Muslim and Buddhist populations.

Putin, who has donated a month's salary to Moscow's Jewish museum and who has opened mosques, is not an ideological ally of European nationalists like the National Front in France, who manage to be both anti-Semitic and Islamophobic. Right-wing populists talk with dread of Muslim "no-go zones" in European cities; Putin's Russia has whole regions, notably Chechnya, where Russian laws are applied only if they are consistent with local and religious traditions. Putin's government has been harsher than most European ones on ethnic nationalism, suppressing neo-Nazi groups with as much cruelty as it has shown Islamist terrorists.

When he came to power, Putin's own ideology was the usual post-Soviet mix of economic neoliberalism, Communist internationalism and the veneration of a Russian history much rewritten by the Soviets. That it has acquired a veneer of right-wing nationalism is in large part the fault of Western leaders who, like Clinton, needed to place Putin on their mental maps and couldn't quite do it. He was a post-Soviet chameleon, picking the colors that suited him at any given moment. That's what happened with "conservatism": He put on the colors of the camp that would accept him and not try to tell him what to do.

Putin, who has trampled on the Russian constitution in the most egregious ways, is an embodiment of its Article 13: "No ideology can be established as a government-imposed or obligatory one."

The mismatch between an ideological Clinton and an opportunist Putin is fraught. Clinton has spoken many times about the need to undermine and contain dictators. In an interview with The Atlantic in 2014, she described her experience with the Arab Spring revolutions. "So you can go back and argue, should we have helped the people of Libya try to overthrow a dictator who, remember, killed Americans and did a lot of other bad stuff, or we should have been on the sidelines," she said. It's clear which option she favored then, boasting, famously, after Moammar Al Qaddafi's death: "We came, we saw, he died."

It's easy to agree with this "democracy good, dictatorship bad" approach, but harder to imagine what it will mean in practice. In Ukraine, for example, trying to thwart Putin could mean buying the line President Petro Poroshenko is trying to sell to the West -- that his opportunistic, thoroughly post-Soviet government is a beacon of freedom and a shield against the Russian plague. Poroshenko's fondest wish is to get lethal weapons from the U.S. Granting it would probably lead to an even more destructive and deadly phase of the now-frozen conflict. What will the U.S. do if Ukraine is overrun by Russian troops as a result? Neither Clinton nor anyone else in Washington has even discussed this possibility in public.

In Syria, President Bashar al-Assad is obviously a dictator, and he's tight with Putin to boot. Clinton had urged President Barack Obama to be more resolute in removing him by aiding the Syrian opposition. What if President Clinton uses force more directly against Assad? Will Putin shrink from some kind of military confrontation with the U.S.? I fear not: Russian generals have been itching for such a test for the last few years, since Russia has rearmed and reformed its military. And if the confrontation occurs, consequences will be even more unpredictable than from arming Ukraine.

The Obama administration has espoused the same ideology as Clinton, but it has pulled back from actual conflict with Putin's Russia. It has probably exhausted its opportunities to keep doing both. Putin has seen the pattern and resolved to remain the first mover, not expecting much American pushback except in words. The next administration will have to act, and there are three distinct courses of action open.

One is to remove the ideological red lines, allow that Russia may hold on to Crimea and Assad may remain in power in Syria, and try to make pragmatic deals with Putin -- for example, siding with him against the Islamic State. Another is to act as forcefully as possible in both Ukraine and Syria, risking a military confrontation with Russia but hoping Putin will be intimidated and desist. The third option is to step up economic sanctions against Russia and wait for the Putin regime to collapse for economic reasons while avoiding a direct show of force.

My fear is that Clinton will choose one of the latter two options or a combination of them. That will enable Putin to step up the anti-Western hysteria in Russia -- and almost force him to pick up the gauntlet as soon as possible, before Russia collapses economically. He has proven many times that he doesn't have a reverse gear. His recent ultimatum to the U.S. is proof that he's willing to play the escalation game. A military escalation between Russia and the U.S. could have dramatic consequences for my country -- and also for the U.S. if it allows itself to be dragged into war with such a dangerous rival.

Clinton halfheartedly tried the realpolitik option with Russia during the infamous "reset." Her heart wasn't in it, and Putin felt he was being duped rather than offered real carrots to join forces with the U.S. As president, Clinton probably won't give it another, better try. I wish someone would, though: Russia cannot easily be forced onto a democratic, Western path.

That's why I would prefer a more flexible leader, equally good with carrot and stick, to lead the U.S. It's likely, however, that no such leader exists in the current lineup. Trump is unpredictable, which is the worst thing to be. And that's where I disagree with most of my compatriots.


Article Link To The Bloomberg View:

I'm An Anti-Putin Russian And Clinton Makes Me Nervous

Yemen Is A Horror Show That Obama Used To Call A Success

By Benny Avni
The New York Post
October 12, 2016

Yemen, one of the world’s poorest countries, has become a battlefield for the Mideast’s most vicious rivalries. That’s bad for Yemenis, bad for the region and bad for us.

Over the weekend an American destroyer, the USS Mason, came under missile fire in the Red Sea. The Mason was there to beef up the US military presence in the region after a United Arab Emirates ship was destroyed off Yemen’s shores. US officials say the Houthis are responsible for both incidents.

The Houthis belong to the Zaidi sect, an offshoot of Islam close to Shia. Although the Houthis are an indigenous Yemeni force, Shiite Iran supports them with money, weapons and training. They now control much of the country, including the capital, Sana.

Enter the Saudis. Fearing Iran’s rise — not to mention Houthi incursions into its own territory next door — Riyadh gathered a coalition of Sunni states from nearby in the Persian Gulf and as far away as Egypt and Morocco. They launched a ferocious war on the Houthis that has already killed 4,000 civilians.

This week, a Saudi air attack hit a funeral procession in Sana, killing 140 and raising an outcry around the world. Fingers were pointed not only at the Saudi-led coalition, which has committed several such atrocities in recent weeks, but also at America.

After the Iran nuclear deal raised anger at Washington across the Sunni Mideast, President Obama sought to appease the Saudis by selling them a new bundle of warplanes, tanks and other war toys. Now many in the region and beyond accuse us of complicity in war crimes in Yemen.

Meanwhile, not all is hunky-dory among Arab coalition members. Yes, on the surface an old enmity between the two top monarchies, Saudi Arabia and Qatar, seems to have at least temporarily receded to the background. But that may not last.

As a well-connected diplomat tells me, the Qataris think any outcome in Yemen is a win for them: If the coalition loses out to the Houthis, the Saudi king, hated by the emir of Qatar, will be diminished. On the other hand, the only forces able to defeat the Houthis are affiliated with the Muslim Brotherhood, a leading anti-Western Sunni political force, backed by Qatar. A victory of Brotherhood-affiliated militias will widen Qatar’s influence in the region.

Happy either way, the Qataris therefore increasingly support the Saudi-led coalition.

But everyone else shouldn’t be so optimistic. The Egyptians, for one, may soon realize their help in Yemen elevates the Brotherhood, which was born in Egypt and is the top domestic enemy of President Abdel Fatah al-Sisi.

As for America, do we really want anti-Western Sunni forces to emerge victorious? Remember, Yemen was home to the bin Laden family. It served as a base for prolific terrorist recruiter Anwar al-Awlaki, who inspired bombers from Paris to Boston to Chelsea’s 23rd Street.

On the other hand, do we really want victory by an Iranian-backed gang, the Houthis, which, as the weekend incident demonstrates, are no friends of ours?

What about letting them fight each other to the death, while paying lip service to Yemeni casualties by denouncing atrocities on both sides? Regrettably, that cynical solution won’t do either.

The weekend incidents are a reminder, for one, that any of the factions fighting in Yemen may eventually use Bab al Mandeb (The Gate of Grief), a narrow strait at the bottom of the Red Sea, against us, blocking a crucial naval commercial passage connecting Africa and South Asia with the Mediterranean and Europe.

Two years ago, Obama presented Yemen as a success story in his mostly neglectful approach to the Mideast wars.

Shortly after, the Houthis captured Sana after allying with the ousted former president of Yemen, Ali Abdullah Saleh. Any hope of success in the UN-led diplomacy behind Obama’s “Mission Accomplished”-like boast died.

Yemen, a microcosm of the current Mideast mess, can in part be chalked up to America’s policy in the last decade. We tried to divorce ourselves from a region that simply refuses to accept our pleas for separation.

Our withdrawal gave rise to the region’s most extremist elements and their anti-American backers.

Regrettably, the two presidential frontrunners signal they’ll mostly continue Obama’s attempt at ending America’s traditional global leadership, which sooner or later will come back to bite us, and America will likely be drawn into a much messier war.


Article Link To The New York Post:

On The Bombing Of Aleppo

By George Soros
Project Syndicate
October 12, 2016

The world is witnessing in Syria a humanitarian catastrophe of historic proportions. It is being perpetrated by Russian President Vladimir Putin in support of his protégé, Syrian President Bashar al-Assad. Russian warplanes are bombing the civilian population of Aleppo, the country’s most populous city, to assist Syrian government forces attempting to take control of rebel-held areas.

The combined assault has, among other things, killed hundreds of people and wounded more than a thousand, put the city’s remaining hospitals out of commission, and deprived the population of drinking water.

Putin is moving aggressively to exploit the three months between now and the January 20 inauguration of the next US president, based on the callous calculus that the United States will be mostly immobilized by the political transition. As The New York Times puts it: “Putin calculates that the departing President Obama will be unlikely to intervene in the escalating Syrian conflict and a new American president who might consider a tougher policy will not yet be in office.” The Times then quotes Russian political scientist Nikolai V. Petrov: “The next American president will face a new reality and will be forced to accept it.”

Other reports in the Times and elsewhere have vividly depicted the suffering of Aleppo’s people and the heroic efforts of the doctors and civilians, like the White Helmets, who are risking their lives to help them. When the facts are fully established, Putin’s bombing of Aleppo will be viewed as among the modern world’s most egregious war crimes.

I appeal to the people of Russia, the US, Europe, and the rest of the world not to stand idly by, but to spread the word and voice their outrage. An outpouring of public opinion could induce Putin to call a halt to his heinous crime against humanity.


Article Link To Project Syndicate:

Wells Fargo Faces Costly Overhaul Of Bankrupt Sales Culture

By Dan Freed and E. Scott Reckard
Reuters
October 12, 2016

Embroiled in a scandal over unauthorized customer accounts, Wells Fargo & Co faces a steep challenge in overhauling its hard-charging sales culture without gutting profits.

Until recently, Wells staffers labored under ambitious quotas while executives boasted to Wall Street about “cross-selling” each customer multiple accounts.

That system collapsed with revelations that thousands of employees opened as many as 2 million accounts without customer permission, leading to a $185 million fine in September. But the problems ahead extend far beyond regulatory penalties, investigations and lawsuits.

Executives will have to dismantle and rebuild systems of sales incentives and performance management that date back two decades, said retail banking experts, including two consultants who have worked for Wells Fargo. That will require heavy spending on hiring, training and installing safeguards against abuses.

"They have to retrain their entire sales culture going back years," said Paul Miller, an analyst at FBR Capital markets. "It's a huge job."

Wells Fargo spokesman Oscar Suris declined to comment for this story.

On Monday, bank CEO John Stumpf and President Tim Sloan led a conference call with 500 executives to lay out responses to the scandal, including the addition of 2,000 risk management employees and a series of branch tours by the new head of retail banking, according to the Wall Street Journal.

Management said the bank had lost some retail banking business and could lose more.

“It’s going to be harder for awhile, and we get that," Sloan said, according to the Journal.

Dan Kleinman - a San Francisco-based consultant who has worked with Wells Fargo on and off since the 1970s - predicted it would take the bank 3-5 years to rebuild its sales and management structures, which he called a "Herculean task.”

Retraining could involve as many as 100,000 staffers at more than 6,000 locations. Some other potential costs are less obvious, such as recruiting and retaining the necessary talent.

"The question is whether the type of folks you want as employees will even work for the bank," Kleinman said. "Its reputation is soiled.”

Slashed Profit Forecasts

Most stock analysts covering Wells Fargo have cut profit forecasts, citing fallout from the scandal. Fitch Ratings also cut the bank's credit rating outlook to "negative," citing potential profit erosion.

The bank ditched its sales quotas on Oct. 1, amid political pressure. Stumpf has said he still "loves" cross-selling, but he used the word sparingly while fielding withering questions from the Senate Banking Committee. Stumpf explained that it was “shorthand for deepening relationships."

Some industry experts agree that the bank’s failures stem more from poor management than from the mere idea of selling customers multiple accounts, which isn’t unique to Wells.

Citigroup Inc predecessor Citicorp was one of the first companies to encourage cross-selling in banking in the late 1970s under former CEO Walter Wriston, according to financial journalist and author Philip Zweig, whose biography of Wriston was published in 1996.

"There's nothing inherently wrong with cross-selling," Zweig said. "The Wells Fargo scandal is the result of greed, perverse incentives, lack of controls ... and just plain bad management."

Short-Sighted Strategy

Wells Fargo embraced cross-selling about two decades ago, as “supermarket” banking gained popularity as a business model. By 1999, Wells Fargo's annual report referred to "stores" rather than "branches."

Kleinman, a sales compensation expert who worked at Wells Fargo in the 1970s and 1980s, saw the shift in corporate culture taking hold by 2003, when he returned as a consultant.

Retail operations were headed at the time by Stumpf, then executive vice president of community banking, and Carrie Tolstedt, then regional banking executive vice president. Kleinman recalled being summoned to a big meeting with large audio-visual displays on sales strategy.

“I walked into basically a corporate sales event, pumping people up, very different than the culture I had seen before,” he said.

Now Stumpf is battling to survive as CEO. Tolstedt retired as head of community banking in July amid investigations into the bank’s high-pressure sale culture. Her $125 million severance package has since sparked widespread criticism. The two executives forfeited $41 million and $19 million in unvested stock, respectively, in response to the blowback.

Michael Moebs - a Wells Fargo executive in the 1970s and later a consultant to the bank for two decades - said the bank’s quota system would have been more appropriate for selling cars than car loans.

Because retail banks sell ongoing services, measuring long-term customer service and satisfaction is far more important than short-term sales figures, said Moebs, now a banking consultant based in Lake Bluff, Ill.

“You're not just selling a product, but establishing a relationship," he said.

A Crucial 'Pivot’


Since Wells agreed to a regulatory settlement with the Consumer Financial Protection Bureau on Sept. 8, executives have denied that the bank's sales quotas and culture caused the widespread abuses. Chief Financial Officer John Shrewsberry has said Wells Fargo's customers were still happy and its employees were productive.

"I think we can make this pivot in a way that protects our business model," he said at an investor conference last month.

Wells has tried before to curtail gaming of sales quotas. In 2014, the bank monitored certain statistics as indicators of unauthorized account openings, one former Los Angeles-area branch manager told Reuters.

In a “quality sales report card,” the bank set limits on the number of accounts that went unused - but the limits were so high as to undercut any serious reform, said the former manager, who declined to be identified because he now works for a Wells competitor.

The bank directed managers, for instance, to ensure that no more than 45 percent of debit cards went without activation, and no more than 27.5 percent of new accounts went unfunded, the former manager said. The "report cards" were also cited in a 2015 federal lawsuit filed in San Francisco by employees alleging unauthorized account openings.

Suris, the Wells Fargo spokesman, declined to comment on the bank's efforts to track unused accounts.

Moebs, the consultant, said any effective reform effort would include more sophisticated employee incentives, such as bonuses that vest over several years with sustained growth in sales and customer satisfaction.

The cost of such efforts would cut into short-term profits, he said, but with the ultimate payoff of customer and employee loyalty.

"Like the rebuilding of any sports team,” Moebs said, “it takes time, money and talent."


Article Link To Reuters:

Wednesday, October 12, Morning Global Market Roundup: Asia Shares Slip As U.S. Earnings Disappoint, Dollar Gains

By Hideyuki Sano
Reuters
October 12, 2016

Asian shares hit three-week lows on Wednesday after a dour start to Wall Street's corporate earnings season knocked U.S. stocks, while the dollar and Treasury yields were at multi-month highs on growing expectations of a U.S. interest rate hike in December.

The British pound jumped back from lows in a volatile trading session, though concerns about a "hard Brexit" are likely to keep the currency under pressure.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.4 percent while Japan's Nikkei futures JNMcm1 slipped 0.6 percent.

On Wall Street, the U.S. S&P 500 Index .SPX fell 1.2 percent to near one-month low, and dipped below its 100-day moving average - seen as a major support - for the first time since June.

Shares of aluminum producer Alcoa (AA.N) tumbled 11.4 percent and diagnostics test maker Illumina (ILMN.O) plummeted 24.8 percent following their disappointing earnings, casting a pall over the market.

Also undermining risk sentiment were rises in global bond yields.

"Rising bond yields will be a major market theme in coming three months or so. For one, there's speculation that central banks in both Europe and Japan could start tapering," said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.

"Inflation expectations are rising because of oil and U.S. wage growth. We don't expect oil prices to hit $80 or $90, but even if they stay around $50, that's about 10 percent above their levels last year, thus putting inflationary pressure."

Investors are growingly convinced that the U.S. Federal Reserve will raise interest rates in December while avoiding a hike at its next meeting less than a week before the U.S. presidential election.

The 10-year U.S. Treasuries yield US10YT=RR rose to 1.781 percent, its highest level since early June.

U.S. interest rate futures <0> are pricing in about 75 percent chance of a rate hike by December, little changed over the past couple of days.

"The markets had relied on expectations of monetary stimulus for a long time but that is changing with bond yields rising around the world. You have rising interest rates and falling EPS. That's obviously bad for stocks," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

The specter of rising U.S. interest rates helped to lift the dollar's index against a basket of six major currencies .DXY =USD to its highest in seven months.

The index stood at 97.476, after having risen to as high as 97.758 on Tuesday, climbing above its July peak of 97.569.

The euro EUR= hit a two-month low of $1.1049 and last stood at $1.1054.

The Chinese yuan continued to soften as the dollar firmed, slipping to a fresh six-year low of 6.7230 in onshore trade CNY=CFXS while the offshore yuan CNH= traded near its lowest since January.

The yen JPY= was little changed at 103.42 to the dollar.

The British pound jumped 1.5 percent in thin Asian trade to $1.2307, after having fallen nearly 5 percent in the previous four sessions.

Some market players suspected sterling benefited from a report by Bloomberg that British Prime Minister Theresa May has accepted that Parliament should be allowed to vote on her plan for taking Britain out of the European Union.

"The pound is being bought back after its big falls. But given that Brexit will remain a major theme for the markets, its likely to be capped," said Shinichiro Kadota, chief currency strategist at Barclays Securities Japan.

Oil prices inched up to stay near one-year highs hit earlier this week, with investors waiting for talks between OPEC producers and other oil exporters on curbing output to end a glut in the global market.

Brent crude futures LCOc1 traded at $52.59 per barrel, up 0.3 percent in Asia, edging closer to Monday's high of $53.73.


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Investors Demand Answers, New Phone From Samsung After Note 7 Fire Fiasco

By Se Young Lee
Reuters
October 12, 2016

Samsung Electronics Co Ltd needs to quickly find the cause of the fires that led to it pulling its Galaxy Note 7 smartphones and get a new model to market, investors said on Wednesday, as shares in the company slipped to a one-month low.

The world's top smartphone maker on Tuesday scrapped the $882 flagship smartphone in what could be one of the costliest product safety failures in tech history.

Samsung announced the recall of 2.5 million Note 7s in early September following reports of the phones catching fire. The firm appeared to have the situation under control as it issued replacement devices with different batteries, until the new phones also began to smoke and combust.

Investors and analysts agreed that the damage to Samsung's brand and future earnings would deepen the longer the market was left in the dark about the origin of the fault, with some already predicting lost revenue in the region of $17 billion.

"It's good that Samsung made a firm decision on the Note 7, but people are concerned about the situation because people don’t know what the problem is," said Kim Hyun-su, a fund manager at IBK Asset Management, which owns shares in Samsung.

"There needs to be explanation from Samsung in order for consumers to understand that problems won’t occur in the next models ... Samsung needs to clearly explain and admit what went wrong."

Samsung would likely push ahead to get the latest version of its premium S-series smartphones to market as soon as possible, fund managers said. Typically, the South Korean company unveils a new Galaxy S phone on the sidelines of the Mobile World Congress trade show in the first quarter as it battles Apple Inc to stay at the top of the smartphone market.

"We'll have to see what the future plans are but I suspect Samsung will move quickly to get the Galaxy S8 ready; they have the manufacturing and production capabilities," IBK's Kim said.

Experts are baffled by what could be causing the overheating in the replacement phones, if not the batteries, and Samsung has not commented.

An official at the Korean Agency for Technology and Standards, which is investigating the problem alongside Samsung, said the fault in the replacement devices might not be the same as the problem in the original product. The official asked not to be identified as he was not authorized to speak publicly.

Aviation authorities and airlines around the world are telling passengers to switch off their Note 7s and keep them out of checked baggage, amid fears they could bring down a plane.

Samsung shares were down 1.6 percent as of 0436 GMT after touching a one-month low of 1.494 million won ($1,340), reflecting concerns about fourth-quarter earnings as well as the potential long-term impact on its smartphone business.

The stock is down 11 percent so far this week, on track for worst weekly percentage fall since December 2008.

"Damage control at Samsung will face an uphill battle to redeem the company's tarnished image owing to the dangerous and dramatic nature of the phone's failure," Vijay Michalik, an analyst at research firm Frost & Sullivan, said.

A permanent end to Note 7 sales could cost Samsung up to $17 billion, according to calculations based on analysts' projected sales of the phone.

While the damage to Samsung's brand remains hard to quantify, negative publicity from the botched recall could touch off a turf war among Android smartphone manufacturers, analysts said.

Consumers tend to commit to their choice between Apple's iOS operating system and Google’s Android, leaving Samsung’s fellow Android manufacturers such as G Electronics Inc and Alphabet Inc's Google in prime position to strike.

($1 = 1,114.7500 won)


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Sprint To Raise $3.5 Billion Through Sale, Lease-Back Of Airwaves: WSJ

By Abinaya Vijayaraghavan
Reuters
October 12, 2016

Sprint Corp (S.N), the No. 4 U.S. wireless carrier, is preparing to mortgage a little more than 10 percent of its wireless airwaves to raise cash, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

The company, whose majority owner is Japan's SoftBank Group (9984.T), believes the airwaves are worth more than $14 billion and will try to raise about $3.5 billion initially, the Journal said.

Sprint could not be immediately reached for comment.

In November, Sprint signed a $1.2 billion deal for the sale and lease-back of certain leased devices and in April, said it would raise $2.2 billion in cash through the sale and lease-back of certain network assets.

The company had negative cash flow of $3.17 billion in the financial year ended March 31.

The carrier, which has been burning through cash as it faces intense competition for subscribers, has said it aims to slash costs by more than $2 billion this fiscal year.


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Apple To Set Up R&D Center In Shenzhen, Bolster China Ties

By Sijia Jiang
Reuters
October 12, 2016

Apple Inc (AAPL.O) will set up a research and development center in China's manufacturing metropolis Shenzhen, the U.S. tech giant said on Wednesday, as the firm looks to spur growth in the world's second largest economy amid growing competition.

The Shenzhen hub follows a similar plan for a center in Beijing, and comes as Apple is looking to bounce back in China, where local rivals like Huawei Technologies [HWT.UL], OPPO and Vivo have been taking market share from its flagship iPhone.

Apple's chief executive Tim Cook announced the plan during a meeting with senior officials from the southern Chinese city where he is attending a nation-wide innovation event, the Shenzhen Economic Daily reported.

"We are excited to be opening a new Research and Development center here next year so our engineering team can work even more closely and collaboratively with our manufacturing partners," Cupertino-based Apple spokesman Josh Rosenstock said in emailed comments.

"The Shenzhen center, along with the Beijing center, is also aimed at strengthening relationships with local partners and universities as we work to support talent development across the country," he said.

The Shenzhen Economic Daily, citing Cook, said Apple was keen to attract talented software developers in the city, which remains an important center for manufacturing Apple products. It added Terry Gou, founder and chief executive of Apple's major supplier Foxconn, also attended the meeting.

In August Cook unveiled plans for a Beijing-based R&D facility, its first in China, and promised to invest more in China during a visit to the country. [nL1N1AX200]


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