Tuesday, October 18, 2016

European Stocks Open Higher With Sentiment Boosted By Stronger Oil Prices; Inflation In Focus

By Gemma Acton
October 18, 2016

The pan-European STOXX 600 was around 0.62 percent higher with all major bourses in positive territory.

However, data from the Institute of International Finance showing weak portfolio flows to emerging markets is adding to nerves around the strength of China and is just one factor putting a break on risk appetite.

Investor caution continues to mount as election day approaches in the U.S. This as comments from Federal Reserve Vice Chair Stanley Fischer on Monday suggested the U.S. central bank was "very close" to meeting its employment and inflation goals, sending U.S.stocks lower into Monday's session close.

In Asia, disappointing earnings and weak outlooks from Hong Kong-listed companies, particularly in the telco and property space, dampened enthusiasm for equities, as concerns over a softer yuan continue to grow.

All eyes are now on inflation data expected out of the U.S. and U.K. as a multi-week sell-off of government bonds in these markets continued apace on Monday.

Article Link To CNBC:

Trump Is Missing Out On Showing The World His Sweet Side

By Heather Robinson
The New York Post
October 18, 2016

The Donald showed up a little late for the luncheon, and he brought a date — not on his arm, but in his arms.

It was 1997, an event for “young leaders” organized by the Jewish charity UJA-Federation. We were all surprised to see Donald Trump show up holding his 3-year-old daughter Tiffany, golden-haired and dressed all in white.

Trump carried Tiffany in, then referenced her several times as he spoke, as in: “I know you all paid to hear me, and you’re getting two for the price of one today because I brought Tiffany.”

He added, “Some people think it’s funny that we named her Tiffany because of Tiffany & Co. [the jewelers,] but I don’t care. I think her name is cute.”

All so different from the prickly hypersensitivity and defiance we’ve seen from Trump in recent months.

The mogul told the crowd of well-heeled young professionals that he’d brought the toddler along because Tiffany’s mother Marla was sick that day

They passed close to me as he walked out afterward, holding Tiffany’s hand. I noticed how much she resembled him. (She still does.)

Overall, Trump came across as very tender, loving and attentive to his child — deftly balancing his attention to Tiffany with his commitment to his audience.

I’ve thought about that day countless times over the past 18 months as I struggled to reconcile the campaign-trail Trump with the nurturing man I saw that day, one flexible enough to take over parenting duties because his spouse was ill.

He’s kept the same spontaneity, which enables him to be funny and charismatic — but the sweetness is missing. (And he’s rarely with Tiffany in public.)

As a single woman listening to Trump, I remember being moved that this important man was so caring and loving with his little daughter — and clearly proud of her.

Coming into the final stretch of the campaign, I wonder: Is Trump missing some opportunities to show some of that warmth, flexibility, and ability to connect?

Is the bold and uncompromising Donald Trump we see today — with his current wife Melania wordlessly expressionless beside him as he steamrolls ahead — the only iteration of the man?

The crude brags on that 11-year-old tape will make it hard for any undecided or independent voters — women, in particular —to even consider turning out for him.

But if Trump acted as he did with Tiffany that day, maybe we’d think again. That man had the decency to take over parenting because his wife was under the weather. He didn’t waste his words disparaging women as “pigs,” “dogs” and “slobs,” but instead focused on the positive.

That man had the depth and sensitivity to be delighted with an adorable, offbeat-looking daughter.

Not that all of his kids aren’t admirable. Trump’s four confident adult children are all successful, show real social conscience and appear good at sustaining relationships.

Ivanka is a businesswoman with her own clothing and accessories line as well as an executive in the family business and married mother of three. Eric runs a charitable foundation that has raised over $6.5 million for St. Jude’s Children’s Research Hospital, a nonprofit that provides free medical care to children with catastrophic diseases. Donald Jr. is a married father of five and an executive VP in his father’s company.

Tiffany is a recent college grad preparing to take the LSAT.

It’s hard to believe Trump could have helped raise them into such decent, hardworking, unspoiled adults — ones devoted to him, no less — if he were a monster or true out-of-control misogynist.

No doubt the rigors of surviving and thriving in New York City’s business world, and the relentless push to get and stay ahead, won’t bring out anyone’s softer qualities. Nor will the often dirty business of politics, or the entertainment world with its pressure to be sensationalistic and extreme.

And in many ways, Trump’s harshness may have helped bring him this far. But perhaps Trump’s gentler, more decent side — the family man I witnessed that day with his daughter Tiffany — could save him in the final stretch.

Channeling that man who took over for his wife for the day and walked hand-in-hand with Tiffany might allow him to show a more vulnerable side and connect with voters, especially women.

Appearing more with both his daughters would at least help. And a sincere apology to the women of America for the insensitivity of some of his on-the-record remarks about women would be a good start.

As would an honest discussion about how he would feel if someone spoke about his daughters the way he has, at times, spoken about other people’s daughters.

As my own father once told me, everyone is someone’s child. If Trump could keep that in mind, and speak to American women in a way that shows he understands this truth, maybe America, including American women, could glimpse the man at his best.

Article Link To The New York Post:

The Real Reason American Businesses Aren't Taking Risks — And Aren't Growing

Today’s lack of spending threatens the economy’s long-term, fundamental productive potential.

The National Interest
October 18, 2016

Where are the “animal spirits” that once motivated American business? Their absence bodes ill for the future. This plea must sound as if it emerged from a Trump harangue, but actually it reflects the deep thinking of a very different sort of man, the great economist John Maynard Keynes. He used this admittedly colorful phrase to describe the sometimes-irrational optimism of business people, a confidence in the future that drives them to build and hire on the expectation that the investment will pay out in time. Keynes saw the impulse as essential for economic growth. Alone, he argued, this willingness to construct, update, and re-equip production facilities allows the economy to expand its physical productive capacity, apply new technologies, and so increase worker productivity enough to support higher wages. America has missed such “spirits” and the investment they support for some years now.

Certainly, a paucity of capital spending explains in large part why this overall recovery since 2009 has disappointed. Whereas historically, real economic growth has averaged 3–3.5 percent a year, and closer to 4–4.5 percent in recovery years, it has in this recovery averaged a mere 2.1 percent a year, a third less than the average and less than half the typical recovery. According to Commerce Department figures, this shortfall is almost entirely due to the reluctance by business to spend. For the past three years, the economy has seen business’ capital investment expand only 2.75 percent a year. That pace might seem in line with overall growth, but it is disproportionately slow by the standards of past recoveries. Had capital spending come close to its 7.1 percent yearly growth pace averaged in all recoveries during the past forty years or even the 6.1 percent pace averaged after the 2001–02 recession, it would have increased the economy’s overall growth pace by an additional 1.0 percent point, bringing it much closer to historic averages.

Matters however speak to greater dangers than just disappointingly slow current growth. Today’s lack of spending also threatens the economy’s long-term, fundamental productive potential. Because existing equipment and facilities are always depreciating and becoming obsolete, basic improvements in the economy depend on business’ willingness to keep up spending on new equipment, facilities, systems, etc. Without it, that natural tendency toward depreciation and obsolescence ultimately erodes the economy’s overall ability to produce, its physical plant as well as the relative state of the technologies with which it produces. That deterioration further renders workers less productive and less able to command higher wages. If something does not change, the future seems bound to suffer just such an erosion. Business during the past three years has purchased new physical capital and technology at barely 24 percent above the rate of depreciation and obsolescence. That rate may seem adequate to forestall an outright decline in productive potential, but it is far below the historic 40 percent averaged over the last forty years.

This frightening picture may already show in measures of labor productivity. The average worker’s output per hour in all aspects of the private economy has actually declined at a 1.3 percent yearly rate during the past nine months and increased at barely 1.0 per year at other times in this recovery, half the 2.0 percent a year averaged over the prior forty years. Such measures are of course subject to all kinds of temporary influences, but it is also entirely plausible that this shortfall reflects the relative lack of new equipment, facilities, systems and technologies that in the past have enhanced the average worker’s ability produce and earn. It might also explain why wage growth has so disappointed.

If immediate growth rates and longer-term income and productive potentials depend on a return of “animal spirits,” it is reasonable to ask what stole them in the first place. Two related suspects present themselves. One is the legacy of the great recession of 2008–09. The other is Washington’s anti-business rhetoric and threats coupled with extensive legislation. The former has had the most straightforward effect. During the severe recession many firms had trouble making payroll and nearly went bankrupt. Many did go bankrupt. The understandable fears managers have harbored since have created an equally natural reluctance to extend themselves and their firms, to take on debt, to hire on the expectation of future growth, to put firm assets at risk in any way. It speaks volumes in this regard that non-financial corporations today hold cash deposits almost twice historic levels relative to other balance sheet measures. And they are doing little more with these monies beyond buying back stock.

Washington’s rhetorical and legislative agenda, especially early in President Obama’s first term, has had an independent effect. Threats to firms, common at the time, certainly discouraged risk taking. The Affordable Care Act and the Dodd-Frank financial reform legislation, whether good laws or bad, compounded the problem by creating tremendous uncertainties in a business community already cowed by its 2008–09 experiences. Managers, facing more difficulty than usual calculating future health care expenses, the cost of credit, or its availability, became that much more reluctant to take risks. It has not helped that the legislation, though passed into law in 2010, still remains less than fully defined. Until the details of these immense bills become clear and managers can estimate costs, firms across the entire economy—small, midsized and large—will remain reluctant to hire, expand, and put monies at risk for years before they pay off.

Time may help remedy this situation. “Animal spirits” may return as its passage dulls memories of the great recession. Time may also bring clarity at last to the business implications of the Affordable Care Act, the Dodd-Frank financial reform legislation, and other rules imposed on business during the past few years. Perhaps then business managers will recapture their old spirited ways, spend more on new equipment and the like, and so put growth prospects back on their old and better footing. If time fails to heal, then the economy will need more proactive efforts to inspire business to take risk. The class warfare and name calling that have characterized the past few years and the current election campaign will be especially counterproductive for such an effort.

Article Link To The National Interest:

America's Assad Quandary

An excruciating fact confronts us: it does not necessarily follow that Bashar al-Assad’s departure would improve the situation in Syria.

By Robert D. Kaplan
The National Interest
October 18, 2016

A PRINCIPAL tenet of realism is that disorder is worse than injustice, since injustice merely means the world is imperfect, whereas disorder can mean there is no justice for anyone. President Bashar al-Assad of Syria has tested this thesis to an unbearable extent. The degree of injustice he has perpetrated can be equated with crimes against humanity. Hundreds of thousands have been killed in a half-decade-old civil war, both ignited and perpetuated by Assad’s regime—not to mention the millions of refugees and regional chaos his rule has spawned in the Middle East and Europe. But an excruciating fact confronts us: it does not necessarily follow that his departure would improve the situation, at least at this juncture. Syria, to put it mildly, is in great disorder. Assad’s abdication could both deepen and broaden that disorder, if it has any effect at all.

Don’t ever assume that things cannot get worse. Assad remains a secular ruler from a minority group, whose forces and allied criminal bands still control more of the Syrian heartland than any other warlord. These are not altogether negative attributes, given Syria’s level of anarchy and the plethora of Islamic extremist outfits operating in that environment. His departure, rather than leading directly or indirectly to peace, would more likely raise the stakes for those already vying for supremacy. Rebels would not surrender their guns at the sight of his removal—they would have even more cause to keep fighting for each patch of ground. Damascus, in such a circumstance, could quickly descend into another version of the humanitarian hell that is Aleppo, as various rebel groups battle over the frightful carcass of what was once Syria. Fanciful descriptions of Assad ceding command, even as the Alawite power structure survives to provide transitional stability, entirely miss the point: The Alawite state itself may be synonymous with the very person of Assad, who assumed power in 2000 precisely because it was only he who could unite the various factions of the regime built by his father, Hafez al-Assad. Quite possibly, Bashar al-Assad is the state, or what’s left of it. In any case, an outside power demonstrably acting to dislodge him would have to assume moral and political responsibility for the consequences, which might include a variety of dire outcomes: some ethnic cleansing of the Alawites; the slaughter of more Christians; and the eventual establishment of a Sunni jihadist regime in Damascus more hostile than Assad to Israel and Jordan, both U.S. allies.

THE FACT that Russia and Iran are acting, in effect, to prevent such a cascade of events is ironic, but hardly unprecedented. It is an irony that the Israelis can appreciate: The disengagement accords Henry Kissinger negotiated between Israel and the elder Assad regime in the mid-1970s constituted, for all practical purposes, a peace treaty that lasted for over thirty-five years until the present civil war. Who says the Israelis have not found the Assads useful? They may still do.

Moreover, the notion that there is a beneficent negotiated settlement lurking somewhere on the horizon that will lead Assad into exile completely misunderstands the nature of his dictatorship. Assad is complicit in the killing of hundreds of thousands in order to stay in power—not to give it up! He can’t give up. He is trapped. There are likely layers of people around him whose own lives are dependent on him staying in power. Dictators fall when, usually through illness or age, they lose the all-consuming will to remain in control. Both the shah of Iran and Nicolae Ceaușescu of Romania were physically failing when they were toppled. They were only shadows of the men that they had been only a few years earlier. Hosni Mubarak of Egypt, already in his eighties, was psychologically devastated by the abrupt death of a grandson two years before the Arab Spring, and was never the same afterward, according to those close to him.

Assad, by contrast, is a mere stripling at fifty-one, and he may have a surge of adrenaline having survived so many years after the world assumed he’d be toppled. Russia’s entry into the war can only have improved his morale. His father, who himself had killed tens of thousands of civilians for the sake of remaining in power, would be proud of him, he must now think. This is not a man about to resign from office in an age of the International Criminal Court. Quite the contrary: better to fight on in a rump Alawite state. From his point of view, there would be more honor in such a path.

The truth is that there was probably never a possibility of a soft landing for the sanguinary Baathist regimes of Syria and Iraq, which eviscerated all levels of civil society between the ruler at the top and the tribes and extended families at the bottom. Once these Baathist regimes were challenged or toppled there was only dust left in their wake. For their origins lay less in usurpation than in the demonstrated failure of attempts at democracy in the early and middle decades of the twentieth century in Damascus and Baghdad, owing to ethnic, regional and sectarian divides. The idea that democracy has not been tried in Syria is a myth. Elections in 1947, 1949 and 1954 ultimately broke down along the lines of groups and sects specific to parts of the country. By the time Hafez al-Assad came to power in a coup in 1970 there had been twenty-one changes of government in twenty-four years of independence. Nobody could bring order to the state until he arrived.

During the Cold War phase of the Arab-Israeli conflict, Syria was known as the throbbing heart of Arabism, since the only way to assuage Syria’s internal divisions was to smother them with an uplifting pan-Arab cause: destroying the Jewish state. Indeed, the most virulently anti-Israel states in the Arab world during that period were those that were never really countries to begin with—not the ones with specific, accessible pasts, such as Morocco, Tunisia and Egypt, but states that were but vague geographical expressions. Syria, Iraq and Libya housed identities so weak that they depended on extreme authoritarianism and an outside hatred for sustenance. Syria was always more identifiable as a vast region within the Ottoman Empire (stretching from the Taurus Mountains in Turkey to the Nafud Desert in Saudi Arabia) than as a state in the post-Ottoman sense. It was for these reasons, among others, that I predicted Syria’s eventual demise in a February 1993 essay in the Atlantic. In “Syria: Identity Crisis,” I concluded, “Assad’s passing may herald more chaos than a chaotic region has seen in decades.”

To be sure, Hafez al-Assad was always a brilliant tactician. He tolerated the peace process with Israel—so long as it never led to formal peace—because it allowed him to have a reasonable relationship with the United States, even as the Warsaw Pact supplied him with arms and closely advised him on the techniques of torture and repression. But true peace, he knew, would have led to chaos, since it would have robbed the Baathist state of its only unifying national purpose. As the British traveler and Arabist Freya Stark wrote in 1928, and later published in Letters from Syria, “I haven’t yet come across one spark of national feeling: it is all sects and hatreds and religions.”

By accomplishing the near impossible—stabilizing a place that for all of its previous postcolonial history had never been stable—Hafez al-Assad had afforded Syria the opportunity to forestall Stark’s bleak, deterministic vision. He could have transformed Syrians from subjects to citizens. After all, he was in power for three decades. But opening up the society and the economy, becoming an enlightened authoritarian, in other words, would have entailed risks and the workings of a much broader vision than his narrow, suspicious gaze allowed. And as the machine-like sterility of his rule suggested, rather than become a statesman, he morphed into an Arab Brezhnev who merely staved off the future—which arrived bloodily during his son’s reign.

As the elder Assad’s rule demonstrates, the tragedy of the Arab world was never a lack of democracy, but a lack of enlightened authoritarianism. What was needed was not someone like Václav Havel but more leaders like Oman’s Sultan Qaboos bin Said Al Said, an absolute dictator who has ruled in the Asian style according to liberal precepts. Syria’s chance for liberal rule now lies in the past, when it had the prerequisite political order to build upon, without which freedom is impossible. It is Bashar al-Assad’s father who is the true father of today’s chaos. This is all Hobbes 101.

OF COURSE, Hafez al-Assad himself was quite restrained, that is, compared to Iraq’s Saddam Hussein. Whereas the former killed tens of thousands, the latter was a beast altogether who killed hundreds of thousands. And that excludes the Iran-Iraq War. After Saddam invaded Kuwait, Hafez al-Assad reportedly joked that “Saddam is like a chain smoker; the moment he finishes one war he has to start another.”

The ground-level reality of these two countries in the 1970s and 1980s bore this out. Despite several visits to Syria, I was shocked the first time I arrived in Iraq. In Damascus, I could walk into the telex room of a post office and punch out a story unsupervised. In Baghdad, plate glass separated me from the telex machines. Copy was handed to an Iraqi official on the other side of the window who decided whether or not it would be sent. In Syria, I travelled on my own all over the country. In Iraq, that would have landed me in prison. I remember a conversation I had in Washington with David Newton, the U.S. ambassador to Iraq from 1985 to 1988, whom I had met during one of my visits to Baghdad. He had hoped that over time, and with U.S. encouragement, “Iraq’s level of repression could have been improved to that of Syria.” Rather than a pathetic goal, Newton’s hope—had it been realized—would have constituted a minor human-rights miracle. In a small and somewhat poignant way, given the sometimes awful psychological conditions that Newton and other Arabists had to labor under during the Cold War, his remark was an example of realism personified, respectful as it was of historical and cultural constraints. But to appreciate it, one had to have—as Peter Bechtold, another Foreign Service Arabist, memorably told me a quarter-century ago—“a frame of reference based on travel experience that not only most Americans lack, but so do people on the National Security Council.”

Many years have passed, and many of us have, or should have, been chastened by events. The idea of bringing democracy overnight to Baathist societies, or to Libya, for that matter—or even installing a better military dictatorship in Iraq following a U.S. invasion, as I had once hoped—now stands exposed as a pipe dream. As I watch the disorder in the Middle East accumulate, no reputations have ripened so well as those of the Cold War–era area specialists I portrayed in The Arabists. Without these State Department figures, Henry Kissinger could not have operationalized his strategy. They were the intuitive children of George F. Kennan, who knew that without interests a state’s values cannot be projected in the first place.

The Arabists understood that you work with the material at hand, rather than impose your own historical experience on others. They operated in the narrow realm of the possible; to demand democracy or something like it in many Arab countries was a fantasy. They did not have the advantage of their Foreign Service colleagues in Eastern Europe during the Cold War, where geography and the legacy of empires offered much greater hope for the future. Eastern Europe represented the more enlightened material bequeathed by the Prussian, Habsburg and Ottoman empires, whereas the Middle East represented the most backward areas of Ottoman rule. And besides, there was the intractability of Islam. Yet, these men and women labored incessantly for the most incremental of goals and concessions in dealing with the most benighted regimes. The Arabists arguably lacked sufficient imagination, not to mention a particular lack of empathy for Israel, but at least they were innocent of hubris. They had a built-in granular awareness, based on actually living in these countries, of how much worse things could get if such authoritarians were ever summarily replaced.

In Iraq, the disorder was total after Saddam Hussein was overthrown. In Syria, because the Baathist regime still hangs on in much of the country, the disorder—as truly horrific as it has been—may actually still not be complete. Of course, the Islamic State (ISIS) is a child of this disorder. Therefore, the amelioration of order must take precedence over the battle against injustice. To say Assad must go, while fighting to defeat ISIS, is a manifestation of policy incoherence. Foreign policy is governed by a hierarchy of needs, not by a suite of moral desires.

SOME FACTS are incontrovertible. Assad, a secular leader from a minority group, has spilled too much blood to be eased out of power by the so-called international community. The Russians and the Iranians, who have more skin in the game and are more knowledgeable about internal regime politics in Damascus, than the United States, will fight to keep him in power. The Russians are not in danger of being caught in a quagmire in this endeavor because, unlike America in Iraq, they are not fighting on the ground to topple an existing order and then build a new one. They are fighting from the air merely to maintain the existing order. And in fact, this order that they are helping to maintain, which goes under the name of Assad and the motley groups associated with him, constitutes a weapon against ISIS. ISIS, moreover, can only be destroyed by out-administering it—that is, by not only capturing Raqqa (and Mosul) but by establishing a new and more moderate administrative order in those cities. Doing so will be exceedingly difficult. Doing so without at least some sort of a working relationship with Russia and Iran could be nigh impossible.

Because all or much of the above is known but less often admitted, coherent policy has been thwarted. Policy does not require complete public candor, but public statements and actual goals do have to be modestly aligned. For too long, this has not been the case with Syria. Policy discipline requires that the road to defeating ISIS must go, at least to some extent, through Moscow and Tehran. It requires acknowledging that toppling Assad could bring more anarchy, not less. And it requires acknowledging that information on the Syrian opposition remains highly imperfect and unreliable.

America will never control the outcome in Syria. Of course, it can build leverage and improve its standing as a regional player by arming and advising proxy groups in ways that might pay off down the road. Washington might work more closely with Moscow in Syria, if it can extract concessions from the Kremlin in Ukraine. The United States can also work to end conflict between the Kurdish groups and the Arab rebels it is supporting. Meanwhile, progress is already being made on the ground against ISIS. The situation is certainly not hopeless, as long as Washington abjures the requirement for perfect moral outcomes.

Assad is a mass murderer. He is morally repugnant. Yet, there are key differences between Syria and Yugoslavia. The humanitarian intervention in Yugoslavia was aided by a specific geopolitical circumstance absent in Syria. The 1990s were a time when Russia wielded little influence in the Balkans, owing to its own chaotic conditions immediately following the collapse of Communism. Thus, the United States had an unusual window that allowed it to operate with virtual impunity. That window closed with Vladimir Putin. Truly, there were no great and competing regional actors Washington had to contend with in Yugoslavia, beyond the half dozen or so ethnic and religious factions fighting in that civil war, none of which were international terrorists. In Syria, it is not only Russia that America has to take into account, but Turkey, Iran and Saudi Arabia as well. And rather than a few factions, there are literally dozens fighting. Stabilizing a post-Assad Syria without literally divisions of peacekeepers ready for deployment could be an impossibility.

But can’t we set up safe areas, lift starvation sieges and so forth? All possible. More can be done. But the situation is also more infernally complex and risky by manifold degrees than Yugoslavia. This is, ultimately, the legacy of Baathism, a hollow, woolly-headed ideology that attempted to paper over ethnic, religious and sectarian fissures with an appeal to Communist-style economics and repression. It was this that Hafez al-Assad and Saddam Hussein had to offer, in place of building civil societies. The postcolonial legacy in the Levant has been arguably more lethal than the colonial one. No one as yet has found a solution to the collapse of the Ottoman Empire.

Article Link To The National Interest:

A Cheat Sheet For The Battle Of Mosul

By Benny Avni
The New York Post
October 18, 2016

To the Iraqi forces that launched a campaign to liberate Mosul and deal ISIS its most serious blow yet: godspeed. To America: Welcome back to Iraq, and let’s hope we get it right this time.

“We will meet soon on the ground of Mosul to celebrate liberation,” Iraqi Prime Minister Haider al-Abadi vowed early Monday, announcing the long-awaited start of the battle to free the country’s second-largest city from ISIS.

Capturing Mosul was ISIS’s most valuable victory. In the spring of 2014, after tearing through other parts of Iraq’s Sunni areas, these terrorists took over the city — prompting Abu Bakr al-Baghdadi, its megalomanic leader, to announce a caliphate, an Islamic state that was to grow in territory, fame and influence and defeat the world’s infidels.

Since then, would-be terrorists from as far as Orlando, Fla., have sworn allegiance to the victor of Mosul, which is why defeating it there is so crucial.

ISIS’s victory came about two years after President Obama ordered all US troops out of Iraq. In the face of the enemy, the Iraqi army — armed, trained and funded by America since 2003 to become the best fighting force in the Arab world — collapsed, fleeing the city and abandoning piles of modern US-made weapons.

But ISIS’s ensuing atrocities prompted Obama to quietly return to Iraq, and US-backed Iraqi units now look a bit more promising. Iraq’s counter-terrorism brigades, including the elite Golden Division, will carry most of the Mosul fighting — with American air cover (plus help from the Brits, French, Germans and others).

There’s much to worry about, though.

The United States has wisely conditioned its air support on the exclusion of Iranian-backed Shiite militias from the battlefield. Abadi has agreed: Where we bomb, those militias — loyal to Nouri al-Malaki, prime minister before Abadi, and Tehran’s fave — can’t fight.

But what if Abadi’s special forces aren’t enough to capture and control a city of over 1 million terrorized locals? Especially when ISIS fighters have likely booby-trapped every nook and cranny of the city, and dug deep fighting tunnels under it?

True, independent Kurdish peshmerga fighters are helping. In the early fighting, the Kurds captured several villages northeast of Mosul, as the Iraqi armies moved in from the south. But the Kurds aren’t likely to go deep into Mosul or risk major loses to liberate the city’s Sunnis.

So if the Iraqi army gets bogged down (or if Iran insists), the Shiite militias might well enter the fray.

Sectarian enmities will then reignite, making the rise of some new extremist Sunni threat more likely.

Turkish forces that have been stationed near Mosul may also join the battle. Officially, they’re there to protect Iraq’s Turkmen minority — but Turkey’s President Recep Tayyip Erdogan also detests Iraq’s Abadi. The Turks may itch to show off their prowess — and to stick it to Baghdad while expanding Turkish influence in Iraq.

Then there’s a real fear that Mosul will become an Iraqi version of the horrors of Aleppo. Unlike the Russians, Iranians and regime forces in Syria, US planes won’t target hospitals or schools — but mistakes happen, and ISIS will do its best to encourage them.

Will war-shy Obama then keep his eyes on the prize, defeating ISIS? Will he insist, as he must, on keeping Iran from dominating Iraq’s Sunnis through its proxy Shiite militias? What if Tehran threatens to tear up the president’s beloved nuclear deal?

The answers to those questions depends on whether Obama has learned from one of his worst mistakes. Remember: His premature, hasty withdrawal from Iraq created the divisions that allowed ISIS to take over Mosul in the first place. To avoid a repetition, he may have to accept a deepening American involvement in the battle for Mosul.

Iraqi spokesmen estimate that liberating the city will take up to six months — which leaves the messy Iraq theater as a top foreign-policy crisis for our next president, who’ll need to start handling it minutes after the Jan. 20 inauguration.

Here’s hoping that he or she has learned from all the errors committed by the two previous administrations.

Article Link To The New York Post:

Why Populists Lose Elections

By Pankaj Mishra
The Bloomberg View
October 18, 2016

In a democracy, the “people” are the supreme arbiters, and their wisdom speaks through the electoral process. Such is the assumption on which the modern world has been built since God and monarchs began to fade from the scene. Lately, however, the wisdom of the people has felt a bit off-key. In one country after another, from the Philippines to the U.S., Hungary to India, the people have chosen to boost demagogues, not to mention serial gropers.

Philippine President Rodrigo Duterte’s faith in extrajudicial murder may have actually helped boost his approval ratings to nearly 90 percent. The brazen homophobia, Islamophobia and anti-Semitism of Poland’s ruling Law and Justice Party hasn’t dented its popularity in the slightest. In recent weeks, xenophobic sentiments have been amplified in Britain, the world’s oldest democracy, by a government borrowing from the playbook of the far-right U.K. Independence Party (UKIP).

It’s not surprising that most mainstream journalists neither anticipated nor can satisfactorily explain the startlingly worldwide rise in demagoguery -- a kind of extreme democracy that threatens to derail economic globalization and radicalize political life. Their worldview was shaped by the dominant ideology of the post-Cold War era: progress through technocratic capitalism and liberal-democratic trustees.

As the Financial Times columnist Wolfgang Münchau wrote last month, “many pundits, myself included, had their formative years from the 1980s onwards.” The Soviet empire had imploded, discrediting not only communism but also a broad range of social-democratic ideals. In the 1990s, major politicians of the center-left (Bill Clinton, Tony Blair, Gerhard Schröder) as well as the conservative right took to advocating greater deregulation and privatization. Their consensus found a responsive echo in the media.

“The Populist Explosion: How the Great Recession Transformed American and European Politics,” a short book by John B. Judis, shows why journalists who have a sense of history, and its irony, need not be bewildered by the astonishing revolt against globalized elites in our time. Judis’s ambit is broad: It includes Podemos in Spain, Syriza in Greece and the People’s Party in Denmark as well as Trumpism in America. But he defines his subject precisely.

Populists, for instance, should not be confused with authoritarians and despots; they embrace the “democratic competition for power” instead of subverting it. Furthermore, populism “is not an ideology” but a political and moral rhetoric that pits ordinary people (noble victims) against elites (treacherously self-serving). Such a definition allows Judis to trace a genealogy of populism, from the American People’s Party of 1892 (which brought the term into circulation) to Marine Le Pen’s National Front of 2016.

It allows him to make careful distinctions between left and right versions of populism, to distinguish between Bernie Sanders and Donald Trump. “Leftwing populists,” he writes, “champion the people against an elite or an establishment. Theirs is a vertical politics of the bottom and middle arrayed against the top.” On the other hand, “rightwing populists champion the people against an elite that they accuse of coddling a third group, which can consist, for instance, of immigrants, Islamists, or African-American militants.”

Populists of both kinds tend to enjoy limited success, and often fail to cross the electoral threshold. For one thing, their definition of the people is too vague: Trump’s, for instance, includes both Ivy League students burdened with debt and blue-collar workers suffering from extensive de-industrialization. Such a people, united by anger and disaffection, can be easy to mobilize but hard to consolidate, especially when populists find themselves making hard political choices.

The populists don’t help their own cause by making demands that seem impossible in the present conditions, such as Sanders’s “Medicare for all.” They are better at devising catchy slogans: “one percent versus the 99 percent.” Still, the impracticality of their schemes for taking back control doesn’t lessen the massive influence of populists. They are the symptoms of a crisis, an unmistakable sign that the old consensus has broken down and needs to be replaced with something politically more acceptable.

As Judis writes, “their demands may be co-opted by the major parties or they may be thoroughly rejected. But the populists roil the waters.” In the U.S., he points out, populists from the 1890s to the segregationist George Wallace in the 1960s, “have had an outsized impact.”

Certainly, Sanders and Trump have already forced Hillary Clinton out of many of her previously held positions on free trade. The UKIP leader Nigel Farage claimed accurately last week, as the British government stoked anti-foreigner passions, that his party has “changed the center of gravity of British politics.”

However, the wisdom of the people, manifested lately by demagogues, has to reckon with the wisdom, often more arbitrary, of global markets. The pound is sliding amid fears of a “hard Brexit,” and Scottish nationalists threaten secession from the U.K. The very attempt by populists to take back control is making the future uncontrollable.

Article Link To The Bloomberg View:

The Chimera Of Stock-Market Short-Termism

By Mark Roe
Project Syndicate
October 18, 2016

An often-heard refrain, increasingly voiced in US politics, is that corporate America is excessively influenced by short-term stock-market considerations. While the US presidential election is not particularly focused on policy at the moment, the campaign will soon end, at which point people will govern and policies will be adopted. Given that both Republicans and Democrats have criticized short-termism, it is possible that some of those policies might aim to address it. They are unlikely to make any difference.

Not only has the problem of short-termism been woefully exaggerated, but the policy proposals for addressing it are severely lacking. Consider Democratic presidential nominee Hillary Clinton’s proposal – which Vice President Joe Biden has endorsed – to use the capital gains tax to encourage share-owners to hold on to their stock for a longer time.

The idea is that when share-owners furiously trade their stock, corporate executives feel pressed to ensure high earnings every quarter, so that the share price does not fall. Investment in, say, research and development, despite its long-term benefits, can induce share-owners to sell, punishing the company with a declining stock price.

Today, the lower capital gains rate is available on shareholder profits made when selling stock held for one year or more. Clinton and her advisers hope, instead, to tax capital gains at ordinary rates for stock held for up to two years, after which the rate would decline by four percentage points per year until, after several years, it reached the current long-term rate, which tops out for wealthy investors at 20%.

If stockholders know that holding a company’s stock will eventually allow them to benefit from a lower tax rate, the argument goes, they will be more willing to withstand a drop in that company’s quarterly earnings. With greater scope for longer-term thinking, executives would make decisions that have a long-term payoff, even if they are costly today.

The plan certainly sounds reasonable. The problem is that a falling tax rate for capital gains will not stop most stockholders from trading; at most, it will impel some of them trade less often. Executives will still have to worry about the price that traders accord to their stock.

Of course, curtailing the velocity of trading may have other effects, both good and bad. If too many resources and too much brainpower are now devoted to finding slight under-pricing or overpricing of stock, Clinton’s program might be a good thing, as it would help to reallocate those resources. If, however, less trading makes markets more volatile and unpredictable, taxing short-termism could turn out to be a cure worse than the disease.

In any case, Clinton’s program will not achieve its stated goal of inducing those doing the trading, and thus setting stock prices, to take a longer-term perspective. Nor will it make corporate executives less concerned about the next quarter’s results. Prices will, after all, still be going up and down.

There is another reason the proposal will not be effective: many of the largest share-owners are institutions that don’t pay tax anyway, such as pension funds and foundations. And many other stockholders buy and sell within a year, even though it means paying the full tax rate. Their decision-making time horizon will not be affected by a long phase-in of the more advantageous tax rate.

But the fact that Clinton’s plan will not achieve its goal is not exactly the end of the world. Contrary to widespead belief, stock-market-induced short-termism is probably not much of an economic handicap anyway. There is considerable (though not conclusive) evidence that it is not nearly as widespread – or as problematic – as many think.

Consider this: four of the ten biggest companies in the United States today, measured by stock-market capitalization, are Amazon, Apple, Alphabet (Google), and Microsoft. None of them can be accused of failing to invest in R&D or other long-term, sometimes even visionary, projects. And the stock market supports all of them well. If they can do it, others can – and surely do.

Simply put, ending short-termism has turned into a bigger political issue than it deserves to be. It is a cause that resonates widely not because short-termism is hampering the economy, but because saying that it is justifies protecting those with a stake in the status quo – well-paid employees; CEO's and senior managers; and board directors – from rapid change.

The bottom line is that there are bigger, more pressing problems to address. And, even if short-termism were a major problem, Clinton’s tax proposal would not resolve it. The good news here is that the plan is not particularly high on Clinton’s agenda, leaving a chance that she might not feel compelled to implement it when elected.

Article Link To Project Syndicate:

WikiLeaks Is Politics For Cowards

By Francis Wilkinson
The Bloomberg View
October 18, 2016

The public release, via WikiLeaks, of purloined e-mails and documents related to Hillary Clinton and her campaign has produced starkly different reactions. On the whole, the news media is nonplussed.

In a typically snarky tweet, Washington Post reporter David Weigel mocked the notion that the WikiLeaks dump would alter the dynamics of the election, summing it up with the purposefully mundane revelation that “Clinton strategists debated how to respond to controversies.”

The leaks, which may or may not be part of a Russian effort to undermine Clinton in order to advance her rival, largely expose routine political discussion among staff engaged in the constant, necessary balancing of policy, politics and presentation. It’s an equilibrium that any successful campaign must achieve before assuming leadership of a successful government.

How far should the campaign go in appeasing popular Senator Elizabeth Warren? How would the media react if Clinton, in discussing her use of e-mails, said she was “bemused” by technology? How should the candidate reposition herself on trade, given the shifting politics?

To anyone who has worked in electoral politics, or extensively covered it, the WikiLeaks dump reads like a thousand variations on the theme of “dog bites man.” It paints a portrait of Clinton as a normal politician surrounded by a normal staff engaged in normal politics.

To many on the political right, that reality is unacceptable. They had told themselves that WikiLeaks would be the deus ex machina of this election, exposing Clinton as a treasonous devil and delivering the White House, and all its broad powers, into the transgressive hands of Donald Trump. Now, having promised themselves scandalous gold, they re-imagine every dull pebble in the pan as a shimmering nugget.

Americans for Tax Reform, an organization devoted to using the tax code to preserve and enhance the financial interests of the wealthy,packaged a leaked e-mail on gun regulation -- ATR leader Grover Norquist sits on the board of the National Rifle Association -- with a video that the group had unearthed of Clinton testifying on guns in 1993. “On April 14, 2016,” the press release stated, “ATR released previously unseen video footage from a non-C-SPAN camera showing Hillary’s visceral facial expression” as then Senator Bill Bradley of New Jersey discussed a proposed gun tax.

Not only is the video footage “previously unseen,” it emanated from a “non-C-SPAN camera.” Ooh-la-la. The secret footage shows Clinton silently nodding her head, appearing both sincere and thoughtful as she acknowledges either her agreement with, or merely the rudimentary comprehension of, another person. The “visceral facial expression” is recognizably human.

Judicial Watch, a right-wing organization that has pursued Clinton for years and sued to gain access to her State Department e-mails, likewise has been sifting through its discoveries. After another batch was released last week, Judicial Watch President Tom Fitton stated in a press release that “the e-mails are further proof that Hillary Clinton used her office to provide special treatment -- even photo ops -- for donors to the Clinton Foundation.”

Judicial Watch is based in Washington D.C. Throughout that city, lobbying and law-firm offices, even cubicles occupied by junior staff, are accented with photographs of the occupant grinning next to President Ronald Reagan or George H.W. Bush or Bill Clinton or George W. Bush or Barack Obama or hundreds of other prominent politicians. There is cause for unease about Clinton’s use of a private e-mail system when she was secretary of state and, to a lesser extent, about the dual tracks of the Clinton family’s foundation work and the powers of the office that Clinton seeks. A proliferation of photo-ops, however, is not a threat to the republic.

There is more than desperation in these efforts to transform a “visceral facial expression” or a series of photo-ops into a sinister conspiracy. There is pathos. It reaches its logical conclusion in right-wing blogs, such as the popular Gateway Pundit, which posited that leaked e-mails suggest that Supreme Court Justice Antonin Scalia, who died last year one month before his 80th birthday, was murdered and that Clinton’s campaign chairman John Podesta was involved.

The suggestion is painfully stupid (you can read it here if you have an abundance of patience or a paucity of wits). Yet it’s a mistake to think that stupidity is the common ground for such wild charges. Norquist is no dummy, and most likely the others are plenty bright as well.

The source fueling the right’s recklessness isn’t stupidity. It’s cowardice. It takes a basic level of character and respect for truth to confront the world as it is rather than concoct fantasies that flatter your ideology, complement your anxieties and excuse your faults.

Clinton is a complex, real politician with formidable skills and obvious failings. The cartoon versions of the right -- and left -- are shabby frauds devised by people who shrink from the demands of honest politics. To defeat Clinton, and the political tradition she embodies, on the merits requires facts, arguments, policies, vision. Credible opponents rise to the task. For cowards, there’s WikiLeaks.

Article Link To The Bloomberg View:

The Plot Against America

Donald Trump alights on the Compleat Conspiracy. Anti-Semites are thrilled.

By Bret Stephens
The Wall Street Journal
October 18, 2016

They meet in secret. Men of immense wealth; a woman of limitless ambition. Their passports are American but their loyalties are not. Through their control of international banks and the media they manipulate public opinion and finance political deceit. Their aim is nothing less than the annihilation of America’s political independence, and they will stop at nothing—including rigging a presidential election—to achieve it.

Call it for what it is: “A conspiracy on a scale so immense as to dwarf any previous venture in the history of man.”

Astute readers will note the quotation of a speech delivered in the U.S. Senate in June 1951 by the then-junior senator from Wisconsin. We’re in historically familiar territory. Joe McCarthy inveighed against Communists in control of the State Department. For Charles Lindbergh it was “war agitators,” notably those of “the Jewish race.”

And now we have Donald Trump versus what Laura Ingraham calls “the globalist cabal”—the latest enemy from without, within. In a speech Thursday in West Palm Beach the GOP presidential nominee painted a picture of a “global power structure” centered around Hillary Clinton that aims to “plot the destruction of U.S. sovereignty” while stepping on the necks of American workers with open borders and ruinous trade deals.

“There is nothing the political establishment will not do,” Mr. Trump thundered. “No lie they won’t tell, to hold their prestige and power at your expense, and that’s what’s been happening.

Here, then, was the real Donald, fresh off his self-declared unshackling from the rest of the GOP. No longer will the nominee content himself with pursuing petty mysteries such as President Obama’s birth certificate or Alicia Machado’s alleged sex tape.

Now he’s after the Compleat Conspiracy, the one that explains it all: the rigged election, migrant Mexican rapists, the lying New York Times, thieving hedge funds, Obama-created ISIS, political correctness, women insufficiently attractive to grope, Chinese manufacturers, the Clinton Foundation. If it isn’t voting for Donald Trump and has recently crossed an international border, it’s a problem.

It did not escape notice that Mr. Trump’s remarks smacked of darker antipathies. A reporter for the New York Times suggested that the speech “echoed anti-Semitic themes.” The Daily Stormer, which bills itself as the premier publication of the alt-right, was less delicate, praising the speech for exposing the mass media as “the lying Jewish mouthpiece of international finance and plutocracy.”

But one needn’t accuse Mr. Trump of personal animus toward Jews (there’s no evidence of it) to point out that his candidacy is manna to every Jew-hater. Anti-Semitism isn’t just an ethnic or religious prejudice. It’s a way of thinking. If you incline to believe that the world is controlled by nefarious unseen forces, you might alight on any number of suspects: Freemasons, central bankers, the British foreign office. Somehow, the ultimate culprits usually wind up being Jews.

That’s why it’s utterly unwise for politically conservative Jews to make common cause with Mr. Trump, on the theory that he’d be a tougher customer in the Middle East than Mrs. Clinton. Leave aside the fact that Mrs. Clinton called privately for bombing Iran’s nuclear facilities in one of her leaked Goldman Sachs speeches, while Mr. Trump has found public occasion to praise both Saddam Hussein and Bashar Assad.

More dangerous is that a Trump administration would give respectability and power to the gutter voices of American politics. Pat Buchanan would be its intellectual godfather, Ann Coulter and Ms. Ingraham its high priestesses, Breitbart and the rest of the alt-right web its public trumpets. American Jews shouldn’t have to re-live the 1930s in order to figure out that the “globalist cabal” might mean them.

Nor should Jews ignore the rekindling of right-wing anti-Semitism simply because its next-of-kin—left-wing anti-Zionism—remains so potent on college campuses and in progressive political circles. The GOP’s conversion to being a powerfully pro-Israel and philo-Semitic party is a relatively recent development. No law dictates that it is destined to be a lasting one.


The title for this column is taken from the 2004 Philip Roth novel that imagines what might have been for America if Lindbergh had defeated Franklin Roosevelt for the presidency in 1940, signed neutrality pacts with Germany and Japan and initiated a re-education campaign for recalcitrant American Jews. The novel draws its power from being a too-plausible alternative reality from which we were spared less by the wisdom of the public than by the vagaries of history. The McCarthy chapter also might have ended differently, if McCarthy himself had been less buffoonish. Even then it took public courage to stand up to him.

Life imitates art, and vice versa. This time the plot against America is a work of non-fiction, its outcome is still undetermined, and its perpetrators are the very people alleging the conspiracy.

Article Link To The Wall Street Journal:

The Cheap Moralizing Of Never Trump

Trump voters get that the elite contempt for their man is a proxy contempt for them.

By William McGurn
The Wall Street Journal
October 18, 2016

Three weeks out from Election Day, the Never Trump argument has been neatly summed up by Bill Maher. Not only is Donald Trump coarse and boorish, anyone who supports the man is as revolting as he is.

On his show last month, Mr. Maher put it this way to Trump campaign manager Kellyanne Conway: “You are enabling pure evil.” The HBO comedian went on to amuse himself by adding that “Hillary was right when she called a lot of his supporters deplorable.”

Mr. Maher might have added that it is also a well-worn Democratic trope. After all, wasn’t it Barack Obama who described small-town Americans as bitterly clinging to guns and religion and disliking anyone who is different? As for Hillary Clinton, in her deplorables crack she dismissed half of Mr. Trump’s followers as “racist, sexist, homophobic.” Less well noted (but more telling), she also declared them “irredeemable.”

This is an old argument for the left. But Republicans are now hearing it from the right as well. Which puts conservative Never Trumpers in a curious position vis-à-vis government of, by and for the people: Are the tens of millions of Americans who will pull the lever for Trump come November evil too, or just invincibly stupid?

Give the Never Trumpers their due: Most do not shy away from the implication that anyone who would vote for Mr. Trump is as low and base as he is. Their problem is that the argument doesn’t seem to be having much traction with Republican voters. A Rasmussen poll released Monday found that while Mrs. Clinton enjoys the support of 78% of Democrats, Mr. Trump is supported by 74% of Republicans. Other polls show that even after all his fumbles and embarrassments, the vast majority of Republicans do not want Mr. Trump to drop out.

One reason may be that the argument about morally corrupt GOP voters is not really an argument. More precisely, it’s an argument Republicans typically hear from the left. Instead of weighing the prosaic facts—i.e., the practical ramifications of having Mrs. Clinton sitting in the Oval Office versus Mr. Trump—how much easier it is to try to end all discussion by pronouncing the GOP nominee repellent.

Trump supporters get this. Probably few were surprised by the “Access Hollywood” tape that showed Mr. Trump in full Bill Clinton mode. They support him in spite of it.

They support him because they fear political correctness is making vital discussions about the country impossible—and conclude that any candidate who’s going to take this on is not going to be Miss Manners. They support him because they know what they will get if Mrs. Clinton wins, as now looks likely.

They support him because they get the contempt dripping from Mr. Obama and Mrs. Clinton whenever the subject is the things they cherish: faith, patriotism, the decency of ordinary citizens, and so on. Above all, they support him because they also get that the elite contempt for Donald Trump is a proxy contempt for them.

Still, each new day brings new accusations and analogies. Like college sophomores ransacking history for the most extreme metaphors, no pejorative is too fantastic. Trump is Hitler! Trump is Mussolini! Trump is Nietzsche! Even George Will just likened the GOP convention to a “mini-Nuremberg.”

Ironically, the cheapest moralizing has been reserved for those trying to make the best of a bad situation. Thus Trump running mate Mike Pence finds himself accused of moral turpitude for working to keep the Republican Party from coming apart and giving voters some hope for a conservative agenda if Mr. Trump were to win.

Ditto for House Speaker Paul Ryan, excoriated by the Trumpers for his efforts to preserve the GOP’s House majority and by Never Trumpers for refusing to un-endorse the Republican nominee. Mr. Ryan understands that losing the Congress would give President Hillary Clinton two years to push through the progressive wish list, not to mention putting a liberal majority on the Supreme Court, preserving ObamaCare and maintaining the travesty that is the nuclear deal with Iran. Having watched what the 2010 GOP House takeover did to the Obama agenda, she would no doubt take full advantage of the time she has to act.

In the end, the strongest argument for a Trump vote has always been this: The alternative is a president who lies, whose public life has been a series of scandals from cattle futures to the destruction of documents under subpoena, who would be a third term for disastrous Obama policies at home and abroad, and who has never taken a position that wasn’t done from naked political expediency—from supporting the Iraq war in 2002 or opposing it later to invoking Abraham Lincoln to justify saying one thing in public and another in private.

Meanwhile, the Never Trump movement’s contribution has been to give us a word for all those who have weighed this evidence and have found the argument against a Clinton presidency persuasive: evil.

Article Link To The Wall Street Journal:

Democrats Need To Get Ready To Run Washington

An unanticipated wave election could hand them the White House and both chambers of Congress. Are they prepared to govern?

By Brian Beutler
The New Republic
October 18, 2016

The bottoming-out of Donald Trump’s campaign, and the obvious difficulties he will have rehabilitating it, have made the unthinkable thinkable.

Until this past week, political observers commonly assumed partisan GOP gerrymandering after the 2010 midterm, and the geographic clustering of liberal voters in urban enclaves, had placed the House of Representatives out of Democratic reach until at least 2022.

These structural factors serve as a massive buffer for Republicans who can lose the popular vote in the landslide and still maintain control of the House. In 2012, Democratic House candidates garnered a million more votes than Republicans, but Republicans retained a 234-201 majority. Most election analysts believe Democrats would have to win the overall House vote by seven or eight percent in order to gain a bare majority.

Thanks to Trump, we are closing in on that spread.

House Minority Leader Nancy Pelosi told her members last week that if the election were held that day, they would win a majority.

The prospect of total Democratic control of government is a tantalizing one for liberals, who have imagined Clinton’s presidency as a slog of gridlock and obstruction. Like Obama’s presidency, minus the first two years of unified government. Even fleeting Democratic majorities would allow Clinton to craft policy, improve people’s lives, and build a legacy for herself.

The problem is that Democrats are suffering from something like Stockholm Syndrome for political minorities. Unable to fathom majority status, they have devoted little creative imagination to the agenda they’d pass if they were in charge.

“Leader Pelosi is singularly focused on Election Day,” Pelosi’s deputy chief of staff Drew Hammill told Politico Monday, stressing, in Politico’s words, “that there’s no measuring of the drapes or planning for a takeover behind the scenes.”

Republican leaders have been priming members to enact a specific agenda for several years running, making it very clear what they would do with absolute political power. With Democrats it’s much less clear. The potential for tension with the White House is underscored by the fact that their agenda isn’t nearly as fleshed out as Clinton’s presidential platform is. The two camps would be well served by spending the next three weeks expanding their range of common ground. If they don’t, they may end up governing together without a clear vision of how to proceed.

Clinton’s agenda is almost ridiculously detailed, especially in contrast to her opponent. “Trump’s campaign has posted just seven policy proposals on his website, totaling just over 9,000 words,” The Associated Press reported in August. “There are 38 on Clinton’s ‘issues’ page, ranging from efforts to cure Alzheimer’s disease to Wall Street and criminal justice reform, and her campaign boasts that it has now released 65 policy fact sheets, totaling 112,735 words.”

But on this score, House Democrats look more like Trump than Clinton. There are five bullet points on their economic agenda—infrastructure, job training, student debt relief, gender pay equity, and Social Security expansion—four of which they propose to address with draft bills that have varying degrees of support within the Democratic caucus.

That’s a start, but it would behoove Democrats to work with Clinton to expand their agenda, and agree on a set of high-priority items to enact first and quickly, before legislative sclerosis sets in.

At a more general level, Democrats need to be psychologically prepared to use power—endure political risk—to help struggling people in material ways. That’s the single tool they will have to combat the incredible cynicism that this election, and years of economic stagnation, have bred in the public. Infrastructure spending and debt-free college (two programs Clinton has proposed) are good starting points, but it’ll be just as important for Democrats to serve basic maintenance functions, from fixing the shortcomings of the Affordable Care Act to enacting stimulus in the event of an economic downturn.

That in turn will likely require Senate Democrats to reform or abolish filibuster rules that allow a minority of members to passively obstruct any piece of legislation—rules that Mitch McConnell weaponized as Senate minority leader during Obama’s first term. Since Democrats are expected to have a thin majority in the Senate, it would make liberal reforms all but impossible to pass. If Republicans use the filibuster to preserve a vacancy on the Supreme Court, Democrats will likely eliminate the filibuster for all nominees, irrespective of what happens in the House. If Democrats retain the House, they will have to do the same thing for regular legislation, too, or their governing majority will be paralyzed.

In August, the outgoing Senate Minority Leader Harry Reid—still immensely influential among Democrats—told the New York Times Republicans would either have to relent from abusing the filibuster, or Democrats would take the tool away from them. “Unless after this election there is a dramatic change to go back to the way it used to be, the Senate will have to evolve as it has in the past,” said Reid, referring to a former tradition of rarely mounting filibusters. “But it will evolve with a majority vote determining stuff. It is going to happen.”

It’s natural that Democrats are a bit behind the eight ball. Before Obama’s presidency, Democrats controlled the House and Senate, and used the resources they commanded to build the educational and analytical groundwork for the legislating they would do the following Congress. This helped lay the groundwork for the Affordable Care Act— which still proved to be a Sisyphean challenge—and allowed the House to pass an extensive agenda, including ambitious climate change legislation, within the first few months of the 111th Congress.

Today’s Democrats are at a disadvantage relative to their 2008 counterparts, and if they win the House, their power to act will be confined by the relative thinness of their majority. But there’s no reason they should be caught entirely flatfooted by an unanticipated victory.

Article Link To The New Republic:

Tuesday, October 18, Morning Global Market Roundup: Asian Stocks Extend Rise In Light Volume; Aussie Shines

By Saikat Chatterjee
October 18, 2016

Asian shares extended gains on Tuesday, pulled higher by financials and a rebound in oil prices, while the Australian dollar hit a two-week high as investors trimmed expectations for a central bank rate cut this year.

Despite the bounce in risk-sensitive assets in Asia, volumes were light with markets hugging well-worn trading ranges. Investors are now awaiting China data due this week, including the September quarter gross domestic product on Wednesday, after last week's trade figures raised concerns about the health of the world's second-biggest economy.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.8 percent, extending earlier gains. Australia's benchmark index was up 0.4 percent while Japanese stocks .N225 edged higher on a softer yen. European shares are expected to open higher, tracking the Asian moves.

"Investors are slightly risk averse while their attention has been on the dollar-yen levels," said Kazuhiro Takahashi, an equity strategist at Daiwa Securities. "They are waiting for a turning point, and until then, they will likely stay on the sidelines.

China's B share market .SSEB bounced 1.5 percent after tumbling more than 6 percent on Monday on concerns of extended yuan weakness while Hong Kong shares rose, led higher by financials and utilities.

"The Hong Kong markets should find some support around current levels though the weak outlook from the telecom and the property sector and continued concerns of yuan weakness will prevent any sharp gains," said Alex Wong, a portfolio manager at Ample Capital, which has $100 million in assets under management.

As campaigning for the U.S. presidential elections enters its home stretch and concerns about the Chinese economy deepen after last week's weak trade data, risk aversion is broadly on the rise - forcing investors to cut positions after a strong rally in risky assets in the third quarter of 2016.

Daily portfolio flows to emerging markets declined sharply last week with the seven-day moving average falling to its lowest level since a surprise Chinese currency devaluation in August 2015, according to data from Institute of International Finance.

"It's been an incredibly quiet start to the week as most currencies remain rangebound but don't let this sense of calm fool you as markets may be poised to explode," said Stephen Innes, a senior trader at FX broker OANDA, referring to a multitude of macro-economic risks on the horizon.

Adding to the headwinds for emerging markets is the growing likelihood of a U.S. rate increase in December which has lifted 10-year U.S. Treasury yields by 25 basis points so far this month and boosted the dollar.

Wall Street ended down as lower oil prices weighed on energy shares.[.N] Stock futures SPc1 were flat in Asian trade.

Major currencies were confined in broad trading ranges on the back of soggy U.S. data and the absence of fresh triggers.

"Rangebound trading continues, with the 104 level heavy for the dollar-yen," said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo. "It's just short-term guys, playing in the market."

The dollar index, which tracks the greenback against six major rivals, was flat at 97.74 .DXY, after rising as high as 98.169 in the previous session, its highest level since March 10.

Still, some risk indicators in the market were flickering green such as the Australian dollar AUD=, which was up around 0.6 percent at $0.7669. This came after comments from Reserve Bank of Australia Governor Philip Lowe, which suggested the bar for further rate cuts this year is higher than what markets currently expect.

Meanwhile, oil prices rose on hopes the market may not be as oversupplied as some analysts believe.

International benchmark Brent crude LCOc1 was up 0.5 percent while U.S. West Texas Intermediate (WTI) CLc1 edged 0.6 percent higher.

Safe-haven gold XAU= was firm around the $1250 per ounce level as growing risk aversion encouraged buyers, halting a 6 percent fall over the last few weeks.

Article Link To Reuters:

Netflix Subscriptions Boom Around World, Shares Jump 20 Percent

By Lisa Richwine and Rishika Sadam
October 18, 2016

Netflix Inc added over 50 percent more subscribers than expected in the third quarter as original shows such as "Stranger Things" drew new international viewers and kept U.S. customers despite a price hike, sending its shares soaring 20 percent in late trade.

The company's performance represented a turnaround from the previous quarter of disappointing subscription growth. Netflix, which has spent heavily to expand outside its home market, also said that it was on track to start harvesting "material global profits" next year, even as it raised spending on original programming.

Shares of Netflix rose to $119.82 in extended trade from a close of $99.80.

Netflix added about 3.20 million subscribers internationally in the third quarter, higher than the 2.01 million average analyst estimate. (bit.ly/2e2gsRD)

In the United States, Netflix added 370,000 subscriptions, compared with analysts' estimate of 309,000, according to research firm FactSet StreetAccount.

"Investors appear laser focused on subscriber growth, and so long as Netflix delivers on that metric, investors will bid its shares up," said Wedbush Securities analyst Michael Pachter. However, Pachter said he thought the continuing cost of developing new shows would undermine plans to deliver material profits in 2017.

Netflix has expanded into more than 130 markets worldwide, including most major countries, except China. It said on Monday it was dropping plans to launch a service in China in the near term, opting instead to license its shows for "modest" revenue.

The company said it still hopes to launch service in China "eventually."

In the meantime, Netflix plans to keep pouring money into building its stable of original and licensed TV shows and movies. Content spending will rise to $6 billion next year, a $1 billion increase from 2016, the company said."We will keep investing in growing the content spend, even domestically, for quite a long time," Chief Executive Reed Hastings said on webcast.

Netflix has been facing a slowdown in subscription growth in the United States as the market matures and a planned U.S. price hike raised concerns it would not hit its targets. It also faces competition from the likes of Hulu and Amazon.com Inc.

But the company, whose other popular original shows include "Orange is the New Black" and "House of Cards", said it expects to add 1.45 million subscribers in the United States in the current quarter.

Analysts on average were expecting 1.27 million additions, according to research firm FactSet StreetAccount.

"Netflix has successfully navigated the challenges of a price increase," retail research group Conlumino said in a note, adding that it had been "somewhat less successful" in maintaining subscriber growth.

In its international markets, it expects subscriber additions of 3.75 million, compared with the average analyst estimate of 3.32 million.

Third-quarter revenue rose 31.7 percent to $2.29 billion.

Netflix's shares have surged in the past few years, driven by rapid growth as the company redefined television and fueled "binge watching".

The stock, however, was down 12.7 percent this year as investors fretted about slowing growth in its domestic market and increasing competition.

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Australia's Tabcorp, Tatts In Talks To Create $7 Billion Gaming Giant

October 18, 2016

Australia's Tatts Group Limited and Tabcorp Holdings Ltd on Tuesday said they are in talks to create a A$9.34 billion ($7.1 billion) betting industry giant, hoping to join forces to fend off popular online rivals.

An investment banker involved in the talks, who declined to be named as he was not authorized to speak publicly, said a transaction could be announced within the next two days.

In almost identical statements, the companies requested trading halts until market open on Wednesday, pending "a potential change of control transaction". They declined to comment further.

Australia's two largest non-casino gambling firms are struggling to cope with mounting competition from online betting agencies which have taken off since the deregulation of gambling licenses in 2012, and both reported profit falls in August.

"The entry of large global operators such as William Hill and Sportsbet could have helped push a deal across the line as they have taken a sizeable slice of the local wagering market," said Matthew Felsman, a wealth adviser at AAP Securities.

Brisbane-based Tatts, a 135-year-old company whose name is synonymous with lotteries in some parts of Australia, has a market capitalization of A$5.3 billion. Melbourne-based Tabcorp, Australia's biggest betting company, has a market value of A$4.1 billion.

Together they command more than two-thirds of Australia's A$3.5 billion sports wagering market, but online-only players are growing their share, according to a March report from researcher IBIS World.

The companies failed in a previous attempt to merge in 2015, and since then Tabcorp's shares have gained 11.4 percent while Tatts has fallen by the same amount.

The companies provided no details of the merger's structure, but Deutsche Bank analysts estimated Tabcorp could pay up to A$4.75 per Tatts share in a deal that would boost Tabcorp's earnings per share by 1 percent.

"Mergers of equals are normally struck based on a stock’s last closing price, so you would assume Tab is a little happier to revisit the deal now," Felsman said.

Scheme Of Arrangement

The companies indicated that the deal would be a scheme of arrangement, which would require the approval of 75 percent of the target's shareholders by value through a vote at a shareholder meeting.

Australia's competition regulator said it also would scrutinize the proposal, citing "a range of potential issues and areas of overlap".

Analysts said last week's reversal of a ban on greyhound racing in New South Wales state may have been another motivating factor behind the talks.

"You make hay while the sun shines and it will be a lot easier for them to put together a growth story while the greyhounds are on play," said Mathan Somasundaram, analyst at stockbroker Baillieu Holst.

"They are probably both running out of growth, so put them together and they probably could do savings and on aggregate they might pull out a double-digit growth number."

Both companies posted modest revenue growth for the 2016 financial year citing tougher competition, particularly from foreign players.

($1 = 1.3187 Australian dollars)

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Hyundai Motor's Two New China Plants To Build Green Cars, China-Specific Models

By Hyunjoo Jin 
October 18, 2016

South Korean's Hyundai Motor Co said two new China factories will produce more environment-friendly vehicles and models targeting the world's biggest auto market, as the firm strives to fend off growing competition from Chinese rivals.

Hyundai said in a statement on Tuesday it has completed its latest Chinese plant, its fourth, in Changzhou and will open another one in Chongqing next year. The addition of the two plants - each with annual production capacity of 300,000 - will lift the total number of vehicles it can make in China, its biggest market, by about half to 1.81 million a year.

The focus on green cars is part of a new Hyundai strategy for China. The automaker, which ranks third in China sales together with affiliate Kia Motors, has seen its market share fall to 8.9 percent last year - a seven-year low - from 10.4 percent a year earlier as cheaper Chinese rivals lured away customers.

"We will accelerate our efforts to achieve a market share of more than 10 percent again with the opening of Changzhou factory," Hyundai said in its statement. It didn't disclose how much it's investing in the new plants.

The South Korean duo will have total capacity of 2.7 million vehicles once Kia's 890,000 capacity is counted in.

Hyundai said it aims to produce nine green vehicles in China by 2020, targeting 10 percent of its sales in the country by that year, to meet fuel economy regulations and compete with Chinese automakers, which dominate the segment.

The automaker said the new plants will build models of varying sizes to compete with low-cost Chinese rivals. It also said it plans to sell a China-specific sport utility vehicle from as early as next year, with more SUV models planned. Reuters earlier this year reported that Hyundai and Kia plan to launch three low-cost SUVs in China from next year.

As part of its new strategy, Hyundai will boost the number of China dealerships to 1,400 by 2020, from 1,000 currently. It also plans to secure dealers in southwestern regions and small cities which it said have a higher growth potential.

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Once Jobless And Uncounted, Eager Workers Could Slow Fed Rate Hike

By Howard Schneider
October 18, 2016

The crammed-to-capacity parking lot at a job training center in this St. Louis suburb is exhibit A for why the U.S. Federal Reserve remains at odds over the health of the U.S. labor market and how quickly interest rates should rise.

Among those in the building on a recent fall day, 23-year-old Joshua Goodson described his recent work history as a "dead end." Motivated by the prospect of a firm career foothold, he is now in a program at the Family and Workforce Centers of America that includes both a curriculum in heating and air conditioning installation, and the "soft" social skills needed to keep steady employment.

It will take a few months, but "I will get a job, and nail it," he said.

As the nation's six year run of job creation reaches deeper into neighborhoods like Wellston and nearby Ferguson -- site of a police shooting two years ago that highlighted the depressed economic conditions in some U.S. neighborhoods -- Goodson is among a pool of sidelined workers returning to the labor force in unexpected numbers and more readily landing jobs.

That subtle but surprising shift has stoked fresh debate within the Fed over whether to risk slowing a process that is finally drawing in marginalized residents like Goodson, and showing up in middle and lower end incomes.

The discussion may be unlikely to stave off a December rate increase. But it could influence the already glacial pace of tightening expected by the Fed.

A Reuters analysis of federal labor flow data shows workers are moving from outside the labor force directly into jobs at a record pace. That is what Fed Chair Janet Yellen and others hoped would take hold as the economy rebounded from a crisis that left millions jobless or caused them to stop looking for work and leave the labor force altogether.

It is also something trainees in this high unemployment pocket northwest of St. Louis hope will continue as they learn construction, business administration and other skills, confident there will be steady jobs at the end.

For Goodson, it is a chance to set aside a turbulent period in his life that included participation in the Ferguson riots two years ago.

"I want to change my life, better myself, try to get a skill or trade that could benefit me as a career," he said in an interview at a facility that is working to prepare an often young and often black clientele for jobs that are, at present, plentiful around St. Louis.

A Handoff To Those On The Sidelines

Job growth during a recovery typically first absorbs the unemployed -- people without a job who are actively looking for one -- before reengaging those who have dropped out. Over the past two years, there's evidence that has now begun to happen. The flow of workers from outside the labor force directly into jobs has grown to more than double the number captured in statistics as moving from out of the labor force to unemployed.

Seven years since the recession ended, loose monetary policy is "supporting the reabsorption of workers who have a relatively hard time finding employment," said John Robertson, a senior policy adviser to Atlanta Federal Reserve bank president Dennis Lockhart. It's a development policymakers want to understand better to judge if there are "structural limits" to how far it can proceed, he said.

With a national unemployment rate at five percent and other labor-related measures near long run averages, some policymakers argue their employment goal has been met and that interest rates should rise to stay ahead of the inflation that typically comes with a tightening jobs market.

Others are hesitant, noting as Fed chair Janet Yellen did last week that a "high pressure economy" may be what's needed to repair some of the damage from the crisis.

An eroded middle class or a poorly educated and compensated work force, she has argued, could impair the country's economic potential. The Fed's bias through much of the recovery has been to risk more inflation in favor of a fuller jobs rebound, and at her most recent press conference Yellen said she was encouraged.

"We were not really certain that this is something that would happen," Yellen said of an uptick in the labor force participation rate.

"The economy has a little more room to run than might have been previously thought."

An Encouraging Turn In Incomes

After years of income stagnation, the steady demand for labor finally showed up in 2015 census surveys showing median incomes rising for the first time since 2007, with the strongest wage gains at the lower end. That's helping nudge people like Toshia Verheggen to take the trouble to retrain.

As her son reached school age, Verheggen, 37, heard about LaunchCode, a nonprofit that trains non-computer experts as coders and places them in apprenticeships. She landed a job early this year, moving from a labor force nonparticipant to writing software programs for a retirement benefits manager.

"Employers are bringing more jobs and more applicants are trying to get into the funnel," LaunchCode executive director Mark Bauer said of the current labor situation in St. Louis.

The movement of people like Verheggen into jobs is helping answer an important issue - whether the dislocation of workers during the crisis would be permanent, scarring their finances as well as the country's potential, or reverse as conditions improved.

Adults who are neither in jobs or looking for work are not considered part of the labor force. Their numbers have risen by a third in the last 15 years to more than 94 million, and grown as a share of the over-16 population from 32 percent to 37 percent.

While that sometimes figures into political rhetoric, it is mostly driven be demographics and personal choice as people retire, attend college, or stay home to care for family.

More telling is the number not in the labor force who say they want a job, meaning they would like to work but are not out looking. That number stands at around 6 million, roughly 2.3 percent of the population over the age of 16.

From a recent high of around 2.7 percent in 2012, that number has been falling towards its pre-Recession norm of close to 2 percent. To reach that level, a million more people would need to get back into work.

Carolyn Seward, chief executive of the workforce center where young adults like Goodson are training in heating and air conditioning, said people are ready to engage but still midstream in their plans. Now would be the worst time for job creation to slow.

"It is going to take another ten to fifteen years" to dent unemployment rates of 10 to 25 percent common in St. Louis' northwestern suburbs, Seward said. "There has been such a disconnect."

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