Tuesday, October 25, 2016

Nicolas Sarkozy Plays Trump Card, Warns Of ‘Stolen’ Election

The former French president is falling behind and says left-wingers may try to infiltrate Conservative primary.

Politico EU
October 25, 2016

With his campaign to return to the French presidency losing steam, Nicolas Sarkozy is readying supporters for defeat by blaming a mysterious outside force: left-wing voters planning to destabilize the Conservative primary election.

In several recent stump speeches, the former president warned that hordes of left-wingers were planning to infiltrate the primary process in order to “steal” its result from bona fide conservative voters.

Behind the plot, Sarkozy’s camp sees the hand of Alain Juppé, the favorite to win the Républicains’ party primary, whom they accuse of reaching out to left-wingers who would do anything — including lie about their political beliefs in a signed charter — to keep Sarkozy out of power.

“I won’t let anyone steal this election from you,” roared Sarkozy at a recent rally. “Where is the sense of loyalty when you are calling on left-wing voters to sign and perjure themselves on a piece of paper in which they say they share the values of the Right?” he added, without naming Juppé.

In private, some Sarkozy backers take his logic a step further. A Conservative primary decided by left-wingers, they argue, will not be totally legitimate.

"[Sarkozy’s] warnings about a stolen election are prompting his backers to look beyond the primary to the next big internal fight, for control over parliament."

“We underscored this problem from day one,” said one senior Sarkozy aide who asked not to be named.

“Clearly, if we have indications that there was a big turnout of left-wingers who lied in order to cast their vote, purely in the interest of blocking our candidate, then there is going to be a problem of legitimacy in the eyes of many rank and file activists.”

Trump-ian Defense

If Sarkozy’s warnings of a “stolen” vote sound like U.S. Republican candidate Donald Trump’s complaints about a “rigged election,” it’s because the two men are in a similar bind.

Both owe their popularity to a motivated base of hard-line supporters. Both are losing steam with weeks to go until voters head to the polls.

In Sarkozy’s case, the bad news is piling up.

A Harris Interactive survey last week showed Juppé prevailing over Sarkozy in the primary’s runoff round on November 27, with 54 percent of the vote. Another poll, which was conducted by Odoxa before the October 13 primary debate, showed Juppé gaining ground among members of the Républicains party — exactly the group that Sarkozy is depending upon to hand him the election.

The next debate on November 3 is a chance for Sarkozy to try to turn the tide. But rivals will be ready to pounce on the former president over a quote attributed to him by l’Obs magazine, in which Sarkozy called his supporters “hicks.”

Sarkozy’s camp said he never used the word.

Amid the flow of bad news, warnings about a stolen result act as an insurance policy against defeat.

Unlike Trump, Sarkozy stated clearly that he would accept the primary’s outcome “without reserve.” But his repeated warnings about a stolen election are prompting his backers to look beyond the primary to the next big internal fight, for control over parliament.

Parliamentary elections directly after the May 2017 presidential vote are likely to pit Sarkozy backers against Juppé loyalists in a nasty, internecine battle. Already, the former is hard at work trying to portray the 71-year-old Juppé as a sort of Conservative Quisling — a spineless technocrat ready to court left-wingers and Islamists to win the election.

“I can’t lose this primary against a 72-year-old leftie,” Sarkozy told supporters earlier this month.

Left-Wing Mirage?

It would be easy to dismiss Sarkozy’s warnings as pure sore-loserism — if there were not a real possibility of left-wingers voting in November.

Technically, nothing can stop even a card-carrying member of the Communist Party from participating in the Conservative vote. All that is required is to sign a charter (including name, birthplace and address) stating that the voter shares “Republican values of the Right and the Center.”

“Not only is it impossible to check who is being sincere,” said Sarkozy campaign spokeswoman Catherine Vautrin. “It’s extremely difficult and probably not desirable to follow up and say how many left-wing voters ended up participating, which is worrying.”

She added, “Clearly there will be a reckoning after the primary about how it was organized.”

According to an Ifop poll for l’Obs magazine, 57 percent of left-wing voters considered it “fair” for them to participate in the Right’s primary. The left-leaning magazine cited several anonymous voters — including “Nathalie, 48, real estate [agent]” — who said they would vote in the primary to stop Sarkozy from returning to power.

But the poll gave no indication of how many left-wingers were actually planning to vote. When POLITICO reached out on social media for left-wing voters who were planning to vote in the primary, none came forward.

For Yves-Marie Cann, an analyst at pollster Elabe, the risk of left-wingers deciding the primary has been overstated.

“We do observe that there are some leftist sympathizers who say they want to participate,” said Cann. “But to suggest that such votes could decide the election, I think that’s a step too far.”

“Today, the phenomenon seems to be largely offset — and thus canceled — by potential voters who come from the FN [far-right National Front] and who massively lean in favor of Sarkozy.”

Regardless of how many show up, the left-wing voter has already been designated as the primary’s bogeyman — one who may haunt the French Right for years to come.

Article Link To Politico EU:

Democrats’ Failures Are Lost In The Glare Of Trump’s Personality

By Rich Lowry
The New York Post
October 25, 2016

Hillary Clinton may be the first candidate in American history to win a contest of personalities without having one.

She’s been content to make the election all about Donald Trump’s character and Trump has obliged — because, really, what else would he consider as fascinating and important as himself?

In a more normal year, ObamaCare would be a byword for the failures of liberal technocrat rule. Persistently unpopular and under-performing, the law has had a dreadful 2016.

Insurers have been exiting the exchanges and many of those that are staying are hiking premiums — on average, by 25 percent for mid-level plans according to the Obama administration’s own reckoning. Even a Democratic governor, Mark Dayton of Minnesota, has said ObamaCare is “no longer affordable to increasing numbers of people,” and in Arizona premiums are going to jump more than 100 percent.

In a more conventional election, President Obama’s foreign policy would be under relentless assault. The Russian re-set is in flames. Syria is Obama’s Rwanda. Iran, with its nuclear program intact, is making a bid for regional hegemony. ISIS established its caliphate in the space created by Obama’s passivity.

In any other campaign, the economy would be front and center, and the slowest recovery in the post-World War II period a constant flashpoint.

Instead, none of these issues have had the resonance of Donald Trump’s early-hours Twitter war with a former Miss Universe, or even his aside in the third debate that Hillary Clinton is a “nasty woman.”

And these have been third-tier controversies, compared to the ones that have truly rocked the campaign, like Trump’s post-convention fight with the Khan family and the airing of the “Access Hollywood” tape.

It’s not as though Trump doesn’t talk about the issues. But nothing besides his core of immigration and trade has the force to escape the extreme gravitational pull of his persona, which is outsized, compelling and — in a presidential campaign — ripe for deconstruction.

If Trump is defeated in November, he will lose more than anything else on the basis of his character flaws.

His lack of discipline. His thin skin. His boastfulness. His refusal to admit error, even when it’s in his interest. His inability to project seriousness or to hit a grace note.

The Clinton campaign has exploited them all, and Trump, ever himself, has lacked the self-awareness or wherewithal to keep from playing to type every single time.

The so-called beer test is the usual personality metric in presidential politics: Which candidate would you rather share a cold one with? Hillary’s campaign has worked instead to make the personality benchmark the “nuclear code” test: Which candidate would you prefer to have his or her finger on the button?

It’s meant to portray Trump’s outrageousness as affirmatively dangerous, and cast her own persona — which belongs in the same leaden category as Al Gore or Michael Dukakis — in the best possible light.

No candidate who has had such a seemingly commanding lead in a presidential race has ever been so little in evidence as Clinton. She’s winning when politics isn’t her strength because she can rely on surrogates to do much of the campaigning (especially Barack and Michelle Obama) while she raises the money to feed the massive Democratic political apparatus. Otherwise, she tries to stay out of her own way — with some mixed success — and counts on Trump to soak up all the attention.

And so he does. His “closing argument” speech over the weekend started with a threat to sue his accusers that inevitably drove all the press coverage. Any other candidate would want to change the subject from the accusations — but not Trump, who can never let a damaging controversy go, even two weeks before the election.

In the primaries, Trump displayed an uncanny ability to understand and target the vulnerabilities of his opponents. But he either never understood, or didn’t care to minimize, his own. This is why he chose to make the election about the single hardest thing for him to defend effectively, namely Donald J. Trump.

Article Link To The New York Post:

The Media Can’t Be Bothered To Fact-Check Trump’s Accusers

By Betsy McCaughey
The New York Post
October 25, 2016

The roll-out of women accusers against Donald Trump continues. On Saturday, accuser No. 11, Jessica Drake, an adult-film performer who also operates a Web site “Guide to Wicked Sex,” came forward. Drake claims she met Trump 10 years ago at a golf outing and he invited her to his hotel room.

When she got there, he hugged her tightly and kissed her on the lips.

Attorney Gloria Allred, a two-time Hillary Clinton convention delegate and Democratic Party grenade-thrower, flanked Drake as she told her story to reporters.

Last Thursday, Allred staged another press conference to unveil Accuser No. 10, Karena Virginia. She says Trump took hold of her right arm in a crowd at the 1998 US Open. When he did, his hand also made contact with the side of her breast.

Sexual assault is a serious issue. But these accusations raise another grave issue: Is it fair for the media to rush to publicize damaging claims against Trump — or anyone else — without witnesses or back-up evidence?

Consider accuser No. 1, Jessica Leeds. She told The New York Times that almost 40 years ago, Donald Trump sexually groped her on a flight to New York, while a man across the aisle looked on, his eyes “bugging out of his head.”

Less than 48 hours after interviewing Leeds, and despite Trump’s protests that the charge was false, the Times ran the allegation on the front page. The reporters couldn’t confirm the date or even the year the incident supposedly occurred, or on what flight. They didn’t find even one witness. No facts.

Two days after the Times article, Anthony Gilberthorpe came forward, saying he was the man across the aisle: “I was there,” and what Leeds is claiming is “wrong, wrong, wrong.” Gilberthorpe said Leeds was all over the mogul, and when Trump went to the bathroom, she confessed she wanted to marry him. Gilberthorpe, whose colorful past raises questions, also had no facts to prove his statements.

So, who’s telling the truth? Impossible to say. That isn’t stopping the media from repeating the Times’ account, despite all the holes.

And despite the controversy over an earlier Trump hit piece by the same reporters. They argued that Trump treated women in his Miss Universe contests like objects, inspecting them up and down on stage. Imagine that at a beauty contest.

Two women quoted in that article — Miss California USA Carrie Prejean and Rowanne Brewer Lane — said the Times reporters had twisted their words.

Is accuser No. 11 the last? Probably not. Natasha Rickley, a former Miss Nebraska Teen, says ABC News is trying to reach every beauty contestant who ever had contact with Trump.

Allred appears heavily involved. Democrats have called on her to smear Republican candidates in the past, including presidential hopeful Herman Cain and California gubernatorial candidate Meg Whitman.

On Oct. 15, Allred led accuser Summer Zervos into a press conference like a pony on a rope to accuse Trump of forceful kissing and touching. These accusations are rushed into print without facts. The Washington Post blazoned Kristin Anderson’s accusation that Trump put his hand up her mini skirt at a night club, even though she couldn’t remember what year it happened or the friends with her that night. Pretty thin.

What about “innocent until proven guilty”? The media often forget that, like when a student at the University of Virginia concocted a tale of gang rape. The sensationalist coverage of that smeared innocent people. But it didn’t influence a presidential election.

A Reuters poll released Friday shows 63 percent of Americans now believe Trump committed sexual assault.

Maybe he did, and maybe not. Trump and the public deserve fair, balanced coverage of the accusations until the facts are known. Sadly, they’re not getting it. Times media reporter Jim Rutenberg suggests that “normal standards” of journalistic fairness do not apply because in the media’s view, Trump is a “demagogue” who must be brought down. Voters beware.

Article Link To The New York Post:

Hillary Clinton’s Catholic Fan Club

Under Pope Francis, Progressive Catholics exaggerate papal authority.

By William McGurn
The Wall Street Journal
October 25, 2016

In Catholicism, “ultramontanism” is a worldview in which the pope is accorded exaggerated authority. Ultramontane means “beyond the mountains,” and it is today a remnant of European struggles from centuries back when some looked to the pope who lived over the Alps in Rome over their own authorities.

For most of its history “ultramontanism” has been a temptation of the right. But the leaked John Podesta emails on Catholics suggest that there now thrives a progressive ultramontanism—one that welcomes papal authority so long as it confines itself to subjects such as income inequality or fossil fuels.

Just to recap, Mr. Podesta, chairman for Hillary Clinton’s presidential campaign, back in 2011 received several emails expressing contempt for “Conservative Catholicism.” One of them voiced hope for a “Catholic Spring” that would bring about “the end of a middle ages dictatorship”—and with it the bishops’ fight against the Obama administration’s contraceptive mandate. Mr. Podesta replied that he had helped create pressure groups such as Catholics United and Catholics in Alliance for the Common Good “for a moment like this.”

Yet far more illuminating than the WikiLeaks Podesta dump has been watching Progressive Catholicism’s rapid-response team swing into action. Most interesting was the contribution by a friend of this columnist, the Washington Post’s E.J. Dionne. In addition to echoing the nothing-to-see-here-folks line, Mr. Dionne added that Pope Francis is in fact leading the “Catholic Spring” Mr. Podesta’s correspondent had wished for.

It’s a revealing take. For the great commission of Progressive Catholicism is not about bringing the Gospel to a modern world. It’s about bringing the modern world and its orthodoxies—especially the sexual revolution—into the Catholic Church.

No doubt this is what John Halpin of the Center for American Progress meant when he emailed Jennifer Palmieri, Mrs. Clinton’s current communications director, on how conservatives “must be attracted” to the church’s “severely backwards gender relations.” It is also what the Catholic on the bottom half of the Clinton ticket, Tim Kaine, meant when he expressed his confidence that the church will come ’round to the Democratic platform on same-sex marriage.

Now, nothing disturbs the Progressive Catholic more than the preference for the Republican Party shown by American Catholics who attend Mass regularly. But let’s not give the GOP credit for any genius. Most of these Catholics moved to the Republican Party when the Democratic Party of their parents and grandparents moved sharply against them in the 1970s and 1980s.

Say what you will about the prominent Catholics associated with the GOP, moreover, dozens signed a public manifesto co-written by theologian George Weigel and Princeton’s Robert George loudly declaring Donald Trump unfit to be the Republican nominee. These are not people who just go along. In sharp contrast, Progressive Catholicism is all about silence and obedience, to the point where Mr. Kaine tells us Roe v. Wade is beyond question.

Yes, Pope Francis (or at least their interpretation of Pope Francis) has brought them hope. When the pope declares that climate change is man-made or condemns “the increasing use and power of air conditioning,” suddenly they go full St. Augustine: Roma locuta, causa finita est—Rome has spoken, the matter is finished, in the famous paraphrase of the great saint.

This is liberal ultramontanism, in which Pope Francis is deemed to speak authoritatively when he sounds like the Democratic Party but not so much when he makes less-publicized comments on, say, gender confusion or unborn life.

To defend this pick-and-choose, Progressive Catholicism invokes Catholic social teaching. It is true, this teaching has a richness and breadth far beyond abortion. But it is also true that this teaching is more about principles than conclusions, as in the calculations of a just war. So how is it that the much-covered “Nuns on the Bus” seem to know exactly where He would stand on Citizens United?

It’s telling that in his email Mr. Halpin complains about people “throwing around” terms such as “subsidiarity.” The reference is to a key principle of Catholic social thought, which holds that issues ought to be resolved at the lowest or least-centralized level possible.

No surprise that a Progressive Catholic would not find this congenial. For it might be translated as this: The answer probably isn’t a big fat federal program. Even more ironic is how far these priorities have strayed from those of the original social-justice warrior and candidate for sainthood, Dorothy Day, who found scandalous the idea of turning care of the poor and marginalized over to what she liked to call “Holy Mother State.”

It’s hard enough being a Catholic who believes popes have something to say to the world on faith and morals and the dignity of the human person. But to celebrate the pope as an authority on the details of everything from energy to global finance requires a faith far beyond this poor sinner’s.

Article Link To The Wall Street Journal:

Why Obama Won’t Listen To Reason On Obamacare

By Ramesh Ponnuru
The Bloomberg View
October 25, 2016

One of President Obama’s cherished conceits is that disagreement with him can have no rational basis, and it was the theme of his most recent speech in defense of his health-care law.

Only “ideology” and “politics” are keeping Republicans from working with him to expand Obamacare’s reach. He himself is, as always in his self-portraits, the picture of reasonableness, willing to accept Republicans’ ideas if only they would operate in good faith instead of holding “60-something repeal votes.”

Obamacare has substantially increased the number of Americans who have health insurance, as the president boasted. Some of his other claims -- notably, “This law has actually slowed down the pace of health care inflation” -- are more dubious.

But the core problem with his speech was not that he overestimated the merits of Obamacare (as much as I believe that he did). Nor was it the partisan silliness in which the president sometimes indulged. It’s that he refused to acknowledge that conservatives have reasonable disagreements with him about the direction of health-care policy.

Obama believes that only comprehensive insurance policies are real insurance. Conservatives generally believe, by contrast, that people should be free to buy cheaper policies that protect them only from financial catastrophes arising from their health needs.

It’s a difference that leads to others. Obama says that people who are having trouble buying insurance on Obamacare’s exchanges should receive more generous subsidies. The conservative alternative -- relax the regulations that make the insurance unaffordable for them -- is unacceptable to him because it would be a retreat from comprehensiveness.

All of the president’s shows of open-mindedness include similar caveats. He noted that Obamacare allowed state experimentation. But that experimentation is allowed to proceed only if the experiments promise to end with at least as many people having coverage that is at least as comprehensive as what Obamacare delivers. A policy that resulted in more people having catastrophic coverage wouldn’t qualify.

Obama claims that Republicans have offered no alternatives to the health-care law. They have in fact outlined their own far-ranging plans for health policy. But it’s true that they have not offered alternative ways to get just as many people covered as comprehensively as Obamacare does.

If you start with Obama’s assumptions about what the goals of health policy should be, then it is true that there is no reasonable basis for rejecting his policies. But those assumptions are not self-evidently correct.

A lot of conservatives want a less regulation-heavy system, where everyone has access to relatively cheap catastrophic policies. Obama’s speech offered no reasons for them to stop wanting that or trying to do what they can to move health policy in that direction.

This doesn’t mean that Republicans should insist on making no changes to health policy that fall short of replacing Obamacare. And, in fact, they have not insisted on that.

They have advanced legislation to fix what they see as specific problems with the law, such as its medical-device tax and its prohibition on some people’s existing health policies. But of course conservatives are not going to agree to changes to the law that move the health-care system further away from what we want.

Obama resorted to a number of ill-considered analogies in making his pitch. One likened Obamacare to a “starter home”: “It’s a lot better than not having a home, but you hope that over time you make some improvements.”

Sometimes, though, you decide that you want a different kind of home altogether, and work until you can move there.

Article Link To The Bloomberg View:

Can Europe’s Banks Save The EU?

By Dambisa Moyo
Project Syndicate
October 25, 2016

The multi-billion-dollar fine recently imposed by the US government on Germany’s Deutsche Bank for mis-selling mortgage securities in the United States has done little to improve confidence in the European Union, which remains plagued by slow economic growth, high unemployment, immigration challenges, and mounting uncertainty. What the Deutsche Bank scandal has done is shine a light on a last-resort option – a kind of “Hail Mary pass,” in American football terms – that could potentially save the European project.

Despite representing around 20% of world GDP, the eurozone does not have a top-ten bank or financial services institution in the FT 500 global ranking. The knock-on effects of such a fragmented and vulnerable banking system are apparent in Europe’s relatively poor showing in other sectors, such as technology and energy, that are vital for EU members’ economic future.

Europe has no shortage of banks: Germany has more than 1,500, and Italy has over 600. But many of these are so-called “zombie banks,” with too many branches, too few deposits, and funding costs that far exceed those of their more successful peers.

In fact, according to the International Monetary Fund, some one-third of Europe’s banking sector, representing assets worth $8.5 trillion, remains weak and unable to generate sustainable profits. All of this creates significant downside risks for the EU economy and, ultimately, the entire European political experiment.

Restoring stability in Europe’s banking system, by the IMF’s own estimate, will require at least one-third of Europe’s banks to close or merge. For Deutsche Bank, market speculators already seem to be expecting a merger, such as with Commerzbank, another German institution.

But, if such a merger is to be the first step toward consolidating the European banking sector and strengthening the EU, it should be a cross-border affair, bringing Deutsche Bank together with a significant French and/or Italian financial institution. Such an approach could be a game changer in terms of the EU’s political credibility, which is perhaps most crucial to keeping the EU dream alive.

A cross-border European bank merger would have several benefits. As with any merger, consolidating weak, underperforming banks would enable them to strengthen their balance sheets and restructure non-performing loans – estimated to be worth some €1 trillion ($1.1 trillion), roughly three times higher than other global jurisdictions – thereby benefiting the wider economy.

But a cross-border merger that creates a kind of European super-bank would be even more effective in addressing perennial operational challenges (in particular, liquidity and capital). More important, this type of financial restructuring would open credit channels that are vital to fund investment and drive economic growth.

A cross-border European merger would also give a key region of the world economy a bank that is commensurate with its global importance. A European banking champion would be far more competitive globally, rivaling the brawn of America’s dominant banks.

Creating such an institution is particularly urgent today, given that many countries worldwide seem to be increasingly rejecting economic openness in favor of more protectionist policies and balkanized regulation. In a more fragmented, less globalized world, where cross-border capital flows are declining – last year, the Institute of International Finance reports, net capital flows for emerging markets were negative for the first time since 1988 – Europe’s banking infrastructure will need to become broader and deeper in order to thrive.

The third – and perhaps most important – reason why cross-border mergers might be the key to saving Europe’s banking sector is that they would signal to market participants and European citizens alike that political leaders are committed to European integration. Again, the political and economic backdrop intensifies the urgency of such a move. Progress toward fiscal integration has stalled. National agendas have often taken priority over cooperation. And the United Kingdom is set to start negotiating its way out of the EU altogether – a decision that can reasonably be viewed as an indictment of Europe’s current integration model.

From the perspective of financial markets and investors, a cross-border merger would be viewed bullishly, boosting confidence. Even for ordinary citizens, any indication that the EU is not simply going to fall apart would carry major benefits, offering some semblance of assurance in a highly uncertain environment.

To be sure, a cross-border merger is a radical proposal. The amount of political will it would require will not be easy to muster.

But no bold play is ever a sure thing. The truth is that, without credible and transparent evidence of deepening linkages – not just in fiscal matters, but also in business and finance (the backbone of a modern economy) – the EU will remain a loosely connected and not particularly credible collection of countries. As we have seen in the last few years, such an arrangement will not resolve those countries’ economic woes.

One might argue that now is not the time to push toward greater integration. The situation is too fragile, and popular opposition is too strong. If growth were even middling, skeptics might say, the political environment would be far more amenable. But the EU’s current disjointed structure will not hold. If strong action is not taken soon, the cracks will only widen, generating increasingly powerful political discord and, ultimately, dooming the entire European project.

Article Link To Project Syndicate:

Russians Conduct Nuclear-Bomb Survival Drills As Cold War Heats Up

Bomb shelters are upgraded, gas masks tested amid strained relations between Putin and U.S.

By Thomas Grove
The Wall Street Journal
October 25, 2016

Russian authorities have stepped up nuclear-war survival measures amid a showdown with Washington, dusting off Soviet-era civil-defense plans and upgrading bomb shelters in the biggest cities.

At the Kremlin’s Ministry of Emergency Situations, the Cold War is back.

The country recently held its biggest civil defense drills since the collapse of the U.S.S.R., with what officials said were 40 million people rehearsing a response to chemical and nuclear threats.

Videos of emergency workers deployed in hazmat suits or checking the ventilation in bomb shelters were prominently aired on television when the four days of drills were held across the country. Students tried on gas masks and placed dummies on stretchers in school auditoriums.

The capital’s civil-defense plans are also being upgraded, said Andrey Mishchenko, deputy head of the ministry.

“An inventory was taken in Moscow of the city’s underground spaces, in order to allow us to plan for sheltering 100% of the city’s population,” he said, as reported by state news agency RIA Novosti.

In parallel, commentators on state-dominated airwaves issued some of the shrillest anti-American rhetoric in years. “Russia is sick of America’s arrogant lies,” influential commentator Dmitry Kiselyov said this month after a Syrian peace plan collapsed.

After a mistaken strike by U.S.-led coalition warplanes on Syrian troops in September, Russia’s Defense Ministry warned that its air defense systems could shoot down any American plane that threatened its own forces.

And when a Russian tabloid wrote that government officials had been asked to take their children back from the prestigious preparatory schools and universities they attend in Britain, France and the U.S., speculation swirled about preparation for all-out war with the U.S.

The rhetoric reinforces Russians’ idea that their country is a superpower on par with the U.S. It also offers a distraction from an economic recession and from President Vladimir Putin’s approval ratings, which have dipped from recent highs. The threat of nuclear war also keeps the population pliant and uncritical, said Lev Gudkov, head of the Russian polling group Levada-Center.

“Most people believe that the Third World War has begun, but right now we are still in the cold phase of the war, which may or may not turn into a hot war,” he said. “And during war, you have to support your country’s authorities.”

Propaganda attacks in recent months have encouraged public ire toward various targets of the Kremlin, including Turkey, Ukraine and Russia’s domestic political opposition.

Russia’s state media and pro-Kremlin commentators have also begun zeroing in more energetically on Washington. Ties between the two countries fell to a low after a joint Russian-U.S. peace plan fell apart in Syria, where the two countries support opposing sides in a long-running conflict. President Vladimir Putin last year brought Russia into the fight in support of the regime of Syrian President Bashar al-Assad in a direct challenge to the U.S.

“For Russia the breakdown of diplomacy around Syria is a symbol of the dysfunction of the world order established by the U.S. after the Cold War,” said Fyodor Lukyanov, chairman of the Presidium of the Council on Foreign and Defense Policy, which advises the Kremlin and other government institutions. “For Americans, it’s that the Russians are just misbehaving.”

The Cold War echoes also resound in U.S. politics, as Democratic presidential candidate Hillary Clinton has sparred publicly with Republican Donald Trump over Russia policy and cyberattacks that U.S. officials blame on Moscow.

But in Russia, the talk of a new Cold War has taken on a life of its own. Igor Zuyev, whose SIS Proektstroy builds bomb shelters for state companies and private individuals, said his company has seen a threefold rise in demand over the past year for structures that he says guarantee protection from nuclear bombs and military invasion.

“When the situation started to heat up, particularly after the events of Crimea, a few months later people went mad, the demand was furious,” Mr. Zuyev said, referring to Moscow’s annexation of the Black Sea peninsula in 2014. “Demand has been rising ever since.”

Mr. Zuyev said a modestly outfitted bunker starts at around 15 million rubles, or almost $24,000, allowing a family of four to hide comfortably for up to eight hours.

On the high end, the sky’s the limit. Proektstroy offers accessories such as ventilation systems that filter out radioactive waste and satellite and video monitoring systems that allow those underground to know what is going on outside.

“People really want total protection—from natural cataclysms, straight up to military operations,” Mr. Zuyev said.

Article Link To The Wall Street Journal:

My Former Republican Party

The Democrats left my parents. Trump’s GOP has left me.

By Bret Stephens
The Wall Street Journal
October 25, 2016

I grew up with parents who liked the old line that they didn’t leave the Democratic Party—the Democratic Party left them. My father’s political heroes were Franklin Roosevelt and Harry Truman. My mother had been a campaign volunteer for Sen. Eugene McCarthy in 1968. But the party of George McGovern was not for them. As the left turned on “Amerika,” they kept faith in America.

Now it’s my turn to watch the Republican Party drift away. Whether the trend continues after the election remains to be seen, but already the GOP is largely unrecognizable to me. To see how far it’s fallen, let’s remind ourselves of where it once was.

Immigration: At a 1980 Republican primary debate in Houston, candidates George H.W. Bush and Ronald Reagan were asked whether the children of illegal immigrants should be allowed to attend public schools for free. Mr. Bush said they should. “We’re creating a whole society of really honorable, decent, family-loving people that are in violation of the law,” he lamented.

Reagan agreed. Instead of “putting up a fence,” he asked, “why don’t we . . . make it possible for them to come here legally with a work permit, and then, while they’re working and earning here, they pay taxes here.” For good measure, Reagan suggested we should “open the border both ways.”

Where, in the populist fervor to build a wall with Mexico and deport millions of human beings, is that Republican Party today?

Trade: “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy,” wrote Adam Smith in 1776. “If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better to buy it of them.” Two centuries later, Milton Friedman noted that trade protectionism “really means exploiting the consumer” by artificially limiting choice and raising prices for the benefit of domestic producers.

Adam Smith and Milton Friedman were once canonical conservative figures. Free trade was once a Republican conviction. In one of his final radio addresses as president, Reagan warned “we should beware of the demagogues who are ready to declare a trade war against our friends—weakening our economy, our national security, and the entire free world—all while cynically waving the American flag.”

Where, in the tide of Tea Party opposition to the Trans-Pacific Partnership and all those other “disastrous trade deals” that Donald Trump never fails to mention, is that Republican Party today?

Foreign policy: In 1947 Harry Truman asked Arthur Vandenberg, the Republican chairman of the Senate Foreign Relations Committee, to support his efforts to shore up the governments in Greece and Turkey against Soviet aggression. Vandenberg agreed, marking his—and the GOP’s—turn from isolationism to internationalism.

Since then, six Republican presidents have never wavered in their view that a robust system of treaty alliances such as NATO are critical for defending the international liberal order, or that the U.S. should dissuade faraway allies such as South Korea and Saudi Arabia from seeking nuclear weapons, or that states such as Russia should be kept out of regions such as the Middle East.

Where, amid Mr. Trump’s routine denunciations of our allegedly freeloading allies, or Newt Gingrich’s public doubts about defending NATO member Estonia against Russian aggression, or the alt-right’s attacks on “globalism,” or Sean Hannity’s newfound championship of WikiLeaks and its founder, Julian Assange, is that Republican Party today?

Culture, civility and character: For decades, conservative publishers have issued a long succession of titles on the importance of personal character to the preservation of democratic institutions. Notable on the list William J. Bennett’s “The Book of Virtues,” whose first chapter deals with the importance of self-discipline. The former secretary of education followed that one up with “The Death of Outrage: Bill Clinton and the Assault on American Ideals,” timed to the Lewinsky scandal.

These books were not wrong. Character counts. The example set by a leader colors the culture of the company, institution or country he leads. We long for presidents who might follow Washington’s “Rules of Civility and Decent Behavior.” Rule No. 1: “Every Action done in Company, ought to be with Some Sign of Respect, to those that are Present.”

Where, in the apparently limitless forgiveness GOP voters are willing to extend to Mr. Trump for his public affronts to “that face” Carly or that “nasty woman” Hillary Clinton, is that Republican Party today?

I’ve become accustomed to the invariable gusher of letters that will follow this column, pointing out Mrs. Clinton’s well-known character flaws, along with apocalyptic visions of what her presidency might bring. Such deflections are the usual way in which people seek to justify their own side’s moral lapses. I don’t see the point of belonging to a party on the increasingly dubious assumption that it’s slightly less bad than the opposition. If I can’t get my Grand Old Party back, I’d rather help build a new one.

Article Link To The Wall Street Journal:

Why Bernie Sanders Supporters Should Vote Trump

A vote for Hillary Clinton is simply a vote for an establishment insider, for politics as usual, and worse for a continuation of dynastic rule.

By Christopher Willard
The Federalist
October 25, 2016

When Hillary Clinton received the Democratic nomination, articles flooded the net from women who said they had tears in their eyes. I too had tears in my eyes. Not because I was a solid Bernie Sanders supporter who had hoped he would go independent. Not because Sanders seemed to put the Democratic Party ahead of ideas in a flat-out sell-out.

And not because a woman was nominated as a major party’s nominee. (Margaret Thatcher, Angela Merkel, Fernandez de Kirchner, Dilma Rousseff, and other presidents and appointed heads of state have led the way.) I teared up because we suddenly faced the realistic prospect of a ninth, tenth, 11th, and 12th year of a Clinton presidency, which I saw as a further slide into dynastic rule.

Either a Bush or a Clinton has been in power for 20 out of the 28 years since 1989, or 71 percent of the time. Electing Mrs. Clinton would increase this to 24 out of 32 years, or 75 percent of the time. Thomas Jefferson warned about dynastic rule in a 1786 letter to George Washington in which he wrote, “An hereditary aristocracy…will change the form of our governments from the best to the worst in the world.” Those who support Hillary Clinton seem to forget, everything else aside, that a vote for Hillary will be a vote for dynastic rule. This cannot be the sort of change for America that I believe Bernie supporters really want.

The Establishment Wants Politics As Usual

Throughout the election process, Hillary Clinton’s team has consistently positioned her as a contrast to candidates who deviating by extremes. The conceptual framing device looked like this:

Sanders was presented as that wacky, way-left candidate whose untenable ideas such as universal health care and free education at public colleges were from another planet. Bernie’s supporters were allowed to have a good run because everyone knew that talk is cheap, rallies are good clean fun, and, as shown in part by recent WikiLeaks documents, once we got down to an end game Sanders’ campaign would be over.

Simultaneously, Trump has been and continues to be presented via dire warnings as an opinionated demigod with questionable impulse control and a finger on the red button, when the reality is that any American president is restrained by the myriad checks and balances found with due process, the separation of powers, and the rule of law.

The point here is that Clinton’s message is positioned as the moderate antidote to both Bernie and Trump’s “‘totalitarian’ excess,” to use the phrase of philosopher Slavoj Žižek. In this position Clinton continually backs away from dynastic considerations, such as using Hillary rather than Clinton in her messaging.

On February 9, 2015 the Brookings Institution hosted a discussion with Sanders, where he said, “There is a lot of sentiment that enough is enough, that we need fundamental changes, that the establishment — whether it is the economic establishment, the political establishment, or the media establishment — is failing the American people.”

Let’s reframe the candidates based upon each candidate’s position to the existing establishment.

In this configuration, Sanders and Trump share outsider status. As we have seen, both the liberal and conservative establishments have worked hard to discredit the outsiders. It appears that for establishment members, the predictability of politics as usual is preferable to unexpected changes, no matter which side the changes come from. But what exactly is the desired politics as usual?
A Vote for Trump Is a Vote for Change

For an answer we can look toward neo-patrimonialism, a word used by political scientist Francis Fukuyama to describe the way political leaders invoke public good during campaigns yet in reality rule for private gain. If this sounds somewhat familiar, we only have to recall Bernie’s speeches about the 1 percent and about campaign donations. To again quote Fukuyama, “Elites tend to get more entrenched because they can use their wealth, power, and social status to get access to the government….This process will continue until non-elites succeed in mobilizing politically to reverse it….”

Now that two major-party candidates remain, Bernie supporters are continually being told to vote for Hillary. Not long ago, a New York Times headline titled, “Let’s Grow Up, Liberals” implied Bernie supporters’ ideas are juvenile. Approximately two weeks later, an article titled “Will Sanders Supporters Come Around?” suggested Bernie supporters were misguided. Such dismissive and demeaning attitudes should gall all of us Bernie supporters.

As I see it, one of the fundamental themes of Bernie’s campaign was this: Positive change may mean challenging the ingrained establishment business-as-usual model. In this light, a vote for Hillary Clinton, if nothing else, is simply a vote for an establishment insider, for politics as usual, and worse for a continuation of dynastic rule. If Bernie supporters continue to believe change is possible, and I think we do, then I question how we could possibly support establishment insiders and dynastic rule. This cannot be the road map for change.

We are told by liberals that this time this candidate will be different, as though continuing dynastic rule will somehow not be neo-patrimonialism. In response, I offer the old aphorism: Insanity is doing the same thing over and over and expecting different results. We have already recognized, as Žižek wrote, political dynamics in which we get “more of the same in the guise of constant change.”

Bernie supporters, in the long run, have more to gain by supporting Trump, because if anyone has the potential to challenge dynastic rule and business as usual it is an outsider. Sure for many, Trump is an unknown, but he’s an unknown outsider, and this is important. I expect Bernie supporters won’t agree with everything Trump proposes. Yet we can at least credit him for being explicit and for stating his terms. A debate with him on differences will therefore be much fairer than to try and debate someone who acts empathetic to our call for change, yet who never actually effects changes.

A vote for Trump may be Bernie supporters’ best chance to continue having a voice and to further advocate for the changes we rallied for all along.

Article Link To The Federalist:

Tuesday, October 25, Morning Global Market Roundup: Japan Shares Hit Six-Month Top, U.S. Dollar In Demand

By Wayne Cole 
October 25, 2016

Japanese shares hit a six-month top on Tuesday as the dollar advanced on the yen, while risk sentiment got a lift after factory surveys in the United States and Europe boasted the best readings of the year so far.

There were also tentative hopes rising prices for steel and some industrial commodities - zinc surged to a five-year peak and iron ore reached its highest since mid-2014 - could pick up the pulse of inflation globally.

Japan's Nikkei .N225 rose 0.7 percent to levels last seen in April as a softening yen burnished the outlook for the country's exporters. Australian stocks added 0.6 percent and Taiwan .TWII 0.7 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ticked 0.1 percent firmer, as did EMini futures for the S&P 500 ESc1. Spread betters tipped moderate opening gains for European bourses.

South Korea's main index .KS11 slipped 0.5 percent after data showed Samsung Electronics' (005930.KS) decision to scrap its Galaxy Note 7 dragged on the entire economy in the third quarter, though growth still pipped forecasts.

Wall Street had taken encouragement from upbeat corporate results and the Dow .DJIended Monday up 0.46 percent, while the S&P 500 .SPX gained 0.47 percent and the Nasdaq .IXIC 0.91 percent.

Over one third of U.S. companies have now reported and 80 percent have beaten market expectations. Another third of the S&P 500 components are scheduled to report earnings this week, including heavyweights Apple (AAPL.O), Alphabet (GOOGL.O), Amazon (AMZN.O) and Boeing (BA.N).

Merger and acquisition activity added extra fizz in the wake of AT&T Inc's (T.N) $85.4 billion bid for Time Warner Inc (TWX.N), though the deal seemed destined to face stringent scrutiny from regulators.

Dollar In Demand

Aiding risk sentiment was the Markit survey of U.S. manufacturing which climbed to a one-year top of 53.2.

Business activity in the euro zone expanded at the fastest pace this year so far in October and firms raised prices at the sharpest rate in more than five years.

The better news led investors to nudge up the probability of a December rate hike from the Federal Reserve to around 74 percent <0> and pressured Treasury prices.

It also lifted the U.S. dollar to a nine-month high against a basket of major currencies at 98.846 .DXY. The dollar firmed on the yen to 104.43 JPY=, threatening the month's peak at 104.62, while the euro struggled at $1.0878 EUR=.

One mover was the Canadian dollar which rebounded from a seven-month low after Bank of Canada Governor Stephen Poloz said the decision on whether to cut interest rates again was not one to take lightly.

The comments countered recent speculation about an imminent easing and nudged the U.S. dollar down to C$1.3333 CAD=D4 from a peak at C$1.3398.

In commodities, oil prices dipped on news of the impending restart of Britain's Buzzard oilfield and Iraq's wish to be exempted from OPEC production cuts.

Brent LCOc1 was down 9 cents at $51.37 a barrel, while U.S. crude CLc1 also lost 2 cents to $50.50.

Going the other way was iron ore, with Chinese iron ore futures reaching their highest since August 2014.

Coal prices also reached new peaks after weeks of gains, a prop for the Australian dollar AUD=D4 as the two commodities are the country's biggest export earners.

Article Link To Reuters:

Oil Prices Drift South As Upcoming OPEC Meeting Starts To Look Like A Bust

By Jenny W. Hsu
October 25, 2016

Crude futures eased further in early Asia trade Tuesday as the possibility that members of the Organization of the Petroleum Exporting Countries could walk away empty-handed from the upcoming meeting next month looms large after Iraq signaled it might not take part in the proposed production cut deal.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in December CLZ6, +0.00% traded at $50.47 a barrel, down $0.05 in the Globex electronic session. December Brent crude LCOZ6, -0.16% on London’s ICE Futures exchange fell $0.13 to $51.33 a barrel.

“Given that Iran, Libya, and Nigeria are already exempt, leaving Iraq’s 4.7 million barrels a day in production off the list would either prompt others to abandon a deal or greatly weaken the resulting agreement,” said Tim Evans, a Citi Futures analyst.

Iraq, the second biggest producer in OPEC after Saudi Arabia, over the weekend said it should be exempt from any deal to scale back production as it needs the oil revenue to fund its ongoing war against the Islamic State militants. Some media reported that Iraq is only willing to freeze at its September level. The country produced 4.78 million barrels last month, according to its own reporting.

OPEC members last month reached a preliminary agreement to limit the group’s daily production to a range between 32.5 to 33 million barrels a day. The agreement did not include any individual output quotas, a thorny issue that remains a major divisive factor among the members.

Skeptics say even if a deal is cemented in the November 30 meeting, members will likely ignore the quotas and produce at will in order to claw back their lost oil revenue and protect their market shares.

Another wild card that could derail the deal is Russia, which has not offered a clear commitment to join OPEC’s efforts to curb production. Russia’s oil production reached a post-Soviet high in October of 11.2 million barrels a day. The country’s biggest energy company Rosneft recently indicated that it has the capacity to ramp up production if the demand requires.

Russia officials said it would send oil officials to attend a meeting in Vienna to meet with their OPEC counterparts later this month to discuss options.

Meanwhile, analysts are also keeping an eye on the weekly changes in U.S. crude inventories and productions. Analysts surveyed by S&P Global Platts estimate a growth of 400,000-barrels in the U.S. crude stocks in the week ended October 21 as some refineries are still under their seasonal maintenance.

The firm estimates a drawdown of 1.5-million barrels in gasoline stocks and a 1.9-million barrels decrease in distillates stocks. Official data by the U.S. Energy Information Administration will be released Wednesday.

China’s crude imports, however, remains a bright spot in the global oil markets. In September, the world’s second largest oil consumer imported 8.08 million barrels a day of crude, an 18% rise compared with same month last year. The increase is largely due to the government’s aggressive efforts to fill up its strategic reserves, said Energy Aspects.

China’s buying of foreign crude will likely remain strong ahead of the winter months due to anticipated heating needs, said Peter Lee, an energy analyst at BMI Research.

Nymex reformulated gasoline blendstock for November RBX6, -0.59% — the benchmark gasoline contract — fell 50 points to $1.4988 a gallon, while November diesel traded at $1.5781, 17 points lower.

ICE gasoil for November changed hands at $467.75 a metric ton, up $3.50 from Monday’s settlement.

Article Link To MarketWatch:

Wall Street Watchdogs Turn To A.I.

By John McCrank
October 25, 2016

Artificial intelligence programs have beaten chess masters and TV quiz show champions. Next up: stock market cheats.

Two exchange operators have announced plans to launch artificial intelligence tools for market surveillance in the coming months and officials at a Wall Street regulator tell Reuters they are not far behind. Executives are hoping computers with humanoid wit can help mere mortals catch misbehavior more quickly.

The software could, for instance, scrub chat-room messages to detect dubious bragging or back slapping around the time of a big trade. It could also more quickly unravel complex issues, like "layering," where orders are rapidly sent to exchanges and then canceled to artificially move a stock price.

A.I. may even sniff out new types of chicanery, said Tom Gira, executive vice president for market regulation at the Financial Industry Regulatory Authority (FINRA).

"The biggest concern we have is that there is some manipulative scheme that we are not even aware of," he told Reuters. "It seems like these tools have the potential to give us a better window into the market for those types of scenarios."

FINRA plans to test artificial intelligence software being developed in-house for surveillance next year, while Nasdaq Inc (NDAQ.O) and the London Stock Exchange Group (LSE.L) expect to use it by year-end.

The exchange operators also plan to sell the technology to banks and fund managers, so that they can monitor their traders.

Artificial intelligence is the notion that computers can imitate nuanced human behavior, like understanding language, solving puzzles or even diagnosing diseases. It has been in development since the 1950s and is now used in some mainstream ways, like Siri, an application on Apple Inc's (AAPL.O) iPhone that can engage in conversation and perform tasks.

While financial firms are already applying artificial intelligence software for everything from compliance to stock-picking, it is only starting to become useful for market oversight.

"We haven't really let the machines loose, as it were, on the surveillance side," said Bill Nosal, a Nasdaq business development executive who is overseeing its artificial intelligence effort.

50 Billion Events

Market surveillance generally relies on algorithms to detect patterns in trading data that may signal manipulation and prompt staff to investigate.

But the sheer volume of data can lead to an overwhelming number of alerts, many of which are false alarms.

FINRA monitors roughly 50 billion market "events" a day, including stock orders, modifications, cancellations and trades. It looks for around 270 patterns to uncover potential rule violations. It would not say how many events are flagged, or how many of those yield evidence of misbehavior.

The "machine learning" software it is developing will be able to look beyond those set patterns and understand which situations truly warrant red flags, said Gira.

Machine learning is a subset of artificial intelligence in which computers figure out new tasks without having been programmed to do so. In the case of market surveillance, that would mean the computers "learn" which trading patterns lead to enforcement charges, in order to flag the right ones.

FINRA plans to test the new tool next year alongside its existing systems to compare the results.

The regulator has already moved its surveillance systems to Amazon.com Inc's (AMZN.O) web-based Cloud, giving it more computing power to quickly analyze massive data.

Nasdaq is working with cognitive computing firm Digital Reasoning, which it invested in earlier this year.

LSE has teamed up with International Business Machine Corp's (IBM.N) Watson business and cyber-security firm SparkCognition to develop its A.I.-enhanced surveillance, Chris Corrado, chief operating officer of LSE Group, told Reuters in an interview. Watson has become something of a household name, having bested contestants in the game show "Jeopardy" in 2011.

Trader Integrity

The technology would not necessarily prevent events such as the 2010 "flash crash," when the Dow Jones Industrial Average temporarily plunged more than 1,000 points.

However, it could be quicker to catch manipulative behavior thought to contribute to them, potentially saving market watchdogs time and money.

FINRA, Nasdaq and LSE would not provide specific figures for how much the software costs to develop or how much money they expect it to save.

For instance, investigators spent years cross-referencing trading data with old electronic communications to make their case against a group of global banks whose traders were rigging foreign exchange benchmarks. (reut.rs/2ceTeFB)

Nasdaq said the software it is testing with Digital Reasoning and other financial firms could do that task almost in real time.

Artificial intelligence startup Neurensic on Wednesday launched a tool that creates an "integrity score" for traders based on how their trading patterns match up against patterns regulators have deemed suspicious.

"To have that information in terms of running your business more efficiently or proactively avoiding regulatory troubles is huge," said David Widerhorn, the firm's chief executive.

Neurensic has also worked with regulators on market-manipulation investigations and is in talks with two exchanges on supplying artificial intelligence software for surveillance, he said.

Article Link To Reuters:

Failure Of EU Free Trade Deal Would Leave Canada Stranded

By David Ljunggren
October 25, 2016

The looming failure of free trade talks with the European Union would derail Canada's push to reduce its dependence on the United States and potentially complicate negotiations with other nations, such as India and China.

The EU's hopes of signing the pact this week appeared to evaporate on Monday as the Belgian federal government failed to win the consent of regional authorities necessary to approve the deal.

The European deal would have given Canada preferential access to a market of 500 million people, more than the North American Free Trade Agreement(NAFTA), at a time when the U.S.-Canadian partnership is under pressure.

Canada sends 75 percent of all its exports to the United States.

"We are one of the most dependent countries in the world in regards to trade," said former Quebec Premier Jean Charest, who initiated negotiations for the EU-Canada trade deal during his tenure.

"If this agreement fails, it will be a disappointment," he told Reuters on Friday in Montreal.

It would leave Canada, which is desperate to revive a sluggish export sector, in the predicament policymakers have tried to avoid: overly dependent on the United States, where both presidential candidates have talked about changing NAFTA.

Getting the Comprehensive Economic and Trade Agreement (CETA) through would be a coup for Prime Minister Justin Trudeau who has pressed other countries to resist protectionist sentiment ever since taking office in November.

With NAFTA under pressure and a proposed 12-nation Pacific area trade deal on life support, Canadian officials pushed hard to try and overcome hurdles to CETA in various European states.

Along the way, however, Canada made concessions that could make it less attractive for future potential trading partners.

As opposition in Europe grew, Canada agreed to weaker investor protection rules to grant governments more power over overseas companies. Those new regulations will govern any future trade talks the country enters, says the trade ministry.

"Slog For The Future"

Increasing public backlash against globalization, one of the main challenges for the EU deal, means none of the deals Canada is working on could happen soon, said Carleton University trade policy professor Michael Hart.

The need to diversify away from the United States was one of the reasons Trudeau vowed to boost trade with China and India and with CETA in doubt, there will be fresh impetus to press on with those trade deals.

One person close to the discussions, however, said Ottawa would struggle to speed up the pace of those talks.

Discussions with India are going very slowly, in part because the Indian civil service is over stretched, and there is no guarantee the negotiations will succeed, said two people familiar with the talks.

Meanwhile, the Liberal government is split over what concessions to make in free trade talks with China, which wants Canada to ease curbs on investment in key sectors such as energy.

Opinion polls show most Canadians oppose the idea of an China agreement, which insiders say is at least a decade away.

The Trans-Pacific Partnership deal that Canada signed in February looks set to fall victim to political discord in the United States, killing off much-prized access to Japanese markets for Canadian beef.

"For trade policy people, it's going to be a very long slow tedious slog for the future," said Hart, a former long-time Canadian foreign ministry expert who advised on NAFTA.

Asked whether Canada would redouble efforts to strike trade deals with China and India if the European deal died, Freeland told reporters on Monday that her "absolute and relentless focus" this week would be on CETA.

One reason officials refuse to concede the deal's collapse is that the European agreement, which backers say could boost bilateral trade by 20 percent, promises most imminent and tangible benefits.

With a proposed free trade deal between the EU and the United States at best years away, some U.S. firms close to the Canadian border might consider moving operations north to take advantage of European market access, said Jason Langrish, executive director of the Canada-Europe Roundtable for Business trade lobby.

"This is the last hope," he said.

Article Link To Reuters:

Must See TV: Why Gutting NAFTA Is Unlikely To Create U.S. Jobs

By Timothy Aeppel
October 25, 2016

Both U.S. presidential candidates routinely criticize free-trade deals they blame for the loss of American jobs.

But tweaking the North American Free Trade Agreement (NAFTA), as Hillary Clinton has pledged to do, or ripping it up, as Donald Trump demands, may do nothing to help companies like Element Electronics Corp, which owns America’s last television factory.

Winnsboro, South Carolina-based Element, and the television industry more broadly, offer a window into the complexity of industrial supply chains and illustrate why pushing manufacturing jobs back to the United States is so difficult.

Element's plant in South Carolina is nearly identical to a rival factory operated by Taiwanese conglomerate Tatung Company that sits on a dusty back street in this Mexican border town. Both import nearly all their components from Asia. The parts often flow in through the same southern California ports.

But there's a big, and costly, difference. The Mexican plant, by sitting just over the border from El Paso, Texas, doesn't have to pay duty on those parts, even when the finished televisions are sold in the United States. But Element's factory has to foot the tariff bill, which makes its televisions more expensive.

"It's pretty crazy that I'm disadvantaged for using U.S. labor," says Michael O'Shaughnessy, Element’s president.

That's a sentiment that Trump, the Republican nominee, has forcefully tapped as he makes the case that radically revamping the trade deal would level the playing field and bring jobs back. Many trade experts, though, say it would be a costly disaster to try to unravel these production networks, which essentially treat Mexico as a 51st state.

The Peterson Institute for International Economics, a Washington think tank that favors free trade, released a study last month that predicted imposing stiff tariffs on Mexico and China would disrupt North American producers that have created global supply chains and push the United States into a recession.

"The TV industry is characterized by particularly dense webs of cross-border supply chains with Mexico and China," says Marcus Noland, the economist who directed the study. "There'd be chaos and a trade war."

Even many who oppose NAFTA acknowledge it would be disruptive to suddenly erect barriers, given the way companies have shifted supply chains to integrate Mexico.

NAFTA'S Legacy

NAFTA, implemented in 1994, forged a common market between the United States, Mexico and Canada. In response, many industries, including television manufactures, have transformed themselves by creating supply chains that crisscross the border.

Televisions once were produced in the United States and elsewhere with hundreds of parts, often tucked into elaborate wooden cases. A modern flat screen, by contrast, has relatively few parts, and more than 70 percent of its value is packed into the glass and the electronics integrated directly into the panel.

The heart of the industry, including that core glass technology and production, is now based in Asia.

About half of all TVs imported to the U.S. come from Mexico, says Paul Gagnon, an expert on the industry's supply chain at IHS Markit, an economic research firm.

"The main reason for that is so the producers can respond quickly to fluctuations in demand," he says. TV sales are highly seasonal, spiking late in the year. In Mexico, some of the factories double their workforce for just a few months to respond to this.

Gagnon doubts the jobs would come back to the United States, because margins on TVs are so low. "If there were any major cost increase (in Mexico), you'd probably see some shift to Asia for production -- rather than seeing that production happen in the U.S."

Some Mexican plants mold the plastic casing and do other tasks in the assembly process. But in many cases -- including at both the Element and Tatung plants -- the assembly plants do mostly finishing touches like inserting printing circuit boards and tuning the units. This creates relatively few jobs compared to the kind of television manufacturing done in the U.S. industry's heyday.

In the 1950s, there were some 150 domestic television manufacturers in the United States, and employment peaked at about 100,000 in the 1960s.

Mexico's cost advantage over the United State is formidable. O’Shaughnessy said he pays his 200 workers, who operate in a converted shirt factory, about $15 an hour. The pay at the Juarez plant is about $2.50 an hour.

Even with this edge, it's getting harder to do the work in Mexico, said Chan-hsing Diao, manager of the Tatung plant. (Tatung doesn't sell televisions under its own name, but rather is paid by other manufacturers to assemble their name-brand products.)

"The industry is consolidating and the cost pressures are enormous," he said, noting that over the last six years, the amount he is paid to assemble a 32-inch television has fallen by half, from about $6 a unit to $3 a unit.

"The profits are this," he said, holding up two fingers almost touching.

The Tatung plant in Juarez occupies a cavernous space that was once a windshield factory. It now features long assembly lines for televisions and produced 15 million TVs over the last seven years, Diao said. Some 13 million of those were sold in the United States.

In January, the company lost its main customer, a Chinese TV manufacturer that Diao declined to identify. Tatung is scrambling to find a new manufacturer that wants to build TVs for the United States. In the meantime, it continues assembling TVs for Mexico and some other Latin American markets.

Diao warned there would be a trade war if a new U.S. administration tore up the NAFTA agreement. With profits already so tight in Mexico, many Chinese producers might find it easier to ship finished goods directly from Asia rather than move production and jobs to the United States, he said.

In Search Of An Exemption

O'Shaughnessy, for his part, said he just wants to get the same break on import duties as Mexico gets under NAFTA. His decision to build in the United States, he said, was driven entirely by his only customer for the U.S. plant, Wal-Mart, which uses Element as a centerpiece of its campaign to promote domestic manufacturing. The South Carolina TVs are shipped in boxes emblazoned with American flags and bearing the words "Assembled in the USA."

O'Shaughnessy has appealed for a tariff exemption from his local congressman, Rep. Mick Mulvaney, a Republican. Mulvaney said he is sympathetic but has been unable to win over many fellow lawmakers who consider special exemptions a form of earmarks for special interests, which many oppose on principle.

"Element makes clear the real world implications of these trade deals we have signed," said Mulvaney, adding that it's time to "review" NAFTA to iron out this and other loopholes.

Back in Juarez, the annual ramp-up of hiring is under way at the Tatung plant to supply the surge of televisions bought over the holidays. Employment at Tatung goes as low as 280 each year, for instance, but is now on its way up to 600, Diao said.

"You could never do that in America — at least not easily," he says, referring to this cycle of hiring and firing large numbers.

Article Link To Reuters:

Dollar Steady Near Nine-Month High, Underpinned By Fed Rate Outlook

By Hideyuki Sano
October 25, 2016

The dollar held near nine-month highs against a basket of major currencies on Tuesday as solid U.S. manufacturing activity and comments from a Federal Reserve official cemented expectations of a U.S. rate hike by year-end.

The dollar's index against a basket of six major currencies .DXY =USD traded at 98.768. The dollar index had hit a high of 98.846 on Monday, having risen 3.6 percent so far this month.

"Strong U.S. manufacturing data boosted U.S. bond yields and supported the dollar," said Shinichiro Kadota, senior strategist at Barclays Securities.

Preliminary Markit survey on Monday showed U.S. manufacturing activity levels reached a one-year high this month.

Adding to the positive backdrop for the dollar, Chicago Fed President Charles Evans said on Monday the Fed could raise rates three times between now and the end of 2017, so long as inflation expectations and the labour market continue to improve.

Evans' comments built on remarks by San Francisco Fed President John Williams on Friday and New York Fed President William Dudley on Oct. 19, both of whom hinted at a looming rate increase.

As the dollar held firm, the euro eased 0.1 percent to $1.0876 EUR=, languishing near its seven-month low of $1.0859 touched on Friday.

The euro has come under renewed pressure after the European Central Bank last week kept the door open to more stimulus in December and doused speculation that it would taper its asset buying program.

"On the euro, now that it has decisively fallen below $1.10, we expect it to trade lower towards our eventual target of $1.05," said Heng Koon How, senior FX investment strategist for Credit Suisse in Singapore.

The dollar also had an edge against the yen, rising 0.3 percent to 104.48 yen JPY=, just below a 2-1/2-month high of 104.635 yen set earlier this month.

The dollar/yen's implied volatility fell sharply in the last few sessions to seven-month lows as more market players expect the currency pair to get stuck in a narrow trading range.

The one-month volatility JPY1MO= fell to 9.0 percent from around 11 percent just a week ago while the three-month volatility JPY3MO= fell to 9.7 percent from above 11 percent.

Elsewhere, the Canadian dollar CAD=D4 traded at C$1.3339, recovering from seven-month low of C$1.3398 touched on Monday.

Bank of Canada Governor Stephen Poloz said on Monday that a further easing from the Bank of Canada would bring the central bank closer to unconventional monetary policy and the decision on whether to cut rates again is not one to take lightly.

Article Link To Reuters:

Why Asia Is ‘Pivoting Away’ From The US Alliance

By Benny Avni
The New York Post
October 25, 2016

As secretary of state, Hillary Clinton coined the term “pivot to Asia.” President Obama adopted it as his soundest national-security goal. Yet now Asia is steadily pivoting away from us.

The State Department’s top Asia hand, Daniel Russel, visited Manila on Monday in an attempt to smooth relations with the Philippines, one of America’s longest and most important Pacific allies. He told reporters that recent comments by the country’s president cause “consternation in a number of countries, not only in mine.”

Consternation. Agita. Distress. Astonishment: President Rodrigo Duterte can cause all this — and then some. Here, he evokes Hitler’s policies on Jews as a model for dealing with his country’s drug addicts. There, he calls Obama a “son of a whore.”

In this case, Russel was referring to Duterte’s announcement, during a visit to Beijing a week ago, of a “separation” from the United States and an alliance, instead, with China and Russia.

Russel isn’t the first American official to publicly take the mercurial Manila leader to task. Back in July, shortly after Duterte’s election, Obama gave him a long lecture on human rights. (Funny: Our new “allies,” Iran and Cuba, rarely hear such lectures.)

As a presidential candidate, Duterte had sought to appeal to anti-American sentiments, so maybe Obama had grounds to be angry. Yet, to paraphrase President Dwight Eisenhower, Duterte may be a son of a bitch, but the Philippines has long been our SOB. Our two nations signed a defense treaty back in the middle of the last century, and our forces in the Philippines’ Subic Bay are a prominent US military presence in the Pacific.

True, last week the Philippines’ loose-cannon-in-chief walked back his “separation” statement somewhat, after realizing too many of his country businesses rely on US relations for their livelihood.

Yet the underlying dynamics in the region are, for now, as strong as ever; Duterte himself may be nutty as a loon, but bowing to China may not be so irrational for his country.

Consider: Under China’s Xi Jinping, Beijing is ratcheting up its bid to dominate the region, using its economic prowess to coerce neighbors and projecting its growing military might. China has been breezily swiping assets from its neighbors and creating facts on the ground — in the ocean and over airspace — while disregarding territorial claims by others.

America has conducted some joint naval exercises with regional allies, attempting to remind Beijing that we’re still the superior power. But this wasn’t enough for Xi to end its expansionism. So Obama advised China’s neighbors to turn to international arbitration to resolve their disputes with China.

Pointless advice: In July, a Hague tribunal — sure enough — favored the Philippines in a dispute over a part of the South China Sea, which Beijing considers to be its exclusively owned private lake. The ruling: Most of the disputed area, the Scarborough Shoal, belongs to the Philippines.

Yet, while the Hague jurists flash their international badges, Beijing has no use for them. China never recognized the tribunal’s jurisdiction. Instead, it considers its superior military power the law of the land.

And beyond going the international-arbitration route, America has no Plan B. So our old Pacific allies, as well as would-be new ones, now seek to cut deals directly with Beijing.

This may be humiliating, frustrating and disadvantageous for these countries, but China is emerging as the big new boss on the block; its neighbors have no choice but to deal with it.

Obama had made a strong effort to counter China’s economic dominance, negotiating a mega trade deal with our Pacific allies. But, alas, he didn’t sufficiently negotiate that deal, the Trans Pacific Partnership, with Americans. Today, TPP is all but dead: It has become a presidential campaign bogeyman, with Donald Trump railing against it and Clinton following suit.

After the former secretary of state left office, Obama gave her “pivot” a new name. “Pacific rebalancing” sounds more academic and less catchy, but it’s still a sound idea: America’s relations with the Asia-Pacific region will grow in importance in coming decades. Addressing that will be high on the next president’s to-do list.

In the presidential debates, Clinton, now the apparent front-runner, showed a remarkable ability to pivot from difficult questions. If elected, she’ll need to marshal all her advertised disdain to ideological rigidity (she was for the TPP before she was against it), pivot back to Asia and repair our shaky relations. That is, she’ll need to pivot away from Obama’s all talk-no action approach.

Article Link To The New York Post:

The Brexit Paradox

By Ana Palacio
Project Syndicate
October 25, 2016

The French mathematician Blaise Pascal famously said, “It is not certain that everything is uncertain.” Had he been around for Brexit, he might not be so sure. While a moderate outcome remains likely, uncertainty and animosity have been on the rise in recent weeks. This is the Brexit paradox: the longer it takes for pragmatism to re-enter the debate, the higher the chance that the chilling effect of the unknown will cause permanent damage to both the United Kingdom and the European Union.

This was supposed to be the month when the world would gain more clarity on what is in store for the UK and the EU, as the UK prepares to withdraw. But the October European Council did not formally address the Brexit negotiations at all, reinforcing the lack of direction of September’s informal Council meeting in Bratislava, which resulted in only vague promises for unity.

For its part, the UK is in the throes of a bitter row between Prime Minister Theresa May and Parliament over the latter’s role in the negotiations. Rifts have also developed within May’s Cabinet. And questions about Scotland’s future status vis-à-vis the UK and the EU are intensifying.

But the problem extends beyond confusion, with the various sides, playing to their domestic audiences, adopting increasingly polarized, even antagonistic positions. May fired the first major shot at the Conservative Party conference. After declaring that she would invoke Article 50 no later than March 2017, she adopted a decidedly hard negotiating stance, declaring that halting immigration would take precedence over retaining access to the single market.

EU leaders have responded in kind. German Chancellor Angela Merkel, who initially advocated a pragmatic approach, delivered a blistering speech to German business leaders, insisting that access to the EU’s single market could not be divorced from acceptance of the EU’s four freedoms – including freedom of movement. Soon after, French President François Hollande declared that Britain must pay “a price” for Brexit.

European Council President Donald Tusk was the bluntest of all, stating that “the only real alternative to a hard Brexit is no Brexit.” May’s cool reception at the October European Council underlined this message. The Brexit negotiations have not even begun, and a standoff already appears inevitable: Tusk’s salt and vinegar versus British Foreign Secretary Boris Johnson’s cake.

If May sticks to her declared timeline – and, with European parliamentary elections in 2019, she cannot do otherwise – this dynamic is likely to worsen. The first months of official negotiations will coincide with national elections in the Netherlands, France, and Germany, meaning that the European side will be unable to afford anything but a tough position.

Despite all of this, a “hard Brexit” scenario in which the UK severs all ties with the single market remains highly unlikely. The consequences would be too severe to consider.

But designing a new relationship will not be easy. In fact, the one thing on which everyone seems to agree is that it will take much longer than the two years mandated under the EU Treaty. And neither Europe nor Britain can afford years of harsh rhetoric, posturing, and uncertainty.

The hardline approach is already taking its toll on business – and not just in the City of London. Last month, Renault-Nissan became the first major company to announce that it would review its planned investment activities in the UK, owing to the lack of clarity on the post-Brexit trade and legal regime. It surely will not be the last. Indeed, there are rumblings that banks are planning to pull out of the UK as early as the first month of 2017 on account of the ever-worsening rhetoric surrounding the Brexit negotiations.

EU firms in the UK – which account for roughly half of all foreign-direct investment there – are also highly exposed. Moreover, the looming regulatory shifts are hampering progress in important areas, such as capital-markets integration, which is needed to unlock greater productivity and investment on the continent.

A sensible way forward is needed, and fast. One option that has lately been gaining momentum is a durable transitional agreement, similar to the EU’s arrangement with Norway. Such an agreement could be defined relatively quickly, easing the pressure to rush into decisions on thorny issues relating to the EU budget, the jurisdiction of European courts, and migration, while putting in place a broader framework for cooperation. It would also give the EU time to undertake its own internal assessment, including a review of the contours of the freedom-of-movement requirement. But, in order to get there, leaders on both sides of the Channel must take a step back from the brink and infuse some sobriety into the discussion.

Politicians need to take steps to minimize uncertainty now. No one in the UK or the EU – not businesses, investors, or consumers – can afford to live in a purgatory of invective and electioneering.

Article Link To Project Syndicate: