Wednesday, October 26, 2016

Trump, Political Hopes Shot, Sells Trump

Sixteen months and 10 days and too many seconds after he announced his candidacy (but who’s counting?), he is back to square one.

By Olivia Nuzzi
The Daily Beast
October 26, 2016

The bar at the new Trump International Hotel in Washington, Benjamin’s Bar and Lounge, is a sprawling space with high ceilings, few customers and too-sweet cocktails that go for $20 to $100, the most expensive being the bar’s namesake, a concoction of rye, potato and winter wheat vodka, shaken and served with raw oysters and caviar. There is also, inexplicably, a section of the menu called BY THE CRYSTAL SPOON that offers literal spoonfuls of wine for anywhere from $15 to $140. The venue is decorated in blue and white, with plush stools made of velvet and a mirrored wall of empty, crystal barware.

On Tuesday evening around 7:30 pm, Lara Trump, wife of Eric, mingled in the lobby before heading upstairs to dinner at BLT Steak. An older gentleman, sporting a small “TRUMP” pin, sat waiting for his female companion amid the thumping music, reading a biography of William F. Buckley, the late founder of the National Review, the magazine that memorably ran a cover, in January 2016, that declared it was “Against Trump.”

The bartender asked if he could have a look, and he obliged.

There were not, the bartender remarked, a lot of men like Buckley left these days.

The gentleman laughed, a sadness detectable in his voice. He agreed, he said, and what a shame.

With 13 days left until Election Day, it has become overwhelmingly clear that, barring some sort of catastrophe or the return of Christ, 1100 Pennsylvania Avenue, the location of his expansive but unimpressive new hotel, is as close as Donald Trump will get to the White House.

After a shockingly successful showing in the Republican primary, he failed to “pivot,” or tailor his message for the general electorate, whose voters have found his race-baiting and lack of general policy knowledge off-putting. Worse still, he has suffered weeks of accusations from a dozen women who claim he sexually assaulted or otherwise treated them improperly in a sexual context. As a result, he trials the Democratic nominee, Hillary Clinton, by more than five points nationally. His campaign drags on as he refuses to say he’ll concede if (when) he loses, but the fight seems to be over. He’s even stopped donating money to his own campaign.

On Wednesday morning, he will take a break from his campaign-trail duties, which at this point consist of rallies designed to flatter his ego and pander to people who already support him, to appear here for a ribbon cutting ceremony.

Sixteen months and ten days and too many seconds after he announced his candidacy (but who’s counting?), he is back to square one. He is again a celebrity developer, his dreams of higher achievement thwarted by his own hubris, just like the dead bird that had been stuck in (and was finally removed) from the hotel’s mail chute.

In Doral, Florida, on Tuesday afternoon, Trump got started early, promoting his Miami hotel for the crowd. “We could have renovated the inexpensive way with paint, but instead, we ripped it down to the steel,” he said. But his project in Washington, he promised, was even better. “I think it’s one of the great hotels—could be one of the great hotels in the world.”

A few seats away from the Buckley-ite at the bar Tuesday night, another gentleman sat with his younger, heavily made-up date, who scrolled through her glitter-encased iPhone looking at her own selfies while he yammered on, ordering champagne, tasting it, and then asking for a different one.

The chairs, she remarked, were “so slutty.”

The man introduced her to the bartender with a smirk. “This is my cousin,” he said, remarking that he’d been in the previous night with a different cousin. “I have a lot of cousins.”

The man, the woman and the bartender all laughed. “They don’t know the sort of clientele they’re gonna get here,” the man said.

When the bartender came around again, he asked, “Do you want another Trump sparkling wine?”

Article Link To The Daily Beast:

Liberals Didn’t Create The Black Middle Class

Why some black voters prefer Trump’s indifference to Clinton and the left’s self-serving benevolence.

By Jason L. Riley
The Wall Street Journal
October 26, 2016

Black conservatives are as conflicted as the rest of the political right over the candidacy of Donald Trump. Some are supporting the Republican nominee out of partisan duty, while others have decided that he lacks the intelligence and judgment that the presidency demands.

And then there are the black conservatives who are not unbothered by the New York billionaire’s well-documented character flaws but don’t consider them disqualifying. These are blacks who find themselves on the political right not because of the Donald Trumps but notwithstanding them. They’re well aware that racism taints the history of both major political parties, which have evolved dramatically over the decades, but are more interested in what today’s politicians are proposing for the future. These voters are under no illusions that Mr. Trump has given any serious thought to the socioeconomic concerns of millions of black Americans. And yet, as one conservative black friend phrased it over dinner recently, “I’ll take Trump’s indifference over Clinton’s paternalism.”

Last week’s passing of former Princeton President William Bowen recalls one of liberalism’s favorite vehicles for black paternalism: racial preferences. In 1998 Bowen published his most celebrated work, “The Shape of the River,” which was co-written by former Harvard President Derek Bok. The book was a full-throated defense of race-conscious admissions policies at elite colleges at a time when attacks on affirmative action were increasing.

Affirmative action in practice—holding different groups to different standards—had long been unpopular in the U.S. Polls showed that the more specific the description of a race-preference program, the lower the level of support. In 1996 the Fifth Circuit Court of Appeals had ruled in favor of four plaintiffs who alleged that they were denied admission to the University of Texas Law School because they were white. The Supreme Court declined to review the decision, which effectively left in place a ban on racial preferences in universities in Texas, Louisiana and Mississippi. That same year, residents of the nation’s most populous state, California, approved Proposition 209, which prohibited public institutions, including the University of California system, from discriminating on the basis of race.

Messrs. Bowen and Bok set out to show why colorblind admissions policies should be avoided. They argued that black students admitted to elite schools with lower qualifications than other students fared just fine, and they insisted that racial double standards were essential to creating and maintaining a black middle class. Unfortunately for the authors, the evidence they presented substantiated neither claim, and instead of making their raw data on college admissions available to any scholar who wanted to check the book’s conclusions, the data were made available only to scholars who were likely to already agree with those conclusions.

The book’s considerable shortcomings, detailed most persuasively in a blistering 1999 UCLA Law Review article by the scholars Stephan and Abigail Thernstrom, didn’t stop its publication from becoming a news event. The New York Times said that its findings “provide a strong rationale for opposing current efforts to demolish race-sensitive policies in colleges” and that “the evidence collected flatly refutes many of the misimpressions of affirmative-action opponents.” The Los Angeles Times said the authors “prove with facts, not anecdotes, that affirmative action works.”

Freshman college students who don’t meet the academic credentials of the average student at an institution tend to have lower grades than their peers and are less likely to graduate. After California banned race-conscious college admissions, and more black students began attending schools based on their abilities instead of their skin color, black graduation rates increased by more than 50%, including in the more demanding disciplines of math and science. Messrs. Bowen and Bok’s book didn’t compare outcomes of black students admitted to elite schools with preferences and those who were admitted without them. If you don’t do that, you’re not even addressing a central criticism of affirmative action, let alone refuting it.

The authors’ condescending claim that the black middle class owes its existence to racial preferences in higher education is even more bizarre, but it’s consistent with the political left’s belief that black people would be nowhere without its interventions. The reality is that blacks were entering the skilled professions—nursing, teaching, law, medicine, social work—at unprecedented rates prior to the widespread implementation of affirmative action policies on college campuses in the 1970s. Between 1930 and 1970, the number of black white-collar workers quadrupled. Earnings for black males rose 75% in the 1940s and another 45% in the 1950s. In the era of affirmative action, the black middle class has continued to expand, but at a slower rate than it was growing before.

At the remove of nearly five decades, the case for racial-preference paternalism is weaker than ever. It’s no wonder that some blacks prefer Mr. Trump’s indifference to more of the same self-serving benevolence from Mrs. Clinton and the left.

Article Link To The Wall Street Journal:

Barack Obama Is 2016’s Biggest Winner

If only by comparison to Clinton and Trump, Obama looks better in American voters’ eyes.

By David French 
The National Review
October 26, 2016

Who in American politics is having a better year than Barack Obama? At this point in his second term, he has a better approval rating than every post-war president except Bill Clinton and Dwight D. Eisenhower.

It’s easy to see why Clinton and Eisenhower were popular. Despite his scandals, Clinton was a gifted politician who presided over a stunning tech-driven boom. Eisenhower was a war hero who ended large-scale combat in Korea and governed through years of peaceful economic growth. At the end of both presidencies, most Americans could unequivocally declare that they were better off than they’d been eight years before.

But what about Obama? Economic growth in the last eight years lags behind post-war averages. So does GDP growth. So does job growth. Debt has grown more as a percentage of GDP, and for most of Obama’s two terms, median income has actually fallen. His signature domestic achievement — Obamacare — is unraveling before our eyes. His domestic record is far from the worst. But it’s not close to the best, either.

His foreign policy, meanwhile, has been nothing short of a disaster. Every American enemy is stronger than when he took office. Jihadists hold more territory now than they did before, and they strike allied cities across the world. Russia invaded the Ukraine and continues to advance its interests at the West’s expense. China is growing increasingly aggressive. The winner of the Nobel Peace Prize has put American troops back in harm’s way in Iraq and has engaged American forces in combat in more countries than that nasty neocon warmonger George W. Bush ever did.

Political judgments, however, aren’t made in a vacuum. They’re always a matter of contrasts. And Obama has enjoyed the enormous good fortune to be followed onto the scene by two of the most-disliked American politicians in modern political history. On virtually every score, he seems preferable to either Hillary Clinton or Donald Trump.

Sure, he botched the Middle East and squandered victory in Iraq, but he did it because of his ideology, without even a hint of suspicion that the king of Morocco or oil-soaked gulf sheiks were re-writing American foreign policy with gifts to a family charity.

Yes, he may have “joked” about auditing his enemies, and his minions may have urged Democrats to “punch back twice as hard,” but the 2016 race features Trump’s carnival of juvenile playground insults, not to mention all too many actual punches.

Yes, he may have violated his pledge to create the most transparent administration in history, but at least he didn’t create a private, unsecured server on which to discuss the most highly classified information. Hillary was transparent to Russia and China for the sake of being opaque to Americans. She feared FOIA more than she valued our nation’s secrets.

The Obama administration has its share of scandals — the IRS’s targeting of tea-party groups is still one of the worst examples of executive abuse in modern American political history — but his White House has been mercifully grope-free. Trump puts the “T” in tawdry, and Americans know that another round of Bill in the White House means another round of philandering smoke (at best) and fire (at worst), with our popular culture further debased by the leaders of the political “elite.”

It would be hard for Obama not to look better to American voters. He’s made mistakes; if Clinton was any ordinary American, she’d be indicted. His intellect is overstated; Trump’s ignorance is bulletproof. At a time when American politics keeps lowering the bar, bad politicians become better politicians merely by being themselves.

So Obama is about to leave office on a high note, perhaps even with higher approval ratings than Ronald Reagan. But he didn’t build that approval rating. His successors did.

Article Link To The National Review:

Is Mosul ISIS's Alamo?

If the fight isn’t quick, ISIS will tear the shaky U.S.-led coalition apart.

By Daniel L. Davis
The National Interest
October 26, 2016

Last Thursday, Iraqi prime minister Haider al-Abadi shared the good news about Mosul. “The fighting forces are currently pushing forward toward the town more quickly than we thought,” he began, “and more quickly than we had established in our plan for this campaign.” Such statements, while encouraging to his nation, are deceptive. The real fighting has yet to start. It is also vitally important to realize that if ISIS chooses to fight to the death in Mosul—like the Texans’ historic Alamo fight—it is not inconceivable that ISIS could achieve strategic victory even if it is eventually defeated in Mosul.

It is important to understand that Islamic State fighters, while frequently derided as mindless thugs, heartless terrorists and common criminals, pose a formidable tactical threat. They benefit from fifteen years of lessons learned during insurgent operations in Iraq, Afghanistan and Syria. Many of their leaders have significant experience battling against traditional military forces and are experts in the conduct of guerrilla operations and city fighting.

ISIS has experience of fighting in Kobani, Raqqa and now years in Aleppo. Its forces are the most experienced and expert urban fighters in the world right now. ISIS’s members have become masters of crafting elaborate defenses, digging interlocking tunnels, and sowing complex and multilayered minefields. The attacking Iraqi Security Forces (ISF) also have experience in city fighting, as they’ve ejected ISIS from Fallujah, Tikrit and Ramadi. But in each of those battles, ISIS has fought what is essentially a fighting withdrawal.

It has created improvised explosive devices (IEDs), mines and other booby-traps, which it’s hidden in buildings, cars, roads and under sidewalks. ISIS has avoided becoming decisively engaged in its previous city fights, withdrawing when the situation got too hot and it was in danger of being cut off. Whether that was an intentional strategy or not is hard to determine, as reports following the Fallujah battle claimed that ISIS executed scores of its fighters who escaped. This time, however, early evidence indicates that Islamic State leaders have decided to make a fight-to-the-death stand in Mosul.

Some might be tempted to consider this a good thing, thinking that if ISIS makes a stand here and is destroyed, the manpower and leadership gash to the organization will hasten its ultimate demise. That is not a safe assumption; the situation is not as dire for ISIS as might appear.

Mosul is a massive city, similar in size to Philadelphia. Even at the upper end of its estimated numbers, ISIS cannot possibly defend the entire city. Its early actions indicate that in the initial stages of the battle it withdrew numbers of forward-deployed observation posts, designed to give its leadership intelligence on where the liberating force is making its main thrusts. As the attackers continue their drive, ISIS troops will probably conduct harassing fires against them, planting IEDs on the routes of advance, and utilizing snipers to slow the advance, but still not becoming decisively engaged.

They’ll likely continue falling slowly back until finally occupying the main line of defenses they’ve chosen. These are areas they have no doubt prepared over many months for the decisive battle. It will have thorough and elaborate defensive works.

In all likelihood, it will have interlocking tunnels that allow men to move from one position to another without exposing themselves to hostile fire. Snipers will likely occupy key high points in buildings, providing interlocking fires against main routes of advance. Barricades will have been placed roads at multiple points to further slow ISF attacks. Mortars, rockets and possibly some tanks will be placed at strategic locations on and behind the main line of defense.

Regular riflemen will be scattered throughout the battle area and only concentrate for specific actions, otherwise dispersing to increase survivability. They probably have small mobile units to act as local counterattack forces to harass ISF and coalition troops as they move through the city. If ISIS fights with discipline and launches brazen attacks, it is possible to use the urban terrain to exact a high toll on the liberating force and hold out for an extended period.

If the Islamic State has adopted the “Alamo” strategy, it may be willing to suffer 50, 60 or even up to 75 percent casualties, yet still tenaciously fight on. “There is no chance” that ISIS is going to retreat from the city, according an October 23 dispatch published by Mosul Eye, the most authoritative source of information from within Mosul for the past two years. “There is no safe heaven [sic] for them anywhere in Iraq either; it is just impossible for them to blend,” Mosul Eye wrote, and also pointed out that there is no known program for the reintegration of ISIS members.

Meaning that there are few places where ISIS’s Iraqi members can flee, and no motivation to surrender. The chances that Mosul represents the Alamo for ISIS are substantial. There is great risk for the coalition if this turns out to be the case.

First, it will test the mettle of ISF troops in particular. They are two years from their horrific defeat during ISIS’s initial swamp of Iraqi territory. Iraqi troops have been numerically rebuilt, they have been re-equipped with modern weapons, and they have been retrained by U.S. and other allied guides. Today’s ISF is definitely better than the 2014 version, but it has not yet been tested in sustained, difficult combat. It is uncertain what will happen if Baghdad’s troops start suffering high casualties.

Second, the longer the tactical battle for Mosul lasts, the greater the chance ISIS could wear down the tenuous bonds holding coalition forces together and succeed strategically. In an Alamo case, its main intent would likely be to hold out for as long as possible, inflicting as much harm on ISF troops as possible. ISIS has shown it is willing to die for its cause and endure enormous hardships. At least up to this point, the ISF has not shown itself willing to make such sacrifices. ISIS knows it has no hope of actually defeating the liberating force, but it probably realizes it does have a chance to split the coalition and sap its will to fight. Here’s how.

The coalition force is composed of Iranian-backed Shia militia, various Sunni tribal militias, small numbers of Christian and Turkmen militias (many drawn from those who previously lived in Mosul), the Kurdish peshmerga, the Iraqi national troops, and U.S.-led coalition troops providing advisor, artillery and air support. This cobbled-together coalition does not have natural cohesion. In fact, many of these groups are known to deeply distrust one another, with some of the leaders of the Shia militia being on record as promising to kill American troops they find on the battlefield. If this fight drags on and casualties begin to mount among the various militias, the chances for intra-coalition conflict rises.

For example, if the fighting ability of the ISF begins to weaken and Shia militiamen have to take up the slack, fighters in the Shia Popular Mobilization Units might stop cooperating with Baghdad and launch off on their own plan, going where they deem most advantageous. Under a worst-case scenario, they could even battle against other coalition militias, such as Sunni tribal militias and Christian groups. It is also possible that rogue elements of the PMU might make good on their threats and kill American advisors or other support troops in ostensibly “blue-on-blue” attacks.

It is also possible that as the battle progresses, some of the non-Sunni groups might decide to freelance from an agreed-upon campaign plan and try to capture quarters of the city they have not been designated to free. If Shia troops, for example, were to move into Sunni enclaves of Mosul without agreement, the Sunni residents or even the erstwhile allied Sunni militia might turn their guns on the Shia. In such a case, the coalition could actually begin to consume itself.

The odds that Shia, Kurdish, Christian and Sunni armed groups—some of whom take orders more from outside powers than from Baghdad—will work together cooperatively and effectively aren’t the highest. The longer ISIS is able to hold out, and the more casualties it is able to inflict on the coalition, the greater the chance that religious, sectarian and political differences between the liberating forces will bubble to the surface.

This combustive tinderbox of unstable allies doesn’t even include the considerable destabilizing possibilities that might arise if the Turkish armed forces decide to make good on President Recep Tayyip Erdoğan’s promise to take part—with or without permission—in the fight on the ground.

Despite all these challenges, it is still possible that things could still go well for the coalition. It is entirely possible that ISIS’s defenses are breached more rapidly than expected. The faster the battle can be won, the better the chance the coalition remains effective and intact. That is certainly my hope. But it would be a mistake to underestimate ISIS’s capabilities and expect the best.

Islamic State has shown itself to be the most barbaric, cruel and inhumane group to darken the globe in this generation. It offers no hope of a prosperous and peaceful future for anyone on the planet. It has confirmed it has no ability to govern and administer a city. But its members are not stupid, and have shown themselves to be effective at the strategic level.

Though it’s early in the fight, indications are that ISIS is prepared to make Mosul its Alamo, and pay the tactical price on the ground necessary to achieve strategic effects. Its leadership is intimately familiar with each and every point of historic friction between each member of the coalition, and is certain to do all in its power to pit one against another in an attempt to fracture it.

The battle for Mosul has only just begun. The early moves by the coalition have been little more than consolidating lightly or undefended sections of the city’s outskirts. The real fighting hasn’t yet started. Most American and Iraqi government officials portray the battle’s successful outcome as a given and voice concern over what comes next. Those post-conflict concerns are well-founded, but assumptions of tactical success are still premature. It would be wise for Washington and Baghdad to make serious contingency plans for what they would do if the fighting bogs down or the coalition begins to rupture. Pinning all our hopes on a best-case scenario doesn’t appear to be the wisest course of action.

Article Link To The National Interest:

Why The Middle East Knows Not To Trust The United States

By David Ignatius 
The Washington Post
October 26, 2016

When the United States fights its wars in the Middle East, it has a nasty habit of recruiting local forces as proxies and then jettisoning them when the going gets tough or regional politics intervene.

This pattern of “seduction and abandonment” is one of our least endearing characteristics. It’s one reason the United States is mistrusted in the Middle East. We don’t stick by the people who take risks on our behalf in Iraq, Egypt, Lebanon and elsewhere. And now, I fear, this syndrome is happening again in Syria, as a Kurdish militia group known as the YPG, which has been the United States’ best ally against the Islamic State, gets pounded by the Turkish military.

The YPG is a special case for me because I had a chance to meet some of their fighters in May at a secret U.S. Special Operations forces training camp in northern Syria. They described battling to the last man — and sometimes woman — as they drove the Islamic State from its strongholds. Special Ops officers embedded with the YPG recounted their battlefield exploits with deep respect, expressing what one called “the brotherhood of the close fight.”

Unfortunately, allying with the United States can be a dangerous proposition in the Middle East. Last Thursday, Turkey said its warplanes shot 18 targets in YPG-controlled areas of northern Syria. The Turks want to block the YPG from linking up with its fighters in a pocket known as Afrin, northwest of Aleppo. The Turks also want to prevent the YPG from playing a leading role in the liberation of Raqqa, the Islamic State’s capital, as the United States had planned.

“If it doesn’t stop, it could preempt all plans for Raqqa,” warns a Pentagon official about the Turkish onslaught. Kurdish sources tell me that because the United States isn’t responding to pleas about Afrin, the YPG is appealing to Russia.

The U.S. alliance with the YPG was forged during the liberation of Kobane from the Islamic State in late 2014. The Kurds were down to a few hundred fighters when U.S. Special Operations forces intervened. The assistance was brokered by Lahur Talabani, the intelligence chief of the Patriotic Union of Kurdistan, or PUK. He sent several of his operatives into Kobane with GPS devices to call in U.S. close air support, via an operations center in the PUK’s headquarters in Sulaymaniyah, Iraq.

“It was the right thing to do,” Talabani told me Tuesday in an interview in Washington. He explained that the YPG’s success against the Islamic State has saved Kurdish lives in Syria and taken pressure off Kurdish forces in Iraq, who are now fighting to liberate Mosul from the extremists.

The Obama administration embraced the YPG because the Kobane victory was the first major battlefield success against the Islamic State. At last, the United States had a partner that could fight. But this alliance was built atop an ethnic fault line. That ruptured in August, when a YPG-dominated force captured Manbij, just south of the Turkish border. A few weeks later, the Turks invaded Syria and began their barrage against YPG targets.

The United States has tried, unsuccessfully, to finesse the Turkish-Kurdish animosity. Before the Manbij offensive began in May, the United States brought to Incirlik Air Base in Turkey a delegation from the Syrian Democratic Forces, a coalition that nominally oversees the YPG. But this effort to paper over Turkish-Kurdish differences crumpled after the attempted coup in Turkey in July. Some of the Turkish generals who met the SDF are now said to be in prison as coup suspects.

Turkey’s regional ambitions have swollen as President Recep Tayyip Erdogan consolidated power after the coup attempt. Even as Turkish forces harass the YPG and consolidate a border strip in Syria, they’re also advancing in Iraq, seeking a role in the liberation of Mosul despite warnings from Iraq and the United States to stay out. Erdogan speaks of Aleppo and Mosul as former Ottoman regional capitals.

“One wild card is how to manage the role of Turkey in both theaters,” says a senior U.S. official.

Maybe the Kurds should have known better than to ally with the United States, or to trust Turkey to stay out. Kurdish history is a story of betrayal. Fortunately for the United States, some goodwill remains from “Operation Provide Comfort,” the no-fly zone over northern Iraq that the United States imposed after the 1991 Gulf War, which helped create a thriving Kurdish regional government in Iraq.

But people in the Middle East have learned to be wary of American promises. One Iraqi Christian leader recently rejected the suggestion of new American help, post-Islamic State. “You’ll walk away,” said the priest. “That’s what you do.”

Article Link To The Washington Post:

Accountability For ObamaCare

Democrats should pay a political price for this historic failure.

By Review & Outlook
The Wall Street Journal
October 26, 2016

ObamaCare has suddenly been injected back into the 2016 election debate, on the news of the law’s 25%-plus average premium increase for 2017. Even Donald Trump is talking about it. With only two weeks to go, this is a moment for voters to hold accountable the Democrats who imposed this debacle on the country over voter objections.

Next year’s enormous price increases are merely the latest expression of ObamaCare’s underlying problems, and the dysfunction is undermining the health security of Americans who lack employer coverage. A wave of major insurers have quit the exchanges, and those that are left have raised deductibles and co-pays and restricted choices of doctors and hospitals. The public is witnessing—and the unlucky are experiencing—the collapse of one progressive promise after another.

At every stage of the ObamaCare saga, liberals said not to worry. Sure, the law was unpopular when Democrats rammed it through Congress on a partisan vote in 2009-10, but voters would learn to love it once the subsidies started rolling. That didn’t happen, and in 2014 President Obama tried to buck up Democrats by saying that “five years from now” people will look back on the law as “a monumental achievement.” Two years later it’s worse.

Nothing could shake the liberal faith in their supposed landmark: Not the website fiasco of 2013, or the millions of individual health plans that were cancelled despite President Obama’s promise about keeping them. The left kept the faith as the entitlement subtracted from economic growth, hurt incomes and killed jobs. MIT economist Jonathan Gruber called the critics stupid, and Mr. Obama denigrates anyone who disagrees with him as illegitimate or politically motivated.

Now reality is confirming what the critics predicted. ObamaCare’s regulatory mix—benefit mandates, requiring insurers to sell coverage to all comers, and narrow ratings bands that limit how much premiums can vary by health status—was tried by several states in the 1980s and ’90s. Every one saw the same results that are now un-spooling nationally: high and rising costs, low and declining enrollment, and less insurer and provider competition.

The Affordable Care Act was supposed to solve these predictable disruptions with subsidies and a mandate to buy insurance or pay a penalty. But most people don’t think ObamaCare plans provide value for the money, especially if they are non-subsidized.

So now the liberal line is that ObamaCare has a few problems, but don’t worry: The same geniuses who wrote the law know how to fix it. The Bernie Sanders-Elizabeth Warren left wants a new “public option,” higher subsidies, more price controls and even more intrusive regulatory control. Hillary Clinton has endorsed all of this.

“The Affordable Care Act has done what it was designed to do,” Mr. Obama declared last week in Miami, apparently meaning that the law has reduced the number of uninsured. But most of the coverage gains have come from dumping patients into Medicaid, a failing program that provides substandard care. Nominally private exchange plans increasingly resemble Medicaid too.


Mrs. Clinton may be horse-whispering Ms. Warren now, but ObamaCare’s failures aren’t likely to bring the U.S. closer to their single-payer nirvana any time soon. ObamaCare was the best Democrats could do when they had a 60-vote Senate super-majority and bought off interest groups like the insurers, hospitals, drug makers and American Medical Association.

The only way to break the ObamaCare status quo is if the public returns a Republican Congress to Washington. If Republicans can hold the Senate amid a Clinton victory, they’d be in a better position to negotiate solutions along the lines of the House GOP “Better Way” blueprint that would start to repair the individual market and create incentives for more choice and competition.

Take Wisconsin, where Democrat Russ Feingold cast the deciding 60th vote for ObamaCare and voters fired him for it in 2010. He’s back hoping voters forget. Evan Bayh, who also cast the deciding vote before retiring to become a super-lobbyist, is back facing Indiana voters and Hoosiers can deliver a verdict.

In Arizona, premiums will rise a mind-boggling 116%, only two insurers are still selling plans, and John McCain has made ObamaCare a major theme. His opponent, Congresswoman Ann Kirkpatrick, calls ObamaCare her “proudest vote.” Katie McGinty likes to say Pennsylvanians should be “proud of ObamaCare,” though the commonwealth is slated for a 53% increase. A memo about ObamaCare pride month must have gone out from Democratic HQ.

Mr. Trump has missed a chance by not prosecuting a consistent case against ObamaCare, despite Mrs. Clinton’s past as the chief architect of its HillaryCare prototype in the 1990s. As that episode shows, the longstanding progressive goal has been to centralize political control over American health care.

Now voters are finally seeing what happens when the planners try to design a single health-care solution for a large and diverse country. Mr. Obama called ObamaCare “a starter home” in Miami. Republicans ought to campaign as the bulldozer.

Article Link To The Wall Street Journal:

This Is No Way To Mend Europe’s Banks

By Editorial Board
The Bloomberg View
October 26, 2016

Europe urgently needs to repair a banking system that’s weighing on the region’s economy. Governments say they understand, but they still aren’t taking the task seriously.

The issue is global standards for capital -- the bedrock financing that makes banks capable of absorbing losses without going bust. Lack of capital in 2008 turned financial setbacks into a full-scale crisis. Regulators agreed on tougher capital standards back in 2010; now, the Basel Committee on Banking Supervision, which includes regulators from around the world, wants to firm up the rules that tell banks how to comply. Europe’s governments aren’t happy.

The hardest thing about regulating capital is measuring risk, because the riskier a bank’s investments, the more capital it needs. Banks disagree on how to judge the hazards: When presented with the same assets, they come up with different answers. And the temptation to underestimate risk, which would allow them to economize on capital, is always present.

Regulators therefore want to give banks less leeway in making this judgment. Ideas include bounds on the so-called risk weights that banks apply to their assets. Other proposals include a standardized method for calculating operational risk -- the likelihood of running into legal troubles such as those that recently sent Deutsche Bank shares plummeting. The aim is to put these changes in place by the end of the year.

This prospect has caused an uproar in Europe, home to some of the world’s largest and most thinly capitalized financial institutions. Executives argue the changes come at a time when banks are already struggling to turn a profit. Policy makers -- including German Finance Minister Wolfgang Schaeuble -- say the rules must not affect the region’s banks disproportionately. Some have suggested that the European Union should ignore them, undermining the Basel process for cooperating on financial regulation.

This reluctance is ill-advised. The new rules won’t affect banks that are already judging their risks cautiously, as regulators intended. And they’ll give banks that have weighed their risks more optimistically clearer guidance on what they need to do.

Regardless of how one measures risk, Europe’s banks still need more capital. Their failure to recognize losses and raise equity has left them with too many bad loans, and unable to invest in growth. Far from retreating on the new rules, officials in Basel should press for a higher minimum requirement for capital as a percentage of total (as opposed to risk-weighted) assets. This so-called leverage ratio is easier to calculate and tests resilience in unexpected situations where assets once deemed safe turn out to be risky. That makes it a useful backstop for the risk-weighted approach.

For years, Europe’s leaders have chosen to coddle an ailing banking system, rather than face up to its problems and fix them. This needs to change.

Article Link To The Bloomberg View:

China Can Resist A Crash But Can't Prevent One

By Tyler Cowen
The Bloomberg View 
October 26, 2016

After many years of 7- to 10-percent growth, economies tend to overheat, creating bubbles that burst. That’s what happened to South Korea and Japan in the 1980s and 1990s. But China’s economy keeps plugging along (though probably not at its published growth rate of 6.7 percent), defying the predictions of doomsaying pundits. Some indicators show a recovery this year.

That doesn’t mean that the danger of a crash has passed, however. There is growing evidence of a real-estate bubble, and the economy seems increasingly dependent on government stimulus and private-sector credit growth.

I see a few reasons why the Chinese economy really is different from most Western models, and these imply that forecasting the Chinese economy is more like predicting the winner of a race than analyzing a bubble.

Unlike the U.S., China is full of large, state-owned enterprises. That gives the Chinese government the ability to manipulate a large stock of asset wealth. The U.S. government is more dependent on flows of revenue from taxation and the private sector.

When bad economic news arrives, the Chinese government can instruct the companies it owns to spend wealth to keep workers employed. Think of this as using the companies to conduct fiscal policy rather than laying off workers, building another bridge or erecting another steel plant. Whereas Western economies take an immediate hit to income in bad times, the Chinese have been converting this into a hit to wealth, insulating themselves from major downturns.

That can be useful, but it also can be abused. Indeed, China has ended up with too few bankruptcies and significant excess capacity and lots of low-performing firms.

One problem comes when the stocks of corporate wealth are nearly exhausted, or perhaps sooner when managers of state-owned companies rebel against this policy and demand alternatives. Another problem is that too many low-productivity firms survive. So when the dramatic Chinese recession finally does come, it will be without the protective buffers of wealth that the U.S. had during its financial crisis.

Not only is China a poorer country to begin with, but it has been spending down its buffers to postpone a crisis. The decline in foreign-exchange reserves and the recent rapid run-up in debt levels are further signs of this phenomenon, namely that adjustments to wealth are substituting for shorter-run declines in income.

In the meantime, one of the biggest truths economists have learned over the last dozen years is that the Chinese economic system can postpone recessions for much longer than American or European systems. At least by traditional metrics, the Chinese system has showed signs of trouble and excess capacity at least since 2006.

Given that capacity for protection, might there be a chance that China can avoid an economic crackup altogether?

China has several factors going for it here, including increases in labor productivity, productivity-enhancing migration of labor to cities and technology transfers from abroad. A fourth set of factors, which have operated in the past but not so much now, are liberalizations and improvements in government policy. Even when Chinese businesses get into trouble, and might otherwise go bust or be forced to lay off workers, these broad rising tides often have come to the rescue.

So if you think China can reach the proverbial soft landing, your basic take should be that government-run fiscal policy will keep matters afloat long enough for underlying pro-growth forces to validate once more most of China’s struggling investments and debt burdens.

If you are more pessimistic, your core scenario might run like this: Most Chinese have not yet lived through a true economic crash, and policy makers seem to have an increasing focus on the short term and maintaining political power. Given that dynamic, each time China postpones a major recession it encourages more debt and a greater overextension of investment. That requires stronger underlying positive forces to come to the rescue each time, whereas productivity improvements and urbanization probably are slowing down, although Chinese data as usual do not yield definitive answers.

In any case, there is a race on, and much of the global economy depends on the outcome. It’s a question of ticking debt and bad investment decisions against the forces favoring Chinese economic catch-up. For all the talent of Chinese economic policy makers, it seems that the race keeps getting harder. I don’t expect the forces of catch-up to win every time.

I am optimistic about the longer-run prospects of the Chinese economy, given the extraordinary talent and ambition in that country. In the shorter run, I would not be surprised if China’s 1929 moment still awaits. I’m not sure if the passage of another year without major incident, as 2016 seems likely to be, should make me feel better about that.

Article Link To The Bloomberg View:

Private Jets For Corgis And Other Secrets Of Putin's Inner Circle

Navalny reveals army contracts for Putin’s cook, jets for dogs; Insiders are ‘starting to devour one another,’ Navalny says.

By Henry Meyer and Irina Reznik
October 26, 2016

Vladimir Putin is learning that embarrassing leaks are a two-way street.

Infighting among Putin’s inner circle has led to a series of disclosures over the past few months that have shined a harsh light on the private dealings of the Kremlin court -- much as Hillary Clinton has endured the airing of thousands of e-mails as a result of what the U.S. calls Russian hacking of her campaign.

As the Kremlin gears up for Putin’s last re-election bid in 18 months, anti-graft crusader Alexei Navalny has emerged as the conduit of choice for rival factions to scoop dirt on each other as they jostle to retain their fiefdoms. While Putin has largely stayed above the fray, anonymous tips and research by Navalny’s staff of 30 have led to a string of revelations about the extravagance of some of the Russian leader’s closest allies, including a new luxury home for his premier, army contracts for his personal chef and private-jet travel for the show dogs of a top official.

Navalny’s critics say he’s just a pawn in a bigger game, but the 40-year-old lawyer says it doesn’t matter where leaks come from as long as they expose officialdom -- and the more strife sown along the way, the better.

“They’re starting to devour one another,” Navalny said at his foundation’s office in Moscow, which is paid for through public donations.

Bashneft Billions

The latest bout of infighting started in the summer over the largest asset sale of the year -- a controlling stake in Bashneft, a crude producer with more than $10 billion in annual sales. Igor Sechin, who runs state oil champion Rosneft and has worked with Putin since the 1990s, clinched the acquisition this month, but only after a bitter feud with premier Dmitry Medvedev and first deputy premier Igor Shuvalov, both of whom wanted Rosneft excluded from the sale.

As the debate intensified in July, Navalny published investigations on his website revealing that Shuvalov had acquired 10 adjoining apartments in a coveted Moscow skyscraper and spent millions to shuttle his dogs around Europe in a private jet. Shuvalov’s wife said the corgis -- Queen Elizabeth II’s favorite breed –- participate in shows abroad “to defend Russia’s honor.”

Those disclosures were followed by newspaper reports detailing the use of a luxury yacht by Sechin’s wife and the Rosneft chief’s construction of an estimated $60 million villa in an exclusive area near Moscow.

Sechin won an invasion-of-privacy lawsuit over the property story, but by then Navalny had revealed that Medvedev was building a luxury home of his own with funds from a billionaire buddy’s charity. The premier’s spokeswoman, Natalya Timakova, said the estate in question is owned by the state.

Even when the scoops aren’t his own, Navalny serves as an amplifier by tweeting about them to his 1.68 million Twitter followers.

“This is what Navalny does -- he collects trash,” said Mikhail Leontyev, a spokesman for Rosneft and Sechin. Putin’s spokesman, Dmitry Peskov, said the Kremlin has “no opinion” about Navalny, while a spokesman for Shuvalov, the first deputy prime minister, declined to comment.

‘State Of Conflict’

For Gleb Pavlovsky, an adviser to Putin during his first decade in power, all of this muckraking just shows that the state’s campaign against corruption is little more than a diversion from the main event -- the fight for survival among rival groups, one in which Navalny is considered useful.

“Everyone in this arena is in a state of conflict,’’ Pavlovsky said.

Since 2011, when Navalny tried to parlay his popularity as a litigious stockholder in state-run giants like Gazprom and Transneft into a political career, he’s been detained numerous times, held for a year under house arrest and been convicted of fraud twice. He says the charges were trumped up to bar him from running for office, like he did 2013, when he nearly forced a run-off in the Moscow mayor’s race against Putin’s handpicked incumbent.

Navalny said suspended sentences spared him from jail, but his brother, who was also convicted of fraud, is serving two-years “like a hostage.”

Though hailed by fans at home as a Russian Julian Assange, the Wikileaks founder who’s bedeviling Clinton’s campaign, Navalny said that he has no ties to the anti-secrecy group and that his fund’s work differs in a fundamental way -- it relies on open sources and citizen researchers, not on hacked data.

He also rejects domestic critics who accuse him of working on behalf of U.S. interests, as Transneft CEO Nikolay Tokarev did in 2011, after Navalny completed a fellowship at Yale University and then helped lure tens of thousands onto Moscow’s streets for the biggest anti-Putin protests ever.

Conspiracy Rethink

As for the U.S. claims of Russian collusion with Wikileaks, which the Kremlin denies, the activist said they may be right.

A few months ago, such an accusation seemed like “an entirely unfounded conspiracy,” Navalny said. “But now, given how apparently synchronized Wikileaks is with the false propaganda of Russian media like RT and Sputnik, there are reasons to assume that such cooperation is likely.”

Vice President Joe Biden said Oct. 15 the Obama administration will respond to Russian hacking “at the time of our choosing, and under the circumstances that will have the greatest impact.”

Such a threat raises the possibility that the U.S. might have secret details of financial dealings by Putin’s inner circle that could be more politically damaging than anything Navalny has unearthed, according to Vladimir Rimsky, a corruption expert at the Indem research group in Moscow.

“It could be a disaster if the U.S. gets a hold of something like that,” he said.

Putin’s Daughter

For now, Navalny said he’s happy to continue being a thorn in Putin’s side.

Last week, he published a report on a taboo subject for Russian media -- the president’s family, specifically the flow of millions of dollars from state companies into a foundation run by Putin’s youngest daughter, Katerina Tikhonova. Reports like that may not show wrongdoing, but they’re embarrassing for a privileged class that’s used to operating in the shadows, according to Rimsky.

“Rule No. 1 isn’t to come clean, it’s to avoid getting caught,’’ he said. “Everyone would like Navalny to shut up.”

Article Link To Bloomberg:

The Big Media Bogeyman

AT&T’s deal will be a test of Silicon Valley’s strategic silence on Obama regulation.

By Holman W. Jenkins, Jr.
The Wall Street Journal
October 26, 2016

As always in big media deals, this week’s proposed merger of AT&T and Time Warner is eliciting opposition that is ferocious, idiotic and almost contentless. Donald Trump, a touchstone of deep policy thought, was the first to pronounce himself against.

To anyone not immune to the lessons of reality, giant media deals like this week’s have a nearly unbroken record of failing to deliver either the fears of detractors or the hopes of proponents. AOL-Time Warner was a disaster. AT&T’s attempt to sweep up the cable industry in the late 1990s, with deals for TCI and MediaOne, was a disaster. We could go on.

Yes, Comcast-NBC has flourished because both are good businesses, not because of any synergy between them. Their deal today is being strangely cited as a cautionary tale for regulators, but notice that it afforded Comcast zero power to hold back the tides dismantling the cable TV business model. Netflix and its fellow over-the-top TV providers are growing like topsy.

By now, tens of thousands of people in Washington make their living by extracting rents from companies going about their business and trying to adapt to besetting waves of technological and market change. This column has been skeptical about Comcast’s marriage of distribution and content, which the AT&T-Time Warner deal partly resembles, for exactly this reason: because it produces so many political and regulatory anti-synergies.

When cable impresario John Malone kicked off the current round of consolidation three years ago, our exact words were: “Net neutrality . . . has been dying a natural and legal death. Mr. Malone and big cable ought to be leery of adopting a business strategy guaranteed to resurrect it.”

In invoking these furies once more, the AT&T deal does have un-Comcastian virtues. AT&T Wireless has a billing relationship with 90 million Americans—which will be a killer advantage when it takes ownership of one America’s top three premium streaming platforms in HBO Now.

Cable partisans are already firing back preemptively, insisting that wired will always beat wireless in picture quality, latency, speed. Funny, that’s not how they behave. All networks, including cable, rapidly are becoming wireless networks, with the major remaining difference—Wi-Fi vs. licensed spectrum—fading into irrelevance.

Example: My Verizon iPhone recently prompted me to turn on Wi-Fi-assisted calling when the cell signal is weak. Meanwhile, at home, where Comcast is my supplier, I have two dozen devices—phones, tablets, game consoles, Roku, Amazon Fire Stick—connected wirelessly to Comcast’s network. The sole exception, now that I no longer have a desktop PC, is Comcast’s X1 cable box. And—no offense to Comcast—I haven’t noticed any absence of latency when changing channels.

Next year, Comcast will begin offering its own truly mobile wireless service, using Verizon’s network as a backup. Verizon and AT&T, for their part, promise to offer home broadband and TV in competition with cable via the forthcoming 5G wireless standard.

The network, and the whole subject of fixed vs. wireless, will disappear as far as the user is concerned. Connectivity in coming years will be seamless and automatic.

For the companies that build and maintain these networks, the frightening question is whether their brands and ability to get adequately paid will also disappear. Remember when Amazon delivered its original Kindle reader in 2007. Buried in the price of the device and every book was the price of access to Sprint-Nextel’s network to deliver the books.

In the future, it’s not impossible the price of connectivity will largely vanish upstream into the price of the services and devices (mostly disposable) that consumers rent or buy.

Such a future would, of course, violate the ideology of the net neutrality fetishists, since a Netflix subscription, say, would implicitly come with connectivity only to Netflix. Unwisely, Silicon Valley mostly sat out 2014’s epic battle over the Obama administration’s desire to impose antique utility regulation on broadband. Its argument: Who cares? Technology will swamp the regulators with broadband ubiquity anyway, so why pick a fight that would pit the Valley against what it regards as its liberal allies on most issues?

The argument from technological necessity we find hard to rebut, but the Valley’s naïfs may discover they have underestimated the power of bureaucratic perversity and political indifference to things that would actually serve the public good. One way to look at the inevitable torture AT&T is about to undergo at the hands of Washington’s regulators: It will be the first test of the libertarian-optimist theory that technology is more powerful than a bloody-minded bureaucrat.

Article Link To The Wall Street Journal:

Taking Monetary Policy To The People

By Howard Davies
Project Syndicate
October 26, 2016

The United Kingdom was late to adopt central-bank independence, because then-Prime Minister Margaret Thatcher firmly opposed allowing unelected bankers to control interest rates. She famously asserted that she would never hand that control away, and the Bank of England was not set free until 1997, when Tony Blair’s first Labour government was elected.

The Old Lady of Threadneedle Street, as the BoE is known, was 303 years old before she was allowed to make her own decisions – and her own mistakes. While both the US Federal Reserve and the German Bundesbank had long been independent, most other European countries followed suit only in the run-up to establishing a monetary union. For its part, the Bank of France had, since Napoleon, been left “in the hands of the government, but not too obviously so.”

For the last 20 years, central-bank independence has marked a kind of “end of history” for monetary policy, after many other regimes were tried and failed. In the years before the 2008 global financial crisis, independent central banks were seen as successful in controlling inflation; and countries with sizable fiscal deficits were especially enthusiastic about central-bank independence because they benefited from lower long-term interest rates. Central banks that also regulate the banking industry were asked tough questions about their insouciance in the face of rapid credit expansion, but they were widely praised for their prompt and decisive response when trouble hit.

But the period of monetary-policy consensus may be coming to an end. In the United States, Republican presidential candidate Donald Trump has challenged Fed governors’ independence, and made it clear that he would quickly replace the Fed’s leadership were he elected. In Europe, the European Central Bank’s quantitative-easing policies have been widely criticized, and ECB President Mario Draghi recently had to defend his approach before a highly critical German Parliament.

British politicians have also begun to protest, even though criticizing the BoE was long considered tantamount to blaspheming in church. British Prime Minister Theresa May, in a recent speech before the Conservative Party Conference, noted that “monetary policy has had some bad side effects. People with assets have got richer. People without them have suffered … a change has got to come. And we are going to deliver it.”

William Hague, an influential former Conservative leader, was even more blunt when he recently issued a not-so-veiled threat: if central banks do not “change course soon, they will find their independence increasingly under attack.” In that case, he added, “the era of their much-vaunted independence will come, possibly quite dramatically, to its end.”

While May has denied any split between her government and BoE Governor Mark Carney, it is clear that monetary policy has become a subject of political debate for the first time in 20 years. In response to these heretical outbursts, Carney has sounded emollient and understanding; and Draghi has laudably engaged with his critics’ arguments.

But German Bundesbank Executive Board member Andreas Dombret tried a different tack. At a British Bankers Association Conference in London this month, he said: “It may be time for a gentle reminder that central-bank independence is not debatable,” Dombret suggested. “Politicians are well-advised to not exert influence in the wrong places.”

One can see Dombret’s point. Careless talk about monetary policy can unsettle markets, and politicians need to be careful what they wish for. But they are unlikely to agree that central-bank independence is “not debatable.” They will likely ask for more humility from the technocrats, because what politicians give, they may take away. Just because they are debating the social implications of monetary policy does not necessarily mean that they are questioning the legitimacy of those who set the dials.

To be sure, this is delicate territory. There is a powerful argument to be made that central banks, insulated from short-term political pressures, have been careful stewards of price stability, and have served the global economy well. It is not obvious that returning to politically administered interest rates would have any benefits beyond the immediate term.

Still, we must accept that central banks’ large-scale quantitative easing takes them into uncharted territory, where the boundary between monetary and fiscal policy is blurred. In the UK, for example, the Treasury decides on the level of economic intervention, while the BoE determines the timing and method of implementation. So, the central bank’s independence is not absolute.

Central bankers must demonstrate that they understand the political pressures and unusual circumstances that zero, or even negative, interest rates create. Savers are bitterly complaining that they are being penalized for their prudence; refusing to debate this and other implications of current monetary policies is not an acceptable response.

Independence demands higher degrees of accountability and transparency, whereby policies are explained to the public. To its credit, the BoE has been showing the way forward with a series of open forums around the UK. Taking monetary policy to the people is time-consuming, but it is essential if the necessary political consensus to sustain independence is to be maintained.

Article Link To Project Syndicate:

Venezuela Opposition To Protest Maduro 'Dictatorship'

By Alexandra Ulmer
October 26, 2016

Venezuela's opposition was to hold nationwide rallies on Wednesday against unpopular socialist President Nicolas Maduro, whom they accuse of morphing into a dictator by preventing a plebiscite to remove him.

The oil-rich South American country is in the throes of a crippling recession that has many poor families skipping meals or surviving on starches amid scarce food and triple-digit inflation.

The opposition coalition says Maduro must go before the situation worsens, but Venezuela's electoral authorities last week canceled a planned signature drive to hold a recall referendum against him, citing fraud.

An outraged opposition said Maduro, a former bus driver and union leader, had crossed the line.

It held a march led by women dressed in white on Saturday, launched a political trial against him in Congress on Tuesday, and was planning marches called the "Takeover of Venezuela" on Wednesday.

"We're going to hit the street early with a clear and different message, because there's been a coup here," said opposition leader and two-time presidential candidate Henrique Capriles. "Venezuela is in a dangerous situation."

With malaise rife in Venezuela's lines-filled streets, many fear that blocking an electoral solution to the crisis will fan social unrest.

"The Revolution Will Continue!"

Maduro, elected to replace late leader Hugo Chavez after his death three years ago, counters it is in fact the opposition vying for a coup beneath the veneer of peaceful protests.

"Some want to see Venezuela full of violence and divided," a red-shirted Maduro told cheering supporters at a rally on Tuesday, where he vowed to stand firm. "They won't return! The revolution will continue!" he said, pumping his fist.

Opposition protests two years ago led to 43 deaths, including security officials and both government and opposition supporters.

As a result, some Venezuelans are wary of demonstrations or see them as futile.

And Venezuela's poor have to prioritize the all-consuming task of finding affordable food, while many remain skeptical of the opposition, which has a reputation for elitism and whose internal squabbles have for years been a boon for "Chavismo."

Still, the opposition estimates 1 million anti-government protesters flooded Caracas early last month in the biggest demonstration for over a decade.

In an echo of September's demonstration, many stores in capital Caracas were set to remain shut while some parents planned to keep their kids at home on Wednesday.

"We need change and we need to achieve it by taking to the streets to tell the government we're sick of so much misery," said Licis Perez, a 48-year-old beautician in Caracas.

Article Link To Reuters:

Wednesday, October 26, Morning Global Market Roundup: Asia Stocks Slide On Wall Street Losses, Oil Drops On Inventory Rise

By Nichola Saminather
October 26, 2016

Asian shares on Wednesday followed in the footsteps of Wall Street, which pulled back overnight on disappointing earnings, while the dollar inched down from a seven-month high and oil prices extended this week's losses.

MSCI's broadest index of Asia-Pacific shares outside Japan slid 0.6 percent.

Japan's Nikkei slipped 0.2 percent, while South Korea's KOSPI dropped 1.3 percent and Australia fell 1.6 percent.

China's Shanghai Composite index pulled back 0.2 percent, while Hong Kong's Hang Seng lost 0.6 percent.

The declines are "mainly due to the soft lead from Wall Street," said Shane Oliver, head of investment strategy at AMP Capital in Sydney. "Investors remain nervous given the U.S. election, (Federal Reserve) meetings, China property market etc."

U.S. stocks ended Tuesday down between 0.3 percent and 0.5 percent, as results and forecasts from companies in sectors including housing and consumer products missed expectations.

Apple Inc. too dragged the market lower, as iPhone sales, which were better than expected, nevertheless continued a declining trend. The company also forecast slimmer-than-expected profit margins over the coming holiday season, even as it projected record sales.

The U.S. declines followed a mixed performance in Europe, with British shares closing up 0.45 percent, Germany flat after hitting its highest level this year, and France down 0.3 percent. The broader European STOXX 600 fell 0.3 percent.

With investors looking ahead to U.S. third-quarter gross domestic product data on Friday, the dollar index, which tracks the greenback against a basket of six global peers, was steady at 98.748.

It hit its highest level since Feb. 1 on Tuesday as traders saw a more than 78 percent chance of an interest rise hike by the Federal Reserve in December, according to CME Group's FedWatch data.

The dollar edged up 0.1 percent to 104.295 yen after touching the highest level in almost three months on Tuesday.

Sterling retreated 0.2 percent to $1.2164 on Wednesday.

On Tuesday, it slumped to as low as $1.2082, its weakest in 2 1/2 weeks after Bank of England (BoE) Governor Mark Carney said there were limits to the central bank's ability to ignore the effect of the currency's slide on inflation. His comments, ahead of a policy meeting next week, stifled expectations for more monetary stimulus in Europe.

The euro, which slid to a 7 1/2-month low of $1.0851 on Tuesday, recovered to end the session flat, and was trading little changed at $1.0889 on Wednesday.

The Australian dollar jumped 0.6 percent to $0.7689 to post its biggest increase in a week after inflation ran slightly faster than expected, boosting bets the central bank will hold policy steady into next year.

The stronger dollar and a report that showed U.S. inventories grew nearly three times as much as forecast weighed on oil prices.

U.S. crude fell 1.4 percent to $49.30 on Wednesday. It is down 3.1 percent this week.

Brent futures retreated 1.1 percent to $50.21, bringing this week's losses to 3 percent.

"Basically, the glut continues and demand is not coming back," said Phil Davis, a trader at PSW Investments in Woodland Park, New Jersey. "I don't want to read too much into it but the fact of the matter is it certainly doesn't support $50 oil."

Article Link To Reuters:

Amazon Beefs Up Paris Express Delivery Service With Partnerships

By Dominique Vidalon
October 26, 2016

Online retailer Amazon said on Wednesday it was partnering with luxury food group Fauchon, organic food chain Bio c'Bon and wine retailer Lavinia to extend the product range of its Prime Now express delivery service in Paris and its suburbs.

The deal, which will add 5,000 food products to Amazon Prime Now's range of 18,000 products in Paris, comes as French retailer Carrefour started testing its own express delivery service named Livraison Express this month in several Paris stores as it seeks to counter Amazon Prime Now.

Seattle-based Amazon has been stepping up its activity in France in recent years and speed delivery has become a new battleground among retailers seeking to boost sales.

Amazon Prime Now was launched in Paris in June 2016. Its members pay a yearly subscription of 49 euros to get products delivered within one-hour for 5.90 euros or for free within two hours if they order a minimum of 20 euros worth of products.

The deals with Bio c'Bon and Lavinia are effective immediately, while Fauchon will join Prime Now in November, Amazon said in a statement.

Thanks to these partnerships, customers will be able to buy a wider selection of products, including fresh fruits and vegetables, meat, wine, spirits and fresh deli products.

Frederic Duval, General Manager of, told Reuters by phone that the four-month old Amazon Prime Now service had already met "very strong demand" in Paris and was fully on track with the volumes targeted. It was however too early to say if Amazon would replicate the service to other big French cities.

On Oct. 19 Carrefour - France's largest retailer - started a trial delivery of groceries and fresh food within one hour for 4.90 euros in half of the Paris arrondissements. The goal is to extend the trial to all of Paris in coming weeks. Orders are prepared in Carrefour Paris stores and delivered by bike.

Prime Now was first launched in New York City in December 2014. Since then it has expanded to several other major U.S cities, as well as European cities such as London, Berlin, Milan, and Madrid.

Article Link To Reuters:

London House Prices Forecast To Plunge As Brexit Chokes Market

Property prices in U.K. capital to fall 5.6% next year; Inflation, unemployment, migration curbs may weigh on market.

By Lucy Meakin
October 26, 2016

London property prices are set to fall next year as uncertainty about Britain’s exit from the European Union damps the U.K. housing market, according to the Centre for Economics and Business Research.

London, and especially the priciest areas of the capital’s housing market, will be most affected, with prices dropping 5.6 percent in 2017, according to the consultancy’s predictions. Across the U.K., while property value growth will accelerate to 6.9 percent in 2016, its is set to slow to 2.6 percent next year.

“Nervousness and uncertainty are starting to show,” said Kay Daniel Neufeld, an economist at Cebr. “We expect to see house-price growth across the U.K. slowing considerably in the fourth quarter of 2016, a trend that is set to continue in 2017.”

While the housing market was already facing headwinds from tax changes before June’s EU referendum, investors are becoming increasingly nervous about the possibility of a so-called hard Brexit. That could see the U.K. giving up membership of Europe’s single market for goods and services to secure greater control of immigration.

Accelerating inflation, increasing unemployment and slowing business investment are all set to weigh on house prices, while curbs on migration and a retreat from the single market could slow demand from international buyers, the Cebr said.

Article Link To Bloomberg:

Duterte Assures Japan His Visit To China Was All About Economics

By Kiyoshi Takenaka
October 26, 2016

Philippine President Rodrigo Duterte gave his assurances to Japan on Tuesday that his high-profile visit to rival power China last week was all about economics, but again suggested defense ties with longtime ally Washington may be overhauled.

"You know I went to China for a visit. And I would like to assure you that all there was economics. We did not talk about arms. We avoided talking about alliances...," he told Japanese businessmen.

Duterte's visit to Japan comes amid jitters about his foreign policy objectives after weeks of verbal attacks on ally the United States and overtures towards China.

"I would like to make it clear to everybody that we do not pick quarrels with our friends and neighbors but to me it is high time that the president stands up to his dignity as a people," he added.

Article Link To Reuters:

BOJ Set To Hold Fire, Kuroda May Miss Price Goal During His Tenure

By Leika Kihara 
October 26, 2016

The Bank of Japan is likely to hold off on expanding stimulus next week despite an expected downgrade in its price forecast that may show Governor Haruhiko Kuroda won't see inflation hit his 2 percent target before his tenure ends in 2018.

With policy on hold, the nine-member board may also debate some operational details of its new policy framework adopted last month, such as to what extent the central bank could slow its bond purchases if yields fall below target.

In a quarterly evaluation of its forecasts due at the rate meeting, the central bank will cut next fiscal year's inflation forecast slightly, reflecting weak consumption and falling import costs from a strong yen, sources have told Reuters.

The review may also extend the time-frame for hitting its ambitious inflation target beyond Kuroda's five-year term that ends in April 2018. At present, the BOJ projects inflation to reach 2 percent during the fiscal year ending in March 2018.

The BOJ is expected at the two-day meeting ending on Tuesday to maintain its minus 0.1 percent short-term interest rate target and a pledge to guide 10-year government bond yields around zero percent, after having modified its policy framework to one better suited for a long-term battle against deflation.

While global uncertainties such as the outcome of the U.S. presidential election loom, the central bank sees few imminent risks that could derail Japan's moderate economic recovery.

"A downgrade in the BOJ's inflation forecast won't automatically lead to additional easing," said a source familiar with its thinking, a view echoed by two other sources.

Smooth For Now

The BOJ last month switched to a policy of targeting interest rates rather than the pace of its money printing, after years of massive asset purchases failed to jolt the economy out of stagnation.

Under a new "yield curve control" (YCC) framework, the BOJ's main easing mechanism would be to deepen negative rates, accompanied if needed by a cut in its 10-year yield target.

BOJ officials believe the yield curve control is working smoothly for now. Bond markets have remained stable even as the bank slightly trimmed its purchases of super-long bonds this month.

But officials are hardly complacent and stress the BOJ won't sharply cut bond purchases for the time being - particularly to avoid markets jumping to the conclusion that the BOJ was getting ready to taper its massive stimulus program.

Some officials say the biggest challenge for the board would be to agree at each rate review what a desirable yield curve should look like, particularly if bond yields spike on external factors beyond the BOJ's control, or slump on gloomy projections of Japan's economic outlook.

"Just because things are going smoothly so far does not mean they will remain so in the future," another source said.

At the usual post-meeting news conference, Kuroda may reiterate that the BOJ could accelerate or slow bond purchases any time in the future with interest rates - not the amount of buying - now the main policy target.

Article Link To Reuters:

Oil Prices Drop As Concerns Over Global Fuel Glut Re-Emerge

By Henning Gloystein
October 26, 2016

Oil prices fell more than a percent on Wednesday as a report showing a surge in U.S. crude stocks, rising production in Nigeria and squabbling among producers about a planned output cut re-ignited concerns about a global supply glut.

Brent crude futures LCOc1 were down 61 cents, or 1.20 percent, at $50.18 a barrel as of 0417 GMT. Prices hit $50.17 earlier in the session, the lowest in about three weeks. U.S. crude CLc1 was at $49.27 per barrel, down 69 cents, or 1.38 percent, from its settlement on Tuesday.

"Crude is on the defensive this morning following American Petroleum Institute (API) inventory numbers showing a rise of 4.8 million barrels against an expected rise of 1.7 million," said Jeffrey Halley, senior market analyst at brokerage OANDA in Singapore.

Official data by the Energy Information Administration (EIA) is due later on Wednesday.

"EIA crude inventory figures will be closely watched tonight. A large jump in inventories will no doubt see crude pushed lower again," Halley said.

The oil market is also keeping an eye on U.S. currency movements for trading cues.

The dollar hit a nine-month peak overnight against a basket of currencies .DXY, underpinned by expectations U.S. rates will rise by the year-end, making commodities priced in the greenback expensive for holders of other currencies. [USD/]

"Technical resistance with Brent above $50 might (also) be driving some activity," said Michael McCarthy, chief market strategist at Sydney's CMC Markets.

According to a Reuters market analyst, Brent could drop further to $49.67, the next support level. [TECH/C]

Traders said squabbles within the Organization of the Petroleum Exporting Countries (OPEC) about a planned output cut later this year were weighing on oil markets too.

Iraq, OPEC's second biggest oil producer, wants to be exempt from the cut, arguing it needs the revenues to fight Islamic State.

Other OPEC-members, including Libya and Nigeria, are likely to be exempt from cutting production, while Iran and Venezuela and Indonesia are also unlikely to reduce output.

Royal Dutch Shell (RDSa.L) has resumed crude exports from the Forcados terminal in Nigeria's restive Niger Delta following repairs after a militant attack, the Nigerian presidency said late on Tuesday.

Unless non-OPEC production giant Russia joins the effort, that leaves the onus of a potential cut with Arab producers in the Middle East like Saudi Arabia, Kuwait and the United Arab Emirates (UAE).

"OPEC appears to be approaching the limits of its ability to jawbone oil higher without something concrete to put on the table," OANDA's Halley said.

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The Bet Is On Higher Oil Prices

By Amanda Cooper 
October 26, 2016

The chance of an agreement to freeze or cut crude output when OPEC members meet next month might appear more distant now Iraq has joined those asking for an exemption, but investors are ramping up their bets that oil prices will rally.

The price of oil has this month risen to its highest so far this year, having gained more than 10 percent in the four weeks since the Organization of the Petroleum Exporting Countries agreed to cut production and rein excess global supply.

Since the decision at a meeting in Algiers on Sept. 28, at which OPEC said it would seek to cut output to output to a range of 32.5-33.0 million barrels per day, from its current estimate of 33.24 million bpd.

Although there are questions hanging over how much each country will cut and whether all countries will agree to it, investors have raised their bets in both futures and options at breakneck speed that oil prices will continue to rise.

Data from the U.S. Commodity Futures Trading Commission (CFTC) and the InterContinental Exchange shows money managers have added to their bets on a rising crude price at the fastest monthly pace on record in October. [O/ICE] [CFTC/]

Fund managers have bought nearly 218,000 lots of crude futures and options contracts in October alone, the largest monthly rise to date, as investors have taken heart from falling stockpiles.

"While much of the oil market paints a picture of a commodity struggling under the weight of a huge surplus, statistical balances suggest that conditions have improved markedly," Barclays commodities analyst Kevin Norrish said in a note."If OPEC comes up with a meaningful cut to output in November and the northern hemisphere has a reasonably cold winter, then in our view, crude oil price risk will return very much to the upside."

Total net long holdings of U.S. and Brent crude oil futures and options now stands at nearly 688,000 lots, equivalent to around 688 million barrels of oil, nearly a week's worth of total global consumption.

This position has doubled since the start of August, when Saudi Arabia first signaled the possibility of an agreement between the group and non-member Russia to temper output.

Iraq Wants Out

A number of countries that are still scrambling to regain market share, including Iran, which was under Western sanctions until January, Nigeria and Libya, which have seen their production curtailed by violence and civil unrest, are widely expected to be exempt from any such deal.

Brent crude futures fell as much as 2.5 percent on Monday after Iraq, the second-largest OPEC producer after Saudi Arabia and the biggest contributor to the group's supply growth, said it should also be exempt from having to cut.

On the surface, the options market seems to suggest investors are betting against any deal when OPEC members meet in Vienna in late November.

Speculators hold nearly 10 percent more sell options than buy options for contracts expiring after the meeting on Nov. 30, but this belies a more bullish picture.

Holdings of bearish February sell, or put, options that expire after the Vienna meeting have risen by 40 percent to a total 38,000 lots since the gathering in Algiers for puts that give the holder the right to sell at $35, $40, $45 and $50.

Yet the average cost of owning this set of options has tumbled to $0.53 a barrel from $2.42.

Meanwhile, holdings of bullish buy, or call, options that give the holder the right to buy at $50, $55, $60 and $65, have risen by 60 percent to around 26,000 lots since late September and the average cost of owning these particular options has risen to $1.91 a barrel from $1.19 a month ago.

Energy hedge fund manager Pierre Andurand, who shot to financial fame in 2008 by correctly predicting the spike and subsequent drop in the price of crude that year, told the Reuters Commodities Summit on Oct. 13 the OPEC decision was a "game-changer".

"In 2014 the big opportunity was in prices going down and now the big opportunity is in prices going up. That's the way I see it," he said.

Article Link To Reuters:

Dollar Underpinned By Fed Rate Expectations, Aussie Shines

October 26, 2016

Underpinned by expectations U.S. rates will rise by the year-end, the dollar held steady in Asia trading on Wednesday, just below a near nine-month peak struck overnight, while the Australian dollar gained as inflation data doused chances of a rate cut there.

Consumer prices rebounded by more than forecast last quarter in Australia, while the annual pace of core inflation edged up for the first time in over a year, leading investors to price out almost any chance of a near-term cut in interest rates.

The Reserve Bank of Australia holds its monthly policy meeting next week and is expected to keep rates at a record low 1.5 percent.

The Aussie jumped to $0.7709 AUD=D4 from $0.7645 before the data. It was last up 0.5 percent on the day at $0.7684.

"We've seen Aussie buying against the crosses, so Aussie outperformance is the main theme in the Asian session, with it testing recent highs around that 77-figure area," said Sue Trinh, head of Asia FX strategy at Royal Bank of Canada in Hong Kong. "The question, though, is whether it can sustain levels above there."

The dollar index, which tracks the greenback against six major rivals, stood at 98.739 .DXY after rising as high as 99.119 overnight, its highest level since Feb. 1.

The U.S. currency has been bolstered by growing expectations the Fed is on track to raise rates by the year-end. The market was pricing in a greater than 78 percent chance that the Fed would raise rates in December, according to CME Group's FedWatch program, and even a somewhat weak consumer confidence reading did little to dent those expectations.

U.S. data released on Tuesday by the Conference Board showed the consumer confidence index dropped to 98.6 in October from a downwardly revised 103.5 in September.

Given the recent strength of the U.S. currency on a dollar index basis, "it will be interesting to note whether the Fed makes any acknowledgment of the amount of financial tightening that has occurred through dollar strengthening," said Bill Northey, chief investment officer of the private client group at U.S. Bank in Helena, Montana.

The euro EUR= was steady at $1.0890, after slipping to an almost eight-month low of $1.0848 on Tuesday.

Against the yen, the dollar stood at 104.24 JPY=, flat on the day but not far from a roughly three-month high of 104.87 yen touched in overnight U.S. trading.

Sterling, meanwhile, slipped 0.2 percent to $1.2164GBP= after Bank of England Governor Mark Carney cast doubt on expectations for more monetary stimulus in Europe, saying that the BoE would "undoubtedly" take sterling's weakness into account at its rate-setting meeting next week.

Carney's comments helped send the pound to a two-week low of $1.2082.

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