Wednesday, November 2, 2016

Solar Wars Draw Millions In Cash In Threat To Rooftop Industry

Arizona board elections may tip 24-state solar payment debate; Three-year local battle has spurred state fines, U.S. probe


By Mark Chediak and James Nash
Bloomberg
November 3, 2016

There’s a war brewing over the future of rooftop solar, and Arizona is at ground zero.

Pinnacle West Capital Corp., which owns the state’s largest utility, last week said it has formed a third-party group to support candidates for an elected state board that regulates their industry. The move promises to inject $1 million into a race in which SolarCity Corp., a rooftop solar provider, is already planning to spend $2 million though a nonprofit it supports, according to officials from the two groups.

It’s the latest twist in a three-year political battle that’s been punctuated by charges of undue influence, an ongoing probe by the U.S. Attorney’s office and $300,000 in threatened state fines. At stake: A board ruling on a request to raise fees and drastically cut how much homeowners are paid for the solar energy they generate. It’s a decision, foes say, with the potential to hamstring a growing renewables industry.

“It’s not surprising that you are seeing campaign-style tactics in what should be a wonky policy matter because there is a lot at stake here,” said Tyson Slocum, director of the energy program at Public Citizen, a consumer advocacy group. “The rooftop solar issue has become broadly politicized.”

Utilities nationwide are pushing regulators to cut mandated solar payments, an expense they say requires them to boost rates on non-solar customers in order to maintain the grid. Solar supporters, meanwhile, say a big drop in the amount paid to homeowners would undermine the benefits of switching to green power and imperil the industry’s double-digit annual growth.

A decision by Arizona, which last year generated the third most solar power in the U.S., could serve as a bellwether for national change at a time when as many as two dozen other states are weighing the same issue, according to a report by the North Carolina Clean Energy Technology Center.



In December, Nevada regulators voted to allow utilities to increase fees and reduce payments to home solar users. A month later, California rejected reduced solar credits. Now, the spotlight swings to Arizona, one of only 14 states with an elected board -- the Arizona Corporation Commission -- that sets regulatory policy and utility rates.

Arizona has long required utilities to pay consumers for solar energy they put back into the grid. In November 2013, the commission allowed utilities to assess a small connection fee to offset part of that payment. Now, the commission is being asked to consider a proposal from Pinnacle West’s Arizona Public Service unit that would almost triple the fee for some customers to $24 a month, and cut consumer credits for solar power by as much as 80 percent.

Arizona Public Service has more than 50,000 customers with home solar. To pay them, the company estimated it will have to raise bills for non-solar customers by $51 million annually starting next year. At the same time, a June report from Credit Suisse Group AG said approving the new proposal could make solar "uneconomic" across a state that is among the nation’s leaders in the use of home solar.

Public Debate

The issue has spurred an active public debate, pulling in homeowners from both sides of the argument.

Those without solar say they shouldn’t be paying extra for those who do. "People with solar panels on their roofs think they ought to have free electricity," said Fannalou Guggisberg, a retired military chaplain in Sun City West. "I don’t think it’s fair for them to sell back electricity and not pay any taxes on it.”

Proponents counter that charging a fee only serves to discourage the growth of home solar as a feasible energy alternative. "APS is actually battling solar people," said Russell Taylor, a cabinet maker in Goodyear. "They want a monopoly."

Meanwhile, the involvement of the companies has drawn the attention of U.S. and state authorities.

Two Subpoenas

In a U.S. filing in August, Pinnacle West said it received two grand jury subpoenas from the U.S. attorney in June seeking information on the commission’s 2014 elections. While the FBI wouldn’t discuss the specifics of the subpoenas, spokeswoman Jill McCabe confirmed the agency is investigating “certain statewide races in the 2014 election cycle.”

Alan Bunnell, a spokesman for Pinnacle West, has said the company is “cooperating fully with the U.S. Attorney’s office in this matter.”

The probe follows public complaints by a former commissioner, Sandra Kennedy, that the company sought to improperly influence the 2013 fee decision. A year later, Kennedy lost a bid to rejoin the commission in a campaign that saw two nonprofit groups spend $3.2 million in support of board candidates favorable to Pinnacle West.

Spokesmen for both non-profit groups -- Save Our Future Now, and the Arizona Free Enterprise Club -- declined to identify their benefactors, or to comment for this article. James McDonald, a spokesman for the Arizona Public Service unit, declined to say whether the company contributed to either.

"We’ve always complied with all disclosure requests," McDonald said in an e-mail. "We have an obligation to our customers and our shareholders to be politically active.”

Missed Deadlines

SolarCity, meanwhile, hasn’t gone unscathed.

Kris Mayes, president of the nonprofit group Save our AZ Solar, confirmed that SolarCity is its sole funder after the company’s spokeswoman, Suzanne Merkelson, referred calls to her. The group, which records show has received $2 million in contributions, faces fines of as much as $300,000 for missing deadlines on filing reports, according to Thomas Collins, executive director of the Arizona Citizens Clean Elections Commission.

Save our AZ Solar is trying to settle the matter with the commission for $8,000 to $15,000, Mayes said, adding that any violations were inadvertent. "We have been all about transparency and disclosure from the very beginning," she said.

For the 2016 election, Pinnacle West formed the AZ Coalition for Reliable Electricity to openly back three Republicans for board seats, the company said in an e-mailed statement on Oct. 24. Matthew Benson, the group’s spokesman, confirmed the $1 million spending target.

Robert Burns, a commissioner backed by SolarCity in his re-election bid, said he’s concerned about the amount of financing attached to the race. "But there’s nothing I can do about it," he said, noting that the commission has called on companies with business before it to refrain from funding commission campaigns. "I can’t control what they do."


Article Link To Bloomberg:

European Stocks Set To Open Lower On US Election Uncertainty; Persimmon, Lufthansa Earnings Out

By Silvia Amaro
CNBC
November 2, 2016

European markets are seen opening in the red Wednesday as doubts over the U.S. election outcome intensify.

The FTSE is expected to open 37 points lower at 6,880, the German DAX is seen 84 points down at 10,442, and, in France, the CAC should open 61 points lower at 4,431.

Investors are reconsidering their bets on a Clinton victory as opinion polls show the gap between the Democrat and the Republican candidates narrowing. A broad benchmark for Asian shares fell to a seven-week low overnight on the news.

The Clinton campaign is asking the FBI to disclose information on any ties between her opponent, Donald Trump, and Russia. The Democrats blame the FBI for "unfair" publicity too close to election day.

Back in Europe, data released by the British Retail Consortium showed that U.K. prices have not increased for consumers in the fallout of the Brexit vote.

In terms of corporate earnings, both Persimmon and Lufthansa will announce their third-quarter performance. Also, on Wednesday, the euro area's October final manufacturing PMI will be released.


Article Link To CNBC:

Theresa May’s Secret Business Love Affair

Business may find more to like in the UK prime minister’s actions than in her words.


By Tom McTague
Politico EU
November 2, 2016

Theresa May has finally agreed to meet Britain’s leading big business body, after months of hostile rhetoric and cold-shouldering sparked widespread industry alarm.

The U.K. prime minister will hold clear-the-air talks with the head of the Confederation of British Industry Carolyn Fairbairn in Downing Street later this month, senior business and government sources confirmed.

The CBI’s mounting frustration with Number 10 became public last month when Fairbairn, its director general, publicly accused the prime minister of “closing the door” on Britain’s open economy in an interview with the Times.

The intervention gave voice to broad industry concern that the new prime minister was proving far less business friendly than her predecessor David Cameron.

May entered Downing Street with a promise to be guided “not by the interests of the privileged few” but by the concerns of ordinary workers. A few months later, her hardline rhetoric on immigration at the Conservative Party conference, which suggested the government was headed for a hard-Brexit outside the European single market, sparked boardroom concern that 30 years of liberal economic consensus was coming to an end.

It was also in stark contrast to the vision laid out by the leading Brexiteers during the referendum campaign, which promised to turn Britain into a free-market dynamo outside the EU.

Fairburn’s public attack on May infuriated Number 10, said one senior Tory source with close connections to Downing Street. “She took a decision to go nuclear,” the source said, before warning the prime minister’s team continues to view Fairbairn’s close connection to George Osborne, the former Chancellor of the Exchequer, with suspicion.

Industry insiders privately acknowledge the interview was “intentional and calculated” but insist it was necessary to check what they saw as Number 10’s hostile rhetoric. “It was the kick up the arse they needed,” one well-placed big business lobbyist said on condition of anonymity.

Within a week, the CBI secured a meeting with the prime minister, and talks with her joint chiefs of staff Nick Timothy and Fiona Hill were also hastily arranged.

“Things have been tougher, there’s no doubt,” the big business lobbyist said. “There isn’t the warmth there that we’re used to.”

The episode lifts the lid on the fractious, uneasy relationship that has developed between business and the new Conservative government. After Cameron’s cosy embrace, May’s cold detachment has come as a shock to the system.

More Cameron Than Cameron

On closer inspection, however, it is hard to argue that May’s government offers a sharp break from the pro-business agenda of Cameron and Osborne.

Emboldened by soaring opinion polls and the prospect of working class voters abandoning the Labour Party and U.K. Independence Party, which are both in disarray, it is clearly in May’s electoral interests to pursue a “pro-workers” agenda.

But, in practice rather than in rhetoric, May is already showing signs of being even more friendly to business interests than the previous regime.

One of the government’s first acts was to water down Cameron’s childhood obesity strategy, which was opposed by much of the food and drink industry.

Last week the government also sneaked out changes to the apprenticeship levy on business to answer some industry concerns, while it was reported in the Financial Times that ministers were looking at ways to dilute the PM’s pledge to put workers on company boards.

After a short delay, May also signed off a new nuclear power plant at Hinkley Point and broke years of political deadlock to back Heathrow’s extension. And while it is the PM that has been criticized by business, it was Cameron and Osborne who introduced the increased “living wage” and, of course, agreed to hold the EU referendum in the first place.

“Theresa doesn’t see many people – she doesn’t want to spend her evenings hobnobbing.” – Government source

May is certainly not an instinctive economic liberal like Cameron and Osborne, who used their pro-business credentials as a wedge to differentiate the Tories from Labour. But the prime minister isn’t an economic populist, either, having spent her early career at the Bank of England.

In May’s inner circle there is also far more real-world business experience than in Cameron’s, including the Chancellor Philip Hammond, a self-made millionaire.

City of London veteran John Godfrey, who has spent 20 years in the Square Mile including almost a decade at Legal & General, was quickly brought across to head up Downing Street’s policy unit.

Katie Perrior, the director of communication, was also persuaded to leave her job running a successful PR firm. In contrast, Craig Oliver, Cameron’s spin chief, was hired from the BBC.

May has also created a business outreach team at the heart of Number 10, headed up by former Bell Pottinger PR executive and business lobbyist James McLoughlin, the son of Conservative Party chairman Patrick McLoughlin. The outreach unit is strongly backed by Fiona Hill, one of May’s joint chiefs of staff. It is tasked with regularly consulting leading industry figures.

Business Secretary Greg Clark and Brexit Secretary David Davis have also been meeting business groups on a regular basis. Clark has even gone as far as to set up formal, weekly meetings with the CBI and other lobbying groups.

The Federation of Small Businesses, unlike the CBI, has had regular dialogue with Number 10 since May took office. Senior government sources said she had also arranged two business dinners in Downing Street, hosted financial services firms and investors in New York and held one-to-one meetings with global CEOs in Number 10.

“Theresa doesn’t see many people – she doesn’t want to spend her evenings hobnobbing. But the City doesn’t have much to complain about,” said one senior government source.

A Downing Street source added: “We have constant, positive engagement with the business community who, like us, want to grasp the opportunities that Brexit provides. Whether it’s selling UK plc in India, attracting investment from Nissan or taking a decision on Heathrow, where politicians have frustrated businesses for decades, we’re getting on with the job and ensuring the UK is a competitive place to set up and run a business.”

Immigration Worries

That said, perceptions matter – particularly for the City of London.

The U.K.’s financial services sector employs 2.2 million and generates £66 billion in tax revenues for the Treasury each year. Its ability to continue attracting foreign investment is key to its success.

Fairbairn, the director general, said it was the government’s “messages” that were alarming.

“It’s very clear from conversations we are having that the world is watching,” she said. “International investors are watching. Companies here are watching. And they are reading a lot into the signals of this government about how committed they are to creating a strong economy.”

The warning struck a chord.

“It’s certainly the most anti-business Tory government in a long, long while.” – Lobbyist


One financial services lobbyist in the City of London said it was “absolutely true” that the government’s anti-business rhetoric was damaging to U.K.’s international reputation.

A speech by Amber Rudd, the home secretary, in which she said UK businesses hire too many immigrants, in particular, didn’t go down well, the lobbyist said, describing it as “a shock to a lot of businesses.”

“It was also very noticeable how badly it went down in Europe,” he said. “The focus seems to be on immigration and not access to the markets — security over prosperity.

“In the City of London, there is concern. It’s certainly the most anti-business Tory government in a long, long while.”

But whatever tone the prime minister takes, Number 10 is aware that the central demand of business – to stay in the European Union – cannot be delivered.

Nor can May adequately offer industry the certainty is craves. While there is high-level awareness of the frustration caused by the “no running commentary” policy on Brexit, Number 10 is convinced it cannot achieve a good deal for the U.K any other way.

Yet, beyond Brexit, May is no radical.

The prime minister has stolen UKIP’s clothes on Brexit and Labour’s on workers’ rights. But underneath she remains a traditional Tory, running a traditional Tory government.


Article Link To Politico EU:

After Mosul: Why Should America Push On To Raqqa?

Attempting to wrest control of a major city in a war-torn land has no chance of producing positive outcomes for America.


By Daniel L. Davis
The National Interest
November 2, 2016

The battle for Mosul in Iraq is barely two weeks old. As of this writing, coalition forces have yet to even enter the city proper. Yet already, U.S. officials have announced the beginning of the attack on the Syrian base of ISIS support in Raqqa. It is distressing to realize senior American foreign-policy and defense officials remain unaware of the list of critical factors that, under the current circumstances, should argue persuasively against the contemplation of such an operation.

Though Iraqi Security Forces have to date successfully ejected ISIS fighters from a number of sizeable urban centers in Iraq, they have not fought in a city of Mosul’s size, nor against a desperate enemy with its back to the wall. It is far from certain the ISF and other coalition troops will withstand what might end up being a meat grinder of a battle.

Moreover, the coalition of forces currently arrayed against ISIS in Mosul are composed of militias, some of whom are strongly antithetical to each other. It is still not certain whether Turkish troops, stationed just outside of Mosul, will play a neutral, supporting, or destabilizing role in the battle. For the coalition to succeed, many factors must achieve “best-case scenario” outcomes. Yet for all these potential liabilities and uncertainty in the battle to liberate Mosul, they are nothing compared to the mountainous tactical and strategic challenges inherent in trying to oust ISIS from Raqqa.

In the surrounding environs of Mosul there is a fully supported state army, several well-armed and -equipped militias, and the unambiguous support of U.S. ground and intelligence troops. Outside of Raqqa, none of those things exist. There is no state-supported military unit leading the assault, no allied militia that have the luxury of staging outside Raqqa to prepare for the attack in security, and no resupply lines through friendly territory. The disadvantages only get worse at the political level.

Critical to U.S. plans for success is having both Kurdish fighters and the Turkish Armed Forces cooperating to achieve the common goal of expelling ISIS from Raqqa. American Lt. Gen. Stephen Townsend admits that the “tough” question of how the two mortal enemies are expected to work together hasn’t been resolved. As a reminder, barely a week ago Turkey deliberately launched a devastating aerial attack that killed and wounded hundreds of American-supported Kurdish fighters in northern Syria. On Wednesday, Salih Muslim, a Kurdish leader of the Democratic Union Party (PYD) in Syria, said it is important to take Raqqa, “but one point which is bothering us is that, if we go toward Raqqa, we will be stabbed from the back [by Turkey].” His fears are justified.

In August, a Kurdish-led coalition liberated the town of Manbij, just south of the Turkish/Syrian border. Taking Manbij cut a major supply route for ISIS between Turkey and Raqqa, as well as making Turkey safer by denying ISIS an entry point into Turkey. One resident of Manbij said of the liberating Kurdish troops, “You are our children, you are our heroes, you are the blood of our hearts.” The Kurds’ reward for this feat?

Turkish president Recep Tayyip Erdoğan named the PYD as an enemy to be militarily defeated. “Manbij will be cleansed of PYD elements,” Erdoğan said. “We have no tolerance on this issue and we expressed our position to our partners in the coalition.” What possible assurances could the United States give to the Kurds that upon successful liberation of Raqqa, the Turkish army isn’t going to turn on them? Why would the Turks bomb the Kurdish troops one day and then work with them the next, or allow the Kurds to maintain a presence after liberating Raqqa? There is no recognizable logic in these unsubstantiated hopes.

Yet even if somehow the gulf of differences between Turkey and the Kurdish fighters could be overcome, and ISIS were kicked out of Raqqa, it would not diminish the terrorist threat to the United States. Last week, Director of National Intelligence James Clapper was interviewed by Charlie Rose and was asked what threat ISIS will pose after it loses both Mosul and Raqqa. Clapper said ISIS is, “probably not going to go away, and it’ll morph into something else or other similar extremist groups will be spawned. And I believe we’re going to be in the business of suppressing these extremist movements for a long time to come.” That admission is startlingly honest and equally significant.

Even the director of national intelligence admits depriving ISIS of territory isn’t going to make America safer. This would only be the first negative consequence of a “successful” (on the tactical level) Raqqa liberation.

If the group of allied “moderate” rebels defeated ISIS and occupied Raqqa, they would be an island within a sea of civil war. They would still be the enemies of the Syrian regime and would again be targeted by Damascus and its allies. Would the United States then set up a no-fly zone and use lethal power to defend the rebels in the city from Syria and its allies? Doing so might put the United States in military opposition to Russian and Iranian military personnel, and require the UN.

Would the United States be willing risk a major war by attacking and destroying Syrian ground troops, Russian attack jets and Iranian ground forces in defense of a group of Islamic rebels whose governing inclinations are unknown? If American military personnel destroy or kill Syrian, Iranian, or Russian troops, it is certain these nations would respond in some way antithetical to U.S. interests.

Have U.S. officials considered these near-certain responses to our attempt to aid Syria’s civil war opponents? The objective of American foreign policy has to result in outcomes beneficial to U.S. interests. Attempting to wrest control of a major city, in a hostile foreign land enmeshed in a years-long civil war, has—literally—no chance of producing positive outcomes for our country. It could, however, result in deadly consequences.

Without doubt the most dangerous outcome for the United States would be if, in defense of rebels in Raqqa, a U.S. missile shoots down a Russian plane, kills Russian ground troops—or if a Russian antiaircraft missile shoots down and kills American pilots.

How each government would respond to its military personnel being killed by the other is unknown, but the reaction could spiral out of control. The result could degenerate to the point of a nuclear exchange; that such a possibility can’t be ruled out is terrifying.

Why would any responsible leader in the United States even consider taking action that has almost no chance of accomplishing a positive outcome for U.S. interests, yet does have enormous negative possibilities? I can categorically state there is nothing in Syria that is worth the strategic risk of spawning a major war with the world’s largest nuclear superpower.

It is long past time American policymakers accept the fact that military power cannot solve every international problem, however hard some might wish it were so. Moreover, U.S. leaders must stop pressing for objectives of dubious tactical value at the risk of strategic loss. Washington ignores these warnings to its peril. Unfortunately, the 330 million citizens of this country will be the ones who ultimately pay the price if things go bad.


Article Link To The National Interest:

Can Iran Pull Turkey, Iraq Away From Brink Of War?

Despite its tensions with Turkey, Tehran is well-positioned to bring Ankara and Baghdad closer amid their escalating war of words — but could Iran be successful in this endeavor?


Al-Monitor
November 2, 2016

“He insults me. You are not on the same level as me! You are not my equal! Scream all you want from Iraq! It will not change anything! We will do what we want to do.” Turkish President Recep Tayyip Erdogan uttered these words Oct. 11 when addressing Iraqi Prime Minister Haider al-Abadi, in the latest round of verbal sparring between the two neighbors. Turkey, which once had “zero problems” with its neighbors, today has strained relations with every single one of them.

Having encountered numerous problems with former Iraqi Prime Minister Nouri al-Maliki, Erdogan was supportive of Abadi's coming into office. Indeed, most observers were expecting that tensions between Iraq and Turkey would lessen when Maliki stepped down. However, it appears that Erdogan is determined to repeat the cycle of tension between Turkey and its neighbors as well as other regional actors. The state of Turkish relations with Syria, Armenia, Egypt, Russia, Iran and Iraq clearly demonstrates Ankara’s confused foreign policy on Erdogan’s watch.

The recent controversy over Turkey’s military presence in Iraq — while different from previous incidents in some aspects — has one major aspect that is being repeated: It is a reminder of the role that Turkey has played in Syria. Ankara was one of the first capitals to seriously call on Syrian President Bashar al-Assad to step down and was also one of the first countries that proposed military action against the Syrian government. Neither of these demands have materialized, thus forcing Ankara to adopt a more subdued policy.

This raises the possibility that Turkey’s new approach toward Iraq, and especially Mosul, is related to its defeat in Syria. Speaking in the city of Bursa on Oct. 23, Erdogan charged that Mosul has historically belonged to Turkey. These remarks come against the backdrop of past statements that Iraq is not capable of addressing the Mosul challenge on its own. This new Turkish approach has resulted in a rare case of political unity between the various factions in Iraq. From Abadi to Shiite cleric Muqtada al-Sadr, all have condemned the Turkish president’s rhetoric.

One key question is what Iran’s position toward Turkey is amid these developments. One high-ranking Iranian diplomat who spoke to Al-Monitor on condition of anonymity said, “Turkey could not achieve its objectives in Aleppo and now it is looking for the same thing in Iraq and Mosul. Naturally, however, Ankara will not get a better result in Iraq.”

The Turkish pro-government daily Dirilis Postasi argued Oct. 16 that Iran is conducting a massacre in Mosul, charging that Tehran has for two centuries created bloodshed in the Islamic world so that it can have access to the Mediterranean Sea. There was no accompanying explanation of when precisely Iran has hatched such plots, or any sources or pieces of evidence for the latter. Yet, the article can perhaps be seen as a sign of a new negative Turkish approach toward Iran.

A review of recent developments in Iraq and Syria shows that Ankara has generally seen its efforts to play a role worth its standing in the region end in failure. Though Turkey’s entry into the Iraqi and Syrian conflicts has received a lot of media attention, in the end, it has not resulted in any tangible Turkish gains — and especially in the military sphere. Thus, the big picture appears to be that Erdogan’s new approach is the result of his dissatisfaction with the regional situation — dissatisfaction that is the result of the approaches of both Abadi and the United States. Ultimately, this appears to have led Erdogan to decide to act autonomously and pursue his objectives in Iraq and Syria without waiting for the West.

Al-Monitor spoke with Alireza Miryousefi, the head of the Middle Eastern Studies Group at the Foreign Ministry’s think tank, the Institute for Political and International Studies. He said, “Unfortunately, following the Arab Spring, Turkey made some miscalculations and adopted hasty positions. It has been dealing with the consequences of its mistakes for the past five years. Questioning the legitimacy of borders or talking about the necessity of a new Sykes-Picot Agreement are not considered constructive positions. The positive point here is that, similar to Iran, Turkey will also benefit the most from stability in the region. Therefore, Iran should definitely try to lessen the gap between different political approaches in the region with high-level diplomatic negotiations.”

In a live TV program Oct. 22, Turkish Prime Minister Binali Yildirim spoke about Turkey's continuously reaching out to Iran with the hope of finding a solution to the crises in Iraq and Syria. At the same time, there is no sign that Turkey is withdrawing from Syria, and it does not appear that Erdogan is planning to change course for now. What will Iran’s reaction then be if Turkey continues with its current approach? Will there be any attempts at mediating between Baghdad and Ankara?

Speaking to the Iraqi Kurdish Rudaw news channel Oct. 30, Ali Akbar Velayati, the foreign policy adviser to the Iranian supreme leader, announced Tehran’s preparedness to step in, saying, “Iran is ready to mediate between Turkey and Iraq to prevent war.”

Meanwhile, a high-ranking source in the Iranian Foreign Ministry told Al-Monitor on condition of anonymity, “Iran is certainly interested in such a thing happening and it has made several attempts in this regard. However, the Turkish side is not interested as it believes that it can manage the issues in Mosul and Iraq through military force and the way it sees fit. However, not only does the Islamic Republic [of Iran] not believe in such a solution, but the realities of the region show that Turkey’s planned approach is unrealistic.”

Former senior Iranian diplomat Nosratollah Tajik agrees, though he predicts more Turkish pragmatism in the end. Tajik, a former ambassador to Jordan, told Al-Monitor, “Iran and Turkey have different objectives and approaches regarding Mosul. Turkey has historical claims about Mosul that make the situation more complicated, while it is in Iran’s interest to have the Iraqi government win the conflict in Mosul and destroy one of the main bases of Daesh [Islamic State]. Turkey will follow a destructive pattern, but in the end it will have to accept the new order — although it is trying to allocate a bigger share for itself in the new order.”


Bring Back The Smoke-Filled Room

After Trump vs. Clinton, party insiders should get more say in picking a nominee who can win.


By Jason L. Riley
The Wall Street Journal
November 2, 2016

The temptation to tinker with a presidential selection process that has produced the two most unpopular nominees in memory will be significant. If Republican and Democratic officials choose to go that route after this campaign season is behind us, what are the options?

The nomination turmoil on display this year has been a long time coming and is more evidence of the weakened state of the major political parties. A century ago Progressive governors like California’s Hiram Johnson and Wisconsin’s Robert La Follette began advocating for more direct democracy. They targeted the patronage and corruption linked to urban boss politics; instituted ballot initiatives that allowed voters to circumvent state legislators; and favored primary elections over nominating conventions in an effort to make the process more transparent.

Some reforms from that era were adopted more readily than others, but a tipping point occurred in 1968 at the Democratic convention, when Mayor Richard Daley, who headed Chicago’s political machine, passed over Eugene McCarthy, who had won the most primary votes, and delivered the presidential nomination to Hubert Humphrey,who had not even entered a single primary.

After Humphrey lost the general election to Richard Nixon, Democrats gave in to pressure to change the rules so that party leaders would no longer be able to hand-pick convention delegates. The party also required states to choose delegates through primary elections or caucuses.

But party leaders and elected officials didn’t like the extent to which the reforms cut them out of the nominating process, and in subsequent decades the rules were altered again to create so-called superdelegates—insiders who play an outsized role in selecting the nominee. Hillary Clinton easily beat out Bernie Sanders this year among superdelegates, who were reluctant to hand over the Democratic nomination to someone they deemed unelectable and who in any case was a registered independent who switched his party affiliation to Democrat shortly before the New Hampshire primary.

Mr. Sanders and his supporters pushed hard for changing the superdelegate rules after he lost the nomination, but in July the party voted to keep them in place with some modifications going forward. The determination—not unreasonable—was that superdelegates helped the Democratic Party police the nomination process in a way that the Republican Party failed.

Reports that the GOP as we know it is dead may be premature, but it’s clear that the party is in worse shape than its rival. “Astonishingly, the 2016 Republican presidential race has been dominated by a candidate who is not, in any meaningful sense, a Republican,” wrote Jonathan Rauch of the Brookings Institution in the Atlantic magazine over the summer. “The second-place candidate, Republican Senator Ted Cruz, built his brand tearing down his party’s [brand]: slurring the Senate Republican leader, railing against the Republican establishment, and closing the government as a career move.”

Mr. Rauch, who described Messrs. Sanders, Cruz and Trump as “political sociopaths—meaning not that they are crazy, but that they don’t care what other politicians think about their behavior and they don’t need to care,” called for both parties to reform in ways that make nomination procedures less democratic by giving insiders a bigger role. Let parties coordinate with candidates. Lift limits on donations to the parties so that the money isn’t diverted to less-accountable outside groups. Force potential candidates to get permission to run as a Democrat or Republican from elected officials who can vet them.

Mr. Rauch’s criticisms echo those made in the 1970s by leading political scientists like James Ceaser, who argued that Progressive Era reforms in practice undermined a party selection process that can “minimize the harmful results of the pursuit of power by ambitious contenders, help establish the proper kind of presidential leadership and proper scope of executive power, help secure a competent executive, ensure a legitimate accession, and provide for the proper degree of choice and change.”

In some cases, efforts to reduce corruption and further democratize the process have also weakened the influence of party leaders in ways that made coordination, accountability and party unity much more difficult. That’s a trade-off that ought to at least be acknowledged. There’s no need or desire to return to the venal machine politics of New York’s Tammany Hall, where Boss Tweed once said, “I don’t care who does the electing, so long as I get to do the nominating.”

But the reality is that politics is about organization, and political insiders know how to organize, how to turn out the vote, and how to pick capable candidates who are less likely to polarize and more likely to win.


Article Link To The Wall Street Journal:

The Democrats Are In Bad Shape — Even If Hillary Wins

By John Podhoretz
The New York Post
November 2, 2016

Democrats are whistling past the graveyard.

“This is nothing,” they insist, even as they call for FBI director James Comey’s scalp for reigniting the Hillary Clinton e-mail scandal. The problem is that the polls were tightening even before Comey’s Friday announcement. What was a 6-point race in the Real Clear Politics average nationally only a few days ago is now a 2-point race.

And while Hillary still seems to have enough states locked down to win the Electoral College, what looked like a landslide a week ago is right now a potentially comfortable margin that may get narrower and less comfortable by the day.

While most poll respondents say the e-mail business isn’t affecting their potential vote, “most” ain’t “all.” One in 10 say it may.

Introducing a 10-percent note of uncertainty into a race not yet put away isn’t nothing. It’s something. It’s quite a lot of something.

And let’s not forget that Republicans disheartened by Donald Trump suddenly have a new negative lease on life — a new reminder that if they turn out next Tuesday rather than staying home, they might play a role in preventing a third Clinton term.

Some, like The Washington Post’s Greg Sargent, have floated the notion that Comey’s supposedly outrageous conduct may energize Democrats. That sure sounds a lot less like logic and a lot more like graveyard whistling.

Instead, the data suggest growing Democratic listlessness and burgeoning Republican enthusiasm as the election approaches. That said, none of this means Hillary’s candidacy is in the grave; far from it. If you could choose, you would choose to be Hillary right now, not Trump.

Republicans were more enthusiastic about voting in 2012 than Democrats were, and President Obama still won by 4 points in part because his party’s get-out-the-vote machine was so able.

Meanwhile, the GOP’s is more notional than actual, due in large measure to the bizarre refusal of the Trump campaign to embrace even minimal professionalism in approaching the grinding work of engaging with and bringing out voters both early and on Election Day.

So Hillary is likely to pull this out, but the last-minute terror that has gripped sensible Democrats shouldn’t be forgotten if she does.

The rise of Trump and the stark fissures in the Republican Party and the conservative movement have dominated the political conversation for the past 16 months. And understandably so, for they reveal an institutional crisis at the heart of our politics, a loss of faith in the way we go about choosing leaders and a sense that Washington is broken.

But lost in the focus on Republican disarray and decay has been the ongoing story of Democratic Party rot.

The most important political story during the nearly eight years of the Obama presidency is how that presidency delivered a neutron-bomb strike to his party. Obama and the political structure of America have been left standing — but nearly 1,000 Democratic officeholders have been defeated.

In the House of Representatives, three successive elections in 2010, 2012 and 2014 have seen 63 Democratic Congress members lose their seats. In 2009, Democrats held 60 Senate seats. Right now, they hold 46.

So out of 535 elected positions in the US Congress, Obama has overseen a 14 percent reduction in Democratic officeholding — and the loss of majorities in both chambers.

Nationally, the numbers are even more stark. Democrats have lost 910 seats in state legislatures since 2009, while Republicans have gained 12 governor’s mansions. Overall, according to Louis Jacobson of Governing magazine, “Democratic losses in the Senate have so far reached 22 percent, 27 percent in the House, 36 percent in governorships and a stunning 59 percent in fully controlled state legislatures.”

Democrats hope a good showing on Tuesday will win back five Senate seats and maybe 15 House seats, but relative to their party’s losses since 2009, that’s like a bandage on an amputation.

Republicans are in lousy shape, and we all know it. They’ll be in lousy shape even if Trump wins, because victory isn’t going to heal the wounds of the past two years.

But Democrats are in lousy shape as well, and will be in lousy shape even if the E-mail Bleacher wins. Maybe now they’ll wake up to reality, the way Republicans have.


Article Link To The New York Post:

Fraud PACs Plague Fraud Candidate

Like the candidate they purport to back, ‘scam’ political action committees are lining their pockets with Trump supporters’ money while promising to make America rich again.


The Daily Beast
November 2, 2016

Say you’re a Donald Trump voter and, with just six more rotations around the sun until Election Day, you want to contribute your hard-earned money to a political action committee working on behalf of your candidate.

Trump Victory/Make America Great Again sounds good, since you want both of those things, but then Make America Great sounds all right, too, and slightly more to the point. And then there’s Official Let’s Make America Great Again Campaign Corporation, which has official right there in its name, lest you had any doubts.

You’d probably never suspect that these similarly titled organizations do precious little to support the Republican presidential nominee, or that they may feel legally entitled to rip you off, as PACs fall within a gray area of campaign finance regulations.

The so-called scam PAC predates Trump’s candidacy, but they have accumulated with fervor in his orbit over the last 16 months. As the candidate himself finds ways to profit from his political movement, buying his own books at retail cost and frequenting his own businesses with campaign funds, an inordinate number of his fans have apparently decided to get in on the action. Where there’s a huckster politician promising to do right by the working man, it seems, more hucksters will follow.

A review of the Federal Election Commission filings of several PACs that claim to work on behalf of The Donald revealed that they appear to do almost nothing at all.

“Scammers go wherever they think they can make money,” one veteran campaign finance lawyer who asked to remain anonymous told The Daily Beast, “so there are folks who are out there saying, ‘Well, Trump’s got this following of not very bright folks, so, what the heck, we’ll make some money.’”

Trumpvictory.org is the digital home of the Oxnard, California-based Trump Victory/Make America Great Again PAC, organized in March by its treasurer, Glen Rogers, who did not immediately respond to an interview request.

“We are a group of volunteers from all walks of life who are looking for real change in leadership that we believe Donald Trump can deliver,” the website reads. “We donate our time, expertise and money to spread the word about Donald Trump through online marketing campaigns, direct mail and organized events.”

Who exactly “we” is, it’s not clear, since there are no organization members listed. A “Discuss” button under the “Get Involved” tab directs to a pro-Trump Reddit page, and “Events” directs you to the official campaign schedule.

The “Donate Now” button sure works, though, providing you the option to give $50, $100, $250, $500, or an amount of your choosing, “One Time,” “Weekly,” “Every 2 Weeks,” “Monthly,” “Quarterly,” “Semi-Annually,” or “Annually.”

The donation rules and agreement then make a vague promise: “Your contribution will be used in connection with a federal election.”

Trump Victory/Make America Great Again has raised just north of $150,000 since its inception, most of it in small donations, from a truck driver, a farmer, a painter, a doctor, an architect, several homemakers, and 18 retired people.

And here’s how the PAC spent that money in October, the final stretch of the campaign: $3,000 to Nestor Garcia of Coral Gables, Florida, for “Professional Fees”; $14,200 to New Horizon Consulting, LLC, a company filed on July 6 in Cheyenne, Wyoming, about which there is no other public information, also for “Professional Fees”; $929 to Qgiv, the service through which the PAC accepts online donations; and $215 to Upwork for “Computer and Internet Expenses.”

The only effort to Make America Great Again? One hundred and three dollars to Google for “Advertising and Promotions.”

Scam PACs took off with the rise of the Tea Party movement in 2009, but regulatory oversights have prevented their eradication. The FEC only addresses fraudulent solicitations from campaigns or political parties, claiming it doesn’t have the jurisdiction to go after people who purport to be neither. And the Federal Trade Commission, which handles consumer protection, says it doesn’t have the jurisdiction to go after political malfeasance.

In 2012, Allen West, the former congressman and Tea Party star, was reportedly “plagued” by scam PACs, at least eight of them, which sought to use his name to fleece his fans. Sarah Palin, too, was used to trick conservatives into doling out their money and information to shady entities. Erick Erickson, the conservative radio host, in 2015 called scam PACs “a blight on the GOP.” He wrote, “This is becoming a serious issue. One of the dangers of the conversation is deciding what is and is not a Scam PAC, but I would say the starting point is this—if you’re raising money in someone’s name without their consent and then not spending the money to help that person, I’d think that would qualify.”

A May report by Politico found that, of over two dozen unauthorized groups that had by that point formed to back Trump’s candidacy, “only six” had actually spent money to help him. That same month, Roger Stone, Trump’s volatile longtime aide, called Great America PAC, of which former Ronald Reagan campaign manager Ed Rollins is chairman, a “scam.” Just last week, the group mistakenly published the credit card information of its donors online.

“People out there who are getting involved in this election, it’s a very emotional election, and they could easily get sucked into giving money to these PACs,” the campaign finance expert said. “It’s a very scary thing for consumers.”

“What really has to happen is the Justice Department has to go after some of these scammers on plain old ordinary wire and mail fraud,” the expert said. “If they bust one of them for doing that, then the other ones will go, ‘OK, the jig is up.’”

Make America Great, another PAC, became an official entity in October 2015. The treasurer, Roy Jensen, who did not immediately respond to an email sent to the address listed, filed the paperwork from Lancaster, California. The group has no website and has never filed any reports with the FEC. The FEC has sent Jensen four notices about his failure to file, evidently to no avail.

And Official Let’s Make America Great Again Campaign Corporation, filed with the FEC from Lake Mary Florida in August 2016, never filed its necessary paperwork. The treasurer is listed as Jennifer Spalding, but the contact is listed as Michael Todd, someone with an email address connected to a website that advertises time shares in the Bahamas, Las Vegas, and Mexico. A message left on the answering machine connected to the phone number on the paperwork was not immediately returned.

“There’s a very large number of super PACs that have registered that seem to be offering themselves as using [Trump’s] name, or some variation of his name, or the Make America Great Again slogan,” the campaign finance expert said. “I think Trump’s got the record for this cycle in terms of the number.”

Of course, the greatest trick pulled on Trump supporters may be by the candidate himself, who’s spent millions of grassroots dollars patronizing his own companies, for private plane airfare, rent, food and hotel stays, throughout his campaign. The promise to make America rich again, it seems, starts at the top—and extends to anyone with the chutzpah to file some FEC paperwork.


Article Link To The Daily Beast:

The New Fiscal Reality

By Jean Pisani-Ferry
Project Syndicate
November 2, 2016

“When the facts change, I change my mind. What do you do, sir?” This, reportedly, is how Keynes replied to the criticism that he had changed his position on the policy response to the Great Depression. Pragmatism of this sort is not that common: policy views are often characterized by considerable inertia. Too frequently, today’s perspectives remain shaped by yesterday’s facts.

Fiscal policy is a case in point. Facts have changed in two significant ways. First, for sovereign states long-term borrowing costs are exceptionally low. At end-October, the annual yield for government bonds issued by France, a country with public debt approaching 100% of GDP, was 0.5% for ten-year bonds and 1.6% for 50-year bonds. Italy and Spain, both of which faced investors’ reluctance five years ago, have also been able to tap the market for 50-year bonds. As long as high demand for government debt securities lasts (a subject of debate among economists), it offers an unprecedented opportunity to finance public investment.

A key factor in determining whether to borrow is the difference between the rate of nominal GDP growth and the interest rate: if it is negative, debt can easily be repaid, because nominal income grows faster than the interest burden. Using the (fairly miserable) past as a yardstick, it is hard to believe that French nominal GDP will increase by less than 0.5% annually over the next ten years: from 2005 to 2015, nominal growth averaged 2.1%. So low interest rates are an opportunity that should not be missed.

The second way facts have changed is that output growth has been disappointing. In its latest World Economic Outlook, the International Monetary Fund noted that, despite the drop in oil prices and favorable monetary conditions, output and investment in advanced countries have consistently remained below expectations over the last two years. The outlook for the eurozone is especially underwhelming: the IMF expects output growth to slow from 2% in 2015 to 1.7% in 2016 and 1.5% in 2017.

With the European Central Bank’s asset-purchase program close to reaching its limits, an investment-oriented fiscal stimulus would help reverse this weakening. It would also help reverse the slump in public investment experienced by several countries as a consequence of fiscal austerity in recent years.

But, while facts have changed, minds have not. On average, governments are using the gains implied by lower interest rates to spend a bit more or to reduce taxes, rather than to launch comprehensive investment programs. The IMF expects the structural fiscal balance for the eurozone to be roughly the same level in 2017 as in 2014. The same applies to the United States. Some countries, like the United Kingdom, are still in a fiscal tightening phase. Italy is in an expansionary phase, but it is facing criticism from the European Union for non-compliance with its commitments under the Stability and Growth Pact (SGP). Overall, there is no discernible momentum in either direction.

But is there really fiscal space for action? With gross public debt close to 100% of GDP in the US, the UK, and the eurozone, and much higher in Japan (though net debt is less frightening), there is admittedly cause for concern. Market sentiment can change quickly, and some European governments remember how precipitously they were forced to change course in 2010-2011, after having embarked on fiscal expansion. It would be unwise to assume that low interest rates will last forever and simply relax fiscal discipline.

The solution is an approach that combines, on one hand, the continuation of fiscal consolidation, with a view to putting the debt-to-GDP ratio on a steadily declining path, and, on the other hand, special investment programs financed at exceptionally low interest rates. This would serve the medium-term goal of public-finance sustainability, while treating the interest-rate level as a one-off windfall that can be used to address priority investments and strengthen growth potential.

There are several types of investments worth undertaking. In some countries – especially the US – infrastructure is in need of a significant upgrade. In others, like Spain or France, human capital should be given priority, with an emphasis on improving school performance and the skills of the labor force. For countries that must invest in reforms, budgetary support would help overcome political obstacles to institutional transformation. Mitigation of climate change through investment in renewable energy, insulation of buildings, and low-carbon transportation networks is an overwhelming requirement in virtually all countries. In several areas, well-chosen investment – for example, upgrades of equipment and information systems in health care – could even reduce future public spending, thereby strengthening long-term fiscal positions.

In the EU, it is sometimes argued that the way to trigger these investments is to exclude capital spending from the SGP and monitor only the balance for current spending. This would not be the appropriate solution. Brick-and-mortar public investment is often less valuable than spending on education or institutional improvement, and can end up financing “white elephants” of dubious social worth. Moreover, there are few arguments for treating capital spending separately under normal economic conditions. What applies to the current zero-interest rate environment should not be made permanent.

Rather, governments should borrow now to finance special physical and institutional investment programs to be carried out over the next few years. These programs should be given defined goals and be subject to strict governance. In the EU, they should be exempt from SGP rules, but subject to an assessment by the European Commission that they contribute to improving growth and fiscal sustainability in the medium term. And they should be designed in such a way that they can be interrupted if bond-market conditions normalize and interest rates return to historical levels.

We should not be hostage to a false choice between budgetary responsibility and economic revitalization. The facts have changed. We can do both.


Article Link To Project Syndicate:

Here’s How The Impending ObamaCare Disaster Affects You

By Betsy McCaughey
The New York Post
November 2, 2016

This election is a referendum on the Affordable Care Act. Almost everyone in America is affected. Contrary to what ObamaCare’s defenders claim, the law’s hurting millions more people than it’s helping.

Hillary Clinton defends it and wants to “build on it.” Donald Trump is promising to “repeal and replace the disaster known as ObamaCare.” It’s probably our last chance.

“Disaster” sums up the skyrocketing premiums and lack of choice facing many of the 11 million people enrolled in the exchange plans. The plans are unaffordable, unless you’re a low-earner getting a free ride.

ObamaCare enrollees aren’t the only people being clobbered. If you get insured at work — as 155 million people do — your deductibles are up a staggering 49 percent since 2011 thanks to ObamaCare. Part-timers are working fewer hours, so business owners can avoid the law’s employer mandate. Taxpayers are on the hook for some 50 new taxes.

Seniors get hit the hardest. More than half of ObamaCare’s costs are paid for by cutting Medicare, resulting in stingy care for seniors.

Here’s how ObamaCare affects you:

Insured through work? The law forces employers to provide a one-size–fits-all benefits package costing much more than pre-ObamaCare coverage. The law also imposes a slew of new taxes. No surprise, employers are offsetting these costs by raising deductibles and reducing family coverage. In 2017, many companies will eliminate insurance for spouses.

Working part-time? Hundreds of thousands of workers have had their hours cut because ObamaCare requires employers to cover full-time employees, meaning those working 30 hours a week or more. Ironically, colleges, where Democrats outnumber Republicans, are major culprits, slashing hours for adjuncts and student workers to evade providing insurance.

Job-hunting? ObamaCare dampens the job market. In New York, 17 percent of service companies and 21 percent of manufacturers are reducing their workforces to stay below 50 full-time workers and dodge the employer mandate, according to the New York Federal Reserve.

Sixty-five or older?
ObamaCare awards bonus points to hospitals that spend the least per senior. Researchers found that at 231 hospitals getting bonuses for low spending, seniors died needlessly because of inadequate care. For example, seniors having heart attacks were forced to wait too long for angioplasties and died before they could get the procedure.

ObamaCare emergency-room rules slap seniors with bills for “observation care.” You’re in the hospital, but you’re not officially “admitted.” It’s a cost-cutting gimmick. When it’s time to go home, Medicare doesn’t pay and you’re stuck with a huge tab.

A physician? Thank ObamaCare for the thousands of pages of new regulations dictating how you treat your Medicare patients. Precious minutes that could be spent talking to a patient are wasted filling out tedious, repetitive government forms. Physicians are glued to computer screens, following prompts instead of making eye contact with their patients and listening to them.

Refusenik?
If you’re uninsured and refuse to buy ObamaCare, the average penalty is $995 per adult, $500 per child. Ouch.

Clinton promises voters that she’ll make ObamaCare better with billions of dollars of extra spending. But she’s not going to remove the mandates causing people to lose work hours or their jobs. As for the regulations suffocating doctors, count on Hillary to pile on more.

Worst of all, Clinton wants to expand Medicare to people in their 50s. Seniors are already having a hard time finding a doctor to treat them for Medicare’s low rates. Adding millions of “50-somethings” trying to see the same doctors will make it impossible to get an appointment.

Trump knows ObamaCare has to be junked. His plan eliminates the unaffordable mandates and penalties. Consumers will choose from a wide variety of plans, sold across state lines, with special help for people with pre-existing conditions.

Trump gives states flexibility to improve Medicaid for the poor. His plan resembles what House Republicans are pushing, which means it might actually get passed. On Nov. 8, voters have the chance to rid this nation of ObamaCare. They should seize it.


Article Link To The New York Post:

Obama’s Electric Car Money Grab

The president can avoid Congress by using fines on private companies like Volkswagen to fund his pet projects.


By William Yeatman
The Wall Street Journal
November 2, 2016

A federal judge last week approved a $14.7 billion settlement to partially resolve the legal fallout over Volkswagen’s installation of “defeat devices” designed to cheat air quality rules in more than 500,000 vehicles sold in the U.S.

The complicated settlement resolves a number of legitimate claims, providing relief for car owners, the state of California and the Federal Trade Commission. But it also includes a dubious provision that Volkswagen invest $1.2 billion in a plan to be approved by the Environmental Protection Agency to promote “zero-emissions vehicle technology,” a euphemism for electric vehicle charging stations. This is an affront to both common sense and the Constitution.

According to the Justice Department, the $1.2 billion investment remedies Clean Air Act violations for “deceptive marketing.” But this is absurd. The Clean Air Act has nothing to do with the policing of false advertising, of which Volkswagen was guilty. That’s the job of the FTC, which is party to the settlement.

With no basis in existing law, the origins of the $1.2 billion “investment” can be found in a failed legislative proposal from the Obama administration. In his 2011 State of the Union address, President Obama promised to put one million electric vehicles on the road by 2015. To this end, the White House requested from Congress $300 million. Congress demurred.

In 2016 the president once more sought federal spending to support increased usage of zero-emissions vehicles through a program called the 21st Century Transportation Initiative. Again, Congress refused.

Having failed to persuade Congress, the administration now seeks to co-opt the judiciary’s injunctive and contempt powers in order to advance the president’s failed legislative agenda. The proposed consent decree would give the government authority over $1.2 billion in zero-emissions vehicle investments, which is four times what the administration unsuccessfully sought from Congress for effectively the same purpose in 2011.

If allowed to stand, the $1.2 billion electric-car money grab would provide a powerful model for future presidents to cut Congress out of the appropriations process. All future presidents would have to do is allocate resources into regulatory enforcement and then pursue settlements whereby the regulated entity “voluntarily” agrees to fund the president’s preferred policies.

The Volkswagen settlement includes a stipulation that would have allowed the court to remove the industrial-policy provision without altering the rest of the agreement, but the judge refused to exercise this authority.

Because an appeal of the settlement’s approval appears unlikely, it is incumbent on Congress to defend against such blatant executive overreach. In September a bipartisan majority in the House of Representatives passed H.R. 5063, the Stop Settlement Slush Funds Act, which would rein in the president’s power to pursue failed legislative priorities through regulatory enforcement. In the name of constitutional order, the Senate should approve this worthy bill.


Article Link To The Wall Street Journal:

Venezuela Opposition Scraps Maduro Trial But Presses Demands

By Diego Oré and Fabian Cambero 
Reuters
November 2, 2016

Venezuela freed four activists and the opposition postponed a symbolic trial in congress of President Nicolas Maduro on Tuesday even as it warned it would quit Vatican-backed talks in a matter of days if tough conditions were not met.

Maduro met with opposition leaders on Sunday for the start of talks to ease a political standoff between the ruling Socialist Party and the opposition-led parliament during a spiraling economic crisis.

As well as suspending its parliamentary proceedings against Maduro, the opposition also agreed to postpone a march planned for Thursday to the presidential palace that the government had described as part of a coup plot.

But it demanded that the government release around 100 jailed opposition activists and bring forward the next presidential election - conditions that are likely to meet with significant resistance from government leaders.

Venezuela's next presidential election is due in late 2018.

"We have put these points on the table, not so that they can be addressed in months but rather in the coming days and weeks," said opposition legislative leader Julio Borges during Tuesday's session. "Otherwise, we will walk away from the negotiating table and continue with our struggle."

Without concrete progress, Borges said, the opposition would reopen the political trial and resume protests. Hundreds of thousands of people took to the streets last week in demonstrations that left dozens arrested and wounded.

Maduro's adversaries accuse him of creating a dictatorship by leaning on compliant institutions to block the recall referendum and sideline the National Assembly.

The Socialist Party lost control of the legislature in a landslide election in 2015 that was driven primarily by voter outrage over triple-digit inflation and widespread product shortages that have left many unable to eat three meals per day.

Maduro insists economic troubles are the result of an "economic war" imposed by hostile businessmen with the help of Venezuela's ideological adversaries in Washington.

Tensions Surface Quickly

The two sides have held repeated dialogue processes over the years that have generally started with harmonious meetings but quickly reverted to the acrimonious exchange of insults that has characterized Venezuelan politics for more than a decade.

Maduro in a televised broadcast on Tuesday made some overtures to the opposition celebrating the start of the dialogue. But he later lambasted opposition party Popular Will, which was founded by jailed opposition leader Leopoldo Lopez and did not join the dialogue proceedings, as terrorists.

"(The party) is a terrorist group that operates outside the law. I hope that the courts take up this matter," Maduro said. "As head of state, I support all decisions to make this group of terrorists pay."

Opposition coalition leader Jesus Torrealba, who shook hands with Maduro at the opening of talks on Sunday, described the comments as an assault on the dialogue process and a sign of disrespect toward the Pope.

Many in the opposition have called the dialogue a stalling tactic and insist Maduro has no intention of allowing a referendum or an early presidential vote.

Authorities on Monday night freed three activists - Carlos Melo, Andres Moreno and Marco Trejo.

Moreno and Trejo spent a month in jail, accused of damaging military morale in a political propaganda video that showed a soldier suffering the same economic hardships as protesters.

The opposition's coalition on Tuesday said authorities had also released Coromoto Rodriguez, head of security for the legislature who was arrested during an opposition rally in May.

Government critics had said the detention was illegal and called it an effort to intimidate the legislature.

Investigations of the activists will continue, the government says. The three deny the charges.

As well as the Vatican, three former heads of state from Panama, Dominican Republic and Spain plus the regional bloc Unasur are trying to foster dialogue in Venezuela.

Senior U.S. diplomat Tom Shannon is also in Caracas and met with Maduro on Monday to try and support the talks.

Having narrowly won election in 2013 to replace Hugo Chavez, who died of cancer, Maduro has seen his popularity plummet, largely due to the OPEC nation's unprecedented economic crisis.


Article Link To Reuters:

Why America Needs India's Rockets

By Adam Minter
The Bloomberg View
November 2, 2016

Like other big contractors, American space companies have long expected some friendly support from their government. And Uncle Sam has usually been more than happy to help. Sometimes, though, government help causes more harm than good.

Since 2005, U.S. satellite manufacturers have been prohibited from hiring India's space agency to launch their equipment. Private American launch companies, such as SpaceX, are quite happy with this arrangement, which was intended to protect them. But the ban is not only wrong in principle -- it's actually impeding an exciting new American industry.

Last month, under pressure from satellite operators and manufacturers, U.S. trade officials began reviewing the decade-old policy. They should heed the pressure and overturn it.

Emerging India may seem like an unlikely competitor for Silicon Valley rocket companies. Yet since 1969, the Indian Space Research Organization has consistently punched above its modest weight class, racking up a series of cheap and practical achievements. One of its most important feats was the development of the Polar Satellite Launch Vehicle, which was designed to carry satellites for monitoring agriculture and water resources, among other things. What made the PSLV unique was that it was designed to launch small satellites. And that's a good niche to occupy at the moment.

Over the past few years, the small-satellite market has boomed as advances in miniaturization made space accessible to governments and companies that might never have considered it. The uses for such gear seem almost limitless, from shoebox-sized climate-monitoring devices to Samsung's plan to use thousands of micro-satellites to provide global internet access. Some $2.5 billion has been invested in the industry over the past decade.

But getting all those satellites into space is now proving to be a problem, and U.S. policy is partly to blame.

In the 1980's, Ronald Reagan's administration sought to protect nascent private launch companies from subsidized foreign competition by setting up Commercial Space Launch Agreements. The idea was simple: In exchange for the chance to put U.S. satellites into space, foreign governments agreed to launch quotas and set fees. Both China and Russia signed such agreements. In 2005, India was asked to do the same. While the U.S. waited for an answer (it was and continues to be "no"), it imposed an export moratorium on satellites for Indian launch.

The timing was no accident. In 2005, SpaceX was building its Falcon 1 rocket, which was designed to carry small satellites. The ban even came to be known as the "SpaceX Agreement." Problematically, though, the Falcon 1 had only one commercial launch before it was retired in 2009. At the time, the small satellite boom hadn't yet taken off, and SpaceX didn't believe there was a commercial justification for the rocket. (It's now scrambling to correct that mistake.)

Since then, no other U.S. company has offered a rocket for small satellite launches (though some are reportedly in the works), even as demand has surged. That leaves American satellite companies with few options. The U.S. Trade Representative has handed out occasional waivers from the moratorium. And a European government consortium now offers its own small satellite launch vehicle, for a hefty fee. But a far cheaper and more reliable option -- going to India -- remains off the table.

That's only hurting American companies, while sending the wrong message to India. Civilian space cooperation would benefit the economies of both countries, and restraining it to protect American companies -- which have had 10 years to come up with a competitive product -- can't be justified from a business or diplomatic standpoint. If the U.S. government wants to help its space companies shoot for the stars, it should stop shooting itself in the foot.


Article Link To The Bloomberg View:

Wednesday, November 2, Morning Global Market Roundup: Stocks, Dollar Rattled By Tightening U.S. Election Race

By Hideyuki Sano
Reuters
November 2, 2016

Asian shares tumbled to seven-week lows and the dollar was on the defensive on Wednesday as investors were rattled by signs the U.S. presidential election race was tightening just days out to the Nov. 8 vote.

Markets were beginning to rethink their long-held bets of a victory for Democratic candidate Hillary Clinton amid signs her Republican rival Donald Trump could be closing the gap, forcing money out of riskier assets and into safe-havens such as the Japanese yen and gold.

Heavy selling also knocked the Mexican peso MXN=D2, seen as the most vulnerable to a Trump presidency due to his pledge to build a wall along the U.S. border with Mexico to prevent entry of illegal immigrants.

The peso, which posted its biggest fall in two months on Tuesday, extended losses to 19.308 to the dollar, its lowest level since early October.

Investor anxiety has deepened in recent session over a possible Trump victory given uncertainty on the Republican candidate's stance on several issues including foreign policy, trade relations and immigrants, while Clinton is viewed as a candidate of the status quo.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 1.2 percent to seven-week lows while Japan's Nikkei .N225 fell 1.5 percent. U.S. stock futures shed 0.4 percent in Asia, edging near four-month low touched on Tuesday.

"It's becoming all about the U.S. elections. Markets are trying to factor in the changing atmosphere," said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

The tumultuous presidential race appeared to tighten after news that the Federal Bureau of Investigation was reviewing more emails as part of a probe into Clinton's use of a private email server.

While Clinton held a five-percentage-point lead over Trump, according to a Reuters/Ipsos opinion poll released on Monday, some other polls showed her Republican rival ahead by 1-2 percentage points.

That pushed U.S. S&P 500 Index .SPX down to a four-month closing low on Tuesday. The CBOE volatility index .VIX, often seen as investors' fear gauge, briefly rose to a two-month high above 20 percent.

In the currency market, traders sold the dollar partly as they suspect Trump would prefer a weaker dollar given his protectionist stance on international trade.

The euro EUR= rose to a three-week high of $1.1069 in U.S. trade on Tuesday, up about two percent from its 7-1/2-month low of $1.0851 hit just over a week ago. It last stood at $1.1065.

Against the yen, the dollar slipped to 103.69 yen JPY= from three-month high of 105.54 yen set on Friday.

"If you had a long dollar position on the view that the dollar would gain because Clinton would win, you would surely close that position because her victory is less certain," said Koichi Yoshikawa, executive director of financial markets at Standard Chartered Bank.

"And people were buying back the euro because that is the currency that had been being shorted the most against the dollar," he added.

Other safe-haven assets were also favored, with the Swiss franc rising to 1.0782 franc per euro EURCHF=, its highest level since late June. Gold XAU= hit a four-week high of $1,291.6 per ounce on Tuesday and last stood at $1,288.5.

The tense back drop in markets came as the Federal Reserve holds its two-day policy meeting, with its statement due later on Wednesday.

While traders do not expect the central bank to raise interest rates just a week ahead of the presidential election, they are looking for signs that the Fed is set to hike rates in December.

U.S. interest rate futures <0> are pricing in about 70 percent chance of a rate hike in December but virtually no likelihood of a hike on Wednesday.

Oil prices tumbled to one-month lows as a trade group's report of larger-than-expected U.S. crude inventory added to concerns about oversupply from growing doubts over whether oil producing countries can agree on an output cut later this month.

Brent crude futures LCOc1 fell to $47.83 per barrel, having hit a low of $47.72 on Tuesday.

Still, even as investors were moving out of riskier assets, copper CMCU3 bucked the trend, rising to a three-month high of $4,922 a tonne on Tuesday before easing to $4,885 in Asia.


Article Link To Reuters:

Oil Extends Losses After Report Shows Surprise U.S. Stocks Build

By Aaron Sheldrick
Reuters
November 2, 2016

Crude oil prices fell for a fourth day on Wednesday, as jittery investors awaited official U.S. stockpile figures later in the day after industry data showed a surprise build in inventories, underlining a persistent global glut.

The American Petroleum Institute said crude stockpiles rose by 9.3 million barrels in the week to Oct. 28, more than nine times the amount expected by analysts polled by Reuters. [API/S]

U.S. West Texas Intermediate crude CLc1 fell 40 cents, or 0.9 percent, to $46.27. On Tuesday it dipped 19 cents to $46.67. Brent crude LCOc1 was down 32 cents at $47.82, near a one-month low of $47.72 hit in the prior session.

Prices have slumped in recent days as hopes have faded that oil producers would settle their differences and agree to output cuts when the Organization of the Petroleum Exporting Countries (OPEC) meets on Nov. 30.

"Those who were hoping for some upside from any sort of production agreement appear to have their hopes dashed," said Ric Spooner, chief market analyst at CMC Markets in Sydney. "It looks like there are speculative longs quitting the market."

Indications of higher-than-expected U.S. stockpiles is also dragging on sentiment.

The API report typically comes a day before official inventory data from the U.S. government's Energy Information Administration (EIA). [EIA/S]

The API bases its numbers on voluntary reporting by members, while the EIA uses a bigger sample. Traders say oil prices could drop further if the government data confirms the large build.


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Hillary Clinton: Wall Street's Favorite Enemy

By Amanda Becker 
Reuters
November 2, 2016

Hillary Clinton began her presidential campaign by promising to do what it takes to rein in Wall Street.

Boosted by Wall Street's toughest critics, U.S. senators Bernie Sanders and Elizabeth Warren, the Democratic candidate has declared "the deck is still stacked in favor of those at the top" and said she would raise bank fees and tighten banking regulations. She has encouraged regulators to break up too-risky banks.

And yet, Wall Street appears unperturbed by the prospect of a Clinton presidency. In fact, the banking industry has supported Clinton with buckets of cash and stocks have sold off on days when the Clinton campaign stumbles. Privately, bankers say that they trust her to remain a pragmatist who will keep the current regulatory regime laid down by the Dodd-Frank Wall Street reform legislation passed in 2010.

“I don’t think Clinton wakes up thinking about Wall Street," one senior banking industry lobbyist said.

There are hints in apparently leaked email discussions among Clinton's campaign staff that bankers are not far off the mark when they count on her to tread lightly.

Pressed during the campaign by progressive Democrats to call for a revival of the Glass-Steagall Act that would require separation of commercial and investment banking, Clinton ultimately refused. She also weighed another progressive favorite - a tax on financial transactions- but instead recommended a far narrower plan to tax only canceled orders by high speed traders.

Ultimately, what bankers most like about Clinton is that she is not Donald Trump.

Many financiers fear her unorthodox Republican rival could disrupt global trade, damage geopolitical relationships and rattle markets, industry analysts and participants say.

“Those are the kind of things that corner offices think about,” said Karen Shaw Petrou of Federal Financial Analytics Inc, whose firm advises financial firms about U.S. regulatory policy. “The overriding concern about Trump has dominated people’s thinking."

Trump's candidacy has upended traditional political alliances and bankers that usually contribute more to the Republicans have been flinging money at Clinton.

Employees of the 17 largest bank holding companies and their subsidiaries have been sending her $10 for every $1 they contributed to Trump, according to a Reuters analysis. In 2012, the same group contributed twice as much to Republican candidate Mitt Romney as it did to President Barack Obama's re-election campaign.

Devil You Know

People who work for hedge funds and private equity firms have contributed more than $56 million to Clinton’s presidential campaign and the supporting groups that face no legal cap on donations. Trump’s campaign and related groups received just $243,000 from donors in the same sector, according to data from the Center for Responsive Politics.

“It’s basically going with the devil you know over the devil you don’t,” said Brian Gardner, a managing director of New York investment firm Keefe Bruyette & Woods. What also helped, he said, was the familiarity with Hillary and Bill Clinton dating back to the 1990s when her husband was president and ushered in a period of financial deregulation.

“There is a closeness and a comfort level between the titans on Wall Street and the Clintons," he said.

For bankers, the biggest worry is a scenario where Clinton wins and the Democrats take control of the House and the Senate, with progressives such as Warren and Sanders holding sway over everything from new tax laws to appointments of regulators.

Already, Warren has called for immediate dismissal of the Securities and Exchange Commission Chair Mary Jo White. Last year, Warren successfully led a movement to derail Obama’s plan to appoint banker Antonio Weiss to the top job at Treasury.

Warren and other progressives will press Clinton to be tough on Wall Street in return for their campaign support.

Clinton "leaned heavily on Senators Elizabeth Warren and Bernie Sanders, and progressive ideas, when she needed to excite voters,” Adam Green with the Progressive Change Campaign Committee said. “Elizabeth Warren has proven she’s a very powerful ally to have on your side. And it’s well known she’s also a formidable opponent to have against you,” Green said.

However, recent polls suggest it is unlikely that Democrats will take the House and the future of the Senate is far from certain. Even if the Senate goes Democratic, it is likely to be led by New York Senator Chuck Schumer, a moderate who has represented Wall Street with the industry's backing.

Clinton has said she will propose a "risk fee" on the largest financial firms and tighten up rules which allow banks to circumvent bans on proprietary trading by investing in hedge funds. Like Trump, she has proposed to end the tax break that private equity investors enjoy, termed "carried interest."

Yet such provisions will be probably tied up in a much larger tax initiative that will involve months, if not a year or more, of horse trading in Washington. Ultimately, it could end up overshadowed by other progressive goals, such as infrastructure funding, college affordability, or raising the minimum wage.

Those are the causes that Clinton has prioritized and they are likely to supersede her anti-bank rhetoric, say bankers. One industry trade group representative said: "We're not in her top 10 to take care of."


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Chipotle Investors Propose Ousting Founder As Chairman

By Svea Herbst-Bayliss and Lisa Baertlein
Reuters
November 2, 2016

Two union-affiliated shareholders in Chipotle Mexican Grill on Tuesday said they would propose replacing the company's chairman, Steve Ells, who founded Chipotle, with an independent director, piling on pressure after well-known activist Bill Ackman took a large stake in the company.

Amalgamated Bank and CtW Investment Group, both of which have previously sparred with Chipotle, filed a shareholder resolution on Tuesday to strip board leadership from Ells, who is also co-chief executive, by instituting an independent chair.

The non-binding proposal marks escalating pressure from investors who have previously challenged the formerly high-flying restaurant chain over corporate governance and executive compensation. Chipotle shares have plummeted to around $360, less than half their level in summer 2015, when they flirted with $750 before a series of food-borne illnesses at company restaurants.

Chipotle did not immediately respond to requests for comment. Any vote on the latest shareholder proposal would not occur until Chipotle's 2017 annual meeting.

New York City Comptroller Scott Stringer, who oversees a pension fund that owns Chipotle shares, immediately backed the new proposal. Billionaire Ackman, whose hedge fund Pershing Square Capital Management unveiled a 9.9 percent stake in Chipotle in September, declined to comment.

The California Public Employees' Retirement System, which holds 90,771 Chipotle shares, indicated the proposal is in line with its governance principles.

"As a matter of practice and in principle we support separating chairman and CEO roles consistent with the CalPERS Global Governance Principles," a spokeswoman said.

Pershing Square has met with Chipotle, sources familiar with the matter said, but it has not publicly discussed its demands. A spokesman for the hedge fund declined to comment on the new proposal.

CtW, which led a successful shareholder referendum on lavish CEO pay in 2014, failed to get enough support to remove two longtime board members at the company's annual meeting in May.

A New York City Pension Funds resolution making it easier for shareholders to nominate directors passed at this year's annual meeting with the backing of activist investors, including CalPERS.

Since then, investors have grown more worried about Chipotle's ability to rehabilitate its brand.

"Chipotle's closed-off and limited governance structure is unsustainable and counterproductive, posing a direct risk to shareholders and the public at large," Amalgamated Bank CEO Keith Mestrich said in a statement. The bank owns about 5,500 Chipotle shares. CtW works with funds that own about 55,000 shares.

People familiar with Ackman's thinking suggest he also is taking aim at the board, demanding a substantial number of directors be replaced with people who have expertise in food safety, marketing, and digital engagement.

Troy Alstead, the former Starbucks Corp chief operating officer who was instrumental in the coffee chain’s turnaround, could be a Chipotle board nominee, several people with ties to activist investors said. Alstead, who now sits on the board at apparel company Levi Strauss & Co, did not immediately respond to a request for comment.

Chipotle has hired investment banks Goldman Sachs Group Inc and Morgan Stanley, as well as law firm Wachtell, Lipton, Rosen & Katz LLP, and crisis public relations firm Joele Frank to defend against Ackman, people close to the matter have said.

CtW analyst Derrick Wortes said his group will begin reaching out to the company's biggest shareholders, including Fidelity and Vanguard, to make its case for change. "It is time to steer the strategic changes that will help pull the company back from the edge," Wortes said.


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