Friday, November 4, 2016

How Brexit Could Poison The British Political Agenda For Years

The British public will register the unpleasant picture of a government being chased by its own parliament.

The National Interest
November 4, 2016

On Thursday, a British court threw a spanner into the works of the British government’s Brexit tactic, saying that Parliament must be consulted before exit negotiations start. This is contrary to the government’s view that it has the power to do so without consulting Parliament. This is however only one of six major battlefields Prime Minister Theresa May faces and may not even be the most difficult one.

Brexit confronts Prime Minister Theresa May with six front lines: The Tory Party, the Parliament, and the British public, Scotland and Northern Ireland, the World Trade Organization (WTO), and the European Union. A plan to merge adversarial interests into a mutually acceptable outcome must be concocted – a narrow path through the woods, if there is one.

According to media reports, cards are being kept close to the chest. Tactics, ambitions, and objectives are not being disclosed; the adversary might take advantage. Nothing could prove less suitable to square this circle. Theresa May is not negotiating with enemies, but with friends and partners who are disposed to help if given a chance to do so. But how can they without knowing where she sees the solution? Admittedly there are items where you do not reveal red lines such as budget contributions, but for the grand bargain openness is required.

A large majority of the Tory Party respects the result of the referendum, but look for a compromise that will maintain links to the EU. Any efforts to accommodate the hardcore anti-EU wing will bring about new and stronger demands. They will hijack the agenda and depict the government as weak and indecisive. If Theresa May is not willing to put her foot down they will force her to choose between nation and party, betting she succumbs to ephemeral acclaim by choosing the party as David Cameron did.

Her domestic agenda complicates the picture. Key sentences at the party conference convey contradictory messages on free trade, new industrial strategy, and how to encourage, develop, and support sectors of the economy. The emphasis to employ local labor does not fit well into a free market philosophy. Is the party disposed to ditch Margaret Thatcher’s legacy? Occupying the center abandoned by Labour looks like a winner through the prism of the next election, but can the party stomach such a swing in philosophy? And can she juggle with two balls at the same time?

Despite a majority for remain in the Parliament, no one expects it to reverse the June 23 vote. Nevertheless MPs are adamant to protect their right to be heard, consulted, and voice their opinion. You ignore parliament at your peril. Thatcher labelled the European parliament a Mickey Mouse parliament and the birds let loose will come home to roost when in due course it votes on a possible outcome of Brexit negotiations.

As negotiations unfold the other member states will watch closely and the willingness to offer concessions depend on whether Theresa May has parliamentary support as she ultimately will need Parliament to endorse the outcome. The British public will register the unpleasant picture of a government being chased by its own parliament. If the Prime Minister tackles Brexit without a mandate from the voters and if she antagonizes parliament, what is left of her authority?

The dispute, constitutionally and politically, to negotiate – in this case leaving the EU (trigger article 50) – without a vote in parliament, plus the subsequent question of ratification by Parliament of a new treaty, intrigues and fascinates institutional experts. Notwithstanding this, what matters is politics. Can the government achieve and maintain solid Parliamentary support? Do the executive (government) and the legislative branch (Parliament) trust each other or will we see the British political system take a leaf out of the U.S. textbook and go dysfunctional? Will a vital interest for Britain be turned into party politics or personal vendettas?

Knowing that EU/Brexit cuts across party lines it is more likely than not that at the end of the day MPs will be allowed to vote according to conviction. That will almost certainly deliver a majority for the Prime Minister, but the question is whether it will be deemed large enough. In May 1940, Neville Chamberlain probably commanded a majority in the House of Common, but the prospect of a slim majority forced him to resign. Theresa May might face a somewhat similar scenario two years from now unless she seriously engages parliament. Furthermore, a slim majority in a messy situation will keep EU/Brexit on the political agenda for years, poisoning politics and opening the door for contesting whether it was the “right” decision taken by a “correct” procedure.

The British public possesses and radiates common sense to a higher degree than realized by the elite. Voters will interpret an uneasy or worse a rebellious parliament as a sign of the Prime Minister’s incompetence and gradually turn against the government. If she cannot rally other politicians around her course there must be something wrong.

The voters decided that Britain should leave the EU. Yes, but not the people. The turnout was 72.2 percent with 51.9 percent voting for leave. Translation: 37.6 percent of those eligible to vote took this decision. Furthermore they decided to leave the EU, but did not express any opinion about future relationship with the EU.

The task for the government is to shape a majority of people around a clear objective – a coalition perceived as a sincere attempt to bring Britain through what otherwise could turn into a national trauma.

In such a situation the Prime Minister cannot sit back waiting for events to unfold. She must reach out to the voters explaining how she wants to extricate the country from a potential trajectory eviscerating Britain for decades to come.

Maybe Theresa May and some of her colleagues do not see it like that, but voters know very well how seminal the June 23 vote was and demand sincerity and integrity plus, above anything else, honesty and boldness from the government. They want to be taken seriously.

She will have to contend with Scotland and Northern Ireland, who wish to stay as part of the United Kingdom of Britain and Northern Ireland as well as the EU. Scotland emphasizes the single market; Northern Ireland open border to the Republic of Ireland. Theresa May’s task is to deliver both instead of pushing these two parts of the UK into either/or. She showed awareness of that by visiting both immediately after moving into 10 Downing Street.

Since then, news has been anything but encouraging. The problems Scotland and Northern Ireland face as Brexit negotiations loom constitute vital interests for them – politically and economically. It is a non-starter to run the negotiations as the prerogative of the government in Westminster. They will feel sidelined and nourish suspicions that their interests were not defended with the same vigor as English interests.

Scotland’s First Minister, Nicola Sturgeon, has defined the situation, saying that the Britain Scotland voted in 2014 to stay in no longer exists and has drawn up the battle lines by demanding real power during the negotiations and continued full membership of the single market. She plays the institutional as well as the substantial card openly saying that if not, another referendum on Scotland’s independence may be called.

It is unclear, to say the least, what Theresa May will do if Scotland’s wish list for the negotiations deviate substantially from her own. If she cannot get Scotland on board or depict Nicola Sturgeon as unreasonable, Scottish resentment will grow, making a call for a second referendum on independence reasonable and logical in the eyes of many Scots.

A potential drama – constitutionally and politically – may evolve if the government in Westminster concludes a Brexit agreement judged unacceptable or unsatisfactory by Scotland. In such a case Scotland may attempt to use devolved powers to block the agreement’s entry into force. Likely? No. Thinkable? Yes.

The European Union wants to achieve three objectives. First: Get over Brexit as fast as possible and minimize costs for the EU and Britain. Contrary to some opinions, the Union harbors no wish to search for revenge – wasn’t it the French statesman Richelieu who in the seventeenth century said “revenge is a luxury I cannot afford.” Second: Ram it home that the plinth of the integration is not pick and choose, but that member states benefit from participating in all common policies. Gains from some sectors weigh more than losses in other sectors producing a win-win situation. Exemptions can be granted as have been the case for Britain and other member states e.g. Denmark, but must be fully compatible with the treaties. They do not exonerate a member state from the objectives of the treaty, but provide time and flexibility about how to get there ultimately. Third: Resist risks of disintegration or dismantling of what has so painstakingly been built. A drive towards stronger integration to defend vital, strategic interests can be expected. And they are: get out of low economic growth, the debt problem, refugees and migrant, defense in view of reduced U.S. commitment, a more assertive Russia, the risk of Ukraine becoming a failed state, Turkey no longer in the western camp, the Middle East in turmoil, North Africa a potential powder keg and China plus India eating into Europe’s share of the global economy.

Many maybe most of the 27 EU nations classify the crises confronting Europe as an existential question defining which Europe we will see emerge over coming decades. A Europe in conformity with values crafted since the Renaissance or a different Europe hijacked by political forces thought extinct on the old continent? They may disagree on many points, but fundamentally they agree that without the EU they would not stand any chance of finding a way forward. Europe and individual nation-states would become irrelevant.

The decisive element in the negotiations dominated by terrifying technical questions is in fact quite simple: Can and will Britain convince the EU that it leaves the Union, but not Europe? Declarations are not enough. Only by actions and deeds of tangible character will this be taken seriously. Does Britain share the worldview with the continental Europeans and fathom threats to Europe and policies to counteract them like the 27 members of the EU? The more Britain leans increasingly towards the United States and starts to probe how far it can neglect EU treaty commitments, while still formally a member, the less likely it is that the EU will offer concessions.

Theresa May and her government’s rhetoric does not resonate with this and if it translates into policies and negotiation stance, it will block any attempt to forge a “good” Brexit agreement.

Assuming that Britain does not stay in the single market and the customs union, it needs to enter the WTO which it left in 1973. Theoretically, nothing stands in the way of trading with other countries as a non-WTO member but without reciprocal tariff reductions and the dispute settlements mechanism the going will be tough.

There are many estimates of how long it will take to acquire membership. Surmised is that with some goodwill it could be done in a couple of years. This points to 2022 as the earliest moment to enter the fray in what really matters after Brexit: Negotiate free trade agreements (FTAs) with non-EU members of the WTO assuming that trade relations with the EU are covered by a Brexit agreement. If not, Britain might also have to negotiate an FTA agreement with the EU inside the WTO framework.

Reading the mass media, an outsider gets the impression that the British government takes the view that it bestows a favor on other countries offering FTAs and postures as a herald and defender of free trade surrounded by a large numbers of semi-protectionist countries, among which, one supposes, Britain places its erstwhile companions in the EU and the Union itself.

The reality may turn out to be somewhat different. The large majority of potential FTA partners know that a strong argument behind Brexit was to restructure trade away from Europe to high growth countries around the world. There is no altruism in politics and terms offered would reflect this. Partners would act like the Godfather movies “giving Britain an offer she cannot refuse.” They can do without an FTA; Britain cannot.

The financial sector accounts for 10–12 percent of the UK’s GDP and a prime British objective will be to enhance its role or at least defend its place in global finance. Those Britain negotiates with will spot an opportunity to cut a slice of this lucrative business, squeezing Britain where it hurts most.

A country can choose to go alone. There will be an economic price and we will have to wait a couple of years to know its size in the British case.

The core is, however, not economics but politics. In a globalized world the notion of sovereignty is to avoid a conflict between international rules and domestic politics in which domestic politics normally comes off second best. In the EU, sovereignty is pooled (not given away) to co-author rules (act offensively) with other member states pursuing analogous political goals. Countries doing so gain leverage and enhance control over their destiny.

Defining and defending sovereignty as a bulwark against the outside world, closing the door for what a country does not like (act defensively), amounts to presenting the rest of the world with the opportunity to write international rules in conformity with their interests. In reality, “take back control” is equivalent to handing control over to other countries with which Britain has no rule-based links.

Judged on what we know about the British government’s policies, the most likely spring 2019 picture is: Britain leaves the EU without any agreement, no willingness to extend the two year deadline, the treaty and EU regulations cease to apply, no membership of the WTO and no FTAs with any country around the world. There is one word for such a scenario: chaos. Add to this a determined Scotland reconsidering independence and possibly Northern Ireland doing the same and the hair stand on end.

Article Link To The National Interest:

Amid Election Jitters, Many Big Funds Stay Aggressive But Cash Tempts

By Tim McLaughlin and Jamie McGeever
November 4, 2016

Stocks are listing, bonds are drifting and suddenly gold is back in vogue. Global investors appear to be facing the prospect that next week's U.S. presidential election may not play out as they have been expecting.

Until last Friday, when the FBI said it had re-opened a probe of Democrat Hillary Clinton's use of a private email server while she was secretary of state, the prevailing view among the investment set had her coasting to victory. And most investors have said in surveys they were more comfortable with that outcome than a victory by Republican Donald Trump.

Now, though, several polls depict an ever-tightening race as the clock counts down to Election Day on Tuesday, although the latest Reuters/Ipsos poll showed Clinton still with a 6-point lead.

Investors generally see Clinton as a known quantity who would not make major changes that would upend financial markets, while Trump's positions have been difficult to nail down.

Yet against the tumultuous political backdrop, some of the biggest American stock funds remain either too sanguine, too confused or too focused on extending the bull market to guard against an Election Day result that could shock the world like the Brexit vote did in June.

U.S. large-cap mutual funds, which oversee $4 trillion in assets, are heading into the showdown for the White House with only a thin layer of cash to absorb any potential shocks from the stock market.

Gerry Sullivan, who runs USA Mutuals' $234 million Barrier Fund, said it would be hard to reposition his portfolio even if he knew the election results ahead of time.

"There is so much confusion," Sullivan said.

U.S. funds that invest in stocks with large market capitalizations are not showing any drastic moves toward precaution. Overall, they have only 3.1 percent of their assets dedicated to cash, according to the latest data from Morningstar Inc. These same funds held more cash, about 3.4 percent, before Barack Obama defeated John McCain in 2008.

Multi-asset investors are more defensively positioned, especially those outside the United States, according to the latest Reuters asset allocation poll. Funds in Europe held 8.1 percent of their portfolios in cash in late October, while U.K.-based funds had some 9.6 percent of their holdings parked on the sidelines.

"Investors are holding higher-than-normal levels of cash," said Mark Haefele, global chief investment officer for UBS Wealth Management in London, who oversees around $2 trillion in assets. "That's one way of hedging the uncertainty."

Nonetheless, Haefele said: "We've not seen significant de-risking around the election, but we have seen generally a consistent level of caution in the global client base."

With uncertainty about the outcome on the rise, a risk-off mood has enveloped markets around the world.

The S&P 500 index has declined for eight days in a row, its longest losing streak since the market crash in October 2008, while a benchmark for global stocks, the MSCI All-World Index, has dropped for seven of the last eight sessions. Both sit near four-month lows.

Safe-haven bonds, recently under pressure from expectations the U.S. Federal Reserve is on track to raise interest rates this year, have seen only a modest boost in the meantime, but gold has surged to a one-month high near $1,300 an ounce.

"The trades you're seeing in the market at the moment will go further in the event of a Trump victory," said Mike Bell, global market strategist at JP Morgan Asset Management in London. "You'd expect more downside to U.S. equities, the dollar and Treasury yields."

Not An "Investable Event"

More than half of the stock and bond fund managers polled by Northern Trust in the third quarter said they expected the election to cause a large increase in market volatility. Prices for certain S&P 500 index options expiring in the days after the election indicate a market swing of between 2 and 4 percent, in either direction, by then.

Still, portfolio managers sitting on a lot of cash, some with more than 20 percent of assets, say the stockpile is not a sign of worry about the outcome of the race.

"It's due to the diminished risk-reward profile of investment opportunities in a mature profit cycle," said Meggan Walsh, a portfolio manager at the $18 billion Invesco Diversified Dividend Fund. "We do not feel the election is an investable event."

Some value-oriented large-cap fund managers say the stock market is over-valued and they are on high alert for a market correction as the election coincides with a bull market nearing completion of its eighth year.

"It can be tempting to forget that nasty downturns happen with some regularity, and there is never a bell rung to announce their arrival," portfolio managers Arik Ahitov and Dennis Bryant recently warned investors in the $800 million FPA Capital Fund.

After Britain surprised the world with a vote to leave the European Union, the S&P 500 Index tumbled nearly 4 percent on June 24. It soon recovered, however, and had regained record territory by mid-August.

Even in Britain, the referendum's unexpected outcome has yet to show it has long-lasting effects for investors outside of the currency market, where the British pound has sunk to a three-decade low against the dollar. London's FTSE 100 index is up around 14-percent from its post-Brexit trough.

The FPA Capital Fund managers had nearly 28 percent of the fund's $800 million in assets in cash during the third quarter. They see the stock market as too expensive and are ready for a high level of panic, if that happens, according to their October letter to investors.

"An elevated level of forced selling, combined with a lack of liquidity, might result in challenges for many fully invested products such as index funds, many ETFs, and funds that have no to very low levels of cash cushions," the FPA Capital Fund portfolio managers said.

"In a down market, cash helps mitigate losses and affords one the opportunity to buy when others are being forced to sell, generally the best time to buy."

Article Link To Reuters:

Unshackling ASEAN

By Le Hong Hiep
Project Syndicate
November 4, 2016

As the Association of Southeast Asian Nations approaches its 50th anniversary next year, its failure to reach a consensus regarding Chinese territorial claims in the South China Sea has raised concerns throughout the region. Although the requirement that all decisions be made by consensus enables disparate member states to unite while protecting their national interests, it also limits ASEAN’s effectiveness in dealing with emerging security threats.

The consensus rule explains why ASEAN failed to present a united front after the September 11, 2001, terrorist attacks in the United States, and in the subsequent US-led war on terror. Similarly, ASEAN’s response to North Korea’s provocations – such as ongoing nuclear tests and the 2010 attack that sunk the South Korean corvette Cheonan, killing 46 seamen – has been muted, owing to some ASEAN member states’ sympathy for the North Korean regime.

The territorial disputes in the South China Sea are the strongest indicator yet that ASEAN’s consensus principle is limiting the organization’s effectiveness. The question of how to respond to growing Chinese assertiveness in the region has divided ASEAN member states more deeply than any previous issue has.

At the ASEAN Ministerial Meeting in 2012, the organization failed to issue a joint statement for the first time in its history, because Cambodia refused to allow any mention of incidents caused by China in the South China Sea. In July 2016, ASEAN foreign ministers failed to mention in their joint communiqué the landmark ruling against China that had been issued just two weeks before by an international arbitral tribunal on the disputes.

ASEAN’s failure to act on the South China Sea issue is leading member-state governments and citizens to question the organization’s ability “to maintain and enhance peace” – the first purpose listed in its Charter. What’s more, the current stalemate will likely force certain member states to address the issue through other means, which will ultimately jeopardize ASEAN’s regional and international relevance.

ASEAN must solve its consensus dilemma, through either procedural reforms or institutional innovations. For starters, it should follow a previous suggestion, made by the ASEAN Eminent Persons Group in 2006, to introduce majority decision-making. With ASEAN’s range of activities broadening, the EPG observed, it should “consider alternative and flexible decision-making mechanisms,” including voting.

The European Union embraced this governance mechanism long ago, and even within ASEAN there is precedent for majority-vote decision-making, particularly on geopolitical and security issues. For example, the 1995 Treaty on the Southeast Asia Nuclear Weapon-Free Zone established a commission that, “failing consensus,” can make decisions by a two-thirds majority.

When ASEAN member states cannot reach a consensus, they should distinguish between two types of issues to determine the path forward: those that have obvious implications for the sovereignty, territorial integrity, and domestic autonomy of a member state; and those that have obvious implications for regional security. ASEAN member states should seek consensus in the former case, unless the country in question decides otherwise. But in the latter case, they should have the option to conduct a majority vote.

Accordingly, if an issue has significant regional-security implications and does not concern a given member state’s sovereignty, territorial integrity, or political autonomy, that state should not be allowed to sideline all other member states’ interests at the expense of regional peace.

Another way out of the consensus dilemma is to create new institutional frameworks. For example, an ASEAN Commission for the Management of South China Sea Disputes, operating through majority voting, could establish ASEAN’s position on the issue and liaise with China to resolve disagreements when they arise.

Alternatively, ASEAN member states with territorial claims in the South China Sea could align and include non-claimant ASEAN member states. A South China Sea caucus within ASEAN could shape a common position among its own members ahead of ASEAN-related meetings, and make an ASEAN-wide consensus on the issue more likely.

If these options fail, all like-minded countries in the region, regardless of their South China Sea claims or ASEAN membership, should form a larger caucus to address the issue, by formulating a shared position in region-wide platforms such as the ASEAN Regional Forum and the East Asia Summit.

In the future, this regional caucus could, if circumstances allowed, evolve into a more comprehensive regional security arrangement that supplements ASEAN-led mechanisms. Including non-member countries could undermine ASEAN’s unity; but that is a tradeoff ASEAN member states will have to accept if they decide to adhere strictly to consensus decision-making.

That said, the consensus principle should not be abandoned. It is in ASEAN’s best interest to reach a consensus on important issues whenever possible – including on the South China Sea dispute if it proves not to be a serious threat to regional peace. To this end, ASEAN member states should foster more trust, cooperation, and dialogue among themselves, and with China. All ASEAN member states must strike a balance between their respective national interests and broader regional interests.

For its part, China should be more sensitive to ASEAN member states’ security concerns, and act to turn the South China Sea into a haven for peace and prosperity, rather than an arena for tensions and rivalry.

Article Link To Project-Syndicate:

The Other Time Vladimir Putin Swung An Election

Fear of Russian manipulation plays a role in the upcoming American elections, just as it did in Georgia in 2012.

By Melik Kaylan
Politico EU
November 4, 2016

The American pre-election season is disquieting enough, but for those of us who witnessed the October 2012 parliamentary election in the Republic of Georgia, it is particularly sinister.

What I saw in Tbilisi was an uncanny foreshadowing of events unfolding now in the United States. The comparison may sound preposterous at first blush, but the parallels are undeniable and disturbing.

In Georgia in 2012, nobody suspected that a series of seemingly disconnected incidents could influence the election outcome or that they would turn out to be a coordinated campaign from outside the country.

Nobody was ready to detect the Kremlin’s hand in the proceedings — despite ample warnings by the incumbent pro-Western president, Mikheil Saakashvili. On the contrary, Saakashvili’s loud admonitions merely reinforced the impression that he liked to provoke Moscow unnecessarily.

"We too have consistently underestimated Russia’s will and capacity to interfere abroad."

In the U.S., we too have consistently underestimated Russia’s will and capacity to interfere abroad, and have paid the price for it.

In 2012, the anti-incumbent Georgian Dream party won the election. The event was remarkable for the hitherto apolitical oligarch with opaque finances who came out of nowhere to lead the opposition. The oligarch, Bidzina Ivanishvili, refused to criticize Vladimir Putin, a notable stance in a country Putin had invaded only four years earlier.

Ivanishvili spoke of not “picking a fight with Russia.” Instead, he and his retinue invoked an alternate nationalism that defined itself against foreigners and “un-Georgian” elements. The country was being sold to outsiders, jobs were going abroad, Ivanishvili and his aides told his supporters. He hewed close to religious leaders. He railed against globalism and the danger to Georgian identity. He would put Georgia first.

It was the earliest rehearsal of the soon-to-be exportable Putinist ideology of alt-right conservatism that has since become familiar across Europe and most distinctly in the United States with the rise of Donald Trump.

"[Ivanishvili] deliberately and systematically undermined the public’s faith in the election process — much as Trump has done."

Throughout the campaign, Ivanishvili’s supporters held noisy and threatening rallies in which they roughed up opponents before television cameras and warned they would riot if they lost the election. There was talk aplenty by Georgian Dream of the system being rigged against them. Ivanishvili himself warned that he could only lose through vote-rigging and that he would incite civil unrest as a result.

Ivanishvili spoke darkly of sending his supporters to monitor the ballot centers. He deliberately and systematically undermined the public’s faith in the election process — much as Trump has done.

In the weeks ahead of the election, Moscow raised the specter of military confrontation to an alarming pitch, precisely as it did recently with the U.S., with loud public murmurs about the possibility of nuclear war while it conducted domestic civil defense exercises.

In Georgia at the time, as in the U.S. today, voters were effectively asked to choose between a quiet life and a terrifying conflict. Ivanishvili presented himself as the only antidote, his opponent as a warmonger.

"A pro-Russian candidate made the public feel safer, because he was not someone who was likely to poke the bear."

The stratagem grew ever more effective as Putin escalated his interference. Pointing the finger at Moscow increasingly came across as a provocation. A pro-Russian candidate made the public feel safer, because he was not someone who was likely to poke the bear. Similarly Donald Trump has warned, “You’re going to end up in World War lll if you listen to Hillary Clinton.”

In Georgia too, a pre-planned “surprise” — a harrowing prison-abuse video leaked nationwide and later linked to the Moscow-friendly Georgian mafia — hijacked the national debate, just as the release of emails by WikiLeaks has shaped the debate in the U.S.

It’s worth noting that Ivanishvili resigned from political office in 2013, a year after he was elected prime minister. He has continued to run the country through the Georgian Dream party, and has tried to lead his country toward the post-political stupor Soviet Republics enjoyed in the past. Only 51 percent of voters turned up to vote in the national election last month. Perhaps that is what he meant when he said he wanted to make Georgia more Georgian.

"For the first time in their history, Americans are now genuinely concerned about their electoral process."

He always said he wasn’t interested in politics. Many Americans suspect Trump isn’t either.

For the first time in their history, Americans are now genuinely concerned about their electoral process. The possibility that the basis of their democracy — elections — could be destabilized by outside interference is real.

Luckily for all of us, America is a tougher nut for the Kremlin to crack. Georgia is a young democracy and it knew much less about political gamesmanship. Russia’s intimidating shadow loomed a lot larger.

Today at least, there is no longer any doubt about what the Kremlin can do, and does do, to other countries. Even America remains vulnerable as its citizens and institutions reel from unprecedented challenges to the system. Outside interference could still tip the balance — it may have done already — and is likely to remain a threat for many years.

Article Link To Politico EU:

Melania’s Cyber-Bullying Speech Is An Epic Troll Job

By Maureen Callahan
The New York Post
November 4, 2016

This whole campaign is an epic troll, right?

On Thursday, during Melania Trump’s second major speech, our next potential First Lady said her agenda would be to end cyber-bullying.

“Technology has changed our universe,” she said. “But like anything powerful, it can have a bad side. We have seen this already. As adults, many of us are able to handle mean words, even lies. Children and teenagers can be fragile. They hurt when they are made fun of or made to feel less in looks or intelligence.”

Leaving aside Trump’s real-world bullying — calling Carly Fiorina ugly on the debate stage, mocking a disabled reporter at a rally — it would seem selective amnesia is a requirement for marriage to Donald Trump.

Or perhaps this is an overly generous take on a speech that was ostensibly written by committee and vetted by Trump’s own campaign, a speech that describes, more than anyone America currently knows, our most prolific and popular cyber-bully, one with 12 million Twitter followers.

As the election nears and the polls tighten, is Trump looking for an escape hatch? Was Melania’s speech intended as some kind of suicide-by-cop?

After the first presidential debate, in which Hillary Clinton said Trump had disparaged former Miss Universe Alicia Machado, calling her “Miss Piggy,” Trump began tweeting.

“Did Crooked Hillary help disgusting (check out sex tape and past) Alicia M become a US citizen so she could use her in the debate?” That went up at 5:30 am on Friday, Sept. 30, four days after the debate.

In Trump’s Twitterverse, there is no hierarchy, no person or subject too esteemed or esoteric to escape his wrath.

On former Secretary of Defense Robert Gates: “Dopey . . . a total disaster!”

MSNBC host Mika Brzezinski: “Crazy and very dumb.”

Vanity Fair editor-in-chief Graydon Carter: “A total loser.

Colin Powell: “I was never a fan.”

Elizabeth Warren: “Pocahontas . . . lowlife . . . very racist!

Samuel L. Jackson: “Don’t like @SamuelLJackson’s golf swing. Not athletic.”

Megyn Kelly: “I refuse to call Megyn Kelly a bimbo, because that would not be politically correct.”

During the primaries, Trump posted an unflattering photo of Ted Cruz’s wife alongside one of Melania. “A picture is worth a thousand words,” Trump retweeted. It was five minutes to midnight.

Melania Trump delivered her speech in Berwyn, Penn., and was targeting a group Trump needs this Tuesday: white, college-educated suburban women.

“It is never OK when a 12-year-old girl or boy is mocked, bullied or attacked,” Melania said. “It is terrible when it happens on the playground, and it is absolutely unacceptable when it is done by . . . someone on the Internet. We have to find a better way to talk to each other.”

Naturally, Trump disagreed. Appearing on “Good Morning America” yesterday, he doubled down on his online targets.

“Most of them,” he said, “deserved it.”

Article Link To The New York Post:

The Clinton Campaign At Obama Justice

Emails on WikiLeaks show a top federal lawyer giving Hillary a quiet heads up.

By Kimberley A. Strassel
The Wall Street Journal
November 4, 2016

The most obnoxious spin of the 2016 campaign came this week, as Democrats, their media allies and even President Obama accused the FBI of stacking the election. It’s an extraordinary claim, coming as it does from the same crew that has—we now know—been stacking the election all along in the corridors of the Justice Department.

This is the true November surprise. For four months, FBI Director James Comey has been the public face of the investigation into Hillary Clinton’s email server. He played that role so well, putting the FBI so front and center, that the country forgot about Mr. Comey’s bosses. Revelations this week build the case that President Obama’s politicized Justice Department has been pulling strings and flacking for Mrs. Clinton all along.

One piece of evidence comes from WikiLeaks, in a hacked email between the chairman of the Clinton campaign, John Podesta, and Assistant Attorney General Peter Kadzik. It was sent in May of 2015 via a private Gmail account, which has become the favored way for Obama employees to hide communications from the public. “Heads up,” Mr. Kadzik warned, informing the campaign about a coming hearing and a recent legal filing about Mrs. Clinton’s emails.

Don’t let Mr. Kadzik’s fancy title fool you: He is a Clinton partisan. Before joining the Justice Department in 2013, Mr. Kadzik spent 30 years at the (now-closed) law firmDickstein Shapiro,engaging Democratic causes—and Clinton causes. Mr. Kadzik’s wife, Amy Weiss, was deputy press secretary in Bill Clinton’s White House and a communications director for the Democratic National Committee. Mr. Kadzik also represented the DNC. Campaign-finance records show the two variously donated to Hillary’s Senate leadership PAC, to her 2008 presidential campaign and to her current campaign.

Mr. Kadzik is also an old buddy of Mr. Podesta’s. The two go back to Georgetown Law School. When Marc Rich was lobbying Bill Clinton for a pardon, according to a 2002 House Oversight Committee report, the fugitive financier recruited Mr. Kadzik “because he was a long-time friend of White House Chief of Staff John Podesta.” Mr. Kadzik even represented Mr. Podesta, during the Monica Lewinsky saga.

WikiLeaks emails show the two chatting about birthday parties and dinner meetings with fellow Democratic power players. A 2014 email lists donors for a fundraiser that Mr. Podesta held for his daughter, running for a school board in California. Mr. Kadzik (as he sat at the Justice Department) is shown giving $250. Also appearing are the usual Clinton glitterati: Doug Band, Harold Ickes, Neera Tanden, Betty Currie, Madeleine Albright, Carol Browner. This is Mr. Kadzik’s social circle.

The Justice Department has tried to dismiss Mr. Kadzik’s tip-off to the Clinton campaign as a note “about public information,” sent “in his personal capacity, not during work hours.” But Mr. Kadzik is a senior government official. He does not get to feed any information to a potential target of an investigation, at any hour of the day or night.

What the email reveals is the mind-set of the senior officials at the Justice Department. They are in it to win it for Hillary. They have taken a cue from their boss, the president, who has felt free to personally absolve Mrs. Clinton, no matter how inappropriate that is.

Those leaders include Leslie Caldwell, head of the Criminal Division, an anti-business activist tapped by Mr. Obama in 2014. Benjamin Mizer,who leads the Civil Division, went to bat for Mrs. Clinton last year in Freedom of Information Act litigation over her emails. He co-wrote a brief insisting her email production had been “over-inclusive” and arguing there was no evidence that she had “intentionally deleted” public records. The Office of Legal Counsel is under Karl Remon Thompson, once a counselor to the über-political Eric Holder. A Washington Free Beacon report from May found that 228 Justice Department employees had donated some $75,000 to Mrs. Clinton’s campaign. Mr. Trump? Two contributions totaling $381.

So what else has the department done? While Mrs. Clinton was under investigation, Mr. Kadzik had the opportunity to feed her campaign plenty during personal meetings with Mr. Podesta at dinner and the latter’s home. In a previous WikiLeaks email, another Clinton staffer references “DOJ folks” who leaked him information. And Attorney General Loretta Lynch and Bill Clinton would have us believe they only talked grandchildren on that tarmac in Arizona.

Or what about those immunity deals for Clinton aides? Mr. Comey told Congress that they were provided by Justice Department lawyers. The Journal reported this week that “from the start” of the FBI probe into the Clinton Foundation, “Justice Department officials were stern, icy and dismissive of the case.” From the start—meaning before evidence was collected. That story says senior leaders (unnamed) pressured the FBI to shut down the investigation. (Aside: For a supposed hotbed of Trump activism, the FBI sure did a good job of keeping this probe quiet for a year.)

Mr. Comey has botched plenty in the Clinton affair. Maybe the biggest was providing a shield for Justice Department shenanigans. Because if this feels sordid now, just wait for the actual Clinton Justice Department.

Article Link To The Wall Street Journal:

Dems’ War On The FBI Is A Preview Of A Hillary Presidency

By Rich Lowry
The New York Post
November 4, 2016

James Comey surely had no idea what he was in for.

The FBI director knew his decision to notify Congress of effectively re-opening the Clinton e-mail investigation would cause a firestorm. But even he must be taken aback by the tsunami of obloquy that reaches all the way up to the president of the United States.

The day before yesterday, James Comey was the ultimate argument from authority, cited by every Democrat for the proposition that Hillary Clinton’s private e-mail setup was no big deal. Now, he’s accused of violating the law, threatening democracy and returning the specter of J. Edgar Hoover to Washington, DC.

Perhaps Comey’s letter was ill-advised; it certainly wasn’t ill-intentioned. Any reasonable critic of Comey should concede that — coming unexpectedly into possession of 650,000 more e-mails possibly relevant to an investigation that he had told Congress was closed — he was in a tricky spot.

But most of Comey’s detractors aren’t interested in his dilemma or in the Department of Justice protocols they claim to hold so dear. No, Comey’s sin was putting at risk Clinton’s electoral prospects, and he is consequently the object of a campaign of personal destruction whose motive is nakedly political.

President Obama’s spokesman said the other day that he would neither criticize nor defend Comey. That Olympian detachment quickly became inoperative. “I do think that there is a norm that when there are investigations,” Obama said in an interview broadcast Tuesday, “we don’t operate on incomplete information and we don’t operate on leaks.”

There’s also a norm against a president publicly slamming his FBI director, especially when it’s in order to get in lockstep with a partywide pile-on.

The most telling critique of Comey is that he never should have started talking about the Clinton e-mail case back in July. This was probably a mistake, but it was an excess of transparency.

He figured, reasonably enough, that political sensitivities were so high and suspicions had been so aroused by Attorney General Loretta Lynch’s runway meeting with former President Bill Clinton (remember: all these people care about is protocol!) that he should be unusually open.

If Democrats didn’t like his public critique of Clinton, they were happy to cite his opinion that “no reasonable prosecutor” would bring the e-mail case and elevate him to a modern-day Eliot Ness.

But that was one week ago. Now, it’s literally permissible to say anything about Comey.

The New York Times ran a front-page story headlined, “James Comey Role Recalls Hoover’s F.B.I., Fairly or Not.” The “fairly or not” construction is a warrant to publish anything whatsoever. Why not, “Obama Accused of Being Born in Kenya, Fairly or Not.” Or, “The Clintons Accused of Murdering Political Opponents, Fairly or Not.”

The main supporting quotation in the piece is from Georgetown University academic Sanford Ungar. Even he stipulates, “I don’t mean to smear Comey, and it may be an unfair comparison.” Then, why make it? The connection that he discerns between Hoover and Comey is that the notorious 20th-century FBI director “would weigh in on issues without warning or expectation.”

Really? The problem with Hoover was that he occasionally popped off? Not the domestic spying, the political blackmail and the attempts to destroy Martin Luther King Jr.? If only Hoover had had better message discipline, he would’ve been remembered as a hell of a director.

Then there’s Harry Reid, who accused Comey of violating the law — specifically the Hatch Act — which is stupidly malicious even for Reid, who doesn’t have an ounce of Comey’s integrity even on one of the FBI director’s very worst days.

Ian Millhiser of Think Progress argues Comey should be fired because his notification to Congress is the first step on a slippery slope toward the FBI violating the civil liberties of all Americans. First, they came for Hillary Clinton …

The Democrats are portraying themselves as the institutionalists, protecting all that is good and decent in our government from the onslaught of Donald Trump. But the Comey episode shows how their commitment to our institutions is co-terminous with their political interest.

The lockstep attack, from the cable TV talking heads to the president, is something to behold. It’s not just that the Clintons will bend every rule and try to destroy anyone who gets in their way, they will enlist everyone on their side to do the same.

This is how a Clinton administration will work. Consider yourself warned — again.

Article Link To The New York Post:

Noonan: Democracy’s Majesty And 2016’s Indignity

After Tuesday, life will go on, and things are so bad they almost have to get better.

By Peggy Noonan
The Wall Street Journal
November 4, 2016

Thinking about Election Day I realized how much I miss the majesty of the old voting procedures. You used to go into a tall booth and stand alone and no one could see you vote. The booth was enclosed by dark curtains. You entered and pulled a big metal lever and it closed the curtain behind you. You faced long rows of candidate names with a metal toggle switch next to each. You could put your finger on the toggle and hesitate, or you could smack it down like it was a nail and you were a hammer. There was a satisfying little click. I used to take my little boy and explain what we were doing and why it was important. When you were all done you’d pull the big metal lever again, and that would lock in your vote (you hoped—America has always been full of mischief) and the curtain would open with a whoosh and you’d emerge, a citizen who’d done a citizen’s noble work. Pretty much everyone voted on Election Day itself so it was a communal experience. You saw your neighbors.

Now it is some of the neighbors and little majesty, cheap desks in a busy room with anyone walking by and you standing there like a mook, marking a paper. No click, no whoosh, and the desks have sides but it doesn’t feel so much like a secret ballot now, and it doesn’t have the old dignity.

I can hear you saying, “What does?”


Someone is going to win Tuesday and then, if trendlines that have proved reliable in the past continue, the sun will come up on Wednesday. (We claim this with a 3% margin of error.) We’ll go forward. We’re in a hard time and we’ll get through it. The country isn’t just split but unhappy with its choices and pessimistic as to its political future. Twenty sixteen was both the result of and a reckoning with what hasn’t worked the past 15 years. We’ll have to spend the next few years trying to get things in order and figure out how to create a better political reality.

A memory that stays with me is a college student down South who in September asked me if the young, experiencing national politics for the first time this year, should feel despair. No, I said, you should be inspired. You’re not even out of school yet and you can do better than this. All of you will have to set yourselves to saving us. It got a laugh but I meant it, and the audience knew.

How did we get here? How did we get two candidates so widely disliked and disrespected? In broad strokes:

Donald Trump didn’t break one of our two great and ancestral political parties. He won the nomination because the Republican Party was already broken, and those responsible for the party, the elected officials and thinkers, didn’t know. Now they do. Soon they will begin that stage of political mourning known as the symposia process. They’ll discuss how to repair, renew, keep the party together. Or the party will, over the next few cycles, split apart.

Donald Trump doesn’t happen in a more or less united party, he happens in a broken one. As he rose there were essays saying what was happening with the Republicans was the result of a too-great reliance on the thinking and ways of the party’s old, victorious past. There is some truth to that. You can’t be the Democratic Party of 1980 operating from the playbook of 1940. Republicans of 2016 can’t live off the modes and approaches of 1980.

But the split in the party happened in the past 15 years. When you give a party two unwon wars, one a true foreign-policy catastrophe, and a great recession, it will begin to break because its members lose confidence in its leaders. When the top of the party believes in things that the bottom of the party doesn’t want (on immigration, entitlements and trade), things will break further. The bottom will begin to feel the top no longer cares about it. That will end their loyalty. Mr. Trump’s Republican foes are wrong in thinking his followers are just sticking with the party. They’re not, they’ve broken from the party.

In such circumstances the base of a party will do surprising things, such as turn, in hopeful desperation, to a strange outsider in hopes maybe he can break through the mess.

Hillary Clinton’s candidacy results from webs and arrangements—the big name, the big money, the old relationships, the air of inevitability. She is the nominee because the Democratic Party, which used to fight about great issues of war and peace, of the deeper meaning of foreign and domestic policy—it was a vital thing—is now kept together by one central organizing principle: the brute acquisition of power, and holding on to that power no matter what. The worst members of the party appear to care almost nothing about what that power is used for, how it will be wielded to achieve higher purposes. They’re just making a living. They’re just on a team. It is Madison’s fear of the destructive effects of “faction” taken to the nth degree. You see this in the hacked emails of John Podesta. The spirit of the emails I’ve seen is of back-scratching, networking, favor pleading.

The Democratic Party and its lobbyist/think-tank/journalistic establishment in Washington have long looked to me to be dominated by people devoted mostly to getting themselves in the best professional position and their kids into Sidwell Friends School. They want to be part of the web, the arrangement. They want to have connections, associates, a tong. They want to be wired in. They don’t want to be I.F. Stone, alone, reading the fine print of obscure government documents. And Clintonism—for years the biggest web, the securest source of money, a real tong with enforcers and reward-dispensers—has long been a sound route to all of this. You may have to bend rules to be part of it, accept unsavory deals and characters, but it is warm and cozy in there.

One thing I saw this year was that sincere conservatives wholly opposed to socialism had real respect for Bernie Sanders because they saw his sincerity. He wasn’t part of the web and they honored him for it.

Both parties have their webs. Maybe this year begins the process by which they will be burned away.

A closing thought: God is in charge of history. He asks us to work, to try, to pour ourselves out to make things better. But he is an actor in history also. He chastises and rescues, he intervenes in ways seen and unseen. Or chooses not to.

Twenty sixteen looks to me like a chastisement. He’s trying to get our attention. We have candidates we can’t be proud of. We must choose among the embarrassments. What might we be doing as a nation and a people that would have earned this moment?

Article Link To The Wall Street Journal:

Krauthammer: Final Days, Awful Choice

A careless president could bring down the American-led post-war order.

By Charles Krauthammer 
The National Review
October 4, 2016

Rule of thumb for a presidential campaign where the two candidates have the highest unfavorable ratings in the history of polling: If you’re the center of attention, you’re losing.

As Election Day approaches, Hillary Clinton cannot shake the spotlight. She is still ahead in the polls, but you know she’s slipping when she shows up at a Florida campaign event with a week to go accompanied by the former Miss Universe, Alicia Machado.

The original plan was for Clinton to pivot in the final week of the campaign from relentless criticism of Donald Trump to making a positive case for herself. Instead, she reached back for a six-week-old charge that played well when it first emerged back then but now feels stale and recycled.

The setback and momentum shift came courtesy of FBI director James Comey. Clinton’s greatest hurdle had always been the Comey primary, which the Democrats thought she’d won in July when he declined to recommend prosecuting her over classified e-mails. This engendered an outpouring of Democratic encomiums about Comey’s unimpeachable integrity and Solomonic wisdom.

When it was revealed last Friday that there had been a Comey recount and Clinton lost, Solomon turned into Torquemada. But, of course, Comey had no choice. How could he have sat on a trove of 650,000 newly discovered e-mails and kept that knowledge suppressed until after the election?

Comey’s announcement brought flooding back — to memory and to the front pages — every unsavory element of the Clinton character: shiftiness, paranoia, cynicism, and disdain for playing by the rules. It got worse when FBI employees began leaking stories about possible political pressure from the Department of Justice and about parallel investigations into the Clinton Foundation.

At the same time, Clinton was absorbing a daily dose of WikiLeaks, offering an extremely unappealing tableau of mendacity, deception, and the intermingling of public service with private self-enrichment. It was the worst week of her campaign, at the worst time.

And it raises two troubling questions:

1. Regarding the FBI, do we really want to elect a president who will likely come into office under criminal investigation by law enforcement? Congressional hearings will be immediate and endless. A constitutional crisis at some point is not out of the question.

2. And regarding WikiLeaks, how do we know it will have released the most damning material by Election Day? A hardened KGB operative like Vladimir Putin might well prefer to hold back whatever is most incriminating until a Clinton presidency. He is surely not above attempted blackmail at an opportune time.

There seems to be a consensus that Putin’s hacking gambit is intended only to disrupt the election rather than to deny Clinton the White House. Why? Putin harbors a deep animus toward Clinton, whom he blames personally for the anti-Putin demonstrations that followed Russia’s rigged 2011 parliamentary elections.

Moreover, Putin would surely prefer to deal with Trump, a man who has adopted the softest line on the Kremlin of any modern U.S. leader.

In a normal election, the FBI and WikiLeaks factors might be disqualifying for a presidential candidate. As final evidence of how bad are our choices in 2016, Trump’s liabilities, especially on foreign policy, outweigh hers.

We are entering a period of unprecedented threat to the international order that has prevailed under American leadership since 1945. After eight years of President Obama’s retreat, the three major revisionist powers — Russia, China, and Iran — see their chance to achieve regional dominance and diminish, if not expel, American influence.

At a time of such tectonic instability, even the most experienced head of state requires wisdom and delicacy to maintain equilibrium. Trump has neither. His joining of supreme ignorance to supreme arrogance, combined with a pathological sensitivity to any perceived slight, is a standing invitation to calamitous miscalculation.

Two generations of Americans have grown up feeling that international stability is as natural as the air we breathe. It’s not. It depends on continual, calibrated tending. It depends on the delicate balancing of alliances and the careful signaling of enemies. It depends on avoiding self-inflicted trade wars and on recognizing the value of allies like Germany, Japan, and South Korea as cornerstones of our own security rather than satrapies who are here to dispatch tribute to their imperial master in Washington.

It took seven decades to build this open, free international order. It could be brought down in a single presidential term. That would be a high price to pay for the catharsis of kicking over a table.

Article Link To The National Review:

FBI Examining Fake Documents Targeting Clinton Campaign

By Mark Hosenball
November 4, 2016

The FBI and U.S. intelligence agencies are examining faked documents aimed at discrediting the Hillary Clinton campaign as part of a broader investigation into what U.S. officials believe has been an attempt by Russia to disrupt the presidential election, people with knowledge of the matter said.

U.S. Senator Tom Carper, a Democrat on the Senate Homeland Security Committee, has referred one of the documents to the FBI for investigation on the grounds that his name and stationery were forged to appear authentic, some of the sources who had knowledge of that discussion said.

In the letter identified as fake, Carper is quoted as writing to Clinton, “We will not let you lose this election,” a person who saw the document told Reuters.

The fake Carper letter, which was described to Reuters, is one of several documents presented to the Federal Bureau of Investigation and the U.S. Department of Justice for review in recent weeks, the sources said.

A spokeswoman for Carper declined to comment.

As part of an investigation into suspected Russian hacking, FBI investigators have also asked Democratic Party officials to provide copies of other suspected faked documents that have been circulating along with emails and other legitimate documents taken in the hack, people involved in those conversations said.

A spokesman for the FBI confirmed the agency was “in receipt of a complaint about an alleged fake letter” related to the election but declined further comment. Others with knowledge of the matter said the FBI was also examining other fake documents that recently surfaced.

U.S. intelligence officials have warned privately that a campaign they believe is backed by the Russian government to undermine the credibility of the U.S. presidential election could move beyond the hacking of Democratic Party email systems. That could include posting fictional evidence of voter fraud or other disinformation in the run-up to voting on Nov. 8, U.S. officials have said.

Russian officials deny any such effort.

In addition to the Carper letter, the FBI has also reviewed a seven-page electronic document that carries the logos of Democratic pollster Joel Benenson’s firm, the Benenson Strategy Group, and the Clinton Foundation, a person with knowledge of the matter said.

The document, identified as a fake by the Clinton campaign, claims poll ratings had plunged for Clinton and called for “severe strategy changes for November” that could include “staged civil unrest” and “radiological attack” with dirty bombs to disrupt the vote.

Like the Carper letter, it was not immediately clear where the fraudulent document had originated or how it had begun to circulate.

On Oct. 20, Roger Stone, a former Trump aide and Republican operative, linked to a copy of the document on Twitter with the tag, “If this is real: OMG!!”

Benenson’s firm had no immediate comment. Craig Minassian, a spokesman for the Clinton Foundation, said the document was “fake.” He said he did not know if the FBI had examined it.

Stone did not respond to emails requesting comment.

A spokesman for the Clinton campaign, Glen Caplin, said the document was a fake and part of a “desperate stunt” to capitalize on the leak of Democratic emails by Wikileaks.

The developments highlight the unusually prominent role U.S. law enforcement and intelligence agencies have played in a contentious election and an ongoing debate about how public they can or should be about their inquiries.

FBI Director James Comey, a Republican appointed by President Obama, touched off an outcry from Democrats last week when he alerted Congress that agents had found other emails that could be linked to an inquiry into Clinton’s use of a private email server when she was Secretary of State, effectively re-opening an investigation he had closed in July.

Article Link To Reuters:

China Boosts Space Program With New Heavy Rocket Launch

By Michael Martina
November 4, 2016

China has launched its new Long March-5 heavy rocket, state media said, sending its payload into orbit in the country's latest step in advancing its space exploration program.

The launch comes after China began its longest manned space mission last month, sending two astronauts to spend a month aboard a space laboratory that is part of a broader plan to have a permanent manned space station in service around 2022.

The rocket, larger than previous versions of China's Long-March carrier rockets, blasted off on Thursday night from a pad in the southern province of Hainan, state news agency Xinhua said, a launch intended to verify its design and performance.

"Its successful launch has propelled China to the forefront of the world in terms of rocket carrying capacity, and marks a milestone in China's transition from a major player in space to a major power in space," Xinhua cited the ruling Communist Party's Central Committee and powerful Central Military Commission as saying in a letter.

The two-stage rocket's ability to put 25 tonnes of payload into low-Earth orbit and 14 tonnes to geostationary transfer orbit gives it a carrying capacity 2.5 times larger than previous models, Xinhua said.

"With the heavy-lift carrier rocket, China can build a permanent manned space station and explore the moon and Mars," the news agency said.

Advancing China's space program is a priority for Beijing, which insists it is for peaceful purposes.

The U.S. Defense Department has highlighted China's increasing space capabilities, saying it was pursuing activities aimed at preventing other nations using space-based assets in a crisis.

Despite its space program's advancements for military, commercial and scientific purposes, China is still playing catch-up to established space powers the United States and Russia.

China's Jade Rabbit moon rover landed on the moon in late 2013 to great national fanfare, but soon suffered severe technical difficulties.

The rover and the Chang'e 3 probe that carried it there were the first "soft landing" on the moon since 1976. Both the United States and the Soviet Union had accomplished the feat earlier.

U.S. companies, including SpaceX and Blue Origin, are now developing commercial space flight capabilities. Both companies are developing reusable rockets, and SpaceX has put forward the ambitious goal of a human mission to Mars as early as 2024.

Article Link To Reuters:

Friday, November 4, Morning Global Market Roundup: Asian Shares Slip, Dollar Nurses Losses As U.S. Election Looms

By Ayai Tomisawa
November 4, 2016

Asian shares slipped on Friday and the dollar nursed losses in a week marked by growing uncertainty about the outcome of the U.S. presidential election.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.4 percent after brushing its lowest levels since early August. It looked set for a loss of 1.6 for the week.

Investors have been unnerved in recent days by signs that the presidential race between Democrat Hillary Clinton and Republican Donald Trump may be tightening just days before Tuesday's vote.

That anxiety has rippled across global financial markets as investors ponder hedging the possible ramifications of a Trump presidency, overshadowing other events including Friday's U.S. employment report for October.

According to the latest Reuters/Ipsos States of the Nation project, Clinton, who is seen as the status quo candidate by markets, maintained her narrow lead over Trump.

But several swing states that the Republican challenger must win shifted from favoring Clinton to toss-ups, offering Trump a possible route to victory.

"Even if opinion polls show that Clinton is maintaining a lead, anything can happen at the last minute, something the Brexit outcome taught us," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, referring to Britain's surprising vote in June to leave the European Union.

Trump, a political novice, has campaigned to clamp down on immigration, rethink trade relations and slap high tariffs on imported goods. Some fear his election would pose risks for global trade and growth.

"There remains scope for a significant sell-off if Trump wins," wrote Ric Spooner at CMC Markets.

"Markets are currently attempting to strike the right balance between the greater probability of a Clinton win and the possibility of a significant sell-off on a Trump victory," Spooner said.

"The more the market falls in advance of the election, the greater the potential for volatility and a significant bounce if Clinton does get up."

On Wall Street on Thursday, U.S. stocks sagged, with the S&P 500's .SPX eighth straight losing session marking its longest streak since the 2008 financial crisis. A slump in Facebook shares (FB.O) and the U.S. election jitter sapped investor confidence.

Japan's Nikkei stock index .N225 slid 1.4 percent, reopening after a public holiday on Thursday and catching up to losses in the previous global session. It was down 3.2 percent for the week, dragged down by the resurgence of the perennial safe-haven yen as U.S. election jitters mount.

The dollar clawed back some lost ground against the yen, rising 0.1 percent to 103.05 JPY= and pushing away from the previous session's one-month low of 102.54 yen, though still down 1.6 percent for the week. The euro EUR= edged down 0.1 percent to $1.1088 EUR=, up about 1 percent for the week.

The dollar index, which tracks the greenback against a basket of six rival currencies, inched up 0.1 percent to 97.242 .DXY, down 1.1 percent for the week and not far from a more than three-week low of 97.041 struck overnight.

The nonfarm payrolls report due later Friday is expected to show employers added 175,000 jobs in October, according to the median estimate of 106 economists polled by Reuters.

U.S. data on Thursday showed that services industry activity cooled last month amid a slowdown in new orders and hiring, while planned job cuts by U.S.-based employers dropped 31 percent to a five-month low.

That underscored the labor market's healthy fundamentals, though more Americans filed for unemployment benefits last week.

The pound was a stand-out performer overnight, rising to a nearly one-month high of $1.2494 GBP= on Thursday after a British court ruled that the government needs parliamentary approval to start the process of leaving the European Union. That could potentially delay Prime Minister Theresa May's Brexit plans.

The pound also got a boost from the Bank of England, which scrapped its plan to cut interest rates and ramped up its forecasts for growth.

Sterling was last up 0.1 percent at $1.2476, poised to gain 2.4 percent for the week.

Oil prices took back some ground after settling down more than 1 percent on Thursday as investors reacted to a record weekly surge in U.S. crude inventories and remained skeptical that OPEC will actually implement its planned output curbs.

U.S. crude CLc1 added 0.2 percent to $44.76 per barrel. Brent crude LCOc1 also rose 0.2 percent to $46.46.

Article Link To Reuters:

Oil Prices Steady After Five Days Of Declines, Sentiment Bearish

By Henning Gloystein
November 4, 2016

Oil prices edged up on Friday, stabilizing after five straight days of falls triggered by a surge in U.S. crude inventories and doubts over the ability of producers to coordinate output cuts.

Brent crude futures LCOc1 were up 16 cents, or 0.35 percent, at $46.51 per barrel.

U.S. West Texas Intermediate (WTI) futures rose 17 cents, or 0.4 percent, to $44.83.

Despite the slight increases, traders said sentiment was bearish. Brent fell for the past five straight trading sessions and is down over 13 percent since its recent peak in mid-October.

"The persistent market dynamic of softer demand and stronger supply will become a more dominant driver of prices as the impact of OPEC's verbal interventions begins to fade and expectations for coordinated cuts are readjusted," BMI Research said in a note to clients.

"We see a trading range of $43-53 per barrel leading oil markets into the new year and we maintain our forecasts of an average 55 per barrel and $53.5 per barrel for Brent and WTI respectively for 2017," it added.

Analysts said markets were also weighed down by traders pulling out money from futures ahead of the U.S. presidential elections, which are seen as a risk to markets.

"I suspect the main drivers are that risk is being taken off the table ahead of next week's election," said Jeffrey Halley, senior market analyst at OANDA brokerage in Singapore.

Beyond concerns ahead of the elections, traders said oil fundamentals were also weak, with U.S. crude stocks surging, demand growth low, and doubts that the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producer Russia can agree on a meaningful output cut this month.

U.S. crude oil stockpiles soared more than 14 million barrels last week, the largest weekly build since the U.S. Energy Department started keeping records in 1982, highlighting that a global fuel supply overhang is far from over.

While oil production remains near records and inventories are high, British bank Barclays said demand growth was timid.

"Q3 16 demand growth rate is less than one-third that of the same quarter last year," Barclays bank said in a note to clients, estimating last quarter's growth below 1 million barrels per day (bpd).

It said consumption increases for the last quarter of the year would not be much higher, before averaging 1.3 million bpd in 2017.

Article Link To Reuters:

White House Study: China Trade Deal Worsens Damage From TPP Failure

By David Lawder
November 4, 2016

The Obama administration issued a fresh warning on Thursday about the dangers of Congress failing to pass its Asian trade deal, saying that millions of U.S. jobs could be at risk if a rival China-led trade pact is enacted.

As they gear up for one last push to persuade Congress to pass the Trans-Pacific Partnership (TPP)in the two months following Tuesday's elections, senior administration officials said 35 U.S. industrial sectors would lose substantial ground to Chinese competitors in the Japanese market alone.

In a new study, the White House Council of Economic Advisers estimated that China's Regional Comprehensive Economic Partnership (RECAP) trade deal would likely lower Japanese tariffs on Chinese goods by five to 10 percentage points. If TPP is shelved, U.S. companies would be stuck with Japanese tariffs averaging twice as high as their Chinese competitors.

Obama administration officials have long argued that China would seize economic leadership in Asia and write lower-standard trading rules for the region if TPP fails. The White House study seeks to quantify the argument by examining the effect of likely RCEP tariff cuts by Japan.

China is negotiating RCEP with 16 Asian countries, seven of which are also signatories to the TPP agreement: Japan, Australia, New Zealand, Vietnam, Malaysia, Singapore and Brunei.

"If TPP is not passed and RCEP is enacted, which is what all these countries say they are planning to do, then U.S. businesses would face a direct loss of competitive position," said Jason Furman, the chair of the Council of Economic Advisers.

This would displace U.S. goods and be worse than simply maintaining the trade status quo, Furman said. The study identifies 35 industrial sectors employing 4.7 million people with $5.3 billion in sales to Japan that would face such a disadvantage.

A broad manufacturing sector stretching from sporting goods to office supplies could see $720 million in annual sales to Japan at risk, the study said.

The administration faces an uphill battle to get a vote for TPP in Congress' post-election "lame duck" session, due to strong anti-trade rhetoric in the presidential campaign and House Speaker Paul Ryan's recent comments that the trade deal lacks the votes for passage.

But U.S. Trade Representative Michael Froman said he is continuing to press the TPP case with individual members and working with Senate Finance Committee Chairman Orrin Hatch to ease his concerns about patent protections for biologic drugs.

Froman said these efforts have been met with "a lot of receptivity".

Article Link To Reuters:

Is China Repeating Japan’s Economic Missteps?

Beijing may seem dynamic, but it’s heading down a path we’ve seen before.

By Michael Schuman
Bloomberg Businessweek
November 4, 2016

China and Japan may seem to inhabit alternative economic universes. After more than two decades of stagnation, Japan is a fading global power that can’t seem to revive its fortunes no matter what unorthodox gimmicks it tries. By contrast, China’s ascent to superpower status appears relentless as it gains wealth, technology, and ambition.

Yet these Asian neighbors have a lot in common, and that doesn’t bode well for China’s economic future. The sad case of Japan should serve as a cautionary tale for China’s policymakers. Beijing pursued almost identical economic policies to Tokyo’s to generate its rapid development. Now China’s leaders are repeating the missteps the Japanese made that tanked Japan’s economy and thwarted its revival.

“Just like Japan, we believe China will eventually face a period of much slower growth,” Goldman Sachs investment strategists said in a report earlier this year. Analysts at ratings agency Moody’s, writing in May, warned that China could suffer “a prolonged period of sub-optimal economic growth and persistent deflationary pressures, or possibly even economic stagnation.” James Chanos, founder of fund manager Kynikos Associates, has compared China’s trajectory to Japan’s “on steroids.”

Some may disregard these warnings as the same predictions of doom that China has shrugged off time and again. But recall that 30 years ago, few foresaw the decline of Japan, either. Japan was the East Asian giant poised to overtake the U.S. as the world’s top economy. Driving that ascent was an economic system that many considered superior to laissez-faire American capitalism. By fostering close, cooperative ties among the state, big corporations, and banks, Japan’s policymakers encouraged investment and guided a national industrial strategy. Bureaucrats in Tokyo interfered with markets to a degree unthinkable in the U.S. by protecting nascent industries and directing financing to favored sectors and companies. Backed by such support, Japanese companies burst onto the world stage and pushed their American competitors to the wall.

But even as Japan appeared destined for greatness, its economy was, in reality, starting to rot. Those clubby ties among finance, business, and government misallocated capital and led to wasteful investments. Growth was given a boost by cheap credit in the second half of the 1980s, but that also helped inflate debt levels and stock and property prices. When this “bubble economy” burst in the early 1990s, the financial industry was flattened. Japan has yet to fully recover.

China could be hurtling down a similar path. The methods Beijing employed to generate rapid growth—directing finance, nurturing targeted industries, and promoting exports—are replicas of Japan’s. And since the state in China’s “state capitalism” plays an even larger economic role than Japan’s officious bureaucracy does, the Chinese government interferes with markets to a greater degree.

In China, the chummy government-business-banking triumvirate has led to excess steel mills, cement plants, and apartment blocks on a staggering scale. And Beijing’s policymakers have responded to overbuilding with a massive influx of easy cash to keep the old, sputtering growth engines spinning. The flood of yuan has fueled unstable spikes in asset prices, as it did in Japan. Last year stock markets in China escalated to nosebleed levels, only to deflate in a panicked crash. Now property prices in Shanghai, Shenzhen, and other major cities are rising so quickly that officials have stepped in to control them.

"Bubble-prone, debt-obsessed economies are likely to fail, no matter the circumstances."

Perhaps more dangerously, China’s loose money has also pumped up a mammoth increase in debt—like Japan’s in the 1980s. Ratings company Fitch shows that total debt relative to national output in Japan jumped almost 80 percentage points, to 275 percent from 1980 to 1989, on the eve of the country’s financial meltdown. The same ratio in China has risen steeply—more than 100 percentage points from 2007 to 2015, reaching 255 percent of its gross domestic product, according to the Bank for International Settlements.

There are economists who argue that China’s mountain of debt isn’t as risky as it appears. Since the debt consists to a great degree of loans made by state banks to state enterprises, the government is likely to step in and support the financial system. And because Chinese debt is almost entirely domestic and backed by massive savings, the financial sector is unlikely to fall prey to outside shocks.

The experience of Japan suggests otherwise. It, too, was a creditor nation with large trade surpluses and ample savings in the early 1990s, but that didn’t prevent a financial crisis. If anything, Japan is proof that a bubble-prone, debt-obsessed economy is susceptible to failure, no matter the circumstances.

Japan can provide China with a model of exactly how not to handle such problems. Rather than allowing indebted, struggling companies to fail, the Japanese kept many afloat with continued credit, debt-for-equity swaps, and other tricks. Such “zombie” companies drag down the economy to this day. To sustain growth, the government turned to artificial stimulus—deficit-financed spending on infrastructure and unprecedented printing of yen by the central bank. That managed to swell Japan’s total debt to almost four times its national output at the end of 2015 while failing to revive the economy. The meddlesome bureaucracy has never reduced regulation nor opened markets enough to spur competition, efficiency, and entrepreneurship.

Officially, China’s president, Xi Jinping, has embarked on a different course. He’s pledged to undertake a sweeping program of pro-market reforms that could shift the economy toward new sources of growth, scrub out excess and waste, and promote private enterprise. In practice, however, China is following in Japan’s footsteps. Despite promises to eliminate zombie companies, Beijing has kept them alive by flooding the economy with credit and state stimulus. In October government planners announced the details of a debt-for-equity swap plan ostensibly aimed at rescuing “good” companies, but more likely perpetuating excess capacity.

Meanwhile, China’s debt burden continues to get heavier, as the expansion of credit outpaces GDP growth. But that credit isn’t stirring the economy. As in Japan, a kind of paralysis is setting in that renders all that cash less effective. There are indications that more and more new credit is being used just to pay off old debts. That means less and less money is going toward investment that could boost the economy.

China and Japan also share one long-term trend that hampers their economies—aging. Japan’s working-age population decreased 0.4 percent per year from 1990 to 2015. That hurts growth because fewer productive, income-earning workers are supporting a larger army of retirees. As a result of China’s decades-long policy of limiting many couples to only one child—a restriction Beijing eased only over the past three years—the Chinese population is set to age even more quickly, with the workforce expected to shrink nearly 0.5 percent annually over the next 25 years, according to Goldman Sachs.

Fortunately for China, nothing in economics is inevitable. Xi and his policy team can still swerve off Japan’s course if they more forcefully implement the reforms they’ve promised. Until then, the risks that China will become like Japan will only mount. Beijing and Tokyo have suffered from the same fatal flaw: a deep-seated unwillingness to alter a growth model that no longer delivers results.

Article Link To Bloomberg Businessweek:

Japan, Russia Agree To Economic Cooperation Ahead Of Summit

By Kaori Kaneko
November 4, 2016

Japan and Russia will focus on about 30 items of economic cooperation ahead of a December summit at which Japanese Prime Minister Shinzo Abe hopes to make progress in resolving a long-festering territorial row, said the Nikkei business daily.

Japan's trade minister Hiroshige Seko met Russian officials in Moscow, including Economic Development Minister Alexei Ulyukayev, and the two sides agreed to seek concrete progress before Russian President Vladimir Putin visits Japan next month, the Nikkei reported on Friday.

The ministers also agreed to map out by Nov. 18 plans for government-led projects such as improving the urban environment in the southwestern city of Voronezh and training of Russian engineers, the Nikkei said.

That would be before Abe and Putin hold an expected meeting on the sidelines of an Asia-Pacific summit in Peru that month.

Seko and Russian Energy Minister Alexander Novak agreed to work together on oil and gas development and cooperation on decommissioning Japan's disaster-hit Fukushima Daiichi nuclear reactor, the newspaper added.

"Improving the economic relationship between Japan and Russia will of course be a major, important foundation for negotiating a peace treaty," the Nikkei quoted Seko as telling reporters in Moscow.

The dispute over four islands north of Japan's Hokkaido, called the Northern Territories in Japan and the Southern Kuriles in Russia, has kept Tokyo and Moscow from signing a peace treaty formally ending their conflict in World War Two.

Abe is betting his close ties with Putin and the lure of investment from Japanese companies could set the stage for progress in the dispute when the pair meet in Abe's home constituency on Dec. 15.

Article Link To Reuters:

U.S. Employment Growth, Wages Seen Picking Up In October

By Lucia Mutikani
November 4, 2016

U.S. employers likely stepped up hiring in October and boosted wages for workers, which could effectively seal the case for a December interest rate increase from the Federal Reserve.

Nonfarm payrolls likely increased by 175,000 jobs last month after rising 156,000 in September, according to a Reuters survey of economists. The unemployment rate is forecast falling one-tenth of a percentage point to 4.9 percent.

"The expected payroll gains should easily meet the Fed's criteria of some further progress in the labor market, which leaves us with a rate hike in December," said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

The Labor Department will release its closely watched employment report on Friday at 8:30 a.m., four days before the Nov. 8 presidential election.

The report will come on the heels of data last week showing an acceleration in economic growth in the third quarter. But economists see little impact from the report on an increasingly bitter and divisive campaign.

"There is so much noise out there right now, everyone is screaming from the rooftops. I just don't know that any particular data point is going to have a great bearing on the election, in and of itself," said Sam Bullard, senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Though the U.S. central bank is expected to increase borrowing costs next month, that decision will likely depend on the outcome of Tuesday's election. The tight race between Democratic candidate Hillary Clinton and her Republican rival Donald Trump has rattled financial markets.

The Fed on Wednesday left interest rates unchanged but said its monetary policy-setting committee "judges that the case for an increase in the federal funds rate has continued to strengthen." It lifted its benchmark overnight interest rate last December for the first time in nearly a decade.

"The election could still derail the Fed's plans, particularly if a very close result led to one or both candidates contesting it via the courts," said Paul Ashworth, chief economist at Capital Economics in Toronto.

Trend Has Lowered

Despite October's anticipated pick-up in job gains, the trend in employment growth has slowed as the labor market nears full employment and the economy's recovery from the 2007-09 recession shows signs of aging.

Employment growth so far this year has averaged 178,000 jobs per month, down from an average gain of 229,000 per month in 2015. Still, the monthly job gains are more than enough to absorb new entrants into the labor market.

Fed Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with growth in the work-age population.

The prospects of an interest rate hike next month could also be bolstered by an anticipated solid rise in wages. Average hourly earnings are expected to have increased 0.3 percent in October after advancing 0.2 percent in September.

The lift from a calendar quirk could push the year-on-year increase to 2.7 percent from 2.6 percent in September. The Fed on Wednesday struck a fairly upbeat note on inflation, saying price pressures had "increased somewhat since earlier this year."

Despite the labor market nearing full employment, wage growth has remained moderate. Economists blame this on a low labor force participation rate.

The participation rate, or the share of working-age Americans who are employed or at least looking for a job, is hovering near multi-decade lows, in part reflecting demographic changes.

A solid payrolls gain accompanied by a pick-up in wages could support consumer spending heading into the holiday season, and in turn keep the economy on a relatively higher growth path.

Economists expect a marginal impact on job growth from hurricane Matthew, which lashed the southeast of the country last month, causing extensive flooding. However, the storm could have reduced the average workweek in October.

Payrolls could get a boost from early holiday season hiring.

"With labor markets tight, companies have started earlier each year to secure scarce temporary workers for the upcoming holiday season," said Michelle Girard, chief economist at RBS in Stamford, Connecticut.

"If done earlier than the seasonal factors expect, this seasonal hiring could bias the numbers higher."

Manufacturing employment likely fell for a third straight month in October, while construction payrolls probably rose for a second consecutive month.

Article Link To Reuters: