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THE MUSINGS OF A TRADITIONAL SOUTHERN DEMOCRAT

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Location: Douglas, Coffee Co., The Other Georgia, United States

Sid in his law office where he sits when meeting with clients. Observant eyes will notice the statuette of one of Sid's favorite Democrats.

Sunday, December 28, 2014

Hillary Clinton Faces Uphill Fight for White, Rural Vote - Interviews in Arkansas Suggest Leeriness of State’s Former First Lady

 
Hillary Clinton with husband Bill in 1991, shortly before the Arkansas governor said he was running for president. Getty Images   

From The Wall Street Journal:     

DeVALLS BLUFF, Ark.—White, working-class voters in eastern Arkansas for years backed Democratic candidates, among them Bill Clinton and outgoing Gov. Mike Beebe, but have moved sharply toward Republicans in recent elections.

Now, as the 2016 election takes shape, some of Hillary Clinton’s allies are trumpeting her potential as a presidential candidate to bring these voters back to the Democratic Party and to run competitively in a handful of states, including Arkansas, that have spurned President Barack Obama .

But even here, where Mrs. Clinton was the state’s first lady, many voters say they view her with the same leeriness they do Mr. Obama and other national Democrats. That points to a significant question should Mrs. Clinton run: whether enough such voters can separate her from the national party many have grown to dislike.

“I’m mad at the Democratic Party, and I don’t see Hillary changing that,” said Eddie Ciganek, a 61-year-old farmer who serves on Prairie County’s governing board and who has voted Democrat at times. “Her thinking isn’t going to be very far off from President Obama’s thinking, and I don’t think they’re moving the country in the right direction.”

Occasional Democratic voter Johnny Watkins, 64, wearing a light-blue work shirt after finishing his shift at the county landfill, said of Mrs. Clinton: “I don’t think she has any concerns about us.”

Working-class voters have long been a bedrock of Democratic support, and the party continues to do well with voters from lower-income households overall, according to exit polls.

But white, more rural voters in the South and elsewhere have been fleeing the party. Just five years ago, Arkansas Democrats held both Senate seats, three out of four House seats, the governor’s office and control of both chambers of the state legislature. The election in November of Republicans Tom Cotton to the U.S. Senate and Asa Hutchinson to the governor’s office will leave the Democratic Party without a single federal or statewide officeholder in Arkansas, a state that Bill Clinton carried twice by at least 17 percentage points.

Mrs. Clinton’s allies are confident she can attract white voters who have turned away from her party, particularly women. Democratic pollster Geoff Garin, who worked on her 2008 campaign, said she “demonstrated a significant ability to not only win votes from working-class white women but to connect with them on a personal level.”

After a rocky start in that campaign, Mrs. Clinton cast herself as a scrappy underdog and union ally while topping Mr. Obama in more than 20 states in Democratic primaries in places such as Pennsylvania and Ohio that have many white, working-class voters.

Recent Wall Street Journal/NBC News polling shows that Mrs. Clinton’s appeal among those voters has withered.

In June 2008, Mrs. Clinton was viewed positively by 43% of whites without college degrees and negatively by 44%. Last month, 32% of that group held a positive view and 48% had a negative view. Her image among those voters is only slightly better than that of Mr. Obama.

“The Democratic Party is in terrible shape with white, working-class voters, and there’s no evidence that Hillary Clinton brings anything unique to the table,” said Republican pollster Bill McInturff, who helps direct Journal/NBC News polling.

At the same time, Mrs. Clinton draws substantial support from white women overall and from suburban women. Narrow majorities of those groups said in a December Journal/NBC News survey that they would consider supporting Mrs. Clinton for president, putting her far ahead of seven potential Republican candidates and Democratic Sen. Elizabeth Warren of Massachusetts.

Mrs. Clinton’s office didn’t respond to a request for comment.

In Arkansas, which Mr. Obama lost by 24 percentage points in 2012, interviews suggest the years that Mrs. Clinton spent here don’t mitigate her support of the Affordable Care Act or the president’s order shielding millions of illegal immigrants from deportation.

“She’s never been a home girl,” said Mr. Ciganek, who pointed to her choice of names after marriage. “It’s not Hillary Clinton. It’s Hillary Rodham Clinton,” he noted.

Republicans also are trying to sully Mrs. Clinton with working-class voters by flagging her ties to Wall Street and her six-figure speaking fees. In a sign those attacks may be breaking through, 40-year-old Angela Thrift, who earns $9 an hour at a day-care center in nearby Carlisle, said, “She may have cared before she became famous and rich, but she doesn’t work for a living like we do.” Mrs. Thrift said she voted a straight GOP ticket in November.

Local officials say that a state where a candidate’s personality, roots and populism were once able to transcend party lines has become as politically polarized as the rest of the country.

“The nationalization of politics has come to Arkansas,” said Democratic state Rep. John Vines over a plate of barbecue at McClard’s, a favorite Bill Clinton haunt in Hot Springs, where the former president grew up. “I’m not Harry Reid or Nancy Pelosi , but we all get tarred by the so-called sins of the national party,” Mr. Vines said.

In the November election, close ties to the Clintons and deep family roots in the state didn’t save Democratic Sen. Mark Pryor, who lost his re-election bid and trailed Mr. Cotton by 28 points among white voters without college degrees, exit polls found.

“Historically, there were places where Democrats could win by focusing on bread-and-butter economic issues, even among white voters who were really conservative on social issues, and that’s the group that Democrats have washed out with in the Obama era,” said Jay Barth, a professor at Hendrix College in Arkansas who co-wrote a book on the state’s politics with a close friend of Mrs. Clinton’s who died in 2000.

Democrats have been winning a smaller slice of white voters in general, but increasing participation by Hispanic and Asian-American voters have helped the party in presidential-election years, even without winning many Southern states. Still, the steep Democratic losses among white voters in the latest midterm, coupled with uncertainty about minority turnout without Mr. Obama on the ballot, is fueling concerns in the party about 2016.

Democratic strategist Mitch Stewart, who is advising a super PAC preparing for Mrs. Clinton’s campaign, called the former senator and secretary of state “a natural messenger for working families” because of her support for raising the minimum wage and measures aimed at ensuring equal pay for women.

“Secretary Clinton can appeal to a broad cross-section of voters—and she has a proven track record of building support among white, working class voters in key states,” said Mr. Stewart, who worked for Mr. Obama in 2008’s primaries.

Mr. Beebe, the governor, said Mrs. Clinton needs to speak plainly to middle-class voters who feel the American dream is out of reach. “She has to try to make as much personal contact as she can, given the constraints of a national election,” he said.

Saturday, December 27, 2014

GOP Readies Immigration Measures - After President’s Action Curbing Deportations, Congressional Republicans Look to Shape Further Change; Department of Homeland Security’s funding will run out at the end of February, an arrangement aimed at giving the GOP leverage over the president. But GOP leaders have also said they would work to ensure the agency’s funding doesn’t expire, so it is unclear whether or how they can use the appropriations bill to force Mr. Obama’s hand.

From The Wall Street Journal:

WASHINGTON—Republicans in Congress are preparing a variety of bills that would make substantial changes to the immigration system, suggesting that the embers of interest in addressing immigration law, once thought to be extinguished, remain alive.

GOP leaders in both the House and Senate had said President Barack Obama had “poisoned the well’’ when he acted without congressional approval last month to shelter some four million illegal immigrants from deportation.

While many Republicans say the top priority must be to undo Mr. Obama’s unilateral action, the new efforts to write and pass immigration legislation, coming as Republicans prepare to take full control of Congress, show that some lawmakers are eager to navigate their own proposals into law, as well.

The Republican efforts begin with measures tightening security on the Southwest border—a top concern of GOP lawmakers—but go beyond that to include legislation favored by high-tech, agricultural and other business interests that would make more workers available to those sectors.

Republican leaders in the House and Senate have said they want to use their strengthened hand in the next Congress to notch legislative achievements, but it is unclear whether they would back any of the emerging immigration bills. Another question is whether the party would insist that any bill include a reversal of Mr. Obama’s action protecting illegal immigrants. The White House has promised to veto any legislation that scales back his policy. Mr. Obama might also object to the bills on their face.

Among the signs of legislative activity: A House committee is preparing border-security legislation for action early in 2015. Veteran GOP lawmakers have drafted bills offering additional visas both for low-skilled and high-tech workers. Bipartisan discussions are under way in the Senate on legislation to revamp the visa program for farm workers.

Democrats, even those who oppose the Obama executive action, say the best course remains for Congress to pass a comprehensive bill that fixes a range of immigration problems, including help for undocumented residents.

“We need a practical plan that strengthens our borders, addresses the systemic problems with our legal immigration policies and provides a tough, fair process for those who want to earn the opportunity for citizenship,” said a recent letter to congressional leaders from Democratic Sens. Joe Donnelly of Indiana and Heidi Heitkamp of North Dakota.

In the House, the chairman of the Homeland Security Committee is preparing a border-security bill aimed at better measuring illegal crossings, with targeted improvements in equipment and technology along the Southwest border. On the Senate side, the incoming chairman of the Homeland Security Committee said in an interview that he hopes to have a framework for a border-security bill ready by late January.

“We want to set our own agenda on this,” said Rep. Michael McCaul (R., Texas), chairman of the House committee. House leaders have asked him to have a border bill ready for action by late January or February, committee aides said.

Mr. McCaul and some other Republicans say action on a border bill could open political space for legislation on other aspects of the immigration system. “My bill passing, hopefully in the early part of next year, can lay the groundwork for other measures,” Mr. McCaul said.

Sen. Ron Johnson (R., Wis.), the incoming chairman of the Senate committee, said he anticipated advancing border legislation that would provide additional surveillance, fencing, a better visa-tracking system and possibly stronger workplace enforcement through mandatory use of E-Verify, an electronic system for employers to check the legal status of potential employees.

“Once we pass a strong border security enforcement bill, we’ll turn our attention to the other things, as well” to adjust immigration policy, Mr. Johnson said.

An official close to House Majority Leader Kevin McCarthy, who sets the House agenda, said border security would be a priority for the incoming House. It remains unclear whether a bill acceptable to Republicans would also pass muster with Mr. Obama and other Democrats, who have long insisted that legalization for those in the U.S. illegally be included along with any increase in enforcement. Moreover, House Republicans have often suggested they want to move immigration bills without ever doing so.

A GOP committee aide said that a rollback of the executive action might initially be attached to the border bill but would have to eventually be stripped.

“If the intent is to pass a bill I’d want this decoupled. Otherwise, it will be vetoed,” he said.

Other Republicans are preparing legislation to address additional aspects of the immigration system. Rep. Raúl Labrador (R., Idaho), a onetime immigration attorney, plans two bills, an aide said.

One would create a temporary worker program that would allow as many as 350,000 foreigners to enter the country each year for construction, restaurant and other low-skilled jobs. These workers would have most of the labor rights afforded in a broad immigration bill that passed the Senate last year, such as the right to change jobs.

Labor unions and some conservatives are sure to argue that Mr. Labrador’s annual cap on foreign workers, at 350,000, is too high. Last year’s Senate bill, the product of negotiations between labor and business leaders, included a complicated formula for determining the visa cap, but it set the maximum at about 200,000 a year.

Mr. Labrador’s second bill would aid some illegal immigrants by repealing rules known as the “three- and 10-year bars,” which effectively prevent undocumented immigrants from winning legal status through normal channels, such as an employment visa or marrying an American citizen. The existing rules require those who have been in the country illegally for longer than a year to return to their home country for 10 years before becoming eligible for legal status here. Those in the U.S. illegally for more than six months, but less than a year, must return home for three years.

Meanwhile, Sen. Orrin Hatch (R., Utah) plans to introduce legislation making more visas available for high-tech workers, a spokesman said.

Sen. Dianne Feinstein (D., Calif.) is working on a bill revamping the agricultural visa program, based on provisions in last year’s Senate bill. Her staff is in talks on the measure with Republicans including Sen. Marco Rubio of Florida, who helped work out a compromise on this issue in 2013.

Both measures are priorities for industry—high-tech companies want access to more foreign programmers and engineers, while agriculture companies want changes to the farm worker program.

It isn’t clear whether these stand-alone measures could win sufficient support to pass on their own, or whether Mr. Obama would sign them even if his executive action was left intact. In the past, the president has emphasized the need for legislation that addresses all elements of the immigration system, including a legalization program for the undocumented.

The most immediate immigration issue in early 2015 will be whether the GOP attempts to use the appropriations process to try and unravel Mr. Obama’s executive action.

The Department of Homeland Security’s funding will run out at the end of February, an arrangement aimed at giving the GOP leverage over the president. But GOP leaders have also said they would work to ensure the agency’s funding doesn’t expire, so it is unclear whether or how they can use the appropriations bill to force Mr. Obama’s hand.

Frank Sharry, who heads the immigration advocacy group America’s Voice, said he would urge Democrats to oppose any enforcement bill that isn’t balanced with some sort of legalization program.

“We are against pieces moving without balance,” he said.

Mr. Johnson, the Wisconsin GOP senator, said that Democrats have already gotten their half of the bargain through Mr. Obama’s unilateral action. Between the recent executive action and one in 2012 that aided young people, some five million illegal immigrants are now eligible for a temporary reprieve from deportation and work permits.

“By and large, the Democrats got what they have been looking for on their part of the bargain. Now it is time to give the American people what they’ve wanted,” he said.

Friday, December 26, 2014

U.S. Agency Hiring 1,000 After Obama’s Immigration Order

From The New York Times:

WASHINGTON — This is how a bureaucracy grows.
 
Only 10 days after President Obama announced in a prime-time address that millions of undocumented people would soon “be able to apply to stay in this country temporarily without fear of deportation,” an electronic bulletin reached inboxes across Washington. In a crucial detail that Mr. Obama left out, the Citizenship and Immigration Services agency said it was immediately seeking 1,000 new employees to work in an office building to process “cases filed as a result of the executive actions on immigration.”
 
The likely cost: nearly $8 million a year in lease payments and more than $40 million for annual salaries.
 
The announcement of the new “operational center” among the chain restaurants and high-rises of Crystal City, a Northern Virginia neighborhood used for overflow from the federal agencies in Washington, offers a glimpse into how swiftly a president’s words can produce bigger government. It also demonstrates the bureaucracy’s ability to swing into action, even during an extended power struggle between the president and Congress.
 
“When you have an executive order, when you have a president saying, ‘I want you to do this,’ bureaucrats say, ‘O.K., let’s go do what the president says,’” said Elaine Kamarck, a senior fellow at the Brookings Institution and a former White House official who worked on Vice President Al Gore’s “reinventing government” initiative.
 
Although conservatives in Congress are vowing to attack the president’s executive action on immigration by blocking the funding for it, plans for the small army of workers are moving forward. The action is part of a larger trend: From 2001 to 2012 — mostly after the Sept. 11 attacks — the government added about 180,000 federal employees, for a total of more than 4.3 million, according to the Office of Personnel Management.
 
At the citizenship and immigration agency, officials said they had signed a $7.8 million lease in a gleaming new building, which they will occupy starting next month. During a recent speech in Los Angeles, the agency’s director, León Rodríguez, said that 5,000 people had already applied for the Crystal City jobs.
 
In the bulletin that the agency sent out, dated Dec. 1, the word “TODAY!” is printed in red next to a dozen jobs with titles like special assistant, management program analyst and immigration services officer. By the time the new Republican Congress takes up the debate about funding for the president’s immigration plan early next year, many of those new jobs are likely to be filled.
 
Some Republicans who have noticed the preparations for the new center have issued statements of outrage, but so far they have done little else. Senator Jeff Sessions, Republican of Alabama, called the new facility “a clear symbol of the president’s defiance of the American people, their laws and their Constitution.” He said in a statement that the new hiring would “foist on the nation laws Congress has repeatedly refused to pass.”
Mr. Rodríguez declined to be interviewed. But other administration officials readily say they are eager to put in place the infrastructure needed to allow undocumented people to apply for work permits by the early spring. That will require a new website, application forms and people to run background checks and process application fees that will probably be several hundred dollars.
 
The immigration agency officials said the fees would ultimately pay for lease and salary costs. But because the fees are not yet being collected, officials said the initial lease and salary payments would be made from other fees, which would be replenished when the new program was up and running.
The new center is, of course, a minor outpost compared with agencies that have grown rapidly in the past. When Congress and President George W. Bush agreed in 2002 to create the Department of Homeland Security, Mr. Bush said it would employ 170,000 people.
 
Decades earlier, the creation of Medicare and Medicaid in 1965 and 1966 led to new functions of government and large increases in the bureaucracy.
 
In 2010, the passage of the Affordable Care Act led to a surge in hiring at the Internal Revenue Service, which asked for about 1,000 new workers to apply the tax credits and enforce other provisions.
 
“It’s very easy to focus on the benefits,” said Michael R. Strain, an economist at the American Enterprise Institute. “Those are usually the motivating impulse behind the action. But there are costs to it as well.”
 
Mr. Strain said the intense debate about Mr. Obama’s executive action on immigration had focused almost exclusively on questions about the limits of the president’s constitutional authority to act without Congress. Little attention was paid to the impact on the size of the bureaucracy.
 
“One thousand new workers springing up in Arlington, Va. — it’s a nice example of the degree to which when the government does something big, it has a lot of consequences that people don’t think of,” he said. “Our public debate and our political leaders need to do a better job of identifying those effects.”
 
Once it opens next year, the operations center will become a part of the federal suburban sprawl that has helped define the Beltway bubble. But first, the facility could end up at the center of the tug of war between Mr. Obama and the Republican-controlled Congress.
 
“It really goes to what is the extent of executive authority to make policy and then implement policy,” Ms. Kamarck, of the Brookings Institution, said. “This is going to be the crux of the fight.”

Thursday, December 25, 2014

George Will: Cuba Derangement Syndrome strikes again

George Will writes in The Washington Post:

Barack Obama has made a geopolitical irrelevancy suddenly relevant to American presidential politics. For decades, Cuba has been instructive as a museum of two stark failures: socialism and the U.S. embargo. Now, Cuba has become useful as a clarifier of different Republican flavors of foreign-policy thinking.

The permanent embargo was imposed in 1962 in the hope of achieving, among other things, regime change. Well.

Fidel Castro, 88, has not been seen in public since January and may be even more mentally diminished than anyone — including his 83-year-old brother — who still adheres to Marxism. Whatever Fidel’s condition, however, Cuba has been governed by the Castros during 11 U.S. presidencies and for more years than the Soviet Union dominated Eastern Europe. Regime change — even significant regime modification — has not happened in Havana.

Some conservative criticisms of Obama’s new Cuba policy — which includes normalizing diplomatic and commercial relations, to the extent that presidential action can — seem reflexive. They look symptomatic of Cold War Nostalgia and 1930s Envy — yearnings for the moral clarity of the struggle with the totalitarians. Cuba’s regime, although totalitarian, no longer matters in international politics. As bankrupt morally as it is economically, the regime is intellectually preposterous and an enticing model only for people who want to live where there are lots of 1950s Chevrolets.

Eleven million Cubans, however, matter. Obama’s new policy is defensible if it will improve their political conditions by insinuating into Cuba economic and cultural forces that will subvert tyranny.

Sen. Rand Paul, a potential Republican presidential candidate, evidently considers this hope highly probable. He is correct to support giving it a try. But he may not understand how many times such wishes have fathered the thought that commerce can pacify the world. In 1910, 40 peaceful European years after the Franco-Prussian War, Norman Angell’s book “The Great Illusion” became an international bestseller by arguing that war between developed industrial countries would be prohibitively expensive, hence futile, hence unlikely. Soon Europe stumbled into what was, essentially, a 30-year war.

Angell’s theory was an early version of what foreign policy analyst James Mann calls “the Starbucks fallacy,” the theory that when people become accustomed to a plurality of coffee choices, they will successfully demand political pluralism. We are sadder but wiser now that this theory has been wounded, if not slain, by facts, two of which are China and Vietnam. Both combine relatively open economic systems with political systems that remain resolutely closed.

Sen. Marco Rubio, a potential 2016 rival of Paul, is properly disgusted that Obama, in striking his deal with Cuba, accomplished disgracefully little for the country’s breathtakingly brave democracy advocates. There are two reasons for questioning whether Obama really tried. First, he is generally congruent with, and partly a product of, academic leftism. Hence, he might be tinged with the sentimentalism that has made Cuba a destination for political pilgrims too ideologically blinkered to see the extraordinary sadism of Cuba’s treatment of its many political prisoners. Second, Obama is so phobic about George W. Bush’s miscarried “regime change” in Iraq that he cannot embrace, or at least enunciate, a regime change policy toward Cuba. Regime change, however, must be, at bottom, the justification for his new approach.

Cuba Derangement Syndrome (CDS), a recurring fever, accounted for the Bay of Pigs calamity, the most feckless use of U.S. power ever. After this, the Kennedys, President John and Attorney General Robert, continued to encourage harebrained attempts to destabilize Cuba and assassinate its leader.

Today, CDS afflicts those who, like Rubio, charge that U.S. diplomatic relations and economic interactions “lead to legitimizing” Cuba’s regime. U.S. doctrine about legitimacy has been clear since the Declaration of Independence: Governments derive their “just powers” from the consent of the governed. The United States has diplomatic and commercial relations with many regimes that are realities even though they flunk our legitimacy test. Twenty-three years after Cuba ceased being a Soviet satellite, there is no compelling, or even coherent, argument for why Cuba, among all the world’s repulsive regimes, should be the object of a U.S. policy whose rationale is to express the obvious — U.S. distaste.

What makes Rubio uncharacteristically shrill, saying Paul has “no idea what he’s talking about”? And what makes Paul too clever by half when saying Rubio wants to “retreat to our borders” and hence is an “isolationist”? CDS does this. As they brawl about Cuba, a geopolitical irrelevancy, neither seems presidential.

Oil’s Swift Fall Raises Fortunes of U.S. Abroad

From The New York Times:

BRUSSELS — A plunge in oil prices has sent tremors through the global political and economic order, setting off an abrupt shift in fortunes that has bolstered the interests of the United States and pushed several big oil-exporting nations — particularly those hostile to the West, like Russia, Iran and Venezuela — to the brink of financial crisis.
 
The nearly 50 percent decline in oil prices since June has had the most conspicuous impact on the Russian economy and President Vladimir V. Putin. The former finance minister Aleksei L. Kudrin, a longtime friend of Mr. Putin’s, warned this week of a “full-blown economic crisis” and called for better relations with Europe and the United States.
 
But the ripple effects are spreading much more broadly than that. The price plunge may also influence Iran’s deliberations over whether to agree to a deal on its nuclear program with the West; force the oil-rich nations of the Middle East to reassess their role in managing global supply; and give a boost to the economies of the biggest oil-consuming nations, notably the United States and China.
 
It might even have been a late factor in Cuba’s decision to seal a rapprochement with Washington.
 
After a precipitous drop, to less than $60 a barrel from around $115 a barrel in June, oil prices settled at a low level this week. Their fall, even if partly reversed, was so sharp and so quick as to unsettle plans and assumptions in many governments. That includes Mr. Putin’s apparent hope that Russia could weather Western sanctions over its intervention in Ukraine without serious economic harm, and Venezuela’s aspirations for continuing the free-spending policies of former President Hugo Chávez.
 
The price drop, said Edward N. Luttwak, a longtime Pentagon adviser and author of several books on geopolitical and economic strategy, “is knocking down America’s principal opponents without us even trying.” For Iran, which is estimated to be losing $1 billion a month because of the fall, it is as if Congress had passed the much tougher sanctions that the White House lobbied against, he said.
Iran has been hit so hard that its government, looking for ways to fill a widening hole in its budget, is offering young men the option of buying their way out of an obligatory two years of military service. “We are on the eve of a major crisis,” an Iranian economist, Hossein Raghfar, told the Etemaad newspaper on Sunday. “The government needs money badly.”
 
Venezuela, which has the world’s largest estimated oil reserves and has used them to position itself as a foil to American “imperialism,” received 95 percent of its export earnings from petroleum before prices fell. It is now having trouble paying for social projects at home and for a foreign policy rooted in oil-financed largess, including shipments of reduced-price petroleum to Cuba and elsewhere.
 
Amid worries on bond markets that Venezuela might default on its loans, President Nicolás Maduro, who was elected last year after the death of Mr. Chávez, has said the country will continue to pay its debts. But inflation in Venezuela is over 60 percent, there are shortages of many basic goods, and many experts believe the economy is in recession.
 
But the biggest casualty so far has probably been Russia, where energy revenue accounts for more than half of the government’s budget. Mr. Putin built up strong support by seeming to banish the economic turmoil that had afflicted the rule of his predecessor, Boris N. Yeltsin. Yet Russia was back on its heels last week, with the ruble going into such a steep dive that panicked Russians thronged shops to spend what they had.
 
“We’ve seen this movie before,” said Strobe Talbott, who was President Bill Clinton’s senior Russia adviser in the aftermath of the Soviet Union’s 1991 collapse and is now president of the Brookings Institution in Washington.
 
Russia’s troubles have rippled around the world, slashing bookings at ski resorts in Austria and spending on London real estate; spreading panic in neighboring Belarus, a close Russian ally; and even threatening to upend Russia’s Kontinental Hockey League, which pays players in rubles.
 
“It is a big boost for the U.S. when three out of four of our active antagonists are seriously weakened, when their room for maneuver is seriously reduced,” Mr. Luttwak said, referring to Russia, Iran and Venezuela.
 
The only major United States antagonist not hurt by the drop in oil prices is North Korea, which imports all of its petroleum.
 
David L. Goldwyn, who was the State Department’s international energy coordinator during President Obama’s first term, warned that an implosion of Venezuela’s economy could hurt the Caribbean and Latin America in ways that the United States would not welcome.
 
But “on balance, it’s positive for the U.S.,” he said of the low price of oil, because American consumers save money, and “it harms Russia and puts pressure on Iran.”
 
Even some of the indirect consequences of the price slump, like last week’s break in the half-century diplomatic logjam between Washington and Havana, have generally worked in the United States’ favor. Fearful that Venezuela, its main benefactor, might cut off supplies of cash and cheap oil, Cuba sealed a historic deal that has in turn lifted a shadow over the United States’ standing in much of Latin America.
 
Another casualty of the price collapse has been Belarus, a former Soviet territory long reviled by American officials as Europe’s last dictatorship. It produces no significant amount of crude oil itself but has nonetheless taken a big hit. This is because its economy depends heavily on the export of petroleum products that Belarus produces using crude oil supplied, at a steep discount, by Russia.
 
Marwan Muasher, a former foreign minister of Jordan who is now a vice president at the Carnegie Endowment for International Peace, predicted another domino effect in Syria as Russia and Iran find it difficult to sustain their economic, military and diplomatic support for President Bashar al-Assad.
Others speculate that Persian Gulf oil producers, though still wealthy, might trim their financial support for radical Islamist rebel groups in Syria.
 
Hard-hit anti-American oil producers have blamed foreign machinations for their woes, suggesting that Washington, in cahoots with Saudi Arabia, has deliberately driven down prices.
 
This view is particularly strong in Russia, where former K.G.B. agents close to Mr. Putin have long believed that Washington engineered the collapse of the Soviet Union by getting Saudi Arabia to increase oil output, driving down prices and thus starving Moscow of revenue.
 
In many ways, the recent price fall really is the United States’ work, flowing to a large extent from a surge in American oil production through the development of alternative sources like shale.
 
By offsetting declines in conventional oil production, increases in shale oil output have allowed overall American crude oil production to rise to an average of about nine million barrels a day from five million a day in 2008, according to the United States Energy Information Administration. That four-million-barrel increase is more than either Iraq or Iran, the second- and third-largest OPEC producers after Saudi Arabia, produces each day, and it has put strong downward pressure on world prices.
 
The geopolitical shakeout set off by the oil market has not gone entirely America’s way. Russia’s troubles have so far shown no sign of pushing Mr. Putin toward a more conciliatory position on Ukraine, and some analysts believe they could make Moscow even more pugnacious and prone to lashing out.
 
The Bank of England’s Financial Policy Committee, which monitors possible systemic threats, warned in minutes released this week that “sustained lower oil price also had the potential to reinforce certain geopolitical risks.” It voiced alarm, too, over an increased risk of deflation in the eurozone, the 18-nation area that uses Europe’s common currency.
 
The price drop could also encourage more freewheeling use of oil products like gasoline, undermining what appears to be a growing consensus among nations that carbon emissions must be reeled in to offset the most dire effects of global warming.
 
While authoritarian oil producers like Russia are clearly suffering, China is enjoying a huge windfall thanks to the price drop. It imports nearly 60 percent of the oil it needs to power its economy.
 
China became the world’s largest importer of oil in 2013, surpassing the United States, and so stands to benefit from plummeting prices. Bank of America Merrill Lynch estimated last month that every 10 percent decline in the price of oil could increase China’s economic growth by 0.15 percent.
 
Strong growth in China would lift demand for oil and help reduce the current agonies of OPEC, which pumps around a third of the world’s oil but, largely as a result of increased American production, has lost much of its ability to dictate prices by controlling output.
 
In an interview with the Middle East Economic Survey this week, the Saudi energy minister, Ali al-Naimi, indicated a fundamental rethinking by OPEC, saying that it needed to focus on keeping its market share rather than trying to raise prices by slashing production. “We have entered a scary time for the oil market,” he said.

Wednesday, December 24, 2014

A balanced and informative artice: Sharpton faces criticism after NYC officers’ deaths

From The Washington Post:

Veteran civil rights leader Al Sharpton, who has tried to play the statesman during heated protests over police shootings, now faces accusations of incitement after the killings last weekend of two officers in New York City.

The Rev. Sharpton has worked over the years to shed his reputation as a firebrand, and in recent months, he had provoked the ire of younger protesters who favor a more confrontational approach. Sharpton, for instance, angered some young activists by rebuffing them when they unexpectedly asked to speak at a march his nonprofit group organized in Washington.

But after the deaths of the two officers, momentum has shifted away from the protesters, at least temporarily, and now some of the most intense pressure is coming from those who say police have been unfairly vilified.

Rep. Peter T. King (R-N.Y.) and former New York governor George Pataki have blamed Sharpton for using rhetoric that they said fostered an anti-police environment. Former New York City police commissioner Bernard Kerik said Sharpton and others had “blood on their hands.” Conservative commentators posted pictures on Twitter of Sharpton with President Obama to paint the president as a radical on issues of race.

The 60-year-old Obama adviser and MSNBC talk-show host has endured sharp criticism from both flanks, from conservatives who have long seen him as a race-baiting radical to protesters who accuse him of using their movement for self-promotion.

A less experienced civil rights figure might find these waters perilous, but Sharpton’s legitimacy goes deeper than the currents of public opinion. He has been working on issues of police brutality for three decades, and he is the first call many African American families make when they feel that a loved one was unjustly killed by police.

“All of the critics, those people have to ask themselves: Why, if Sharpton is so bad, are the families standing there with him?” he said in an interview last week.

In the wake of the police officers’ deaths, Sharpton has presented himself as a peacemaker, condemning the killings while defending the rights of protesters to continue to decry what they perceive as racist police tactics.

All the while, he has touted his high-profile role. He even concluded a recent news conference by denouncing death threats directed at him — playing one such voice mail for the microphones. “The language is: ‘Hey, n-word, stop killing innocent people. I’m going to get you,’ ” he said. “I have several like this.”

At the podium, he was flanked by Esaw Garner, the widow of Eric Garner, whose death at the hands of police prompted many of the protests. She implored the public not to commit violence in her husband’s name. Sharpton also used his brief remarks to defend New York City Mayor Bill de Blasio, a close ally who has been criticized for his vocal efforts to reform the police force.

“At this point, he is probably the country’s most well-known civil rights activist,” said Peniel E. Joseph, a professor of African American studies at Tufts University in Massachusetts. “He has gone from a street protester from New York in the 1990s to someone who has had his ups and downs but really reinvented himself to now have a seat at the White House.”

Sharpton’s earliest brushes with fame were a result of his activism on the issue of white violence against African Americans, including police killings, beginning in the 1980s. His reputation took a hit in 1987, when he championed the case of Tawana Brawley, a 15-year-old who said she was gang-raped by a group of whites but who was discredited by a grand jury.

He rehabilitated his image, trading in his track suits for ties and blazers. But for much of the country, his reputation remains that of an instigator who uses racial divisions to further his own fame.

Sharpton’s recent prominence follows a wave of killings of unarmed African Americans. Sharpton was one of the first national figures to travel to Sanford, Fla., after 17-year-old Trayvon Martin was shot and killed by a self-appointed neighborhood watch volunteer in 2012. He spent time in Ferguson, Mo., in the wake of the killing of 18-year-old Michael Brown by a white police officer earlier this year.

He has emphasized nonviolence and change through legislative action. On Monday, he devoted his hour-long MSNBC show to remembrances of Rafael Ramos and Wenjian Liu, the New York police officers, while trying to explain why their deaths should not overshadow the concerns raised by protesters.

Younger activists have criticized Sharpton as too much of an establishment insider and have said that he is riding the coattails of their hard work. They have not forgotten that he has at times been critical of the attitude and behavior of black youth.

“Al Sharpton doesn’t speak for us,” said Erika Maye, a spokeswoman for Freedom Side, an Atlanta-based group that has been involved in the protests. “His focus on respectability, pulling up your pants and getting an education — that doesn’t keep our brothers and sisters safe. You can do everything you’re supposed to do, but if a police officer sees you, they will see you as a suspect, so you can still be subject to police violence.”

Sharpton’s backers emphasize that this is not new territory for him and that he has a long career opposing police brutality.

“His career has been about police-community violence. That’s been his issue for 30 years,” said Marc H. Morial, president of the National Urban League and a former mayor of New Orleans. “It’s a natural role that he is playing.”

Sharpton has little patience for his critics. After decades as perhaps the most divisive black civil rights figure in the nation, he points to his ability to execute — to secure meetings with top lawmakers, including Obama, to catapult overlooked anecdotes into the national consciousness, and to organize marches that can, at times, draw tens of thousands.

Despite High Hopes, the Communist Island’s Revolutionary Past Suggests Change Will Come Slowly

From The Wall Street Journal:

Despite high hopes around a new chapter in Cuba’s economic and diplomatic links with the U.S. following the announcement last week by Presidents Barack Obama and Raúl Castro to thaw relations frozen for 54 years, the communist island’s revolutionary past suggests change will come slowly here.

It isn’t easy changing minds in Cuba, which in many ways appears to be stuck in another era. Rundown buildings crowd this capital city, which remains little changed since the guerrilla forces led by Fidel Castro ousted Gen. Fulgencio Batista in 1959. Vintage American sedans, called “almendrones”—or big almonds—because of their bulky rounded exterior, still ply the streets.

The détente calls for the ideological foes to establish formal relations, including embassies. The U.S. will also let American residents quadruple the amount of remittances they can send to the island. The new rules also allow U.S. exports of telecommunications and agricultural gear, as well as construction materials.

What it doesn’t signal, at least not yet, is a Chinese-styled sudden shift toward freer markets or more political freedom, analysts say.

“It’s not realistic to expect Cuba to transform overnight,” said Emily Parker, author of “Now I Know Who My Comrades Are,” a book on underground Internet use in Cuba, Russia and China. “The Cuban government...recognizes that a free Internet would pose a threat to its control over information.”

Only a fraction of Cubans have access to the Internet, and many of those are party or army officials.

Mr. Castro took over for his ailing elder brother, Fidel, in 2006 but it wasn’t until 2010 that the leftist leader began implementing subtle changes to the centralized economy, allowing scores of small-scale private businesses like hotels and restaurants to capitalize on the vital tourism trade. More recently, the government has allowed locals to buy mobile phones and sell their homes and cars.

But those timid reforms have been tough going because average Cubans had no experience in managing businesses, said Pedro Freyre, chair of law firm Akerman LLP, who advises clients looking to do business in Cuba.

“Cubans have forgotten how to be capitalists and some folks are being trained by NGOs to do exactly that,” said Mr. Freyre. “The other thing is that in their heart of hearts, the rulers of Cuba are still Marxists, socialists, and they believe in social planning.”

Way to go Mr. President: Obama Doubts and Lower Gas Prices Cloud Keystone Future - Prospects for Pipeline’s Approval Are Dimming; People familiar with Mr. Obama’s thinking say he believes the pipeline’s symbolic and political importance outweighs its impact on the economy and climate change.

From The Wall Street Journal:

 Prospects for approval of the Keystone XL pipeline are dimming amid two recent developments: lower gasoline prices and increased skepticism from President Barack Obama, whose administration has been reviewing the proposed pipeline for more than six years.

Calgary-based TransCanada Corp. in 2008 applied for a permit for the project from the State Department, which reviews cross-border pipelines.

The administration has been waiting for the Nebraska Supreme Court to rule on a lawsuit brought by landowners who challenged a state law used to approve the pipeline’s path. That ruling is expected in the coming weeks and could clear the way for the administration to decide.

In making its decision—known as the national interest determination—the State Department considers energy security as well as environmental, geopolitical and economic impacts. Together, Mr. Obama’s recent comments suggest he doesn’t think Keystone is in the nation’s interest.

The president hasn’t always been so publicly skeptical. In March 2012, he stood alongside pipes in Cushing, Okla., and said his administration had approved dozens of oil and natural-gas pipelines, including from Canada.

“As long as I’m president, we’re going to keep on encouraging oil development and infrastructure and we’re going to do it in a way that protects the health and safety of the American people,” he said then.

People familiar with Mr. Obama’s thinking say he believes the pipeline’s symbolic and political importance outweighs its impact on the economy and climate change. Keystone has become bound up with his goal of making climate-change action a legacy of his presidency. Global oil prices may make it easier for him to reject Keystone. When the State Department issued an environmental assessment in January, prices were between $94 and $110 a barrel. Now they are between $55 and $61.

Monday, December 22, 2014

Joe Cocker - With a little help from my friends

https://www.youtube.com/watch?feature=player_detailpage&v=QIKBq9TeFlw

From The Washington Post:

Grammy-winning singer Joe Cocker died  Monday at age 70, his record label confirmed. Cocker, the British ’60s rocker most famous for his cover of the Beatles’ “With a Little Help From My Friends” and songs such as “You Are So Beautiful,” was battling cancer.
“It will be impossible to fill the space he leaves in our hearts,” Cocker’s agent, Barrie Marshall, told the BBC.

Though Cocker was legendary for his earlier music (“With a Little Help From My Friends,” which he famously performed at Woodstock, is best-known as “The Wonder Years” classic theme song) he had some success in his later years, too. He had a top-selling European tour along with his final album, “Fire It Up,” in 2012. He also won an Oscar in 1982 for the song “Up Where We Belong,” a duet with Jennifer Warnes on “An Officer and a Gentleman” soundtrack.

You knew this was coming, even before N.Y. killings: Killings of New York Police Officers Spark Backlash to Protests - “If you visited from Mars in the last few months, you would think police do no good in society at all,”

From The Wall Street Journal:

The assassination of two New York City police officers this weekend has emboldened police and their supporters to lash out at weeks of nationwide protest and criticism that they say have left officers more vulnerable.

Police are investigating social-media posts by Ismaaiyl Brinsley, the apparent assailant in the point-blank fatal shootings Saturday of the two officers who were sitting in their patrol car in Brooklyn. In them, he allegedly talked about killing officers in retaliation for the deaths of Eric Garner on Staten Island, N.Y., and Michael Brown in Ferguson, Mo., this summer during confrontations with police.

Experts on law enforcement said the demonstrations that followed grand jury decisions not to charge the officers in those cases have strained police morale nationwide, as officers have been forced to defend their tactics, then deploy in big numbers to protests against those tactics.

“This senseless murder of two of New York’s finest further exemplifies the dangerous political climate in which all members of law enforcement, nationwide, now find themselves,” Baltimore police union President Gene Ryan said in a posting on the Baltimore Fraternal Order of Police website. “Not since the political unrest of the 1960s have police officers been so targeted.”

The shootings of the two officers likely would inflame those who have organized responses against the protesters, and could make it politically difficult for elected officials to engage with demonstrators, said Hasan Kwame Jeffries, a history professor at Ohio State University who focuses on the civil rights movement.

“This is where it can be really dangerous,” he said. “This is reinforcing the worst thoughts of those who were hostile to the protests.”
Mr. Jeffries saw some parallels with the recent turn of events and the splintering of the civil-rights movement. When protests for racial equality became more militant in the late 1960s and sparked police shootings, some liberals stopped participating and elected officials cracked down on the gatherings.

“If you visited from Mars in the last few months, you would think police do no good in society at all,” said Eugene O’Donnell, a professor of law and police studies at John Jay College of Criminal Justice in New York City. “And there’s a complete absence of elected officials, who are the architects of the system, not only not stepping up to defend the police, but sometimes jumping on the bandwagon.”

Police unions, meanwhile, said it was time for elected officials to stop blaming them for tensions between officers and minority communities.

“Enough is enough,” said Chuck Canterbury, national president of the Fraternal Order of Police, in a statement. “There’s nothing wrong with the way cops do their jobs.”

Some conservative leaders said it was time for the protests to wind down or take a more civil tone. In particular, several cast blame on civil-rights leader the Rev. Al Sharpton for his role in the protests.

Even before the NYPD shootings, the protests appeared to be entering a new and undefined phase. Attendance at demonstrations in New York City had dwindled. Protests in Ferguson hadn’t appeared in any organized form in days.

Sunday, December 21, 2014

PTL: In a Break From Partisan Rancor, Ohio Moves to Make Elections More Competitive - Republicans, who in some ways acted against their own interests, were motivated partly out of fear of a potential voter referendum that could impose an even more sweeping overhaul.

From The New York Times:

COLUMBUS, Ohio — Of 435 House races in November, only a few dozen were considered competitive — a result of decades of drawing district lines for partisan advantage, generally by state legislatures.
 
But in an era of hyperpartisan gerrymandering, which many blame for the polarization of state and national politics, Ohio took a step in the opposite direction last week. With the support of both parties, the Ohio House gave final approval Wednesday to a plan to draw voting districts for the General Assembly using a bipartisan process, intended to make elections more competitive.
 
“I think it will be a new day in Ohio,” said Representative Matt Huffman, a Republican who shepherded the plan.
 
While the proposal is aimed narrowly at state legislative districts, it could have an indirect impact on congressional districts because they are drawn by state lawmakers. President Obama carried Ohio, a quintessential swing state, by two percentage points in 2012. Yet Republicans have overwhelming majorities in Columbus, the capital, and a 12-to-4 advantage in congressional seats.
 
“When you’re an outsider looking in, it’s almost shocking,” said Senator Joe Schiavoni, the Democratic leader in the State Senate.
 
The plan explicitly prohibits maps drawn to favor or disfavor one party.
 
Republicans, who in some ways acted against their own interests, were motivated partly out of fear of a potential voter referendum that could impose an even more sweeping overhaul.
 
They also recognized that they could slip into the minority one day. “Right now, we’ve got 65 of 99 seats in the House and 12 of 16 congressmen,” Mr. Huffman said. “But in a state like Ohio, that’s not always going to be the case.”
 
The proposed changes, which Ohioans must vote on in a November 2015 referendum to amend the State Constitution, would not go into effect until the next redistricting, in 2021.
 
In 2010, national Republicans mounted a major effort to capture statehouses in the midterm elections, with their eye on controlling the redrafting of district maps that follows each census. They succeeded in many places. Presidential battlegrounds like North Carolina, Ohio, Pennsylvania and Virginia send many more Republicans than Democrats to Congress, a factor in the party’s ability to gain and then increase its majority in the House over the last three elections.
 
No state has moved more significantly than Ohio since 2012 to take raw partisanship out of the process, said Morgan Cullen, a policy analyst at the National Conference of State Legislatures.
 
Jon Husted, Ohio’s secretary of state and a Republican, praised the plan as a step toward ending polarization in the General Assembly. Many members face competition only in primaries, pushing them to cater to ideological extremes.
 
“We elect people that get there by winning primaries, and we say, ‘Now you come together and do the people’s business,’ ” Mr. Husted, a former speaker of the State House, said. “If your electoral incentive is only to care about staying loyal to the base voter in a primary election,” he added, “then your incentive to govern” is small.
Senator Nina Turner, a Democrat who unsuccessfully challenged Mr. Husted for secretary of state last month, said she thought the plan would create a more balanced General Assembly. “I always say Ohio is conservative by design and not by desire,” she said. “This really is a tremendous deal.”
 
But some Democrats said the change did not go far enough because it excluded congressional maps.
 
Republicans said that was because of the chance that the United States Supreme Court would invalidate an overhaul in a ruling expected next year. Lawmakers in Arizona are suing to reverse a ballot initiative that took the congressional map-drawing decision out of the hands of the Legislature and gave it to an independent commission.
 
In 37 states, legislatures now draw voting maps. The 13 others use commissions that are, in theory, less partisan. In some states, the commissions are independent, and in others, their members are politically appointed. That has been Ohio’s system since the 1970s. The Apportionment Board is composed of three elected state officials — the governor, auditor and secretary of state — and one member from each party chosen by the legislature. Republicans have controlled it for three decades.
 
The new plan would add two members, one from each party. And if the minority-party members did not approve of the district maps, the changes would last only four years, not the traditional 10.
 
Partisan control of the board could seesaw in four years after statewide elections, so this would create an incentive to win the minority’s approval.
 
“I always remind folks that just because it’s worked for us for 30 years doesn’t mean we might not lose the Apportionment Board, and it would be used against you with the same efficiency you used it,” Mr. Husted said.
 
Still, there is no guarantee the plan would lead to a more politically balanced or moderate legislature. Americans have increasingly sorted themselves into communities that are ideologically like-minded, political scientists say. In rural and urban areas alike, the chances that voters of opposite parties live near each other have diminished.
 
California, which introduced a rigorously fair redistricting process before the 2010 census, is an object lesson. There, a 14-member, multipartisan commission draws district lines. In 2012, using new maps, Democrats enlarged their supermajorities in the Legislature.
 
“There’s no perfect map, no panacea,” said Mr. Cullen, of the National Conference of State Legislatures.
 
Two nonpartisan groups that have pushed for decades for changes in Ohio, the League of Women Voters and Common Cause, praised the plan to a point. It “makes significant strides to address gerrymandering of state legislative districts,” Ann E. Henkener of the League of Women Voters said in a statement, but “we are disappointed that it leaves out Congress.”
 
On Wednesday, after the House overwhelmingly passed the final version of the proposal on its last day of business for the year, members broke into applause. Speaker William G. Batchelder, a Republican, stayed his gavel as he told lawmakers, “I’m not going to mention I’m not meant to allow that, because it was so damn refreshing.”

Saturday, December 20, 2014

TARP, $426 billion rescue package that saved a swath of U.S. companies but never won public support.

From The Wall Street Journal:

WASHINGTON—The U.S. government closed a chapter in financial-crisis history Friday when it sold its remaining shares of Ally Financial Inc. and shuttered its auto-bailout program, ending the last major pieces of a $426 billion rescue package that saved a swath of U.S. companies but never won public support.

The Treasury Department said the 2008 Troubled Asset Relief Program has netted a small profit, returning $441.7 billion on the $426.4 billion invested in firms including Citigroup Inc., Bank of America Corp. , General Motors Co. , Chrysler and American International Group , Inc.

That profit, unexpected at the time of the bailout’s inception, has been nonetheless overshadowed by criticism that the rescue program put Wall Street’s interests ahead of Main Street’s, a view that prompted Congress to outlaw future taxpayer bailouts as part of the 2010 Dodd-Frank law. About 35 smaller banks remain in the program, down from about 700 financial firms at the height of the program. Critics have also pointed to the possible costs of having such a large amount of government funds tied up for so long and to the risks assumed by the government with its bailouts.

While the U.S. is largely exiting from its ownership of TARP companies, it still controls mortgage giants Fannie Mae and Freddie Mac . Those firms, which were rescued by the Treasury Department before Congress created TARP, have returned to profitability, but lawmakers and the White House have yet to agree on what role the companies should continue to play and how to unwind the government’s control.

For Corporate America, the program has been seen as a success. The biggest companies rescued by TARP have emerged from the program stronger and more nimble, with some receiving multiple infusions to overcome crippling losses, then later taking themselves public.

In 2010, GM’s $18 billion initial public offering was the largest U.S. IPO that year, and Citigroup’s $10.5 billion stock sale was the largest non-IPO stock offering by a U.S. company, according to Dealogic. In 2012, AIG made the biggest stock sale in the U.S. that year, at $20.7 billion, topping Facebook ’s $16 billion IPO. Overall, the Treasury sold more than $80 billion worth of stock and convertible warrants from 2010 to 2012, or more than 10% of total U.S. equity offerings over that period, according to Dealogic.

Since its third bailout in late 2009, Ally—the former financing arm of GM—has had just three losing quarters, has shed the troubled subprime-mortgage business that was the main source of its financial problems and has reported earnings totaling more than $3.6 billion.

The Treasury said Friday it sold taxpayers’ remaining shares as the broader stock market rose during the past few days, bringing its total income on the investment to $19.6 billion—a $2.4 billion profit. Ally stock rose 51 cents, or 2.2%, to $23.26 during the day’s session.

On Friday, President Barack Obama declared the U.S. rescue of the auto industry “officially over,” adding, “we’ve now repaid taxpayers every dime and more of what my administration committed, and the American auto industry is on track for its strongest year since 2005.”

Mr. Obama and his predecessor, President George W. Bush , have credited TARP with helping avert an even-more-severe recession following the financial crisis. When it was proposed in 2008, the government was desperate to stem an economic panic that was cutting off credit for businesses across the country.

Six years later, the banking industry is “healthier than it was precrisis,” said Barclays PLC analyst Jason Goldberg. “We’re beyond where we were. You have more capital, more liquidity, more scrutiny and more ‘stress-testing.’ ” Mr. Goldberg said profitability measures, such as return on equity and return on assets, are approaching precrisis levels.

Banks across the country in the third quarter notched their largest quarterly revenue increase since 2009, according to data from the Federal Deposit Insurance Corp. Revenue at the 6,589 banks the regulator insures rose 4.8% in the third quarter from a year earlier, to $171.3 billion. Net income increased 7.3% from a year ago to $38.7 billion, the fourth-highest figure on record.

“For other governments who are contemplating how to dispose of the stakes they acquired during the financial crisis, it’s a model case of how to do it. They’ve done an exceptional job,” said Mark Hantho, global head of equity capital markets for Deutsche Bank AG . “The key move by the government was to let the private sector and people close to the companies run the process, as opposed to assigning the work politically.”

But criticism has persisted that TARP put Wall Street ahead of troubled borrowers whose housing woes were at the root of the crisis. Less than $15 billion of $75 billion promised for homeowner assistance has been spent. Earlier this month, the Treasury announced a plan to double payments to some borrowers in an effort to keep homeowners enrolled in the program and spend some of the unused money.

The Treasury’s financial prowess has also been questioned, along with whether it demanded enough from the companies taking billions of taxpayer dollars. In February 2009, a congressional oversight panel reviewed the top 10 TARP transactions by value, not including the Ally bailout, and found, “every time Treasury spent $100, it took back assets that were worth, on average, $66,” meaning taxpayers weren’t adequately compensated for the risk they were taking.

“As a way to stop a panic, [TARP] was absolutely needed and basically successful,” said Damon Silvers, director of policy for the AFL-CIO federation of labor unions and a former member of the oversight panel. “As a financial transaction, the public did not get its money’s worth.”

The Treasury has posted a 3.6% return on its TARP investments thus far. The S&P 500 on Friday was up 206% from its low on March 9, 2009.

Christy Romero, the TARP special inspector general, has faulted the Treasury for not getting concessions from banks taking funds. “There were no strings on the money,” she said.

The decision to save big Wall Street firms, rather than force them to shrink and take heavy losses or file for bankruptcy protection, sowed distrust of both Wall Street and the government’s ability to police it that continues today, as embodied in the populist critiques of Sen. Elizabeth Warren ’s (D., Mass.), another former TARP watchdog.

The program’s defenders say imposing onerous terms on struggling companies would have undermined the purpose of the rescue. TARP’s “benefits in stabilizing the financial system and the economy as a whole were worth hundreds of billions of dollars, and yet it turned out to be essentially free,” said Doug Elliott, a fellow for economic studies at the Brookings Institution. “I call it the best large federal program ever to be despised by the public.”

Ally, formerly known as GMAC, had been by far the largest remaining company on the government dole. It tapped the bailout program three times, receiving taxpayer help worth $17.2 billion as the Bush and Obama administrations moved to backstop a crucial source of financing for GM vehicles. The government owned a 74% stake in the company as recently as November 2013.

Ally’s initial public offering in April raised $2.38 billion for the Treasury, which sold 95 million shares. That offering pared the Treasury’s stake in Ally to 17% from 37%.

The nuclear option and its fallout - The Senate Democrats’ move last year to eliminate filibusters on most nominations — it now takes only a simple majority to confirm — has helped President Obama dramatically increase his impact on the federal judiciary for years to come.

From The Washington Post:

The Senate Democrats’ move last year to eliminate filibusters on most nominations — it now takes only a simple majority to confirm — has helped President Obama dramatically increase his impact on the federal judiciary for years to come.

Obama, approaching the end of his sixth year in office, is on track to put 305 judges on the federal bench — 252 on district (trial) courts and 53 on appeals courts. At this point, he’s well ahead of George W. Bush’s 256 total appointments at the six-year mark and close to Bush’s final total of 324 appointees. He’s just six behind Bill Clinton’s six-year total.

But in January, Obama will, for the first time in his presidency, face a Republican-controlled Senate. And the GOP rancor sparked by the Democrats’ November 2013 rule change — known as the “nuclear option” — could well limit future confirmations. In addition, a bipartisan deal struck in 2013 that greatly shortened the amount of debate required for judicial nominees is set to expire next year.

Thursday, December 18, 2014

Putin’s Year of Defiance and Miscalculation - Kremlin Misjudged Bite of Sanctions, Then Oil Plunged

From The Wall Street Journal:

As Western governments seethed last spring over Russia’s takeover of the Crimea region in Ukraine, Vladimir Putin told advisers that the world eventually would accept the audacious move. The Kremlin was confident the economic costs of Western sanctions, though substantial, would be tolerable for the world’s ninth-largest economy.

For much of the year, the Russian president’s gamble seemed to pay off. “His forecasts have come true,” Alexei Kudrin, a former finance minister and longtime Putin adviser, said in May. “A lot of people have come to terms with Crimea now, at least informally.”

Mr. Putin also seemed confident, according to people who spoke to him at the time, that the deep ties he had nurtured for years with major trade partners like Germany would limit the fallout.

Those calculations turned out to be dead wrong. Broader sanctions choked off Russia’s access to Western capital and technology, tipping the economy toward recession. Then came a second blow that neither Western governments nor Russia could have anticipated: The price of oil—the lifeblood of Russia’s economy—plunged 40% since midsummer, magnifying the effect of sanctions and sending the ruble into a tailspin. The slide turned into a full-on currency crisis on Tuesday as the ruble dropped as much as 20% against the dollar.

As the problems intensify, Mr. Putin’s miscalculations have restricted his options. After largely ignoring the economic costs of the conflict for most of the year, freezing out liberal aides who tried to warn of the impact, he has begun trying recently to win back the confidence of business and revive the economy, people close to the process say. Mr. Putin is expected to be questioned about the ruble crisis during his annual news conference on Thursday.

The Ukraine conflict has produced the deepest breach between Moscow and the West since the Cold War. A notable casualty has been Mr. Putin’s relationship with Angela Merkel , who emerged as Europe’s most powerful leader in large part because of Germany’s relative economic strength.

As recently as a year ago, the German chancellor was one of Mr. Putin’s most reliable Western partners, offsetting more anti-Moscow voices such as the U.S. and Poland. Now, she is keeping the rest of Europe in line behind sanctions and warning of the danger she says Mr. Putin poses to security across the continent.

“We are suddenly confronted with a conflict that goes, so to speak, to the core of our values,” Ms. Merkel said in Sydney, Australia, in November. “Old thinking in terms of spheres of influence, in which international law is trampled upon, cannot be allowed to assert itself.”

Mr. Putin’s rhetoric on Ukraine seems to have softened in recent weeks as state-run pollsters in Russia report growing alarm over the falling ruble and rising prices. “Whenever they start to feel danger in their bones—we saw it in [the financial crisis of] 2008—they start looking for the liberals to help,” a senior Russian legislator said of the hard-liners in Mr. Putin’s inner circle.

The Kremlin declined to comment for this article.

With Mr. Putin’s government warning that significant relief from sanctions could be more than a year away, there is little chance of avoiding surging inflation and further declines in the ruble. This week’s currency crisis has increased the urgency, making a steep recession next year all but inevitable.

The Kremlin appears to have written off hope of rapprochement with the Obama administration, which has pressed the European Union to back strong sanctions. And patching things up with Ms. Merkel doesn’t look any easier.

“Russia has become unpredictable, which is the biggest threat to partnership,” said Gernot Erler, the German government’s coordinator for Eastern European affairs. “We don’t know at all what Russia’s goals are.”

A year ago, it looked as though German relations with Moscow were warming. The revelations of National Security Agency leaker Edward Snowden helped turn public opinion against Washington in privacy-sensitive Germany. Last December, Ms. Merkel formed a new government with the Social Democrats, historically a party friendly to Russia. Foreign Minister Frank-Walter Steinmeier said the EU may have underestimated Ukraine’s economic and “historic emotional” ties to Russia.

Russia annexed the Crimea Peninsula in March. In the early weeks of the crisis, Ms. Merkel remained cautious about tough sanctions, fearing they might prevent a way out for Moscow.
The first round of sanctions mainly affected officials and businessmen with ties to Mr. Putin. Opening a meeting with aides after they were announced, Mr. Putin didn’t even mention the possible economic impact, calling instead for faster growth. But after state-television cameras were ushered out, officials expressed concern.

Mr. Kudrin, the former finance minister and longtime Putin ally who attended, said that even if the sanctions were limited just to individuals, they still would hit growth hard. Wider sanctions on state banks—they would come in the summer—would be much more painful, he warned, fueling capital flight, sapping investment and bruising the ruble.

At the time, the government was expecting the economy to grow and inflation to remain under control. Mr. Kudrin estimated at the time that the Ukraine crisis cut about one percentage point off GDP growth—about what the government spent on the Sochi Olympics. Over two to three years, the bill might rise to $200 billion—“not catastrophic,” as he put it later.

His warning didn’t dissuade Mr. Putin and the rest of the leadership from confronting the West. “They all understood everything,” Mr. Kudrin recalled later. “They’re ready to pay that price.”

When additional sanctions came during the spring, some government officials began to recognize that the informal effect—chilling business activity—was more painful than expected. But their appeals to Mr. Putin were largely ignored, according to people close to the discussions.

“There was a sense that foreign policy was the priority and that it could be conducted without doing much harm to the economy,” said one Kremlin adviser.

As the ground fighting in Ukraine worsened over the summer, Germany’s resolve to take on the Kremlin stiffened. The U.S. had been pressing the Europeans to do so for months. Some German officials were concerned that earlier sanctions hadn’t been tough enough.

Ms. Merkel and Mr. Putin held lengthy, often combative phone calls, according to German officials familiar with the conversations.

Western intelligence suggested Russia was supplying the separatists with weapons and appeared to be coordinating their operations. Mr. Putin said he had nothing to do with it, and told Ms. Merkel that Ukraine was the kind of place where abandoned tanks could be found on farms, according to one official familiar with the discussions.

Ms. Merkel’s office had the German spy agency, the BND, draw up biographies of rebel leaders, most of whom hailed from Russia. Over the phone, Ms. Merkel repeatedly confronted Mr. Putin with evidence that the rebel leaders had ties to Russian intelligence, according to German officials. Mr. Putin, who rarely raised his voice during the discussions, denied he had any influence over the rebels. At important points, he would shift from Russian—which Ms. Merkel learned growing up in Communist East Germany—to German, which Mr. Putin speaks well.

German diplomats thought the downing of Malaysia Airlines Flight 17 on July 17, killing all 298 people aboard, might open a path to calming the conflict. But Mr. Putin publicly denied the rebels had shot down the plane, repeating theories broadcast by Russian television that the Ukrainians were responsible.

He told Ms. Merkel over the phone that his own plane was in the air over Europe at the time and that the shootdown may have been an assassination attempt. “I could have been a victim, too,” he said, according to one person knowledgeable about the call.

The first round of sanctions mainly affected officials and businessmen with ties to Mr. Putin. Opening a meeting with aides after they were announced, Mr. Putin didn’t even mention the possible economic impact, calling instead for faster growth. But after state-television cameras were ushered out, officials expressed concern.

Mr. Kudrin, the former finance minister and longtime Putin ally who attended, said that even if the sanctions were limited just to individuals, they still would hit growth hard. Wider sanctions on state banks—they would come in the summer—would be much more painful, he warned, fueling capital flight, sapping investment and bruising the ruble.

At the time, the government was expecting the economy to grow and inflation to remain under control. Mr. Kudrin estimated at the time that the Ukraine crisis cut about one percentage point off GDP growth—about what the government spent on the Sochi Olympics. Over two to three years, the bill might rise to $200 billion—“not catastrophic,” as he put it later.

His warning didn’t dissuade Mr. Putin and the rest of the leadership from confronting the West. “They all understood everything,” Mr. Kudrin recalled later. “They’re ready to pay that price.”

When additional sanctions came during the spring, some government officials began to recognize that the informal effect—chilling business activity—was more painful than expected. But their appeals to Mr. Putin were largely ignored, according to people close to the discussions.

“There was a sense that foreign policy was the priority and that it could be conducted without doing much harm to the economy,” said one Kremlin adviser.

As the ground fighting in Ukraine worsened over the summer, Germany’s resolve to take on the Kremlin stiffened. The U.S. had been pressing the Europeans to do so for months. Some German officials were concerned that earlier sanctions hadn’t been tough enough.

Ms. Merkel and Mr. Putin held lengthy, often combative phone calls, according to German officials familiar with the conversations.

Western intelligence suggested Russia was supplying the separatists with weapons and appeared to be coordinating their operations. Mr. Putin said he had nothing to do with it, and told Ms. Merkel that Ukraine was the kind of place where abandoned tanks could be found on farms, according to one official familiar with the discussions.

Ms. Merkel’s office had the German spy agency, the BND, draw up biographies of rebel leaders, most of whom hailed from Russia. Over the phone, Ms. Merkel repeatedly confronted Mr. Putin with evidence that the rebel leaders had ties to Russian intelligence, according to German officials. Mr. Putin, who rarely raised his voice during the discussions, denied he had any influence over the rebels. At important points, he would shift from Russian—which Ms. Merkel learned growing up in Communist East Germany—to German, which Mr. Putin speaks well.

German diplomats thought the downing of Malaysia Airlines Flight 17 on July 17, killing all 298 people aboard, might open a path to calming the conflict. But Mr. Putin publicly denied the rebels had shot down the plane, repeating theories broadcast by Russian television that the Ukrainians were responsible.

He told Ms. Merkel over the phone that his own plane was in the air over Europe at the time and that the shootdown may have been an assassination attempt. “I could have been a victim, too,” he said, according to one person knowledgeable about the call.

German officials analyzed Mr. Putin’s flight path and didn’t buy the contention, according to one person familiar with the effort.

Convinced that Mr. Putin wasn’t pushing the rebels to stop fighting, Ms. Merkel corralled the other 27 European Union member states to follow the U.S. and back the first sanctions against sectors of the Russian economy. They amounted to a body blow to Russia, whose largest banks and companies depended on Western financing and technology.

The Kremlin responded with sanctions of its own against food imports from the West, hitting some European farmers hard.

Inside Russia, pro-market advisers who had warned about too much confrontation with the West, including Mr. Kudrin, found themselves largely frozen out, according to people close to them. Mr. Kudrin lamented publicly that he rarely was consulted by the Kremlin anymore and that business was alarmed by Moscow’s anti-Western turn.

A tight circle of mostly hard-line advisers, including Defense Minister Sergei Shoigu and Federal Security Service head Alexander Bortnikov, had become Mr. Putin’s closest confidantes, according to Kremlin insiders and diplomats.

In early September, even though pro-Russian rebels had just signed a cease-fire agreement with Ukraine, Ms. Merkel pushed for a second round of economic sanctions. Ms. Merkel and other Western leaders said Russia was doing little to carry out the terms of the cease-fire agreement, including preventing weapons and fighters from crossing the Russian border into eastern Ukraine.

In early October, German Gref, chief executive of Russia’s state-run Sberbank and the pro-market author of Mr. Putin’s economic programs, lashed out in public at an October conference where the president was to speak.

Warning that defying “the laws of economic development” would bring Russia to collapse as it did the Soviet Union, Mr. Gref ridiculed government policies for replacing sanctioned products with domestic ones. “You cannot motivate people through the Gulag, like in the Soviet Union,” he said to nervous applause.

Mr. Putin shrugged off the comments when asked about them later. The government still was expecting Europe to lift sanctions by the middle of 2015 and for oil prices to recover to $100 a barrel, Russian officials said at the time.

Within weeks, an additional plunge in oil prices forced the Kremlin to reassess its plans.

After spending $30 billion in October in an unsuccessful effort to slow the ruble’s slide, the central bank announced in early November it would let the Russian currency float freely to save its reserves. Hard-line advisers in the Kremlin, including economic aide Sergei Glaziev, had called for fixing the rate and restricting access to foreign currency. But Mr. Putin rejected that advice as risking even more economic disruption. The central bank’s move triggered a slide in the currency.

“In late November and early December, the authorities realized there would be a crisis,” said one Kremlin adviser. Just before Mr. Putin’s state-of-the-nation address on Dec. 4, the Economy Ministry revised its forecast. Russia would get no relief from low oil prices or sanctions in 2015, the new forecast said, which would drive the country into recession.

After other officials criticized the outlook as too gloomy, it quickly disappeared from the ministry’s website.

In his speech, Mr. Putin announced steps to improve the business climate. But he also warned that the Kremlin knew who the “speculators” were who were selling the ruble, which did little to reassure investors or offset market fears.

Tensions exploded this week. The currency plunge left Russians racing to convert their savings out of rubles. An emergency rate hike by the central bank did little to stop the selling.

Frictions surfaced between liberals and hard-liners. Mr. Kudrin took to Twitter to say the market plunge was the result not just of sanctions and low oil prices but “also a lack of confidence in the government’s economic measures.” He criticized a bailout deal for the state oil company, prompting the company’s CEO to denounce him as a “provocateur.”

Amid the deepening crisis, Western diplomats have reported hints of softening in the Kremlin’s position on Ukraine, though they say it is too early to declare a shift. Late Tuesday, Mr. Putin joined a conference call with Ms. Merkel, French President François Hollande and Ukrainian President Petro Poroshenko to discuss new talks to stabilize the cease-fire in eastern Ukraine.

But after a year of diplomatic wrangling, German officials say they have little reason to believe the Kremlin’s policies will change quickly.

The Germans say that continuing to talk to the Kremlin is important for affording Mr. Putin a way out of the crisis. Some German diplomats worry that with the Russian economy deteriorating, Mr. Putin may be tempted to escalate the conflict in Ukraine to distract his countrymen from problems at home.

In November, Ms. Merkel met with Mr. Putin at the Hilton hotel in Brisbane, Australia, talking and sipping wine for more than three hours as their aides waited outside the room. Ms. Merkel hoped that confronting him in a more relaxed format could lead to progress. It didn’t.

Just over a day later, Ms. Merkel delivered some of her angriest remarks of the crisis.

“We can no longer simply hold speeches at memorial events,” Ms. Merkel said, referring to the many commemorations of World War I, World War II and the Cold War held in Europe this year. “Now we have to somehow show what we have learned from all this.”