April 4, 2017

Posted by orrinj at 6:47 PM


CAN TRUMP MATCH XI JINPING'S GAME? (Evan Osnos, 4/04/17, The New Yorker)

[T]rump's posturing as a candidate on China was always a case of theatre over substance, and his advisers occasionally admitted as much. Sure enough, once he was in office, Trump began acting like a pliable counterpart. He has not put tariffs on imports or branded China as a currency manipulator, as he threatened. When Trump briefly showered attention on Taiwan, which Beijing considers a breakaway province, Xi stonewalled him--and Trump's resolve liquefied, just as foreign-policy hands in China had predicted it would. When Rex Tillerson, the Secretary of State, visited Beijing last month, Tillerson even recited Beijing's chosen phrases about "mutual respect" and "win-win solutions." Why does that matter? It's roughly the geostrategic equivalent of trying to haggle over the price of a car in a foreign language that you haven't mastered.

Beijing did not forget the lesson. In anticipation of the summit, Evan Medeiros, an Asia expert at the Eurasia Group, observed that "many in China believe Trump is a 'paper tiger' whose focus on short-term gains can be manipulated." Having concluded that Trump cannot back up his rhetoric, Xi has little reason to accede to Trump's demands, which include getting China to put more pressure on North Korea to curb its nuclear program. The visitors from Beijing also know that, at some point, Trump will attempt a splashy display of confrontation. But Beijing is not overly concerned. Let Trump tweet; Xi is playing a longer game.

Having sent Tillerson home from Beijing spouting Communist Party mantras, Xi's envoys have turned their attention to the representative they really care about: Trump's son-in-law, Jared Kushner. From a Chinese perspective, Kushner's role in the White House is a clannish arrangement that they know well. Many of Trump's current courtiers may be gone in a year of two, but the members of his family will remain. For a while, China appeared to be preparing to endear itself to Kushner in a way that only it can: Anbang, a financial conglomerate with close ties to the Party leadership, was nearing a deal that would have unlocked billions of dollars to help Kushner save a troubled investment in a skyscraper on Fifth Avenue. Last week, the Kushner family announced that talks had broken off, for reasons that were not clear.

Posted by orrinj at 6:37 PM


Islamic State says U.S. 'being run by an idiot' (REuters, 4/04/17)

In the first official remarks by the group referring to President Donald Trump since he took office, spokesman Abi al-Hassan al-Muhajer said:

"America you have drowned and there is no savior, and you have become prey for the soldiers of the caliphate in every part of the earth, you are bankrupt and the signs of your demise are evident to every eye."

"... There is no more evidence than the fact that you are being run by an idiot who does not know what Syria or Iraq or Islam is," he said in a recording released on Tuesday on messaging network Telegram.

Of course, the difference is that we soon won't be while they always will be.

Posted by orrinj at 5:58 PM


The White House Is Reportedly Considering a Carbon Tax (Eric Levitz, 4/04/17, New York)

Initially, the House GOP's silver bullet was a border-adjustment tax (BAT) -- effectively, a measure that would decrease the tax liability of American exporters while increasing that of importers. This would both provide Trump a (relatively) non-disruptive means of making America more protectionist and raise about $1 trillion in revenue, since America imports a lot more stuff than it exports.

But major retailers don't like the BAT. And neither do many consumer groups, who view the tax as regressive. And a bevy of Republican senators has already vowed to kill the provision. So, now, the more moderate wing of the White House is, apparently, considering two other new taxes that will (almost certainly) never, ever pass. As the Washington Post reports:

President Trump's administration is exploring the creation of two controversial new taxes -- a value-added tax and a carbon tax -- as part of a broad overhaul of the tax code, according to an administration official and one other person briefed on the process. 

The value-added tax, which is popular in many other countries, would serve as a kind of national sales tax, one that consumers would pay when they make purchases and that businesses would pay for supplies, services and raw materials. A carbon tax would target the emissions of carbon dioxide and other greenhouses gases in the burning of gasoline, coal and other fossil fuels.

Posted by orrinj at 5:55 PM


Have Worker Wages Really Gone Nowhere for 40 Years? (James Pethokoukis, April 3, 2017, Ricochet)

[Dartmouth economist Bruce] Sacerdote in "Fifty Years Of Growth In American Consumption, Income, And Wages": "These estimates suggest that consumption is up 1.7 percent per year or 164 percent over the whole time period. These estimates of growth strike me as consistent with the significant increases in quality and quantity of goods enjoyed by Americans over the last half century."

Sacerdote doesn't believe those headlines, either, skeptically mentioning them in his paper.

But what about that above chart, the one showing stagnating wages? It looks a lot different depending on the inflation measure you choose. And there seems to be a broad consensus that the traditional consumer price index measure overstates inflation, meaning real wage and income growth are higher than we think. Sacerdote instead focuses on the price consumption expenditure index, which covers a broader range of spending and adjusts for changing consumer behavior. Sacerdote (bold is mine):

PCE adjusted wages appear to have grown at .5% per year during 1975-2015 while the de-biased CPI adjusted wages grew at 1% per year over the same time period. ... This adjustment reverses the finding of wage stagnation. Using the PCE to deflate nominal wages suggests real wage growth of 24 percent from 1975-2015 or about .54% growth in real wages per year. Importantly that growth is significantly less than the 1.18% annual growth in real wages (using PCE inflation) seen in the earlier decade 1964-1975 and is significantly less than GDP per capita growth of 1.8 percent over the 1975-2015 period. But 24 percent growth over the 1975-2015 is substantially better than zero growth and the PCE inflation could itself still contain upward bias. Adjusting for the Hamilton (1998) and Costa (2001) estimates of CPI bias implies real wage growth of 1 percent per year during 1975-2015 and GDP per capita growth of 2.7 percent per year.

And as he sums it up: "Estimates of slow and steady growth seem more plausible than media headlines which suggest that median American households face declining living standards."

Posted by orrinj at 5:47 PM


Why So Many Americans Are Saying Goodbye to Cities : What's happening to New York City is a microcosm of what's happening around the country--the hollowing out of the U.S. city. (DEREK THOMPSON, 4/04/17, The Atlantic)

Net domestic migration to New York City metro area (which includes the five boroughs plus slivers of New Jersey and Pennsylvania) is down by a whopping 900,000 people since 2010. That means that, since 2010, almost a million more people have left New York for somewhere else in America than have moved to New York from another U.S. metro--more than any other metro in the country. This is the "fleeing" that the Post finds so "alarming." But the New York metro has also netted about 850,000 international migrants since 2010. That number is also tops among all metros--more than Miami, Los Angeles, and San Francisco, combined.

So, that's the story of New York City, today. It is an extremely popular first-stop for immigrants. It is also a popular destination for young, upwardly mobile Millennials who have graduated from top colleges and don't yet have families with children. But since it's expensive, chaotic, and mostly lawn-free, it's not a great place for middle class families who dream of an affordable house, car, and yard.

In this regard, New York is a microcosm of the American city. Population growth in big cities has now shrunk for five consecutive years, according to Jed Kolko, an economist and writer. While well-educated Millennials without children have concentrated in a handful of expensive liberal cities, the rest of the country is slowly fanning out to the sunny suburbs.

The proper model for the city is Disneyworld--a place you visit during the day for entertainment that closes at night.

Posted by orrinj at 5:43 PM


FBI plans to create special unit to co-ordinate Russia probe (David J Lynch, 4/02/17, Financial Times)

The FBI is planning to create a special section based at its Washington headquarters to co-ordinate its investigation of Russian activities designed to influence the 2016 presidential election, according to a person familiar with the plan. 

The move, a sign of how seriously the bureau is taking allegations of Russian meddling in American politics, is also aimed at giving FBI director James Comey greater visibility into the investigation's granular details. "It's meant to surge resources," said one FBI agent. 

Posted by orrinj at 1:11 PM


Susan Rice Denies Obama Admin Used Intelligence to Hurt Trump Team (Charles Fain Lehman, April 4, 2017, Free Beacon)

She explained that, as national security adviser, she would sometimes request more information about unspecified "U.S. persons" whose names appeared in intelligence briefings.

No one expected Donald and his team to be anything but inept, but here again we have a defense from them that adds up to : the fact that intelligence on Russian criminality kept serving up our staff proves there was something fishy going on!

Posted by orrinj at 8:31 AM


Race to replace Price: Leading in polls, Ossoff doesn't live in district (Tim Darnell, 2/28/17, WXIA)

The surprising early leader in the special election to replace Tom Price in Congress doesn't live in the district.

Democrat Jon Ossoff lives about 10 minutes south of the district, according to a campaign spokesman. Ossoff grew up in the district and has been registered to vote in it for many years. Ossoff's parents also live in the district, and Ossoff moved out of the 6th and into an Emory-area neighborhood to be close to his girlfriend of 13 years, who started medical school.

Posted by orrinj at 8:25 AM


The cowardly spectacle of the anti-anti-Trump movement (Damon Linker, April 4, 2017, The Week)

The classic case is the anti-anti-communism espoused by some liberals during and after the McCarthy era. Yes, the Soviet Union was a menace, these liberals maintained, but even worse, perhaps, were Americans who were too zealous in their anti-communism. Hence the need to focus on the danger these anti-communists posed to liberal democratic government.

It's not that all or even many anti-anti-communists were intentionally pro-communist. But the effect of their consistent emphasis on the dangers of anti-communism was to downplay the seriousness of the threat posed by the Soviet Union.

One of the strangest developments in this very strange moment in American politics is the rebirth of politics by negation, this time on the right -- in the form of anti-anti-Trumpism, which effectively argues that the president's liberal opponents are somehow worse than this phenomenally bad president.

The obvious point is that both the Left and the Right--but I repeat myself--are fundamentally reactionary.  But it has been hilarious to watch the putatively anti-Trumpers become so ragingly pro-Trump since he won.

Posted by orrinj at 8:21 AM


Fewer than half of white men and rural Americans approve of Trump in brutal new poll (Peter Weber, 4/04/17, The Week)
When President Trump's approval rating dropped to 35 percent in Gallup's tracking poll last week, it appeared to be something of an outlier -- in other polls, Trump's approval was at 38 percent to 45 percent. But while Trump has risen back up to 38 percent in Gallup, a new poll from Investor's Business Daily and TIPP released Monday pegged his approval at 34 percent, an 11-point drop from the IBD/TIPP poll last month; 56 percent disapprove of Trump's performance. Only 49 percent of white men and 41 percent of rural Americans approve of the president. And that's just the tip of the bad-news spear in the poll, conducted March 24-30.

If he can't even keep us crackers on board then what is his base?

Posted by orrinj at 8:15 AM


Black Lives Matter Bans White People From Attending 'Open Meeting' Event (Lukas Mikelionis, April 4, 2017, Heat Street)
A Black Lives Matter chapter in Philadelphia has banned white people from attending an event, claiming it's a "black only space."

According to the "April Open Meeting" event page on Facebook, the gathering, scheduled for April 15, is aimed at discussing future initiatives and projects of the movement in which only black people are allowed to participate. "Please note that BLM Philly is a Black only space," claims the event description.

Funny...the BLM protests here are always only old white Vermonters. 
Posted by orrinj at 6:51 AM


The Pentagon Now Knows That To Get To Trump, You Go Through Jared Kushner (Nancy A. Youssef, 4/03/17, BuzzFeed News)

Given the Trump White House's thwarting the conventional chains of command, the Pentagon has decided to go along, in the hopes that the face time -- coupled with the experience of traveling to the front lines of the war against ISIS -- will become leverage in the discussions about the way ahead.

"You have to understand where the levers are. You don't have to like it, but that is where they are," a defense official told BuzzFeed News. "It's in our interest." [...]

The pair were scheduled to depart after only four hours on the ground, ensuring Kushner is back in time to manage Xi Jinping's visit later this week. A visit that brief is not enough to understand the complex situation in Iraq, but for a fleeting moment for first-time visitors, it can feel like it. Dunford said in a statement released Sunday night that he invited Kushner to see events on the ground, "first-hand and unfiltered."

Dunford stood to gain something as well. For him, it was hours of direct access to arguably the most influential White House adviser -- 16 hours sealed inside a plane to be exact.

"That is a looong time to have someone's ear," a second defense official explained to BuzzFeed News.

Defense officials said while according to the official story, Dunford invited Kushner, they are not sure if the idea was that simple. Rather it was "DoD initiated," the first defense official said. Secretary of Defense Jim Mattis already had extended a similar invitation to Kushner and Steve Bannon, White House chief strategist.

Posted by orrinj at 6:47 AM


Syrian people do not want Assad in power, US envoy tells UN (AFP, April 4, 2017)

The United States believes the Syrian people do not want President Bashar Assad to remain in power and does not accept that he could stand in elections, Ambassador Nikki Haley said Monday.

Haley told a news conference that Assad is a "war criminal," "a hindrance to peace for a long time" and that his treatment of Syrians was "disgusting."

Posted by orrinj at 6:15 AM


Mao enemy Chiang Kai-shek gets new life in China's mainstream culture : Former 'enemy of the people' revived as an anti-Japan hero (LOUISE WATT, 8/18/14, AP)

There has been a grudging acceptance of Chiang's historical role in fighting against Japan following its invasion in the lead-up to World War II. Chiang later lost to Mao Zedong's Communists in the Chinese civil war and fled in 1949 to Taiwan, where he ruled until his death in 1975. [...]

Chiang came to power as head of the Chinese Nationalist government in 1928 and much of his rule was spent fighting the Japanese and Mao's Communists. For more than two decades after the Communists took over, many in the West still considered Chiang the face of China.

His shift on the mainland has been noticeable, if unstated. Over the past decade, Chiang's Nationalist soldiers, known as Kuomintang or KMT, have gone from being portrayed in TV dramas as little more than corrupt and greedy characters to evincing patriotism and even courage as they fight the Japanese.

The fight against Mao, to make the nation Western, was more important and it is the tragedy of China that he lost, giving Taiwan a GDP per capita of $47.8k but the PRC only $15.4k.

Posted by orrinj at 5:38 AM


It's O.K., California. Breaking Up Isn't Hard to Do. (STEVEN GREENHUT, APRIL 4, 2017, NY Times)

"We should explore creating more states so we have a democracy that's closer to the people," said Scott Baugh, a former Republican assemblyman who met with Mr. Banks and Nigel Farage when they were in Orange County to receive an award. California has nearly 40 million people and is growing. At what point is the population too large for a single state? he wondered in a recent interview. That's a question Californians have been asking since the early days of the state's existence.

When a motley crew of American settlers, native-born "Californios" and European immigrants assembled in Monterey in 1849 for a constitutional convention, there was wide disagreement about where to put the eastern boundary for the proposed state of California. Some wanted an enormous state that would have encompassed a lot of modern-day Utah.

Since California achieved statehood in 1850, residents have floated dozens of plans to break it up. A proposed 2016 measure to carve it into six states, which did not make it onto the ballot, was initiated by a Silicon Valley entrepreneur, Tim Draper, who also is behind the effort that Mr. Banks and Mr. Farage recommended. News reports suggest his latest plan is to largely split the state east to west, but Mr. Draper told me his idea has no specific boundaries yet.

"We are doing deep research on everything from infrastructure to higher education to safety to water to the electric grid to politics to income levels to health care," Mr. Draper said.

Posted by orrinj at 5:13 AM


Iran signs contract for 60 Boeing 737 Max aircraft: IRNA (REuters, 4/04/17)

Iran's Aseman airline signed a contract with Boeing (BA.N) on Tuesday to buy 60 737 Max aircraft, according to the Islamic Republic News Agency (IRNA). 

Posted by orrinj at 5:10 AM


Elizabeth Warren's Female Staffers Made 71% of Male Staffers' Salaries in 2016 (Brent Scher, April 4, 2017, Daily Beacon)

The gender pay gap in Sen. Elizabeth Warren's (D., Mass.) is nearly 10 percent wider than the national average, meaning women in the Massachusetts Democrat's office will have to wait longer than most women across the country to recognize Equal Pay Day.

Posted by orrinj at 4:56 AM


At Kushners' Flagship Building, Mounting Debt and a Foundered Deal  (CHARLES V. BAGLI, APRIL 3, 2017, NY Times)

The Kushner Companies bought the building in January 2007, closing the deal on Jared Kushner's birthday and paying the highest price ever for a New York office building. "This is a great acquisition for our company," Jared Kushner said at the time.

According to the Kushners, they put $500 million into the purchase. They then took out a mortgage and hundreds of millions in additional loans to cover the purchase price and ancillary costs.

The building represented a new beginning for a New Jersey real estate family that had specialized in suburban garden apartments. The Kushner Companies moved its headquarters to the 15th floor on Fifth Avenue, from Florham Park, N.J.

While the total paid for the building was not that much higher than the previous record -- $1.72 billion for the MetLife Building -- the price for MetLife worked out to about $600 a square foot, while the Kushners paid $1,200 a square foot for 666 Fifth Avenue.

Even at the time, income from the building, which was almost completely rented, covered only about two-thirds of the annual debt payments, according to records.

Then, as the 2008 financial crisis set in, rents, instead of going up, went down. To pay off some of their debt, the Kushners began selling parts of the building, including its most valuable asset, the retail space on Fifth Avenue, to the Carlyle Group and Crown Acquisitions for $525 million, a remarkable price. The proceeds were used to pay off secondary loans on the building, not the main mortgage.

But the bleeding continued. Two years later, with the tower's reserve funds nearly exhausted and the owner losing as much as $30 million, the mortgage holder appointed a "special servicer" to oversee 666 Fifth Avenue. Such a company manages a property loan when the borrower is in danger of falling into default.

The Kushner Companies renegotiated the terms of the loan in 2011.

At the same time, Vornado, a publicly traded real estate company and one of the city's largest landlords, bought 49.5 percent of the building's office space for $80 million and other financial pledges as part of refinancing the property. In 2013, it bought the retail condominium from Crown and Carlyle for $707 million, except for a portion that had been sold to Zara, the Spanish clothing chain.

Vornado's chairman, Steven Roth, declined to comment on the building. His firm has veto power over any deal, according to its loan agreements with the Kushner Companies.

The $1.2 billion mortgage on 666 Fifth Avenue has swelled to $1.4 billion with accrued interest, according to financial records filed by Vornado. Revenue, which continues to decline, covers only 66 percent of the building's debt obligations, according to the latest report by Trepp.

At this point, the value of the office space is less than the mortgage, said Jed Reagan, a commercial real estate analyst at Green Street Advisors, a real estate research firm based in California. "There is no equity value" on the office portion of the building, he said.