21 September 2017

Catalonia On My Mind

With a major earthquake in Mexico, a devastating hurricane in the Caribbean and, of course, "Rocket Man" at the UN, it is hard to pay attention to what is happening in Spain.

But trust me, something interesting is taking place.

Catalonia, the richest region in the country, has been clamoring for independence for some time now. A framework for more autonomy was worked out in 2006 and it was agreed upon by both Catalan and Spanish authorities.

That agreement was struck down by the Constitutional Court in 2010 fuelling independence calls.

Most observers believe that Catalans are not very serious about full independence. They just want to get a bigger share out of the national budget and/or some acknowledgement that they contribute disproportionately to the union.

The regional government decided to hold a second referendum (the first one in 2014 was non-binding) with the proviso that if pro-independent proposition passes, they would declare it within 48 hours.

It sounds ominous but in reality polls indicated that this was fairly unlikely.

Yet Spanish government reacted with very heavy-handed and brutal tactics.

They started with police raiding printing companies to confiscate ballots.
Armed police in Spain have raided several print works and newspaper offices in Catalonia in recent days in a hunt for voting papers, ballot boxes and leaflets to be used in an Oct. 1 independence referendum which Madrid vehemently opposes. 
They also passed measure to control the regional government's spending to block any referendum related expenditure.
And earlier this week Madrid summoned over 700 Catalan mayors for questioning over their support for the vote. 
Catalonia's president Carles Puigdemont is facing criminal charges.

On Friday, police confiscated 100,000 campaign leaflets in a raid in Catalonia, the Interior Ministry said, without saying where. Catalonia’s top court issued a warning on Friday to seven newspapers, many of them online, not to publish campaign notices for the referendum, a court spokesman said on Saturday.
The police conducted searched in various media outlets and confiscated documents and equipment. They seized up to 10 million ballots. And the Guardia Civil blocked the official referendum Web site (which you can see here if you are not in Spain)

When this was met with protests in Catalonia, Prime Minister Mariano Rajoy massively escalated the crisis.
Spanish police have detained 14 Catalan officials and raided regional government ministries involved in organising an independence vote declared illegal by Spain's government. 
Tensions were already high before Josep Maria Jové, number two in the Catalan vice-presidency, and others were held.
The police (which included the beloved Mossos d‘Esquadra) raided forty ministries and offices and arrested important political figures.
Several ministries in Barcelona were raided on Wednesday, including the economy, foreign affairs, telecoms, social affairs and presidency buildings. Among those detained were officials from the economy ministry, run by Catalan Vice-President Oriol Junqueras, as well as figures from other departments.
So what happened after this crackdown?

Well, the 700+ mayors who were questioned by the police defied Madrid's orders:
The mayors met with Catalonia’s regional head Carles Puigdemont in a show of defiance, following Spanish prosecutors warning earlier this week that officials engaging in any preparations for the vote could be charged with civil disobedience, abuse of office and misuse of public funds.
Meeting in downtown Barcelona in front of hundreds of flag waving pro-independence protesters, the mayors gave speeches in which they promised continued support for the referendum amid chants of “we will vote” and “independence.” 
The soccer club Barcelona, one of the most important global brands in sports, threw its weight behind the Catalonian government and the referendum.
The centre of Barcelona soon became a sea of Catalan flags and the city's renowned football club threw its weight behind the protests, condemning any act that threatened freedom of speech and self-determination.

The puzzling question is this: Why did Rajoy hugely overreact to a referendum that was likely to come back with a No result?

Before the crackdown, there was strong evidence that most Catalans were happy with a regional autonomy arrangement. And the population was trending away from independence.
Just 2.2 million voters out of a potential 5.4 million turned out for the 2014 ballot. (...)
Then in 2015 a coalition of separatist parties won regional elections. Between them, Junts pel Si (Together for Yes), with the support of a radical left-wing party, the CUP, won 48% of the vote.
More worryingly for the secessionists, a public survey commissioned by the Catalan government in July suggested 49% of Catalans opposed independence, while 41% were in favour. 
Turnout at the annual Catalan national day event in Barcelona on 11 September was impressive - around a million people according to local police - but in 2014 it was estimated at 1.8 million. 
Now with Catalan officials under arrest and a brutal oppression reminiscent of the Franco era, a prolonged and violent confrontation is inevitable.

My guess is that Rajoy, the guy who shepherded unpopular austerity measures is doing it for personal political reasons.

He is aware that his party will never get much of the vote in Catalonia (they got 8.5 percent in 2015). So alienating Catalan electorate is not a big deal for him. On the other hand, cracking down on Catalan independence is likely to make him popular elsewhere in the country.

The political theatre is also taking away from the devastation his austerity measures brought to Spain.

In other words, this is what Erdogan or Duterte has been doing and what I predicted Trump will soon be doing.

The problem is that with this escalation he ensured that, next time a referendum is held, Catalans will vote for independence. And in between, there will be more protests, social unrest and violence.

He essentially reversed the current trend.

It is not a winning hand for Rajoy since, at some point, the EU will have to break its rather surprising silence and sanction the Spanish government. It is hard to criticize the illiberal democracies of the East without saying anything about similar tactics in Spain.

Then what?

My guess is that this will have momentous consequences for both Spain and the EU.

20 September 2017

The Soviet Officer Who Saved the World

The word hero is bandied around all the time.

It is the cheapest and most meaningless praise of our time.

And you realize that especially when you encounter a real hero.

This is a story I did not know and I thought it was really unfair that the world was largely uninformed about the actions of one remarkable man.

On 26 September 1983 Stanislav Petrov "was the duty officer at the command center for the Oko nuclear early-warning system when the system reported that a missile had been launched from the United States, followed by up to five more."

This was a little over three weeks after the Soviet Air Force shut down the Korean Airline Flight 007 killing all 269 passengers and crew on board.

The incident was met with global indignation and brouhaha and the relations between the US and Soviet Union were very tense. We are talking about the Reagan Administration with an actor fronting a bellicose military firmly in charge.

Petrov was dubious from the beginning. He thought it made no sense to launch a nuclear attack with only five ballistic missiles since the US knew that the Soviets would retaliate with massive force.

Fire and fury in The Orange Man's words.

But, as any military personnel will tell you, it was not up to him to decide whether the attack was real and what to do about it. He was obligated to report the incident right away.

However, Petrov realized that if he called it in, there was no way his superiors would demure and investigate the matter further. With only two minutes at their disposal, they would have pressed the proverbial button.

That, in turn, would have triggered an even bigger assault by combined Nato forces and life, as we know it, would have ceased to exist on our lovely Blue Planet.

Now, a hero is someone who acts selflessly in addressing such an extraordinary dilemma. If Petrov was wrong he would have caused immense casualties in his own country. If he called it in, he would have destroyed the planet.

The man assume the responsibility of doing nothing and risk everything, including his life and the life of his loved ones.

It turned out Petrov made the right call it was an equipment malfunction.

Almost anybody else, including, as I recently mentioned, the US officer who carries the nuclear football, would have made the opposite call and informed his superiors.

And the rest would have been history. With no one left to record it.

The Soviet army did not punish him, nor did they reward him. They appreciated what he did, but rewarding him would have made hem look bad as the idiots behind the shaky early warning system.

In the end, Petrov retired early as after the incident he suffered a major nervous breakdown.

As he later put it, this was the only time such an event occurred during the Cold War and it happened to him.

And we are all glad that it was him and not someone who mindlessly obeyed orders.

Remarkably, this  is how this real life hero saw what he did.
Petrov has said he does not know that he should regard himself as a hero for what he did that day. In an interview for the film The Man Who Saved the World, Petrov says, "All that happened didn't matter to me — it was my job. I was simply doing my job, and I was the right person at the right time, that's all. My late wife for 10 years knew nothing about it. 'So what did you do?' she asked me. 'Nothing. I did nothing.
He died quietly this last May.

No one in the West knew of his passing until this week.

Because we were too busy admiring our heros.

11 September 2017

Netanyahu's Corruption Cases: Is He On His Way Out?

As impeachment, obstruction of justice and conflict of interest are daily preoccupations in Trump Presidency, few people pay attention to what his happening to his old buddy Bibi Netanyahu.

The other walking conflict of interest.

Netanyahu is facing four separate corruption investigations and on top of all that, Israel's top prosecutor has just announced that he is thinking of charging his wife Sara Netanyahu with fraud and breach of trust.
Prosecutors say Sara Netanyahu and a senior official, Ezra Seidoff, claimed costs for food prepared externally and for hiring private chefs, between September 2010 and March 2013, whilst covering up the fact that the residence also employed a cook. State funding for both is not allowed. 
"In this way, hundreds of meals from restaurants and chefs were fraudulently received in the order of 359,000 shekels," a statement from the attorney general's office said.
359,000 shekels is about $100,000 but Haaretz puts the figure at 400,000 shekels or $111,850.

If Avichai Mandelblit, a Netanyahu appointee,  proceeds with the charges it will be a serious blow for Bibi. But far worse are the four dossiers about him.

Let's take a look.

Case 1000

For years, Israeli billionaire movie producer Arnon Milchan (the owner of New Regency Films) lavished Bibi and Sara Netanyahu with expensive gifts like cigars, champagne and even jewellry.
The estimated value of these gifts from a friend, as Netanyahu describes them—and which Milchan reportedly told police “made him feel sick”—amounted to a hundred and eighty thousand dollars.
Netanyahu always maintained that these were just friendly gestures and no quid pro quo was ever expected or provided.

Until recently, it looked like the only advantage these gifts got Milchan was this:
Netanyahu successfully lobbied Secretary of State John Kerry for the renewal of Milchan’s American visa, which allowed Milchan to avoid paying millions of dollars in Israeli taxes.
At the end of August, police uncovered a very significant Netanyahu intervention that benefitted Milchan immensely.
The police have prima facie evidence according to which Netanyahu used all his weight to convince British Jewish billionaire Len Blavatnik to acquire shares in Israeli Channel 10. A significant portion of those shares were held by Milchan in an investment gone bad, in which he stood to lose tens of millions of dollars. When Blavatnik acceded to Netanyahu’s request and acquired the channel, which he still controls, it redeemed Milchan's failed investment. The acquisition by Blavatnik was worth a fortune to Milchan.
That's definitely a major quo for a pile of expensive quid.

And Milchan is cooperating with the police.

Case 2000

This one involves Netanyahu negotiating with one media mogul for positive coverage for his government in exchange for limiting the circulation of another paper.
Image Flash 90
The police have tapes of Netanyahu negotiating with Yedioth publisher Arnon Mozes, in an apparent effort to skew the daily's coverage in favor of the prime minister. In exchange Netanyahu would supposedly help restore Yedioth’s status to the top of Israel's media industry by spearheading legislation that would hamstring Israel Hayom, the free newspaper owned by American casino tycoon Sheldon Adelson. 
Or, alternatively, perhaps the premier would convince his friend Adelson to restrict the freebie’s distribution.
Netanyahu even gave a list of Yedioth journalists he wanted sidelined.

But when the tapes became public, he claimed that he was not serious about his offer and he was just saying those thing to please Mozes. The problem with his denial is that:
According to a recent Channel Two report broadcast, Adelson told Israeli police investigators that Netanyahu had tried to persuade him to withdraw plans for weekend supplements at Israel Hayom. That would indicate that Netanyahu was indeed intent upon reaching a deal with Mozes.
As a result, Netanyahu has recently been named a suspect in the case.

Even worse for him, there is now a witness willing to point a finger at him.

You see, the conversation was accidentally uncovered when police seized his former chief of staff Ari Harow's telephone. Harow was the point man in the negotiations with Mozes.

He has now agreed to testify against his former boss to avoid jail time in another case.

Case 3000

This one is the most serious and consequential file as it involves bribery and corruption in the military procurement process.

Israel has a small fleet of Dolphin class submarines that are capable of firing cruise missiles with nuclear warheads. There are six of them. In 2015, Israeli Defense Forces (IDF) recommended that one of them should be retired in 2019 and a new one should be purchased.

Later on, the head of the National Security Council discovered that Netanyahu ordered three more subs from Germany at a cost of one and a half billion dollars.

The then Defense Minister Moshe Ya'alon conducted a review to ensure that the Prime Minister was not given misleading information, like IDF needing and requesting not one but four submarines. Nobody had produced such a memo.

A few months later, Ya'alon's office was informed that Netanyahu was going to sign the four-submarine deal during a state visit to Germany. Except no one knew that this deal was on the agenda.
“The issue was examined in the chief of staff’s office, in the Navy headquarters and in the Planning Directorate,” Yediot Ahronot’s Alex Fishman wrote, last November. “No one in each of these three offices had a clue about the new submarine deal.”
When Ya'alon confronted Netanyahu about no such request coming from the IDF, Bibi told him that it was only a Memorandum of Understanding that he was going to sign. The subtext being, there is nothing serious, no need to get worked up.

But within a couple of months, Netanyahu forced Ya'alon to resign as Minister of Defense, ostensibly on the basis of other disagreements, replacing him with extreme right winger Avigdor Lieberman.

At some point, the initial bidding process prepared by the Ministry of Defense was scrapped and the contract for four subs was awarded to ThyssenKrupp.

Photo: EPA, Yaron Brenner
ThyssenKrupp is represented in Israel by Miki Ganor and his commission for the deal was about $45 million.

Ganor's lawyer is Netanyahu's cousin, confidant and personal lawyer David Shimron. In fact, Jerusalem Post called him Netanyahu's right hand man.

And according to Ganor, Shimron was to receive 20 percent of Ganor's cut, which works out to $9 million. 

It turns out the decision for a no-bid procurement was made by Netanyahu with Shimron's pushing. Shimron left a paper trail.
Channel 10 reported that, in July of 2014, the Defense Ministry’s legal adviser had sent an e-mail to the Defense Ministry’s director-general saying that David Shimron, the lawyer representing the German firm’s agent, had called him. Shimron wanted to know, the e-mail said, if “we are halting the bidding process in order to negotiate with his client, as was requested of us by the Prime Minister.”
The problem for Shimron is that Miki Ganor decided to turn state's witness recently. He is providing the police with names of officers he bribed and of other people who pushed the contract through the administration.

As a result, David Shimron was placed under house arrest, though he was subsequently granted permission to go on a trip to the US.

The whole episode has proved to be very damaging for IDF's reputation.
The submarine affair now threatens the Israeli defense establishment and is lifting the veil over the Israeli defense acquisition process itself, which is worth tens of billions of dollars. Netanyahu's former chief of staff David Sharan was arrested Sept. 3 on suspicion of accepting bribes. (Sharan had also served as senior aide to Energy Minister Yuval Steinitz.) Others arrested were Brig. Gen. (res.) Shai Brosh, the former commander of Shayetet 13, Israel’s esteemed naval commando unit, and former minister Eliezer Sandberg, who is close to the Netanyahus.
Netanyahu says that he has no clue about his cousin and adviser Shimron's involvement in the case. Since the whole deal was handled at every turn by the Prime Minister's Office this is rather hard to believe.

Shimron’s law partner Isaac Molho, Netanyahu’s envoy on all sorts of secret diplomatic and other missions, may also be involved in Case 3000. One report says Molho represented the premier in talks with the Germans regarding a sensitive issue that may could have had something to do with the subs. If so, Molho represented the PM while his law partner represented the Germans’ agent. Under these circumstances, it is hard to buy Netanyahu’s claim that he didn’t know of Shimron’s involvement in the deal.
There is also this:
If Netanyahu did know about Shimron’s involvement with the submarines, he will face criminal charges in this affair as well. If he didn’t know, it could cause a lot of people to wonder if such as person is sufficiently competent to lead the country. The submarine and naval vessel deal is viewed as a strategic transaction involving Israeli national security, and as such, it was administered and led by the prime minister himself. Responsibility for the deal was placed on his shoulders alone. “I didn’t know” is an excuse that could extricate Netanyahu from criminal charges, but not from the public’s blame.
Case 4000

This is a fairly recent case and its relevance is in the fact that, as one scandal too many, it made defending Netanyahu very difficult.

The Bezeq affair, which is named after Israel's giant telco, erupted in July with State Comptroller Jospeh Shapira's report. He alleged that, Netanyahu, who was also Minister of Communication at some point, did not disclose that he was very good friends with Bezeq's owner Shaul Elovitch. As Minister he made many decisions that affected Bezeq and that's conflict of interest.

When Ha'aretz disclosed that Netanyahu was given positive coverage in Walla web portal which is owned by Bezeq, Netanyahu was prevented from handling matters concerning Bezeq.

The Director General of the Communications ministry was Avi Berger. Berger was trying to enact a broadband reform that would have negatively affect Bezeq's monopoly. So Netanyahu got rid of him and appointed Shlomo Filber as his replacement.
The [Shapira] report found that Shlomo Filber, director general of the Communications Ministry and a former top aide to Netanyahu, had been providing Bezeq with confidential documents and other information from which the company stood to benefit. 
Filber was sent to house arrest.

What Happens Now?

Avichai Mandelblit' recent announcement about Sara Netanyahu is a sign that the noose around the Prime Minister's neck is tightening.

Up to a few months ago, people thought that the Attorney General, a Netanyahu ally, would never go after him.
Avichai Mandelblit, the Attorney General, was appointed by Netanyahu. As Ruth Margalit noted last month, there is evidence that Mandelblit sat on compromising evidence for months. “When the thrust of the allegations is so powerful, they cannot ignore them,” Arad said. “But they can delay, control, and spin.”
Now he is actively investigating all these corruption cases.

The same aboutface is also true for the friendly media.
However, the real surprise comes from Israel Hayom, which for years has all but explicitly celebrated its strong ties with Netanyahu but now seems to concede as well that a metaphorical noose is tightening around Netanyahu’s neck.
Hayut Photo credit: Flash 90/ Channel 2 News
All of this came to fruition at a particularly bad time for Netanyahu.

His Justice Minister Ayelet Shaked (HaBayit HaYehudi) lost her fight to stop the appointment of Esther Hayut as Supreme Court's Chief Justice.

Daughter of Holocaust survivors, Hayut is a fiercely independent and brilliant jurist who is hated by all religious and right wing parties in Israel.

Her handling of the appeal of these corruption cases could prove to be critical for Netanyahu.

In any event, whatever happens next, this point is worth remembering.
Netanyahu has no intention of vacating his seat willingly, however, and will fight for it with all the means at his disposal. One of his political rivals in the Likud told Al-Monitor on the condition of anonymity, “Netanyahu won’t hesitate to burn down the house over its inhabitants. His personal [political] survival is more important to him than the public good.”
And, like his good buddy Donald Trump, this could involve a nice little war.

Perhaps an excursion into Syria? 

And why not?

All it takes is a permission from Putin. Trump's other buddy.

We live in scary times.

05 September 2017

How Mueller Is Cornering Trump

New York Times recently ran a piece indicating that Robert Mueller asked for and received an early draft of the James Comey firing letter.

At the time, the draft (penned by Stephen Miller, the ironic white supremacist) was blocked by White House Counsel who asked Deputy Attorney General Rod Rosenstein to produce a different text.

The insinuation was that the original draft could be used to show that Trump was guilty of obstruction of justice.

I disagree. I think Mueller's move is a classic misdirection.

As I mentioned before, obstruction of justice charges or impeachment are a logical impossibility with a Congress controlled by the GOP. They would never throw one of their own under the bus and they would never go against Trump's core constituency.

As the song goes, without them, they are nothing.

What Mueller is doing is to obscure his real target, which is money laundering for Russian oligarchs through real estate deals.

And he is moving carefully yet deliberately and he is blocking all potential exit points before Trump realizes he is cornered.

The look on his face in that recent photo tells you what you need to know about his intentions.

Let's start with his first move.

After putting together a team which specializes in financial fraud and criminal accounting, he ordered a pre-dawn raid to the home of Paul Manafort, Trump's former campaign manager to collect evidence.

What kind of evidence?

Squeezing the Perp

Well, Manafort is an interesting guy. He has all sorts of connections to Russian oligarchs. This is how Politico summarized them.

But let me remind you the highlights.

Manafort had to resign from Trump's campaign when the New York Times revealed that
Ukrainian investigators were looking into a “secret ledger” that listed $12.7 million in cash payments earmarked for Manafort by the party of the deposed former Ukrainian President Viktor Yanukovych.
While the Ukrainian prosecutors subsequently found no evidence of foul play, such large sums on a secret ledger didn't leave a positive impression.

So, no one was surprised when it was reported that Manafort "owed as much as $17 million to companies controlled by a Russian oligarch and a Ukrainian businessman with political ties to Moscow."

And the debt was owed to well connected people.
Manafort—who retroactively registered as a foreign agent last month for his lobbying work—owed $7.8 million to a company connected to Oleg Deripaska, a Russian oligarch with close ties to Vladimir Putin. Manafort also owed a separate sum of $9.9 million to a Cyprus company linked to Ivan Fursin, a Party of Regions member of the Ukrainian Parliament, through a Delaware-based LLC that he previously used to purchase real estate in New York City, the Times reports.
Manafort was also present in Donald Jr.'s infamous meeting with a Kremlin-connected Russian lawyer who promised to provide dirt on Hillary Clinton.

Also in attendance was "Irakly “Ike” Kaveladze, [who] had once been accused by congressional investigators of participating in a $1.4 billion money laundering scheme to funnel money from Eastern Europe through U.S. banks."

Given this background, if you were Mueller, you would expect some skeletons in Paul Manafort's closet. And he must have found some, as the search warrant for the raid was approved by a federal judge who agreed that there was probable cause.

Normally, as a prosecutor, you squeeze the perp (I am fully versed in Law and Order lingo) and they give you the higher ups.

Except in this case, Manafort knows (and Trump has already inquired to find out) that the President can pardon him no matter what. In essence, he is unsqueezable, if there is such a word.

To counter that, Mueller approached New York's Attorney General Eric Schneiderman to include him in the Manafort dossier, as there are some New York City real estate deals and lobbying done from the city.

This has two advantages.

One, Schneiderman hates Trump with a passion as the President attacked him on Twitter using derogatory terms like "hack" and "lightweight." He is the one who forced Trump to settle the Trump University case for $25 million. And he can do more.
The New York prosecutor’s office also is looking into some of Trump’s business transactions and could potentially share those records with Mueller’s team, one of these people said. 
But the real reason why Mueller got Schneiderman to investigate Manafort is this:
It also could potentially provide Mueller with additional leverage to get Manafort to cooperate in the larger investigation into Trump’s campaign, as Trump does not have pardon power over state crimes.
In order words, Manafort has now become eminently squeezable.
Former federal prosecutors tell The Daily Beast one of Manafort’s biggest legal liabilities could be to what’s called a “check the box” prosecution. Federal law requires that people who have money in foreign bank accounts check a box on their tax returns disclosing that. And there’s speculation that Manafort may have neglected to check that box, which would be a felony.
If you are looking into Manafort's tax returns for possible crimes, why wouldn't you look into his former bosses returns?

In fact, Mueller can do that using Manafort's case.

Enter the IRS.

IRS Criminal Investigations Unit

If there was any doubt that Mueller's focus was on financial shenanigans, his decision to get the IRS' Criminal Investigation unit (CI) involved should set things straight.
Special counsel Bob Mueller has teamed up with the IRS. According to sources familiar with his investigation into alleged Russian election interference, his probe has enlisted the help of agents from the IRS’ Criminal Investigations unit.
Now these are folks who take financial crime seriously and besides tax evasion, their specialty is money laundering.
This unit—known as CI—is one of the federal government’s most tight-knit, specialized, and secretive investigative entities. Its 2,500 agents focus exclusively on financial crime, including tax evasion and money laundering. 
Apparently they hold Mueller in high esteem and the feeling is reciprocal.
“They view them with the highest regard,” Sheil said. “IRS special agents are the very best in the business of conducting financial investigations. They will quickly tell you that it took an accountant to nab Al Capone, and it’s true.”
So now Mueller has Trump's tax returns and he has the CI unit working overtime to follow the money trail. Besides the enormous threat that represents, it also puts a significant financial burden on the targets of the investigation.
The Daily Beast previously reported that targets of Mueller’s probe—including Manafort—are facing financial strain because of the probe, and that Manafort recently parted ways with the law firm WilmerHale in part because of his financial troubles.
In other words, it does not look good for Trump.

But there is one other escape hatch for him.

Justice Department's Tax Division

 You see,
As special counsel, Mueller is subject to the same rules as U.S. Attorneys. That means that if he wants to bring charges against Trump associates related to violations of tax law, he will need approval from the Justice Department’s elite Tax Division.
If there was a guy, like Jeff Sessions, appointed by Trump with his interests at heart, he might have stopped Mueller or dilute his findings or do something, anything.

Except, like almost 80 percent of federal senior positions, Team Trump neglected to appoint anyone to that post. It is being helmed by career bureaucrats.

And it is too late to do anything about it as it requires Senate confirmation and it is a sure bet that the Democrats would block a pro-Trump candidate until after the conclusion of the Mueller investigation.

Is it kismet or irony?

You decide.

30 August 2017

Can Trump Start a Nuclear War?

My last post got mixed reviews.

It seems that people agreed with the bulk of my argument but I lost them at the conclusion. Trump starting a war to save his presidency was too far-fetched for many of my readers.

Their point was not that the "short-fingered vulgarian" would be incapable of incinerating millions of people: they all agreed that he would do so with glee.

But surely, they said, someone would stop him.

You know, the Secretary of Defense, one of the generals, Javanka, someone.

Instead of replying "don't call me Shirley," as I should have, I Googled the question "can anyone stop Trump if he starts a nuclear war?" and I got 4,600,000 hits.

I am sure not all of them are on this topic but I went three pages deep and discovered that, as early as 1 December 2016, Washington Post had a piece declaring that Trump could start a nuclear attack if he felt like it and no one could prevent it.

More significantly, after his Arizona speech last weekend (where he hinted Arpaio's pardon), former Director of National Intelligence James Clapper issued a warning about Trump's likelihood to launch a nuclear attack.
Clapper described a plausible scenario with North Korea. “In a fit of pique he decides to do something about Kim Jong-un, there’s actually very little to stop him,” Clapper warned, “The whole system is built to ensure rapid response if necessary. So there’s very little in the way of controls over exercising a nuclear option, which is pretty damn scary.”
Around the same time, dozens and I mean dozens of magazine articles were published on this very topic and they all suggested that Trump was a thin skinned bully who would think nothing of destroying countries and killing millions.

Clearly, I wasn't the only one who had this macabre thought.

The so-called nuclear football was designed to start the launch in four minutes, there is nothing that can be done once the attack is underway and the targets will be hit within 30 minutes.

Trump needs no second person (unlike the military personnel who actually launch the missiles) to sign off on his command and there is no other impediments once he issued the order and entered the code.

Okay, you might say, surely, there would be serious repercussions for him if he did that.

Unsurprisingly, I disagree with that premise. In fact, the point in my previous post was that starting a nuclear war with North Korea had absolutely no downside for a cornered Trump and many upsides.

In case you are under the mistaken impression that America's political leaders would find a nuclear war abhorrent, this is Lindsey Graham talking at the beginning of this month:
“If there’s going to be a war to stop [Kim Jong Un], it will be over there. If thousands die, they’re going to die over there. They’re not going to die here. And [Trump’s] told me that to my face,” Graham said. “That may be provocative, but not really. When you’re president of the United States, where does your allegiance lie? To the people of the United States.”
Let me repeat the cold and callous phrase: "it will be over there."

See how easy it would be to defend such a decision?

Think about it, if Trump were to attack North Korea, other than a bunch of hippies, most Liberals would stand behind the president, as they did in the Iraq War.

Trump would suddenly become presidential, just like Dubya.

North Korea would try to retaliate but they can only reach Guam and chances are US anti-ballistic missiles would stop their rockets. And even if they can't, it's only Guam and brown people.

In such a scenario, experts believe that Kim Jong-un would punish South Korea by trying to kill as many of their people with conventional weapons before the radiation clouds get to them.

I firmly believe that, in the US, such a horrific scenario would not make people upset. Asians are killing each other, people would say, we have nothing to do with it.

Just like they had nothing to do with the tens of millions of people who died in the Middle East.

Stuff happens. Let's watch Entertainment Tonight honey!

Breitbart might even present the catastrophe as something beneficial for the US, like you know, Korea's manufacturing jobs might come back to America.  The ones they stole from us in the first place.

And Trump would use this as a talking point in one of his rallies to thunderous applause from Americans of all walks.

I made America great again!

The upside includes the potential damage to be done to China. As a neighbouring country they might get radiation poisoning. Serious pollution and agricultural problems.

Would that bother Trump? Or anyone else?

In short, if Trump is cornered, and he will be at some point, his most obvious move would be (besides first pardoning himself) to start a nice little nuclear war "over there."

Kim Jung-un is the perfect foil. And he will provide the unassailable pretext.

One final thought: What we learned from new leaders like Erdogan or Duterte or Trump is that they will go to places where no decent person would go and no politicians had gone previously.

They do so because there is no penalty for it.

In fact, they are rewarded by a tribal electorate who declared that there is nothing that would change their minds about their Dear Leader.

Surely, fire and fury then.

Yes and at that point you can call me Shirley.

Or Ishmael.

28 August 2017

How Will Trump Try to Save His Presidency

In my previous post, I outlined the elements that could sink Trump's presidency.

Losing the support of corporate titans is a big deal as it will make governing much harder: If they all take a risk averse position, like Waterbridge, the currency and bond markets could sink.

And if stock prices tanked as well, collectively they could drag down the entire US economy.

Already, Trump's threat to shut down government over the funding of his "big beautiful wall" had a sgnificant impact: the "rate on Treasury bills maturing Oct. 12 jumped by as much as 5 basis points Thursday, the largest intraday move since March."

Expect more economic turbulence during the upcoming debt-ceiling debate.

Trump's other problem is more pressing. Robert Mueller is gathering evidence on the link between Russian dirty money and Trump Organization's decades long efforts to launder it.

A smoking gun, or as it is more likely, an arsenal of smoking guns on those shady deals would be much more damaging in the eyes of Trump supporters than a tenuous link between Russian hackers and US elections.

The latter could be dismissed as fake news, the former reveals Trump as a crooked One Percenter.

To make matters worse, Trump's unhinged tweets and his approving reaction to neo-Nazi violence led the Establishment to question his fitness for the office.
"Republicans in Congress, the highest of intelligence officials, the highest of military officers in our country, leaders of the business community -- all of whom have dealt with the White House, and many of them dealt personally with Donald Trump -- have come to believe that he is unfit for the presidency," Bernstein told CNN's Brian Stelter on Sunday. He said those people are "raising the very question of his stability and his mental fitness." 
Given this background, the question for people around him is this: how do you save a senile thin-skinned bully with a narcissistic personality disorder?

My somewhat educated guess is that Javanka and John Kelly have a comprehensive plan.

They are responsible for the entire portfolio of Trump Administration, after all.

But will it work?

Let's start with the plan.

Mollifying the Establishment

The first step would be to repair Trump's relationship with the business community and what better way to do it than passing a massive tax cut for One Percenters.
The Trump administration has decided to push hard for tax reform and dial down a controversial national security investigation into steel imports in a bid to swing Republican support behind the president after the turmoil of recent weeks, according to senior officials. 
They said that former marine general John Kelly, the new chief of staff, was leading efforts to restore order to the White House and reassure Republican leaders alarmed by Donald Trump’s equivocal reaction to white nationalist-fuelled violence in Virginia last week and the subsequent open criticism from business leaders.
Along with that, the plan would call for him to persuade Congress to review and shrink the Volcker rule so that Wall Street firms and banks can play the stock market with their own money.

If Trump succeeds, this might even stop Lloyd Blankfein from trolling him on Twitter.

Vampire squid tamer Matt Taibbi is pleased as there are signs that this is already happening.

Next step would be to give the Pentagon some generous war goodies.

Which has already happened, in the form of the Afghanistan announcement that calls for troop increase.

I say "war goodies" because Trump's shiny new Afghan policy does not have achievable goals or an exit strategy or even a timeline. It has no purpose other than appease the generals, especially the ones who think he is unfit for the office.

Naturally, the "warrior monk" James "Mad Dog" Mattis is pleased.

The third step would be to move Trump away from the alt-right discourse, soften his interventions to make him more presidential and establish some message control.

In that respect, Steve Bannon's exit is significant and it shows that Kelly is now in charge. Same with the recent departure of the rather ghoulish Sebastian Gorka.

His guiding hand is also evident in persuading Trump (after his rambling and angry speech in Arizona) to use a teleprompter and to stay on message for his rally in Reno, Nevada where he called for unity.

But is it possible to keep Trump under control?

After all, he has a beautiful brain and he is his own counsel.

So this is the question:

Could This Plan Work?

To put it bluntly, I seriously doubt it.

That's not just because Trump is Trump. He is. And that's a big obstacle.

But more importantly, the plan's implementation requires Trump to overcome some contradictory elements and that might not be possible.

Let's go through the items.

Tax reform is unlikely to pass.

Sure, all the deficit scolds like Fix the Debt folks are shamelessly supporting a plan that would reduce tax revenue by a staggering 3.9 trillion over the next decade.
Some of the same people who were anxious about the debt sounded delighted by Donald Trump’s plan to cut taxes for corporations and high earners, trumpeting it as a way to fuel growth. Never mind that estimates from the conservative-leaning Tax Foundation showed Trump’s campaign plan could reduce federal revenue by $3.9 trillion over 10 years. 
And under normal circumstances GOP would only be too happy to oblige, as they have every time they were in power.

You know, #StarveTheBeast.

But Trump is in the middle of another nasty feud with Mitch McConnell, John McCain and a number of prominent Republicans so it is hard for the White House to expect much support at the Hill for their legislative agenda.

Moreover, his vicious attacks and his tendency to hog all the credit and deflect all the blame is already making the Republican Congress trepidatious.

In that context, if the Senate Democrats held firm as they did for the Obamacare repeal efforts, it would be difficult for the GOP leadership to find the requisite 60 votes in the Senate.

In fact, since this massive giveaway to the ultra-rich would make a touchy campaign issue during next year's midterm elections, some vulnerable GOP Representatives might balk, fearing electoral backlash from their constituency.

As I said, it is unlikely.

The second leg of the plan, which is expanding the war in Afghanistan with a troop surge, is easier to implement, as it might go unnoticed for a while.

As we know from the Iraq War, all you need to do is to populate Sunday morning talk shows with a bunch of Very Serious People (VSP), in Atrios' phrase, and soon folks will believe that America's longest war is actually winnable.

If you can also control the information about body bags, as Bush successfully did, the time frame for maintaining this illusion is quite large.

These efforts will also be helped by the fact that there is nothing more presidential than blowing up people, as we know from the Syria strike and the subsequent media lovefest.

So, this one could work.

The third element is the trickiest.

Leaving MAGA Nation Behind

The third element, that is, moving Trump away from his racist, divisive and belligerent discourse and gently nudging him towards a more acceptable platform might be the biggest problem.

You see, before Charlottesville, the MAGA Nation was showing signs of support erosion.
Last month, Gallup found that Trump’s approval rating was underwater in 31 states nationwide—including 11 that he won in the election. FiveThirtyEight’s adjusted poll aggregator shows that his popularity has hit an all-time low of 36.6 percent—worse than any other president at the same 200-day mark in more than 60 years of polling.
An Investor's Business Daily (IBD) poll puts his disapproval rating at %32, the lowest figure for his entire presidency.

That general decline has also seeped into his Republican base. Overall, between July and August, there is a drop of 11 to 12 point in all categories of voters.

However, as CNN noted, the fall is less steep among non-college whites, which was his core group in the election. But even in that group, there is a significant decline.
But that standing still represents an erosion from his 2016 vote among blue-collar whites in 12 of those states; in five of them, he's declined by double-digits. Perhaps most important are the trends in four of the Rust Belt states that proved decisive last year: Michigan, Ohio, Wisconsin and Pennsylvania. In all of them exit polls found Trump won between 62 and 64% of non-college whites. (...)
In Wisconsin, for instance, Trump's approval among whites without a college degree now stands at 51%, close to Romney's 53% vote share in 2012 but far below Trump's own 62%. Likewise, in Pennsylvania, Trump is now at 55% approval with non-college whites, almost exactly Romney's 56% vote in 2012, but well below the president's 64% among them.
In that sense, Trump cannot afford to move his message to the center. Already, he is hemorrhaging support among the educated white conservatives which occupy that space. Moving into their field would not help him.

He needs to stay with his core constituency and he needs to stir them up. This is especially the case because when Mueller strikes they are the only ones who are likely to stay with him.

There is one more thing.

People refer to Trumpistas as fringe elements or extreme right wingers. They are not. They are the heart and soul of the Republican Party and they represent the vast majority of their primary voters.

After Charlottesville, most news outlets claimed that Trump's numbers sank. Google it and you'll see.

In fact they held steady. The downward trend noted above notwithstanding, there is less than one percent shift between pre and post Charlottesville.
As of Wednesday evening, Trump’s approval rating was 36.9 percent, according to the FiveThirtyEight average, down only slightly from 37.6 percent on the day before1 a counter-protester and two police officers were killed in Charlottesville. His disapproval rating was 56.8 percent, up only slightly from 56.3 percent before Charlottesville.
So his support of neo-Nazis did not negatively affect his standing within his constituency.

That's because the voters who flocked to Trump are not there for the issues.

They adore Trump because, like them, he feels aggrieved and wronged by others and he liberally lashes out at them. They feel exactly the same way.

And like him, they are frustrated that they are no longer allowed to express their martyrdom in an appropriate (i.e. aggressive) manner because of rampant Political Correctness.

These are the people who declare, poll after poll, that White Christians are the most discriminated against group in America.
Fully 77% of Trump voters think the president "did enough" to condemn white nationalist violence in Charlottesville. Two-thirds of them had no problem with the president's delay in mentioning neo-Nazis and white supremacists by name. 
Perhaps most remarkably, 48% of Trump voters think the Charlottesville white nationalists either "have a point" (37%) or were "mostly right" (11%). And 68% of Trump voters see "a lot of discrimination" against white people in the US.
To them, Trump's pro-white, racist, sexist and anti-liberal stances represent a time when men were men, women, kids and minorities knew their places and that was that.

Which is why, surprising as that may seem, he does have a considerable following among African Americans, Hispanics, Muslims and, of course, white women who do not mind an occasional pussy grab.

Trump is their warrior and he is avenging them and he is standing up to them (whoever "them" might be) and he is kicking them viciously.

As long as he does that, in their eyes, he can do no wrong.

This is how Nate Silver puts it.
Trump won 23 percent of everyone, regardless of party, who cast a vote in the Democratic or Republican primaries last year. Those are the people who were truly with him from the start. 
A recent Monmouth University poll found that 61 percent of Trump supporters said they’d never change their minds about him
That works out to about 23 percent of the country overall. About 20 percent of voters say they strongly approve of Trump.
In other words, despite his overall decline, Trump has not lost his core constituency. And more importantly, he cannot afford to turn them off.

Besides, Steve Bannon and alt-right already warned him that if he abandoned those aggrieved white nationalists they would launch the mother of all wars. And that is a credible threat: Any negative news coming from Washington Post may be shrugged off but coming from Breitbart and similar outlets, they will hurt.

With Mueller breathing down his neck Trump is stuck. So he will continue to be their fighter: Hence Joe Arpaio pardon.

However, that is a problem in and of itself.

He cannot govern with 23 percent of the electorate behind him.

The system that made One Percenters possible relies on a sanitized, bland environment where government is silently making changes for a continual upward income redistribution without ordinary people noticing: Do not wake them up and take their attention away from baseball, Survivor and Entertainment Tonight.

In that sense, Trump and his 24-hour Twitter cycle is making One Percenters very unhappy. Why cheer the neo-Nazis and get all this media attention on stupid and useless stuff, they say, people could start paying attention and then we are screwed.

OK, maybe not screwed, as we will continue the plundering, but why make the whole thing more difficult?

So if he cannot give them their tax cuts and deregulation they will turn on him.

On top of that, intelligence agencies will continue their regular leaks of damaging information.

And soon GOP will realize that 2018 midterm elections might become a bloodbath.

At that point Trump will have one card to play.

And that's starting a big and beautiful war.

His short fingers are already on the buttons.

Stay tuned.


This is how Wall Street feels about Trump presidency:
Despite an initial excitement about having a “C.E.O. president” in the White House who would promote business-friendly policies and unleash growth the likes of which the world had never seen, Wall Street and business leaders have begun to get the sinking feeling that a six-time bankrupt real-estate developer might not turn out to be the savior they were promised. As Trump remains unable to focus for one freaking second in order to get his legislative agenda passed, insiders have been selling millions of their banks’ own shares, with sales by board members and executives outnumbering purchases by roughly 14 to one, according to the Financial Times. In total, top brass at the U.S.’s six biggest banks have dumped a net 9.32 million in shares since the beginning of the year. Since the election, UBS credit analyst Robert Smalley, bank stocks have become “a barometer” for “failure or success” of Trump’s policies. Given the lack of them, you can kind of see where Wall Street is coming from.

22 August 2017

Trump's Downward Spiral

The Orange Man is in trouble.

A couple of months ago, I predicted that Trump was not going to be able to finish his first term.

I did not suggest that GOP might impeach him or that his core constituency would gradually turn against him.

In fact, I said the opposite.

GOP would never impeach one of their own, unless they reinforce social safety net, push for universal health care and increase taxes.

And at the rank and file level, polls indicated that there was no significant buyer's remorse among Trumpistas.

My prediction was based on the fact that Trump and GOP (and their wealthy donors) made a Faustian bargain whereby Trump was going to profit immensely from the presidency and, in exchange, he was going to deliver a specific legislative agenda designed to turn One Percenters into Point Five Percenters by repealing affordable health care, passing massive tax cuts for the rich and destroying the social safety net for the poor in any way he can.

I maintained that, because of his original feud with intelligence agencies, he was not going to be able to deliver an this legislative agenda as they were going to reveal all his money laundering deals with Russian oligarchs and organized crime in a steady drip, drip, drip movement.

And when that happens Trump will be toast, I said, because the One Percenters will desert him and along with them the GOP. He will be forced to resign.

Welcome President Pence.

I didn't think the downward movement would start this soon but it seems to be happening.

And exactly on the terms I suggested in my original post.

One Percenters are Leaving the Ship in Droves

If we follow my framework, we start with the fact that Trump has so far been unable to pass any legislation through Congress even though his party is controlling both chambers.

That in turn negatively affected his relations with One Percenters.

You already know that since June, five members of his business advisory councils have resigned (Elon Musk of Tesla and Bob Iger of ABC/Disney for pulling out of Paris accord and Kenneth Frazier of Merck, Kevin Plank of Under Armour and Intel's Brian Krzanich for Trump's reaction to Charlottesville).

And after his disastrous press conference on Tuesday, 15 August where he blamed the so called "alt-left" for the violent confrontation with neo-Nazis, many more CEOs headed for the door.

So much so that Trump announced that he was disbanding both of his advisory councils.

In fact, it turned out that it was not his decision.
On Wednesday morning, a dozen of the country’s most influential C.E.O.s joined a conference call, and, after some debate, a consensus emerged: The policy forum would be disbanded, delivering a blow to a president who came into office boasting of his close ties with business leaders.

With the collapse of the councils, the president has all but lost his most natural constituency — the corporate leaders who stood to benefit from his agenda of lower taxes and lighter regulation.
The bold rebuke by the CEOs is a big deal given Trump's penchant to attack companies on Twitter and the federal government's massive role in the economy. It is hard to govern if you have the captains of the industry against you.

Moreover, this is not a symbolic gesture. Wall Street is up in arms.

And I am not talking about Goldman Sachs CEO Lloyd Blankfein trolling Trump on Twitter.

Ray Dalio, founder of Bridgewater, one the world's biggest macro hedge funds with $150 billion in assets under management said that he was "cutting his exposure to risk because of his concerns about stability in Washington."
While I see no important economic risks on the horizon, I am concerned about growing internal and external conflict leading to impaired government efficiency (e.g. inabilities to pass legislation and set policies) and other conflicts.
See what I mean?

The high flying stock market was one of Trump's (unwarranted) selfies. It now looks like the markets are heading south.
“If you look at various valuation metrics, it’s hard to argue that this isn’t an overstretched market,” said Mohamed El-Erian, chief economic adviser to Allianz. 
Underscoring the view that the US stock market is overdue a correction, big investors such as Pershing Square’s Bill Ackman and Pimco’s Dan Ivascyn have recently said they have bought protection against any turbulence, and US equity funds have suffered nine straight weeks of outflows, with $4bn seeping out over the period according to EPFR.
 The currency and bond markets were especially hard hit.
US Treasury yields, which shot up after Mr Trump’s November victory in expectation of inflationary infrastructure spending, have sagged lower for much of 2017. The dollar has slid almost 9 per cent this year against a basket of other major currencies, and US small-cap companies, which would benefit from tax cuts and a stimulus-primed domestic economy, are down nearly 5 per cent in August. That puts them on track for their worst monthly performance since the global stock market slump in early 2016.
So that is the most damaging and consequential problem for Trump. And it will be the key to his undoing.

But the more pressing problem is the direction the Robert Mueller investigation seems to have taken.

Financial Shenanigans and Money Laundering

It is being reported that Robert Mueller has gathered a team of financial experts who are experienced in following dirty money, links to organized crime groups, campaign financing fraud and similar white collar crimes.

Which means that his focus is not obstruction of justice but rather financial shenanigans. And he is going after not just Trump but his sons and Kushner as well.

In that respect, FBI's  the pre-dawn raid to Trump's former campaign manager Paul Manafort's house to confiscate computers and various records is not a good sign for Trump. Manafort is a low hanging fruit (with his well publicized shady deals in Russia and Ukraine) and Mueller's move might have been designed to get his cooperation against bigger targets.

There is more.

The Guardian recently reported that Deutsche Bank executives were going to be subpoenaed by Mueller. In case you are wondering what might be behind this move, well, it is a complicated and potentially very damaging tale.

Trump had borrowed $640 million from the bank's real estate lending division before the 2008 crisis. When he was unable to pay the $40 million portion that came due, he sued the bank for its role in the subprime debacle to get out of his liability.

Unimpressed, Deutsche Bank countersued.

Then something amazing happened. The bank's wealth management unit lent the $40 million to Trump in order for him to pay back its own real estate division.

Trump then moved his business from real estate division to private wealth management unit. That unit continued to lend him another $300 million. And this, at a time when no US banks or Wall Street firms would do business with the Trump Organization.

Ivanka and Jared also became clients of the same division. Reportedly, Kushner's mother was given an unsecured $25 million line of credit and Kushner also got a loan of $285 million last year.
Apart from the Trumps and Kushners, Deutsche Bank also has deep ties to Russia. In addition to settling allegations earlier this year that it allowed $10 billion to be laundered out of Eastern Europe, Deutsche Bank had a “cooperation agreement” with Vnesheconombank, a Russian state-owned development bank that is the target of U.S. economic sanctions.
In case the name of the Russian bank sounds familiar that's because you remember it from a meeting between Kushner and its CEO Sergey Gorkov arranged by the Russian Ambassador Kislyak, a meeting he conveniently forgot about until it was leaked.

Deutsche Bank is connected to Russia and money laundering in another way.
. . . in May, federal prosecutors settled a case with a Cyprus investment vehicle owned by a Russian businessman with close family connections to the Kremlin. The firm, Prevezon Holdings, was represented by Natalia Veselnitskaya, the Russian lawyer who was among the people who met during the presidential campaign with Donald Trump Jr. about Hillary Clinton. Federal prosecutors in the United States claimed Prevezon, which admitted no wrongdoing, laundered the proceeds of an alleged Russian tax fraud through real estate. Prevezon and its partner relied in part on $90 million in financing from a big European financial institution, court records show. It was Deutsche Bank.
Besides Deutsche Bank, Russian money connection is evident in various Trump projects like his infamous Soho building.

Trump's Russian partners include the Bayrock Group owned by Tevfik Arif of Kazakhstan, the Samir Group owned by Tamir Sapir of the former Soviet Republic of Georgia.

They were involved in several Trump projects. And by all accounts their main business is money laundering through real estate deals.

Felix Sater, a Russian-born American, who was the managing director of Bayrock is mentioned as a person of interest for Mueller. (He is the one on the right, the guy in the middle is Arif)

Sater is a convicted felon with extensive ties to Russian and American mob.
Before linking up with the company and with Trump, he had worked as a mob informant for the U.S. government, fled to Moscow to avoid criminal charges while boasting of his KGB and Kremlin contacts there, and had gone to prison for slashing apart another man’s face with a broken cocktail glass.
As I mentioned previously, one of Bayrock principals sued the company and accused them of being a front for a large money laundering operation.
“Tax evasion and money-laundering are the core of Bayrock’s business model,” the lawsuit said of the financiers behind Trump Soho. The financing came from Russian-affiliated business interests that engaged in criminal activities, it said. 
More specifically, the suit
alleged that Bayrock was “covertly mob-owned and operated,” “backed by oligarchs and money they stole from the Russian people,” and “engaged in the businesses of financial-institution fraud, tax fraud, partnership fraud, human trafficking, child prostitution, statutory rape, and, on occasion, real estate.
Finally, there is a long list of projects and real estate deals that are considered clear conflicts of interest.

It is only matter of time for Mueller to indict a Trump family member.

Firing Mueller is not a good option because the information he gathered would be leaked again in a paralyzing drip, drip movement.

Ok then, you say, what are Trump's option at this point?

That is the subject of my next post.