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01/14/2017

For the week 1/9-1/13

[Posted 10:30 PM ET, Friday]

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Edition 927

Washington, Obama and Trump

Late Tuesday came the bombshell, via various media outlets, that U.S. intelligence agencies and the FBI have been investigating explosive (some salacious) claims, compiled by a former Western intelligence official, that Russian government operatives engaged in a conspiracy with advisers to Trump’s presidential campaign and employees of his company.

Senior intelligence officials then shared the claims in a two-page addendum to a classified briefing President-elect Trump received a week ago Friday.

On Wednesday, Kremlin spokesman Dmitry Peskov dismissed the report, denying Russia has compromising material on Donald Trump.

“This is a clear attempt to damage our bilateral relations,” he said.  “Truly, there are those who whip up this hysteria, who will break their necks to support this ‘witch hunt.’”

Trump tweeted after the allegations surfaced publicly Tuesday, “FAKE NEWS – A TOTAL POLITICAL WITCH HUNT!”

U.S. officials did confirm that a summary of the information had been given to Trump out of an abundance of caution to make him aware of the allegations that could become public.

But an early investigation of the claims by the FBI revealed that in one key instance, the allegation that Trump’s attorney Michael Cohen traveled to Prague to meet with Kremlin officials to arrange cash payments to hackers working under Moscow’s direction, the FBI found no evidence that Cohen had traveled to Prague, ever, as Cohen himself asserts.  Then we learned it wasn’t even the same Michael Cohen!

Christopher Steele, 52, was identified as the ex-MI6 agent behind the dossier.  He went into hiding after his name was disclosed.  Steele, who is director of a private security firm, prepared the 35-page report – alleging Russia had compromising information on Trump – and now he fears for his life and expects backlash from Russia, the Daily Telegraph reports.  You made your bed, buddy (though I feel for his innocent family).

But on the issue of fake news (in the case of Russia, propaganda), Tuesday night, Hillary Clinton’s former campaign team ran with the above, the BuzzFeed story, with Brian Fallon and Josh Schwerin, both of whom served as Clinton spokesmen, saying the information meant the Kremlin could be in a position to blackmail Trump.  All of them reacted via Twitter.

“This is only credible theory for why Trump refuses to accept intelligence community’s finding that Russia was behind hacks,” Fallon said.  “No matter what he tweets in next 24 hours, Trump must be interrogated about Russia more than anything else at his (Wednesday) press conference.”

Schwerin also suggested Russia may seek to blackmail Trump with information it may have obtained.  “There’s a reason all presidential candidates traditionally release tax returns and have full financial transparency.  Blackmail should be impossible.”

Jesse Ferguson, also a Clinton campaign spokesman, said “could we really go from our first black male president to our first blackmailed president?”

Former Harry Reid spokesman Adam Jentleson also took to Twitter on Tuesday to say that the former Senate Democratic leader had seen the documents before writing an October letter to FBI Director James Comey about Trump’s ties to Russia.  The letter asserted that Comey was in possession of “explosive information” about close ties and coordination between Trump, his top advisers and the Russian government.

“Now you know,” Jentleson said, in a series of tweets.

But the dossier was fake news!  All the above Clinton team members jumped to conclusions, as is today’s modern politics, I understand.  But you ever wonder why I’m the “wait 24 hours” guy?  It’s because I prefer to be responsible, and as accurate as possible.

I have never, ever, published one of the fake news stories from this past election cycle, or any cycle over the nearly 18 years of this column.  [The only instance I can think of offhand that comes remotely close was in passing along the Judith Miller/New York Times pieces on WMDs in Iraq that proved to be false, but this wasn’t Russian-inspired disinformation.] 

I received all the fake news stories of the last two years in particular from many of my friends, and they should have known when I refused to reply to them what I thought of the garbage.

I like Glenn Kessler’s explanation, Kessler being responsible for the Washington Post’s Fact checker: “People seem to confuse reporting mistakes by established news organizations with obviously fraudulent news produced by Macedonian teenagers.”  There have been reports that young Macedonians were setting up sites on Facebook devoted to click-baity, pro-Trump deception, and reaping advertising profits, as reported by the Post’s Margaret Sullivan.

[Speaking of the Washington Post, I told you the other day how I didn’t include their story about Russian hacking of a Vermont utility because it didn’t meet my standards...and it proved to be false.]

There’s a good reason why I read up to 20 sources a day, from around the world, before I put this column together.  Yes, they are mainstream media outlets, but I get all sides and then use my brain to come up with some conclusions, coupled with giving you both sides on all the major stories of the day to help you in your own decision-making as to what’s right and what’s wrong.  It’s also a “week in review,” not “12 hours in review,” which is what we had the past few days, and sadly may get the next four to eight years.

John Podhoretz / New York Post...on the BuzzFeed decision....

“Readers of this newspaper know well not to include me among Trump’s supporters.  But the scurrilousness of what BuzzFeed has done here is so beyond the bounds of what is even remotely acceptable it should compel even those most outraged by Trump’s political excesses to come to his defense and to the defense of a few other people mentioned in these papers whose names are also dragged through the mud.

“There is literally no evidence on offer in these memos or from BuzzFeed that any single sentence in these documents is factual or true.  What’s more, we know most major news organizations in America had seen them and despite their well-known institutional antipathy toward Trump, had chosen not to publish them or even make reference to them after efforts to substantiate their charges had failed....

“Indeed, the memos are designed to read as though they were cables sent from the field to the home office. And they should set off the bull detector of every rational person who reads them....

“(In my 31 years as a newspaper and magazine editor), there is no source of whom you need to be more skeptical, and whose information you need to verify to the letter before you can even begin to think of publishing it, than an ‘intelligence’ source....

“Since the person retailing the factoids has an agenda, as BuzzFeed acknowledges here, he has at the very least a bias toward believing every piece of anti-Trump detail he puts down on paper – and at worst a desire to throw every single rumor he can collect (or generate out of his own fevered imaginings) at the wall to see which ones might stick.

“At a moment when journalists are up in arms about ‘fake news,’ what BuzzFeed has done here is take fake news to a new level.  Its editor, Ben Smith, acknowledges ‘there is serious reason to doubt the allegations.’  In other words, there is almost certainly fake news inside these memos, and it might all be fake, or some parts of it might be true but buried so deeply under falsity that it would be impossible to separate it out.

“ ‘Publishing this dossier reflects how we see the job of reporters in 2017,’ Smith writes.  This is an amazing thing to say, because if you think it through, it means publishing open libels and slanders is the job of reporters in 2017.

“ ‘Fake news will become more sophisticated, and fake, ambiguous, and spun-up stories will spread widely,’ warned an important American editor at the end of December 2016.  His name: Ben Smith.  His publication: BuzzFeed.

“I didn’t make that up.”

Rich Lowry / New York Post

“The paradox of the Trump phenomenon is that he may be ripping up sundry political norms, yet he benefits when his opponents and adversaries do the same.  When Marco Rubio descended to Trump’s level in the primaries and mocked the size of his hands, it hurt Rubio most.  Democrats have done themselves no favors by implicitly refusing to accept the election results after browbeating Trump for months to accept the results in advance.  And if the press is going to lower its standards in response to Trump, it will diminish and discredit itself more than the president-elect.

“For all that Trump complains about negative press coverage, he wants to be locked in a relationship of mutual antagonism with the media.  It behooves those journalists who aren’t partisans and reflexive Trump haters to avoid getting caught up in this dynamic. If they genuinely want to be public-spirited checks on Trump, they shouldn’t be more bitterly adversarial, but more responsible and fair.

“This means taking a deep breath and not treating every Trump tweet as a major news story. It means covering Trump more as a ‘normal’ president rather than as a constant clear and present danger to the republic.  It means going out of the way to focus on substance rather than the controversy of the hour.

“(While Trump did a fine job shaming reporters at his news conference, he was notably weak on the details on how he wants to replace ObamaCare).  It means a dose of modesty about how the media has lost the public’s trust, in part because of its bias and self-importance.

“None of this is a particularly tall order.   Yet it’s unlikely to happen, even if it was encouraging that so many reporters opposed BuzzFeed’s decision.  The press and Trump will continue to be at war, although only one party to the hostilities truly knows what he is doing, and it shows.”

But then...

David Ignatius / Washington Post

“ ‘Something is rotten in the state of Denmark,’ mutters Marcellus as ghosts and mad spirits haunt Elsinore castle in the first act of Shakespeare’s ‘Hamlet.’

“After this past week of salacious leaks about foreign espionage plots and indignant denials, people must be wondering if something is rotten in the state of our democracy.  How can we dispel the dark rumors that, as Hamlet says, ‘shake our disposition’?

“I’d suggest four questions to clear the haze of allegation and recrimination that surrounds President-elect Donald Trump and our intelligence agencies a week before his inauguration.  Getting answers may take months – but that’s the best way to avoid a Shakespearean tragic ending.

“Question 1: Did Trump’s campaign encourage Russia’s alleged hacking to hurt his rival Hillary Clinton and help him, and does Russia have any leverage over him?  Trump finally conceded at his news conference Wednesday that ‘as far as hacking, I think it was Russia,’ but he insisted he has ‘no dealings with Russia’ and ‘no loans with Russia.’  He didn’t answer a question about whether he or anyone from his staff had contact with Russia during the campaign....

“Question 2: Why did the Obama administration wait so long to deal with Russia’s apparent hacking?  This is the Hamlet puzzle in our drama.  Like the prince of Denmark, President Obama delayed taking action even as evidence mounted of dastardly deeds.  The first stories about Russian hacking broke in the summer. In September, the ‘Gang of Eight’ – the top congressional leadership on intelligence – was getting detailed briefings on the hacking.  The FBI by then had obtained the British ex-spy’s dossier.

“The intelligence community issued a statement Oct. 7 charging that ‘Russia’s senior-most officials’ had sought to ‘interfere with the U.S. election process.’ Given that, why didn’t Obama do more?  [Ed. this was my point a few weeks ago.  Obama said he didn’t want to appear to be interfering in the election and that he feared escalation if he acted against Russia.]....

“Question 3: What discussions has the Trump team had with Russian officials about future relations?....

“Retired Lt. Gen. Michael T. Flynn, Trump’s choice for national security adviser, cultivates close Russian contacts. He has appeared on Russia Today and received a speaking fee from the cable network, which was described in last week’s unclassified intelligence briefing on Russian hacking as ‘the Kremlin’s principal international propaganda outlet.’  According to a senior U.S. government official, Flynn phoned Russian Ambassador Sergey Kislyak several times on Dec. 29, the day the Obama administration announced the expulsion of 35 Russian officials as well as other measures in retaliation for the hacking.  What did Flynn say, and did it undercut the U.S. sanctions?....

[Ed. Friday, the Trump transition team said Flynn was just placing calls to the ambassador to set up a post-Inauguration phone call between Trump and Putin.  We’ll see.]

“Question 4: Finally, what’s the chance that Russian intelligence has gamed its covert action more subtly than we realize?  Applying a counter-intelligence lens, it’s worth asking whether the Russians hoped to be discovered, and whether Russian operatives fed the former MI6 officer’s controversial dossier deliberately, to sow further chaos.

“These questions need to be answered – not to undermine Trump, but to provide a factual base to help the country recover from an attack on its political system. As Trump rightly says, ‘fake news’ threatens our democracy. Truth will protect it.”

Meanwhile, the Justice Department’s inspector general’s office said on Thursday it would open an investigation into the decision in October by FBI Director James Comey to inform Congress about a new review in the Hillary Clinton email investigation.

This doesn’t just draw negative attention to Comey, but to the Bureau overall.

So this will go on and on and on....

Inspector General Michael Horowitz said he would be examining other issues, including whether the deputy director of the FBI, whose wife ran as a Democrat for the Virginia State Senate, should have recused himself from involvement in the Clinton email investigation.  And Horowitz is going to investigate whether a top Justice Department official (Peter Kadzik) gave information to the Clinton campaign about an upcoming congressional hearing that seemed likely to raise questions about Mrs. Clinton.

Separately, Director of National Intelligence James Clapper apologized to Donald Trump for the leaked content from a classified briefing, Trump having accused the intel community of leaking it, with Clapper saying “I do not believe the leaks came from within the IC.”

President Barack Obama gave his farewell address in Chicago on Tuesday.

“By almost every measure, America is a better, stronger place” than it was eight years ago when he took office, he told thousands of supporters.

But he warned “democracy is threatened whenever we take it for granted.”  Obama outlined three threats – economic inequality, racial divisions and the retreat of different segments of society into “bubbles,” where opinions are not based on “some common baseline of facts.”

On his achievements:

“If I had told you eight years ago that America would reverse a great recession, reboot our auto industry, and unleash the longest stretch of job creation in our history... If I had told you that we would open up a new chapter with the Cuban people, shut down Iran’s nuclear weapons program without firing a shot, and take out the mastermind of 9/11... If I had told you that we would win marriage equality, and secure the right to health insurance for another 20 million of our fellow citizens – you might have said our sights were set a little too high.”

Obama’s only other reference to foreign policy was in discussing the post-World War II order.

“That order is now being challenged – first by violent fanatics who claim to speak for Islam; more recently by autocrats in foreign capitals who see free markets and open democracies and civil society itself as a threat to their power. The peril each poses to our democracy is more far-reaching than a car bomb or a missile.  It represents the fear of change; the fear of people who look or speak or pray differently; a contempt for the rule of law that holds leaders accountable; and intolerance of dissent and free thought; a belief that the sword or the gun or the bomb or the propaganda machine is the ultimate arbiter of what’s true and what’s right.

“Because of the extraordinary courage of our men and women in uniform, because of our intelligence officers, and law enforcement, and diplomats who support our troops, no foreign terrorist organization has successfully planned and executed an attack on our homeland these past eight years.  And although Boston and Orlando and San Bernardino and Fort Hood remind us of how dangerous radicalization can be, our law enforcement agencies are more effective and vigilant than ever.  We have taken out tens of thousands of terrorists – including bin Laden.  The global coalition we’re leading against ISIL has taken out their leaders, and taken away about half their territory.  ISIL will be destroyed, and no one who threatens America will ever be safe.”

A little later....

“(The) fight against extremism and intolerance and sectarianism and chauvinism are of a piece with the fight against authoritarianism and nationalist aggression.  If the scope of freedom and respect for the rule of law shrinks around the world, the likelihood of war within and between nations increases, and our own freedoms will eventually be threatened.

“So let’s be vigilant, but not afraid.  ISIL will try to kill innocent people. But they cannot defeat America unless we betray our Constitution and our principles in the fight.  Rivals like Russia or China cannot match our influence around the world – unless we give up what we stand for – and turn ourselves into just another big country that bullies smaller neighbors.”

That was it.  Of course in building his legacy, Obama doesn’t want to talk about his catastrophic foreign policy. 

Obama, despite his pledge to ensure a smooth transition for his successor, took a few shots without naming Donald Trump.

In addressing the “corrosive” nature of the nation’s political dialogue, Obama said it threatened the foundations of democracy in the U.S.

“We weaken those ties when we define some of us as more American than others; when we write off the whole system as inevitably corrupt, and blame the leaders we elect without examining our own role in electing them.

“It falls to each of us to be those anxious, jealous guardians of our democracy.”

Of course now Trump is vowing to undo many of Obama’s accomplishments on his first day in the White House, from immigration to ObamaCare.  It will be an interesting limo ride from the White House to the Capitol for the two of them on Friday.

Editorial / USA TODAY

“It was little more than eight years ago and three miles away that Barack Obama embraced the promise of his presidency, addressing a jubilant crowd in Chicago’s Grant Park at a victory celebration on election night 2008.

“A political lifetime later, before a sea of supporters at McCormick Place, Obama on Tuesday delivered what is expected to be his final formal address to the nation.  His hair was grayer, his tone more somber. And since election night 2016, his message has been aimed at rallying downcast supporters and defending a legacy that his successor has vowed to dismantle.

“In his speech, he recited a litany of his proudest achievements, among them the economic recovery from the Great Recession, the diplomatic outreach to Cuba, the nuclear accord with Iran, the death of Osama bin Laden, the extension of health care coverage to 20 million people and more.

“ ‘That’s what we did,’ he said to cheers.  ‘That’s what you did.  You were the change. Because of you, by almost every measure, America is a stronger, better place than it was when we started.’

“Still, while Obama is finishing his term with a healthy approval rating...the election of a political nemesis as his successor poses grave risks to what he leaves behind on everything from health care to climate change....

“Obama’s decision to deliver a farewell address, and the unprecedented venue he chose for it, is part of his effort to make the case for his legacy and rally his reeling party.  He is all too aware of the impact Hillary Clinton’s defeat in November is likely to have on his legacy, one reason he and Michelle Obama campaigned so fiercely on her behalf.

“During the 2008 campaign, Obama raised the hackles of some Democrats when he told The Reno Gazette-Journal that Ronald Reagan had ‘changed the trajectory of America in a way that Richard Nixon did not and in a way that Bill Clinton did not. He put us on a fundamentally different path because the country was ready for it.’

“It wasn’t just a matter of timing, though. Reagan’s impact endured in part because he was succeeded in the Oval Office by his vice president, George H.W. Bush, who articulated his own message but also helped cement Reagan policies....

“Consider the comments by a senior Trump adviser in an interview with USA TODAY Monday about Obama’s farewell address.  ‘It’s a great idea for him to do this,’ Kellyanne Conway said, ‘because he knows that a great deal of what he did is not going to survive this next presidency, or maybe even this next month, in some cases.’”

Editorial / New York Daily News

“President Obama set out not only to remake the United States in its own eyes and heal longstanding partisan divisions, but to recast America in the eyes of the world.

“He would end the war in Iraq, which Obama had famously called a ‘dumb war.’  He would wind down the war in Afghanistan.  He would rebuild alliances strained under the eight-year term of George W. Bush.

“In 2009, before Obama had the chance to make good on any of these seismic promises, he won the Nobel Peace Prize.

“And throughout his two terms, as Obama strained to recast American foreign policy in his own image, he repeatedly crashed against the rocky shoals of reality.

“A promise to swiftly close the terrorist detention center in Guantanamo Bay was thwarted.  A Russia reset failed, as relations with one crucially important partner soured.

“An intervention in Libya succeeded on some terms, toppling Moammar Qaddafi, and failed on others.  Four Americans lost their lives in Benghazi.

“As Obama hemmed, a civil war in Syria raged.  The President drew a ‘red line’ warning dictator Bashar Assad not to use chemical weapons, then flinched when it was crossed.

“Though the U.S. made progress against core Al Qaeda, the even more brutal terrorist offshoot known as the Islamic State, which Obama had dismissed as a ‘JV’ team, made bloody and chilling gains in Syria, Iraq and beyond.

“America’s friendship with close ally Israel turned tense, especially as Obama pressed to complete a nuclear deal to welcome terrorist-supporting, Israel-hating Iran back into the international community.

“Obama brokered that agreement, and joined an international accord on climate change, and thawed relations with Cuba – ending more than a half-century of hostilities with the Communist nation off Florida’s coast.  And even as smaller wars rage, American troops are no longer dying in large numbers in Iraq and Afghanistan.

“His supporters celebrate those triumphs. But to others, his time in office was marked by discord, turmoil and arguably a diminishment of America’s standing in the world.”

George F. Will / Washington Post

“Obama leaves office serene because, as he put it, ‘almost every country on Earth sees America as stronger and more respected today than they did eight years ago.’

“Two seemingly unimpressed nations are Russia, which is dismembering a European nation (Ukraine), and China, which is shredding international law by turning the world’s most important waterway, the South China Sea, into militarized Chinese territory.

“Obama’s policies that brought America to a pinnacle of admiration, as he sees it, were an amalgam of Wilsonian and anti-Wilsonian elements. (Woodrow) Wilson’s grand ambition for the United States was to reorder the world in a way that would make it unnecessary for America to have grand ambitions.  He thought America could lead a restful life after strenuous diplomacy had written rules for the game of nations....

“Obama seemed to doubt that America has much to teach the world, beyond post-Iraq modesty – herewith his Wilsonian dimension – and the power of diplomacy’s soft power to tame the world.  Although neither the English nor the American nor the Russian nor the Spanish nor the Chinese civil war was ended by negotiations, Obama thought the especially vicious and complex civil war in Syria’s sectarian and tribal society could be ended diplomatically. Russian President Vladimir Putin picked a side and helped it win.

“The fact that the world is more disorderly and less lawful than when Obama became president is less his fault than the fault of something about which progressives are skeptical – powerful, unchanging human nature.  Humans are, as Job knew, born unto trouble as the sparks fly upward: They are desirous and competitive, and hence are prone to conflict.

“And to causing progressives to furrow their brows in puzzlement.  In 2014, when Russia annexed Crimea, Secretary of State John F. Kerry was disappointed with Putin, saying, more in sorrow than in anger: ‘You just don’t in the 21st century behave in 19th-century fashion.’  If you do, you place yourself on (in one of Obama’s favorite phrases) ‘the wrong side of history.’

“Make that History, which, in progressives’ lexicon, is a proper noun, an autonomous thing with a mind, or at least a logic, of its own.  Kerry’s reprimand of Putin expressed a progressive’s certitude about progress: The passage of time should ineluctably improve the comportment of nations. Which is why in 1911, the renowned 11th edition of the Encyclopedia Britannica, in its entry on torture, said ‘the whole subject is one of only historical interest as far as Europe is concerned.’  The Dachau concentration camp was opened in March 1933.

“Obama’s foreign policy presumed the existence of ‘the community of nations.’  But that phrase is worse than hackneyed and sentimental, it is oxymoronic: Different nations affirm different notions of justice; a community consists of people made cohesive by a consensus about the nature of justice.

“Obama’s second-worst unforced error, second to declaring and then abandoning a ‘red line’ about Syrian chemical weapons, was involving the U.S. military in regime change in Libya.  Perhaps this venture appealed to him because it was untainted by any discernible connection with American national interest.  He conducted it by ‘leading from behind,’ which he described as U.S. forces ‘being volunteered by others to carry out missions’ in Libya.  As George Orwell said, ‘The great enemy of clear language is insincerity.’

“Soon, foreign policy will be conducted by a man who, although in 2010 he said WikiLeaks’ Julian Assange deserves the death penalty, now seems to trust Assange on the subject of Russian hacking more than he trusts the consensus of the nation’s $53 billion civilian intelligence institutions.  Time passes and, we are told, brings progress.”

Editorial / Wall Street Journal

“President Obama once said that as President he aspired to be the progressive Ronald Reagan, and as he prepares to leave office he has succeeded in fundamental if ironic ways.

“While Reagan left behind a calmer, more optimistic country, Mr. Obama leaves a more divided and rancorous one.  While the Gipper helped elect a successor to extend his legacy, Mr. Obama will be succeeded by a man who campaigned to repudiate the President’s agenda.  Barack Obama has been a historic President but perhaps not a consequential one.

“Mr. Obama was always going to be a historic President by dint of his election as the first African-American to hold the office.  His victory affirmed the American ideal that anyone can aspire and win political power.  This affirmation was all the better because Mr. Obama won in large part thanks to his cool temperament amid the financial crisis and his considerable personal talents.

“Yet his Presidency has been a disappointment at home and abroad, a fact ironically underscored by Mr. Obama’s relentless insistence that he has been a success.  In his many farewell interviews, he has laid out what he regards as his main achievements: reviving the economy after the Great Recession, a giant step toward national health care, new domestic regulations and a global pact to combat climate change, the Iran nuclear deal, and a world where America is merely one nation among many others in settling global disputes rather than promoting its democratic values.

“Even on their own terms those achievements look evanescent. Congress has teed up ObamaCare for repeal, and Donald Trump will erase the climate rules. The global climate pact is built on promises without enforcement, and Mr. Trump ran against and won in part on the slow economic recovery.  Authoritarians are on the march around the world as they haven’t been since the 1970s, and perhaps the 1930s....

“Mr. Obama’s progressive agenda failed most acutely on its core promise of economic ‘fairness.’ The President made income redistribution to address inequality his top policy priority, above economic growth.  The result has been the slowest expansion since World War II and even more inequality....

“The Reagan and Bill Clinton expansions left the public in an optimistic mood.  Illegal immigration and trade deficits were larger than during the Obama years, but Americans worried less about both because they could see the tide rising for everyone.  The slow-growth Obama years created the dry political tinder for Mr. Trump’s campaign against immigration and foreign trade.

“The story is in many ways even worse on foreign policy. When Reagan left office the Soviet Union was in retreat and the Cold War was nearing its end. As Mr. Obama leaves office, the gains of the post-Cold War era are being lost as world disorder spreads.

“This too flows from Mr. Obama’s progressive worldview.  He fulfilled his 2008 campaign promise to reduce America’s global involvement, especially in the Middle East, but his willy-nilly retreat has led to more chaos. He deposed a dictator in Libya but walked away from the aftermath.  His decision to leave Iraq let him claim the ‘tide of war is receding’ as he ran for re-election in 2012, but it allowed Islamic State to gestate there and in Syria as he let its civil war burn out of control.

“The President’s calls for a world without nuclear weapons have been met by the acceleration of nuclear programs in North Korea and Pakistan.  A ‘reset’ with Moscow did nothing to alter Vladimir Putin’s revanchism in Ukraine and beyond.  Reductions in U.S. military spending have emboldened China to press for regional dominance in East and Southeast Asia.

“Whether his deal with Iran prevents that country from becoming a nuclear power won’t be known for several years, but it has already helped Iran fund its terrorist proxies in Syria, Lebanon and Yemen.  His outreach to Cuba may be historic but so far it has yielded no benefits for the Cuban people.

“Perhaps the most decisive verdict on the Obama era is the sour public mood.  While Americans like and respect the President personally, which explains his approval rating, on Election Day they said by nearly 2 to 1 that the country is on the wrong track.  Even race relations, which should have improved under Mr. Obama’s leadership and example, seem to have become worse.  His polarizing Presidency has now yielded an equally polarizing successor.

“The lesson is not that Mr. Obama lacked good intentions or political gifts.  Few Presidents have entered office with so much goodwill. The lesson is that progressive policies won’t work when they abjure the realities of economic incentives at home and the necessity of American leadership abroad.”

Finally...on a combination of Trump and Obama....

Charles Krauthammer / Washington Post

“The shortest honeymoon on record is officially over.  Normally, newly elected presidents enjoy a wave of goodwill that allows them to fly high at least through their first 100 days.  Donald Trump has not yet been sworn in and the honeymoon has already come and gone.

“Presidents-elect usually lie low during the interregnum.  Trump never lies low. He seized the actual presidency from Barack Obama within weeks of his election – cutting ostentatious deals with U.S. manufacturers to keep jobs at home, challenging 40-year-old China policy, getting into a very public fight with the intelligence agencies.  By now he has taken over the presidential stage.  It is true that we have only one president at a time, and for over a month it’s been Donald Trump.

“The result is quantifiable.  A Quinnipiac poll from Nov. 17 to 20 – the quiet, hope-and-change phase – showed a decided bump in Trump’s popularity and in general national optimism. It didn’t last long.  In the latest Quinnipiac poll, the numbers have essentially returned to Trump’s (historically dismal) pre-election levels.

“For several reasons.  First, the refusal of an unbending left to accept the legitimacy of Trump’s victory...He lost the popular vote, it’s James Comey’s fault, the Russians did it.

“Second, Trump’s own instincts and inclinations, a thirst for attention that leads to hyperactivity.  His need to dominate every news cycle feeds an almost compulsive tweet habit.  It has placed him just about continuously at the center of the national conversation and not always to his benefit.  Trump simply can’t resist playground pushback.  His tweets gave Meryl Streep’s Golden Globes screed priceless publicity.  His mocking Arnold Schwarzenegger for bad ‘Apprentice’ ratings – compared with ‘the ratings machine, DJT’ – made Trump look small and Arnold (almost) sympathetic.

“Nor is this behavior likely to change after the inauguration.  It’s part of Trump’s character.  Nothing negative goes unanswered because, for Trump, an unanswered slight has the air of concession or surrender.

“Finally, it’s his chronic indiscipline, his jumping randomly from one subject to another without rhyme, reason or larger strategy. In a week packed with confirmation hearings and Russian hacking allegations, what was he doing meeting with Robert Kennedy Jr., an anti-vaccine activist pushing the thoroughly discredited idea that vaccines cause autism?....

“Compare this with eight years ago and the near euphoria – overblown but nonetheless palpable – at the swearing-in of Barack Obama.  Not since JFK had any new president enjoyed such genuine goodwill upon accession to office.

“And yet it turns out that such auspicious beginnings are not at all predictive.  We could see it this same week. Tuesday night, there stood Obama giving a farewell address that only underscored the failure of a presidency so bathed in optimism at its start.  The final speech, amazingly, could have been given, nearly unedited, in 2008.  Why, it even ended with ‘yes we can.’

“Is there more powerful evidence of the emptiness of the intervening two terms?  When your final statement is a reprise of your first, you have unwittingly confessed to being nothing more than a historical parenthesis.”

Wall Street

Just a few economic notes from the week, one that saw the Dow Jones once again fail to crack the 20000 barrier.

Retail sales for the month of December were disappointing, up 0.6%, which seems strong, but unchanged when you strip out autos and gasoline, 0.2% ex-autos.

The producer price index for December came in at 0.3%, 0.2% ex-food and energy, with figures for 2016 at 1.2%, 1.4% on core.

I cover the first few bank earnings releases down below and the tone was optimistic, though like with everyone else they are waiting to see what happens come the first 100 days.

Fed Chair Janet Yellen, in a town hall meeting on Thursday, said the U.S. economy is doing well and faces no serious obstacles in the short term.  Various Fed officials spoke this week and the Open Market Committee seems to have coalesced around the three rate hikes in 2017 consensus.

A survey of 67 economists for the Wall Street Journal had a strong 64% saying the risks were to the upside in their forecasts.  The average GDP estimate for 2017 is 2.4%, 2.5% in 2018, which is above the Fed’s forecast of 2.1% for this year.

For the fourth quarter, the average forecast is around 2.2%, but the Atlanta Fed’s GDPNow indicator pegs it at 2.8%.

Earnings begin to roll in in earnest next week, but I can’t imagine CEOs will offer much guidance.  What many will say, as Delta Air Lines’ did this week, is that there has been a change in sentiment, a positive change, but, again, we need to wait and see.

Europe and Asia

The unemployment rate for the eurozone came in at 9.8% for November, same as October, as reported by Eurostat.  The 9.8% compares with 10.5% for November 2015.

Germany’s jobless rate is 4.1% (the government pegs it at 6.0%), France is 9.5%, Italy 11.9% (up from 11.5% a year ago, not good), Spain 19.2% (though down from 20.9% yoy), and Greece 23.1% (Sept.).  [Ireland is down to 7.3%.  It was about 15% at the peak of the financial crisis, if I recall.]

The youth unemployment rate for November remained stubbornly high in the likes of Greece 46.1% (Sept.), Spain 44.4%, and Italy 39.4% (up 2% from September).

Industrial production in the euro area jumped 1.6% in November over October, 3.2% year over year, which is solid.

Eurozone consumer confidence is at a 20-month high.

So all in all, after a slew of data to open the new year the eurozone economy is hanging in there for the most part.  The key player, Germany, reported GDP growth of 1.9% in 2016, the best annual pace since 2011, as the weaker euro benefits the nation’s exporters. The 1.9% compares to 1.7% in 2015.

Spain reported its core inflation rate hit an annualized rate of 1% in December so inflation pressures are finally emerging after two years of deflation.  This is good.

Minutes released this week from the European Central Bank’s December 8 meeting show policymakers opted to trim their monthly bond purchase because of concerns they couldn’t find enough suitable paper to buy, so the monthly purchase target under its quantitative easing program was cut from 80bn euro to 60bn beginning in April.

If it continued to snap up bonds at the same pace, the ECB felt it could result in a liquidity crisis down the road.

Eurobits....

--U.K. Prime Minister Theresa May said she will spell out her vision for Brexit in a speech on Tuesday.  May, who hopes to create a “truly global Britain”, will attempt to answer calls from business leaders and politicians for more detail as her target date for triggering the withdrawal process from the European Union, end of March, is fast approaching.

This is a big event, as it will also provide her EU counterparts ammunition for the opening negotiations.  May has signaled that Britain’s ability to control immigration is her red line and that this issue, along with escaping from the European courts, outweighs Britain remaining in the EU’s single market.

But European leaders say they won’t allow the U.K. to “cherry pick,” with the attitude being they want to make it bad for the U.K. to discourage others from taking the same path.

German Chancellor Angela Merkel reiterated her demand that the U.K. adhere to European Union rules on freedom of movement in return for market access.  Aiming to maintain “good relations” with Britain doesn’t mean caving in once Brexit talks get under way, Merkel said.

Separately, British Trade Secretary Liam Fox has identified 50 nations as potential markets as he urges businesses to take advantage of export opportunities, but experts are warning that Britain risks a “catastrophic Brexit,” as one Canadian, Jason Langrish, told the Observer because a trade deal could take a decade to strike.

Economically, the Bank of England will be releasing its latest forecasts next week and inflation is expected to rise sharply, which will test how resilient the British consumer will be.

Nick Clegg, former deputy prime minister / Financial Times

“I have a tip for Mrs. May: put the briefings away, tell your gatekeepers to cool down and give the civil servants a rest.  Then, with a clear head, make a judgement about what you believe is in the national interest....

“The choice facing Mrs. May is stark: a hard, swift break from the EU – the most politically convenient option – will do most damage to the UK’s prosperity and security. Alternatively, a softer Brexit, minimizing economic disruption and retaining some links with Brussels for crime fighting, climate change and other areas, will bruise the prime minister’s political standing.

“So Mrs. May’s place in history will come to her willingness to put country before party. If she is ready to be brave, the outlines of a way forward are becoming clearer.  There are, in fact, only two big judgments for her to make: whether the UK stays in the single market, and how to control immigration.  If she makes the right calls, the other ingredients for a workable Brexit could fall into place....

“The prime minister should tiptoe back from her rhetoric and affirm her wish to stay in the single market.  It would be bizarre if she instead presides over an increase in protectionist red tape and bureaucratic border checks while extolling free trade.

“On immigration, the prime minister has also created needless hostages to fortune.  By interpreting anxieties about immigration as applying only to freedom of movement within the EU, she is missing the point.  The public’s concern draws on many fears: illegal immigrants jumping out of the back of lorries; Europe’s refugee crisis; cultural segregation in some communities.

“It is absurd to funnel these disparate concerns into a clampdown against Spanish nurses, French lawyers, German engineers, Baltic fruit pickers and Portuguese social workers.  After all, immigration from outside Europe has exceeded EU migration for the past 40 years.  Mrs. May could address concerns about immigration by tackling the wider issues rather than picking a fight with only one part of our open labor market.

“Crucially, as the rest of the EU rushes to toughen up its immigration policies, there is a deal to be done....British concerns about immigration within Europe could be married to EU-wide concerns about the movement of people from outside the continent.

“So there are ways in which the prime minister could square the circles of Brexit, immigration, the single market and the needs of the rest of the EU.  It would require big judgments, skill and some luck. It would not make her popular with her own political tribe, but that is what serving the national interest sometimes demands.”

Ah, the fun is just beginning, sports fans.

--German government officials are investigating an unprecedented proliferation of fake news items ahead of September’s parliament election.  Yes, it’s Russia, according to intelligence reports.  Angela Merkel has always been the next target for the Kremlin, as she has stood strong against Vladimir Putin, post-invasion of Crimea, holding firm on sanctions as other European leaders waffle.

BfV, the German domestic intelligence agency, confirmed on Monday that it has seen a wide variety of Russian propaganda tools and “enormous use of financial resources” to carry out disinformation campaigns aimed at destabilizing the German government.

One more note on Germany...the number of asylum seekers entering Germany fell by about two thirds last year but the proportion of rejected applicants who left remained low, ergo, lots of extremists are circulating in the country.

280,000 entered Germany last year in search of asylum, down from a record 890,000 in 2015. But only 80,000 left Germany either voluntarily or were deported.

Plus the number of those filing asylum claims lags behind the actual number of newly arrived migrants, i.e., Germany hardly has a handle on the situation.

--French National Front Leader Marine Le Pen was seen at Trump Tower on Thursday, which riled up the press, until they learned she was not meeting with Donald Trump, or anyone from his staff (supposedly), but rather a key advisor of hers who lives three stories below Trump’s penthouse and is a member of Trump’s Mar-a-Lago club in Palm Beach.  The adviser, Guido Lombardi, along with his wife have been described by Trump as “friends for a long time.”

But no doubt Le Pen was in New York to attempt to drum up some financial support.  She said this week that French banks have refused to meet with her to discuss the possibility of financing her presidential campaign.

“The fact that the banks won’t lend to us, playing a political role, poses a real problem for democracy,” she said.  ‘It’s the banks who decide who can run and who can’t.”

So off to New York she went.

Le Pen is set to launch her bid on Feb. 4 in Lyon.  She has been a vocal supporter of Trump’s policies for the U.S. and called him “a sign of hope” for European anti-establishment movements.

Turning to Asia, China’s official statistics folks released a slew of data this week.  Producer prices in December rose a strong 5.5%, year over year, 1.6% month on month, with metals prices rising 4.4% for December, 18.2% yoy, which is encouraging.

For all of 2016, the PPI, however, fell 1.4% on average from 2015, but the days of deflation would certainly appear to be over.

Consumer prices last month rose 2.1%, 0.2% on the month.  The CPI in 2016 was up 2% vs. 1.4% in 2015.

But the trade data wasn’t as good. December exports fell 6.1% year over year, while imports rose a less than expected 3.1%, though there was stronger demand for commodities.

Exports for all of 2016 fell 7.7%, with imports declining 5.5%.  Now it’s all about Donald Trump and what kind of policies will he adopt on the trade front, such as protectionist measures, which China promises to counteract should this come to pass.

Car sales in China for 2016 rose at the fastest pace in three years, up 15% to 24.38 million vehicles (compared with the 17.55 million figure for last year in the U.S.).  The Chinese Association of Automobile Manufacturers, though, is forecasting growth will slow to 5% in 2017.

VW was the top foreign seller, 3.98m in 2016, up 12%; GM sold 3.87m, up 7% (though it was just fined $29 million for antitrust violations and it’s not giving an outlook for ’17); and Ford sold 1.27m vehicles in China, up 14%.

Street Bytes

--Stocks finished mixed, with the Dow Jones losing 0.4% to 19885, while the S&P 500 fell 2 points, 0.1%.  But Nasdaq finished Friday at another new high, 5574, up 1.0%.

--U.S. Treasury Yields

6-mo. 0.61%  2-yr. 1.19%  10-yr. 2.40%  30-yr. 2.99%

Unchanged on the week.

--House Speaker Paul Ryan promised Republicans will repeal and replace ObamaCare but that they are under “no hard deadlines” for producing an alternate program.

But Friday, the House voted along party lines to pass key preliminary legislation to roll it back, the Senate having done so on Thursday, the legislation allowing Republicans to use special budget procedures to repeal major parts of the Affordable Care Act without cooperation from Democrats.

Speaker Ryan, in a floor speech today, said the measure would launch a “thoughtful, step-by-step process” toward replacing ObamaCare.

“In the weeks ahead, several steps will be taken to provide relief – some steps will be taken by this body; some steps will be taken...by the new administration.

“Our goal is a truly patient-centered system, which means more options to choose from, lower costs and greater control over your coverage,” he continued.  “And as we work to get there, we will make sure that there is a stable transition period so that people don’t have the rug pulled out from under them.”

--At Donald Trump’s first formal press conference, the President-elect indicated his administration would go after the pharmaceutical industry and the prices it charges for drugs, with the government being a key customer through Medicare and Medicaid. Trump added Uncle Sam doesn’t drive a hard bargain when buying drugs.

“Pharma has a lot of lobbyists and a lot of power, and there is very little bidding.  We’re the largest buyer of drugs in the world and yet we don’t bid properly, and we’re going to save billions of dollars.”

--JPMorgan Chase reported robust earnings in the fourth quarter, owing largely to traders and investment bankers, with net income for the two up 96 percent from a year earlier, boosted by the post-election surge in trading.

The retail banking side of things was flat, with a slight drop in net revenues for credit cards and auto loans.

Overall, net revenues came in shy of analysts’ estimates at $23.4bn.

That said, the bank’s results “were a strong end to another record year, reflecting our intense client focus and solid performance across our businesses,” said chairman and CEO Jamie Dimon.

Addressing the issue of a new administration in the White House, Dimon said, “Looking ahead there is opportunity for good, rational and thoughtful policy decisions to be implemented, which would spur growth, create jobs for Americans across the income spectrum and help communities, and we are well positioned to play our part.”

JPM’s shares hit an all-time high Friday.  Five of the top ten gainers in the S&P 500 since the election are banks, led by Goldman Sachs and Bank of America.

--Speaking of BofA, it announced a share buyback of $1.8bn after it reported high trading volumes and lower cost controls led to a better-than-expected rise in fourth-quarter profits.

Its global markets business had net income of $658m in the quarter, up from $171m a year earlier, owing to the increase in trading activity.

Overall revenue of $20bn, though, was short of expectations.

--Wells Fargo’s profits declined a second year after fourth quarter earnings fell short of analyst forecasts, Wells still struggling to get over the fake account scandal.

Net income fell 4.4% for the year, while earnings for the fourth quarter fell short of expectations.

Tim Sloan, new CEO, said in a statement: “While we have more work to do, I am proud of the effort of our entire team to make things right for our customers.”

Shares in Wells, however, like the other banks since the election, have been rising sharply because of hopes that higher interest rates will boost lending margins.

But in Q4, net interest margin came in at 2.87 percent, down from 2.92 percent a year earlier.

--BlackRock, the world’s largest asset manager, reported a net inflow of $202bn in 2016, as its total assets under management rose to $5.14 trillion.

Revenues, though, fell 2% compared to 2015, and operating income also dropped 2%.

--Volkswagen will plead guilty to three felonies and pay $4.3bn in penalties to settle a U.S. Dept. of Justice investigation into the diesel emissions scandal.  VW has admitted that more than 11m vehicles worldwide were fitted with “defeat devices” to fool emissions tests.  When government regulators then grew suspicious, executives, six current and former ones who were indicted, destroyed documents and lied.

All six were charged with one count of conspiring to defraud the U.S., commit wire fraud and violate the Clean Air Act by lying to regulators and the public about the ability of VW’s “clean diesel” technology.

Just a reminder.  Engineers developed a new diesel engine in 2006, but they realized it would not be powerful enough to satisfy car owners and not green enough to pass emissions tests.  The new engine was to be the centerpiece of the automaker’s sales strategy in the U.S., but rather than go back to the drawing board, VW wrote software that would detect when the car was undergoing the government’s standard laboratory tests and operate in accordance with EPA limits.

But when it was on the road, the software allowed the car to spew up to 40 times the allowable levels of nitrogen oxides.  So VW employees hid the existence of the defeat device.  From there it was one set of lies after another by top execs.

The penalty is the second-largest criminal environmental settlement in U.S. history, behind BP’s Deepwater Horizon case.

Wednesday’s actions, which include a criminal fine of $2.8m, are on top of the $15.3bn that VW agreed to pay in June in a partial civil settlement with federal and state governments and owners of the cars in question.  VW previously said it had set aside $19.2bn to cover the costs of the scandal.

--Fiat Chrysler Automobiles said on Sunday it was investing $1 billion to retool and modernize two plants in the Midwest, one of which (Warren, Mich.) will now produce FCA’s Ram pickup truck – a vehicle currently produced in Mexico.

Fiat Chrysler said the investment would create 2,000 production-related jobs.  Happy days.  Trump pleased.

But then on Thursday, the Environmental Protection Agency accused Fiat Chrysler of using secret software that allowed illegal excess emissions from at least 104,000 diesel vehicles, the models including 2014, 2015 and 2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks. The EPA said the excess emissions of nitrogen oxides “threatens public health by polluting the air we breathe.”

Fiat Chrysler fought back quickly, not wanting to become another VW, with CEO Sergio Marchionne rejecting the allegations, saying there was no wrongdoing and the company never attempted to create software to cheat the system (to detect when the vehicle was in test mode). The stock fell about 10%.

--Friday, Renault shares fell on news French prosecutors are investigating it over suspected cheating on vehicle emissions, sending its shares lower.

--Takata Corp. has agreed to plead guilty to charges as early as Friday as part of a $1 billion settlement with the U.S. Justice Department to resolve an investigation into deadly air bag ruptures. The settlement breaks down to a $25 million criminal fine, $125 million in victim compensation and $850 million to compensate automakers who suffered from massive recalls.

In addition, three Takata executives were indicted and could be extradited to the U.S.

Only about one-third of inflators recalled to date have been replaced, with 42 million vehicles in the U.S. impacted.

--According to Gartner Inc., worldwide personal computer shipments receded again in the fourth quarter, down 3.7% from a year earlier.  International Data Corp. said shipments fell 1.5% during the quarter. Sales have been in decline since 2012.

Both firms have Lenovo Group remaining the top PC vendor, with Hewlett-Packard second, Dell third.

--ZTE Corp., China’s largest listed telecommunications network equipment manufacturer (think Cisco Systems) is apparently planning to eliminate 3,000 jobs in the first quarter, 5% of its global workforce, as reported by the South China Morning Post.

Washington slapped export restrictions on ZTE last March for violating U.S. trade sanctions on Iran and the sanctions have taken a toll, as well as stiff competition in the global market for telecom network equipment and smartphones.

--The McKinsey Global Institute released a report on new technology and automation, which breaks jobs down by work tasks – more than 2,000 activities across 800 occupations, from stock clerk to company boss.  As the New York Times’ Steve Lohr reports, the research arm of McKinsey & Company, “concludes that many tasks can be automated and that most jobs have activities ripe for automation.  But the near-term impact, the report says, will be to transform work more than to eliminate jobs.

“Globally, the McKinsey researchers calculated that 49 percent of time spent on work activities could be automated with ‘currently demonstrated technology’ either already in the marketplace or being developed in labs.  That, the report says, translates into $15.8 trillion in wages and the equivalent of 1.1 billion workers worldwide.  But only 5 percent of jobs can be entirely automated.

“ ‘This is going to take decades,’ said James Manyika, a director of the institute and an author of the report.  ‘How automation affects employment will not be decided simply by what is technically feasible, which is what technologists tend to focus on.’”

Other reports have different conclusions. Researchers at Oxford University estimated in a widely cited paper published in 2013 that 47 percent of jobs in the U.S. were at risk, while “a report published last year by the Organization for Economic Cooperation and Development concluded that across its 21-member countries, 9 percent of jobs could be automated on average.”  [Steve Lohr]

--In an attempt to get in Donald Trump’s good graces, Amazon announced it plans to hire 100,000 new employees in the U.S. in 18 months, though many of these jobs are at the expense of traditional retail as malls shrink, or are demolished, with anchor stores closing.  [Amazon is growing at a pace that would have warranted the expansion as well.]

Lawrence Katz, an economics professor at Harvard who studies labor and technological change, told the Associated Press: “There are huge benefits to consumers from Amazon.  But the workers they are hiring aren’t the same ones being laid off.”

And in line with the above bit on automation, Amazon is continuing to introduce robots that will clearly cost jobs, though the company says they will work in conjunction with people instead of replacing them.

--Wal-Mart Stores Inc. announced it was cutting hundreds of jobs by the end of the month, both at its Bentonville, Arkansas headquarters as well as regional personnel that support stores. 

--McDonald’s is selling a controlling stake in its China business to a group led by state-owned conglomerate Citic for a reported $2.1 billion.  Citic will own 52%, Washington-based private equity firm The Carlyle Group will own 28%, and McDonald’s will retain 20%.

About two-thirds of the China operation’s 2,640 outlets, including 240 in Hong Kong, will be refranchised.

Under CEO Steve Easterbrook, McDonald’s restructuring plan involves franchisees taking over more company-owned outlets to better respond to local tastes, in this case, Asian customers.

--Wendy’s announced that it’s 4 for $4 Meal will include an option of a Double Stack burger as the sandwich option so on Thursday I rushed to my local outlet to check it out, but, boy, the patties were puny (but still decent value).

--Privately held Mars Inc. (think M&M’s and Skittles) is making an attempt to dominate the fast-growing pet-care business with a $7.7 billion purchase of veterinary and dog day-care company VCA Inc.

I forgot that Mars owns Pedigree and Iams, among other pet-food brands, and with the acquisition of VCA, Mars’ pet-care division would contribute more than half of overall sales.

--Billionaire hedge-fund manager George Soros lost nearly $1 billion as a result of the stock market rally following Donald Trump’s election.  But as the Wall Street Journal reported, Soros’ former deputy, Stanley Druckenmiller, anticipated the post-election bump and scored big gains.

--While the experts aren’t saying so yet, the drought across virtually all of California should be considered over after this week’s series of big storms.  Northern California was already out of its drought, and now the southern part should be as well with reservoirs over 100% of normal. The drought-punished Southern Sierra has snowpack 187% of the norm as of early this week.

But the experts say we’re only one-third of the way through the wettest part of the season and southern Cal could yet see the spigot turned off.

--Boy, it’s been cold in Europe...record cold, ten people dying in Poland alone.  River transport on the Danube was shut down for a long stretch as it froze over, a rarity.   Temperatures in some regions of Russia hit -40F, and we aren’t talking Siberia. Athens didn’t climb above 32F last weekend.

But for all the cold and snow the past week, an ultra-dry December was death for European resorts at Christmas, for the third year in a row, and as some operators are now saying, “There is an understanding that Christmas is just not the right time to go skiing.”  [Bloomberg]

There was less snow in Switzerland in December than ever before, going back more than 100 years.

Back in the States, New Jersey and Pennsylvania resorts are once again struggling mightily, the fourth poor year in the last five.  It hit a record 67 degrees here in Summit, N.J. on Thursday, and next week is forecast to have temps in the 40s and 50s.  [Normal would be 38 for late January, and importantly the 20s at night for snowmaking.]

--Aaron Elstein of Crain’s New York Business had a piece on Queens, New York’s sewer pipes.  “So much used cooking oil is poured down the drain that sewers in Queens regularly experience the municipal equivalent of cardiac arrest.

“Some sections of the city’s 7,500 miles of sewer lines get blocked virtually every day, and discarded cooking oil is the reason 60% of the time.”

In Queens, cooking oil is the culprit about 80% of the time.  Why?  Well, Queens is the most diverse borough, with residents from 120 different countries, which is rather astounding, and these folks prepare a lot of food.

Used cooking oil is supposed to be sealed in non-recyclable containers and thrown out with the rest of the trash, not poured down the sink.

Here’s something gross.  As reported by Aaron Elstein, “Two years ago in London, an 11-ton mound of congealed fat was extracted from a sewer, requiring more than $600,000 in repairs.”

--Back to the weather...and traffic...you think your commute is bad?  Flash floods in southern Thailand on Tuesday washed out a bridge on the country’s main north-south highway, “backing up traffic for 200km (125 miles).”   [Reuters]

That would be like from New York to Philadelphia, which would kind of suck if you were a Mets fan, heading to a game in Philly.

Thailand’s rainy season normally ends in November, but the heavy rains have continued well into what should be the dry season.  One resident described the southern part of the country as “like a big pond.”  #mosquitoes #zika

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: Friday, in an interesting move and, perhaps, the first sign of an improved Russia-U.S. cooperation that Vladimir Putin and Donald Trump have spoken of, Russia invited the incoming Trump administration to Syrian peace talks the Kremlin is sponsoring (with Turkey and Iran) later this month, after the Obama administration was pointedly left out of the process.  [National security adviser designate Michael Flynn spoke to Russia’s ambassador on the topic, around the time of David Ignatius’ questioning of his calls.]

Separately, Syria accused Israel of firing rockets that hit a major military airport west of Damascus early Friday morning, with the Assad regime warning of repercussions.  The attack was the third such incident recently, according to the Syrian government.  [Israel said nothing.]

As for the ceasefire, while it is holding in about 80% of the country, the truce is fragile and the Syrian government continues to launch airstrikes, such as one in Aleppo province Thursday that killed at least six civilians, including four children, according to the Syrian Observatory for Human Rights.

Last Saturday, a huge tanker truck bomb killed at least 43 people in the Syrian rebel-held town of Azaz near the Turkish border.  Most of those killed were civilians and ISIS was accused of being responsible.

Russia was said to be drawing down its military presence, starting with the withdrawal of its warships from the eastern Mediterranean.

In Iraq, there were more car bombs, one killing at least 11 in Baghdad, with ISIS claiming responsibility.

Israel: In the corruption investigation into Prime Minister Benjamin Netanyahu, Haaretz reported he was recorded trying to negotiate a deal for more positive newspaper coverage two years ago.  In exchange for suppressing a free daily, Israel Hayom, owned by Las Vegas casino magnate Sheldon Adelson, a longtime Netanyahu supporter who backed Donald Trump, Arnon Mozes’ Yediot Ahronot newspaper that Netanyahu has long reviled as part of a media conspiracy against him, would provide him positive coverage, but the proposal never materialized.

Last Sunday, four Israeli soldiers were killed when a Palestinian driver intentionally rammed his truck into a group of them at a promenade in Jerusalem.  Netanyahu said the assailant, who was killed by other soldiers on the scene, showed “all the signs he was a supporter of the Islamic State.”

Hamas staged a rally to celebrate the attack.

“The message of our Islamic party Hamas is a message of encouragement and support for every jihadi who carries out an attack that puts an end to the acts of the Zionist enemy,” the bastards said in a statement.

Iran: Former President Ali Akbar Hashemi Rafsanjani died.  He was 82.  The death represented a big blow to ‘moderate’ President Hassan Rouhani, who won the election in 2013 largely because of support from Rafsanjani (who was barred from running himself), and now, Rouhani, facing re-election later this year, won’t have his chief ally, who was still highly-respected in the country, to support him.

Rafsanjani was an aide to Iran’s revolutionary supreme leader, the late Ayatollah Ruhollah Khomeini, who then became president (1989-1997) upon Khomeini’s death in 1989; this after Khomeini appointed Rafsanjani a commander of Iran’s armed forces towards the end of the Iran-Iraq war that left 1 million dead from 1980 to 1988.

Rafsanjani was viewed as a moderate in terms of foreign investment and on cultural issues, though this was misleading as he brutally cracked down on any opposition.  He also amassed tremendous personal wealth through a business empire that included his family’s pistachio operation and construction.

But in the context of Iranian politics, he was viewed in the West as somewhat of a pragmatist and his support for the nuclear deal was critical in its passage.

Rafsanjani was head of the Expediency Council, an advisory board to Supreme Leader Ayatollah Ali Khamenei and he was expected to serve as kingmaker when Khamenei, in failing health, passes from the scene.

So Rouhani will find it hard to be reelected and it is expected Iran will become even more hardline.

Rafsanjani was buried next to Ayatollah Khomeini.

I have written a ton on the man over the years, and particularly in those first years after 9/11, I was urging the United States to work behind the scenes with Rafsanjani, who while not president at the time was still highly influential.  I readily recognized that he was a terrorist...blamed for two bombings against Jewish interests in Buenos Aires in 1992 and ’94 that killed more than 100 people.  And he was president when, in 1996, Iranian agents bombed Khobar Towers in Saudi Arabia, killing 19 U.S. service members.

But in the post-9/11 era, I thought he was someone we could have cut a deal with (an admittedly dirty one), in return for dismantling Iran’s then-burgeoning nuclear program and non-interference in its neighbors’ politics.  He was a businessman, in part, the wealthiest individual in his country, and I thought there was room for a deal.  I still believe that, just as I was right about 2012, Syria, President Erdogan and no-fly zones.

Rafsanjani did, after all, support Iran’s Green Movement after the rigged 2009 presidential election in Iran, but the United States didn’t offer any support whatsoever for the protesters in President Obama’s first year in office.  Surprise, surprise.  It would become one of the first of many missed opportunities during the Obama presidency.

President Rouhani said of Rafsanjani’s passing: “Islam lost a valuable treasure, Iran an outstanding general, the Islamic revolution a courageous flag-bearer and the Islamic system a rare sage.”  [Just including this quote for the historical record.]

Separately, in perusing some of Iran’s newspapers, the Navy announced last weekend that it had successfully test-fired a coast-to-sea cruise missile with a range of 150km, part of a large military drill near the Strait of Hormuz.

Afghanistan: Tuesday, the day of President Obama’s Farewell Address, the Taliban launched three attacks.  One in Kandahar killed at least 11 people, including five diplomats from the United Arab Emirates, though the U.A.E. ambassador, visiting the city with his associates, was said to have survived.  [Initially, the stories said the ambassador had been killed.]

The second, a suicide attack in the capital Kabul killed more than 30, as twin blasts went off near parliament offices and hit a crowded area during the afternoon rush hour, the worst attack there in weeks.  A suicide bomber blew himself up and then was followed almost immediately by a car bomber in the coordinated operation.

A third bombing took place in the capital of Helmand province, killing at least three.

President Obama did not mention Afghanistan in his address.

It just needs to be said, the Taliban is winning and one of the awful surprises of 2017 could be the re-taking of Kabul and the decapitation of the government.  It would just take two or three insiders to blow up a session of parliament and the leadership.

China: In response to secretary of state nominee Rex Tillerson’s comment that the U.S. should deny Beijing access to new islands in the South China Sea, Communist Party mouthpiece the Global Times had some of the following in an editorial, Friday:

“(Nominee) Rex Tillerson uttered astonishing statements during his confirmation hearing...(likening) China’s island-building in the South China Sea to ‘Russia’s taking of Crimea,’ and said the new U.S. government would send China a clear signal that ‘first the island building stops, and second your access to those islands is also not going to be allowed.’....

 “Tillerson did not give details of how he would achieve his self-proclaimed goals....

“”China has enough determination and strength to make sure that his rabble rousing will not succeed.  Unless Washington plans to wage a large-scale war in the South China Sea, any other approaches to prevent Chinese access to the islands will be foolish.

“The U.S. has no absolute power to dominate the South China Sea.  Tillerson had better bone up on nuclear power strategies if he wants to force a big nuclear power to withdraw from its own territories....

“South China Sea countries will accelerate their  negotiations on a Code of Conduct.  They have the ability to solve divergences by themselves without U.S. interference.  Just as the Philippines and Vietnam are trying to warm their ties with China, Tillerson’s words cannot be more irritating.”

A Chinese foreign ministry spokesman, Lu Kang, was muted.  China had the right to conduct “normal activities” in its own territory, he said, and he didn’t respond to hypothetical questions on blocking access.

But the other major mouthpiece in China, The China Daily, said Tillerson’s remarks showed ignorance of Sino-U.S. relations and diplomacy in general.

“Such remarks are not worth taking seriously because they are a mish-mash of naivety, shortsightedness, worn-out prejudices and unrealistic political fantasies.  Should he act on them in the real world, it would be disastrous.

“As many have observed, it would set a course for devastating confrontation between China and the U.S.  After all, how can the U.S. deny China access to its own territories without inviting the latter’s legitimate, defensive responses?”   [BBC News]

Yuan Zheng, a researcher at the Chinese Academy of Social Sciences’ Institute of American Studies told the South China Morning Post:

“China is not Cuba, and the South China Sea is not the Caribbean. The South China Sea is not under the U.S. sphere of influence, it’s China’s territorial waters.”

Meanwhile, a Chinese aircraft carrier floated off Taiwan’s coast this week (though not in Taiwan’s territorial waters), as Taiwanese President Tsai Ing-wen traveled to Central America, via the United States*, to improve relations with the island’s few remaining allies in the region. 

Early indications are that Tsai’s trip was a success, without roiling the waters too much with Beijing. But the carrier pass was a warning.

*Tsai met with Texas Republican Senator Ted Cruz in Houston last Sunday, but no one from the Trump transition team, and on her way back from her travels, as she passages through San Francisco, the Trump folks said they would not meet her there.  It was the post-election phone call between Trump and Tsai that riled up Beijing.  Sen. Cruz’ visit was totally appropriate.

The senator said after: “The People’s Republic of China needs to understand that in America we make decisions about meeting with visitors for ourselves.  This is about the U.S. relationship with Taiwan, an ally we are legally bound to defend. The Chinese do not give us veto power over those with whom they meet. We will continue to meet with anyone, including the Taiwanese, as we see fit.”  [I’m not a fan of Cruz, but this was the senator at his best, ditto his defense of Jeff Sessions at his confirmation hearing.]

On a different issue, the Chinese government is carefully monitoring the rising nationalism on the mainland, fed by territorial disputes with its neighbors, and U.S. statements.  What worries Beijing is patriotic protests morphing into ‘mass protests’. With the five-yearly party congress later this year, where President Xi Jinping is looking to solidify his leadership (and possibly ask for a third term beyond his second five-year one), there is a fine line on protests.

Such as in 2012 when anti-Japanese protests swept the nation, sparked by Tokyo’s decision to purchase the disputed Diaoyu Islands in the East China Sea. Both nations claim the islands and protests swept through several Chinese cities, with Japanese-made cars and businesses attacked.

Lastly, Singapore is upset nine armored personnel carriers that have been detained in Hong Kong haven’t been returned to them as yet.  Customs authorities in Hong Kong, a Chinese territory, seized the infantry carriers in November as they were being shipped back to Singapore from Taiwan, where they were used in military exercises; Taiwan being an ally of Singapore.

But China is not happy with Singapore’s stance on Taiwan, so it is being a royal pain in the ass, as is its wont.

Beijing has told Singapore it needs to be cautious in its handling of the seizure of the nine vehicles. Singapore insists the detention does not comply with international law.

The aforementioned Chinese foreign ministry spokesman, Lu Kang, said on Monday: “I want to stress that China hopes other nations, including Singapore, follow the one-China principle.  This is the foundation for bilateral ties between China and any other nation.”

Military ties between Singapore and Taiwan date back four decades.

North Korea: What is Kim Jong Un going to do around next Friday, Inauguration Day?

William J. Perry, former defense secretary from 1994 to 1997 / Washington Post

“In 1994, when I was secretary of defense, we came perilously close to a second Korean War because of North Korea’s nuclear program. Today we are again approaching a crisis with North Korea, and again the cause is its nuclear program. A war in 1994 would have been terrible, but we were able to avoid it with diplomacy (the Agreed Framework, from which the United States and North Korea withdrew in 2002).  Today a war would be no less than catastrophic, possibly destroying the societies of both Koreas as well as causing large casualties in the U.S. military....

“The threat is real enough.  North Korea has built more than a dozen nuclear bombs and conducted five nuclear tests, several at about the destructive power of the Hiroshima bomb.  Pyongyang also has a robust ballistic missile program – it has fielded a large number of medium-range missiles and is testing long-range missiles.  So the question is not whether but when Pyongyang will have a nuclear-armed ICBM....There is no reason to doubt that it will reach an operational capability, perhaps in the next few years....

“I believe that the danger of a North Korean ICBM program is not that they would launch an unprovoked attack on the United States – they are not suicidal.  But they have been playing a weak hand for decades, and they have demonstrated a willingness to take risks in playing it.  The real danger of their ICBM program is that it might embolden them to take even greater risks – that is, overplay their hand in a way that could (inadvertently) lead to a military conflict with South Korea....(But) if North Korea were to begin losing a conventional conflict (the U.S. being very much involved), they might in desperation turn to their nuclear weapons.”

Perry urges diplomacy, but, “If we don’t find a way – and soon – to freeze North Korea’s quest for a nuclear ICBM, this crisis could all too easily spin out of control, leading to a second Korean War, far more devastating than the first.”

Separately, a story by the Financial Times notes that “South Korea is creating a hit squad with a mission to eliminate Kim Jong Un and his top command in the event of war, as it vows to ramp up its response to the growing threat from the North.”

This is not your father’s hit squad. We’re talking as many as 2,000 troops, modeled on Special Forces in the U.S.

Russia, part dva: Russian Defense Minister Sergei Shoigu said in a public lecture on Thursday that when it comes to strategic deterrence, Russia might replace its nuclear weapons with precision bombs, in order to help reduce international tensions and strengthen world peace.  As news agency RIA Novosti reported, according to Shoigu, Moscow plans to rely on warships and submarines armed with cruise missiles to carry the bulk of its precision-guided weapons.

What’s curious about this is that Shoigu also said Moscow had no intention of being dragged into a nuclear arms race, which flies in the face of Vladimir Putin’s Dec. 22 remarks to a meeting of Russia’s Defense Ministry Board, where he said, “We need to enhance the combat capability of strategic nuclear forces, primarily by strengthening missile complexes that will be guaranteed to penetrate existing and future missile defense systems.’

The same day, President-elect Donald Trump called on America to “strengthen and expand its nuclear capability until such time as the world comes to its senses regarding nukes.”  [Moscow Times]

Philip Stephens / Financial Times

“Cuddle up to the Kremlin and do not be surprised when you are burnt.  There is no need to believe the lurid, unverified tales about Russian efforts to cultivate and compromise Donald Trump to recognize the danger in the president-elect’s infatuation with Vladimir Putin. Mr. Trump is a wealthy property developer; the Russian president a former head of his country’s ruthless Federal Security Service, or FSB.  This is not a balanced match-up.

“Mr. Putin has pocketed one significant victory even before Mr. Trump reaches the White House.  The next time U.S. intelligence agencies flag up a security threat – another Russian incursion into Ukraine, say, or the subversion of elected governments in Eastern Europe – the Kremlin has a riposte. If the occupant of the Oval Office has no faith in the CIA, the National Security Agency or the Federal Bureau of Investigation, why should anyone else believe them?  Mr. Trump broke all the rules of politics to win the White House, but a president at war with those charged with keeping America safe?

“Intelligence agencies do not always get it right.  The CIA will pay the price for its flawed judgments on Saddam Hussein’s weapons programs for years to come.  But the spooks could scarcely have been more confident in saying that the Kremlin hacked into Democratic party computers during the presidential election campaign....

“Mr. Trump prefers to shoot the messenger: this week’s leak of allegations that Moscow had gathered personally compromising material was proof of the witch-hunt against him by America’s own agencies. When Mr. Trump asks rhetorically whether he is living in Nazi Germany, the adjective that comes most readily to mind is ‘unhinged.’...

“There would be little to quarrel with in a show of White House ‘respect’ for the Russian president to reduce tension.  Mr. Putin craves recognition as a leader with a place at the top table of global affairs. He shares Mr. Trump’s desperately thin skin.  They are brothers in narcissism.  If some Trumpian backslapping succeeds in salving Mr. Putin’s wounded pride, all well and good.

“The world is a safer place when the U.S. and Russia find a way to manage their differences.  They did so with some effect at the height of the Cold War.  Neither side has benefited from the renewed military build-up in Eastern Europe and the Baltics.  There are too many nukes around. The risks of accidental confrontation are not negligible....

“As vague as Mr. Trump is about what he wants from the Kremlin, Mr. Putin’s goals are crystal clear.  They start with Western acquiescence in Russian revanchism in Ukraine and in the merciless bombing of civilians to prop up Bashar al-Assad’s regime in Syria.  They continue with the lifting of economic sanctions against Moscow, and end with eventual U.S. disengagement from Europe and the establishment of a Russian sphere of influence in the territories of the former Soviet Union.

“When Kremlin officials talk about a new security architecture for Europe what they mean is the end of the U.S. presence. The Cold War is over so the Americans should go home.  Through this prism, Georgia, Belarus, and Moldova and central Asia as well as Ukraine ‘belong’ to Moscow.  For its part, NATO has outlived its purpose and certainly has no place in the former states of the Warsaw Pact....

“(The) Kremlin will not be content with its early success. And who knows what Mr. Trump will do once he is in the White House?  Dangerous times seems something of an understatement.”

Editorial / Wall Street Journal

“Mr. Trump may be able to build a better relationship with the Russian strongman, but then that’s also what George W. Bush and President Obama thought. Mr. Bush thought his good-old-boy bonhomie could charm him, while Mr. Obama thought the example of his claims to moral superiority would persuade him.  Mr. Trump seems to think his advantage will be his superior deal-making skills.

“But Mr. Putin respects power, and nothing else.  If Mr. Trump wants Russia to respect U.S. interests, he will have to show Mr. Putin that he will pay a price for damaging those interests. This means not covering up nuclear arms-control violations, as Mr. Obama did, and not dismissing or apologizing for Russian cyberattacks, as Mr. Trump has been too close to doing.

“Mr. Trump won the White House fair and square, and he could help himself by acting like it.  The best defense against Russian cyberattacks is to show Americans and the world that he knows better than Mr. Obama how to use U.S. power to deter them.  Instead of assailing every critic out of political and personal vanity, it’s time for Mr. Trump to realize that the best revenge against his implacable opponents is to succeed as President.”

Meanwhile, Thursday, an American armored brigade slid across the German frontier into Poland, part of a permanent NATO troop presence along the alliance’s eastern flank.

But whereas when the plan to first rotate troops into the region was proposed was widely applauded, now there is concern whether with a Trump presidency the troops will arrive in the numbers promised, and whether Trump cuts a deal with Putin for friendlier relations undermines the effort.

I believe Poland and the Baltics need not worry, though there will be pressure for Europe to step up its contributions and they should be forthcoming.

Lastly, David Satter had an op-ed in the Wall Street Journal wherein he said, regarding Rex Tillerson’s confirmation hearings:

“Senators should demand that the former Exxon Mobil CEO demonstrate an understanding of recent developments regarding three issues: the 2015 assassination of opposition leader Boris Nemtsov, the 2013 Boston Marathon bombing, and the 1999 Russian apartment bombings.”

There it is again, the topic I wrote of in 1999, blaming Vladimir Putin.

Satter:

“(There is) new information about the September 1999 Russian apartment bombings, the acts of terror that brought Mr. Putin to power. The bombings – in Moscow, Buinaksk and Volgodonsk between Sept. 4 and 13 – killed 300 and were blamed on Chechen terrorists and used to justify the second Chechen War. The Chechens have always denied the accusation.

“On Sept. 22, 1999, another bomb was discovered, in the basement of a building in Ryazan, southeast of Moscow.  Two days later, two men and a woman were arrested for planting it.  They turned out to be not Chechens but agents of the FSB.

“After the arrests, Russian officials said the bomb was a fake and part of an FSB ‘training exercise.’  The U.S. never officially challenged the Kremlin’s version of events, despite its implausibility.

“Last month I received documents from the State Department in response to my pending Freedom of Information Act lawsuit.  In a cable on the Ryazan incident, the U.S. Embassy in Moscow reported that  a former member of Russia’s security services (name redacted) said that the true story of the Ryazan affair would never be known because ‘the truth would destroy the country.’ The CIA, meanwhile, is refusing to release any information about the 1999 bombings, including its view about who was responsible.

“The new administration needs to demand that all information about how Putin came to power be made a matter of public record. The failure of previous administrations to react to the 1999 apartment bombings and the 2006 murders of former FSB agent and Kremlin critic Alexander Litvinenko and investigative journalist Anna Politkovskaya led to the Obama administration’s ‘reset’ policy and the Russian invasion of Ukraine.  The failure to weigh the lessons of the murder of Boris Nemtsov, the Boston bombing and the apartment bombings will make possible a new ‘reset,’ with consequences not difficult to foresee.”

Finland: Correction...the car-tracking system I wrote of last time is not yet law.  But more on the country next time.

Random Musings

--It was funny watching Donald Trump’s Cabinet nominees, in their first round of confirmation hearings, take positions, one after another, that contradicted the President-elect’s stances.

As the Washington Post’s Karen Tumulty summed up:

“Retired Marine Corps Gen. James Mattis, Trump’s nominee to be defense secretary, told the Senate Armed Services Committee that the United States must honor the ‘imperfect arms-control agreement’ with Iran that Trump has vowed to dismantle because ‘when America gives her word, we have to live up to it and work with our allies.’

“He also took a more adversarial stance than Trump has toward Russian President Vladimir Putin and cited Moscow as one of the nation’s top threats.

“ ‘I’ve never found a better guide for the way ahead than studying the histories.  Since [the 1945 meeting of world powers at] Yalta, we have a long list of times we’ve tried to engage positively with Russia.  We have a relatively short list of successes in that regard,’ Mattis said.  ‘I think right now, the most important thing is that we recognize the reality of what we deal with [in] Mr. Putin and we recognize that he is trying to break the North Atlantic alliance.’

“At a witness table in another Senate hearing room, Rep. Mike Pompeo (R-Kan.), whom Trump picked to head the CIA, assured the Intelligence Committee that he would ‘absolutely not’ use brutal interrogation tactics on terrorism suspects in contravention of the law, even if ordered to do so by a president who campaigned on a promise to reinstate the use of such measures.”

--I watched Sen. Jeff Sessions’ confirmation hearing to become the next Attorney General and he performed well. Sessions has gotten a raw deal with claims he is a racist.

Last week I wrote of how New York Gov. Andrew Cuomo is clearly setting himself up for a 2020 presidential run (if he can skate by the corruption investigations swirling around him).  And Wednesday, we saw another 2020 probable candidate, New Jersey Dem. Sen. Cory Booker, take center stage in becoming the first senator, ever, to testify against a fellow senator’s confirmation, with Booker saying Sessions’ record suggested he wouldn’t aggressively pursue voting or civil-rights cases.

“I want an attorney general who is committed to supporting law enforcement and securing law and order, but that is not enough,” said Booker.

Sessions said the day before he would enforce all laws, including those he disagreed with, and forcefully fought allegations he was motivated by racial bias.

But Booker, in a disgraceful performance, said Sessions “has not demonstrated a commitment to a central requisite of the job – to aggressively pursue the congressional mandate of civil rights, equal rights and justice for all of its citizens.”

Booker’s statement had zero to do with actual fact and Sessions’ record.

Jesse Seroyer, a former U.S. marshal in Alabama, and a former Alabama prosecutor, Willie Huntley, both black men who worked with Sessions, testified on his behalf.

“Jeff will protect and defend the rights of all people,” Mr. Huntley said, describing how he prosecuted civil-rights cases under Sessions and later defended Sessions personally against claims of ethics violations on which he was exonerated.  [Aruna Viswanatha / Wall Street Journal]

--Michael Barone / New York Post

“President Obama went up to Capitol Hill on Wednesday (Jan. 4) to counsel congressional Democrats on how to save ObamaCare.  Or at least that’s how his visit was billed.

“But to judge from the responses of some of the Democrats, his advice was typical of the approach he’s taken to legislation in his eight years as president – which is to say disengaged, above the fray, detached from any detailed discussion of how legislation actually works.

“He was ‘very nostalgic,’ said Louise Slaughter, a veteran of 30 years in the House and the ranking Democrat on the House Rules Committee.  But, she added, he left it up to Hill Democrats to come up with a strategy to protect ObamaCare.

“This is in line with the standoffish relations Obama has had with members of Congress, even with Democrats who are inclined to be and are capable of being helpful.

“Nor has he ever seemed interested in the content of laws, even his trademark health-care legislation....accepting a bill with multiple flaws, many of them glaringly visible after passage.

“But policy just hasn’t been his thing....

“The problem with this approach has been apparent since the 9 o’clock hour on election night, when it became clear that Donald Trump was going to be elected president.  In 2010, Obama assumed there always would be a Democratic Congress to repair any glitches in ObamaCare.  In 2016, he assumed that there would be a President Hillary Clinton to keep his pen-and-phone regulations and ‘guidance’ in place.

“It’s apparent Obama is thrashing around trying to keep his policies in place. But more than those of other outgoing presidents replaced by successors of the other party, they’re in danger of being overturned.

“One reason is that they were never firmly established in the first place – and not just because the Democrats’ 60-vote Senate supermajority existed for only eight months, from July 2009 to February 2010.

“Rather, the Obama Democrats’ policies, passed through slapdash legislation or through questionably legal regulations, never really captured the hearts and minds of the American people.”

[Friday, Obama suddenly called a final, final presser for next Wednesday.  The one the other day was supposed to be his last.  This will no doubt be, again, about saving his legacy, ObamaCare, the Russian hacking and who knows what else.]

--A Marist Poll has found overwhelming support for the swift nomination of a U.S. Supreme Court justice who will apply the Constitution as originally written.  80% of Americans say it is an “immediate priority” or an “important” one to appoint Supreme Court justices that will interpret the Constitution as it was originally written.  53% of Independents, 80% of Republicans and 42% say it is an “immediate priority.”

By a 52-40 margin, a majority of Americans want the court to interpret the Constitution “as it was originally written” and not on what they think the “Constitution means now.”

--Jared Kushner will become a senior White House adviser to his father-in-law, Donald Trump.  Ethics experts have questioned whether the appointment is legal under federal anti-nepotism laws designed to prevent family ties from influencing the functioning of the government.

Kushner, 36 and married to Ivanka Trump, plans to sell some of his real estate holdings and other assets, according to his lawyer.

I don’t have a problem with this, as I see Kushner as a voice of reason.

--Donald Trump was skewered at the Golden Globes Awards last Sunday. I was watching “60 Minutes” and then a Wake Forest basketball game so I was hardly interested, but I did just flip it on after the game and it was just then that Meryl Streep went on her long rant against Trump.

“Hollywood is crawling with outsiders and foreigners, and if we kick them all out you’ll have nothing to watch but football and mixed-martial arts, which are not the arts,” Street said.

I haven’t been to a movie in decades and never gave a damn about Hollywood. 

Trump fired back at Streep, calling her a “Hillary flunky who lost big” and “overrated,” when The Donald should have just shut up.

--A federal jury sentenced Dylann Roof to death on Tuesday for killing nine black parishioners inside a Charleston, S.C., church in 2015.

Aja Risher, granddaughter of victim Ethel Lance, said, “I didn’t think the verdict would affect me the way it has; I haven’t stopped crying.  But I’m so happy that their lives matter.  It’s not just a terrible tragedy that happened.  It renews my faith a little bit.  If this case didn’t warrant the death penalty, what case would?”  [Washington Post]

Sadly, the sentence won’t be carried out for years.

--New York lost a real hero this week, NYPD Detective Steven McDonald, who died at age 59 after suffering a heart attack.

Police Commissioner James O’Neill said, “No one could have predicted that Steven would touch so many people, in New York and around the world.  Like so many cops, Steven joined the NYPD to make a difference in people’s lives. And he accomplished that every day.  He is a model for each of us as we go about our daily lives.”

Former mayor Michael Bloomberg said in a statement: “Steven McDonald was a New York City hero who inspired people everywhere he went.  His relentless determination to use his tragedy to save others was an extraordinary act of selflessness and an incredible gift to the world.”

McDonald was a patrolman on July 12, 1986, when he spotted bicycle thief Shavod “Buddha” Jones and two other teenagers in Central Park.  He moved to frisk one of them because he believed he had a weapon in his sock, then, the 15-year-old Jones pulled out a weapon of his own and shot McDonald three times, one bullet tore into McDonald’s neck, one his wrist and a third lodged behind his right eye.  The first shot severed his spinal cord, paralyzing him.

Doctors told his wife, Patti, who was three months pregnant, that he wouldn’t live through the afternoon.

On March 1, 1987, at his son’s baptism, McDonald’s wife read a statement from him: “I forgive (Jones) and hope he can find peace and purpose in his life.”

He never wavered from that stance.

McDonald then became a messenger of peace, traveling extensively in his wheelchair, dependent on a ventilator to breathe and speak.  He was like a rock star in those first years, meeting with Pope John Paul II and Nelson Mandela.  He sat for an interview with Barbara Walters and did Letterman.

While the television cameras faded, McDonald made hundreds of appearances a year, telling his story of “Faith and Forgiveness” to anyone who would listen.

The New York Rangers set up an award in his name, and every season McDonald was honored on ice with his family.

“Rest in peace, Steven McDonald,” the Rangers tweeted Tuesday.  “Our friend.  Our hero.  Above and beyond.”

Carinal Timothy Dolan called McDonald “an icon of mercy and forgiveness, a prophet of the dignity of all human life.”

For his part, Buddha Jones was sentenced to 10 years in prison for attempted murder and was not a model prisoner.  McDonald tried to carry out a correspondence with him but it lasted for only a little while.  Shortly after his release from prison in 1995, Jones died in a motorcycle accident.  [Crain’s New York Business]

Editorial / New York Post

“Many would give up after injuries like Steven McDonald suffered.  Instead, he gave New York a 30-year legacy of bravery that will continue to inspire – and that underscores why our police officers are known as New York’s Finest.  RIP.”

Steven McDonald’s funeral was held at St. Patrick’s Cathedral. 

--Finally....the link below is to a real farewell address...Ronald Reagan’s.

https://www.youtube.com/watch?v=UKVsq2daR8Q

---

Pray for the men and women of our armed forces...and all the fallen.

God bless America.

---

Gold $1197
Oil $52.52

Returns for the week 1/9-1/13

Dow Jones  -0.4%  [19885]
S&P 500  -0.1%  [2274]
S&P MidCap  +0.3%
Russell 2000  +0.4%
Nasdaq  +1.0%  [5574]

Returns for the period 1/1/17-1/13/17

Dow Jones  +0.6%
S&P 500  +1.6%
S&P MidCap  +1.6%
Russell 2000  +1.1%
Nasdaq  +3.6%

Bulls 58.6
Bears 18.3  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore



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Week in Review

01/14/2017

For the week 1/9-1/13

[Posted 10:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs and your support is appreciated.  Click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.

Edition 927

Washington, Obama and Trump

Late Tuesday came the bombshell, via various media outlets, that U.S. intelligence agencies and the FBI have been investigating explosive (some salacious) claims, compiled by a former Western intelligence official, that Russian government operatives engaged in a conspiracy with advisers to Trump’s presidential campaign and employees of his company.

Senior intelligence officials then shared the claims in a two-page addendum to a classified briefing President-elect Trump received a week ago Friday.

On Wednesday, Kremlin spokesman Dmitry Peskov dismissed the report, denying Russia has compromising material on Donald Trump.

“This is a clear attempt to damage our bilateral relations,” he said.  “Truly, there are those who whip up this hysteria, who will break their necks to support this ‘witch hunt.’”

Trump tweeted after the allegations surfaced publicly Tuesday, “FAKE NEWS – A TOTAL POLITICAL WITCH HUNT!”

U.S. officials did confirm that a summary of the information had been given to Trump out of an abundance of caution to make him aware of the allegations that could become public.

But an early investigation of the claims by the FBI revealed that in one key instance, the allegation that Trump’s attorney Michael Cohen traveled to Prague to meet with Kremlin officials to arrange cash payments to hackers working under Moscow’s direction, the FBI found no evidence that Cohen had traveled to Prague, ever, as Cohen himself asserts.  Then we learned it wasn’t even the same Michael Cohen!

Christopher Steele, 52, was identified as the ex-MI6 agent behind the dossier.  He went into hiding after his name was disclosed.  Steele, who is director of a private security firm, prepared the 35-page report – alleging Russia had compromising information on Trump – and now he fears for his life and expects backlash from Russia, the Daily Telegraph reports.  You made your bed, buddy (though I feel for his innocent family).

But on the issue of fake news (in the case of Russia, propaganda), Tuesday night, Hillary Clinton’s former campaign team ran with the above, the BuzzFeed story, with Brian Fallon and Josh Schwerin, both of whom served as Clinton spokesmen, saying the information meant the Kremlin could be in a position to blackmail Trump.  All of them reacted via Twitter.

“This is only credible theory for why Trump refuses to accept intelligence community’s finding that Russia was behind hacks,” Fallon said.  “No matter what he tweets in next 24 hours, Trump must be interrogated about Russia more than anything else at his (Wednesday) press conference.”

Schwerin also suggested Russia may seek to blackmail Trump with information it may have obtained.  “There’s a reason all presidential candidates traditionally release tax returns and have full financial transparency.  Blackmail should be impossible.”

Jesse Ferguson, also a Clinton campaign spokesman, said “could we really go from our first black male president to our first blackmailed president?”

Former Harry Reid spokesman Adam Jentleson also took to Twitter on Tuesday to say that the former Senate Democratic leader had seen the documents before writing an October letter to FBI Director James Comey about Trump’s ties to Russia.  The letter asserted that Comey was in possession of “explosive information” about close ties and coordination between Trump, his top advisers and the Russian government.

“Now you know,” Jentleson said, in a series of tweets.

But the dossier was fake news!  All the above Clinton team members jumped to conclusions, as is today’s modern politics, I understand.  But you ever wonder why I’m the “wait 24 hours” guy?  It’s because I prefer to be responsible, and as accurate as possible.

I have never, ever, published one of the fake news stories from this past election cycle, or any cycle over the nearly 18 years of this column.  [The only instance I can think of offhand that comes remotely close was in passing along the Judith Miller/New York Times pieces on WMDs in Iraq that proved to be false, but this wasn’t Russian-inspired disinformation.] 

I received all the fake news stories of the last two years in particular from many of my friends, and they should have known when I refused to reply to them what I thought of the garbage.

I like Glenn Kessler’s explanation, Kessler being responsible for the Washington Post’s Fact checker: “People seem to confuse reporting mistakes by established news organizations with obviously fraudulent news produced by Macedonian teenagers.”  There have been reports that young Macedonians were setting up sites on Facebook devoted to click-baity, pro-Trump deception, and reaping advertising profits, as reported by the Post’s Margaret Sullivan.

[Speaking of the Washington Post, I told you the other day how I didn’t include their story about Russian hacking of a Vermont utility because it didn’t meet my standards...and it proved to be false.]

There’s a good reason why I read up to 20 sources a day, from around the world, before I put this column together.  Yes, they are mainstream media outlets, but I get all sides and then use my brain to come up with some conclusions, coupled with giving you both sides on all the major stories of the day to help you in your own decision-making as to what’s right and what’s wrong.  It’s also a “week in review,” not “12 hours in review,” which is what we had the past few days, and sadly may get the next four to eight years.

John Podhoretz / New York Post...on the BuzzFeed decision....

“Readers of this newspaper know well not to include me among Trump’s supporters.  But the scurrilousness of what BuzzFeed has done here is so beyond the bounds of what is even remotely acceptable it should compel even those most outraged by Trump’s political excesses to come to his defense and to the defense of a few other people mentioned in these papers whose names are also dragged through the mud.

“There is literally no evidence on offer in these memos or from BuzzFeed that any single sentence in these documents is factual or true.  What’s more, we know most major news organizations in America had seen them and despite their well-known institutional antipathy toward Trump, had chosen not to publish them or even make reference to them after efforts to substantiate their charges had failed....

“Indeed, the memos are designed to read as though they were cables sent from the field to the home office. And they should set off the bull detector of every rational person who reads them....

“(In my 31 years as a newspaper and magazine editor), there is no source of whom you need to be more skeptical, and whose information you need to verify to the letter before you can even begin to think of publishing it, than an ‘intelligence’ source....

“Since the person retailing the factoids has an agenda, as BuzzFeed acknowledges here, he has at the very least a bias toward believing every piece of anti-Trump detail he puts down on paper – and at worst a desire to throw every single rumor he can collect (or generate out of his own fevered imaginings) at the wall to see which ones might stick.

“At a moment when journalists are up in arms about ‘fake news,’ what BuzzFeed has done here is take fake news to a new level.  Its editor, Ben Smith, acknowledges ‘there is serious reason to doubt the allegations.’  In other words, there is almost certainly fake news inside these memos, and it might all be fake, or some parts of it might be true but buried so deeply under falsity that it would be impossible to separate it out.

“ ‘Publishing this dossier reflects how we see the job of reporters in 2017,’ Smith writes.  This is an amazing thing to say, because if you think it through, it means publishing open libels and slanders is the job of reporters in 2017.

“ ‘Fake news will become more sophisticated, and fake, ambiguous, and spun-up stories will spread widely,’ warned an important American editor at the end of December 2016.  His name: Ben Smith.  His publication: BuzzFeed.

“I didn’t make that up.”

Rich Lowry / New York Post

“The paradox of the Trump phenomenon is that he may be ripping up sundry political norms, yet he benefits when his opponents and adversaries do the same.  When Marco Rubio descended to Trump’s level in the primaries and mocked the size of his hands, it hurt Rubio most.  Democrats have done themselves no favors by implicitly refusing to accept the election results after browbeating Trump for months to accept the results in advance.  And if the press is going to lower its standards in response to Trump, it will diminish and discredit itself more than the president-elect.

“For all that Trump complains about negative press coverage, he wants to be locked in a relationship of mutual antagonism with the media.  It behooves those journalists who aren’t partisans and reflexive Trump haters to avoid getting caught up in this dynamic. If they genuinely want to be public-spirited checks on Trump, they shouldn’t be more bitterly adversarial, but more responsible and fair.

“This means taking a deep breath and not treating every Trump tweet as a major news story. It means covering Trump more as a ‘normal’ president rather than as a constant clear and present danger to the republic.  It means going out of the way to focus on substance rather than the controversy of the hour.

“(While Trump did a fine job shaming reporters at his news conference, he was notably weak on the details on how he wants to replace ObamaCare).  It means a dose of modesty about how the media has lost the public’s trust, in part because of its bias and self-importance.

“None of this is a particularly tall order.   Yet it’s unlikely to happen, even if it was encouraging that so many reporters opposed BuzzFeed’s decision.  The press and Trump will continue to be at war, although only one party to the hostilities truly knows what he is doing, and it shows.”

But then...

David Ignatius / Washington Post

“ ‘Something is rotten in the state of Denmark,’ mutters Marcellus as ghosts and mad spirits haunt Elsinore castle in the first act of Shakespeare’s ‘Hamlet.’

“After this past week of salacious leaks about foreign espionage plots and indignant denials, people must be wondering if something is rotten in the state of our democracy.  How can we dispel the dark rumors that, as Hamlet says, ‘shake our disposition’?

“I’d suggest four questions to clear the haze of allegation and recrimination that surrounds President-elect Donald Trump and our intelligence agencies a week before his inauguration.  Getting answers may take months – but that’s the best way to avoid a Shakespearean tragic ending.

“Question 1: Did Trump’s campaign encourage Russia’s alleged hacking to hurt his rival Hillary Clinton and help him, and does Russia have any leverage over him?  Trump finally conceded at his news conference Wednesday that ‘as far as hacking, I think it was Russia,’ but he insisted he has ‘no dealings with Russia’ and ‘no loans with Russia.’  He didn’t answer a question about whether he or anyone from his staff had contact with Russia during the campaign....

“Question 2: Why did the Obama administration wait so long to deal with Russia’s apparent hacking?  This is the Hamlet puzzle in our drama.  Like the prince of Denmark, President Obama delayed taking action even as evidence mounted of dastardly deeds.  The first stories about Russian hacking broke in the summer. In September, the ‘Gang of Eight’ – the top congressional leadership on intelligence – was getting detailed briefings on the hacking.  The FBI by then had obtained the British ex-spy’s dossier.

“The intelligence community issued a statement Oct. 7 charging that ‘Russia’s senior-most officials’ had sought to ‘interfere with the U.S. election process.’ Given that, why didn’t Obama do more?  [Ed. this was my point a few weeks ago.  Obama said he didn’t want to appear to be interfering in the election and that he feared escalation if he acted against Russia.]....

“Question 3: What discussions has the Trump team had with Russian officials about future relations?....

“Retired Lt. Gen. Michael T. Flynn, Trump’s choice for national security adviser, cultivates close Russian contacts. He has appeared on Russia Today and received a speaking fee from the cable network, which was described in last week’s unclassified intelligence briefing on Russian hacking as ‘the Kremlin’s principal international propaganda outlet.’  According to a senior U.S. government official, Flynn phoned Russian Ambassador Sergey Kislyak several times on Dec. 29, the day the Obama administration announced the expulsion of 35 Russian officials as well as other measures in retaliation for the hacking.  What did Flynn say, and did it undercut the U.S. sanctions?....

[Ed. Friday, the Trump transition team said Flynn was just placing calls to the ambassador to set up a post-Inauguration phone call between Trump and Putin.  We’ll see.]

“Question 4: Finally, what’s the chance that Russian intelligence has gamed its covert action more subtly than we realize?  Applying a counter-intelligence lens, it’s worth asking whether the Russians hoped to be discovered, and whether Russian operatives fed the former MI6 officer’s controversial dossier deliberately, to sow further chaos.

“These questions need to be answered – not to undermine Trump, but to provide a factual base to help the country recover from an attack on its political system. As Trump rightly says, ‘fake news’ threatens our democracy. Truth will protect it.”

Meanwhile, the Justice Department’s inspector general’s office said on Thursday it would open an investigation into the decision in October by FBI Director James Comey to inform Congress about a new review in the Hillary Clinton email investigation.

This doesn’t just draw negative attention to Comey, but to the Bureau overall.

So this will go on and on and on....

Inspector General Michael Horowitz said he would be examining other issues, including whether the deputy director of the FBI, whose wife ran as a Democrat for the Virginia State Senate, should have recused himself from involvement in the Clinton email investigation.  And Horowitz is going to investigate whether a top Justice Department official (Peter Kadzik) gave information to the Clinton campaign about an upcoming congressional hearing that seemed likely to raise questions about Mrs. Clinton.

Separately, Director of National Intelligence James Clapper apologized to Donald Trump for the leaked content from a classified briefing, Trump having accused the intel community of leaking it, with Clapper saying “I do not believe the leaks came from within the IC.”

President Barack Obama gave his farewell address in Chicago on Tuesday.

“By almost every measure, America is a better, stronger place” than it was eight years ago when he took office, he told thousands of supporters.

But he warned “democracy is threatened whenever we take it for granted.”  Obama outlined three threats – economic inequality, racial divisions and the retreat of different segments of society into “bubbles,” where opinions are not based on “some common baseline of facts.”

On his achievements:

“If I had told you eight years ago that America would reverse a great recession, reboot our auto industry, and unleash the longest stretch of job creation in our history... If I had told you that we would open up a new chapter with the Cuban people, shut down Iran’s nuclear weapons program without firing a shot, and take out the mastermind of 9/11... If I had told you that we would win marriage equality, and secure the right to health insurance for another 20 million of our fellow citizens – you might have said our sights were set a little too high.”

Obama’s only other reference to foreign policy was in discussing the post-World War II order.

“That order is now being challenged – first by violent fanatics who claim to speak for Islam; more recently by autocrats in foreign capitals who see free markets and open democracies and civil society itself as a threat to their power. The peril each poses to our democracy is more far-reaching than a car bomb or a missile.  It represents the fear of change; the fear of people who look or speak or pray differently; a contempt for the rule of law that holds leaders accountable; and intolerance of dissent and free thought; a belief that the sword or the gun or the bomb or the propaganda machine is the ultimate arbiter of what’s true and what’s right.

“Because of the extraordinary courage of our men and women in uniform, because of our intelligence officers, and law enforcement, and diplomats who support our troops, no foreign terrorist organization has successfully planned and executed an attack on our homeland these past eight years.  And although Boston and Orlando and San Bernardino and Fort Hood remind us of how dangerous radicalization can be, our law enforcement agencies are more effective and vigilant than ever.  We have taken out tens of thousands of terrorists – including bin Laden.  The global coalition we’re leading against ISIL has taken out their leaders, and taken away about half their territory.  ISIL will be destroyed, and no one who threatens America will ever be safe.”

A little later....

“(The) fight against extremism and intolerance and sectarianism and chauvinism are of a piece with the fight against authoritarianism and nationalist aggression.  If the scope of freedom and respect for the rule of law shrinks around the world, the likelihood of war within and between nations increases, and our own freedoms will eventually be threatened.

“So let’s be vigilant, but not afraid.  ISIL will try to kill innocent people. But they cannot defeat America unless we betray our Constitution and our principles in the fight.  Rivals like Russia or China cannot match our influence around the world – unless we give up what we stand for – and turn ourselves into just another big country that bullies smaller neighbors.”

That was it.  Of course in building his legacy, Obama doesn’t want to talk about his catastrophic foreign policy. 

Obama, despite his pledge to ensure a smooth transition for his successor, took a few shots without naming Donald Trump.

In addressing the “corrosive” nature of the nation’s political dialogue, Obama said it threatened the foundations of democracy in the U.S.

“We weaken those ties when we define some of us as more American than others; when we write off the whole system as inevitably corrupt, and blame the leaders we elect without examining our own role in electing them.

“It falls to each of us to be those anxious, jealous guardians of our democracy.”

Of course now Trump is vowing to undo many of Obama’s accomplishments on his first day in the White House, from immigration to ObamaCare.  It will be an interesting limo ride from the White House to the Capitol for the two of them on Friday.

Editorial / USA TODAY

“It was little more than eight years ago and three miles away that Barack Obama embraced the promise of his presidency, addressing a jubilant crowd in Chicago’s Grant Park at a victory celebration on election night 2008.

“A political lifetime later, before a sea of supporters at McCormick Place, Obama on Tuesday delivered what is expected to be his final formal address to the nation.  His hair was grayer, his tone more somber. And since election night 2016, his message has been aimed at rallying downcast supporters and defending a legacy that his successor has vowed to dismantle.

“In his speech, he recited a litany of his proudest achievements, among them the economic recovery from the Great Recession, the diplomatic outreach to Cuba, the nuclear accord with Iran, the death of Osama bin Laden, the extension of health care coverage to 20 million people and more.

“ ‘That’s what we did,’ he said to cheers.  ‘That’s what you did.  You were the change. Because of you, by almost every measure, America is a stronger, better place than it was when we started.’

“Still, while Obama is finishing his term with a healthy approval rating...the election of a political nemesis as his successor poses grave risks to what he leaves behind on everything from health care to climate change....

“Obama’s decision to deliver a farewell address, and the unprecedented venue he chose for it, is part of his effort to make the case for his legacy and rally his reeling party.  He is all too aware of the impact Hillary Clinton’s defeat in November is likely to have on his legacy, one reason he and Michelle Obama campaigned so fiercely on her behalf.

“During the 2008 campaign, Obama raised the hackles of some Democrats when he told The Reno Gazette-Journal that Ronald Reagan had ‘changed the trajectory of America in a way that Richard Nixon did not and in a way that Bill Clinton did not. He put us on a fundamentally different path because the country was ready for it.’

“It wasn’t just a matter of timing, though. Reagan’s impact endured in part because he was succeeded in the Oval Office by his vice president, George H.W. Bush, who articulated his own message but also helped cement Reagan policies....

“Consider the comments by a senior Trump adviser in an interview with USA TODAY Monday about Obama’s farewell address.  ‘It’s a great idea for him to do this,’ Kellyanne Conway said, ‘because he knows that a great deal of what he did is not going to survive this next presidency, or maybe even this next month, in some cases.’”

Editorial / New York Daily News

“President Obama set out not only to remake the United States in its own eyes and heal longstanding partisan divisions, but to recast America in the eyes of the world.

“He would end the war in Iraq, which Obama had famously called a ‘dumb war.’  He would wind down the war in Afghanistan.  He would rebuild alliances strained under the eight-year term of George W. Bush.

“In 2009, before Obama had the chance to make good on any of these seismic promises, he won the Nobel Peace Prize.

“And throughout his two terms, as Obama strained to recast American foreign policy in his own image, he repeatedly crashed against the rocky shoals of reality.

“A promise to swiftly close the terrorist detention center in Guantanamo Bay was thwarted.  A Russia reset failed, as relations with one crucially important partner soured.

“An intervention in Libya succeeded on some terms, toppling Moammar Qaddafi, and failed on others.  Four Americans lost their lives in Benghazi.

“As Obama hemmed, a civil war in Syria raged.  The President drew a ‘red line’ warning dictator Bashar Assad not to use chemical weapons, then flinched when it was crossed.

“Though the U.S. made progress against core Al Qaeda, the even more brutal terrorist offshoot known as the Islamic State, which Obama had dismissed as a ‘JV’ team, made bloody and chilling gains in Syria, Iraq and beyond.

“America’s friendship with close ally Israel turned tense, especially as Obama pressed to complete a nuclear deal to welcome terrorist-supporting, Israel-hating Iran back into the international community.

“Obama brokered that agreement, and joined an international accord on climate change, and thawed relations with Cuba – ending more than a half-century of hostilities with the Communist nation off Florida’s coast.  And even as smaller wars rage, American troops are no longer dying in large numbers in Iraq and Afghanistan.

“His supporters celebrate those triumphs. But to others, his time in office was marked by discord, turmoil and arguably a diminishment of America’s standing in the world.”

George F. Will / Washington Post

“Obama leaves office serene because, as he put it, ‘almost every country on Earth sees America as stronger and more respected today than they did eight years ago.’

“Two seemingly unimpressed nations are Russia, which is dismembering a European nation (Ukraine), and China, which is shredding international law by turning the world’s most important waterway, the South China Sea, into militarized Chinese territory.

“Obama’s policies that brought America to a pinnacle of admiration, as he sees it, were an amalgam of Wilsonian and anti-Wilsonian elements. (Woodrow) Wilson’s grand ambition for the United States was to reorder the world in a way that would make it unnecessary for America to have grand ambitions.  He thought America could lead a restful life after strenuous diplomacy had written rules for the game of nations....

“Obama seemed to doubt that America has much to teach the world, beyond post-Iraq modesty – herewith his Wilsonian dimension – and the power of diplomacy’s soft power to tame the world.  Although neither the English nor the American nor the Russian nor the Spanish nor the Chinese civil war was ended by negotiations, Obama thought the especially vicious and complex civil war in Syria’s sectarian and tribal society could be ended diplomatically. Russian President Vladimir Putin picked a side and helped it win.

“The fact that the world is more disorderly and less lawful than when Obama became president is less his fault than the fault of something about which progressives are skeptical – powerful, unchanging human nature.  Humans are, as Job knew, born unto trouble as the sparks fly upward: They are desirous and competitive, and hence are prone to conflict.

“And to causing progressives to furrow their brows in puzzlement.  In 2014, when Russia annexed Crimea, Secretary of State John F. Kerry was disappointed with Putin, saying, more in sorrow than in anger: ‘You just don’t in the 21st century behave in 19th-century fashion.’  If you do, you place yourself on (in one of Obama’s favorite phrases) ‘the wrong side of history.’

“Make that History, which, in progressives’ lexicon, is a proper noun, an autonomous thing with a mind, or at least a logic, of its own.  Kerry’s reprimand of Putin expressed a progressive’s certitude about progress: The passage of time should ineluctably improve the comportment of nations. Which is why in 1911, the renowned 11th edition of the Encyclopedia Britannica, in its entry on torture, said ‘the whole subject is one of only historical interest as far as Europe is concerned.’  The Dachau concentration camp was opened in March 1933.

“Obama’s foreign policy presumed the existence of ‘the community of nations.’  But that phrase is worse than hackneyed and sentimental, it is oxymoronic: Different nations affirm different notions of justice; a community consists of people made cohesive by a consensus about the nature of justice.

“Obama’s second-worst unforced error, second to declaring and then abandoning a ‘red line’ about Syrian chemical weapons, was involving the U.S. military in regime change in Libya.  Perhaps this venture appealed to him because it was untainted by any discernible connection with American national interest.  He conducted it by ‘leading from behind,’ which he described as U.S. forces ‘being volunteered by others to carry out missions’ in Libya.  As George Orwell said, ‘The great enemy of clear language is insincerity.’

“Soon, foreign policy will be conducted by a man who, although in 2010 he said WikiLeaks’ Julian Assange deserves the death penalty, now seems to trust Assange on the subject of Russian hacking more than he trusts the consensus of the nation’s $53 billion civilian intelligence institutions.  Time passes and, we are told, brings progress.”

Editorial / Wall Street Journal

“President Obama once said that as President he aspired to be the progressive Ronald Reagan, and as he prepares to leave office he has succeeded in fundamental if ironic ways.

“While Reagan left behind a calmer, more optimistic country, Mr. Obama leaves a more divided and rancorous one.  While the Gipper helped elect a successor to extend his legacy, Mr. Obama will be succeeded by a man who campaigned to repudiate the President’s agenda.  Barack Obama has been a historic President but perhaps not a consequential one.

“Mr. Obama was always going to be a historic President by dint of his election as the first African-American to hold the office.  His victory affirmed the American ideal that anyone can aspire and win political power.  This affirmation was all the better because Mr. Obama won in large part thanks to his cool temperament amid the financial crisis and his considerable personal talents.

“Yet his Presidency has been a disappointment at home and abroad, a fact ironically underscored by Mr. Obama’s relentless insistence that he has been a success.  In his many farewell interviews, he has laid out what he regards as his main achievements: reviving the economy after the Great Recession, a giant step toward national health care, new domestic regulations and a global pact to combat climate change, the Iran nuclear deal, and a world where America is merely one nation among many others in settling global disputes rather than promoting its democratic values.

“Even on their own terms those achievements look evanescent. Congress has teed up ObamaCare for repeal, and Donald Trump will erase the climate rules. The global climate pact is built on promises without enforcement, and Mr. Trump ran against and won in part on the slow economic recovery.  Authoritarians are on the march around the world as they haven’t been since the 1970s, and perhaps the 1930s....

“Mr. Obama’s progressive agenda failed most acutely on its core promise of economic ‘fairness.’ The President made income redistribution to address inequality his top policy priority, above economic growth.  The result has been the slowest expansion since World War II and even more inequality....

“The Reagan and Bill Clinton expansions left the public in an optimistic mood.  Illegal immigration and trade deficits were larger than during the Obama years, but Americans worried less about both because they could see the tide rising for everyone.  The slow-growth Obama years created the dry political tinder for Mr. Trump’s campaign against immigration and foreign trade.

“The story is in many ways even worse on foreign policy. When Reagan left office the Soviet Union was in retreat and the Cold War was nearing its end. As Mr. Obama leaves office, the gains of the post-Cold War era are being lost as world disorder spreads.

“This too flows from Mr. Obama’s progressive worldview.  He fulfilled his 2008 campaign promise to reduce America’s global involvement, especially in the Middle East, but his willy-nilly retreat has led to more chaos. He deposed a dictator in Libya but walked away from the aftermath.  His decision to leave Iraq let him claim the ‘tide of war is receding’ as he ran for re-election in 2012, but it allowed Islamic State to gestate there and in Syria as he let its civil war burn out of control.

“The President’s calls for a world without nuclear weapons have been met by the acceleration of nuclear programs in North Korea and Pakistan.  A ‘reset’ with Moscow did nothing to alter Vladimir Putin’s revanchism in Ukraine and beyond.  Reductions in U.S. military spending have emboldened China to press for regional dominance in East and Southeast Asia.

“Whether his deal with Iran prevents that country from becoming a nuclear power won’t be known for several years, but it has already helped Iran fund its terrorist proxies in Syria, Lebanon and Yemen.  His outreach to Cuba may be historic but so far it has yielded no benefits for the Cuban people.

“Perhaps the most decisive verdict on the Obama era is the sour public mood.  While Americans like and respect the President personally, which explains his approval rating, on Election Day they said by nearly 2 to 1 that the country is on the wrong track.  Even race relations, which should have improved under Mr. Obama’s leadership and example, seem to have become worse.  His polarizing Presidency has now yielded an equally polarizing successor.

“The lesson is not that Mr. Obama lacked good intentions or political gifts.  Few Presidents have entered office with so much goodwill. The lesson is that progressive policies won’t work when they abjure the realities of economic incentives at home and the necessity of American leadership abroad.”

Finally...on a combination of Trump and Obama....

Charles Krauthammer / Washington Post

“The shortest honeymoon on record is officially over.  Normally, newly elected presidents enjoy a wave of goodwill that allows them to fly high at least through their first 100 days.  Donald Trump has not yet been sworn in and the honeymoon has already come and gone.

“Presidents-elect usually lie low during the interregnum.  Trump never lies low. He seized the actual presidency from Barack Obama within weeks of his election – cutting ostentatious deals with U.S. manufacturers to keep jobs at home, challenging 40-year-old China policy, getting into a very public fight with the intelligence agencies.  By now he has taken over the presidential stage.  It is true that we have only one president at a time, and for over a month it’s been Donald Trump.

“The result is quantifiable.  A Quinnipiac poll from Nov. 17 to 20 – the quiet, hope-and-change phase – showed a decided bump in Trump’s popularity and in general national optimism. It didn’t last long.  In the latest Quinnipiac poll, the numbers have essentially returned to Trump’s (historically dismal) pre-election levels.

“For several reasons.  First, the refusal of an unbending left to accept the legitimacy of Trump’s victory...He lost the popular vote, it’s James Comey’s fault, the Russians did it.

“Second, Trump’s own instincts and inclinations, a thirst for attention that leads to hyperactivity.  His need to dominate every news cycle feeds an almost compulsive tweet habit.  It has placed him just about continuously at the center of the national conversation and not always to his benefit.  Trump simply can’t resist playground pushback.  His tweets gave Meryl Streep’s Golden Globes screed priceless publicity.  His mocking Arnold Schwarzenegger for bad ‘Apprentice’ ratings – compared with ‘the ratings machine, DJT’ – made Trump look small and Arnold (almost) sympathetic.

“Nor is this behavior likely to change after the inauguration.  It’s part of Trump’s character.  Nothing negative goes unanswered because, for Trump, an unanswered slight has the air of concession or surrender.

“Finally, it’s his chronic indiscipline, his jumping randomly from one subject to another without rhyme, reason or larger strategy. In a week packed with confirmation hearings and Russian hacking allegations, what was he doing meeting with Robert Kennedy Jr., an anti-vaccine activist pushing the thoroughly discredited idea that vaccines cause autism?....

“Compare this with eight years ago and the near euphoria – overblown but nonetheless palpable – at the swearing-in of Barack Obama.  Not since JFK had any new president enjoyed such genuine goodwill upon accession to office.

“And yet it turns out that such auspicious beginnings are not at all predictive.  We could see it this same week. Tuesday night, there stood Obama giving a farewell address that only underscored the failure of a presidency so bathed in optimism at its start.  The final speech, amazingly, could have been given, nearly unedited, in 2008.  Why, it even ended with ‘yes we can.’

“Is there more powerful evidence of the emptiness of the intervening two terms?  When your final statement is a reprise of your first, you have unwittingly confessed to being nothing more than a historical parenthesis.”

Wall Street

Just a few economic notes from the week, one that saw the Dow Jones once again fail to crack the 20000 barrier.

Retail sales for the month of December were disappointing, up 0.6%, which seems strong, but unchanged when you strip out autos and gasoline, 0.2% ex-autos.

The producer price index for December came in at 0.3%, 0.2% ex-food and energy, with figures for 2016 at 1.2%, 1.4% on core.

I cover the first few bank earnings releases down below and the tone was optimistic, though like with everyone else they are waiting to see what happens come the first 100 days.

Fed Chair Janet Yellen, in a town hall meeting on Thursday, said the U.S. economy is doing well and faces no serious obstacles in the short term.  Various Fed officials spoke this week and the Open Market Committee seems to have coalesced around the three rate hikes in 2017 consensus.

A survey of 67 economists for the Wall Street Journal had a strong 64% saying the risks were to the upside in their forecasts.  The average GDP estimate for 2017 is 2.4%, 2.5% in 2018, which is above the Fed’s forecast of 2.1% for this year.

For the fourth quarter, the average forecast is around 2.2%, but the Atlanta Fed’s GDPNow indicator pegs it at 2.8%.

Earnings begin to roll in in earnest next week, but I can’t imagine CEOs will offer much guidance.  What many will say, as Delta Air Lines’ did this week, is that there has been a change in sentiment, a positive change, but, again, we need to wait and see.

Europe and Asia

The unemployment rate for the eurozone came in at 9.8% for November, same as October, as reported by Eurostat.  The 9.8% compares with 10.5% for November 2015.

Germany’s jobless rate is 4.1% (the government pegs it at 6.0%), France is 9.5%, Italy 11.9% (up from 11.5% a year ago, not good), Spain 19.2% (though down from 20.9% yoy), and Greece 23.1% (Sept.).  [Ireland is down to 7.3%.  It was about 15% at the peak of the financial crisis, if I recall.]

The youth unemployment rate for November remained stubbornly high in the likes of Greece 46.1% (Sept.), Spain 44.4%, and Italy 39.4% (up 2% from September).

Industrial production in the euro area jumped 1.6% in November over October, 3.2% year over year, which is solid.

Eurozone consumer confidence is at a 20-month high.

So all in all, after a slew of data to open the new year the eurozone economy is hanging in there for the most part.  The key player, Germany, reported GDP growth of 1.9% in 2016, the best annual pace since 2011, as the weaker euro benefits the nation’s exporters. The 1.9% compares to 1.7% in 2015.

Spain reported its core inflation rate hit an annualized rate of 1% in December so inflation pressures are finally emerging after two years of deflation.  This is good.

Minutes released this week from the European Central Bank’s December 8 meeting show policymakers opted to trim their monthly bond purchase because of concerns they couldn’t find enough suitable paper to buy, so the monthly purchase target under its quantitative easing program was cut from 80bn euro to 60bn beginning in April.

If it continued to snap up bonds at the same pace, the ECB felt it could result in a liquidity crisis down the road.

Eurobits....

--U.K. Prime Minister Theresa May said she will spell out her vision for Brexit in a speech on Tuesday.  May, who hopes to create a “truly global Britain”, will attempt to answer calls from business leaders and politicians for more detail as her target date for triggering the withdrawal process from the European Union, end of March, is fast approaching.

This is a big event, as it will also provide her EU counterparts ammunition for the opening negotiations.  May has signaled that Britain’s ability to control immigration is her red line and that this issue, along with escaping from the European courts, outweighs Britain remaining in the EU’s single market.

But European leaders say they won’t allow the U.K. to “cherry pick,” with the attitude being they want to make it bad for the U.K. to discourage others from taking the same path.

German Chancellor Angela Merkel reiterated her demand that the U.K. adhere to European Union rules on freedom of movement in return for market access.  Aiming to maintain “good relations” with Britain doesn’t mean caving in once Brexit talks get under way, Merkel said.

Separately, British Trade Secretary Liam Fox has identified 50 nations as potential markets as he urges businesses to take advantage of export opportunities, but experts are warning that Britain risks a “catastrophic Brexit,” as one Canadian, Jason Langrish, told the Observer because a trade deal could take a decade to strike.

Economically, the Bank of England will be releasing its latest forecasts next week and inflation is expected to rise sharply, which will test how resilient the British consumer will be.

Nick Clegg, former deputy prime minister / Financial Times

“I have a tip for Mrs. May: put the briefings away, tell your gatekeepers to cool down and give the civil servants a rest.  Then, with a clear head, make a judgement about what you believe is in the national interest....

“The choice facing Mrs. May is stark: a hard, swift break from the EU – the most politically convenient option – will do most damage to the UK’s prosperity and security. Alternatively, a softer Brexit, minimizing economic disruption and retaining some links with Brussels for crime fighting, climate change and other areas, will bruise the prime minister’s political standing.

“So Mrs. May’s place in history will come to her willingness to put country before party. If she is ready to be brave, the outlines of a way forward are becoming clearer.  There are, in fact, only two big judgments for her to make: whether the UK stays in the single market, and how to control immigration.  If she makes the right calls, the other ingredients for a workable Brexit could fall into place....

“The prime minister should tiptoe back from her rhetoric and affirm her wish to stay in the single market.  It would be bizarre if she instead presides over an increase in protectionist red tape and bureaucratic border checks while extolling free trade.

“On immigration, the prime minister has also created needless hostages to fortune.  By interpreting anxieties about immigration as applying only to freedom of movement within the EU, she is missing the point.  The public’s concern draws on many fears: illegal immigrants jumping out of the back of lorries; Europe’s refugee crisis; cultural segregation in some communities.

“It is absurd to funnel these disparate concerns into a clampdown against Spanish nurses, French lawyers, German engineers, Baltic fruit pickers and Portuguese social workers.  After all, immigration from outside Europe has exceeded EU migration for the past 40 years.  Mrs. May could address concerns about immigration by tackling the wider issues rather than picking a fight with only one part of our open labor market.

“Crucially, as the rest of the EU rushes to toughen up its immigration policies, there is a deal to be done....British concerns about immigration within Europe could be married to EU-wide concerns about the movement of people from outside the continent.

“So there are ways in which the prime minister could square the circles of Brexit, immigration, the single market and the needs of the rest of the EU.  It would require big judgments, skill and some luck. It would not make her popular with her own political tribe, but that is what serving the national interest sometimes demands.”

Ah, the fun is just beginning, sports fans.

--German government officials are investigating an unprecedented proliferation of fake news items ahead of September’s parliament election.  Yes, it’s Russia, according to intelligence reports.  Angela Merkel has always been the next target for the Kremlin, as she has stood strong against Vladimir Putin, post-invasion of Crimea, holding firm on sanctions as other European leaders waffle.

BfV, the German domestic intelligence agency, confirmed on Monday that it has seen a wide variety of Russian propaganda tools and “enormous use of financial resources” to carry out disinformation campaigns aimed at destabilizing the German government.

One more note on Germany...the number of asylum seekers entering Germany fell by about two thirds last year but the proportion of rejected applicants who left remained low, ergo, lots of extremists are circulating in the country.

280,000 entered Germany last year in search of asylum, down from a record 890,000 in 2015. But only 80,000 left Germany either voluntarily or were deported.

Plus the number of those filing asylum claims lags behind the actual number of newly arrived migrants, i.e., Germany hardly has a handle on the situation.

--French National Front Leader Marine Le Pen was seen at Trump Tower on Thursday, which riled up the press, until they learned she was not meeting with Donald Trump, or anyone from his staff (supposedly), but rather a key advisor of hers who lives three stories below Trump’s penthouse and is a member of Trump’s Mar-a-Lago club in Palm Beach.  The adviser, Guido Lombardi, along with his wife have been described by Trump as “friends for a long time.”

But no doubt Le Pen was in New York to attempt to drum up some financial support.  She said this week that French banks have refused to meet with her to discuss the possibility of financing her presidential campaign.

“The fact that the banks won’t lend to us, playing a political role, poses a real problem for democracy,” she said.  ‘It’s the banks who decide who can run and who can’t.”

So off to New York she went.

Le Pen is set to launch her bid on Feb. 4 in Lyon.  She has been a vocal supporter of Trump’s policies for the U.S. and called him “a sign of hope” for European anti-establishment movements.

Turning to Asia, China’s official statistics folks released a slew of data this week.  Producer prices in December rose a strong 5.5%, year over year, 1.6% month on month, with metals prices rising 4.4% for December, 18.2% yoy, which is encouraging.

For all of 2016, the PPI, however, fell 1.4% on average from 2015, but the days of deflation would certainly appear to be over.

Consumer prices last month rose 2.1%, 0.2% on the month.  The CPI in 2016 was up 2% vs. 1.4% in 2015.

But the trade data wasn’t as good. December exports fell 6.1% year over year, while imports rose a less than expected 3.1%, though there was stronger demand for commodities.

Exports for all of 2016 fell 7.7%, with imports declining 5.5%.  Now it’s all about Donald Trump and what kind of policies will he adopt on the trade front, such as protectionist measures, which China promises to counteract should this come to pass.

Car sales in China for 2016 rose at the fastest pace in three years, up 15% to 24.38 million vehicles (compared with the 17.55 million figure for last year in the U.S.).  The Chinese Association of Automobile Manufacturers, though, is forecasting growth will slow to 5% in 2017.

VW was the top foreign seller, 3.98m in 2016, up 12%; GM sold 3.87m, up 7% (though it was just fined $29 million for antitrust violations and it’s not giving an outlook for ’17); and Ford sold 1.27m vehicles in China, up 14%.

Street Bytes

--Stocks finished mixed, with the Dow Jones losing 0.4% to 19885, while the S&P 500 fell 2 points, 0.1%.  But Nasdaq finished Friday at another new high, 5574, up 1.0%.

--U.S. Treasury Yields

6-mo. 0.61%  2-yr. 1.19%  10-yr. 2.40%  30-yr. 2.99%

Unchanged on the week.

--House Speaker Paul Ryan promised Republicans will repeal and replace ObamaCare but that they are under “no hard deadlines” for producing an alternate program.

But Friday, the House voted along party lines to pass key preliminary legislation to roll it back, the Senate having done so on Thursday, the legislation allowing Republicans to use special budget procedures to repeal major parts of the Affordable Care Act without cooperation from Democrats.

Speaker Ryan, in a floor speech today, said the measure would launch a “thoughtful, step-by-step process” toward replacing ObamaCare.

“In the weeks ahead, several steps will be taken to provide relief – some steps will be taken by this body; some steps will be taken...by the new administration.

“Our goal is a truly patient-centered system, which means more options to choose from, lower costs and greater control over your coverage,” he continued.  “And as we work to get there, we will make sure that there is a stable transition period so that people don’t have the rug pulled out from under them.”

--At Donald Trump’s first formal press conference, the President-elect indicated his administration would go after the pharmaceutical industry and the prices it charges for drugs, with the government being a key customer through Medicare and Medicaid. Trump added Uncle Sam doesn’t drive a hard bargain when buying drugs.

“Pharma has a lot of lobbyists and a lot of power, and there is very little bidding.  We’re the largest buyer of drugs in the world and yet we don’t bid properly, and we’re going to save billions of dollars.”

--JPMorgan Chase reported robust earnings in the fourth quarter, owing largely to traders and investment bankers, with net income for the two up 96 percent from a year earlier, boosted by the post-election surge in trading.

The retail banking side of things was flat, with a slight drop in net revenues for credit cards and auto loans.

Overall, net revenues came in shy of analysts’ estimates at $23.4bn.

That said, the bank’s results “were a strong end to another record year, reflecting our intense client focus and solid performance across our businesses,” said chairman and CEO Jamie Dimon.

Addressing the issue of a new administration in the White House, Dimon said, “Looking ahead there is opportunity for good, rational and thoughtful policy decisions to be implemented, which would spur growth, create jobs for Americans across the income spectrum and help communities, and we are well positioned to play our part.”

JPM’s shares hit an all-time high Friday.  Five of the top ten gainers in the S&P 500 since the election are banks, led by Goldman Sachs and Bank of America.

--Speaking of BofA, it announced a share buyback of $1.8bn after it reported high trading volumes and lower cost controls led to a better-than-expected rise in fourth-quarter profits.

Its global markets business had net income of $658m in the quarter, up from $171m a year earlier, owing to the increase in trading activity.

Overall revenue of $20bn, though, was short of expectations.

--Wells Fargo’s profits declined a second year after fourth quarter earnings fell short of analyst forecasts, Wells still struggling to get over the fake account scandal.

Net income fell 4.4% for the year, while earnings for the fourth quarter fell short of expectations.

Tim Sloan, new CEO, said in a statement: “While we have more work to do, I am proud of the effort of our entire team to make things right for our customers.”

Shares in Wells, however, like the other banks since the election, have been rising sharply because of hopes that higher interest rates will boost lending margins.

But in Q4, net interest margin came in at 2.87 percent, down from 2.92 percent a year earlier.

--BlackRock, the world’s largest asset manager, reported a net inflow of $202bn in 2016, as its total assets under management rose to $5.14 trillion.

Revenues, though, fell 2% compared to 2015, and operating income also dropped 2%.

--Volkswagen will plead guilty to three felonies and pay $4.3bn in penalties to settle a U.S. Dept. of Justice investigation into the diesel emissions scandal.  VW has admitted that more than 11m vehicles worldwide were fitted with “defeat devices” to fool emissions tests.  When government regulators then grew suspicious, executives, six current and former ones who were indicted, destroyed documents and lied.

All six were charged with one count of conspiring to defraud the U.S., commit wire fraud and violate the Clean Air Act by lying to regulators and the public about the ability of VW’s “clean diesel” technology.

Just a reminder.  Engineers developed a new diesel engine in 2006, but they realized it would not be powerful enough to satisfy car owners and not green enough to pass emissions tests.  The new engine was to be the centerpiece of the automaker’s sales strategy in the U.S., but rather than go back to the drawing board, VW wrote software that would detect when the car was undergoing the government’s standard laboratory tests and operate in accordance with EPA limits.

But when it was on the road, the software allowed the car to spew up to 40 times the allowable levels of nitrogen oxides.  So VW employees hid the existence of the defeat device.  From there it was one set of lies after another by top execs.

The penalty is the second-largest criminal environmental settlement in U.S. history, behind BP’s Deepwater Horizon case.

Wednesday’s actions, which include a criminal fine of $2.8m, are on top of the $15.3bn that VW agreed to pay in June in a partial civil settlement with federal and state governments and owners of the cars in question.  VW previously said it had set aside $19.2bn to cover the costs of the scandal.

--Fiat Chrysler Automobiles said on Sunday it was investing $1 billion to retool and modernize two plants in the Midwest, one of which (Warren, Mich.) will now produce FCA’s Ram pickup truck – a vehicle currently produced in Mexico.

Fiat Chrysler said the investment would create 2,000 production-related jobs.  Happy days.  Trump pleased.

But then on Thursday, the Environmental Protection Agency accused Fiat Chrysler of using secret software that allowed illegal excess emissions from at least 104,000 diesel vehicles, the models including 2014, 2015 and 2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks. The EPA said the excess emissions of nitrogen oxides “threatens public health by polluting the air we breathe.”

Fiat Chrysler fought back quickly, not wanting to become another VW, with CEO Sergio Marchionne rejecting the allegations, saying there was no wrongdoing and the company never attempted to create software to cheat the system (to detect when the vehicle was in test mode). The stock fell about 10%.

--Friday, Renault shares fell on news French prosecutors are investigating it over suspected cheating on vehicle emissions, sending its shares lower.

--Takata Corp. has agreed to plead guilty to charges as early as Friday as part of a $1 billion settlement with the U.S. Justice Department to resolve an investigation into deadly air bag ruptures. The settlement breaks down to a $25 million criminal fine, $125 million in victim compensation and $850 million to compensate automakers who suffered from massive recalls.

In addition, three Takata executives were indicted and could be extradited to the U.S.

Only about one-third of inflators recalled to date have been replaced, with 42 million vehicles in the U.S. impacted.

--According to Gartner Inc., worldwide personal computer shipments receded again in the fourth quarter, down 3.7% from a year earlier.  International Data Corp. said shipments fell 1.5% during the quarter. Sales have been in decline since 2012.

Both firms have Lenovo Group remaining the top PC vendor, with Hewlett-Packard second, Dell third.

--ZTE Corp., China’s largest listed telecommunications network equipment manufacturer (think Cisco Systems) is apparently planning to eliminate 3,000 jobs in the first quarter, 5% of its global workforce, as reported by the South China Morning Post.

Washington slapped export restrictions on ZTE last March for violating U.S. trade sanctions on Iran and the sanctions have taken a toll, as well as stiff competition in the global market for telecom network equipment and smartphones.

--The McKinsey Global Institute released a report on new technology and automation, which breaks jobs down by work tasks – more than 2,000 activities across 800 occupations, from stock clerk to company boss.  As the New York Times’ Steve Lohr reports, the research arm of McKinsey & Company, “concludes that many tasks can be automated and that most jobs have activities ripe for automation.  But the near-term impact, the report says, will be to transform work more than to eliminate jobs.

“Globally, the McKinsey researchers calculated that 49 percent of time spent on work activities could be automated with ‘currently demonstrated technology’ either already in the marketplace or being developed in labs.  That, the report says, translates into $15.8 trillion in wages and the equivalent of 1.1 billion workers worldwide.  But only 5 percent of jobs can be entirely automated.

“ ‘This is going to take decades,’ said James Manyika, a director of the institute and an author of the report.  ‘How automation affects employment will not be decided simply by what is technically feasible, which is what technologists tend to focus on.’”

Other reports have different conclusions. Researchers at Oxford University estimated in a widely cited paper published in 2013 that 47 percent of jobs in the U.S. were at risk, while “a report published last year by the Organization for Economic Cooperation and Development concluded that across its 21-member countries, 9 percent of jobs could be automated on average.”  [Steve Lohr]

--In an attempt to get in Donald Trump’s good graces, Amazon announced it plans to hire 100,000 new employees in the U.S. in 18 months, though many of these jobs are at the expense of traditional retail as malls shrink, or are demolished, with anchor stores closing.  [Amazon is growing at a pace that would have warranted the expansion as well.]

Lawrence Katz, an economics professor at Harvard who studies labor and technological change, told the Associated Press: “There are huge benefits to consumers from Amazon.  But the workers they are hiring aren’t the same ones being laid off.”

And in line with the above bit on automation, Amazon is continuing to introduce robots that will clearly cost jobs, though the company says they will work in conjunction with people instead of replacing them.

--Wal-Mart Stores Inc. announced it was cutting hundreds of jobs by the end of the month, both at its Bentonville, Arkansas headquarters as well as regional personnel that support stores. 

--McDonald’s is selling a controlling stake in its China business to a group led by state-owned conglomerate Citic for a reported $2.1 billion.  Citic will own 52%, Washington-based private equity firm The Carlyle Group will own 28%, and McDonald’s will retain 20%.

About two-thirds of the China operation’s 2,640 outlets, including 240 in Hong Kong, will be refranchised.

Under CEO Steve Easterbrook, McDonald’s restructuring plan involves franchisees taking over more company-owned outlets to better respond to local tastes, in this case, Asian customers.

--Wendy’s announced that it’s 4 for $4 Meal will include an option of a Double Stack burger as the sandwich option so on Thursday I rushed to my local outlet to check it out, but, boy, the patties were puny (but still decent value).

--Privately held Mars Inc. (think M&M’s and Skittles) is making an attempt to dominate the fast-growing pet-care business with a $7.7 billion purchase of veterinary and dog day-care company VCA Inc.

I forgot that Mars owns Pedigree and Iams, among other pet-food brands, and with the acquisition of VCA, Mars’ pet-care division would contribute more than half of overall sales.

--Billionaire hedge-fund manager George Soros lost nearly $1 billion as a result of the stock market rally following Donald Trump’s election.  But as the Wall Street Journal reported, Soros’ former deputy, Stanley Druckenmiller, anticipated the post-election bump and scored big gains.

--While the experts aren’t saying so yet, the drought across virtually all of California should be considered over after this week’s series of big storms.  Northern California was already out of its drought, and now the southern part should be as well with reservoirs over 100% of normal. The drought-punished Southern Sierra has snowpack 187% of the norm as of early this week.

But the experts say we’re only one-third of the way through the wettest part of the season and southern Cal could yet see the spigot turned off.

--Boy, it’s been cold in Europe...record cold, ten people dying in Poland alone.  River transport on the Danube was shut down for a long stretch as it froze over, a rarity.   Temperatures in some regions of Russia hit -40F, and we aren’t talking Siberia. Athens didn’t climb above 32F last weekend.

But for all the cold and snow the past week, an ultra-dry December was death for European resorts at Christmas, for the third year in a row, and as some operators are now saying, “There is an understanding that Christmas is just not the right time to go skiing.”  [Bloomberg]

There was less snow in Switzerland in December than ever before, going back more than 100 years.

Back in the States, New Jersey and Pennsylvania resorts are once again struggling mightily, the fourth poor year in the last five.  It hit a record 67 degrees here in Summit, N.J. on Thursday, and next week is forecast to have temps in the 40s and 50s.  [Normal would be 38 for late January, and importantly the 20s at night for snowmaking.]

--Aaron Elstein of Crain’s New York Business had a piece on Queens, New York’s sewer pipes.  “So much used cooking oil is poured down the drain that sewers in Queens regularly experience the municipal equivalent of cardiac arrest.

“Some sections of the city’s 7,500 miles of sewer lines get blocked virtually every day, and discarded cooking oil is the reason 60% of the time.”

In Queens, cooking oil is the culprit about 80% of the time.  Why?  Well, Queens is the most diverse borough, with residents from 120 different countries, which is rather astounding, and these folks prepare a lot of food.

Used cooking oil is supposed to be sealed in non-recyclable containers and thrown out with the rest of the trash, not poured down the sink.

Here’s something gross.  As reported by Aaron Elstein, “Two years ago in London, an 11-ton mound of congealed fat was extracted from a sewer, requiring more than $600,000 in repairs.”

--Back to the weather...and traffic...you think your commute is bad?  Flash floods in southern Thailand on Tuesday washed out a bridge on the country’s main north-south highway, “backing up traffic for 200km (125 miles).”   [Reuters]

That would be like from New York to Philadelphia, which would kind of suck if you were a Mets fan, heading to a game in Philly.

Thailand’s rainy season normally ends in November, but the heavy rains have continued well into what should be the dry season.  One resident described the southern part of the country as “like a big pond.”  #mosquitoes #zika

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: Friday, in an interesting move and, perhaps, the first sign of an improved Russia-U.S. cooperation that Vladimir Putin and Donald Trump have spoken of, Russia invited the incoming Trump administration to Syrian peace talks the Kremlin is sponsoring (with Turkey and Iran) later this month, after the Obama administration was pointedly left out of the process.  [National security adviser designate Michael Flynn spoke to Russia’s ambassador on the topic, around the time of David Ignatius’ questioning of his calls.]

Separately, Syria accused Israel of firing rockets that hit a major military airport west of Damascus early Friday morning, with the Assad regime warning of repercussions.  The attack was the third such incident recently, according to the Syrian government.  [Israel said nothing.]

As for the ceasefire, while it is holding in about 80% of the country, the truce is fragile and the Syrian government continues to launch airstrikes, such as one in Aleppo province Thursday that killed at least six civilians, including four children, according to the Syrian Observatory for Human Rights.

Last Saturday, a huge tanker truck bomb killed at least 43 people in the Syrian rebel-held town of Azaz near the Turkish border.  Most of those killed were civilians and ISIS was accused of being responsible.

Russia was said to be drawing down its military presence, starting with the withdrawal of its warships from the eastern Mediterranean.

In Iraq, there were more car bombs, one killing at least 11 in Baghdad, with ISIS claiming responsibility.

Israel: In the corruption investigation into Prime Minister Benjamin Netanyahu, Haaretz reported he was recorded trying to negotiate a deal for more positive newspaper coverage two years ago.  In exchange for suppressing a free daily, Israel Hayom, owned by Las Vegas casino magnate Sheldon Adelson, a longtime Netanyahu supporter who backed Donald Trump, Arnon Mozes’ Yediot Ahronot newspaper that Netanyahu has long reviled as part of a media conspiracy against him, would provide him positive coverage, but the proposal never materialized.

Last Sunday, four Israeli soldiers were killed when a Palestinian driver intentionally rammed his truck into a group of them at a promenade in Jerusalem.  Netanyahu said the assailant, who was killed by other soldiers on the scene, showed “all the signs he was a supporter of the Islamic State.”

Hamas staged a rally to celebrate the attack.

“The message of our Islamic party Hamas is a message of encouragement and support for every jihadi who carries out an attack that puts an end to the acts of the Zionist enemy,” the bastards said in a statement.

Iran: Former President Ali Akbar Hashemi Rafsanjani died.  He was 82.  The death represented a big blow to ‘moderate’ President Hassan Rouhani, who won the election in 2013 largely because of support from Rafsanjani (who was barred from running himself), and now, Rouhani, facing re-election later this year, won’t have his chief ally, who was still highly-respected in the country, to support him.

Rafsanjani was an aide to Iran’s revolutionary supreme leader, the late Ayatollah Ruhollah Khomeini, who then became president (1989-1997) upon Khomeini’s death in 1989; this after Khomeini appointed Rafsanjani a commander of Iran’s armed forces towards the end of the Iran-Iraq war that left 1 million dead from 1980 to 1988.

Rafsanjani was viewed as a moderate in terms of foreign investment and on cultural issues, though this was misleading as he brutally cracked down on any opposition.  He also amassed tremendous personal wealth through a business empire that included his family’s pistachio operation and construction.

But in the context of Iranian politics, he was viewed in the West as somewhat of a pragmatist and his support for the nuclear deal was critical in its passage.

Rafsanjani was head of the Expediency Council, an advisory board to Supreme Leader Ayatollah Ali Khamenei and he was expected to serve as kingmaker when Khamenei, in failing health, passes from the scene.

So Rouhani will find it hard to be reelected and it is expected Iran will become even more hardline.

Rafsanjani was buried next to Ayatollah Khomeini.

I have written a ton on the man over the years, and particularly in those first years after 9/11, I was urging the United States to work behind the scenes with Rafsanjani, who while not president at the time was still highly influential.  I readily recognized that he was a terrorist...blamed for two bombings against Jewish interests in Buenos Aires in 1992 and ’94 that killed more than 100 people.  And he was president when, in 1996, Iranian agents bombed Khobar Towers in Saudi Arabia, killing 19 U.S. service members.

But in the post-9/11 era, I thought he was someone we could have cut a deal with (an admittedly dirty one), in return for dismantling Iran’s then-burgeoning nuclear program and non-interference in its neighbors’ politics.  He was a businessman, in part, the wealthiest individual in his country, and I thought there was room for a deal.  I still believe that, just as I was right about 2012, Syria, President Erdogan and no-fly zones.

Rafsanjani did, after all, support Iran’s Green Movement after the rigged 2009 presidential election in Iran, but the United States didn’t offer any support whatsoever for the protesters in President Obama’s first year in office.  Surprise, surprise.  It would become one of the first of many missed opportunities during the Obama presidency.

President Rouhani said of Rafsanjani’s passing: “Islam lost a valuable treasure, Iran an outstanding general, the Islamic revolution a courageous flag-bearer and the Islamic system a rare sage.”  [Just including this quote for the historical record.]

Separately, in perusing some of Iran’s newspapers, the Navy announced last weekend that it had successfully test-fired a coast-to-sea cruise missile with a range of 150km, part of a large military drill near the Strait of Hormuz.

Afghanistan: Tuesday, the day of President Obama’s Farewell Address, the Taliban launched three attacks.  One in Kandahar killed at least 11 people, including five diplomats from the United Arab Emirates, though the U.A.E. ambassador, visiting the city with his associates, was said to have survived.  [Initially, the stories said the ambassador had been killed.]

The second, a suicide attack in the capital Kabul killed more than 30, as twin blasts went off near parliament offices and hit a crowded area during the afternoon rush hour, the worst attack there in weeks.  A suicide bomber blew himself up and then was followed almost immediately by a car bomber in the coordinated operation.

A third bombing took place in the capital of Helmand province, killing at least three.

President Obama did not mention Afghanistan in his address.

It just needs to be said, the Taliban is winning and one of the awful surprises of 2017 could be the re-taking of Kabul and the decapitation of the government.  It would just take two or three insiders to blow up a session of parliament and the leadership.

China: In response to secretary of state nominee Rex Tillerson’s comment that the U.S. should deny Beijing access to new islands in the South China Sea, Communist Party mouthpiece the Global Times had some of the following in an editorial, Friday:

“(Nominee) Rex Tillerson uttered astonishing statements during his confirmation hearing...(likening) China’s island-building in the South China Sea to ‘Russia’s taking of Crimea,’ and said the new U.S. government would send China a clear signal that ‘first the island building stops, and second your access to those islands is also not going to be allowed.’....

 “Tillerson did not give details of how he would achieve his self-proclaimed goals....

“”China has enough determination and strength to make sure that his rabble rousing will not succeed.  Unless Washington plans to wage a large-scale war in the South China Sea, any other approaches to prevent Chinese access to the islands will be foolish.

“The U.S. has no absolute power to dominate the South China Sea.  Tillerson had better bone up on nuclear power strategies if he wants to force a big nuclear power to withdraw from its own territories....

“South China Sea countries will accelerate their  negotiations on a Code of Conduct.  They have the ability to solve divergences by themselves without U.S. interference.  Just as the Philippines and Vietnam are trying to warm their ties with China, Tillerson’s words cannot be more irritating.”

A Chinese foreign ministry spokesman, Lu Kang, was muted.  China had the right to conduct “normal activities” in its own territory, he said, and he didn’t respond to hypothetical questions on blocking access.

But the other major mouthpiece in China, The China Daily, said Tillerson’s remarks showed ignorance of Sino-U.S. relations and diplomacy in general.

“Such remarks are not worth taking seriously because they are a mish-mash of naivety, shortsightedness, worn-out prejudices and unrealistic political fantasies.  Should he act on them in the real world, it would be disastrous.

“As many have observed, it would set a course for devastating confrontation between China and the U.S.  After all, how can the U.S. deny China access to its own territories without inviting the latter’s legitimate, defensive responses?”   [BBC News]

Yuan Zheng, a researcher at the Chinese Academy of Social Sciences’ Institute of American Studies told the South China Morning Post:

“China is not Cuba, and the South China Sea is not the Caribbean. The South China Sea is not under the U.S. sphere of influence, it’s China’s territorial waters.”

Meanwhile, a Chinese aircraft carrier floated off Taiwan’s coast this week (though not in Taiwan’s territorial waters), as Taiwanese President Tsai Ing-wen traveled to Central America, via the United States*, to improve relations with the island’s few remaining allies in the region. 

Early indications are that Tsai’s trip was a success, without roiling the waters too much with Beijing. But the carrier pass was a warning.

*Tsai met with Texas Republican Senator Ted Cruz in Houston last Sunday, but no one from the Trump transition team, and on her way back from her travels, as she passages through San Francisco, the Trump folks said they would not meet her there.  It was the post-election phone call between Trump and Tsai that riled up Beijing.  Sen. Cruz’ visit was totally appropriate.

The senator said after: “The People’s Republic of China needs to understand that in America we make decisions about meeting with visitors for ourselves.  This is about the U.S. relationship with Taiwan, an ally we are legally bound to defend. The Chinese do not give us veto power over those with whom they meet. We will continue to meet with anyone, including the Taiwanese, as we see fit.”  [I’m not a fan of Cruz, but this was the senator at his best, ditto his defense of Jeff Sessions at his confirmation hearing.]

On a different issue, the Chinese government is carefully monitoring the rising nationalism on the mainland, fed by territorial disputes with its neighbors, and U.S. statements.  What worries Beijing is patriotic protests morphing into ‘mass protests’. With the five-yearly party congress later this year, where President Xi Jinping is looking to solidify his leadership (and possibly ask for a third term beyond his second five-year one), there is a fine line on protests.

Such as in 2012 when anti-Japanese protests swept the nation, sparked by Tokyo’s decision to purchase the disputed Diaoyu Islands in the East China Sea. Both nations claim the islands and protests swept through several Chinese cities, with Japanese-made cars and businesses attacked.

Lastly, Singapore is upset nine armored personnel carriers that have been detained in Hong Kong haven’t been returned to them as yet.  Customs authorities in Hong Kong, a Chinese territory, seized the infantry carriers in November as they were being shipped back to Singapore from Taiwan, where they were used in military exercises; Taiwan being an ally of Singapore.

But China is not happy with Singapore’s stance on Taiwan, so it is being a royal pain in the ass, as is its wont.

Beijing has told Singapore it needs to be cautious in its handling of the seizure of the nine vehicles. Singapore insists the detention does not comply with international law.

The aforementioned Chinese foreign ministry spokesman, Lu Kang, said on Monday: “I want to stress that China hopes other nations, including Singapore, follow the one-China principle.  This is the foundation for bilateral ties between China and any other nation.”

Military ties between Singapore and Taiwan date back four decades.

North Korea: What is Kim Jong Un going to do around next Friday, Inauguration Day?

William J. Perry, former defense secretary from 1994 to 1997 / Washington Post

“In 1994, when I was secretary of defense, we came perilously close to a second Korean War because of North Korea’s nuclear program. Today we are again approaching a crisis with North Korea, and again the cause is its nuclear program. A war in 1994 would have been terrible, but we were able to avoid it with diplomacy (the Agreed Framework, from which the United States and North Korea withdrew in 2002).  Today a war would be no less than catastrophic, possibly destroying the societies of both Koreas as well as causing large casualties in the U.S. military....

“The threat is real enough.  North Korea has built more than a dozen nuclear bombs and conducted five nuclear tests, several at about the destructive power of the Hiroshima bomb.  Pyongyang also has a robust ballistic missile program – it has fielded a large number of medium-range missiles and is testing long-range missiles.  So the question is not whether but when Pyongyang will have a nuclear-armed ICBM....There is no reason to doubt that it will reach an operational capability, perhaps in the next few years....

“I believe that the danger of a North Korean ICBM program is not that they would launch an unprovoked attack on the United States – they are not suicidal.  But they have been playing a weak hand for decades, and they have demonstrated a willingness to take risks in playing it.  The real danger of their ICBM program is that it might embolden them to take even greater risks – that is, overplay their hand in a way that could (inadvertently) lead to a military conflict with South Korea....(But) if North Korea were to begin losing a conventional conflict (the U.S. being very much involved), they might in desperation turn to their nuclear weapons.”

Perry urges diplomacy, but, “If we don’t find a way – and soon – to freeze North Korea’s quest for a nuclear ICBM, this crisis could all too easily spin out of control, leading to a second Korean War, far more devastating than the first.”

Separately, a story by the Financial Times notes that “South Korea is creating a hit squad with a mission to eliminate Kim Jong Un and his top command in the event of war, as it vows to ramp up its response to the growing threat from the North.”

This is not your father’s hit squad. We’re talking as many as 2,000 troops, modeled on Special Forces in the U.S.

Russia, part dva: Russian Defense Minister Sergei Shoigu said in a public lecture on Thursday that when it comes to strategic deterrence, Russia might replace its nuclear weapons with precision bombs, in order to help reduce international tensions and strengthen world peace.  As news agency RIA Novosti reported, according to Shoigu, Moscow plans to rely on warships and submarines armed with cruise missiles to carry the bulk of its precision-guided weapons.

What’s curious about this is that Shoigu also said Moscow had no intention of being dragged into a nuclear arms race, which flies in the face of Vladimir Putin’s Dec. 22 remarks to a meeting of Russia’s Defense Ministry Board, where he said, “We need to enhance the combat capability of strategic nuclear forces, primarily by strengthening missile complexes that will be guaranteed to penetrate existing and future missile defense systems.’

The same day, President-elect Donald Trump called on America to “strengthen and expand its nuclear capability until such time as the world comes to its senses regarding nukes.”  [Moscow Times]

Philip Stephens / Financial Times

“Cuddle up to the Kremlin and do not be surprised when you are burnt.  There is no need to believe the lurid, unverified tales about Russian efforts to cultivate and compromise Donald Trump to recognize the danger in the president-elect’s infatuation with Vladimir Putin. Mr. Trump is a wealthy property developer; the Russian president a former head of his country’s ruthless Federal Security Service, or FSB.  This is not a balanced match-up.

“Mr. Putin has pocketed one significant victory even before Mr. Trump reaches the White House.  The next time U.S. intelligence agencies flag up a security threat – another Russian incursion into Ukraine, say, or the subversion of elected governments in Eastern Europe – the Kremlin has a riposte. If the occupant of the Oval Office has no faith in the CIA, the National Security Agency or the Federal Bureau of Investigation, why should anyone else believe them?  Mr. Trump broke all the rules of politics to win the White House, but a president at war with those charged with keeping America safe?

“Intelligence agencies do not always get it right.  The CIA will pay the price for its flawed judgments on Saddam Hussein’s weapons programs for years to come.  But the spooks could scarcely have been more confident in saying that the Kremlin hacked into Democratic party computers during the presidential election campaign....

“Mr. Trump prefers to shoot the messenger: this week’s leak of allegations that Moscow had gathered personally compromising material was proof of the witch-hunt against him by America’s own agencies. When Mr. Trump asks rhetorically whether he is living in Nazi Germany, the adjective that comes most readily to mind is ‘unhinged.’...

“There would be little to quarrel with in a show of White House ‘respect’ for the Russian president to reduce tension.  Mr. Putin craves recognition as a leader with a place at the top table of global affairs. He shares Mr. Trump’s desperately thin skin.  They are brothers in narcissism.  If some Trumpian backslapping succeeds in salving Mr. Putin’s wounded pride, all well and good.

“The world is a safer place when the U.S. and Russia find a way to manage their differences.  They did so with some effect at the height of the Cold War.  Neither side has benefited from the renewed military build-up in Eastern Europe and the Baltics.  There are too many nukes around. The risks of accidental confrontation are not negligible....

“As vague as Mr. Trump is about what he wants from the Kremlin, Mr. Putin’s goals are crystal clear.  They start with Western acquiescence in Russian revanchism in Ukraine and in the merciless bombing of civilians to prop up Bashar al-Assad’s regime in Syria.  They continue with the lifting of economic sanctions against Moscow, and end with eventual U.S. disengagement from Europe and the establishment of a Russian sphere of influence in the territories of the former Soviet Union.

“When Kremlin officials talk about a new security architecture for Europe what they mean is the end of the U.S. presence. The Cold War is over so the Americans should go home.  Through this prism, Georgia, Belarus, and Moldova and central Asia as well as Ukraine ‘belong’ to Moscow.  For its part, NATO has outlived its purpose and certainly has no place in the former states of the Warsaw Pact....

“(The) Kremlin will not be content with its early success. And who knows what Mr. Trump will do once he is in the White House?  Dangerous times seems something of an understatement.”

Editorial / Wall Street Journal

“Mr. Trump may be able to build a better relationship with the Russian strongman, but then that’s also what George W. Bush and President Obama thought. Mr. Bush thought his good-old-boy bonhomie could charm him, while Mr. Obama thought the example of his claims to moral superiority would persuade him.  Mr. Trump seems to think his advantage will be his superior deal-making skills.

“But Mr. Putin respects power, and nothing else.  If Mr. Trump wants Russia to respect U.S. interests, he will have to show Mr. Putin that he will pay a price for damaging those interests. This means not covering up nuclear arms-control violations, as Mr. Obama did, and not dismissing or apologizing for Russian cyberattacks, as Mr. Trump has been too close to doing.

“Mr. Trump won the White House fair and square, and he could help himself by acting like it.  The best defense against Russian cyberattacks is to show Americans and the world that he knows better than Mr. Obama how to use U.S. power to deter them.  Instead of assailing every critic out of political and personal vanity, it’s time for Mr. Trump to realize that the best revenge against his implacable opponents is to succeed as President.”

Meanwhile, Thursday, an American armored brigade slid across the German frontier into Poland, part of a permanent NATO troop presence along the alliance’s eastern flank.

But whereas when the plan to first rotate troops into the region was proposed was widely applauded, now there is concern whether with a Trump presidency the troops will arrive in the numbers promised, and whether Trump cuts a deal with Putin for friendlier relations undermines the effort.

I believe Poland and the Baltics need not worry, though there will be pressure for Europe to step up its contributions and they should be forthcoming.

Lastly, David Satter had an op-ed in the Wall Street Journal wherein he said, regarding Rex Tillerson’s confirmation hearings:

“Senators should demand that the former Exxon Mobil CEO demonstrate an understanding of recent developments regarding three issues: the 2015 assassination of opposition leader Boris Nemtsov, the 2013 Boston Marathon bombing, and the 1999 Russian apartment bombings.”

There it is again, the topic I wrote of in 1999, blaming Vladimir Putin.

Satter:

“(There is) new information about the September 1999 Russian apartment bombings, the acts of terror that brought Mr. Putin to power. The bombings – in Moscow, Buinaksk and Volgodonsk between Sept. 4 and 13 – killed 300 and were blamed on Chechen terrorists and used to justify the second Chechen War. The Chechens have always denied the accusation.

“On Sept. 22, 1999, another bomb was discovered, in the basement of a building in Ryazan, southeast of Moscow.  Two days later, two men and a woman were arrested for planting it.  They turned out to be not Chechens but agents of the FSB.

“After the arrests, Russian officials said the bomb was a fake and part of an FSB ‘training exercise.’  The U.S. never officially challenged the Kremlin’s version of events, despite its implausibility.

“Last month I received documents from the State Department in response to my pending Freedom of Information Act lawsuit.  In a cable on the Ryazan incident, the U.S. Embassy in Moscow reported that  a former member of Russia’s security services (name redacted) said that the true story of the Ryazan affair would never be known because ‘the truth would destroy the country.’ The CIA, meanwhile, is refusing to release any information about the 1999 bombings, including its view about who was responsible.

“The new administration needs to demand that all information about how Putin came to power be made a matter of public record. The failure of previous administrations to react to the 1999 apartment bombings and the 2006 murders of former FSB agent and Kremlin critic Alexander Litvinenko and investigative journalist Anna Politkovskaya led to the Obama administration’s ‘reset’ policy and the Russian invasion of Ukraine.  The failure to weigh the lessons of the murder of Boris Nemtsov, the Boston bombing and the apartment bombings will make possible a new ‘reset,’ with consequences not difficult to foresee.”

Finland: Correction...the car-tracking system I wrote of last time is not yet law.  But more on the country next time.

Random Musings

--It was funny watching Donald Trump’s Cabinet nominees, in their first round of confirmation hearings, take positions, one after another, that contradicted the President-elect’s stances.

As the Washington Post’s Karen Tumulty summed up:

“Retired Marine Corps Gen. James Mattis, Trump’s nominee to be defense secretary, told the Senate Armed Services Committee that the United States must honor the ‘imperfect arms-control agreement’ with Iran that Trump has vowed to dismantle because ‘when America gives her word, we have to live up to it and work with our allies.’

“He also took a more adversarial stance than Trump has toward Russian President Vladimir Putin and cited Moscow as one of the nation’s top threats.

“ ‘I’ve never found a better guide for the way ahead than studying the histories.  Since [the 1945 meeting of world powers at] Yalta, we have a long list of times we’ve tried to engage positively with Russia.  We have a relatively short list of successes in that regard,’ Mattis said.  ‘I think right now, the most important thing is that we recognize the reality of what we deal with [in] Mr. Putin and we recognize that he is trying to break the North Atlantic alliance.’

“At a witness table in another Senate hearing room, Rep. Mike Pompeo (R-Kan.), whom Trump picked to head the CIA, assured the Intelligence Committee that he would ‘absolutely not’ use brutal interrogation tactics on terrorism suspects in contravention of the law, even if ordered to do so by a president who campaigned on a promise to reinstate the use of such measures.”

--I watched Sen. Jeff Sessions’ confirmation hearing to become the next Attorney General and he performed well. Sessions has gotten a raw deal with claims he is a racist.

Last week I wrote of how New York Gov. Andrew Cuomo is clearly setting himself up for a 2020 presidential run (if he can skate by the corruption investigations swirling around him).  And Wednesday, we saw another 2020 probable candidate, New Jersey Dem. Sen. Cory Booker, take center stage in becoming the first senator, ever, to testify against a fellow senator’s confirmation, with Booker saying Sessions’ record suggested he wouldn’t aggressively pursue voting or civil-rights cases.

“I want an attorney general who is committed to supporting law enforcement and securing law and order, but that is not enough,” said Booker.

Sessions said the day before he would enforce all laws, including those he disagreed with, and forcefully fought allegations he was motivated by racial bias.

But Booker, in a disgraceful performance, said Sessions “has not demonstrated a commitment to a central requisite of the job – to aggressively pursue the congressional mandate of civil rights, equal rights and justice for all of its citizens.”

Booker’s statement had zero to do with actual fact and Sessions’ record.

Jesse Seroyer, a former U.S. marshal in Alabama, and a former Alabama prosecutor, Willie Huntley, both black men who worked with Sessions, testified on his behalf.

“Jeff will protect and defend the rights of all people,” Mr. Huntley said, describing how he prosecuted civil-rights cases under Sessions and later defended Sessions personally against claims of ethics violations on which he was exonerated.  [Aruna Viswanatha / Wall Street Journal]

--Michael Barone / New York Post

“President Obama went up to Capitol Hill on Wednesday (Jan. 4) to counsel congressional Democrats on how to save ObamaCare.  Or at least that’s how his visit was billed.

“But to judge from the responses of some of the Democrats, his advice was typical of the approach he’s taken to legislation in his eight years as president – which is to say disengaged, above the fray, detached from any detailed discussion of how legislation actually works.

“He was ‘very nostalgic,’ said Louise Slaughter, a veteran of 30 years in the House and the ranking Democrat on the House Rules Committee.  But, she added, he left it up to Hill Democrats to come up with a strategy to protect ObamaCare.

“This is in line with the standoffish relations Obama has had with members of Congress, even with Democrats who are inclined to be and are capable of being helpful.

“Nor has he ever seemed interested in the content of laws, even his trademark health-care legislation....accepting a bill with multiple flaws, many of them glaringly visible after passage.

“But policy just hasn’t been his thing....

“The problem with this approach has been apparent since the 9 o’clock hour on election night, when it became clear that Donald Trump was going to be elected president.  In 2010, Obama assumed there always would be a Democratic Congress to repair any glitches in ObamaCare.  In 2016, he assumed that there would be a President Hillary Clinton to keep his pen-and-phone regulations and ‘guidance’ in place.

“It’s apparent Obama is thrashing around trying to keep his policies in place. But more than those of other outgoing presidents replaced by successors of the other party, they’re in danger of being overturned.

“One reason is that they were never firmly established in the first place – and not just because the Democrats’ 60-vote Senate supermajority existed for only eight months, from July 2009 to February 2010.

“Rather, the Obama Democrats’ policies, passed through slapdash legislation or through questionably legal regulations, never really captured the hearts and minds of the American people.”

[Friday, Obama suddenly called a final, final presser for next Wednesday.  The one the other day was supposed to be his last.  This will no doubt be, again, about saving his legacy, ObamaCare, the Russian hacking and who knows what else.]

--A Marist Poll has found overwhelming support for the swift nomination of a U.S. Supreme Court justice who will apply the Constitution as originally written.  80% of Americans say it is an “immediate priority” or an “important” one to appoint Supreme Court justices that will interpret the Constitution as it was originally written.  53% of Independents, 80% of Republicans and 42% say it is an “immediate priority.”

By a 52-40 margin, a majority of Americans want the court to interpret the Constitution “as it was originally written” and not on what they think the “Constitution means now.”

--Jared Kushner will become a senior White House adviser to his father-in-law, Donald Trump.  Ethics experts have questioned whether the appointment is legal under federal anti-nepotism laws designed to prevent family ties from influencing the functioning of the government.

Kushner, 36 and married to Ivanka Trump, plans to sell some of his real estate holdings and other assets, according to his lawyer.

I don’t have a problem with this, as I see Kushner as a voice of reason.

--Donald Trump was skewered at the Golden Globes Awards last Sunday. I was watching “60 Minutes” and then a Wake Forest basketball game so I was hardly interested, but I did just flip it on after the game and it was just then that Meryl Streep went on her long rant against Trump.

“Hollywood is crawling with outsiders and foreigners, and if we kick them all out you’ll have nothing to watch but football and mixed-martial arts, which are not the arts,” Street said.

I haven’t been to a movie in decades and never gave a damn about Hollywood. 

Trump fired back at Streep, calling her a “Hillary flunky who lost big” and “overrated,” when The Donald should have just shut up.

--A federal jury sentenced Dylann Roof to death on Tuesday for killing nine black parishioners inside a Charleston, S.C., church in 2015.

Aja Risher, granddaughter of victim Ethel Lance, said, “I didn’t think the verdict would affect me the way it has; I haven’t stopped crying.  But I’m so happy that their lives matter.  It’s not just a terrible tragedy that happened.  It renews my faith a little bit.  If this case didn’t warrant the death penalty, what case would?”  [Washington Post]

Sadly, the sentence won’t be carried out for years.

--New York lost a real hero this week, NYPD Detective Steven McDonald, who died at age 59 after suffering a heart attack.

Police Commissioner James O’Neill said, “No one could have predicted that Steven would touch so many people, in New York and around the world.  Like so many cops, Steven joined the NYPD to make a difference in people’s lives. And he accomplished that every day.  He is a model for each of us as we go about our daily lives.”

Former mayor Michael Bloomberg said in a statement: “Steven McDonald was a New York City hero who inspired people everywhere he went.  His relentless determination to use his tragedy to save others was an extraordinary act of selflessness and an incredible gift to the world.”

McDonald was a patrolman on July 12, 1986, when he spotted bicycle thief Shavod “Buddha” Jones and two other teenagers in Central Park.  He moved to frisk one of them because he believed he had a weapon in his sock, then, the 15-year-old Jones pulled out a weapon of his own and shot McDonald three times, one bullet tore into McDonald’s neck, one his wrist and a third lodged behind his right eye.  The first shot severed his spinal cord, paralyzing him.

Doctors told his wife, Patti, who was three months pregnant, that he wouldn’t live through the afternoon.

On March 1, 1987, at his son’s baptism, McDonald’s wife read a statement from him: “I forgive (Jones) and hope he can find peace and purpose in his life.”

He never wavered from that stance.

McDonald then became a messenger of peace, traveling extensively in his wheelchair, dependent on a ventilator to breathe and speak.  He was like a rock star in those first years, meeting with Pope John Paul II and Nelson Mandela.  He sat for an interview with Barbara Walters and did Letterman.

While the television cameras faded, McDonald made hundreds of appearances a year, telling his story of “Faith and Forgiveness” to anyone who would listen.

The New York Rangers set up an award in his name, and every season McDonald was honored on ice with his family.

“Rest in peace, Steven McDonald,” the Rangers tweeted Tuesday.  “Our friend.  Our hero.  Above and beyond.”

Carinal Timothy Dolan called McDonald “an icon of mercy and forgiveness, a prophet of the dignity of all human life.”

For his part, Buddha Jones was sentenced to 10 years in prison for attempted murder and was not a model prisoner.  McDonald tried to carry out a correspondence with him but it lasted for only a little while.  Shortly after his release from prison in 1995, Jones died in a motorcycle accident.  [Crain’s New York Business]

Editorial / New York Post

“Many would give up after injuries like Steven McDonald suffered.  Instead, he gave New York a 30-year legacy of bravery that will continue to inspire – and that underscores why our police officers are known as New York’s Finest.  RIP.”

Steven McDonald’s funeral was held at St. Patrick’s Cathedral. 

--Finally....the link below is to a real farewell address...Ronald Reagan’s.

https://www.youtube.com/watch?v=UKVsq2daR8Q

---

Pray for the men and women of our armed forces...and all the fallen.

God bless America.

---

Gold $1197
Oil $52.52

Returns for the week 1/9-1/13

Dow Jones  -0.4%  [19885]
S&P 500  -0.1%  [2274]
S&P MidCap  +0.3%
Russell 2000  +0.4%
Nasdaq  +1.0%  [5574]

Returns for the period 1/1/17-1/13/17

Dow Jones  +0.6%
S&P 500  +1.6%
S&P MidCap  +1.6%
Russell 2000  +1.1%
Nasdaq  +3.6%

Bulls 58.6
Bears 18.3  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore