Category Archives: politics

Handling Classified

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FBI Director James Comey had this about Huma Abedin and her role in the ex-Secretary of State Hillary Clinton (D) classified email scandal:

Somehow, her [Clinton’s] emails were being forwarded to Anthony Weiner, including classified information.  His then-spouse, Huma Abedin, appears to have had a regular practice of forwarding emails to him for him to print out for her, so she could deliver them to the secretary of state.

Comey justified his lack of action with this:

We didn’t have any indication that she had a sense of what she was doing was in violation of the law[.]

There is, however, no requirement for mens rea under the relevant law; if nothing else Abedin’s actions fit the law’s gross negligence felony charactistic.

With such a bold, declarative statement about what Abedin was doing, then, I have to wonder why there’s been no indictment and subsequent prosecution.

Probably for the same reason he declined to bring a case against Clinton after having said her actions were excessively careless: it’s not politically expedient.

Long Maturity Debt Instruments

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Treasury Secretary Steven Mnuchin is kicking around the idea of instituting long-maturity debt instruments, specifically, 50-year and 100-year US bonds.

Treasury’s Borrowing Advisory Committee, though, demurs.  This committee, made of movers and shakers of financial institutions that are themselves movers and shakers in the bond market,

does not see evidence of strong or sustainable demand for maturities beyond 30 years.

They ask a not unreasonable question, too:

what types of investors would buy ultralong bonds….

On that, the US has tried long(er) maturity bonds before—50-year instruments to finance the Panama Canal and 40-year instruments in the Eisenhower and Kennedy administrations to, in Eisenhower’s words, stretch out the national debt, for instance.

Over the years, however, the Treasury concluded it could most efficiently finance large amounts of debt through regular auctions of 30-year bonds.

That’s not the only possible market for Treasury ultra-long bonds, though.  Just one venue might include investors, especially institutional investors, looking for ways to hedge really long-term risk.  Government ultra-longs might be one way.  The question, from Government’s perspective, thus is irrelevant.

Any lack of demand for such long maturities—in any venue—simply means that such debt instruments wouldn’t be bought.  That should be a market decision, made by American individual investors, not a centrally controlled market decision made by Government.

It’s also a cheap experiment to run: it would cost Government nothing to offer to borrow at such lengths when no one would lend at such lengths.

EU and Brexit

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The European Union is either demonstrating its lack of understanding of a main motivator for the people of Great Britain’s decision to quit the EU, or it’s intent on making the departure onerous pour encourager les autres, or some combination of the two.  Michel Barnier, the EU’s “Brexit negotiator,” has laid out the terms of his initial position.

One such term is

ensuring that EU citizens in the UK keep their welfare benefits and residency rights for their lifetimes.

Never mind that EU citizens drawing welfare benefits should have those benefits paid for by the EU or those citizens’ home country—which do not today pay the generous rates that the British government does.

Furthermore, those rights

should be directly enforced by the European Court of Justice, the EU’s top court, giving it a role in Britain until “well after the UK leaves.

This ignores the simple fact that, as a sovereign nation, Great Britain gets to use its own court system for all domestic matters and to determine whom it shall permit within its borders.  It is not for any nation, or any foreign court, to dictate to another to what laws that other must submit or whom that other must accept into its bosom.

That’s not all.  There must be

British payment to cover past EU financial commitments[.]

The payments, of course, insists the EU through Barnier, must be in euros, putting the currency exchange risk on the departing Brits.

And

the status of the Northern Ireland border

is for negotiation and not for the sovereign British to decide with the Republic of Ireland—which is to say the border’s status is already determined.

And this bit:

Michel Barnier repeatedly emphasized that Brexit would be painful and complicated.

Which reminds me of what Theron said to Queen Gorgo in 300.  Barnier displays the same contemptuous disdain for Great Britain.  He should however, recall Theron’s fate at Gorgo’s hand.

The Apocalypse is Upon Us

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Or so Lauren Collins would have us believe in her fearful piece in the New Yorker, titled The Future of Europe Hinges on a Face-Off in France about this weekend’s money round of the Presidential election in France.

After all, this election is a referendum between a globalist economy and a globalist identity (Macron) and a nationalist economy and a nationalist identity (LePen).  That does sound apocalyptic, but really, it’s more apocryphal.

As a practical matter, and as is the case with most democratic-oriented governments, French government power is divided between an executive, the President, and the legislative, which elections are next month.  French government power is divided further: the legislative branch’s majority party appoints the Prime Minister, who has serious executive authorities of his own.

A President Le Pen will face two obstacles to her agenda: a Prime Minister from another party (Front National is unlikely to win more than a few legislative seats) and a hostile legislative.  A President Macron may well have to work with a Prime Minister from another party (his En Marche! is all of a year old and unlikely to win many more seats than Front National), and while he would face a not particularly hostile legislative, its agenda most assuredly will not be his.

Either President will find Executive ambitions greatly dampened.  That’s a purely domestic matter, but it spills across French borders.

As a (n international) political matter, Europe’s political future is not much influenced by either President.  Aside from the domestic dampening, which must also dampen these potential Presidents’ influence externally, both Europe and the European Union are made of sterner stuff.

I’ve written of the lack of long-term viability of the EU, but that weakness stems from weaknesses internal to the EU as an institution, not from pressures from within this or that member State, for all that France is an important member State.  No, the EU is good for several more years, the British departure won’t hurt it or Europe, German continued prosperity definitely won’t hurt Europe or the EU, not even the continued brink-of-bankruptcy state of Greece won’t hurt it.

And neither will a staunch EU-supporting President Macron significantly enhance the viability of the EU, nor will a staunch anti-EU President Le Pen significantly diminish the EU.  Indeed, Le Pen has promised a referendum on French membership in the entity, and the French citizenry are strongly more in favor of Remain than of Exit.

What is a threat to Europe is the aggressively acquisitiveness of Russia and most of Europe’s timidity in responding to that.  Nor Macron’s election nor Le Pen’s will have much impact on Europe’s attitude or what France might do about either that timidity or Putin’s acquisitiveness.  Even with Le Pen’s affinity for all things Putin.

Little Compelling Evidence?

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Greg Ip, in his Monday Wall Street Journal piece on the matter of corporate tax cuts, says that

most of the US’ largest trading partners cut their corporate rates. But their experience offers a reality check. There is little compelling evidence any enjoyed substantially faster growth as a result, and certainly not on the scale of Mr Trump’s ambitions….

He offered some examples:

Britain reduced its corporate rate from 30% in 2007 to 19% now. A 2013 study by the British Treasury predicted the tax cuts since 2010 would eventually boost the level of gross domestic product by 0.6%. That is certainly worth having, but spread out over, say, six years, would boost the growth rate by a barely noticeable 0.1 percentage point.

British investment as a share of GDP is actually lower than before 2007….

But the EU, which included a full-throated Great Britain at the time, suffered even more deeply from the Panic of 2008 than the US, and its “recovery” has been even poorer than ours, albeit Great Britain was one of the nominal leaders of that sham recovery.  Not many of the EU member nations have recovered to their pre-Panic levels.

And

Canada cut its corporate rate from 28% in 2000 to 21% in 2004. While growth from 2000 to 2004 was about half a percentage point faster than the prior decade, it has since slowed.

A couple of other things contaminate Ip’s thesis that “[t]here is little compelling evidence” that corporate tax rates actually stimulate economic growth. In Great Britain’s and Canada’s cases in particular, and in the EU generally, the presence of VAT taxes (20% for Great Britain, 13% for Canada, similarly high rates for the continental nations of the EU) vastly dilute the impact of a mere corporate income tax cut.

Also, the existence of régimes of heavy regulation in Great Britain, Canada, and in continental EU add costs that heavily dampen the favorable impact of corporate tax cuts.

The small bumps in economic growth that followed those corporate tax cuts came despite those road blocks.