U.S. and China announce new tariffs in escalation of trade war

06/15/2018

The Confirmation Files Business, Economy, government, Politics , , , Leave a comment

President Trump followed through Friday on his threat to crack down on China for its “very unfair” trade practices, imposing a 25 percent tariff on $50 billion in Chinese imports.

Beijing quickly responded. In a late-night statement, China’s Ministry of Commerce said it would impose trade barriers of the “same scale and the same strength.”

The Chinese government said Trump’s tariffs were “damaging” relations and “undermining the world trade order.”

U.S. and Chinese officials in recent weeks had made progress on a deal that involved up to $70 billion in additional purchases of American products. But the Chinese offer was now “invalid,” the statement said.

Chinese officials, who had signaled their intention to retaliate if Trump went through with his tariff threats, are targeting the president’s supporters in farm states and the industrial Midwest.

Anticipating the Chinese response, the president said the United States would “pursue additional tariffs,” raising the specter of the tit-for-tat trade war that business leaders and many congressional Republicans fear.

In a short White House statement, the president said the import tax would apply to “goods from China that contain industrially significant technologies.”

Friday’s action follows an administration report in March that complained China had forced foreign companies to surrender their technology secrets in return for market access and had pilfered other advanced U.S. technologies through a campaign of cybertheft and investment in Silicon Valley start-ups.

“These practices . . . harm our economic and national security and deepen our already massive trade imbalance with China,” Trump said.

The United States last year ran up a $375 billion deficit in goods trade with China, a figure the president blames on Chinese trade barriers. Most economists say the gap is the result of broader forces such as Americans’ low savings rate.

On April 6, the administration published a proposed list of 1,333 products targeted for tariffs. After hearing objections from business groups, U.S. Trade Representative Robert E. Lighthizer dropped 515 items and added 284 new ones.

As a result, the tariffs will be imposed in two steps. On July 6, customs officers will begin collecting the tax on an initial basket of goods valued at $34 billion, which were on the initial list. The Office of the U.S. Trade Representative (USTR), meanwhile, will field comments on the new items on the list, valued at $16 billion.

“These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs,” the president said.

USTR also plans to establish a process for U.S. companies to request permission to continue importing the targeted items on a duty-free basis, if no alternative suppliers exist.

The Chinese government is pursuing a $300 billion program of subsidies to enable its companies to dominate next-generation technologies such as artificial intelligence, robotics and quantum computing, upping the stakes for Trump’s efforts to preserve U.S. technological secrets.

China has a history of targeting industries such as steel or solar energy for growth, which results in excessive investment by its state-led firms. That, in turn, swamps global markets, driving prices to unsustainable levels and making it all but impossible for private companies to compete, a senior administration official said.

Unless the United States can somehow force China to change its industrial policies, American companies will lose out in a range of advanced technology markets, the official said.
“This is not market capitalism,” the official said, speaking anonymously to brief reporters. “These are state policies where they are targeting certain industries.”
Trump’s complaints about China’s trade practices are shared by many business leaders. But there is little support for using import taxes, which are paid by Americans, as a tool against the Chinese.
“Imposing tariffs places the cost of China’s unfair trade practices squarely on the shoulders of American consumers, manufacturers, farmers and ranchers. This is not the right approach,” said Tom Donohue, president and chief executive of the U.S. Chamber of Commerce.
The U.S. announcement comes at a complex juncture in U.S.-China relations.
Following a summit in Singapore between Trump and North Korean leader Kim Jong Un, Secretary of State Mike Pompeo stopped in Beijing for meetings with President Xi Jinping and other top Chinese leaders.

On Thursday, Pompeo thanked Xi for China’s help with North Korea and even wished the Chinese president a happy birthday.

But at a news conference with China’s foreign minister, Wang Yi, tension over trade was clear. Pompeo said the U.S. trade deficit with China is still too high, and Wang called for Washington to make a “wise choice” on tariffs.

After Trump’s statement Friday, Lu Xiang, a trade expert at the Chinese Academy of Sciences in Beijing, warned that relations between the two countries were heading to their lowest point since China began its economic reforms in the late 1970s.

“This is like holding up a pistol, putting the finger on the trigger,” he said of Trump’s actions. “It’s just one step away from pulling the trigger and firing the pistol. It’s a very dangerous and sensitive moment now.”

by David J. Lynch and Emily Rauhala/WAPO

Posted by The NON-Conformist

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Obamacare Critics and Defenders Team Up Against the Trump Administration’s Refusal to Defend the Health Law in Court The DOJ’s argument for striking down the health law’s preexisting conditions rules is weak.

06/15/2018

The Confirmation Files Business, Economy, Education, government, Health, Politics , , , , , Leave a comment

Last week, in response to a legal challenge filed by Texas and a group of conservatives states, the Trump administration took an unusual step by announcing that it would not defend Obamacare in court. Instead, the Trump administration took the position that the health law’s was unconstitutional, and that its preexisting conditions regulations should be struck down.

The federal government’s suit has drawn rebuke from some unlikely quarters. An attorney with 20 years of experience at the Justice Department resigned this week as a result of the administration’s position. Sen. Lamar Alexander (R-Tenn.) said it was “as far-fetched a legal argument as I think I’ve ever heard.” Senate Majority Leader Mitch McConnell distanced his party from the argument, saying that “everyone” in the Senate favored maintaining coverage for people with preexisting conditions.

Even Health and Human Services (HHS) Sec. Alex Azar, who signed the brief in question, described it as a “constitutional and legal position, not a policy position.”

It doesn’t appear to be much of one.

Among the more unusual responses to the administration’s argument came today in the form a brief filed by five academic experts with wildly divergent views about Obamacare. The brief is signed by Jonathan Adler, Nicholas Bagley, Abbe Gluck, Ilya Somin, and Kevin Walsh. Bagley and Gluck have both defended the health law’s legality in the past. Walsh has published several analyses of the legal arguments surrounding Obamacare. But Adler and Somin, notably, are libertarian-leaning law professors who have been quite critical of the health law over the years. (Both are also contributors to the Volokh Conspiracy, which is published at Reason.com.)

The opening of the brief stresses that the signers have spent the last several years disagreeing with each other, in some cases quite forcefully, about the legal and constitutional merits of the health law. The brief takes no position on the mandate itself. But in this case, they all agree that the federal government’s argument for striking down the law’s preexisting rules is, legally speaking, pretty terrible.

Understanding the brief requires a little bit of background. In 2012, the Supreme Court ruled that although Obamacare’s mandate was unconstitutional when viewed as a purchase requirement or economic command, it could stand because it raised revenue and therefore functioned as a tax. But last year, as part of tax reform legislation, Congress eliminated the penalty for not complying with Obamacare’s individual mandate. The mandate remained on the books, but for all practical purposes it had been repealed. And it no longer raised any revenue.

As a result, a group of conservative states, led by Texas, challenged the legality of the (now unenforceable) mandate, and further argued that because it is the centerpiece of the health law, all of Obamacare should be struck down.

This is an argument about what’s known as “severability” — whether the remaining parts of a law should be struck down if a court finds one provision to be illegal.

The Trump administration’s argument does not go quite as far as the states. It agrees that the mandate is now unconstitutional, and takes the position that although much of the law, including the Medicaid expansion and private insurance subsidies, can stand, the preexisting conditions rules should be tossed along with the mandate, because the mandate and the preexisting conditions rules are not severable. To back up its argument, the administration cites findings associated with the statute of Obamacare (that were also cited by the Obama administration in court) declaring that the mandate and the preexisting conditions rules are a bundle that should not be separated.

For critics of Obamacare, there is something naturally appealing about this argument: It uses the text of the health law, and the Supreme Court’s decision to uphold it, to attempt to knock it down. I have been open to arguments along these lines under the Obama administration, and I think they made sense at the time.

The problem, as the new brief points out, is that determining severability is about determining congressional intent. And the current Congress has made its position on the matter quite apparent. Often, this requires some sort of guessing. But at this point, we know exactly what Congress thinks about the law it chose to amend, because it very clearly chose to eliminate the mandate penalty while leaving the preexisting conditions rules in place. That is about as clear a statement of intent as you can ever imagine from Congress.

The brief argues that the administration’s argument relies on “time shifting” to make its case, and that the administration’s case effectively gets severability backward by “[disregarding] the clearly expressed intent of Congress and seek judicial invalidation of statutory provisions that Congress chose to leave intact.”

The findings about severability that the administration cites to back up its arguments about the preexisting were made by a different Congress, prior to the elimination of the mandate penalty and other alterations to the law. They were made in the context of what is now, essentially, a different law. They don’t apply.

I have been a critic of Obamacare for years, and I continue to believe there are many problems with the law. The preexisting conditions rules, while popular, distort the individual market and have contributed to rising premiums in the exchanges. (The popularity of those rules, of course, is one reason why Republicans haven’t touched them, and why GOP officials are distancing themselves from the policy implications of their argument.) But critics of the health law do themselves no favors by signing on to a fundamentally weak legal challenge like this.

The bigger problem with this case is that it has the potential to serve as a substitute for a policy agenda. Republicans still need a broad health policy vision that goes beyond simply attacking Obamacare. But as long as they are basing their hopes on a legal manuever as poorly thought out as this one, that’s not something we’re likely to see.

By Peter Suderman/reason

Posted by The NON-Conformist

Huckabee Sanders Defends Ripping Children From Parents, Because It’s “Very Biblical to Enforce the Law”

06/15/2018

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Asked to comment on remarks made by Attorney General Jeff Sessions earlier in the day about how the Trump administration’s policy of ripping children out of the arms of their immigrant parents is somehow justified by the Christian Bible, White House press secretary Sarah Huckabee Sanders on Thursday afternoon said she could not respond specifically to the AG’s claims but said “it is very biblical to enforce the law.”

“That is actually repeated a number of times throughout the Bible,” Huckabee Sanders said in response to the question by CNN’s Jim Acosta as she appeared to glance at notes on her podium.

More from Common Dreams

Posted by Libergirl

Hiding the Real Number of Unemployed

06/13/2018

The Confirmation Files Business, government, Politics , , Leave a comment

Your government believes that exhausting your unemployment benefits is a cause for celebration — because you are no longer unemployed!

Huh? Well, there is a slight of hand here. Only working people who are receiving unemployment benefits are counted as “unemployed” in official statistics issued by countries around the world. Thus the actual unemployment rates are much higher than the “official” rates, generally about twice as high. Most governments make it difficult to find the actual rate, and the corporate media does its part by reporting the official rate as if that includes everybody.

Then there is the matter of how much of a given national population is actually engaged in paid employment, another useful number difficult to discover. Finally, we can consider wages, both how fast they might be rising as compared to inflation and whether they are increasing in concert with increases in productivity.

To cut to the chase, things ain’t so hot. But you already knew that, didn’t you?

Let’s start our global survey with the United States, where, contrary to expectations, the real unemployment figure is easier to discover that most other places. Perhaps the Trump régime hasn’t gotten around to suppressing it, busy as it is hiding scientific evidence about global warming, pollution and other inconvenient facts. The official U.S. unemployment rate for May was reported as 3.8 percent, the lowest it has been in several years, and less than half of what it was during the post-2008 economic collapse. Predictably, the Trump administration was quick to take credit, although the trend of falling employment has carried on for eight years now.

Nonetheless, you might have noticed that happy days aren’t exactly here again. The real U.S. unemployment figure — all who are counted as unemployed in the “official” rate, plus discouraged workers, the total of those employed part-time but not able to secure full-time work and all persons marginally attached to the labor force (those who wish to work but have given up) — is 7.6 percent. (This is the “U-6” rate.) That total, too, is less than half of its 2010 peak and is the lowest in several years. But this still doesn’t mean the number of people actually working is increasing.

Fewer people at work and they are making less

A better indication of how many people have found work is the “civilian labor force participation rate.” By this measure, which includes all people age 16 or older who are not in prison or a mental institution, only 62.7 percent of the potential U.S. workforce was actually in the workforce in May, and that was slightly lower than the previous month. This is just about equal to the lowest this statistic has been since the breakdown of Keynesianism in the 1970s, and down significantly from the peak of 67.3 percent in May 2000. You have to go back to the mid-1970s to find a time when U.S. labor participation was lower. This number was consistently lower in the 1950s and 1960s, but in those days one income was sufficient to support a family. Now everybody works and still can’t make ends meet.

And that brings us to the topic of wages. After reaching a peak of 52 percent in 1969, the percentage of the U.S. gross domestic product going to wages has fallen to 43 percent, according to research by the St. Louis branch of the Federal Reserve. The amount of GDP going to wages during the past five years has been the lowest it has been since 1929, according to a New York Times report. And within the inequality of wages that don’t keep up with inflation or productivity gains, the worse-off are doing worse.

The Economic Policy Institute noted, “From 2000 to 2017, wage growth was strongest for the highest-wage workers, continuing the trend in rising wage inequality over the last four decades.” The strongest wage growth was for those in the top 10 percent of earnings, which skewed the results sufficiently that the median wage increase for 2017 was a paltry 0.2 percent, the EPI reports. Inflation may have been low, but it wasn’t as low as that — the typical U.S. worker thus suffered a de facto wage decrease last year.

What this sobering news tells us is that good-paying jobs are hard to come by. An EPI researcher, Elise Gould, wrote:

“Slow wage growth tells us that employers continue to hold the cards, and don’t have to offer higher wages to attract workers. In other words, workers have very little leverage to bid up their wages. Slow wage growth is evidence that employers and workers both know there are still workers waiting in the wings ready to take a job, even if they aren’t actively looking for one.”

The true unemployment rates in Canada and Europe

We find similar patterns elsewhere. In Canada, the official unemployment rate held at 5.8 percent in April, the lowest it has been since 1976, although there was a slight decrease in the number of people working in March, mainly due to job losses in wholesale and retail trade and construction. What is the actual unemployment rate? According to Statistics Canada’s R8 figure, it is 8.6 percent. The R8 counts count people in part-time work, including those wanting full-time work, as “full-time equivalents,” thus underestimating the number of under-employed.

At the end of 2012, the R8 figure was 9.4 percent, but an analysis published by The Globe and Mail analyzing unemployment estimated the true unemployment rate for that year to be 14.2 percent. If the current statistical miscalculation is proportionate, then the true Canadian unemployment rate currently must be north of 13 percent. “[T]he narrow scope of the Canadian measure significantly understates labour underutilization,” the Globe and Mail analysis conclude.

Similar to its southern neighbor, Canada’s labor force participation rate has steadily declined, falling to 65.4 percent in April 2018 from a high of 67.7 percent in 2003.

The most recent official unemployment figure in Britain 4.2 percent. The true figure is rather higher. How much higher is difficult to determine, but a September 2012 report by Sheffield Hallam University found that the total number of unemployed in Britain was more than 3.4 million in April of that year although the Labour Force Survey, from which official unemployment statistics are derived, reported only 2.5 million. So if we assume a similar ratio, then the true rate of unemployment across the United Kingdom is about 5.7 percent.

The European Union reported an official unemployment rate of 7.1 percent (with Greece having the highest total at 20.8 percent). The EU’s Eurostat service doesn’t provide an equivalent of a U.S. U-6 or a Canadian R8, but does separately provide totals for under-employed part-time workers and “potential additional labour force”; adding these two would effectively double the true EU rate of unemployed and so the actual figure must be about 14 percent.

Australia’s official seasonally adjusted unemployment rate is 5.6 percent, according to the country’s Bureau of Statistics. The statistic that would provide a more realistic measure, the “extended labour force under-utilisation” figure, seems to be well hidden. The most recent figure that could be found was for February 2017, when the rate was given as 15.4 percent. As the “official” unemployment rate at the time was 5.8 percent, it is reasonable to conclude that the real Australian unemployment rate is currently above 15 percent.

Mirroring the pattern in North America, global employment is on the decline. The International Labour Organization estimated the world labor force participation rate as 61.9 percent for 2017, a steady decline from the 65.7 percent estimated for 1990.

Stagnant wages despite productivity growth around the world

Concomitant with the high numbers of people worldwide who don’t have proper employment is the stagnation of wages. Across North America and Europe, productivity is rising much faster than wages. A 2017 study found that across those regions median real wage growth since the mid-1980s has not kept pace with labor productivity growth.

Not surprisingly, the United States had the largest gap between wages and productivity. Germany was second in this category, perhaps not surprising, either, because German workers have suffered a long period of wage cuts (adjusted for inflation) since the Social Democratic Party codified austerity by instituting Gerhard Schröder’s “Agenda 2010” legislation. Despite this disparity, the U.S. Federal Reserve issued a report in 2015 declaring the problem of economic weakness is due to wages not falling enough. Yes, the Fed believes your wages are too high.

The lag of wages as compared to rising productivity is an ongoing global phenomenon. A separate statistical analysis from earlier this decade also demonstrated this pattern for working people in Canada, the United States, Britain, France, Germany, Italy and Japan. Workers in both Canada and the United States take home hundreds of dollars less per week than they would if wages had kept up with productivity gains.

In an era of runaway corporate globalization, there is ever more precarity. On a global scale, having regular employment is actually unusual. Using International Labour Organization figures as a starting point, John Bellamy Foster and Robert McChesney calculate that the “global reserve army of labor” — workers who are underemployed, unemployed or “vulnerably employed” (including informal workers) — totals 2.4 billion. In contrast, the world’s wage workers total 1.4 billion. Writing in their book The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China, they write:

“It is the existence of a reserve army that in its maximum extent is more than 70 percent larger than the active labor army that serves to restrain wages globally, and particularly in poorer countries. Indeed, most of this reserve army is located in the underdeveloped countries of the world, though its growth can be seen today in the rich countries as well.” [page 145]

Having conquered virtually every corner of the globe and with nowhere left to expand into nor new markets to take, capitalists will continue to cut costs — in the first place, wages and benefits — in their ceaseless scrambles to sustain their accustomed profits. There is no reform that can permanently alter this relentless internal logic of capitalism. Although she was premature, Rosa Luxemburg’s forecast of socialism or barbarism draws nearer.

By Pete Dolack/Counterpunch

Posted by The NON-Conformist

A Blow to Interventionists, as US and North Korea Move Toward Peace

06/13/2018

The Confirmation Files Business, current events, government, media, Politics , , , , Leave a comment

Critics and pundits have been reacting dismissively to President Donald Trump’s engagement with North Korea’s Kim Jong Un. A few weeks ago Donald Trump was going to start World War III with the Korean peninsula’s “Rocket Man,” or so observers said. Now, the prospect for peace, which has never been formally codified by treaty with North Korea since 1953, seems to have critics equally vexed and upset.
Yet, hoping for peace to fail in order to prevent Trump from gaining a victory is to engage in precisely the type of behavior his critics accuse him of displaying.
It is premature to determine the ultimate outcome of this meeting between Trump and Kim. But such a meeting is precisely what President Barack Obama suggested doing in 2008. The GOP derided Obama for this proposal, and many Democrats likely scorned it at the time as well, and they certainly are now.
Engaging North Korea is challenging. First, there is the legacy of the war from 1950-53, in which the North was completely bombed into rubble. The end of the Cold War did little to alleviate tensions; indeed, North Korea had nowhere to turn when it suffered a deadly famine in the 1990s that took anywhere from 500,000 to 3.5 million lives in a country with a population of 22 million.
After 9-11, President George W. Bush named North Korea along with Iraq and Iran as the “Axis of Evil.” Bush intended to send a strong message to North Korea’s then-Supreme Leader Kim Jong-Il. Yet, the elder Kim drew another conclusion, which was to accelerate development of nuclear weapons in order to prevent regime change. North Korea carried out its first successful test of an atom bomb in October 2006.
The fates of Saddam Hussein in Iraq, executed by hanging, and of Muammar Gaddafi in Libya, whose killing and mutilation was filmed by a rebel militia, further fixed in mind the lesson that to protect one’s regime it is necessary to possess weapons of mass destruction. After all, Gaddafi unilaterally gave up his chemical and nuclear weapons programs to improve Libya’s relations with the West. The uprisings of the Arab Spring, however, led the liberal interventionists in Washington and Europe to back the forces seeking his overthrow.
But, North Korean leader Kim Jong Un, according to President Trump, is willing to denuclearize. What might be his reasons for disarming and trusting the US, when doing so led Gaddafi to a bloody and gruesome end? And what are the grounds for trusting North Korea this time, when the arms control agreements of the past have fallen apart?
The current situation hints that conditions in North Korea may have shifted in decisive ways. Much of the population in the North appears to have attained a higher standard of living through illegal or semi-legal trade. Such gains are threatened by US-led sanctions, and the triage measures taken by North Korea in the past may not be as effective in keeping the country afloat. Although North Korea remains in principle a socialist state, nevertheless, the government has built complexes for its citizens to engage in this unofficial commerce.
Second, the US proposal to halt military exercises with South Korea is a goodwill gesture that assuages North Korea’s concern for its security and gives neighbors China and Russia greater incentive to cooperate with the US.
Third, Trump’s embrace of Obama’s 2008 strategy to talk with leaders “hostile” to the US, along with rejection of regime change policies of neoconservatives and liberal interventionists may bring about greater regional stability by reducing the risk of armed conflict, a prospect that China and Russia are certain to welcome along with the two Koreas.
Finally, the administration of Moon Jae-in in South Korea has committed itself to engaging the North, breaking with the hardline stances of the two previous presidents. What should not be expected is for North Korea to dismantle its nuclear industry. Nuclear technology can be used to generate electricity and is a prestige item for the North generally.
In short, neoconservatives and liberal interventionists aside in the United States, there is much to cautiously herald in the current moves by Kim Jong Un and Donald Trump toward peace in North Korea.

By Jeffrey Sommers – Peter Paik/Counterpunch

Posted by The NON-Conformist

At the Singapore summit, President Trump got played

06/12/2018

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Trump Kim Summit

EVAN VUCCI / AP Photographer

President Trump got played.

After all the hoopla and pageantry and Trump braggadocio at the Singapore summit, with Kim Jong Un standing alongside the U.S. president in front of thousands of journalists, the North Korean leader came out the winner.

Kim had already racked up points just by standing alongside the U.S. president as an equal, showered with Trump’s praise and transformed from pariah to international rock star.  In recent weeks he was welcomed to Beijing and Seoul, and invited to Moscow. China and Russia have already started to loosen up sanctions.

All this might have been an acceptable cost for achieving the U.S. goal: to get Kim to commit specifically to shedding his nuclear weapons within a reasonable time frame, in a verifiable fashion.  But, on this, Trump failed big time: The joint statement that emerged from the summit included no such firm commitments, using vague language on denuclearization that is interpreted very differently by the two sides. “It does not meet the minimum requirements in terms of what we expected them to do,” Ambassador Joseph Y. Yun, the former Special U.S. Representative to North Korea, told CNN.

>> READ MORE: Analysis: By Trump’s own yardstick, North Korea pact falls flat

Instead, Trump made a huge concession up front – stopping joint U.S. military exercises with South Korea, a key tool for keeping pressure on the North. And he didn’t even inform the Seoul government beforehand, leaving it publicly grasping for information on U.S. intentions.

“I gave up nothing,” the president insisted in a press conference. He was clearly oblivious to the fact that he was playing into North Korea’s longtime game plan: to emerge as an internationally recognized state, recognized by America and the world — without surrendering all of its nukes.

Let’s look at what the president did give up.

In the run-up to the summit, U.S. and Korean negotiators were wrestling over whether North Korea would make a substantial pledge of denuclearization up front, including details of its nuclear program and a timeline for dismantling it.

But, going into the summit, the two sides could not even agree on a common definition of the term  “denuclearization.”

“Our definition of denuclearization is they give up all their fissile material, facilities, nuclear material taken out, irrevocably and verifiably,” says Dr. Jung Pak, top Korea expert at Brookings and former senior CIA Korea analyst.

The joint statement, however, contained only a vague commitment to “complete denuclearization of the Korean peninsula” – terminology favored by Pyongyang and Beijing.  In North Korea’s interpretation, say North Korea experts, this means an end to the U.S. troop presence in South Korea and nuclear umbrella over that country and Japan – without any corresponding specifics on eliminating its own nuclear program.

By using this language – and ending joint exercises – Trump acceded to Kim’s game plan. He went even further, repeating his desire to pull U.S. troops out of Korea (although not immediately) and emphasizing his desire to save money by so doing.  All this before North Korea makes any firm commitment to giving up its nuclear weapons and missile programs.

True, Kim has frozen his nuclear tests and missile tests – for now.  And he has destroyed an already collapsing nuclear test site and promised Trump more on other sites.  But none of this speaks to the onetime American demand that North Korean completely, irrevocably and verifiably destroy its weapons.

Negotiations will now commence, but if the past is history, they could drag on for a very long time and never reach a firm conclusion.  Meanwhile, U.S. leverage on North Korea is declining,  as China and Russia push to loosen sanctions.  A push for a formal peace between North and South Korea will further weaken any future pressure.  And Trump’s eagerness to halt joint military excercises – and remove U.S. troops – undermines U.S. leverage further.

This gives North Korea little reason to swiftly negotiate an end to its weapons program.  After all, the U.S. president has told the world that Kim is “very smart” and “honorable” and “wants to do the right thing.”  Trump even sloughed off questions at the press conference about North Korean forced labor camps where thousands are tortured and murdered, saying such things happen elsewhere.

How embarrassing it would be for Trump to resume insulting the great Korean leader.  Much easier to insult a democratic prime minister like Justin Trudeau.

The irony here is that, contrary to Trump’s exaggerated claims, Presidents Clinton and George W. Bush got much more specific commitments from Pyongyang. In 1992, 1994 and 2005, the North Koreans pledged to eliminate all their nuclear weapons.  They reneged.

When asked why he’d do better, Trump bragged: “This is a much different president.”  Clearly this president believes his smarts will get results from North Korea, where previous presidents met failure.

The good news is that war on the Korean peninsula looks far less likely than a few months ago. But judging from the Singapore summit, it is Kim Jong Un who has mastered the art of dealing with Trump.

By Trudy Rubin/Phillynews

Posted by The NON-Conformist

 

‘Everything’s on the line’: AT&T’s showdown with DOJ over Time Warner finally gets a decision today

06/12/2018

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A federal judge is expected to rule Tuesday on whether to block AT&T’s $85 billion Time Warner merger, in what has become America’s most closely watched antitrust trial in decades.

The opinion by Judge Richard Leon could determine AT&T’s future in digital entertainment as the company seeks to go toe-to-toe with tech titans such as Facebook, Google and Netflix. But the stakes are equally high for the Justice Department, which has not litigated a case of this kind since the Nixon administration. A court victory for the government, analysts say, could symbolize the beginning of a tough new era in antitrust enforcement. But an AT&T win could give pause to regulators — and perhaps deter them from blocking mergers in the future that might otherwise be deemed anticompetitive.

Though the Justice Department has sought to tamp down concerns about the AT&T case being a bellwether, analysts widely anticipate more deals to be announced in the event of an AT&T court victory, particularly mergers involving corporations that primarily operate in different industries. These types of so-called vertical deals are becoming more popular. In recent months, Verizon has purchased the digital media companies AOL and Yahoo. Amazon.com expanded its grocery business by buying Whole Foods. (Amazon chief executive Jeffrey P. Bezos also owns The Washington Post.) Comcast, meanwhile, is gearing up to fight Disney for control over 21st Century Fox.

“Everything’s on the line now for the Department of Justice,” said Gene Kimmelman, a former DOJ antitrust official who now leads the consumer advocacy group Public Knowledge. “They either come out as enormous victors … or they’ll face an avalanche of new transactions if they lose this case.”

Analysts predict a wide range of possible outcomes in the trial. Leon could determine the merger poses a competitive threat and block the deal outright, siding with the Justice Department. He could rule for AT&T and approve the entire acquisition without conditions, making it possible for the deal to close by June 18. Or he could strike a middle ground, imposing his own changes to the deal or asking the two sides to help him tweak it.

No matter how he rules, the full implications will take time to digest — and will likely hold implications for a string of other mergers and acquisitions on the horizon. Leon has previously said to expect at least a 200-page written opinion.

[Goodbye to net neutrality. Hello to an even-bigger AT&T?]

The lengthy decision reflects the grueling six-week legal assault that government lawyers mounted against AT&T and Time Warner this spring in a dim, windowless Washington courtroom. Both AT&T and the Justice Department declined to comment for this story.

The merged firm, prosecutors argued, would anticompetitively unite AT&T’s massive distribution infrastructure — its cellular and wired broadband networks — with Time Warner’s premium content including HBO, Warner Bros. and Turner Broadcasting, whose assets include the cable channels CNN, TBS and TNT.

AT&T executives defended the merger in court as a major strategic shift for the telecom giant, one that could prove as significant as the company’s decision more than a decade ago to enter the market for broadband and mobile data. In reinventing itself for an age of streaming media, AT&T aspires to deliver more television content over Internet connections to mobile and digital devices. With the viewing data it gathers from smart TVs, computers, tablets and smartphones, AT&T plans to build a targeted advertising empire resembling that of the Web’s biggest ad giants.

That effort could be aided by another major milestone this week: The official repeal on Monday of the federal government’s net neutrality rules. The rules, targeted for elimination by the Federal Communications Commission in a vote last year, had banned providers like AT&T or Verizon from prioritizing their own content over that of other websites. And they had laid the foundation for more stringent — though now also repealed — privacy regulations governing ISPs’ handling of customer data.

[The FCC’s net neutrality rules are officially repealed. Here’s what that really means.]

Winning the antitrust case could allow AT&T to capitalize on that deregulation, analysts say.

“Consumer groups are worried that the court will give AT&T powerful new content, and that the FCC will let them monetize it in anticompetitive ways,” said Paul Gallant, an industry analyst at Cowen & Co. “But investors are more sanguine. They like the hedge of AT&T owning content.”

Antitrust attorneys litigating the Time Warner case relied on complex economic models and testimony from AT&T’s competitors to outline a nightmare scenario in which AT&T could allegedly use its newfound control over Turner Broadcasting to unfairly benefit DirecTV, AT&T’s own subscription television service.

Turner’s control over live sports, news and other desirable programming would encourage AT&T to seek more money for that content when licensing it to competing TV services, the Justice Department argued. Those higher prices would allegedly be passed along to consumers to the tune of hundreds of millions of dollars per year. Meanwhile, the attorneys said, DirecTV would reap rewards by luring away any customers dissatisfied with the price hikes at other cable companies.

“AT&T would not want Time Warner content distributed in ways that increase competitive pressure on DirecTV,” the government wrote in its closing brief to the court.

Attorneys for AT&T and Time Warner lashed out at the government’s antitrust claims, calling them “preposterous.” Thanks to new targeted advertising revenue, AT&T argued, the deal would lead to price decreases for TV viewers, not increases. And to highlight its good faith in content negotiations, AT&T pointed to 1,000 letters it sent to rival TV services last year committing to an arbitration process after the merger, in the event those competitors felt they were being overcharged for Time Warner content. Opponents of the deal said the arbitration offer was insufficient, though in his questioning in court, Leon expressed significant interest in it.

AT&T’s legal team sought to dismantle the Justice Department’s economic analysis of the deal, poking holes in research done by the agency’s star witness, a University of California economist named Carl Shapiro. Shapiro’s analysis failed to consider enough real-world examples of programming disputes, AT&T argued, instead drawing on surveys and long-term projections to arrive at the conclusion that consumers will be harmed by the merger.

Hanging over the trial was also the political shadow of President Trump, who has publicly and repeatedly criticized the merger as concentrating too much power “in the hands of too few.” Arguing that it was being unfairly singled out for punishment, AT&T briefly demanded that the Justice Department hand over White House communications logs that could prove whether Trump inappropriately directed the agency to block AT&T’s merger. But Leon denied that request, focusing narrowly instead on the core antitrust arguments in the case.

The high-profile case is widely viewed as a bellwether for other mergers waiting in the wings. Should AT&T be allowed to buy Time Warner, analysts say an arms race will follow in which companies of all stripes will seek to consolidate with other businesses. An acquisition involving 21st Century Fox is already in the works, with Comcast and Disney poised for a bidding war over Fox’s lucrative film and TV studios, cable networks and other assets. Meanwhile, T-Mobile and Sprint have announced a merger of their own.

Wall Street will be looking for clues in the AT&T decision as to whether the government is likely to challenge those deals.

“At the simplest level, the market will draw a conclusion as to whether this administration is laissez faire or interventionist when it comes to big deals,” he said.

By Brian Fung/WAPO

Posted by The NON-Conformist

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