Wednesday, August 1, 2018

"The Month That Was - July 2018"

Sydney M. Williams

The Month That Was – July 2018
August 1, 2018

No other date on the calendar more potently symbolizes
what our nation stands for than the fourth of July.”
                                                                                    William “Mac” Thornberry (1958-)
                                                                                    U.S. House of Representatives (R-TX)

Liberty has special reverence for July. On July 4, 1776, the Declaration of Independence was signed, or, at least, that is the date we celebrate its signing. It gave birth to the greatest nation and the freest people the world had ever known, which in subsequent years has become larger and freer. On July 14, 1789, the Bastille, a military fortress and prison, was stormed and the prison gates opened, a turning point in the French Revolution. And, on July 20, 1969, Neil Armstrong became the first man to walk on the Moon – a manifestation of the power of freedom and capitalism and a giant step in technology, science and courage.

Three news items during the month deserve special notice – the miraculous recovery of twelve boys and their coach from two and half miles into a water-clogged cave in northern Thailand; the truce on trade wars agreed to between Mr. Trump and European Commission President Jean-Clade Juncker, and the poor performance by Mr. Trump in Helsinki and the even worse reaction on the part of his critics.

Let me tackle the latter first. There is an advantage in having an outsider in Washington – the absence of political ties that prevent fresh looks at long-persistent problems, formed, in part, by long associations. Perhaps voters felt, given the soiled nature of relationship politics, that a fresh face would be a reminder of Lord Palmerston’s admonition that a nation’s interests have more permanence than its friends?

There are, though, disadvantages: Washington works differently than business; there are three co-equal branches of government, making collaboration imperative and executive orders undemocratic. In politics, grey is more common than black or white. Also, while ultimate power is vested in the people, administrators and bureaucrats, through knowledge of how things work, do hold power – which needs to be recognized by the occupant of the oval office. The Presidency is unlike any other job in the world. It comes without training wheels. Thus, beginner mistakes are made. Nevertheless, the President sets the tone. As an outsider, Mr. Trump, in his quest to fulfill campaign promises, has run afoul of mainstream media and establishment insiders. Why, for example, at his joint news conference with Mr. Putin, did Mr. Trump state that he trusted the words of the Russian President over revelations of the intelligence community?  Why did Mr. Trump’s attempt to correct that error – a claim that it was the use of a double negative – remind us of President Clinton when he said it depends on your definition of “is?” Why did he appear on the cusp of offering up former U.S. Ambassador to Russia Michael McFaul and progenitor of the Magnitsky Act Bill Browder for questioning by Vladimir Putin, in exchange for Robert Mueller being given the right to interview a dozen indicted Russians for allegedly hacking into the Democrat National Committee’s computers?

The answer, in part, lies in the visceral responses by Mr. Trump to the unprecedented attacks on him from mainstream media, the establishment and what from passes for so-called cultural parts of our society: the entertainment industry, university professors and administrators, and television talk-show hosts. Their attacks are vulgar, violent and disquieting. Voters in 2016 did not elect an angel or a saint. They elected a 70-year-old white man who had for decades been involved in the murky world of commercial real estate. They voted for a man who had been twice divorced and whose extra-curricular activities had been well-documented. But he was also a man who reflected their inner fears and concerns – that elites in politics, business, finance, universities and the media, with a focus on plastic straws, transgenders and multiculturalism, had ignored the more pressing needs of stagnating incomes, jobs and respect.

The press, Democrats and many Republican “never-Trumpers” deliberately conflate two distinct words – meddling and colluding – as they apply to the alleged Russian interference in the 2016 election. The first is a “dog bites man story;” the second is a “man bites dog story,” and is worthy of investigation and, if true, punishment. President Trump’s animus toward the press is well known, and understandable given its ferocity toward him. His reactions, therefore, are unsurprising. As well, people see through the obvious bias of those doing the investigating. The release of the heavily redacted FISA application for a warrant against former Trump campaign aide Carter Page confirmed that the FBI relied on the Steele dossier without acknowledgement, a dossier funded by the DNC and the Clinton campaign. Even so, many of us would prefer Mr. Trump use humor to deflect the slings and arrows flung at him, rather than nasty Tweets.

Mr. Trump is the Constitutionally-elected President and a certain level of respect should be shown him and the office he represents. Mr. Trump was wrong to criticize his own intelligence officers and to suggest that Mr. Putin might be correct when he denied interference in the 2016 election. But the hyperbolic reaction of those who dislike him works to their disadvantage: John King, CNN commentator, said the President had “surrendered” to the Russians. Jill Wine-Bank, on MSNBC compared the President’s performance in Helsinki to the Japanese attack on Pearl Harbor or Kristallnacht, Former CIA Director John Brennan claimed that Mr. Trump’s joint press conference with Mr. Putin was “nothing short of treasonous.” Mr. Trump is fortunate in receiving such diabolical diatribes and in having political opponents like Elizabeth Warren and Nancy Pelosi. Whenever they speak, they make him look good.

The meeting in Washington between Mr. Juncker and Mr. Trump was big news. Tensions have been high between the European establishment elite, represented by Mr. Juncker and the American elephant in the china shop, Mr. Trump. The latter has been concerned with a mounting trade deficit between the U.S. and Europe and unequal tariffs that, for example, favored European auto manufacturers over their American counterparts. When the two men announced an alliance against third parties’ “unfair trading practices” they didn’t have to explain the reference was to China. Tellingly, the day following the meeting CBS Radio made no mention of the agreement on its 6:00AM news. The New York Timespublished a front-page report of the meeting next day, but under a misleading headline: “Truce on Trade Follows Route Obama Paved.” Both sides – Europe and the U.S. – would like to declare victory, which means that only time will expose the details. Regardless, the fact of the meeting was big news, and it was good news. 

The saving of the boys in Thailand was a miracle, only marred by inappropriate comments from Elon Musk. The feat combined what best characterizes our species: faith, meditation, perseverance, courage, audacity, patience, intelligence, and the technology we have developed. The world waited and watched as SEAL-teams from a dozen countries assisted Royal Thai SEAL-team members in rescuing the boys and their coach, from a narrowly-accessed, water-filled cave. Time was of the essence, because the onset of the Monsoon season would have meant a possible delay of another three or four months. A colossal human tragedy was averted. Most news reported is tragic or bad, for that’s what sells. This rescue provided daylight for the boys as they emerged, but the story also shone sunlight on the world.


President Trump visited NATO and Great Britain, before meeting with Vladimir Putin in Helsinki. At NATO, he repeated his demand that Europe pay more for its defense needs, which is gradually, but reluctantly, being done. While he still has misgivings about the seriousness of EU members regarding defense, he reiterated his support for NATO. He did, however, question the wisdom of invoking Article 5, should Montenegro, NATO’s newest member and a nation of 630,000, be attacked. His is a position that Lord Palmerston would have understood, even as his opponents did not. In England, in an interview with the British tabloid The Sun, Mr. Trump belittled Theresa May’s handling of Brexit but the next day defended her, in an amusing and friendly joint press conference. Tea with the Queen followed. Protestors, with their “Baby Trump” blimp, were visible on network and cable TV, but small-town Brits were ignored when they expressed solidarity with Mr. Trump, like the mayor of Ramsgate Trevor Shonk who said the President was moving things in the right direction, globally.

Foreign Minister Boris Johnson and Brexit Secretary David Davis resigned from Mrs. May’s cabinet over the slow and bumbled walk toward Brexit. A few days later, Brussels rejected Theresa May’s Brexit plan for City access to the EU market. Israel and Hamas agreed to a cease-fire in Gaza brokered by Egypt. Syrian government forces re-took the city of Deraa, seen as the cradle of the revolution against Bashar al-Assad, which began in 2011. (It was Russian military intervention into Syria in 2015 – ironically, invited in by former Secretary of State John Kerry – that turned the civil war in Mr. Assad’s favor.) A Syrian jet fighter was shot down by Israeli forces when it entered her airspace. Turkey’s Recep Tayyip Erdogan, having won re-election in June, appointed his son-in-law to head the newly formed treasury and finance ministry, replacing market savvy persons who had held the position in Mr. Erdogan’s previous government. Turkish stocks and the Lira fell. Robert Mueller indicted a dozen Russian intelligence officers for engaging in a “sustained effort to hack into the computer networks of the DNC and DCCC(Democrat Congressional Campaign Committee)” – a provocative gesture, as it immediately preceded the Helsinki talks, and empty, as Mr. Mueller knows the accused will never stand trial.  


It is becoming difficult for Democrats to continue the pretense that the tax bill signed last December was a sop to the wealthy. Connecticut, a “Blue” state with one of the highest disparities in income, joined a lawsuit filed by Maryland, New Jersey and New York contesting new limits on the state and municipal tax payments that filers can deduct on their federal returns. (The tax bill capped deductions at $10,000, which has no effect on those earning $100,000 or less. Median household income in Connecticut, for example, is $73,400.) Unstated is the fact that the suits, all supported by the states’ respective Democrat governors, are designed to help their wealthiest citizens. Scott Pruitt resigned as head of the EPA, but, fortunately for the economy, only after he had undone many of the restrictive rules implemented during the previous Administration. Peter Strzok’s disingenuous and disrespectful testimony before the House was a vivid manifestation of the arrogance and condescension that characterize progressive, professional bureaucrats. 

Preliminary Second Quarter GDP growth was reported at + 4.1 percent, the strongest in four years. China continued to weaken the Yuan, to offset the effect of tariffs on exported goods. But devaluing one’s currency starts a country down a slippery slope, as it serves to scare away foreign investors. The price of a Bitcoin continued volatile, up 28% for the month, back to where it was in May. In U.S. equity markets, volatility remained muted, as the DJIA moved up 4.7 percent. The yield curve continued to flatten, with the spread between the Ten-year Treasury Bonds and the Two-year Treasury Note narrowing to 16 basis points, (from 32 basis points a month earlier). What gets economists concerned is that every recession in the past sixty years has been preceded by an inverted yield curve – short rates higher than long rates. But, as The Wall Street Journaleditorialized on July 23, “…it’s hard to know what this means given the Fed’s continuing dominant role in the long-bond market.” Following the 2008 credit crisis, the Fed took unprecedented steps to keep short rates at extraordinary low levels and their quantitative easing programs did the same for long rates. The lifting of Fed Funds’ rates, which began in the fourth quarter of 2015, has taken that rate from 25 Basis Points, where it had been for seven years, to 200 Basis Points today. (In the 1990s, when inflation was about the same as today’s 2.3%, Fed Funds averaged around 550 Basis Points.) The unwinding of the Fed’s long-bond purchase program ended in October 2014, but these rates, too, are historically low. In other words, both short and long rates remain uncommonly low. Mr. Trump is wrong to try to talk rates down. 


In sports, France and Croatia played for the World Cup, with France winning 4-2. The U.S. did not even qualify for the tournament. The New York Timesreported that the number of players in the U.S. aged 6-12 has declined 14% over the past three years. Germany’s Angelique Kerber beat Serena Williams at Wimbledon, while Serbia’s Novak Djokovic defeated Kevin Anderson for the men’s title. Australia’s Georgina Hope Rinehart National Training Center took both men’s and women’s championship at Henley, winning the Grand Challenge Cup and the Remenham Challenge Cup respectively. The British Open was won by Italy’s Francesco Molinari. The Tour de France was won by Welshman Geraint Thomas. Baseball’s All-Star game was won by the American League 8-6, its 13thvictory in the past sixteen years. LeBron James signed a four-year, $154 million contract with the Los Angeles Lakers.


A still-raging California wildfire has killed eight, burned over 100,000 acres and destroyed more than seven hundred homes near the city of Redding. Missouri’s Democrat Senator Claire McCaskill, seeking sympathy and preparing for a possible loss, has already blamed Russia for meddling in her re-election bid. Alexandria Ocasio-Cortez, a 28-year-old avowed Socialist defeated longtime Democrat Representative Joe Crowley in New York’s 14thCongressional District. Joe “Jaws” Chestnut, the perennial winner of Nathan’s Fourth of July hot dog eating contest on Coney Island, downed 74 hot dogs in ten minutes to win his 11thvictory. A duck boat, an amphibious craft, sank in Missouri’s Table Rock Lake, during a sudden squall. Seventeen of the thirty-one passengers died, nine from one family. A steam pipe exploded in New York’s Flatiron district, dislodging about 500 people for a number of days. Twisters, with no warning, struck several Iowa towns, leaving seventeen injured. New York City subway ridership is down, so Democrats did what Democrats do – blamed Uber and proposed fare hikes. Stormy Daniels’ husband filed for divorce on grounds of adultery! Who would have suspected? In good news, Japanese-based Eisai and Biogen disclosed results from a mid-stage study that appear positive for their Alzheimer drug, BAN2401. Republicans should be heartened, as the disgraced James Comey said he would support Democrat candidates in this fall’s election. 

Redoine Faid, France’s most recognized and notorious gangster, made a daring and dramatic escape by helicopter from the Sud-Francillien Prison in Réau, about 35 miles south of Paris. Israel’s Mossad agents made a daring raid on a Tehran warehouse where they grabbed Iranian nuclear archives, which included warhead designs and production schedules. Russian hackers gained access to the networks of several U.S. utilities. One hundred and thirty-two died in Pakistan, during a troubled election in which Imran Khan, a former cricketeer and anti-American politician, was elected Prime Minister. Maria Butina, a red-haired Russian agent who offered sex in exchange for information, was charged with acting as a foreign agent. Wild fires near Athens, Greece killed at least a hundred. Four people were hospitalized during Pamplona’s annual running of the bulls. Russia announced its intent to raise the retirement age to 65 from 60 for men and to 63 from 55 for women. Life expectancy in the former Communist country is 66.5. A shooting in the Greek district of Toronto left two dead and twelve wounded. The shooter, Faisal Hussein, was killed by police. In a case of perverted priorities, some of the press and many Democrats were upset when President Trump did not bow to Queen Elizabeth, but they were okay when President Obama did bow to Saudi Arabia’s King Abdullah in 2009. It is fascinating how retirement can turn a hard-left partisan into a statesman. But that is what Barack Obama showed in an hour and eighteen-minute speech in South Africa celebrating the one hundredth anniversary of Nelson Mandela’s birth. He spoke of the importance of borders, citizenship and listening to those with whom one disagrees, concepts he ignored as President.  

In a sign that sanctions are biting, Iranian President Hassan Rouhani warned: “Mr. Trump, don’t play with the lion’s tail. This would only lead to regret…” The American President naturally responded on Twitter: NEVER, EVER THREATEN THE UNITED STATES AGAIN…” Pundits and mainstream media immediately suggested Mr. Trump – not Mr. Rouhani – was war-mongering. But, how should he have responded? Turned the other cheek? A few days later, the mercurial but pragmatic Mr. Trump said he would be willing to meet with Mr. Rouhani about the nuclear issue. 


Lord Carrington died at 99. He was born Peter Alexander Rupert Carrington and served in the governments of Winston Churchill, Harold MacMillan, Sir Alec Douglas-Home, Edward Heath and Margaret Thatcher. As well, he had been secretary general of NATO, and he had been a member of the House of Lords for 78 years. Sergio Marchionne, the man who revived Fiat and Chrysler, died at 66. Nancy Sinatra, the first of Frank Sinatra’s four wives and the mother of his three children, died at 101.


The month ended amidst heat and humidity, at least here in Connecticut, just payment for the below-average, cooler spring we experienced. August will bring primaries in fifteen states, including my state of Connecticut, so politics, if not the weather, will remain intemperate. As Caroline and I will be on the Jersey shore, we have already voted. I urge everyone to get to the polls and exercise your right, which is truly a privilege. A country is best served when its representatives most fully reflect all its citizens.

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