Week in Review

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Week in Review

02/20/2016

For the week 2/15-2/19

[Posted 11:00 PM ET, Friday]

Warning: If you normally print this column out, today’s is about 38 pages.

Note: StocksandNews has substantial costs.  If you haven’t already done so, please click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.  Special thanks this week to former lefty hurler Bobby C., one of Summit’s great pitchers of all time.

Edition 880

Washington and Wall Street

Global markets rallied strongly, snapping back after the bloodbath of the prior two weeks as investors, at least temporarily, focused more on probable further stimulus, such as in Japan and Europe, and a Federal Reserve that hardly seems ready to hike interest rates again, and could potentially opt to take away the lone increase from December instead (though I doubt this).

The Fed’s minutes for its January meeting, released on Wednesday, showed that policymakers were wary of rushing to premature conclusions about the implications of the month’s financial turbulence, but there was agreement the outlook had become more clouded.

China emerged as a particular worry among the Fed folks, as well as emerging markets, not that this should be anything new to them, and this week some Fed governors were changing their tune from December when the talk was of four rate hikes in 2016.

Bottom line, further confusion.

On the data front, January housing starts fell 4%, owing in no small part to the blizzard in the Northeast and Mid-Atlantic, but industrial production for the month was better than expected, up 0.9%.

As for inflation, producer prices for January were up 0.1% when a decline had been expected, with the year over year being -0.2%.  But ex-food and energy, the PPI was 0.4% and 0.6% yoy, an improvement.

Then you had consumer prices for the month and there were positive surprises here as well; unchanged and up 0.3% on core, while for the 12 months the CPI was 1.4%, but 2.2% ex-food and energy, or the fastest pace since June 2012.

I’ve been saying it’s hard to ignore core CPIs of 2.0% or greater, as well as recent wage growth of 2.5%, even though the Fed keeps bitching inflation isn’t at its 2% target.  It is!

Oh, I know.  The Fed prefers the PCE (personal consumption expenditures) indicator and in December it was just 1.4%, plus wage growth should be closer to 4% at this point in the cycle, with unemployment rates as they are, but this is part of the conundrum the Fed is faced with.  [The next PCE reading is Feb. 26.]

Editorial / The Economist

“One fear above all stalks the markets: that the rich world’s weapon against economic weakness no longer works.  Ever since the crisis of 2007-08, the task of stimulating demand has fallen to central bankers. The apogee of their power came in 2012, when Mario Draghi, boss of the European Central Bank (ECB), said he would do ‘whatever it takes’ to save the euro. Bond markets rallied and the sense of crisis receded.

“But only temporarily.  Despite central banks’ efforts, recoveries are still weak and inflation is low. Faith in monetary policy is wavering.  As often as they inspire confidence, central bankers sow fear.  Negative interest rates in Europe and Japan make investors worry about bank earnings, sending share prices lower.  Quantitative easing (QE, the printing of money to buy bonds) has led to a build-up of emerging-market debt that is now threatening to unwind.  For all the cheap money, the growth in bank credit has been dismal. Pay deals reflect expectations of endlessly low inflation, which favors that very outcome.  Investors fret that the world economy is being drawn into another downturn, and that policymakers seeking to keep recession at bay have run out of ammunition.

“The good news is that more can be done to jolt economies from their low-growth, low-inflation torpor....The bad news is that central banks will need help from governments.  Until now, central bankers have had to do the heavy lifting because politicians have been shamefully reluctant to share the burden.  At least some of them have failed to grasp the need to have fiscal and monetary policy operating in concert.  Indeed, many governments actively worked against monetary stimulus by embracing austerity....

“Politicians have known all along that they can make a difference, but they are weak and too quarrelsome to act.  America’s political establishment is riven; Japan’s politicians are too timid to confront lobbies; and the euro area seems institutionally incapable of uniting around new policies.

“If politicians fail to act now, while they still have time, a full-blown crisis in markets will force action upon them.  Although that would be a poor outcome, it would nevertheless be better than the alternative.  The greatest worry is that falling markets and stagnant economies hand political power to the populists who have grown strong on the back of the crisis of 2007-08.  Populists have their own solutions to economic hardship, which include protectionist tariffs, windfall taxes, nationalization and any number of ruinous schemes.

“Behind the worry that central banks can no longer exert control is an even deeper fear.  It is that liberal, centrist politicians are not up to the job.”

Finally, I was astounded by some of what President Obama said at his press conference on Tuesday.  While I cover the Syria crisis below, I can’t help but put some of his remarks up top.

Q: Last year, when President Putin was about to enter into Syria, you said that he was doing so from a position of weakness and that he would only get himself involved in a quagmire there.  Now, with Aleppo about to fall, it seems like President Putin is basically getting one of his goals, which is to bolster Assad and to take on the rebels, which the U.S. is backing.  How do you respond to critics who say that you have been outfoxed by Putin? And what is your plan if Aleppo does fall?

Obama: “First of all, if you look back at the transcripts, what I saw was that Russia has been propping up Assad this entire time. The fact that Putin finally had to send his own troops and his own aircraft and invest in this massive military operation was not a testament to great strength; it was a testament to the weakness of Assad’s position. That if somebody is strong, then you don’t have to send in your army to prop up your ally. They have legitimacy in their country and they are able to manage it their self, and then you have good relations with them.  You send in your army when the horse you’re backing isn’t effective. And that’s exactly what’s happened.

“Now, what I said was, is that Russia would involve itself in a quagmire. Absolutely, it will.  If there’s anybody who thinks that somehow the fighting ends because Russia and the regime has made some initial advances – about three-quarters of the country is still under control of folks other than Assad.  That’s not stopping anytime soon.

“I say that, by the way, with no pleasure.  This is not a contest between me and Putin. The question is, how can we stop the suffering, stabilize the region, stop this massive out-migration of refugees who are having such a terrible time, end the violence, stop the bombing of schools and hospitals and innocent civilians, stop creating a safe haven for ISIS. And there’s nothing that’s happened over the last several weeks that points to those issues being solved. And that is what I mean by a quagmire.

“Now, Putin may think that he’s prepared to invest in a permanent occupation of Syria with the Russian military.  That’s going to be pretty costly. That’s going to be a big piece of business. And if you look at the state of the Russian economy, that’s probably not the best thing for Russia.

“What would be smarter would be for Russia to work with the United States and other parties in the international community to try to broker some sort of political transition.  Now, John Kerry, working with his Russian counterpart, has, on paper, said that there’s going to be a cessation of hostilities in a few days. This will test whether or not that’s possible.  It’s hard to do because there’s been a lot of bloodshed. And if Russia continues indiscriminate bombing of the sort that we’ve been seeing, I think it’s fair to say that you’re not going to see any take-up by the opposition.....

“We will see what happens over the next several days. And we will continue to work with our partners who are focused on defeating ISIS to also see how we can work together to try to bring about a more lasting political solution than aerial bombardment of schools and hospitals are going to achieve.

“But it’s hard. I’m under no illusions here that this is going to be easy.  A country has been shattered because Assad was willing to shatter it, and has repeatedly missed opportunities to try to arrive at a political transition.  And Russia has been party to that entire process. And the real question we should be asking is what is it that Russia thinks it gains if it gets a country that’s been completely destroyed as an ally that it now has to perpetually spend billions of dollars to prop up?  That’s not a great prize.  Unfortunately, the problem is, is that it has spillover effects that are impacting everybody, and that’s what we have to focus on.”  [whitehouse.gov]

Again, I just want to scream.  Obama’s behaving like some college professor.  He’s acting like his job is to be an observer of the situation these last five years, and not, as the head of the world’s lone superpower, a leader!  He has watched this country, and region, burn to death.

As for the “spillover effects,” you are the freakin’ cause of them, Mr. President.

Europe and Asia

European Central Bank chief Mario Draghi, speaking to a European parliament committee, claimed half the economic recovery in the eurozone is owed to the ECB’s monetary policy, and that he “doesn’t agree” with the notion the bank’s quantitative easing isn’t working.

“It has worked a lot.  By an estimate that we have, half of the recovery in the last two years can be ascribed to our monetary policy.  In the last four years our monetary policy has been the only stimulative policy.  It is upon this foundation that we have to reach the other objective, the inflation rate of below 2%.”

Draghi added low interest rates, which are a source of concern for investors, especially those investing in bank shares, aren’t simply a problem for the eurozone:

“This policy has produced low interest rates. Is it only something specific for the Euro area? There is nothing special with the ECB’s monetary policy, the problems that pension funds and savers have to cope with are the same as in the U.S., in Japan... We are very conscious, and wish interest rates could go up again, but this is not the case now.”  [Financial Times]

So Draghi said that when it comes to the ECB’s next meeting on March 10, the ECB is “ready to do its part” to spur more growth and that it “will not hesitate to act” if inflation weakens further.

 “A general deteriorating in market sentiment has taken root and has gathered pace over the last week,” which is helping keep inflation low, Draghi added. [USA TODAY]

There is talk of cutting the deposit rate for banks further into negative territory.

So a few eurozone tidbits....

Euro area car sales (registrations) rose 6% in January, year over year, with Ford up 11.4%, GM 12.4% and Fiat 13.7%.  Volkswagen, Europe’s largest automaker, was down 4% owing to the ongoing impact of the emissions scandal.

Registrations were up 17% in Italy, 12% in Spain.

In Germany, factory gate, or producer prices, fell 2.4% in January on an annualized basis, the 30th consecutive month of declines.

The ECB said Greek banks won’t need further recapitalization after the last round of funding, 14.4bn euros.

But the government of Prime Minister Alexis Tsipras said last weekend that ongoing disputes over the country’s pension reform plans are holding up a review of its latest financial bailout.  The government has faced widespread protests from austerity-weary Greeks pushing back against further cuts.

The IMF’s director for Europe, Poul (sic) Thomsen, said last week that Greece needs to implement further measures to meet its fiscal targets by 2018 and “We cannot see how Greece can do so without major savings on pensions.”

Ergo, protests will only increase.

In non-euro Britain, retail sales in January were up a solid 2.3% over December, and, ex-fuel, are up 5.0% year over year...very strong. 

Britain’s unemployment rate was 5.1% in December, also strong, with wages up 2.0% yoy.

Wolfgang Munchau / Financial Times

“(The recent turmoil in euro financial markets is) sending us four specific messages.  The first and most important is the return of the toxic twins: the interaction between banks and their sovereigns.  Last week’s crash in bank share prices coincided with an increase in bond yields in the eurozone’s periphery. The pattern is similar to what happened during 2010-12....

“The second message is that Europe’s banking union has failed.  The banking union the EU ended up with was a foul compromise: joint bank supervision and a joint resolution regime, but no deposit insurance and no government backstop to bail out failing lenders....

“The third message is the market expectations of future inflation have suffered a permanent shift.  The ECB is taking market-based estimates of future inflation seriously – perhaps too seriously....

“The fourth message is that the markets fear negative interest rates.  This is because the vast majority of Europe’s 6,000 banks are old-fashioned savings and loans: they take in deposits and lend them out.  The banks would normally adjust the rates they offer to their savers in line with the rates the ECB charges them, maintaining a profit margin between the two.  But if the ECB imposes a negative rate on the banks, this no longer works.  If the banks imposed negative rates on savings accounts, small savers would take their money and run.  The banks could, of course, reduce their reserves at the central bank and lend the money instead.  Or they could invest in risky securities.  But that prospect is not necessarily reassuring to bank shareholders either, especially if they do not see good lending and investment opportunities.

“Looking back, the cardinal error committed by the European authorities was the failure in 2008 to clean up their banking system after the collapse of Lehman Brothers. This was the original sin. Many other mistakes subsequently compounded the problem: pro-cyclical fiscal austerity, the ECB’s multiple policy failures and the failure to create a proper banking union. It is interesting that every single one of these decisions was ultimately the result of pressure brought by German policymakers.”

On the migration front, Austria has begun instituting its daily cap.  Just 80 asylum applications will be accepted per day at Austria’s south border, after which it will be shut.  The European migration commissioner has described the measure as “plainly incompatible” with European Union law.

EU leaders are holding a summit in Turkey in March to attempt to seek fresh solutions.  “The EU-Turkey action plan is our top priority,” Council President Donald Tusk said this week in Brussels.  The EU previously pledged $3.3bn in aid to Turkey for housing refugees on its territory.

The Brussels meeting was contentious, with German Chancellor Angela Merkel unable to convince Austrian Chancellor Werner Faymann, a former ally, to postpone his border restrictions that will lead to a chain reaction along the main migration route into Europe, leaving them stuck in Greece.

Following Austria’s move, Slovenia, Croatia, Serbia and Macedonia said they would adopt similar policies.

The European Commission can sue countries it believes are in breach of EU rules.

Meanwhile, France rejected the idea of a permanent quota system for distributing asylum seekers, with Prime Minister Manuel Valls saying France would take on 30,000 of the 160,000 European countries agreed to divide among themselves, but it would not accept additional numbers.

“We won’t take any more,” Valls said.  “France never said ‘come to France,’” a dig at Angela Merkel’s entreaty.

Valls added that France had received 80,000 asylum applications last year and was struggling with youth radicalization and high unemployment.  [Washington Post]

Youth radicalization is what I began writing of a number of months ago.  It is a looming problem in  Germany, too, because of the huge numbers it is taking in.  Assimilation?  I think not.  They are being taken in by fellow migrants, who give them a place to stay, food, and a place to worship and they will never know what it is like to be a German, a Frenchman, a Belgian, etc.  They will just learn one thing...hate.

Finally, on the issue of Britain and staying in or leaving the European Union, “Brexit,” Prime Minister David Cameron has been scrambling to obtain a package palatable to the British people at the summit in Brussels.

Recent polls have indicated the people now want to leave the EU.

Louise Mensch [columnist for The Sun on Sunday and former Conservative member of the British Parliament] / op-ed New York Times:

“Brexit offers Britons more money, more control, free trade and planned immigration.

“First, the cash.  Britain sends about $80 million per day to Brussels.  To place that in context, Daniel Hannan, a Conservative member of the European Parliament, calculated that all the austerity cuts that the chancellor of the Exchequer, George Osborne, made during the last Parliament, amounted to $55 billion, while Britain’s contribution to the European Union in the same period was $130bn.  [Ed. I’m rounding off.]  Mr. Osborne could reverse every cut in public spending and still pay the deficit down faster if Britain were outside the European Union.

[The EU does return some of the money through spending in Britain, “though not nearly the amount it takes out.”]

“The second issue is the wave of illegal immigrants effectively invited into Europe by Germany’s chancellor, Angela Merkel.  A growing proportion of Britons believes their country should accept fewer refugees; Turkey, where a majority of these migrants have come from, is already a safe destination.

“We also note that many are young men, of fighting age, who appear to have abandoned their families; the recent sexual assaults on women in Cologne, Germany, by marauding groups of migrants have confirmed the fears of many in Britain.  With no curbs on the free movement of migrants under Europe’s Schengen Agreement, British voters expect a wave of unwanted immigration once these migrants are given asylum elsewhere in Europe.  We are unwilling to close our eyes to this, and we want our borders back.”

As I go to post, Cameron and the EU have reached an agreement on a package but there is no way I can analyze it tonight.  Needless to say, there will be plenty of commentary next time on this critical issue.

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Turning to Asia, China’s retail sales rose 11.2% during the week-long Lunar New Year vacation compared with last year, according to the Ministry of Commerce.

But exports in January fell 11.2% in dollar terms, year over year, while imports plummeted 18.8%.

After being closed for a week due to the holiday, Chinese stocks rose some, helped by the government guiding the yuan up sharply, including the single biggest gain since 2005, in a move against speculators and an attempt to try to reassure everyone capital flight was under control.

Goldman Sachs Gao Hua Securities economist Song Yu told the Sydney Morning Herald that while China’s growth would continue to decelerate, there was no reason for panic.  GDP is expected to slow to 6.7% in the first quarter and full-year growth will drop to 6.4% in 2016.

Song says: “Some people are making extreme arguments to say the whole machine is not working.  That’s not what we see.”

When growth slows, “policy makers will come up with something,” he adds.

But then I see this headline in the South China Morning Post on Friday.

“Sensitive financial data ‘missing’ from central bank report on capital flowing out of China’s slowing economy”

As reported by Zhou Xin and Wendy Wu: “Sensitive data is missing from a regular central bank report in China amid concerns about the flow of cash out of the country as its economy slows and currency weakens.

“Financial analysts say the sudden lack of clear information makes it difficult for markets to assess the scale of capital flows out of China....

“Another key item of potentially sensitive financial data has also been altered in the latest report.”  [The “position for forex purchase” and “foreign exchange purchase” position, which covers all financial institutions including the central bank.]

“The central bank has tweaked items on its financial statements before, but the latest unannounced change comes at a particularly sensitive time when Beijing is trying hard to stabilize the yuan exchange rate.”

In Japan, in yet another example of how Abenomics is misfiring, fourth-quarter GDP was down 1.4% on an annualized basis, though this was seen as a bad news/good news situation because Tokyo’s Nikkei index rallied 7.2% on Monday following the news, one of its biggest days ever with investors expecting more stimulus.

The GDP report revealed consumption was down 3.3% (ann.) but business investment rose 5.7% in the quarter.  Exports fell 3.4%.

The biggest issue is weak wage growth, which is holding consumption down across the board, including autos.

For all of 2015, GDP was up 0.4%; exports up 2.7%, consumption down 1.2%.

One last item, in terms of stimulus that hasn’t worked in decades here, on Friday, Japan’s 10-year government bond, JGB, had a yield of -0.016% before closing the week at 0.00%.

Street Bytes

--The rally caps were on across the globe.  Aside from the Dow Jones and S&P 500 registering their biggest gains since November, up 2.6% and 2.8%, respectively, Nasdaq gained 3.9% for its best week since July.

But you had Tokyo +6.8%, Shanghai +3.5%, Sydney +3.9% London +4.3% Frankfurt +4.7%, and Paris +5.7%.  As Ronald Reagan would have said, ‘Not bad...not bad at all.’

Frankly, a lot of it was short covering after a major downdraft.  Don’t read too much into it.  We are hardly back off to the races.  The world still sucks.

--U.S. Street Bytes

6-mo. 0.44%  2-yr. 0.74%  10-yr. 1.74%  30-yr. 2.60%

Yields on the long end were unchanged on the week.   The German 10-year Bund saw its yield decrease from 0.26% to 0.20% (it was at 0.13% intraday on Friday).

--The average price of gasoline across the country this week hit $1.70, or 55 cents lower compared to the same time last year.  But pump prices could rise some the next two months due to seasonal refinery maintenance ahead of the summer driving season, which reduces supply on an interim basis.

--Several big oil producers, including Russia and Saudi Arabia, sought to cap production at existing levels, but Iran refused to curb its own output, thus throwing the plan’s prospects into question.  OPEC is scrambling to prop up the market, with Venezuela, Nigeria and nonmember Russia being hit particularly hard.

It doesn’t help that Iran is eager to boost its production after coming off sanctions, while Iran and Saudi Arabia are backing different sides in the likes of Syria and Yemen.

Tehran said it won’t consider limits until it increases output by one million barrels a day this year; that’s one million more onto an already glutted market.

Oil fell on Friday, though finished up $0.20 on the week to $29.64, with Iraq’s oil minister saying negotiations among the big players had stopped short of agreeing to freeze output.

The International Energy Agency warned of a “false dawn” in prices as the market remains awash with the stuff and inventories are expected to keep growing.

--Wal-Mart reported its first annual sales decline since at least 1980, minus 0.7% to $478.6bn for the year ended January, due in part to the strong dollar, without the impact of which sales would have risen 2.8%.

Nonetheless, the world’s largest retailer also said ecommerce sales slowed for the fifth consecutive quarter to 8% in the final three months of the year.  By contrast Amazon’s quarterly growth was 26% despite its much larger base.

More troubling, Wal-Mart reduced its growth outlook for 2016 to flat from between 3-4% and the shares fell.  In the last quarter, U.S. comp store sales rose just 0.6%.

Wal-Mart still accounts for 9.2% of all retail sales in the U.S., down from 9.9% five years ago.  Many would say it’s been floundering for ten years.

--Shares in Deere, the largest maker of tractors and other agricultural equipment, slumped on Friday as the company cut its forecast for the year, warning it faces a challenging environment.  Deere said full-year sales could be down 10 percent, when just three months earlier it forecast a drop of 7 percent.

--Researchers in Brazil say that “most” of the microcephaly cases reported in the country, now over 4,400, were linked to the Zika virus, but the vast majority of them are still being investigated. 

The World Health Organization did say that a rise in Guillain-Barre syndrome has been seen in several Latin American countries, GBS causing temporary paralysis and worse, though it has not been proven there is a link as yet to Zika; it just seems highly probable at this point.

Then on Friday, the WHO said there was an increasing accumulation of evidence of an association between the Zika virus and microcephaly, but it could take 4-6 months to prove.

And, yes, with the plunging economy, the massive corruption scandal that could still take down President Dilma Rousseff, and the shaky Olympic Games coming up, assuming they aren’t canceled (though no one honestly expects this), Zika couldn’t have come at a worse time.

Separately, the World Bank estimated that Zika will have an economic impact on the region’s countries of $3.5 billion in 2016, though for those nations most highly dependent on tourism, Zika would cost about 1% of GDP, according to the WB.  Not a catastrophe by any stretch, but if the virus persists, year after year, you’ll see a grinding impact affecting millions of workers, for starters.

There has been a surge in travel insurance owing to Zika, though standard policies won’t let you cancel simply because of fear of the virus.  As the Los Angeles Times’ Hugo Martin notes, you have to buy more expensive cancel-for-any-reason policies to get your money back if you cancel out.

--Canada’s Bombardier announced it would cut 7,000 jobs, or almost ten percent of its 71,000 workforce, with the aircraft maker saying most of the cuts would come in its train-making operation.  The company is also facing falling sales in business jet manufacturing and predicted total revenue in 2016 far short of 2015.  Fourth-quarter revenue was down 16%.

--I see where Southwest Airlines Co.’s ground staff just approved, narrowly, a new five-year contract that would include pay raises of more than 20 percent over the life of the agreement, which is an example of a bit of inflation.

--Shares of IBM had their strongest day in seven years on Thursday, up 5%, after Morgan Stanley said investors “under-appreciated” Big Blue’s transformation efforts.

IBM has seen sales fall every year since 2012 as its older businesses, such as making servers and workstations, have deteriorated amid the shifting landscape, and the shares had fallen by more than 20% over the past 12 months.

--Yahoo! continues to flounder under CEO Marissa Mayer.  This week she jettisoned seven digital magazines she had unveiled just two years earlier, including Yahoo! Tech, which will get folded into the remaining verticals focusing on news, sports, finance and lifestyle.  The company is in the process of cutting 1,700 jobs, or 15 percent of its workforce.

Friday, the company announced it had hired a number of Wall Street banks to examine its options, i.e., a probable sale of the company, including the fate of its $25bn stake in Alibaba.

Mayer said: “Separating our Alibaba stake from Yahoo’s operating business is essential to maximizing value for our shareholders.”

Whatever.

--Procter & Gamble is slashing another $10bn from its costs over the next five years, which would be on top of the $7bn it has already eliminated since 2012.  Newly installed CEO David Taylor has vowed to overhaul the company’s manufacturing and distribution system in the U.S. and is now extending the efforts to Europe and elsewhere.

But while this is all well and good from a shareholder standpoint, you still need growth and that has been lacking.

P&G is in the middle of selling 43 of its beauty brands, including Clairol, to Coty, and after selling off Duracell this year, it will be left with 65 brands, down from 166, which it hopes will make it more flexible.

--Venezuela’s central bank said inflation last year surged to 180.9% and the economy contracted by 5.7%, as President Nicolas Maduro announced some emergency measures.

--Meteorologists see signs El Nino is weakening, slightly, but they are still forecasting a spring that’s wetter than normal throughout much of the West (as well as the South and parts of the East).

As for the snowpack in the Sierras, it is averaging 94% of normal for this time of year and officials are “cautiously optimistic this winter could offer a measure of drought relief.”  [Los Angeles Times]

But judgment day is not until April 1, when officials can make an assessment of just how much snow might be available to supply California’s water demands over the summer and fall.

Northern California is doing great, but Southern California has hit a dry spell.

--Billionaire Ken Griffin paid about $500 million for two paintings, one by Jackson Pollock and the other by Willem de Kooning from David Geffen’s foundation.  The confidential deal was completed in the fall and is not just a record for both artists but exceeds the last high mark for a private sale, the $300 million paid for a Paul Gauguin painting.  [Gauguin blows.]

Both paintings went on display at the Art Institute of Chicago in September, Griffin being a trustee there since 2004, but the details have just emerged.  [Chicago Tribune]

Yup, a case of the ‘haves’ and ‘have nots.’

--Apple Inc. CEO Tim Cook said his company will resist a federal court order to unlock access to a cellphone that belonged to one of the terrorists in the San Bernardino attack last year.

Cook said such a move would undermine encryption by creating a backdoor that could potentially be used on future devices.

“In the wrong hands, this software – which does not exist today – would have the potential to unlock any iPhone in someone’s physical possession,” his statement read.

The FBI has been unable to fill in an 18-minute gap in the couple’s movements between the time of the attack and their deaths in a firefight with police hours later.  The phone could yield information on whether the two received any help in plotting or carrying it out.

The FBI said Apple should be able to turn off the device’s auto erase functions, allowing the government to submit “test passcodes” to the phone without the risk of destroying the data.

Google CEO Sundar Pichai voiced support for Apple in a series of tweets.

“Forcing companies to enable hacking could compromise users’ privacy,” adding that the case “could be a troubling precedent.”

In an open letter, Tim Cook declared:

“If the government can use the All Writs Act [Ed. a 1789 law that for centuries has required private assistance with law enforcement efforts] to make it easier to unlock your iPhone, it would have the power to reach into anyone’s device to capture their data.”

But in Apple’s strategy of protecting customer data, it risks alienating consumers who put a higher value on national security than privacy.  A recent survey by the Pew Research Center found 82 percent of U.S. adults deemed government surveillance of suspected terrorists to be acceptable. 

But only 40 percent of the Pew respondents said it was acceptable for the government to monitor U.S. citizens.  [Associated Press]

Others say a government victory could encourage regimes in China and elsewhere to make similar requests for access to smartphone data.   China is Apple’s second-largest market.

The government maintains it is asking only for help with this one phone.

Editorial / Washington Post

“The public has reason to be frustrated that investigators cannot execute valid search warrants; this is a worrying impediment to legitimate law enforcement.  We believe Apple should help search for a workable solution. If there is a Paris-style attack in the United States, decisions may be imposed on it in a far less benign atmosphere.  But the decisions should be made by Congress.

“Meanwhile, Apple’s role as a leading exponent of data security brings special responsibilities.  Whatever U.S. officials decide, the policy will be the legitimate product of a democratic government and the rule of law. That will not be true in countries such as China, where dictators would use anti-terrorism tools to crack down on dissenters. We hope that Apple will fight as hard to safeguard its users’ privacy from authoritarian abuse.”

Editorial / Wall Street Journal

“The fear among law enforcement and the national-security agencies is that jihadists and criminals are going dark.  FBI chief James Comey and Manhattan District Attorney Cy Vance warn they are losing the capacity to execute bona fide search warrants granted under the Fourth Amendment.  So they support a mandate that the U.S. tech industry install a master security key – the ‘backdoor’ Mr. Cook invokes – to unlock any device.

“The CEO has a strong case when he says that backdoors create more problems than they solve.  Introducing security vulnerabilities that third parties like cops and spooks can use as needed can also be exploited by hackers, crooks and spies.  Nations can mandate backdoors, but there will always be some encrypted channels outside of their jurisdiction where the likes of ISIS can plot.  The result would be weaker products for law-abiding consumers that leave U.S. companies less competitive with little security benefit.

“Stronger cybersecurity is more important than ever in a world of corporate espionage, millions of compromised credit-card numbers and the stolen identities at the Office of Personnel Management. Encryption may lead to fewer anti-terror intercepts, though the universe of signals that can be tapped has expanded radically and on balance more secure phones are a major advance for human freedom.  Ask the Chinese pastors or Russian dissidents who are targeted by authoritarian regimes and want encrypted iPhones....

“It’s an understatement to say that Apple is taking a risk by challenging the Administration in a high-profile domestic terror incident with unpredictable politics.  ‘Apple chose to protect a dead ISIS terrorist’s privacy over the security of the American people,’ said Arkansas Republican Tom Cotton, and Donald Trump has been no more subtle.

“But for the same reason, the Administration ought to have resolved the situation confidentially before it reached legal and political Defcon One.  Terror cases by their nature are different from run-of-the-mill law enforcement, and San Bernardino requires more than the government’s typical show of incompetence....

“A mature democracy – if America still is one – ought to be able to work out these crucial matters of national security through legislative deliberation. The public interest on encryption is best served with a rational debate, not the ad hoc nuclear legal exchange that the Administration is inviting.”

Michael Wolff / USA TODAY

“Extending Apple some sort of benefit of the doubt, it is not clear whether the company truly sees itself as an ultimate protector and enforcer of a new tech order, existing beyond the capabilities of courts and government authority to regulate, or if it is, in the Snowden age, just doing some proactive PR.

“It’s certainly quite a melodramatic and chest beating letter, not to mention a fairly preposterous one....

“In Apple’s telling, make everybody’s phone transparent to all the world’s bunko artists, sleazebags and brigands....

“Said (Tim) Cook: ‘The government suggests this tool could only be used once, on one phone. But that’s simply not true.  Once created, the technique could be used over and over again, on any number of devices.  In the physical world, it would be the equivalent of a master key, capable of opening hundreds of millions of locks – from restaurants and banks to stores and homes.  No reasonable person would find that acceptable.’....

“The government, Cook goes on, ‘Could extend this breach of privacy and demand that Apple build surveillance software to intercept your messages, access your health records or financial data, track your location, or even access your phone’s microphone or camera without your knowledge.’

“That’s the rub of the argument and of Apple’s agitprop. The government is the enemy, even the operative villain in modern life, perfidiously or mindlessly intent on taking away the privacy of its citizens. Technology companies, on the other hand, have created all manner of tools to protect our privacy.

“Come again?  In some more precise ontological understanding, it is technology companies that have not only created the means by which our privacy is, on a constantly expanding basis, ever-more lost, but they are the prime beneficiaries of this access to messages, health records, financial data and all the rest.

“It is technology companies whose foremost business goal is to protect their data monopolies and, indeed, the illusion that privacy exists (pay no attention to the fact that we are not private to them).

“Edward Snowden, whose theft and escape were enabled by encryption protocols, has been an active tweeter on the side of Apple in the current debate. Snowden, perhaps honorably but quite mindlessly, too, showed both how communication devices potentially compromise our privacy and, as well, how would-be terrorists might circumvent such exposure and protect their dastardly plans.  In response, technology companies must grandly assert the virtue of their devices, and law enforcement must dig deeper into them.”

Friday, the Justice Department demanded that a judge immediately order Apple to give it the technical tools to get inside the phone.

It said that Apple’s refusal to help unlock the phone for the FBI “appears to be based on its concern for its business model and public brand marketing strategy,” rather than a legal rationale.

“Rather than assist the effort to fully investigate a deadly terrorist attack by obeying this court’s order of February 16, 2016,” prosecutors wrote, “Apple has responded by publicly repudiating that order.”

Apple has until next Friday to file their formal response.

The case is headed to an appeals court and maybe higher.

Foreign Affairs

Syria/ISIS/Russia/Turkey:

The United Nations plans to make its first air drops of food aid in Syria, to Deir al-Zor, a town of 200,000 besieged by Islamic State.  Starting Wednesday, UN trucks have been delivering food and medical supplies to 80,000 people in five besieged areas.

Hundreds of Syrian rebels are heading to the front line in northern Aleppo province after crossing from Turkey to reinforce fighters battling Kurdish militia.

The Kurds in this case are the Kurdish People’s Protection Units (YPG), which Turkey considers a branch of the Kurdistan Workers’ Party (PKK) that has waged a decades-long insurgency against it.

So with the above in mind, tensions soared between Russia and Turkey after another terror attack on Turkish soil, another one in the capital of Ankara that killed 28 on Wednesday.  Turkey’s prime minister, Ahmet Davutoglu, said the suicide attack had been carried out by a member of the YPG, but Davutoglu turned his anger on Moscow.

“I am warning Russia once more,” he said in a televised statement, saying that Moscow’s condemnation of the attack was insufficient.  “If these attacks continue, they will be as responsible as the YPG.”

The United States, though, treats the YPG as a partner in the Syrian war, rather than the terrorist group that Turkey claims it is, and since Russia tacitly backs the YPG as well, strikes against the mainstream rebels that Turkey (and Saudi Arabia and the U.S.) support allows the Kurdish militia to advance.

Turkey, and Saudi Arabia, believe Bashar al-Assad must go before there can be any real peace talks, but the fact Russia has been supporting Assad has poisoned relations between Ankara and Moscow.

When you talk about the Kurds, it is complicated and as Davutoglu added, “Turkey reserves the right to take any measure against the Syrian regime,” and “the YPG is a pawn of the regime.”  [Financial Times]

Within hours of the Ankara attack, Turkish air force jets hit what it described as PKK positions in northern Iraq.

“We hope that our allies see that the YPG is an affiliate of the terrorist organization,” Mr. Davutoglu said in his address.

Since last weekend, Turkey has been shelling Kurdish rebels in another theater of operations inside Syria, near its southwest border, where the Kurds attempted to take control of an abandoned air force base.  If successful, they would be able to connect their two cantons in the east and west of Syria, which Turkey has said it would not allow.

Meanwhile, Russian and Syrian airstrikes have been targeting more hospitals and schools in northern Syria, according to a UN human rights spokesman.

Turkey’s foreign minister said the attacks were obvious war crimes, accusing Russia of carrying out the strikes.  Kremlin spokesman Dmitry Peskov dismissed such claims.  Instead Peskov cited Syrian Ambassador to Russia Riyad Haddad as blaming the attacks on the United States.

The airstrikes on at least four hospitals killed at least 50 people, including children.  Two of the four were supported by UNICEF. Doctors Without Borders said one of its hospitals was hit, killing seven.

Finally, a ceasefire was to take effect on Friday.  Needless to say it didn’t.  A resumption of peace talks, slated for Feb. 25, is also out the window.

David Gardner / Financial Times

“After Russian president Vladimir Putin sent his air force into Syria in September, the tide of war turned in favor of Bashar al-Assad, whose regime had started succumbing to Sunni rebels over the summer.  It was plain from the outset that Russia was targeting this threat – not the jihadis of ISIS.  What is abundantly clear now is that Moscow is eliminating any alternative between the regime and ISIS, razing the liberated areas of Syria that might nurture one, and driving out a new surge of refugees who have run out of places to hide.  Mr. Putin is going about this systematically.

“For five years, Syrians have suffered as the Assad regime bombarded hospitals, schools and bakeries, attacked water and power supplies, and obliterated rebel-controlled civilian enclaves.  But much of this barrel-bombing and shelling was indiscriminate.  Russia is discriminating carefully in its targeting of civilian infrastructure.  For Mr. Putin, evidently, Aleppo is no different to Grozny....

“Russia and the U.S. – as well as Iran and Turkey – are storing up decades of trouble through their behavior, as well as betraying the prostrate people of Syria.  The talks steered by Sergei Lavrov, Mr. Putin’s foreign minister, and John Kerry, U.S. secretary of state, in Vienna and New York, Geneva and Munich, were much-needed explorations of a way out of this disaster.  But Mr. Lavrov has been weaving words about transitions and ceasefires as a smokescreen for Mr. Putin’s unbridled bombing – and Moscow makes clear it will keep attacking ‘terrorists,’ if not ISIS.

“Some of Mr. Kerry’s statements are pure Pangloss and Pollyanna.  The unreality of much western reaction makes a piteous contrast to the reality of the rubble to which Russia is reducing Syria’s few remaining hospitals.  German chancellor Angela Merkel said this week: ‘It would be helpful if there was an area in which none of the warring parties carry out attacks by air.’  Yes, wouldn’t it?  Even though the rebel warring party has no air force, let alone air defenses.

“Diplomatic engagement with Russia, necessary as it is, cannot come at the price of turning a blind eye to its war crimes and cynically destructive agenda.  Of course, a ceasefire must be pursued.  But the U.S. and its allies need to match Russian ruthlessness and start protecting Syrian civilians. Mr. Putin’s Russia, already cash-strapped by the collapse in oil prices and sanctions over Ukraine, should at the very least be threatened with the sort of sanctions that brought Iran to the negotiating table.  Of words there have been enough.”

Editorial / Wall Street Journal

“The fall of Aleppo and other rebel enclaves in western Syria will allow Mr. Assad to consolidate his grip on the most fertile and populated part of the country. Next month’s negotiations can then ‘freeze’ the conflict in place, a tactic Russia used to its advantage after its invasion of Georgia in 2008 and last year’s Minsk agreement over eastern Ukraine.  ISIS can be dealt with later, while Mr. Assad can count on U.S. air strikes to degrade ISIS’ capabilities as he deals with his more immediate enemies.

“This isn’t the Russian ‘quagmire’ Mr. Obama predicted last year when Moscow stepped into Syria.  Mr. Putin has consolidated his strategic position in the eastern Mediterranean with a tough but limited military intervention and minimal casualties. He has strengthened ties to Tehran.  He has shown the Muslim world that he’s the power to be reckoned with, which is why Sunni states like Saudi Arabia, Egypt and the United Arab Emirates have backed away from their opposition to Mr. Putin’s gambit....

“The next U.S. president will inherit the wreckage. This includes the betrayal of the Free Syrian Army and the example it sets for other potential U.S. allies; the non-defeat of ISIS; the loss of credibility with traditional allies in Jerusalem, Riyadh and Cairo; Russia’s renewed influence in the region; the improbable victory of a murderous dictator who Mr. Obama once insisted had to ‘step aside’; and the consolidation of an Iranian crescent from Tehran through Baghdad and Damascus to Beirut.

“Add to that the killing of more than 250,000 Syrians [Ed. the Journal should be using the updated figure of 400,000+] and the greatest refugee crisis since the end of World War II, and this is some record.  Mr. Obama might call it success, but George Orwell would have used a different term.”

At a Munich security conference last weekend, Sen. John McCain said a pivotal part of Russia’s strategy was “to exacerbate the refugee crisis and use it as a weapon to divide the transatlantic alliance and undermine the European project.”

At the same conference, Secretary of State John Kerry said: “In some quarters there is pessimism in the air.  I believe we have good reason, actually, to be optimistic about the future...This moment is not as overwhelming as people think it is,” he said.  “We know what needs to be done, and most importantly, we have the power to do it.”  [Wall Street Journal]

That was Saturday.  As you saw from the above, the situation worsened another two- or three-fold the rest of the week.  We truly need Sec. Kerry to disappear, for the sake of all of us.

Editorial / The Economist

“In a war as ugly as the one in Syria, several bleak lessons stand out: the longer it goes on, the bloodier it gets, the more countries are sucked into the vortex and the more unpalatable become the options to stop, or at least contain, the fighting.  But perhaps the biggest lesson is how America’s absence creates a vacuum that is filled by dangerous forces: jihadists, Shia militias and now an emboldened Russia.

“Syria is a nasty complex of wars within a war: an uprising against dictatorship; a sectarian battle between Sunnis and Alawites (and their Shia allies); an internecine struggle among Sunni Arabs; a Kurdish quest for a homeland; a regional proxy war pitting Saudi Arabia and Turkey against Iran; and a geopolitical contest between a timid America and a resurgent Russia.

“Into this blood-soaked mess, Vladimir Putin has thrust himself on the side of Bashara al-Assad and the Shia axis. His air power has transformed the battlefield.  Pro-Assad forces have cut off a vital corridor that resupplied rebel-held parts of Aleppo from Turkey.  Mr. Assad is on the point of encircling what was once Syria’s biggest city. Refugees are again pressing on Turkey’s borders, but many will stay put.  In the diplomatic dance over ceasefires, humanitarian relief and a political settlement, Russia is now setting the terms, much as America did after intervening in the Balkan wars of the 1990s.  Barack Obama’s policy in Syria – to wish that Mr. Assad would go, without willing the means to get him out – has been wretched.  Mr. Assad, it seems, will outlast Mr. Obama.  But the war will not end.  Indeed, it has taken a turn for the worse.

“Turkey is being sucked deeper into the maelstrom.  It has started systematically shelling Syrian Kurds. It bundles them together with the Turkish Kurds, who have rashly resumed their decades-old insurgency inside Turkey.  Yet the Kurds have been America’s best allies against the ‘caliphate’ of Islamic State (IS).  Recently they have tilted towards Russia and Mr. Assad, helping to sever the corridor to Aleppo in an attempt to merge the two Kurdish enclaves along the border with Turkey.

“In support of Turkey, Saudi Arabia has deployed military aircraft.  It has announced war games at home involving Sunni partners such as Egypt, Morocco and Pakistan.  The Saudis have offered to send special forces into Syria with American ones, ostensibly to fight IS. Diplomats talk of a return to ‘Charlie Wilson’s War,’ the operation by America, Saudi Arabia and Pakistan to give Stinger missiles to Afghan groups fighting Soviet forces in the 1980s. Would Saudi Arabia now give Sunni groups anti-aircraft weapons to neutralize Russian air power?

“Most alarming is the risk of war between Turkey and Russia....

“So Syria poses growing dangers to the West: that anti-aircraft missiles will proliferate, allowing jihadists to use them on Western planes; that countries such as Lebanon and Jordan will falter; that another flood of refugees will destabilize the European Union; that NATO could stumble into a war with Russia; that Mr. Putin will be spurred to challenge the West elsewhere; and that he will inspire autocrats everywhere....

“The tragedy of Mr. Obama’s feebleness is that actions that were once feasible – establishing a no-fly zone or creating safe areas – now carry the risk of a clash with Russia.”

Separately, ISIS beheaded a 15-year-old Iraqi boy in Mosul for listening to pop music.  He was discovered by an IS henchman while listening to a portable compact disc player.  As reported by the Jerusalem Post, the boy was detained while he sat inside his father’s shop and “was beaten and tried in a local sharia court, which sentenced him to be executed.”

An Associated Press piece did note that ISIS appears to be faced with a cash shortage and it’s been slashing salaries across the region while releasing detainees for a price.  They have even stopped handing out perks such as free energy drinks and Snickers bars.  In the strongholds of Raqqa and Mosul, IS is being forced to turning to alternative funding streams, including in Libya.

As for the battle to retake Mosul, the Pentagon is saying it will take at least a year before such an offensive is launched because there simply aren’t enough Iraqi forces trained for the operation.  It took years to build up a force to retake Ramadi and Mosul is five times bigger.

Libya: Editorial / Washington Post

“In early 2014, the Obama administration stood by as the Islamic State began to expand from eastern Syria to Iraq.  It watched as the terrorists seized control of city after city, including Mosul, fortified by thousands of foreign volunteers.  By the time U.S. airstrikes finally were launched to prevent Iraqi Kurdistan from falling, the Islamic State had enough territory, economic resources and military equipment to consolidate a formidable base.  Despite 18 months of U.S. bombing, it still stands.

“Now something similar is happening in Libya.  Libyan militants allied with the Islamic State control Sirte, the home town of late dictator Moammar Gaddafi, which lies between the capital, Tripoli, and Benghazi.  At the direction of Islamic State authorities in Syria, foreign recruits are headed to Sirte, where they can build up a new ‘emirate’ without being attacked by Western forces.  The Pentagon says there are now more than 5,000 fighters in Sirte and that they control nearly 200 miles of Libya’s coastline.  They have been attacking Libya’s oil infrastructure, and they aspire to launch attacks on Europe.

“President Obama’s senior national security aides have been telling him, sometimes in public, that military action is urgently needed to stop the consolidation of a powerful new terrorist base.  ‘It’s fair to say that we’re looking to take decisive military action,’ said Gen. Joseph F. Dunford Jr., the chairman of the Joint Chiefs of Staff.  Yet the White House is again waffling: A meeting to consider options late last month ended without decisions. The hesitation risks a repeat of the Iraq debacle....

“Ultimately, a Libyan political solution should not be a prerequisite for action against the terrorist threat. On Tuesday, Mr. Obama acknowledged the problems in forming a government and added that ‘as we see opportunities to prevent [the Islamic State] from digging in in Libya, we [will] take them.’  Those opportunities exist now: The United States and its allies could conduct airstrikes against Sirte and help a Libyan protection force that has been trying to guard oil facilities.  Mr. Obama has tried waiting on the sidelines in Iraq and Syria.  He should not make the same mistake in Libya.”

Well, on Friday, the U.S. struck an ISIS camp in Libya that targeted a senior operative linked to two major terrorist attacks in Tunisia last year.  The attack occurred in an area 50 miles west of Tripoli and killed at least 30 IS recruits, a Western source told the New York Times.

Iraq: Loveday Morris of the Washington Post had a story last weekend on Mosul Dam, which has severe structural problems.

“If breached, it could unleash a 180-foot-high wave down the Tigris River basin and drown more than half a million people, with floodwaters reaching as far as the Iraqi capital, about 280 miles to the south.

“The collapse of Mosul Dam would be catastrophic for Iraq.

“The dam has been called the most dangerous in the world for the past decade. But recent assessments by the U.S. Army Corps of Engineers say it is at ‘significantly higher risk’ of failing than previously thought.”

The dam was built on layers of clay and gypsum, “a soft mineral that dissolves when it comes into contact with water, and the dam immediately began seeping” after the reservoir was filled in 1985.  “Since then, around 100,000 tons of grouting have been poured into the structure to prevent it from collapsing.”

“Meanwhile, a government decision to deprive Islamic State-held Mosul of electricity by blocking the flow of water put additional pressure on the dam as water levels rose.”

U.S. officials have warned the Iraqi government the devastation from a collapse could be “a thousand times worse” than Katrina.

Iran: By this time next week, I may or may not be able to speak to Iran’s elections next Friday, Feb. 26, for both the Majlis (parliament) and the Assembly of Experts.

Separately, Iran has a visitor these days.  Hasan Nasrallah, the secretary general of Hizbullah, is in Tehran for urgent cancer treatments.  According to Lebanese media, he is being treated by doctors from Russia and North Korea.

Lebanon: In a huge blow, Saudi Arabia has suspended two grants worth a combined $4 billion to the Lebanese Army and police over a political dispute (think Sunni / Shia). 

Recall, as I know very well, that Saudi Arabia was a huge supporter of Rafik Hariri, who was assassinated 11 years ago, but the political situation today is beyond being categorized as a mess.

Afghanistan: The UN Assistance Mission here reported Sunday that 2015 was the deadliest year for noncombatants since the agency first began tracking civilian casualties in 2009.

3,545 civilians were killed, a 4% increase from 2014.  733 of the deaths were children.

Russia: Speaking at a security conference in Munich last Saturday, Russian Prime Minister Dmitry Medvedev said the world was in a new Cold War and that the West was to blame.

“NATO’s attitude toward Russia remains unfriendly and opaque and one could go so far as to say we have slid back to a new Cold War,” Medvedev said.  “Sometimes I wonder if it is the year 2016 or 1962.”

His remarks came after NATO Secretary General Jens Stoltenberg used an address to defend NATO’s move to strengthen its defenses, including moving more troops and equipment to countries bordering Russia.  Stoltenberg said that he expected a summer NATO summit in Warsaw would be used “to further strengthen the alliance’s defense and deterrence.”

“Russia’s rhetoric, posture and exercises of its nuclear forces are aimed at intimidating its neighbors, undermining trust and stability in Europe,” he said.  [Kim Hjelmgaard / USA TODAY]

China: I wrote last Friday night, Feb. 12: “A crisis in the South China Sea seems inevitable.”

U.S. and Taiwanese officials then confirmed a Fox News report on Feb. 16 of a Chinese missile deployment in the South China Sea on Feb. 14, with satellite images showing there was no presence on the island on Feb. 3.

Taiwan’s ministry of defense said on Wednesday that China had stationed the missiles on Woody island, which is controlled by China but also claimed by Taiwan and Vietnam.

Secretary of State Kerry (him again) said the missile deployment was at odds with a pledge made by Chinese President Xi Jinping while visiting the White House last year to refrain from militarizing clusters of disputed islands throughout the South China Sea.

“When President Xi was here...he stood in the Rose Garden with President Obama and said China will not militarize in the South China Sea.  But there is every evidence, every day that there has been an increase of militarization of one kind or another. It’s of serious concern,” said Kerry.  [Wall Street Journal]

As I also wrote on Feb. 12, Xi is “not a good guy...at all.  He’s liable to do anything.”

President Obama said on Tuesday that the U.S. military would “continue to fly, sail and operate wherever international law allows.”

A Chinese Foreign Ministry spokesman Hong Kei told reporters today, Feb. 19, that the U.S. was responsible for militarizing the South China Sea; saying that patrols by U.S. military aircraft and Navy vessels along with joint exercises with regional partners had raised tensions and constituted true militarization.

Liu Zhen / South China Morning Post, Feb. 19:

“A commentary published online by state media in China says its forces should fire warning shots or even deliberately collide with U.S. warships sailing close to the Paracel Islands in a disputed area of the South China Sea.

“The commentary says tough action would make an impression on the U.S. and ‘teach it a lesson.’....

“The commentary was carried by a social media account controlled by the overseas edition of the People’s Daily, the Communist Party mouthpiece.

“It said the Paracel Islands, which have been under Chinese control for more than 40 years, were China’s bottom line in defending the South China Sea region.

“China must make its stance clear in the area by taking firmer action against any incursions, the commentary said.”

Editorial / Wall Street Journal

“Chinese leaders have long promised that they have no military ambitions in the South China Sea. So much for that. China has now deployed HQ-9 surface-to-air missiles in the Parcel Islands, meaning that any civilian or military aircraft within 125 miles now risks being shot out of the sky.

“Beijing’s move, which satellite images suggest occurred between Feb. 3 and Feb. 14, coincided with President Obama hosting the first summit of Southeast Asian leaders in the U.S., at the Sunnylands ranch in California.  The Chinese appreciate political symbolism, and the timing couldn’t have been coincidence....

“Mr. Obama’s legacy includes the rise and expansion of authoritarian regimes bent on dominating their regions – Russia, Iran and China.  His successor will have to push back or watch the risks of global conflict multiply.”

Editorial / The Economist

“That China has lifted so many out of poverty and become so powerful so quickly is remarkable.  No less remarkable is how America, the incumbent superpower, has mostly treated China’s rise less as a threat than an opportunity.  However, in the South China Sea, through which about 30% of the world’s trade passes, China risks jeopardizing this benign arrangement.  Its behavior there disdains international law, scares its neighbors and heightens the danger of conflict with some of them and with America itself.  Recalling its own slogans about stability and peace, it should back off.

“The latest provocation is the apparent installation on Woody Island in the Paracel archipelago, south of Hainan, of two launch batteries for surface-to-air missiles. China has not clearly denied this dangerous military escalation, talking instead of its right to ‘limited and necessary self-defense facilities.’  The Paracels are also claimed by Vietnam and Taiwan.  China insists that virtually all the sea belongs to it, citing historical apocrypha.

“It has been building frenetically in the Spratly islands, to the south, creating artificial land on rocks and reefs also claimed by the Philippines, Taiwan and Vietnam.  The construction, like the missiles, flouts the spirit of a declaration China signed in 2002 with the Association of South-East Asian Nations (ASEAN), in which the parties promised to ‘exercise self-restraint’ in the sea.  China has also refused to accept the jurisdiction of a tribunal in The Hague which is adjudicating a case on its claims brought by the Philippines under the UN Convention on the Law of the Sea. If, as seems likely, the tribunal later this year finds in the Philippines’ favor on some counts, China will ignore it.  This is not the global ‘responsible stakeholder’ that America had hoped China would become....

“China may calculate that now is the time, in the final months of an American presidency it sees as weak and averse to confrontation, to create facts in the water that will give it an irreversible grip on the sea.  So rather than yield to Chinese intimidation, America should continue to assert the freedom of navigation and overflight, and do so less ambiguously.  Its friends in the region, habitually scared of upsetting China, should give it more full-throated support.  It is in none of their interests to see the South China Sea, with its important shipping lanes, become a South China Lake.”

North Korea: South Korean President Park Geun-hye said her country will take unspecified “stronger and more effective” measures to make North Korea realize its nuclear ambitions will result only in speeding up its “regime collapse.”

Park was addressing parliament in defending her decision to shut the industrial park in Kaesong that is jointly run with the North.

By week’s end there were reports Pyongyang is planning terror attacks against South Korean leaders.  President Park’s father, Park Chung-hee, president from 1962 to 1979, was assassinated in ’79.

Ukraine: The governing coalition collapsed on Thursday after a second party in two days announced it was leaving the majority.

This is a crisis, with $40bn in aid from the International Monetary Fund hanging in the balance.

The growing opposition is accusing President Petro Poroshenko and Prime Minister Arseniy Yatseniuk of conspiring with oligarch-backed parties in parliament to monopolize power.

On Tuesday, Yatseniuk survived a no-confidence vote, after which the party of former prime minister Yulia Tymoshenko quit the coalition.

But there is some hope a party that left the coalition last year could return to the fold.  That said, a most critical period here.

Separately, David Petraeus and John Herbst / Wall Street Journal:

“In recent weeks, Russian-backed separatists have sharply increased their attacks in Donetsk and Luhansk – a stark reminder that President Vladimir Putin hasn’t given up his designs on eastern Ukraine.

“Mr. Putin invaded Russia’s western neighbor two years ago because he saw its emergence as a stable, democratic country integrated with Europe as a fundamental threat.  While he has scaled back overt Russian aggression, this appears to be a temporary tactic designed to win sanctions relief, even as he ratchets up Russia’s military intervention in Syria.

“In addition to NATO’s recent announcement [Ed. of enhancing its forward presence in eastern Europe], the U.S. and its NATO allies would be wise to bolster Ukrainian deterrence against further Kremlin adventurism, and to make clear that the price of such adventurism for Russia will be high if deterrence fails.  The first step is to provide more effective defensive weapons to Ukrainian forces....

“Ultimately, Russia’s bellicose actions in Ukraine are about more than Ukraine.  By bolstering Kiev, we have the opportunity to reaffirm our commitment to the most elemental rules and principles of post-Cold War Europe, particularly that the sovereignty and territorial integrity of states shall not be breached and conflicts shall be resolved through negotiation not force of arms.  By contrast, failing to respond adequately would very likely be an invitation to further aggression by Russia – in eastern Ukraine, and beyond.”

Nigeria: Reports from here aren’t the most reliable, but it would be encouraging if it’s true Cameroon’s military killed 162 militants from Boko Haram in a battle for a northeast Nigeria stronghold of the terrorists.  The report said only two of Cameroon’s soldiers were killed in an operation spanning Feb. 11 to Feb. 14.

Cuba: President Obama will travel to Cuba next month, March 21-22, and meet with President Raul Castro, thus becoming the first sitting American president to visit The Land of Classic Cars in 88 years.  Obama is betting on personal diplomacy to persuade his Cuban counterpart to open up the economy and respect human rights, which Cuba has failed to do since the two leaders announced in December 2014 that they would move toward normalized relations.  Obama plans to meet with political dissidents as well.

Senator Robert Menendez (D-NJ) said: “To this day, we have not seen one substantial step toward transparent democratic elections, improved human rights, freedom of assembly, or the ability to form independent political parties and trade unions in Cuba. Despite the lack of reciprocity from a despotic and reinvigorated Castro regime, our president is rewarding this oppressive regime with a visit.”

Senator Marco Rubio (R-FL): “Having an American president go to Cuba simply for the sake of going there, without the United States getting anything in return, is both counterproductive and damaging to our national security interests.  You will send the message to the oppressed Cuban people that you stand with their oppressors.”

But for the other side....

Senator Jeff Flake (R-AZ): “For Cubans accustomed to watching their government sputter down the last mile of socialism in a ’57 Chevy, imagine what they’ll think when they see Air Force One.”  [New York Times]

Obama, in a brief exchange on Thursday, said, “It will be fun.”  [Not sure if time for golf has been worked into the schedule.]

Random Musings

--For the Republicans, it’s all about South Carolina today, Feb. 20.  The Democrats have their caucus in Nevada.  Then the GOP has its Nevada caucus on Tuesday, while South Carolina Democrats hold their primary Saturday, Feb. 27.

With that in mind, a poll of Republican primary goers in South Carolina from CNN/ORC had Donald Trump with a 38-22 lead over Ted Cruz, Marco Rubio third at 14% and Jeb Bush at 10%.  Surprisingly, this survey showed Evangelicals voting for Trump over Cruz 42-23.

A Monmouth University poll in the state has Trump leading Cruz 35-19, with Rubio at 17% and John Kasich fourth with 9%.

A Fox News poll in South Carolina has Trump at 32%, followed by Cruz 19%, Rubio 15%, Bush and Carson 9%.  Among Evangelicals, this survey has it 31-23 Trump over Cruz.

But a late NBC/WSJ/Marist poll has Trump only up 28-23 over Cruz, 15% Rubio, 13% Bush.

The CNN/ORC poll of Democrat voters in the Palmetto State had Hillary Clinton with a 56-38 lead over Bernie Sanders.

The Monmouth poll in S.C. has Clinton leading 59-30.

The NBC/WSJ/Marist survey put it at 60-32 Clinton.

In Nevada, it’s a dead heat according to a CNN/ORC survey...48-47 Clinton.

In Nevada among Republicans, the CNN/ORC poll has Trump at a whopping 45%, with Rubio at 19% and Cruz 17%.

In a Quinnipiac University national poll of Republican voters, Trump leads with 39%, his highest ever for this survey, with Rubio at 19% and Cruz 18%.

But then you have this national NBC News/Wall Street Journal poll, conducted after Saturday’s Republican debate, as opposed to the Quinnipiac one that was conducted before, and this has Cruz leading Trump 28-26, Rubio at 17% and Kasich 11%.  No way this is correct and it’s of only 400 registered voters who said they would participate in a GOP primary.  It is the first national poll with Trump second.

A CBS News poll, however, has it Trump 35, Cruz 18, Rubio 12, Kasich 11.

[Kasich should definitely be taking heart in the double digits readings.]

On the Democratic side in the Quinnipiac national poll, Clinton leads Sanders 44-42. 

The NBC/WSJ survey has Clinton ahead 53-42.  A month ago the same poll found her leading 59-34. 

The CBS News poll has it 47-39 Clinton.

But in a Fox News national survey, it’s Sanders 47, Clinton 44.

--Among the lines in Saturday’s Republican debate in South Carolina, Donald Trump confronted Jeb Bush and his brother.

“The war in Iraq was a big, fat mistake.  They lied. They said there were weapons of mass destruction. There were none.”

Bush countered: “While Donald Trump was building a reality TV show, my brother was building a security apparatus to keep us safe.”

Trump then shot back that the destruction of the World Trade Center occurred under George W.’s watch.  The crowd booed.

Trump also called Cruz “the single biggest liar,” after the Texas senator talked of Trump’s liberal policies.

Ohio Gov. John Kasich stayed out of the blood bath.  “People are, frankly, sick of the negative campaigning and I am going to stay positive.”

It’s funny how people view the debates differently and who won, who lost.  Chris Cillizza of the Washington Post, who is good at this kind of thing, thought that Rubio and Bush were winners, with Trump and Carson the big losers.

The writers at The Hill thought Bush, Kasich and Trump were the winners.  I thought it was Trump, Kasich and Rubio.

[Trump’s Howard Stern, 2002, comment on the Iraq war is not an issue at all.]

--Three of Texas’ largest newspapers – the Dallas Morning News, Houston Chronicle and San Antonio News Express – all expressed deep reservations about their hometown senator, Ted Cruz. 

In endorsing Ohio Gov. John Kasich, the Morning News said: “As we’ve written before, continuing obstructionist paths might excite primary voters, but it won’t benefit the nation or the conservative cause.”

The Chronicle, in endorsing Jeb Bush, said: “Cruz, the embodiment of the hard right, wears his disdain for government as a badge of honor. The dislike the man engenders is so intense it’s hard to find a historical precedent for it. Not only do his political opponents detest him, but also his fellow Republicans.  The senator wears his personal and political isolation as another badge of honor, and yet imagine how ineffectual he would be in the White House.  Unable to work even with members of his own party.”

The News Express, which also endorsed Bush, blasted Cruz for his “willingness to push the American economy to the brink of disaster.”  [Enrique Lavin / NJ Advance Media]

--In his Tuesday press conference, President Obama said of Donald Trump’s temperament, “Whoever is standing where I’m standing right now has the nuclear codes with them and can order 21-year-olds into a firefight...

“The American people are pretty sensible.  And I think they’ll make a sensible choice in the end.”

The former community organizer said of all the GOP candidates, “Not a single one of them” is talking about some of the world’s biggest problems.

Trump responded that Obama had done a “lousy job as president” and that he would have defeated him in 2012.

“For him to say that is actually a great compliment,” Trump added.

But back to Obama, he also said this of the presidential campaign.

“I have a lot of faith in the American people. And I think they recognize that being president is a serious job.  It’s not hosting a talk show or a reality show.  It’s not promotion.  It’s not marketing.  It’s hard.  And a lot of people count on us getting it right.

“And it’s not a matter of pandering and doing whatever will get you in the news on a given day. And sometimes it requires you making hard decisions even when people don’t like it, and doing things that are unpopular, and standing up for people who are vulnerable but don’t have some powerful political constituency. And it requires being able to work with leaders around the world in a way that reflects the importance of the office; and gives people confidence that you know the facts, and you know their names, and you know where they are on a map, and you know something about their history. And you’re not just going to play to the crowd back home – because they have their own crowds back home – and you’re trying to solve problems.” [whitehouse.gov]

So spoke one of the five worst presidents in the history of the United States, a man who I struggle to find one thing he got right.

And regarding this last paragraph, I have one word...Syria.  Splice it in like six times within that passage.  If Turkish President Erdogan read the last line, “and you’re trying to solve problems,” he would do so in amazement and think back to 2012 and his cries for help from one Barack Obama that would have prevented 90% of the casualties in the war, and millions of refugees.

--Pope Francis, flying back from his trip to Mexico, weighed in on Donald Trump’s proposal to build a wall along the U.S. border.

“A person who thinks only about building walls, wherever they may be, and not building bridges, is not Christian,” the pontiff said.  “This is not in the Gospel.”

Trump responded that it was “disgraceful” for Pope Francis to question his faith and he went further.

“If and when the Vatican is attacked by ISIS, which as everyone knows is ISIS’ ultimate trophy, I can promise you that the Pope would have only wished and prayed Donald Trump would have been president because this would not have happened,” he said in a statement.

But within 24 hours, both Trump and the pontiff were walking back their statements.  Francis, I imagine, was embarrassed he got sucked into this...and he did indeed screw up.  [God said, “C’mon, man!  You’re better than this.”]

--For Democrats, especially supporters of Bernie Sanders, the issue of the party’s ‘superdelegates’ – delegates not bound by voting results – is a huge one.  Superdelegates are typically governors, members of Congress, and top state party leaders who for now are largely pledged to Clinton, but they can change their opinions come convention time.  Hillary already has a huge lead by virtue of where the superdelegates’ current loyalties lie, despite the fact that after Iowa and New Hampshire, Sanders, by a strict delegate count, should be in the lead; Iowa being a wash, New Hampshire being a rout.  It’s just that the system is rigged for Hillary thus far.

--Maureen Dowd / New York Times

“Hillary started, both last time and this, from a place of entitlement, as though if she reads her resume long enough people will surrender. And now she’s even angrier that she has been shown up by someone she considers even less qualified than Obama was when he usurped her place.

“Bernie has a clear, concise ‘we’ message, even if it’s pie-in-the-sky: The game is rigged and we have to take the country back from the privileged few and make it work for everyone.  Hillary has an ‘I’ message: I have been abused and misunderstood and it’s my turn.

“It’s a victim mind-set that is exhausting, especially because the Clintons’ messes are of their own making....

“Hillary knew that she could count on the complicity of feminist leaders and Democratic women in Congress who liked Bill’s progressive policies on women.  And that’s always the ugly Faustian bargain with the Clintons, not only on the sex cover-ups but the money grabs: You can have our bright public service side as long as you accept our dark sketchy side.

“Young women today, though, are playing by a different set of rules.  And they don’t like the Clintons setting themselves above the rules.”

--Charles G. Koch, chairman and CEO of Koch Industries / Washington Post

“As he campaigns for the Democratic nomination for president, Vermont Sen. Bernie Sanders (I) often sounds like he’s running as much against me as he is the other candidates.  I have never met the senator, but I know from listening to him that we disagree on plenty when it comes to public policy.

“Even so, I see benefits in searching for common ground and greater civility during this overly negative campaign season. That’s why, in spite of the fact that he often misrepresents where I stand on issues, the senator should know that we do agree on at least one – an issue that resonates with people who feel that hard work and making a contribution will no longer enable them to succeed.

“The senator is upset with a political and economic system that is often rigged to help the privileged few at the expense of everyone else, particularly the least advantaged.  He believes that we have a two-tiered society that increasingly dooms millions of our fellow citizens to lives of poverty and hopelessness.  He thinks many corporations seek and benefit from corporate welfare while ordinary citizens are denied opportunities and a level playing field.

“I agree with him.

“Democrats and Republican have too often favored policies and regulations that pick winners and losers.  This helps perpetuate a cycle of control, dependency, cronyism and poverty in the United States....

“I applaud the senator for giving a voice to many Americans struggling to get ahead in a system too often stacked in favor of the haves, but I disagree with his desire to expand the federal government’s control over people’s lives. This is what built so many barriers to opportunity in the first place....

“When it comes to electing our next president, we should reward those candidates, Democrat or Republican, most committed to the principles of a free society.  Those principles start with the right to live your life as you see fit as long as you don’t infringe on the ability of others to do the same.  They include equality before the law, free speech and free markets and treating people with dignity, respect and tolerance.  In a society governed by such principles, people succeed by helping others improve their lives.”

--A USA TODAY/Suffolk University poll found that in a hypothetical race with Donald Trump and Bernie Sanders, Michael Bloomberg does not fare well.  Trump was chosen by 37% of likely voters, Sanders by 30% and Bloomberg by 16%.

Without Bloomberg in the mix, Trump and Sanders were in a dead heat – 44-43.  Bloomberg drew 13 points from Sanders and only seven from Trump.

In a Wall Street Journal/NBC News survey, in a three-way match-up, Sanders would win 43%, Trump 33% and Bloomberg the same 16%.

Boy, quite a difference in the two re Trump and Sanders.

In a head-to-head between Sanders and Trump, Bernie wins 53-37, so Bloomberg would siphon 10 points of support from Sanders and four points from Trump in this one.

Bloomberg has said he’ll wait until after Super Tuesday, March 1, to see how things are shaking out at that time, but if the above is reflective of where Bloomberg would stand in such a three-person race, he won’t run.

--Justice Antonin Scalia died last Saturday at the Cibolo Creek Ranch, a luxury compound located about an hour from the Mexican border and about 40 miles south of Marfa.  It was evidently a rather chaotic scene when his body was discovered, made worse by the fact it took hours to find a justice of the peace due to the remoteness of the resort, and then when one arrived, she pronounced Scalia dead of natural causes without seeing the body and decided not to order an autopsy.

Scalia’s body was taken to a funeral home a full 3 ½ hours from the ranch, which would be like going from New York to Baltimore (without traffic).

President Obama, speaking from a hotel in Rancho Mirage, where he was hosting a summit of Asian leaders, said, “I plan to fulfill my constitutional responsibilities to nominate a successor in due time.  These are responsibilities that I take seriously, as should everyone.”

Senate Majority Leader Mitch McConnell of Kentucky immediately issued a statement that “the American people should have a voice” in the process, and the vacancy should be filled by the winner of the November election.

One thing was clear last weekend; Scalia’s death had the potential of roiling the presidential campaign.

Additionally, in early March, the court is to hear arguments in an abortion case from Texas, one dealing with President Obama’s immigration orders, and another concerning public employee unions and the fees they charge nonmembers.

By midweek, the mood among some Republican senators was changing in terms of obstructing Obama’s selection to replace Scalia.  Judiciary Committee chairman, Sen. Charles Grassley (R-Iowa), who initially agreed with McConnell’s take, said he wouldn’t rule hearings out.

“I would wait until the nominee is made before I would make any decisions.  In other words, take it a step at a time.”

North Carolina Republican Sen. Thom Tillis, a member of the Judiciary panel, said Republicans risked “(falling) into the trap of being obstructionists” if they rejected Obama’s pick out of hand.

Other Republicans, especially those in tight re-election battles, are backing off McConnell’s initial pledge.  So it’s a divided party.

The problem is the timing.  It’s February, not July.

Kathleen Parker / Washington Post

“As Republican presidential candidates invoke Supreme Court Justice Antonin Scalia’s legacy, all insisting that his suddenly vacant seat shouldn’t be filled until a new president is in place, it is helpful to ask: What would Scalia do?

“First, Scalia would read the law and, without much chin-stroking, recommend the obvious intent of Article II, Section 2 of the Constitution, which reads: ‘[The president] shall nominate, and by and with the advice and consent of the Senate, shall appoint...judges of the Supreme Court.’

“See?  That wasn’t complicated.  And the Senate can always a reject a nominee. Yet Majority Leader Mitch McConnell (R-Ky.) made it clear that no Supreme Court nominations would get to the floor. Somewhat less rigid, Sen. Chuck Grassley (R-Iowa), chairman of the Judiciary Committee, has said he’ll wait to see who the nominee is before deciding whether to convene a hearing.

“All Republican candidates have expressed agreement with McConnell, with Donald Trump being the most vocal and least nuanced: ‘Delay, delay, delay,’ he said inimitably at Saturday’s debate in South Carolina, just hours after the nation learned of Scalia’s death....

“(Republicans) have decided that, at least on this matter, the people should have a voice.  Inarguably, with three justices likely to retire during the next presidency and Scalia’s seat now empty, the stakes couldn’t be higher.

“But, if you’ll pardon this intrusion of logic, haven’t the people already had a voice?  Didn’t a majority of the people reelect President Obama, and doesn’t he have nearly a year left to serve out his term? Lame duck doesn’t mean dead duck – and this president’s still quacking....

“So why would the GOP, professed stewards of original intent, seek to thwart the Constitution’s clear purpose? Again, not complicated....

“Republicans are playing with fire. Is this really a precedent they wish to set?  Which of these candidates in the fourth or eighth year of his presidency would surrender his own nominating powers to a successor? And, finally, what if the next president is Hillary Clinton or Bernie Sanders?

“The GOP’s calculation, apparently, is that the greater risk lies in Obama’s nominating a reasonably moderate liberal who passes all the usual tests that Republicans can’t rationally block. If Obama were feeling frisky, he might select a Hispanic or Asian judge, thus helping ensure that the Republican ‘Big Tent’ collapsed from the weight of emptiness.

“All things considered, it may seem wiser to avoid the advise-and-consent process, but hypocrisy takes no prisoners.  You can’t attach yourself to Scalia’s originalist virtues and also ignore the rule of law he so passionately defended.  Scalia’s advice might be his own reflections on being a good and faithful judge:

“ ‘You have to resign yourself to the fact that you’re not always going to like the conclusions you reach.’”

--Jonah Goldberg / New York Post

“In Springfield, Ill., last week, President Obama commemorated the ninth anniversary of his bid for the White House.  He admitted that one of his ‘few regrets’ was his inability ‘to reduce the polarization and the meanness in our politics.’

“To conservative ears, Obama’s comments fell somewhere between risible and infuriating.  Obama has always done his best to demonize and marginalize his opponents.  Either the president honestly cannot see that, or he’s cynically pretending that the fault lies entirely with his critics. If only there were some way to figure out whether he’s sincere.

“Well, let no one say the moral arc of the universe doesn’t bend toward second chances.

“Just a few days after Obama’s remarks, Supreme Court Justice Antonin Scalia died. Scalia was not only one of the most gifted writers and intellectuals to ever don the robe, he was also a founding father of the originalist counterrevolution and the elder statesman of the court’s conservative wing.

“So it’s no wonder conservatives should grow instantly queasy at the thought that Obama will replace him with yet another high priest of the cult of the ‘living Constitution.’

“Already, partisans are sharpening their spears for what could easily be the meanest and most polarizing nomination battle in modern American history.  It will get ugly, very ugly....

“Within 48 hours of the news that Senate Majority Leader Mitch McConnell would block any nominee Obama sent his way, New York Times editorial writer Brent Staples opined on Twitter, ‘In a nation built on slavery, white men propose denying the first black president his constitutional right to name Supreme Court nominee.’

“Never mind that this would be Obama’s third such appointment, Staples’ tweet is but a drop in the river of poison to come....

“On the Democratic side, some are claiming that the GOP would be violating a sacred and inviolable norm by preventing another Obama appointee. That’s ridiculous on its face.  Democrats have been blowing up the appointment process piecemeal since they turned Judge Robert Bork’s last name into a verb back in 1987....

“Sen. Charles Schumer (D-NY) gave a blistering speech in 2007 vowing to do everything he could to prevent President George W. Bush from appointing any more conservatives to the bench. Schumer said John Roberts and Samuel Alito were quite enough for one president.

“Switch the names in that speech from Roberts, Alito and Bush to Elena Kagan, Sonia Sotomayor and Obama, and you have McConnell’s position now.

“Any claim that Republicans are the first to break the peace is as absurd as the suggestion that Obama is blameless for the polarization and meanness in our politics.”

So Friday, in a Washington Post op-ed, Sens. McConnell and Grassley jointly wrote in part:

“No one disputes the president’s authority to nominate a successor to Scalia, but as inconvenient as it may be for this president, Article II, Section 2, of the Constitution grants the Senate the power to provide, or as the case may be, withhold its consent.

“It was interesting to see Senate Minority Leader Harry Reid (D-Nev.) write in The Post just a few days ago that ‘the Senate’s constitutional duty to give a fair and timely hearing and a floor vote to the president’s Supreme Court nominees has remained inviolable.’

“But that’s not what he said on the Senate floor about judicial nominees when a Republican was in the White House.

“ ‘The duties of the United States Senate are set forth in the Constitution of the United States.  Nowhere in that document does it say the Senate has a duty to give presidential nominees a vote.  It says appointments shall be made with the advice and consent of the Senate.  That’s very different than saying every nominee receives a vote.’

“ ‘The Senate,’ he said then, ‘is not a rubber stamp for the executive branch.’

“Indeed, this is the kind of logic that led more than two dozen Democratic senators...to vote to deny President George W. Bush’s nominee to the Supreme Court, Samuel Alito, an up-or-down vote.

“That was when then-senator Obama seemed to have a very different, and very robust, appreciation for the Senate’s constitutional authority....

“Even if some Democrats may be having amnesiac experiences today, it’s clear that concern over confirming Supreme Court nominations made near the end of a presidential term is not new.

“We also know that Americans issued a stinging rebuke to this president and his policies in our latest national election, delivering a landslide for the opposition party as they handed control of the Senate to Republicans in 2014.

“Given that we are in the midst of the presidential election process, we believe that the American people should seize the opportunity to weigh in on whom they trust to nominate the next person for a lifetime appointment to the Supreme Court. It is today the American people, rather than a lame-duck president whose priorities and policies they just rejected in the most-recent national election, who should be afforded the opportunity to replace Justice Scalia.”

On Scalia’s legacy....

Editorial / Wall Street Journal

“Antonin Scalia’s death at age 79 on Saturday leaves a void on the Supreme Court that will in many ways be impossible to fill.  For some 29 years he defended the original meaning of the Constitution against the legal fads and inventions of more political Justices, bequeathing a judicial legacy even in dissent that will carry long into the future.

“Justice Scalia may have been more consequential than any Justice whose jurisprudence so rarely carried a majority of the Court.  He was appointed by Ronald Reagan in 1986 when he and we anticipated a conservative restoration on the bench.  But mistakes by GOP Presidents and the confirmation defeat of Robert Bork kept Justice Scalia in the minority for too much of his tenure.  He also found himself in dissent more often than he would have liked when judicial conservatives like Chief Justices William Rehnquist and John Roberts chose to behave like politicians more than judges....

“Some of Justice Scalia’s greatest opinions were in dissent because his wit and intellect undressed the majority’s logic.  His solo dissent in 1988 in Morrison v. Olson, which upheld the independent counsel statute, is a classic and has been vindicated by history.

“ ‘This wolf comes as a wolf,’ he wrote, as he took apart the majority’s argument that the power to prosecute could be separated from the power of the Presidency under the Constitution.  Only after Bill Clinton’s impeachment did progressives see the wisdom of Justice Scalia’s opinion, even if they still wouldn’t give him credit.

“Justice Scalia’s originalism was above all rooted in his faith in self-government, the right and ability of the people to make their own value judgments. As he put it in dissent in 1992 in Planned Parenthood v. Casey, the abortion case in which Justices Anthony Kennedy and Sandra Day O’Connor indulged their weakness for judicial supremacy:

“ ‘As long as this Court thought (and the people thought) that we Justices were doing essentially lawyers’ work up here – reading text and discerning our society’s traditional understanding of that text – the public pretty much left us alone.  Texts and traditions are facts to study, not convictions to demonstrate about.  But if in reality, our process of constitutional adjudication consists primarily of making value judgments; if we can ignore a long and clear tradition clarifying an ambiguous text...then a free and intelligent people’s attitude towards us can be expected to be (ought to be) quite different.’....

“His vacancy should be filled by the next President.  The public would know the seat is part of the election stakes, and the Senate would honor Justice Scalia’s legacy by shielding the Court from the worst of America’s rancorous political divisions.”

George F. Will / Washington Post

“Scalia lived 27 years after the person who nominated him left office, thereby extending the reach of Ronald Reagan’s presidency and reminding voters of the long-lasting ripples that radiate from their presidential choices.  A teacher, wrote Henry Adams, attains a kind of immortality because one never knows where a teacher’s influence ends.  Scalia, always a teacher, will live on in the law and in the lives of unnumbered generations who will write, teach and construe it.”

--There was a disturbing court case in California, with three high school students from China sentenced in Pomona court on Wednesday for their roles in the kidnapping and assault of another Chinese teenager.

These were so-called parachute kids from China who attend high school in Southern California while their parents remain back home.

The students, who have been in jail since the March 2015 incident, will receive six to 13 years.  The victim had been forced to wipe cigarette butts and ice cream from the floor of an ice cream parlor with her bare hands, was stripped naked, kicked with high-heeled shoes, slapped and burned with cigarettes...outright torture.

As reported by the Los Angeles Times’ Cindy Chang: “The teens are among thousands of young people from China who attend high schools in California without much parental supervision....

“The students typically live in private homes, paying their hosts for room, board, transportation and substitute parenting.  For them, living in the U.S. is a chance to learn a new language and culture and to escape China’s ultra-competitive college-entrance exams.

“Some thrive in their new environment and go on to colleges such as UC Berkeley and UC San Diego.  For others, struggles with dating, friendships or school can spiral out of control without the steadying influence of parents and other family members.”

--Historian John Steele Gordon reviewed two new books about George Washington for the Wall Street Journal, recommending both – “First Entrepreneur” by Edward J. Lengel, and “George Washington’s Journey” by T.H. Breen.

In the latter, Breen writes of Washington’s two trips through the 13 states to help bring the new federal government to the attention of the people.

Washington knew how fragile the new union was and he set out to sell the people on our institutions.  He also knew he was the most famous American and it was up to him to symbolize the union and bring it to life for Americans from Georgia to New Hampshire.

The roads were awful and Washington insisted on staying in public inns with bad beds and terrible food.

On his first trip, he traveled from Mount Vernon to New York City to be inaugurated and he was astonished by the crowds that greeted him.  “As he crossed into Pennsylvania, he was greeted by the local militia, mounted on horseback and enduring the pouring rain.  Washington didn’t like the image of them getting wet while he rode in his coach.  He quickly secured a large white horse and rode with the troops.”

And I loved this anecdote from Breen’s book, per John Steele Gordon:

“When outside of Salisbury, N.C., Washington, on horseback, stopped at a house to ask for water. The 12-year-old girl who answered the door complained that she was home alone – the rest of her family had gone to town to see the president.  ‘I do so wish I could see him,’ she told him.  Washington, taken aback, said simply: ‘General Washington is before you.’”

---

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

God bless America.  May we never forget the greatness of George Washington and Abraham Lincoln.

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Gold $1226
Oil $29.64

Returns for the week 2/15-2/19

Dow Jones  +2.6%  [16391]
S&P 500  +2.8%  [1917]
S&P MidCap  +3.5%
Russell 2000  +3.9%
Nasdaq  +3.9%  [4504]

Returns for the period 1/1/16-2/19/16

Dow Jones  -5.9%
S&P 500  -6.2%
S&P MidCap  -6.6%
Russell 2000  -11.1%
Nasdaq  -10.6%

Bulls  26.5
Bears  39.8 [Source: Investors Intelligence...last week I noted that the 24.7 bull reading was the lowest since two readings on Nov. ’08 and Mar. ’09, the latter representing the bottom.]

This week marks 17 years of StocksandNews.    Thank you for your support.

And thank you to Dr. Bortrum and, earlier, Harry Trumbore, for their contributions.

Brian Trumbore

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