24 June 2018

Is Separating Children From Their Parents Trump's Katrina Moment?

After weeks of horrible pictures and video clips about ICE thugs torturing migrant families and kidnapping their children, the Orange Man relented.

Well, sort of.

But can we claim that this was a big deal for his base, as did the former New York Times editor and current Guardian columnist Jill Abramson, that the new policy of taking away children and toddlers from their families and putting them in metal cages was Donald Trump's Katrina moment.

She is adamant about it.

I, on the other hand, don't think so.

There is absolutely nothing Donald J. Trump could do that would turn his base against him.


He famously said:
“I could stand in the middle of Fifth Avenue and shoot somebody and I wouldn’t lose any voters”
And he was right.

You could have a clip of him having sex with a minor and the evangelicals would rush to call him a man of God.

You could show him in that Moscow hotel with some sort of golden shower situation, Republicans would applaud him for his unconventional hair growth techniques.

You could prove that he is milking the presidency for personal economic gain and his base will praise him for his business acumen.

Well, they are already doing that last one.

There are two reasons for that.

First, that's because for the Republican party voters Trump is the Savior.

He is the man who put black and brown people down (literally and figuratively), put women in their place and restore the good old days when blacks were called with the n-word, Mexicans were wetbacks and women knew that the kitchen was their sole domain.

Plus and perhaps most importantly, in a polarized society, he knows how to ridicule libturds and kick them in the teeth.

Did I mention that the Republican base is racist? They are.

African Americans and Hispanics are not really human in their eyes. Remember, for them, the elegant and brilliant and supremely accomplished Michelle Obama (Princeton and Harvard Law School alumnus) was an ape on heels.

Forced separation of Mexican toddlers from their mothers is nothing to them.

Trump's first campaign manager Corey Lewandowski was on Fox News recently and when they mentioned a ten year old girl with Down syndrome was separated from her parents, his response was "womp, womp."

Hilarious, right? A frightened, handicapped child is so funny when they are Mexican.

There is more.
In recent days, abuse claims have surfaced about how migrant children have been detained at two centres. 
Juveniles held in a detention centre in Virginia say they were handcuffed, beaten, left nude in concrete cells and locked in solitary confinement, the Associated Press reported.
Some have said guards strapped them to chairs with bags over their heads.
Can you say, Vel" d'Hiv Roundup?

I sense you disagree with my characterization of GOP voters.

Well, according to the most recent Gallup poll as reported by FiveThirtyEight,
Trump does have near-ironclad support (close to 90 percent approval, according to Gallup) among self-described Republicans nationally.
See what I mean? 90 percent.

More importantly, a clear majority of Republicans approve of the separation of children from their parents.
A strange thing happened on the way to a predicted universal condemnation of Mr Trump's policy of separating children from parents who cross the US-Mexico border without documentation. It turns out Republican voters like it. 
According to a recent Quinnipiac poll, while 91% of Democrats and 68% of independents oppose separating asylum-seekers and others in the US illegally from their children, 55% of Republicans support it. 
Far from being Trump's Katrina moment, this is his victory lap.

Trump voters adore him because he got rid of the dog-whistle.  He was the first openly racist presidential candidate and Republicans love him for that.

That is why the GOP will never abandon him, He is their wet dream.

The second reason is the media coverage of all things Trump.

Trump voters get their news from Fox. Fox is an echo chamber. They don't mention children chained to walls or sleeping on concrete floors or the fact that none of the kidnapped 2300 kids will ever be returned to their parents.

If you watch Fox News they are on a cushy summer camp having fun.
Fox News host Laura Ingraham called the detention centres "essentially summer camps", and praised Mr Trump for "doing what we should have been doing all along, prosecuting all border crashers". 
Conservative author Ann Coulter called the children "child actors weeping and crying" on TV networks.
But it is not just Fox News. The so called liberal media is guilty of helping the Trump agenda by not challenging his lies.

For weeks, Trump claimed that this cruel policy was a legacy of the Democrats and he was helpless to change it. Everybody knew that this was a huge lie as it was something enacted by his KKK-loving garden gnome Attorney General Jeffrey Beauregard Sessions.

But you wouldn't know this if you were reading about it on BBC News. This was a Trump tweet.

This is how BBC explained it.
There is no law that mandates separating children from parents who cross the border illegally. 
In 1997, Democratic President Bill Clinton signed the Flores Settlement law that required unaccompanied minors who arrive in the US to be released to their parents, a legal guardian or an adult relative, If no relatives are available then the relevant government agency can appoint an appropriate adult to look after the child. 

And in 2008, Republican President George W. Bush signed an anti-trafficking statute that requires unaccompanied minors to be transferred out of immigration centres within 72 hours. Neither of these recommends separating families.
Basically, anything and everything except to say that Trump is not telling the truth. And the piece was entitled "Reality Check."


You so care don;t U 
Another excellent example is the jacket Melania chose to wear to visit a children detention center.

I Really Don't Care, Do U? said her vetement.

Somehow, most media outlets pondered whether this was a hidden message.  This was so hard to decipher.

What could it mean?

BBC provided five different explanations.

I am not kidding.

Guardian columnist Arwa Mahdawi, questioned in an article entitled "the great Melania mystery, does she really care?"

Who could tell? The message was so scrambled.

The Independent was equally perplexed. They wondered "Why didn't someone stop Melania Trump from wearing that 'I really don't care' jacket?"

Well, can you imagine the shitstorm if Michelle Obama went to a similar event with this outfit?
On his late-night show, comedian Stephen Colbert asked a version of the question reverberating around political Washington: “How many people would get fired for this at a normal White House? One? Five? The entire executive branch? ... People who were supposedly on her side let her get on a plane with a jacket that said, ‘I really don’t care, do you?’”
In Melania's case, her spokespeople said there was no hidden message and most media outlets reported that.

Now, can you see the message?

If you can, you are are so biased.

Shame on you.

It is just a jacket.

Donald Trump is what you get when you put together a rabidly racist electorate with a meak media.

So, no, this is not his Katrina moment.

And he will never have a Katrina moment as long as Fox News exists and the rest of the media will give him a free pass on every lie.

12 June 2018

Turkish Elections and Why the Opposition Should Hope for an Erdogan Win

It's not for nothing that I am your resident contrarian.

My Turkish friends are furious about this statement. Especially now that some analysts seem to believe that Erdogan might lose these elections.

They keep reminding me that Tayyip Erdogan is a corrupt bully who destroyed the country's institutions to pave the way for an unchallenged one-man rule and ask me why they should hope for him to win again.

There are three very good reasons.

The first one is the fact that Erdogan would never relinquish power and would do anything, including killing scores of people, to remain president. He had done it before, ask the Kurds.

The second reason is the looming economic crash from which there is no escape. Any government will be sitting on a ticking time bomb.

Thirdly, Erdogan destroyed all the major institutions of the country and filled them up with his poorly educated and unqualified supporters. Essentially, Turkey is ungovernable.

This is the end of the Erdogan model and I would rather that he stayed in power to face the consequences of his policies and the major upheaval that will ensue. Besides, this is the only way to avoid a future Erdogan.

Let me explain my thinking.

A Revolutionary Guard Called SADAT

As I said, Erdogan will never relinquish power willingly. If his private polling is in line with the outlier poll I mentioned in my previous post (indicating that Erdogan would lose against Good Party leader Meral Aksener in the second round) he would never allow the elections to take place.

To do so is very easy.
Adnan Tanriverdi

Erdogan has been building up a private militia called SADAT. It was created by Adnan Tanriverdi, a retired brigadier general who was expelled from the army in 1997 for his Islamist views. The organization promotes itself as a defense consultancy but it is much more than that.

SADAT is fashioned after Iran's Islamic Revolutionary Guard Corps (IRGC) i.e. unlike the military which is loyal to the state, SADAT is loyal to the Dear Leader and his regime. For instance, there are eyewitness accounts about SADAT snipers killing people during the botched coup attempt on 15 July 2016.

Tanriverdi is Erdogan's principal military adviser and reportedly he has more influence than the Chief of General Staff. There are credible allegations that SADAT was training ISIS and other terror groups in Syria. They are also quite active in agitating Turks in Europe and they seem to have a hand in recruitment for radical Islamist groups.

If Erdogan's internal polling shows that he might lose, all he needs to do is to direct SADAT goons to start some  street violence in pro-opposition districts in large cities and to have them kill a large number of people.  You may be surprised to learn that extrajudicial killings are no longer a crime  in Turkey.

Next thing you know, he declares the suspension os the elections.

Erdogan is fully cognizant that if his opponents ever get the opportunity, they will uncover all his corrupt dealings and punish him, his family and his entourage very severely. He simply cannot afford to let go of power.

But lets, for the sake of the argument, envisage a scenario where he lost the elections and agreed to step away.

I can categorically tell you that, regardless of its composition, the new government is doomed to fail.

A Crumbling Economy

Turkish economy is about to collapse as it is facing a perfect storm.

The economy is built on borrowed money and a lot of it is short term capital. In a global economy where the Feds increase interest rates (as they are expected to so again later in the year) the dollar is rushing back home, creating a liquidity crisis for the so called emerging markets.

Within that category, Turkey is the worst hit because of its exceptionally weak economic fundamentals.

To begin with, it has a huge corporate debt. As of April 2018, corporate debt was 70 percent of the GDP.

A little over half of that is in foreign currency. Turkish Lira has lost 20 percent of its value since the beginning of the year (40 percent in 2 years and 124 percent in 5 years). As one brokerage put it "each 1 cent depreciation in the currency adds about 5 billion liras to the cost of Turkey’s foreign borrowings."

Very few companies can withstand that kind of profit erosion. As a result, companies that are previously considered too-big-to-fail, began to default or ask banks to restructure their debts. Two recent examples:
On Saturday, Hurriyet newspaper revealed that Dogus Holding, one of Turkey’s largest conglomerates, was in talks with several banks to restructure TL23.5bn ($5.81bn) in debt. Just in September last year, Turkey was still dealing with its largest debt default, Otas, on a $4.75bn loan.
There is also Yildiz Holding, the owner of Godiva chocolates and McVitie's biscuits looking for a $7 billion loan, the largest ever in Turkey.
Turkish food giant Yildiz Holding is to restructure $6.5 billion of its $8.5 billion in debt and the refinancing could be completed by the end of next week, two people familiar with the matter said on Wednesday.
In global markets, Turkish banks are seen as high risk institutions and they are having a hard time raising funds. Fitch has just placed 25 Turkish banks on watch negative citing risks to performance, asset quality and liquidity.

Moreover, the banking sector is holding its breath about the fine to be imposed on Halkbank. If, as predicted, the fine is $30 billion and over, you can forget about Turkish banks being able to raise funds for a good while.

This is happening at a time when there is not much money in Turkey's coffers.

Currently, Turkey's foreign debt is a little over $450 billion and to service it, it needs $188 billion in the next 12 months. Add to that $50 billion to finance a current account deficit of 6.5 percent of GDP (which shot up by 35.6 percent last April to hit almost $7 billion for the month) and you can see the enormity of the problem.

Ostensibly Turkey's Central Bank has roughly $100 billion in its foreign currency reserves. But that might be a major overestimate. Some of that money is in gold and a good chunk of it is commercial bank reserves deposited there. Analysts from UBS and other banks estimated (in 2017) that the real figure is closer to $35 billion and I know some analysts who put it even lower.

There is one more threat to the Turkish banking sector and that is the real estate bubble. Turkey's economic growth was largely fuelled by construction. With increased demands, construction companies rushed to build residential and non-residential buildings and banks happily provided financing. As long as prices went up and interest rates stayed flat, the formula worked.

One of the ways banks kept interest rates flat was to raise their funds abroad. With both the Dollar and Euro having a low interest rate, they could charge a higher domestic rates and make a healthy margin. In fact, they were so confident that things would stay the same, they sold long term (10-15 years) fixed rate interest mortgages. That encouraged further demand and led to even more construction.

When foreign currency interest rates started to creep up (and domestic rates shot up) those long term loans became a major liability. The banks saw their margins disappear and started losing money.

But now the construction sector is in deep trouble. One analyst is expecting serial bankruptcies. This is partly because construction companies are unable to fund their projects and have a hard time collecting the money they are owed. Currently, they survive with a barter system -a percentage of the building in exchange for materials to build it- but it is not tenable and industry insiders warn against a serious implosion in the second half of the year.

When construction sector loans start defaulting Turkish banks will be in serious jeopardy.

And that is not all.

Inflation hovers around 12 percent (and this is despite changing the measuring basket in an effort to get a lower figure) and it is rising.
[A]n inflation report showed consumer prices rose 12.15 percent in May from a year earlier, with the worst core reading on record and producer prices advancing more than 20 percent.
Normally, faced with similar situations, Central Banks hike up interest rates. That cools off the economy, reduces demand and gets inflation under control. And it also supports the currency.

However the Turkish Central Bank has been unable to do that because Erdogan is opposed to raising interest rates. He summoned the Chair of the supposedly independent Central Bank to his party headquarters to dress him down about "interest rates [being] the mother and father of all evil"

He is convinced that the best way to fight inflation is to lower interest rates. When he recently shared this rather unconventional axiom to money managers in London they laughed him off.

Still, when the Lira hit 4.92 against the Dollar in May the Bank had to move in to prevent the psychologically traumatic 5 Lira barrier and raised interest rates by 300 points. Which meant  a hike from 13.5 percent to 16.5 percent. It wasn't enough: four days ago, the Bank raised it again by 125 basis points to reach 17.75 percent.

But it was too late. Despite a initial rally, the Lira did not recover and the Dollar is still hovering around 4.52 and Moody's just threatened to lower Turkey's credit rating again (last downgrade was in March to Ba2, which is "junk" category).

That would force Turkey to pay a significant risk premium for any money coming into its banks.

In fact, the situation is so bad that more than one analyst warned that Turkey will be the ground zero for the next global debt crisis. Famed economic historian Russell Napier made the same prediction recently. And famous Harvard economist Kenneth Rogoff admitted the plausibility of that scenario. The fear is not that about the $330 billion foreign bank exposure in Turkey. They worry that a Turkish default could trigger a chain reaction involving Argentina, Brazil and even Italy.

In any event, whoever wins the elections, they will have two options. They will either hike up interests rates dramatically or let inflation soar.

If they choose the first solution, that would destroy the construction sector which is sitting on a glut of unsold buildings and they will bring down the banks that financed them. Moreover, higher rates would make credit very expensive, severely slowing down economic activity. That in turn will raise the already double digit unemployment to new heights.

If they choose the second solution, that is keep rates low and let inflation go crazy, this will lead to rapidly increasing prices and will decimate people's purchasing power. Turkey already went through 100 percent inflation rates in the 1980s  and people will not take this lying down. High inflation will also push foreign currency up making imports prohibitively expensive.

If the opposition wins and they choose one or the other option they will be blamed for people's economic woes. I can easily foresee major street protests (helped by SADAT) to clamor for new elections. Erdogan will return triumphant and that will be that.

An Ungovernable Country

Turkey's economic problems are well known. What is not generally discussed is the dismal shape of its institution.

Erdogan's early success was largely credited to the technocrats belonging to Fethullah Gulen's Hizmet movement. They ran the economy and staffed the senior positions in state enterprises.  For instance, the incredible success of Turkish Airlines owed a lot to their managerial know how. The carrier maintained an annual 10 percent growth for a decade and remained profitable. It was elected Europe's best airline for many years and had the lowest cost profile among large carriers.

Since 2013, Erdogan has been removing these technocrats and replacing them with his own pitifully underqualified supporters. Just to use the same example, 8,000 people were fired or pushed to early retirement at Turkish Airlines. The new managers reversed the trend the airline went "from big profit to big loss."

The same thing happened with the army, judiciary, general state bureaucracy, schools and universities and any institution you can name as Erdogan got rid of anyone who could represent a challenge to his rule.

A new government will have to run the country without the participation of these institutions. And that is not a tenable position.

Replacing Erdogan's cronies would take a long time and in many cases, the previous staffers either left the country or are too broken up about their treatment to be able to make a reasonable come back.

So, while seeing Erdogan defeated would put a smile on my face, I would much rather have him dealing with the inevitable chaos after the elections.

31 May 2018

Turkish Elections and Why Erdogan Might Lose

Not many Western media outlets are covering the upcoming Turkish elections.

And since they might end up with a major upset, I thought I gave you a brief summary.

In a second post, I will outline the reasons why I think the opposition should hope for an Erdogan win.

Let's start with the elections.

Actually, there are two elections, the first one is to elect an executive president ostensibly styled after the American presidency as it exists in the mind of Donald J. Trump, al-Sisi be damned.

You know, someone who controls all three branches of government and, of course, the media.

Those elections are schedules for 24 June and if no candidate secures 50 percent of the votes a second round will take place on 7 July.

Concurrently, on June 24 legislative elections will be held to elect members of parliament (MPs) to a newly enlarged 600-member National Assembly.

The Players

There are six presidential candidates and two electoral alliances.

Tayyip Erdogan, the current president and the leader of the Justice and Development Party (AKP), is the most popular candidate by a country mile. Various polls place his first round electoral support somewhere between 42 and 54 percent.

So it is conceivable that he could get elected president in the first round. But most polls indicate that this is not very likely. After 15 years in power with his pugnacious ruling style and his polarizing rhetoric, there is a palpable Erdogan fatigue in the country, even among his supporters.

Muharrem Ince is the candidate put forward by the main opposition Republican People's Party (CHP). He is not the leader of CHP and he was designated as candidate when the party leader Kemal Kilicdaroglu's amazingly stupid plan of fielding the former president and AKP founder Abdullah Gul as the opposition candidate did not pan out.

Ince is more popular than the charismatically challenged Kilicdaroglu and he is proving himself a decent candidate.

Meral Aksener, the leader of newly formed Good Party (IP) is a curious candidate. She was one of the senior leaders of the proto-fascist National Action Party (MHP) and left MHP when the party leader, Devlet Bahceli, blocked her leadership bid. She formed the Good Party to go after MHP voters.

The dark side of her candidacy is the fact that, most of the extrajudicial killings that took place in southeast Turkey in the 1990s happened when she was the Minister of the Interior.

Selahattin Demirtas was the leader of the pro-Kurdish HDP until his recent incarceration. He was the man who engineered the stinging Erdogan setback in June 2015 elections by pushing his pro-Kurdish party over the 10 percent electoral threshold and reducing AKP's legislative presence.

Erdogan responded by bombing Kurdish cities in the southeast and by removing duly elected mayors of Kurdish-majority cities. Properly cowed, Kurdish voters flocked back to him six months later and he won a bigger majority. He then convinced Kilicdaroglu to agree to a constitutional amendment to lift the legislative immunity of MPs and once that was passed, Demirtas was promptly indicted and put in jail.

This could have been the last footnote for Demirtas had it not been for Erdogan's infamous Afrin invasion. As the June 2015 electoral defeat for Erdogan was largely the result of the Kobane debacle what put Demirtas back on top in Kurdish and Turkish politics was the misguided Afrin adventure. Pious Kurds decided to give him a second chance as did the Turkish progressives.

Two Electoral Alliances

For the presidential elections, Erdogan and MHP leader Bahceli formed the People's Alliance which fielded Erdogan as its sole candidate.

CHP, IP and the Islamist Felicity Party formed the Nation Alliance but they decided to fight the first round with their individual candidates. Whoever gets the second largest vote will face Erdogan with the support of the other parties.

Given CHP's electoral history and the recent emergence of IP, most analysts assume and most polls indicate that Ince will be the opposition candidate for the run off elections.

However, one polster (with a solid history for accuracy) recently suggested that Aksener had a comfortable lead over Ince and was likely to become the opposition candidate.
First round results

This is very interesting for a very good reason.

The Equations

According to the same polling company, if Aksener is the opposition candidate to face Erdogan, she gets 54 percent of the vote and becomes president.

Conversely, if Ince is the opposition candidate, he loses to Erdogan 57-43.

That's largely because Turkey's conservative center cannot bring itself to vote for a progressive candidate. In the eyes of this segment, Aksener being a staunch nationalist and a practising Muslim she is seen as a major departure from Erdogan himself.

This is substantiated by the fact that 80 percent of MHP voters and 15 to 20 percent of AKP voters are willing to support her against Erdogan. Whereas the support figures from MHP and AKP electorate for Ince go down to 20 and 7 percent respectively.

More interestingly, while some 35 percent of HDP voters are willing to vote for Ince in the second round, a staggering 65 percent declared that they would cast their ballots for Aksener. This, despite her past record about massacring Kurds.

It shows how pious and divided the Kurdish electorate is. Her Muslim identity is more important than her past as Turkish nationalist who waged a covert war against Kurdish separatists.

Nevertheless, Kurds are the kingmakers in these elections. HDP is expected to clear the 10 percent threshold for the legislative elections. If that happens, the AKP-MHP electoral alliance may no longer have the majority in Parliament.

Erdogan is so worried about that prospect that he got the Higher Electoral Board to relocate polling stations from pro-HDP villages to pro-AKP villages in southeastern Turkey.

I would not write Erdogan off as he is a wily politician with boundary issues: he will do anything and everything to stay in power.

In this instance, I think that would be the best option for the future of the country.

I will explain why in my next post.

14 May 2018

The Looming Halkbank Fine

If you are like most people, the name of the state-owned Turkish bank will not mean anything to you. However, in a few days time, it might become the most important news item about Turkey's economic future and political stability.

I mentioned Halkbank, or Halk Bankasi AS (its full Turkish name) about two years ago as a major threat to Erdogan's political survival. It played a key role in the biggest sanctions-evasion scheme in recent memory.

Reza Zarrab, a dual Iranian-Turkish citizen helped Iran sell its oil and gas and buy goods by creating an alternative to the SWIFT network through Halk Bankasi.

It was a complicated setup.
Tehran then decided to use a bypass system based on Turkey’s Halkbank. SWIFT was sidelined first by setting up front companies in China. Money was sent to the Chinese bank accounts of these companies from Iran as if they were reimbursements for exports. That money was instantly transferred to front or real companies in Turkey, also as export reimbursements. Gold bought with that money was moved to Iran via Dubai.
According to the Foundation for Defense of Democracies (FDD), this "massive "gas-for-gold" sanctions-busting scheme yielded neighboring Iran some $13 billion in Turkish gold between 2012 and 2013."

In fact, this was just the tip of the iceberg as the FDD estimates that the actual sums were much higher.
The more we investigated, the more we realized that Zarrab’s schemes, which could have helped Iran pocket more than $100 billion, rank among the largest sanctions evasion episode in modern history.
Since the sanctions were designed to hamper Iran's nuclear program, you can imagine where at least some of that money went.

Zarrab took his family to Disneyland in March 2016 and was promptly arrested by the American authorities and indicted by Preet Bharara, the then US Attorney for the Southern District of New York.

After a long trial with many ups and downs, former Halkbank deputy general manager Hakan Atilla was found guilty on 3 January 2018 (along with two Turkish ministers who were charged in absentia) and he is awaiting sentencing. While the prosecution is asking 20 years, the judge postponed sentencing twice so far. It has just been reported that the sentence will be announced on Wednesday 16 May.

What is more interesting for our purposes is the fine that the Treasury Department's Office of Foreign Assets Control (OFAC) is likely to impose to Halkbank and perhaps six other Turkish banks.

Turkish analysts and markets initially appeared optimistic about the size of the fine. But people who are familiar with the BNP Paribas (BNP) believe that Turkey is in for a big surprise.
In a decision made in May 2015, a U.S. court imposed a penalty of $8.9 billion against BNP, including $8.8 billion that it said was equal to the amount of transactions identified as criminal. The agreement with BNP was conditional on it accepting full responsibility for the crime and convincing U.S. authorities that it would set mechanisms in place to ensure full compliance with the sanctions regime in the future.
Remember that the amount BNP was accused of laundering was $10.3 billion.
The fact remains that Halkbank has laundered at least four (4) times more money than BNPP. In addition, a former top level U.S. Treasury official testified at Mr. Atilla’s trial that U.S. officials had warned Mr. Atilla and other Halkbank executives not to violate U.S. sanctions on a few occasions. Moreover, Halkbank has had the benefit of BNPP’s example as a test case for what happens when banks violate sanctions regimes. As a result, any fine imposed upon Halkbank will likely exceed that of BNPP’s and any settlement will likely contain stricter and more rigid measures.
I got curious and called a friend of mine who is in senior management at BNP and put the question to him. He said that the BNP analysts believe that the fine will be between $30 billion and $100 billion.

I asked if their people could be mistaken as these are huge sums and they would certainly bring Turkey to its knees. His response was that, is OFAC followed the same guidelines, there is no way they can impose a fine less than $30 billion.

He also added that they might postpone the decision until after the upcoming Turkish elections on 24 June. He was implying that the results might determine the size of the fine.

What should be worrisome for Turkish companies is the fact that such fines are always accompanied with an admission of wrongdoing and we know that Turkey's bombastic president will never agree to issuing such statement.

And without one, Washington could designate Halkbank on OFAC's sanction list.
This designation would effectively cut off the bank’s access to the U.S. market. Since Halkbank is the largest listed bank in Turkey, such a designation could have serious repercussions not just for the bank, but for Turkey at large.
That would remove Halkbank's ability to do business in dollars. And that is a kiss of death for any bank.

Moreover, if the fine was very high and targeted the other six banks named, the economic repercussions would be very serious.
The evaporation of credit would bring household consumption and fixed capital formation growth downward significantly, subsequently bringing headline GDP growth down by about 1 percentage point compared with current projections. Depreciation of the lira would be more prolonged, the stabilization of which would deplete foreign currency reserves to dangerously low levels. The sharp weakening of the lira and concurrent drop in reserves would severely undermine the country's ability to meet external debt obligations. Net portfolio capital flows could be outward for several months, raising the likelihood of a current-account crisis. With markets unstable, inflation would spike.
Originally, the OFAC decision was scheduled for 17 May (I can't find the link but I know I read it somewhere). If my friend at BNP is correct, we will see it postponed until after 24 June.

But if it is announced before the elections and it is substantial then we can assume that Turkey is no longer useful for the longer term American regional plans.


The sentence came in as reported and it is just two years and eight months. Judge Berman was lenient:
Prosecutors had asked for at least 15 years in prison for Mr Atilla, 47, citing the seriousness of the crimes and the need to deter similar offences. 
But US District Judge Richard Berman said that the Halkbank executive appeared to have been “following orders” from the bank’s chief executive, Suleyman Aslan, who is one of several suspects wanted in the US in connection with the case, along with Zafer Caglayan, a former minister of the economy. 
“Mr Atilla was something of a cog in the wheel and, I would add, at times a reluctant one at that,” he said, arguing that he deserved a “lenient” sentence because of his minor role and otherwise “exemplary” life. 
But analysts believe that (a) the fine will come after the elections on June 24 and (b) it will be large enough to cause major disruption.

We'll see in due course.

21 March 2018

Shooting White People While Being Mohamed Noor

Last July, a nice Australian woman called 9-11 to report a rape incident.

When the police car arrived at the scene, she was shot by one of the officers.

Now, as I noted at the time, this is something of a routine in the USA. You look directly into a police officer's eye you are shot. You look unhappy about being Tasered you are shot. You have the wrong skin color, you are definitely shot.

But in this instance, this is what I wrote:
Last year, 968 people were killed by police. This year, so far, 554
There were several issues with this one though. 
Otherwise it would not have made the headlines. 
First, she was a white woman. 
Second she was from Australia, an English speaking and relatively powerful country where the media can ask questions
Finally, the officer who shot her was called Mohamed Noor. 
Remember Philando Castile? Also in Minnesota. 
And countless others
But I predict that this time they will indict the officer. 
And throw the book at him. 
Because he shot a white woman from Australia while being Mohamed Noor.
Well, they just did. He is charged with third-degree and second-degree murder.

Don't get me wrong, I am not suggesting that this is an injustice for the officer.

Far from it. He should get punished for what he did and if you ask me, what they are proposing is rather lenient.

What I am suggesting that, under the same circumstances, Jeronimo Yanez who shot Philando Castile was charged with lesser crimes and, well, he was acquitted.

What I am also suggesting is that this case shows very clearly the racial bias in the US. When white police officers kill black people, it's all good. In fact, this is the majority of the shooting incidents I linked above.

And this what "All lives matter" idiots are trying to hide.

But when a Muslim officer kills a white woman, we know that "White Lives Matter."

Which was my point.

Nevertheless, I wish Justine Damond was alive and I didn't have to make this point.

But I also wish that Philando Castile was with us.

You know, all lives matter.


18 March 2018

Will Trump Fire Mueller? A Second Take

I pondered this question last December and my answer was that it was rather likely.

A month later, we found out that Trump had indeed tried to fire Mueller six months earlier but the White House Counsel Donald McGahn blocked his directive.

Now, I am more convinced that he will fire Mueller in the next few weeks.

How do you know that, you may ask.

First, Trump knows that Mueller has turned several witnesses and they are all going to implicate him, his family members and his inner circle.

He also knows that his dealings with Russian oligarchs and criminal groups were, well, charitably put, not above board. Refusing to release your tax returns might cheer up your base as sticking it to the Man, to use the 60s lingo, but it would not deter someone like Mueller.

But Trump would be worried mostly about his kids getting in the crosshairs of Robert Mueller.

And this is happening right now.

Mueller Investigation and Ivanka and Don Jr.

Robert Mueller has just subpoenaed Trump Organization's documents in their dealings with Russian business interests.

This week, congressional investigators claimed that the Trump Organization was negotiating a deal with a Russian bank during the 2016 election campaign.
Democratic congressional investigators this week claimed in a memo that they had learned that the Trump Organization was “actively negotiating” a deal in Moscow during the election campaign that involved a Russian bank that was under US sanctions. The deal never went through and it is not clear which bank the congressional investigators were referring to. 
When you say Trump Organization, you mean Ivanka, Don Jr and Eric. So the kids are being targeted now.

And this is not the first time.

There is also the Trump SoHo deal, which involved Tevfik Arif and Felix Sater and their real estate group Bayrock.

These two were born in the Soviet Union and have extensive commercial and shady connections in Russia including various criminal enterprises.

I mentioned them many times and you can read more about them and their involvement with the Trump Organization here and here.

Basically, as it was subsequently alleged, the Trump SoHo project was a Russian money laundering scheme whereby they sold overpriced real estate to unsuspecting investors who eventually lost their shirt.

That deal was investigated in 2012 by the Manhattan District Attorney's office and according to ProPublica and the New York Times, having found a smoking gun in Ivanka and Donald Jr's emails about their intent to defraud investors, the prosecutors were ready to indict the siblings.
In one email, according to four people who have seen it, the Trumps discussed how to coordinate false information they had given to prospective buyers. In another, according to a person who read the emails, they worried that a reporter might be onto them. In yet another, Donald Jr. spoke reassuringly to a broker who was concerned about the false statements, saying that nobody would ever find out, because only people on the email chain or in the Trump Organization knew about the deception, according to a person who saw the email.
Then, Trump lawyer Marc Kasowitz made a surprise visit to Manhattan DA Cyrus Vance Jr after which he instructed his prosecutors to shut down the investigation.

In case you are wondering, Kasowitz donated $25,000 to Vance's re-election campaign becoming one of his biggest donors. Vance returned the money when this strange coincidence was revealed. Undeterred, Kasowitz subsequently organized a fundraiser that netted Vance $50,000.

But, of course, there was no quid pro quo, as we all know that happens only in sub-Saharan Africa and some other, hmmm, what is the term, oh yes, shithole countries.

But not in the good old USA.

Where lawyers pay $130,000 to porn stars from their own pocket, just because...

Where prosecutors always go after the rich and powerful people like Cy Vance going after Harvey Weinstein.

In any event, not only is Mueller looking into this again but he is doing it in collaboration with New York's Attorney General Eric Schneiderman who hates Trump with a passion.

This is relevant since it puts Ivanka and Don Jr beyond their father's ability to pardon, which is limited to federal cases and Schneiderman's involvement makes it state level.

So stopping Mueller is now very important for Trump.

He thinks, firing Mueller might just stop the whole thing.

Does he have cover to do it?

Wel, the GOP has just arranged for it.

The End of House Probe on Russia Collusion

The House Intelligence Committee just ended its investigation on whether or not Trump Campaign colluded with Russia to influence electoral results.

Their report said there was nothing serious there. Nothing at all. A few mistakes here and there, but no Benghazi.
The House Republicans also said that a 150-page report they prepared — without consulting their Democratic colleagues — contradicts the U.S. intelligence community's firm conclusion that the goal of the Russian government effort was to boost Trump's campaign. 
See, it was all a witch hunt and Trump has always maintained that.

True, there is also an ongoing Senate probe but since that chamber is also controlled by the GOP don't expect a much different result. The GOP has a tight control over all their congresspeople. The carrot is money and stick is a Tea Party primary challenger.

If John McCain didn't have a brain tumor and sudden concerns about his legacy, he might have voted for Trump despite the Orange Man's previous comments about him not being a hero.

Why is that relevant?

When Trump fires Mueller, his GOP defenders will go on Sunday talk shows and say that the Mueller investigation was a waste of taxpayers' money since Congress already exonerated the President.

Those will be the same people who provided tens of millions dollars to Kenneth Starr's Whitewater inquiry and investigated Benghazi countless times.

But no corporate media personality will ever point that out.

So what is next for Trump?

Getting Ready to Fire Sessions

There are several reports that Trump is getting ready to fire his Attorney General, Jeff Sessions.
[S]ources said Trump has discussed a plan to fire Attorney General Jeff Sessions. According to two Republicans in regular contact with the White House, there have been talks that Trump could replace Sessions with E.P.A. Administrator Scott Pruitt, who would not be recused from overseeing the Russia probe. Also, as an agency head and former state attorney general, Pruitt would presumably have a good shot at passing a Senate confirmation hearing.
Now, I have to admit that this one would be a clever move because Pruitt might limit the Mueller investigation so much that there might not be any need to fire him.

Under that scenario, Trump gets exonerated without firing Mueller because Mueller couldn't talk about stuff he uncovered.

Not bad at all.

Hence, I believe firing the garden gnome might be the most likely next move.

Trump has been testing the waters with the firing of Rex Tillerson and Andrew McCabe (two days before his full pension retirement) to see what kind of push back he would get.

We now know the answer is, not much. And this, despite trolling him for moths about preventing him from getting his full pension.

Reportedly, the next person he is planning to fire is his National Security Advisor H.R. McMaster.

That should provide the litmus test.

It will be interesting to see how getting rid of his Secretary of State and National Security Advisor weeks before his planned meeting with Kim Jong-un would be handled by the Washington Establishment, the corporate media and the GOP.

If nothing happens, as I expect, Trump might decided to fire Mueller too.

What About Intelligence Agencies?

Previously, I suggested that even if Trump fires Mueller, he alienated intelligence agencies so much that they will continue to leak damaging information collected by his probe and more.

They have done that in previous months as every scoop by the Washington Post or the New York Times could be traced back to one of those alphabet agencies.

But Trump made another clever move. He nominated the torturer's torturer "Bloody" Gina Haspel to the head of the CIA.

That pleased everyone because she is one of them and they know her and are confident that she will not damage their interests or betray their secrets.

Would that be enough?

This is what the former CIA Chief John Brennan said today:
Brennan addressed the president earlier on Saturday, writing: “When the full extent of your venality, moral turpitude, and political corruption becomes known, you will take your rightful place as a disgraced demagogue in the dustbin of history.

“You may scapegoat Andy McCabe, but you will not destroy America … America will triumph over you.”
So what do you predict, you ask.

My guess is that being impulsive (plus his kids being in the crosshairs) Trump will fire Mueller.

This will cause a constitutional crisis and put  GOP in a bind. But they will stand by him and defend him until the 2018 elections.

If they lose badly, the Orange Man is toast.

And, despite Gina Haspel nomination, the intelligence community will leak damaging stuff like never before.

2018 will be a fun year.


It turns out that the garden gnome Beauregard lied under oath and Mueller knows it.

I am wondering why this is coming to the surface right now.
U.S. Attorney General Jeff Sessions’ testimony that he opposed a proposal for President Donald Trump’s 2016 campaign team to meet with Russians has been contradicted by three people who told Reuters they have spoken about the matter to investigators with Special Counsel Robert Mueller or congressional committees.
Someone should congratulate Scott Pruitt right now as he is preparing his presidential bid. I am not kidding.

15 March 2018

Tillerson Firing and the Irrelevance of the State Department Under Trump

Most pundits believe that it was Rex Tillerson calling the Orange Man "a fucking moron" that did him in.

Credit Reuters
Trump hold grudges for a long time, they say and his revenge was to fire him via Twitter when he was out of the country.

Others point to a fundamental incompatibility between the two men and Trump himself alluded to that as a chemistry issue or lack thereof.

I am sure these and other problems played a part in the latest The Apprentice moment.

But to my contrarian eyes, there is a more fundamental reason why Tillerson had to go.

Most people assume that the main job of of the State Department (or any diplomatic service for that matter) is to represent the US abroad, negotiate with partners and adversaries and propagate and emphasize the messages of its government.

In fact, this last function makes the previous two possible and it is what should properly called foreign policy.

In clearer terms, it consists of vigorously pushing meticulously crafted narratives around America's imperial, or to put it more bluntly, imperialist actions.

These narratives are designed to obfuscate the real motives of such acts and offer more palatable justifications. And they are based on soothing and innocuous notions like democracy, freedom, free market economy, America's national security and, of course, its benevolent approach to being a superpower.

In short, the mission is to convincingly defend the indefensible.

Defending The Indefensible

This is how it works:

Say the president decides to invade a country, overthrow a government, implement new tariffs, meddle in elections, engineer a coup against elected officials, commit war crimes and torture suspected terrorists.


Now, no Administration has ever acknowledged its actions in these terms. They have always been explained or presented in euphemisms referring to American ideals like freedom and democracy.

Funding fascist squads in Nicaragua was supporting freedom fighters. Engineering a coup against the duly elected Salvador Allende in Chile and cheering the murder and incarceration of thousands of people was called restoring democracy and preventing communist authoritarianism. Waging war against Ho Chi Minh, originally a nationalist who admired the US, was to stop the domino theory of communism.

Torturing is using Enhanced Interrogation Techniques to protect Americans, overthrowing a government is liberating its people and invading a country is bringing democracy to it.

It is the State Department's job to push these justificatory narratives and to have its diplomats  around the world to charm, cajole, pressure and bribe local politicians, media personalities and any other relevant figure to ensure that the real motives behind the actions are substituted with a new and nicer narrative.

Concrete example. Remember the Iraq War?

The real motive was to use the Saudi funded 9/11 as a pretext to implant the US into the Middle East in order to control the flow of oil and gas as a way to keep in check the energy needs of emerging powers like China and India.

At the time, 72 and 73 percent of oil and gas flows, respectively, were going through the region. Iraq was, in the immortal words of a Wall Street oil analysts “a military base with a very large oil reserve underneath."

The initial justification, the presence of WMDs, came from the Pentagon and the State Department forcefully pushed it everywhere, including Secretary of State Colin Powell going to the UN with a bogus Powerpoint presentation.

When it became obvious that there were no WMDs in Iraq and that the US invaded a sovereign country for no good reason and without a UN Security Council authorization, the new narrative focused on the evil dictatorship of Saddam Hussein and how the US acted selflessly to liberate the Iraqi people.

I could give you hundreds of other examples from the Middle East, Southeast Asia, Latin America and of course the "Banana Republics" in Central America and the accompanying idealistic justifications but you get the idea.

Not to give you the wrong impression let me add that the State Department's narratives are not limited to these acts of belligerence. It also covers other indefensible positions like supporting Saudi Arabia.

We know that the title of the world's most oppressive regime should go to either North Korea or Saudi Arabia.

It's probably a tie, unless you are a feminist like me, in that case, Saudi Arabia wins the trophy.

Yet the US has always been ready to nuke the former to smithereens but have always sided with the latter. And no matter what.

These are the folks who behead as many people as ISIS on any given year, who keep half of their population under house arrest, who surveil everyone and who incarcerate, torture and lately extort money from their subject with absolutely no due process.

They raised over $200 billion (by 2008, it is probably $300 billion by now) for Jihad, for radicalizing young Muslims and for funding Wahhabi institutions around the world.

Yet, the State Department has always defended America's fondness for this pernicious regime. The narratives, depending of the decade, were (a) oil dependency, it is our fault, (b) stability of the region and security of Israel, (c) a bulwark against Iranian ascendency.

Anyone who knows a little bit about foreign policy can tell you that this is all rubbish.

Oil dependency was never an issue, as, at the time, between Canada and Venezuela and its own reserve, the US had all the oil it needed. As for the second claim, if the security of Israel depended on the House of Saud, the biggest raiser of terrorist funds of all time, I would pity the Jewish State. And Saudi Arabia couldn't last two days against Iran, let alone being a bulwark.

The real reason has always been the protection money they pay to America's military industrial complex, as Saudis are by far the best clients of the US defense industry. I guarantee you that the day they stop buying those shiny deadly toys is the day the House of Saud and the House of Wahhab will collapse.

In fact, this is why Mohammed Bin Salman was desperate to find the funds to pay for the protection racket after he promised to buy $110 billion worth of arms during Trump's visit.

And this is why the Saudis remained an important US ally after the rise of fracking industry and American oil independence.

But we cannot say any of that, can we? The only narrative in mainstream media will be the one pushed by the State Department.

However, all of this changed with the Orange Man.

America First: the President as the "Ugly American"

As I outlines, through this duality between deeds and discourse, the US has always been able to present itself as a beacon of freedom, a tireless supporter of democracy and the defender of the underdog, while doing the opposite.

With Donald Trump this duality is no longer necessary. Because, just like he made openly racist statements to his domestic audience instead of relying on GOP dog whistles, he now tells the world exactly what his goals are and what he thinks of them.

In one of his first speeches (to the CIA) he argued that after liberating Iraq, the US should have kept the oil for itself. International law? What international law? We have the military might and next time we'll take it.

His approach was the same for Article 5 of Nato. He openly said that no Nato country who didn't use 2 percent of its GNP for defense expenditures should expect America's help when they trigger Article 5. Since most Nato defense procurement goes to American military industrial complex, it was his way of asking for protection money.

And who cares about treaty obligations.

When he launched his trade war, his goal was to have a trade surplus with every country. And for no other reason than the US is more powerful than other countries. And he clearly stated it.

Same with Iran, he is itching to abandon the nuclear deal so that he can bomb the country. And it looks like he is about to hire John Bolton, the perfect guy to do this as his National Security Advisor:
In 2015, he wrote a New York Times op-ed headlined, “To Stop Iran’s Bomb, Bomb Iran,” and last month, he wrote a Wall Street Journal op-ed outlining the legal case for a pre-emptive strike against North Korea.
Trump does not call torture Enhanced Interrogation Techniques. He calls it torture and states that "torture absolutely works" and he might just use it. In fact, his new pick for CIA Chief, Gina Haspel ran the first CIA black site in Thailand in 2002 and implemented waterboarding and other "enhanced techniques."

African nations and Haiti are shithole countries.

With Trump, there is no need to defend the indefensible. He says it in so many words and he doesn't want it defended. In fact, if you try to soften his remarks he will attack you on Twitter and double down on his rhetoric, as Tillerson discovered many times.

He does not care about soft power. He only cares about military power.

Tellingly, he increased the Pentagon's budget by the same percentage he decreased Foggy Bottom's.

And let's not forget the fact that the reason Tillerson called Trump a "fucking moron" was because the Orange Man was asking a ten-fold increase in America's nuclear arsenal.

In short, by removing its main function, Donald J. Trump made the State Department irrelevant.

He thinks he will just tell Kim Jong-un and Hassan Rouhani to disarm and it they don't, he will nuke them. That's as simple as that.

Tillerson might have objected, his replacement Mike Pompeo will ask to be in the room when Trump pushes the button.

As one recent op-ed noted, Trump is the Ugly American as the President.



From the desk of Nikki Haley, the next Secretary of State after Mike Pompeo:
U.S. Ambassador to the United Nations Nikki Haley is proposing a sweeping reassessment of U.S. foreign assistance with a view to punishing dozens of poor countries that vote against U.S. policies at the U.N., according to a confidential internal memo drafted by her staff. 
The move to make foreign aid conditional on political support follows a U.S. decision to cut tens of millions of dollars in assistance to Palestinian refugees, a cut made in retaliation for Palestine’s sponsorship of U.N. resolutions denouncing U.S. President Donald Trump’s controversial recognition of Jerusalem as Israel’s capital. Haley now wants to apply a similar principle to decisions about aid to other needy countries.
That's America First with a chin flick.

Who needs a State Department when this is your attitude.