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China's U.S. Debt Portfolio Will Not Be Weaponized for the Trade War

May 22, 2019 in Economics

By Daniel J. Ikenson

Daniel J. Ikenson

The U.S.-China trade war has reignited debate over the question
of whether Chinese ownership of U.S. government debt is an asset
that Beijing will weaponize. In other words, is the possibility
that the Chinese could sell off large swaths of their $1.1 trillion
holdings of U.S. treasury securities, causing bond prices to fall
and interest rates to rise, something that should concern U.S.
policymakers? Although profligate spending and an accumulating
national debt may well be the toxins that eventually destroy the
U.S. economy, the fact that the Chinese own some of that debt
neither gives Beijing leverage over U.S. policy nor does it present
a threat to the U.S. economy.

The fact that the Chinese
own U.S. government debt neither gives Beijing leverage over U.S.
policy nor does it present a threat to the U.S. economy.

For starters, consider why the Chinese buy U.S. debt in the
first place. For two decades, the Chinese have been purchasing U.S.
treasuries not as a favor to the citizens of the United States, but
because it has been in China’s interest to do so. Nobody in
Washington forces or begs the Chinese to buy U.S. debt. All by
themselves, the Chinese (like investors at home and across the
globe) see the value proposition. It just so happens that U.S.
government-issued debt securities are considered the least risky
investments in the world. Investors know their assets are safe,
accessible, and guaranteed to be repaid virtually on demand.

That’s not to say Americans haven’t benefited handsomely from
China’s investment decisions. The inflow of Chinese (and other
foreign) capital to U.S. debt and equity markets has helped keep
interest rates well below historical averages, effectively serving
to subsidize U.S. consumption, which, in turn, has kept Chinese
factories—as well as factory workers, software engineers,
designers, accountants, and sales representative in other countries
(including the United States)—humming along for decades.

Another reason for China’s appetite for U.S. treasuries is that
purchasing dollar-denominated assets helps prop up the value of the
dollar, which is an outcome that has been favorable to Beijing from
an exporting perspective because U.S. demand for Chinese goods
tends to rise with the value of the dollar. Meanwhile, over the
years, a strong or strengthening dollar has helped preserve the
value of China’s existing portfolio of U.S. debt and other
dollar-denominated assets.

In summary, U.S. treasuries are attractive investments to the
Chinese because of their limited risk, relative liquidity, impact
on U.S. interest rates (i.e. demand for Chinese goods), and impact
on the value of the dollar (i.e., demand for Chinese goods; value
of Chinese-owned U.S. asset portfolios).

Second, even if China did want …read more

Source: OP-EDS

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Trump on Tariffs: Consistent, and Consistently Wrong

May 22, 2019 in Economics

By Simon Lester

Simon Lester

Recently, a decades-old video of Donald Trump on
“Oprah” circulated, in which Trump offered up all the
same trade policy views he holds today: Our trading partners are
cheating us, bilateral trade deficits are hurting the U.S. economy,
U.S. negotiators have done a bad job with trade deals, and higher
tariffs would help the U.S. economy.

Politicians often get criticized for flip-flopping, as they
change their policy positions over time in an attempt to please
voters or interest groups. On tariffs, Donald Trump has not flipped
or flopped at all. As president, he is implementing the exact same
policies he has talked about for years. Unfortunately, they are bad
policies, based on a misreading of history and a misunderstanding
of economics.

Trump may be looking at U.S. tariff history in the following
way. In the 1800s, the United States had relatively high tariffs.
Also in the 1800s, the United States experienced strong economic
growth and industrialization. Therefore, tariffs always lead to a
good economy.

Many people —
inside and outside the administration — have explained to
Trump why he is wrong about tariffs and trade, but he does not want
to hear about it.

The reality is that economic cause and effect is much more
complicated. The telegraph also played a big role in the 1800s, but
bringing back the telegraph today would not be a boon to the
economy. In the 1800s, governments used tariffs as a primary source
of revenue. Administratively, it was easiest to collect taxes on
products as they entered a country, so for most countries tariffs
were a main source of government funding. However, over the years
governments found other alternatives, and tariffs as revenue became
less important.

Tariffs were also used to protect domestic industries. In this
way, they were the original “swamp” policy. The
Constitution gives Congress power of tariffs, and during this
period companies that wanted protection from foreign competition
would go to their member of Congress and ask them to push for
tariffs on the products of their competitors. An individual tariff
could cause harm to consumers in other districts, but all those
seeking protection would join forces: All the members looking for
protection would support each other’s tariff requests, so
that they could all deliver for the interest groups they
represented.

Of course, other groups were hurt by this: U.S. consumers, who
paid higher prices; and U.S. exporters, who were hit with
retaliatory tariffs imposed by our trading partners. But this kind
of “log-rolling” was able to generate the majority needed for
Congress to pass high tariffs.

This approach culminated in the infamous Smoot-Hawley tariffs
just after the start of the Great Depression. …read more

Source: OP-EDS

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Impeachment Should Be on the Table If Trump Bombs Iran

May 22, 2019 in Economics

By Gene Healy

Gene Healy

We’re told that the Trump administration’s
brinksmanship on Iran stems from a power grab by President Donald Trump’s
undeterrable national security advisor, John Bolton. And it’s
true that Bolton has never met a “preventive” war he didn’t
like
and that there’s every reason to suspect him of
scheming to create an excuse for one. But lately it’s getting
hard to distinguish President Trump from “President Bolton.” “If Iran
wants to fight, that will be the official end of Iran,” Trump
rage-tweeted Sunday. “Never threaten the
United States again!”

If the administration can’t be convinced to stand down,
the House of Representatives should launch a preemptive strike of
its own. They should credibly threaten to impeach the president if
he goes to war without congressional authorization.

Waging war without legal authority is an impeachable offense, if
anything is. Impeachment was designed to thwart attempts to subvert the Constitution;
congressional control of the war power was one of that
document’s core guarantees. “In no part of the
constitution is more wisdom to be found,” James Madison
affirmed, “than in the clause which confides the question of war or peace
to the legislature, and not to the executive department.”

Without Congress’s
approval, he has no legal authority to start a war, no matter what
John Bolton seems to think.

The first federal impeachment case, brought less than a decade
after the Constitution’s ratification, centered on charges of
unauthorized warmaking. In 1797, the House impeached Tennessee
Senator William Blount for conspiring to raise a private army for
“a military hostile expedition”
against Spanish-held Louisiana and Florida, “in violation of
the obligations of neutrality, and against the laws of the United
States.” In the Founding era, usurpation of the war power was
considered serious enough to merit the ultimate constitutional
remedy.

No president has yet been impeached for illegal warmaking, but
Richard Nixon came closest. In 1974, the House Judiciary Committee
debated impeaching Nixon for conducting a secret bombing campaign
in Cambodia “in derogation of the power of the Congress to
declare war.” The article never made it into the final
charges, possibly scuttled by Democratic leadership out of fear of
revealing “that a few prominent members
of their party had known about the secret bombing at the
time.” As Congressman William Hungate put it afterwards: “It’s kind of
hard to live with yourself when you impeach a guy for tapping
telephones and not for making war without authorization.”

Current members of Congress should find it hard to live with
themselves if they don’t do something …read more

Source: OP-EDS

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Analysis: What Wisconsin's Governor Gets Wrong About How Much Milwaukee’s School Voucher Program Costs — and How Much It’s Helping Students in (and out of) the Classroom

May 22, 2019 in Economics

By Corey A. DeAngelis, Will Flanders

Corey A. DeAngelis and Will Flanders

In a recent
74 Interview
, Wisconsin Gov. Tony Evers repeated a number of
misleading statements about private school choice programs in
justifying his efforts to freeze or end them. Here, we respond to three
of Evers’s claims.

“[The program is] costing hundreds and hundreds of
millions of dollars
.”

Advocates for educational
options for low-income families in Wisconsin must remain
vigilant.

Because the voucher amount is substantially less than the
funding level for traditional public schools, the program
represents a savings to taxpayers so long as a significant portion
of voucher students would have attended traditional public schools
in the absence of the voucher. The nonpartisan Legislative Fiscal
Bureau put the break-even point around 73 percent for Racine, and it would be
comparable in other districts. Dr. Robert Costrell of the School
Choice Demonstration Project at the University of Arkansas
similarly estimated the break-even to be around 74 percent and found that the program
saved around $32 million by 2008. Further, Dr. Martin Lueken of
EdChoice estimated the breakeven point to be around 75 percent for the Milwaukee voucher
program and found that the program saved Wisconsin taxpayers about
$343 million by 2015.

Given that most students using the voucher program are from
low-income households, it is likely that well over three-quarters
switch from public to private schools. In fact, the most recent experimental evaluation of the
Louisiana Scholarship Program — and the most recent experimental evaluation of the D.C.
Opportunity Scholarship Program — both found that 89 percent
of children who lost the voucher lottery attended public schools
without the voucher.

The bottom line? School choice saves taxpayer money in the
Badger State.

“The data we’ve had for 20-some years pretty
much shows that there’s not an appreciable – or any -
difference in academic achievement of kids that get a voucher and
those that go to regular public schools.”

While the inclusion of the caveat “not appreciable”
could allow for substantial hedging, the preponderance of
scientific evidence is hard to ignore. There is considerable
research on the Milwaukee Parental Choice Program – and most of the
rigorous evidence reveals benefits.

The two random assignment evaluations of the program, published
in the Quarterly Journal of Economics and Education and Urban Society, found that the
program increased students’ test scores. The more recent
longitudinal evaluation by the University of
Arkansas found that students participating in the program have
higher achievement growth in reading than their matched peers in
public schools, though similar achievement growth in math. An
evaluation …read more

Source: OP-EDS

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When Apollo 10 Nearly Crashed Into the Moon

May 21, 2019 in History

By Amy Shira Teitel

Apollo 10 marked NASA’s last step before going for Apollo 11′s full lunar landing. But the practice run came close to failure.

On May 22, 1969, almost four days and six hours after leaving the Earth, the crew of Apollo 10 was enjoying a delightfully uneventful mission. Rather, it was as uneventful as a mission to the moon could be.

Commander Tom Stafford and Lunar Module Pilot Gene Cernan had just returned from their close pass by the lunar surface and were readying to go through the staging maneuver that would bring them into the correct lunar orbit to rejoin Command Module Pilot John Young waiting in the Command-Service module. On schedule, the LM’s ascent engine fired.

Then all hell broke loose.

The crew saw the lunar horizon swivel past their window half a dozen times as Cernan yelled out “Son of a bitch!” Apollo 10’s lunar module, with two astronauts on board, was careening out of control a quarter of a million miles from home.

A view of the Moon’s surface photographed by the Apollo 10 astronauts in May of 1969.

Apollo 10 Was a Full Dress Rehearsal for Apollo 11

Apollo 10 marked NASA’s last step before going for the full lunar landing with Apollo 11. To that point, the space agency’s approach to landing on the moon had been incremental. Apollo 7 had tested the command-service module (CSM) in Earth orbit in October of 1968. Two months later, Apollo 8 had taken that same spacecraft for a test flight to the moon, ensuring it would be able enter and leave lunar orbit without any problems. In March of 1969, Apollo 9 was the first to take the full Apollo stack for a test drive, flying both the CSM and the lunar module (LM) on a simulated lunar landing mission in the relative safety of Earth orbit.

READ MORE: How Landing the First Man on the Moon Cost Dozens of Lives

Apollo 10’s mission plan was in effect a full dress rehearsal of a lunar landing that would stop just short of the surface. This would give NASA a final check that the CSM and LM could fly properly in lunar orbit. The lunar lander, later nicknamed Snoopy, would descend almost to the moon’s surface and then reascend and re-dock with the command module.

There was some concerns that the irregular gravitational environment around the moon from …read more

Source: HISTORY

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Are UFOs a Threat to National Security? This Ex-U.S. Official Thinks They Warrant Investigation

May 21, 2019 in History

By History.com Editors

Throughout his distinguished government career, Chris Mellon has been keenly focused on the prospect of unconventional national threats. Now he works with a civilian group called To the Stars Academy of Arts & Science, trying to prod the U.S. defense and intelligence communities to investigate reports of unidentified aerial phenomena (UAPs—also known as UFOs) that maneuver in ways that have no known precedent.

He’s inspired, he says, by the growing number of such sightings in sensitive military contexts—reported by highly trained, highly credible witnesses and corroborated by some of the world’s most sophisticated technology, including several infrared videos shot from fighter jets. He doesn’t claim to know what these unusual crafts might be, nor does he assume they bring “aliens” from afar. To him, they signal a potential high-level strategic threat of unknown origin—one the nation would be foolish to ignore.

Chris Mellon (left) and Luis Elizondo of To the Stars Academy of Arts & Science.

Mellon is uniquely qualified to assess such threats. Having served as Deputy Assistant Secretary of Defense for Intelligence during the Clinton and George W. Bush administrations, and later as Minority Staff Director of the Senate Intelligence Committee, he was heavily responsible for reviewing agencies and budgets involved in top-secret “black programs” related to things such as special operations and nuclear weapons. Mellon is now an integral part of the investigative team featured on HISTORY’s “Unidentified: Inside America’s UFO Investigation.” We talked to him about what’s happening—and what he thinks should be done.

Why raise the alarm now about UFOs/AAVs?

What is really motivating me right now, what really has accelerated and solidified my interest, is the [2004] USS Nimitz case—when I learned of that and began to talk to the military personnel involved. We had multiple naval aviators [reporting] what they saw [wingless UFOs, with extraordinary capabilities] in broad daylight, over an extended period of time. It was corroborated by the most sophisticated air-defense sensor systems on earth, and on multiple platforms operated by multiple independent individuals. So when you start talking about that level of evidence, I think any reasonable person would have to say—this is real, and we should proceed accordingly.

READ MORE: When Top Gun Pilots Tangled with a Baffling Tic-Tac-Shaped UFO

USS Nimitz ‘Tic Tac’ UFO: Declassified Video (TV-PG; 2:45)

Which means what? Intelligence gathering? Risk assessment?

From a national security standpoint of course, you’re paid to be paranoid, to …read more

Source: HISTORY

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Jones Act Expensive, Benefits Questionable

May 21, 2019 in Economics

By Colin Grabow, Michael Hansen

Colin Grabow and Michael Hansen

Beyond mere tweaks, reforms to the Jones Act are necessary,
given that the Act’s costs to Hawaii are more substantial and
its benefits far more elusive than indicated.

The Jones Act refers to several federal domestic shipping laws,
the best known of which is Section 27 of the Merchant Marine Act of
1920 regulating the domestic transportation of goods by water.

These laws require a vessel in domestic trade be built and
registered in the United States and mostly owned and crewed by U.S.
citizens.

The argument that removal
of the Jones Act would leave the noncontiguous jurisdictions
— Alaska, Hawaii, Guam and Puerto Rico — without
adequate shipping, meanwhile, is completely specious and used by
Jones Act interests to scare the public.

While most countries with coastlines and navigable rivers have
similar laws regulating their domestic waterborne commerce —
known as maritime cabotage — the U.S. system is the
world’s most restrictive. This is primarily due to the
requirement vessels in domestic trade be constructed at a shipyard
in the U.S. typically at five times the cost of comparable ships
built in Asia.

The Merchant Marine Acts passed between World Wars I and II had
the stated purpose of promoting “a merchant marine of the
best equipped and most suitable types of vessels to carry the
greater portion of its commerce and serve as a … military
auxiliary.” That remains current U.S. shipping policy.

Clearly, these laws and policy have failed. Today, less than 2
percent of the seaborne foreign trade is carried by U.S. flag
ships, domestic ocean shipments have declined by 95% since 1980,
the U.S. flag oceangoing fleet has declined by 93% since 1960, and
effectively none of the privately-owned ships providing military
sealift are drawn from the U.S.-built fleet.

A key failure has been to produce a fleet of suitable ships to
meet the nation’s domestic ocean transportation needs. There
are just 99 oceangoing Jones Act-qualified ships including 57
tankers and 25 containerships in narrow capacity ranges. In
comparison, there are approximately 42,000 foreign-flag ships
trading worldwide incorporating a wide variety of types and
capacities. Most types are absent from the Jones Act fleet
including liquefied natural gas carriers and livestock
carriers.

The argument that removal of the Jones Act would leave the
noncontiguous jurisdictions — Alaska, Hawaii, Guam and Puerto
Rico — without adequate shipping, meanwhile, is completely
specious and used by Jones Act interests to scare the public.

Even if Hawaii were independent as it was before annexation in
1898 and foreign vessels could operate unfettered in trade with the
U.S. mainland, any shipping company using foreign vessels would
have a vested interest …read more

Source: OP-EDS

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Ship carrying 937 Jewish refugees, fleeing Nazi Germany, is turned away in Cuba

May 21, 2019 in History

By History.com Editors

A boat carrying 937 Jewish refugees fleeing Nazi persecution is turned away from Havana, Cuba, on this day in 1939. Only 28 immigrants are admitted into the country. After appeals to the Unites States and Canada for entry are denied, the rest are forced to sail back to Europe, where they’re distributed among several countries including Great Britain and France.

On May 13, the S.S. St. Louis sailed from Hamburg, Germany to Havana, Cuba. Most of the passengers—many of them children—were German Jews escaping increasing persecution under the Third Reich. Six months earlier, 91 people were killed and Jewish homes, businesses, and synagogues were destroyed in what became known as the Kristallnacht pogrom. It was becoming increasing clear the Nazis were accelerating their efforts to exterminate Jews by arresting them and placing them in concentration camps. World War II and the formal implementation of The Final Solution were just months from beginning.

The refugees had applied for U.S. visas, and planned to stay in Cuba until they could enter the United States legally. Even before they set sail, their impending arrival was greeted with hostility in Cuba. On May 8, there was a massive anti-Semitic demonstration in Havana. Right-wing newspapers claimed that the incoming immigrants were Communists.

The St. Louis arrived in Havana on May 27. Roughly 28 people onboard had valid visas or travel documents and were allowed to disembark. The Cuban government refused to admit the nearly 900 others. For seven days, the ship’s captain attempted to negotiate with Cuban officials, but they refused to comply.

The ship sailed closer to Florida, hoping to disembark there, but it was not permitted to dock. Some passengers attempted to cable President Franklin D. Roosevelt asking for refuge, but he never responded. A State Department telegram stated that the asylum-seekers must “await their turns on the waiting list and qualify for and obtain immigration visas before they may be admissible into the United States.”

As a last resort, the St. Louis continued north to Canada, but it was rejected there, too. “No country could open its doors wide enough to take in the hundreds of thousands of Jewish people who want to leave Europe: the line must be drawn somewhere,” Frederick Blair, Canada’s director of immigration, said at the time.

Faced with no other options, the ship returned to Europe. It docked in …read more

Source: HISTORY

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SCOTUS Agonistes

May 21, 2019 in Economics

By Ilya Shapiro

Ilya Shapiro

No matter how much we might rage against the political calendar
(the bastards are encouraged even if we don’t vote), the 2020
presidential race is upon us. Having finally learned the lesson of
ceding judicial nominations to the Republican Party, all 837
Democrats running for the White House are determined to make the
Supreme Court a campaign issue.

But this isn’t just the usual demagoguery about how the
Federalist Society picks judges to create a world where, to quote
Ted Kennedy’s 1987 calumnies against nominee Robert Bork and
a conservative Court, “women would be forced into back-alley
abortions, blacks would sit at segregated lunch counters, rogue
police could break down citizens’ doors in midnight raids,
schoolchildren could not be taught about evolution, writers and
artists could be censored at the whim of the government, and the
doors of the federal courts would be shut on the fingers of
millions of citizens.”

No, the play now is to pack the Court, among other
“reforms” to our constitutional structure.
(“Reform” meaning, of course, “radical change
that will make James Madison spin in his grave.”)

Democrats have made Merrick Garland the holy martyr of this
crusade. This in retaliation for the Republicans’ violation
of the Constitution’s “Supreme Court nominees must get
hearings and votes no matter what” clause. Senates, the
Democrats claim, are expected to confirm forthwith nominees made by
a president of the opposing party to high-court vacancies arising
in presidential election years. Indeed, that has happened…
as recently as 1888.

The Democrats believe all
this norm-breaking can be remedied only by breaking more norms -
like expanding the Supreme Court, eliminating the Electoral
College, lowering the voting age to 16, restricting political
speech, and giving the Federal Election Commission a partisan
slant.

And in 1992 when a young Judiciary Committee Chairman named Joe
Biden said that presidents shouldn’t get to appoint justices
in the last year of their terms, that was totally different… Just
like it was different when Senator Chuck Schumer said the same in
2007, because the presidents then were Republicans.

Not that Senate Majority Leader Mitch McConnell couldn’t
cite longstanding precedent for his own decision to ignore Garland
— the first nominee on whom the Senate took no action since
the nomination of Stanley Matthews in 1881. (A few nominees
withdrew before the Senate could non-act, like Douglas Ginsburg in
1987. Ginsburg smoked pot with his law students, and thus became
the Drug War’s last public casualty.)

To be fair to McConnell, he never claimed to be making anything
but a political argument: That the voters, having in their infinite
wisdom re-elected President Barack Obama in 2012 but then flipped
the Senate …read more

Source: OP-EDS

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How 9/11 Became the Deadliest Day in History for U.S. Firefighters

May 20, 2019 in History

By Patrick J. Kiger

Though they surmised that the twin towers had suffered structural damage, firefighters rushed into the unknown to try and save civilians. As an FDNY division chief later said, “We had to try to rescue them.”

At 8:46 a.m. on September 11, 2001, hijackers crashed American Airlines Flight 11 into the north tower of the World Trade Center in New York City. Six minutes later, the first contingent of New York City firefighters—two ladder and two engine companies—had arrived at the stricken building. They had just begun to climb a stairwell in an effort to reach people trapped on the upper floors, when another hijacked airliner, United Airlines Flight 175, struck the south tower at 9:03 a.m.

The 9/11 attacks not only became the single deadliest terrorist attack in human history, they were also the deadliest incident ever for firefighters, as well as for law enforcement officers in the United States. The New York City Fire Department lost 343 among their ranks, while 23 New York City police officers and 37 Port Authority officers lost their lives, according to the 9/11 Commission that investigated the attacks and emergency response.

Civilians bolt in the opposite direction as firefighters rush towards the Twin Towers of the New York City’s World Trade Center after a plane hit the building on September 11, 2001.

View the 9 images of this gallery on the original article

“We had a very strong sense we would lose firefighters and that we were in deep trouble, FDNY Division Chief for Lower Manhattan Peter Hayden later told the commission. “But we had estimates of 25,000 to 50,000 civilians, and we had to try to rescue them.”

READ MORE: 9/11 Timeline

On the ground, fire department officials quickly realized that there was no hope of controlling the blaze. Instead, they focused on the desperate mission of evacuating the office workers who were inside the two massive buildings. Though they surmised that the twin towers had suffered structural damage and the fire-suppression systems might have been rendered inoperable, they had almost no solid information about the situation inside. So the firefighters rushed into the unknown.

But probably no one realized just how bad it would be. Among the 2,753 people killed at the World Trade Center site on 9/11, 343 were FDNY fatalities. That somber figure far surpasses the 78 lives lost in the next …read more

Source: HISTORY