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Westlake Legal Group > Posts tagged "United States"

Big Banks Are Earning Billions of Dollars. Trump’s Tax Cuts Are a Big Reason.

Westlake Legal Group 17banks1-facebookJumbo Big Banks Are Earning Billions of Dollars. Trump’s Tax Cuts Are a Big Reason. Wells Fargo&Company United States Politics and Government United States Economy United States Taxation Stock Buybacks Moynihan, Brian T JPMorgan Chase&Company Interest Rates Goldman Sachs Group Inc Federal Taxes (US) Federal Reserve System Donofrio, Paul M Credit and Debt Company Reports Citigroup Inc Banking and Financial Institutions Bank of America Corporation

The five largest banks in the United States reaped tens of billions of dollars in profits in the first half of the year, thanks in part to a strong economy and to the lingering effects of President Trump’s tax cuts.

Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Wells Fargo have all seen their tax rates decline to 22 percent or less as a result of the cuts, compared with rates of around 30 percent three years ago, one of the most consistent sources of strength apparent in quarterly earnings reports issued this week.

JPMorgan’s tax rate fell to just under 15 percent in this year’s second quarter, although the bank said it would probably inch higher later in the year. Wells Fargo’s tax rate for the quarter was just over 17 percent, and Bank of America’s was 18 percent.

The reduced rates helped offset a general decline in Wall Street trading revenue and added some pep to what would have otherwise been unremarkable quarterly performances by most of the banks.

Bank of America had the strongest results across the board among the five. It earned $7.3 billion from April through June, 8 percent more than it did during the same period last year. It also reported growth in deposits and loans to consumers.

“We see solid consumer activity across the board,” Bank of America’s chief executive, Brian Moynihan, said in a statement. He added that the country’s economy still appeared to be “steadily growing.”

JPMorgan’s overall results were strong, too: It earned $9.7 billion for the quarter, 16 percent more than in last year’s second quarter. Its credit card business boomed, but revenue from other kinds of loans fell.

Activity on Wall Street has faltered recently, with investors unsure of how to plan for fallout from Mr. Trump’s continuing trade war and the increasing likelihood that the Federal Reserve will begin to cut interest rates after a brief period of increases.

“We don’t know what kind of rate cut we’re going to get and we don’t know why,” Paul Donofrio, Bank of America’s chief financial officer, said. “That’s important.”

Lower interest rates could cause banks to earn less in interest on loans. Bank of America and JPMorgan both warned that the Fed’s likely shift toward lowering rates meant that they would probably earn less in the second half of the year than they originally anticipated.

Goldman Sachs was the only one of the five big banks to declare some type of win on Wall Street, although it was a partial one: an increase in revenue from trading stocks and certain kinds of derivatives. At $9.5 billion, Goldman’s overall quarterly profit was down 2 percent from the same period last year. It was the only one of the five to report a decline.

Citigroup may have gotten the most significant lift from a lower tax rate. The bank’s chief financial officer, Mark Mason, said the strength in Citi’s adjusted per-share earnings — $1.83, higher than Wall Street analysts’ expectations — was mostly a result of the lower rate and of a decline in its outstanding shares. The decline stemmed from Citi repurchasing shares.

Citi, Bank of America, JPMorgan and Wells Fargo said last month that they planned to repurchase a combined $105 billion in shares over the next year.

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Facebook Cryptocurrency Plans Have a Problem: Facebook’s Reputation

Westlake Legal Group 16libra-facebookJumbo Facebook Cryptocurrency Plans Have a Problem: Facebook’s Reputation Zuckerberg, Mark E Virtual Currency United States Politics and Government United States Trump, Donald J Stocks and Bonds Social Media Senate Committee on Banking Securities and Exchange Commission Regulation and Deregulation of Industry Powell, Jerome H PayPal Money Laundering Mnuchin, Steven T Marcus, David A Libra (Currency) House Financial Services Committee Federal Trade Commission Federal Reserve System Facebook Inc E-Commerce Consumer Protection Computers and the Internet Brown, Sherrod Bitcoin (Currency) Banking and Financial Institutions

Lawmakers made it clear at a Senate Banking Committee hearing on Tuesday that they believe the biggest roadblock to Facebook’s plan to enter the world of cryptocurrency and global finance is the company’s reputation.

Facebook’s cryptocurrency project, Libra, has been in the works for more than a year. It has an ambitious goal: to offer an alternative financial system that makes it possible to send money around the world with few fees.

But almost immediately, the company has run into resistance from Washington.

“Facebook is dangerous,” Senator Sherrod Brown, Democrat of Ohio, said at the hearing. “Facebook has said ‘just trust us.’ And every time Americans trust you, they seem to get burned.”

The initiative is far from the first effort of its kind. The best-known cryptocurrency, Bitcoin, is in wide circulation, and it introduced the idea of digital currencies that are free from government control.

But the Libra effort has put a spotlight on cryptocurrencies and amplified the voices of critics who say the technology has little value beyond speculative investing and illegal transactions, like online drug sales.

When Facebook announced Libra in June, it also faced immediate skepticism from people who are wary of the power the social media company has already accumulated. Within days, regulators in Washington were calling for hearings on Facebook’s plans.

That concern was obvious on Tuesday when members of the committee questioned David Marcus, who leads the company’s cryptocurrency initiative, for more than two hours. Mr. Marcus was asked about a range of Facebook controversies, from lax protection of the private information of its users to Russian disinformation on Facebook’s platforms to claims that is tries to muzzle conservative viewpoints.

“Why in the world should Facebook of all companies do this?” asked Senator Brian Schatz, a Democrat from Hawaii. “Maybe before you do a new thing you should make sure you have your own shop fixed.”

Mr. Marcus, adopting a conciliatory tone, said the company would do its best to fight fraud and to earn back the trust of the more than two billion people who use Facebook’s services regularly.

“We’ve made mistakes in the past,” Mr. Marcus said. “We have been working, and are working hard to get better.”

The Senate session was the first in a day of Capitol Hill hearings involving the technology industry. House lawmakers were set to question multiple tech executives at an afternoon hearing focused on competition issues as part of a broad antitrust inquiry. And Google executives were scheduled to face questions at another hearing on the subject of whether the company censors conservative voices.

Facebook officials will also have to answer more questions about the company’s cryptocurrency plans in a House Financial Services Committee hearing on Wednesday.

Some lawmakers and regulators — most notably at the Securities and Exchange Commission — have been raising concerns about the legality and usefulness of cryptocurrencies for some time.

The involvement of Facebook, which has faced an onslaught of controversy over the last two years and is expected to pay a $5 billion settlement with the Federal Trade Commission, has put a charge into those discussions.

Last week, the chair of the Federal Reserve, Jerome H. Powell, said Libra raised “serious concerns” around “money laundering, consumer protection and financial stability.”

“I just think it cannot go forward without there being broad satisfaction with the way the company has addressed money laundering” and other issues, Mr. Powell said as he testified before the House Financial Services Committee. Central bankers from Britain, China, France, Singapore and the European Central Bank have all voiced similar concerns.

President Trump also criticized Libra and Bitcoin, writing on Twitter last week that the digital tokens were “highly volatile and based on thin air.”

And at a news conference on Monday afternoon, Treasury Secretary Steven Mnuchin also raised questions about Libra and other cryptocurrencies. Facebook has “a lot of work to do before we get to the point where we’re comfortable with it,” Mr. Mnuchin told reporters.

The issue provides a rare instance when the Trump administration is lining up with Democrats rather than other Republicans. While Democrats on the Senate Banking Committee lashed into Facebook, several Republicans on the committee voiced support for Facebook and its new initiative.

“I just think we should be exploring this and considering the benefits as well as the risks,” said Patrick Toomey, a Republican from Pennsylvania. “To announce in advance that we have to strangle this baby in the crib seems wildly premature.”

But not all Republicans on the committee were so positive.

Martha McSally, a Republican from Arizona, said “I don’t trust you guys.”

And Tom Cotton, a Republican from Arkansas, worried that conservatives would not be treated fairly in the Libra system, echoing a frequent Republican talking point about the liberal bias of tech companies.

Mr. Marcus, a former PayPal executive, was handpicked by Mark Zuckerberg, Facebook’s chief executive, to lead the Libra effort.

Facebook’s role in the project will be run through a subsidiary company called Calibra, led by Mr. Marcus and other top Facebook employees. If the Libra digital token become popular, Calibra could build a business around offering customer financial services, including loans and other actions traditionally offered by the banking industry.

A separate entity called the Libra Association, whose proposed board would include more than a dozen partners in the tech and financial industries, would manage the cryptocurrency system once it is up and running, which Facebook is hoping to do next year.

Mr. Brown asked if there was any amount of opposition that would convince Facebook to scrap Libra.

“Is there anything that elected leaders can say that will convince you and Facebook that it should not launch this currency?” he said.

Mr. Marcus said that the company would not move ahead with the project until the concerns of regulators are answered.

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Tariffs on China Don’t Cover the Costs of Trump’s Trade War

Westlake Legal Group merlin_156648417_22d1cfc3-1331-4e84-b1a5-5523c82cc0e2-facebookJumbo Tariffs on China Don’t Cover the Costs of Trump’s Trade War Vietnam United States Economy United States Trump, Donald J Nucor Corporation International Trade and World Market Customs and Border Protection (US) China

WASHINGTON — President Trump on Monday portrayed America as being on the winning end of his trade war, saying tariffs are punishing China’s economy while generating billions of dollars for the United States, an economic victory that will allow him to continue his fight without domestic harm.

“We’ve taken in tens of billions of dollars in tariffs from China,” Mr. Trump told reporters during a “Made in America” product event at the White House. While China has taken $16 billion “off the table” by stopping its purchases of American agriculture, he said, the United States has “taken in much, much more — many times that in tariffs.”

But government figures show that the revenue the United States has collected from tariffs on $250 billion worth of Chinese goods is not enough to cover the cost of the president’s bailout for farmers, let alone compensate the many other industries hurt by trade tensions. The longer Mr. Trump’s dispute with China drags on, the more difficult it could be for him to ignore that gap.

Mr. Trump’s tariffs on Chinese imports raised $20.8 billion through Wednesday, according to data from United States Customs and Border Protection. Mr. Trump has already committed to paying American farmers hurt by the trade war $28 billion.

The president has rolled out two rounds of financial support for farmers: a $12 billion package that was announced last July, of which nearly $10 billion has been spent, and an additional $16 billion announced in May.

The government has provided no such benefit to the myriad other businesses, including plane makers, technology companies and medical device manufacturers, that have lost contracts and revenue as a result of Mr. Trump’s tariffs and China’s retaliation against American goods.

Trade talks with China have faltered in recent months, and Mr. Trump and his aides appear to be in no hurry to resolve the dispute, projecting confidence that China is suffering more of the harm, if not all of it.

Mr. Trump’s tariffs are undeniably hurting China, where exports power about 20 percent of the economy, compared with 12 percent in the United States. On Monday, the Chinese government said its economy had grown at a 6.2 percent annual rate in the second quarter, the lowest rate in 27 years.

“The United States Tariffs are having a major effect on companies wanting to leave China for non-tariffed countries,” Mr. Trump wrote on Twitter on Monday morning, commenting on the Chinese growth figures. “Thousands of companies are leaving. This is why China wants to make a deal with the U.S., and wishes it had not broken the original deal in the first place.”

There is little sign, though, that China’s loss is America’s gain. Much of the business activity is shifting to other low-cost countries, like Vietnam, with a transition cost attached for American companies that depend on them.

Numerous companies have announced changes in their supply chains or other effects from the tariffs, and more could be revealed as companies report second-quarter earnings in coming weeks. Nintendo has accelerated the shift of its Switch console to Vietnam from China, according to Panjiva, a supply chain research firm, while GoPro, Hasbro and other companies are reworking their supply chains to reduce their exposure to China.

The president and his advisers have argued that now is the time to try to force China to change trading practices that they say have hurt American companies and resulted in the loss of American jobs. The administration argues that the status quo was not without costs to the American economy. An investigation by the administration into Chinese intellectual property theft found that China’s policies had resulted in harm to the American economy of at least $50 billion per year.

Many trade experts and business leaders support confronting Beijing, and some have said the heavy cost of the trade war will be worth it if the United States can persuade China to open up its economy. But most disagree with the administration’s claim that the trade war is having no negative effect on American businesses.

“Certainly it is absolute folly to suggest that this is cost free for the U.S.,” said Rufus Yerxa, the president of the National Foreign Trade Council, which represents major American exporters.

Numerous studies have shown that American consumers are bearing much of the cost of the tariffs. Studies from the Tax Foundation in Washington and the Penn Wharton Budget Model at the University of Pennsylvania have shown that the tariffs amount to a significant tax increase on Americans, by raising the prices of goods. The damage is concentrated, as a percentage of income, among the lowest earners, who spend a larger share of their pay on imports than the upper middle class and the rich.

The administration has gradually increased the amount of Chinese goods subject to tariffs over the last year, from an initial $34 billion to a total of $250 billion, and ramped up the tariff rate on those goods.

But the monthly pace of revenue collection from tariffs has not increased this year. That’s because America is importing fewer Chinese goods than it did a year ago, which has canceled out the higher tariffs on a larger share of Chinese goods.

That decline appears to be the product of an overall slowdown in trade — which has contributed to weakened exports for American manufacturers — and the shift in supply chains to other countries. Imported goods from Vietnam have risen more than 30 percent this year from a year ago, Commerce Department data show.

Tariff revenue would likely surge if Mr. Trump followed through on his threat to impose tariffs on nearly all Chinese goods.

The administration has tried to put the levers of the government to work to shelter and support American businesses. On Monday, Mr. Trump signed an executive order requiring that 95 percent of the steel and iron that goes into projects funded by federal contracts eventually be American made, up from 50 percent.

The order is the latest in a series of proclamations that the president has made to encourage more purchases of American goods. An order in January encouraged companies to use American iron, steel, aluminum, cement and other products to the extent practical, but did not set any binding target.

John Ferriola, the chief executive of Nucor, a steel company in North Carolina, applauded the move. “We believe it’s good for our country, and it’s certainly good for the industry, I can’t deny that,” he said.

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Turkey Gets Shipment of Russian Missile System, Defying U.S.

ISTANBUL — Defying strenuous American objections and the threat of sanctions, Turkey began receiving the first shipment of a sophisticated Russian surface-to-air missile system on Friday, a step certain to test the country’s uneasy place in the NATO alliance.

The system, called the S-400, includes advanced radar to detect aircraft and other targets, and the United States has been unyielding in its opposition to Turkey’s acquisition of the equipment, which is deeply troubling to Washington on several levels.

It puts Russian technology inside the territory of a key NATO ally — one from which strikes into Syria have been staged. The Russian engineers who will be required to set up the system, American officials fear, will have an opportunity to learn much about the American-made fighter jets that are also part of Turkey’s arsenal.

That is one reason the Trump administration has already moved to block the delivery of the F-35 stealth fighter jet, one of the United States’ most advanced aircraft, to Turkey, and has suspended the training of its pilots, who were learning how to fly it. (Whether NATO, in turn, might glean some Russian secrets from Turkey’s acquisition of the S-400 is unclear.)

But the problem runs far deeper. A breach with Turkey over the S-400 casts into question the future of the Incirlik air base, a critical post for American forces in the region. And while American officials never discuss it in public, the base is also the storage site for scores of American tactical nuclear weapons, a leftover of the Cold War.

To the minds of Pentagon strategists, the S-400 deal is part of President Vladimir V. Putin’s plan to divide NATO. American officials are clearly uneasy when asked about the future of the alliance, or even how Turkey could remain an active member of NATO while using Russian-made air defenses.

“The political ramifications of this are very serious, because the delivery will confirm to many the idea that Turkey is drifting off into a non-Western alternative,” said Ian Lesser, director of the German Marshall Fund in Brussels. “This will create a lot of anxiety and bad feelings inside NATO — it will clearly further poison sentiment for Turkey inside the alliance.”

Strategically positioned at the crossroads of Europe and Asia, and sharing a border on the Black Sea with Russia, Turkey has long been both a vital peg in NATO and one of its more prickly members.

With one foot in the conflicts of the Middle East and a toehold in Europe, its interests have not always easily aligned with an alliance originally forged as a Western European defense against the Soviets. Instead, under the leadership of President Recep Tayyip Erdogan, Turkey has increasingly played both sides in the East-West struggle.

NATO has stationed the American-made Patriot surface-to-air missile system on Turkish soil since the outbreak of the civil war in Syria, but Mr. Erdogan has insisted his country needs its own long-range system.

ImageWestlake Legal Group merlin_157184076_cc3469e7-1701-4afe-b680-f79d86ce9759-articleLarge Turkey Gets Shipment of Russian Missile System, Defying U.S. United States Defense and Military Forces United States Turkey Russia North Atlantic Treaty Organization Erdogan, Recep Tayyip Defense and Military Forces

President Recep Tayyip Erdogan of Turkey, center left, with President Trump at the Group of 20 summit meeting in Japan last month. The delivery of the S-400 is likely to worsen strained Turkish-American relations.CreditErin Schaff/The New York Times

Turkey tried for years to buy its own Patriot system, but talks with Washington never produced a deal — a result that President Trump, at the Group of 20 meeting last month, said was the fault of the Obama administration.

“It’s a mess,” Mr. Trump said. “And honestly, it’s not really Erdogan’s fault.”

Even as he announced the arrival of three planes bearing the first parts of the Russian system, Defense Minister Hulusi Akar said Turkey still hoped to buy its American counterpart. “We are looking for Patriot procurement and our institutions are working intensively in that regard,” he said in remarks shown on the state-owned TRT channel.

Turkey does need to fill a gap in its defenses, but in purchasing the S-400, “the political-military outcomes could turn into a weakness for Turkey’s security,” said Ahmet Han, professor of international relations at Altinbas University in Istanbul. “The delivery has already caused a creeping vulnerability because it has damaged Turkey’s relations with NATO.”

The presence of the Russian system — which includes truck-mounted radars, command posts and missiles and launchers — would introduce an extra consideration into every NATO operation, he said, and that added strain “is the exact thing that Russia is after.”

Turkey’s turn to Russia for its own system is a success for Mr. Putin, who has sought to draw Turkey closer since a dramatic falling-out over the Syrian war, in which the Kremlin has backed the Assad government, while Turkey has supported a rebel faction.

Turkey shot down a Russian jet on its southern border with Syria in 2015, and the following year, a Turkish policeman who shouted “don’t forget Syria” fatally shot and killed the Russian ambassador at an art gallery in Ankara.

The two countries still back opposing sides in Syria, but have avoided further direct clashes and have come to collaborate closely through peace talks led by Russia, Turkey and Iran.

The S-400 delivery comes just ahead of celebrations on Monday in Turkey to mark the third anniversary of a failed coup attempt against Mr. Erdogan. That upheaval marked a turn in relations with Russia, said Diba Nigar, the Turkey director for the International Crisis Group, a research institute based in Brussels.

Many Turks, she said, believe “that NATO allies didn’t stand up for Turkey, that the West turned a blind eye during the coup but that Moscow was more supportive.”

The sale also promises to add to Russia’s growing reach in the greater Middle East.Moscow’s decisive intervention in the conflict in Syria has cemented Russia’s dominance there, and the Libyan strongman Khalifa Hifter is another beneficiary of its support.

Russia has won friends in Tehran by supporting Iran in its standoff with the Trump administration while also pursuing business, military and diplomatic ties with the American-aligned Arab monarchies. And since the military takeover in Egypt in 2013, Russia has also begun selling jets, helicopters and missiles to Cairo, another key American ally.

S-400 surface-to-air missile systems at a military base near Kaliningrad, Russia, in March.CreditVitaly Nevar/Reuters

Mr. Erdogan has pursued the Russian missile system despite American warnings and the damage that sanctions could do to his country’s already suffering economy, including a renewed slide in the Turkish lira. His party suffered a set of stinging defeats in local elections this year, largely because of the economic recession, his worst political setback in many years.

Speaking last month, Mr. Erdogan warned the United States not to risk a larger fissure in ties with Turkey over the missile system, and he said he was confident that he could reach an understanding with Mr. Trump to avoid sanctions.

“They should think deeply, because losing a country like Turkey will not be easy,” Mr. Erdogan said of the United States. “If we are friends, if we are strategic partners, then we should handle this issue between each other.”

A NATO spokesman said on Friday, “we are concerned about the potential consequences of Turkey’s decision to acquire the S-400 system,” in part because it is considered technically incompatible with the weapons systems used by NATO countries.

“Interoperability of our armed forces is fundamental to NATO for the conduct of our operations and missions,” said the spokesman who, in keeping with the organization’s protocol, declined to be quoted by name. “We welcome that Turkey is working with several Allies on developing long-range air and missile defense systems.”

The Turkish and Russian defense ministries both reported that the first parts of the system arrived at the Murted airfield in Ankara on Friday. Turkish news media reported that a team of Russian specialists had also arrived to assemble the system.

Russian officials used the occasion to boast of the S-400’s effectiveness, and to tweak the United States.

Turkey “came under unprecedented pressure and nevertheless prioritized national security,” Franz Klintsevich, a Russian senator, told the Interfax news agency. He claimed that Patriot missiles are made to be incapable of locking onto “a target carrying the U.S. flag,” adding, “everyone knows that.”

“Russian S-400 systems guarantee preservation of their sovereignty,” he said of Turkey. “No wonder the Americans are irate.”

Turkey would be liable for sanctions under the 2017 Countering America’s Adversaries Through Sanctions Act, which mandates United States sanctions against anyone making a significant deal with the Russian defense industry. American officials have said that Turkey would incur sanctions as soon as it received the weapon system on its soil.

The law calls on Mr. Trump to select five sanctions from a list of 12 to impose against Turkey. There is no waiver or suspension that could apply to Turkey, but there is no time schedule laid down for enforcement.

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A Koch Executive’s Harassment in China Adds to Fears Among Visitors

A Koch Industries executive was told he could not leave China. An ex-diplomat who helped organize a technology forum in Beijing was hassled by authorities who wanted to question him. An industry group developed contingency plans, in case its offices were raided and computer servers were seized.

Business executives, Washington officials and other frequent visitors to China who were interviewed by The New York Times expressed increasing alarm about the Chinese authorities’ harassment of Americans by holding them for questioning and preventing them from leaving the country.

They worry that trade tensions between Washington and Beijing could turn businesspeople and former officials into potential targets. Some companies are reviewing or beefing up their plans in case one of their employees faces problems, three people said. Many of the more than a dozen people interviewed by The Times asked for anonymity because they feared reprisals from the Chinese authorities.

“In a very not-so-subtle manner, the Chinese government has upped the ante by detaining Americans at the borders and at their hotels, and with the obvious intent to send a message to the Trump administration that they can engage in hostage diplomacy if push comes to shove,” said James Zimmerman, a partner in the Beijing office of the law firm Perkins Coie, which works with American companies in China.

“If they go in that direction, this would not be received well by the American business community, which puts at risk billions of dollars of investment in China,” he said.

The problems escalated after Canadian officials arrested an executive of Huawei, the Chinese technology giant, at the behest of American officials. China then detained a Canadian businessman and a former diplomat.

The fear spreading through the American business community highlights how fraught ties between the world’s two largest economies have become. Though President Trump and China’s president, Xi Jinping, have agreed to restart trade talks, which broke off in May, the two sides remain far apart on the most contentious issues.

ImageWestlake Legal Group merlin_157181262_86a6b94b-7e19-45ba-9b2f-b1bb9e3d60df-articleLarge A Koch Executive’s Harassment in China Adds to Fears Among Visitors United States Political Prisoners Koch Industries Inc International Trade and World Market China

President Trump and his Chinese counterpart, Xi Jinping, right, have agreed to restart trade talks, yet the two sides remain far apart on the most contentious issues.CreditErin Schaff/The New York Times

The extent of the harassment is unknown, but several recent episodes are likely to add to the concerns. Companies that publicly discuss such problems in China could face punishment from the politicized court system, calls for boycotts in the state-run news media or other punishments meted out behind closed doors. Officials at China’s Foreign Ministry and the Ministry of Public Security, its main police agency, did not respond to requests for comment.

Many American business figures still come and go without major incident. Elon Musk, the chief executive of the electric-car maker Tesla, was offered permanent residency by Li Keqiang, China’s premier, after he visited China in January to open a factory.

Still, a number of recent run-ins with the authorities have prompted broader worries. In late June, one American industry group sent an email to its members detailing how it was trying to mitigate its own risks.

“Foreign staff in particular have reported a high level of anxiety about the current environment,” it said in the message, which was reviewed by The Times. It said it was “in the process of finalizing a detailed crisis plan to be used in the event that one of our offices is raided and/or one of our staff is detained.”

Those plans included a procedure if its servers were seized. It also said it had reviewed insurance policies to ensure that staff evacuations were covered, and it recommended that workers not travel to sensitive parts of China.

Washington officials continue to warn travelers that the Chinese authorities have blocked a number of Americans from leaving China, a practice known as exit bans. Many of those targeted are businesspeople. Often they are naturalized American citizens who were born in China.

In some cases, the Chinese authorities use such bans to exert pressure on Americans who are members of the families of local officials, like the wife and children of Liu Changming, a former executive at state-owned bank accused of fraud. Huang Wan, the American daughter-in-law of Zhou Yongkang, a fallen former senior leader, has also publicly said she has been forbidden to leave.

In early June, a Chinese-American executive at Koch Industries, the conglomerate owned by the conservative billionaire brothers David and Charles Koch, was told he could not leave the immediate vicinity of his hotel in southern China, according to three people with knowledge of the matter. He was then interrogated for multiple days, with the discussion hitting on the trade war and souring relations between the United States and China.

Chinese leaders see American restrictions on companies like Huawei, the telecommunications giant, as an effort to hold back their country’s progress.CreditLam Yik Fei for The New York Times

While the authorities told the man that he would not be allowed to leave China, they did not take his passport. After the State Department intervened, tensions subsided and he was able to fly out of the country, the people added.

Given some of the discussion, two of the people with knowledge of the episode involving the Koch Industries executive said they believed it was an attempt to send a message to Mr. Trump.

The Kochs have traditionally been major financial backers of Republicans, including Mike Pompeo, the secretary of state and a former Republican congressman from Kansas. Koch Industries also has big investments in China, where it employs more than 23,000 people. Last year, a Koch subsidiary said it would put more than $1 billion into a chemical plant in Shanghai.

But the Kochs, whose views are more libertarian than populist, have also criticized Mr. Trump’s trade and immigration policies, prompting the president on Twitter to call them “a total joke in real Republican circles.”

In late June, the authorities tried to interrogate a former Beijing-based American diplomat, according to three people with knowledge of the incident. The former diplomat had been attending an artificial intelligence forum in Beijing, which he helped organize, when a hotel employee called his room on the night of June 25, saying that government security officers in the lobby wanted to speak with him. Alarmed, the former diplomat emailed the other American conference attendees, then went down.

Two plainclothes officers asked him to go with them to answer questions. They asked him about his diplomatic status and whether he had diplomatic immunity, the people said. They demanded to see his passport, which he refused to show.

The former diplomat called American Embassy officials. After a few senior diplomats arrived, the Chinese officers left, the people said.

Other run-ins create an atmosphere of intimidation. Early this year, a technology industry executive who has traveled to and worked in China for more than a decade without major incident encountered authorities in a smaller city in eastern China, according to an account from the person, who asked not to be identified publicly for fear of retaliation.

While the executive was traveling between meetings, a black car appeared to be following, often taking no precautions to disguise its presence. When the executive arrived at the airport to leave, a group of about six men with earpieces and bulletproof vests emerged from the car. One carried a visible sidearm, and another filmed the executive. Two of the men then followed the executive through security to the airport gate before the executive flew out.

As the trade war has intensified, China has tried to use American businesses to send a message to the Trump administration. It summoned American executives in June to warn them that they would suffer if they followed the administration’s proposed ban on sales of American technology. Businesspeople have taken new steps to reduce their profiles when traveling in China, including using burner phones and wiping laptops that may contain sensitive information, according to three people with knowledge of the matter.

Over all, that has led to growing nervousness among businesspeople.

“A lot of Western businesses are not willing to speak up loudly because they think things could get worse,” said Peter Humphrey, a British private investigator who was imprisoned in China in 2013 while working for GlaxoSmithKline. Now living in Britain, he advises companies on security and business issues in China and says his clients face growing retaliation.

“I believe we are seeing the worst environment since the Cultural Revolution,” he added, “in terms of the extent to which people are under surveillance and control, and the extent to which people are punished.”

Nicholas Confessore contributed reporting from New York.

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Logic Need Not Apply As California Passes Law Giving Free Healthcare to Illegal Immigrants

Westlake Legal Group gavin-newsom-fortunate-son-620x284 Logic Need Not Apply As California Passes Law Giving Free Healthcare to Illegal Immigrants United States unintended consequences unfunded liabilities Politics Illegal Immigration Gavin Newsom Front Page Stories Front Page Financial Trouble Featured Story dumb democrats crisis California border patrol

California Gov. Gavin Newsom just signed into law a bill that will extend free healthcare coverage to illegal immigrants 0-25 years old (the coverage for minors had been previously passed).

On Tuesday, California Gov. Gavin Newsom signed into law State Bill 104, which now extends health care benefits to illegal immigrants between the ages of 19-25, in addition to the law that already had guaranteed coverage to illegal immigrants under the age of 19.

The Hill noted, “The bill, introduced earlier this year, is estimated to cover about 90,000 low-income residents overall and comes with a roughly $98 million price tag.”

This comes as California’s financial future gets even bleaker. While some are claiming a recent single year surplus means everything is all good, that ignores the unfunded liabilities and the fact that they have almost four times as much debt as cash on hand (and states can’t just print more money to cover shortfalls).

In fact, things are so bad that of the $5T in unfunded state and local liabilities in the United States, a full $1T of it resides in California, which only makes up 12% of the actual population in the country. California’s debt-to-GDP ratio is also approaching that of several eurozone countries that experienced economic collapses.

Worth noting is that cities like Los Angeles and San Francisco are dealing with an explosion of homelessness right now, many of which are mentally ill or drug addled. Instead of spending the proper resources to try to handle that issue, California is using its already finite, over-strapped resources to give free healthcare to illegal immigrants. Meanwhile, crime has spiked and feces litter the streets as homeless encampments spring up everywhere.

Keep in mind, there are plenty of poor Americans in the state not getting such coverage. It’s actually gotten to the point in California that it could be preferable to be in the country illegally.

Even past the financial considerations, giving free healthcare to illegal immigrants only incentivizes more illegal immigration. That means more money for the cartels, more women raped on the journey, more sick and dead children, and further strain on an already resource-starved Border Patrol. This also means that the “price-tag” for this program will balloon as more and more people show up, creating yet more liabilities for California they can’t pay.

It’s completely irresponsible and ignores all the unintended consequences that are ultimately produced by such a move. That’s a trademark of progressivism though. As long as it feels good, it’s worth doing. Who cares if it actually makes the situation worse, right?

As a moral imperative, I’d love to give everybody on this planet free healthcare. But I recognize that’s not only impossible, trying to do would could cause far more harm than good if it ends up bankrupting everyone in the end.

I’ll end by mentioning the other reason none of this is sustainable. Because of California’s ridiculous finical decisions and over-regulation, which has lead to high taxes and housing shortages, they are experiencing massive emigration to other states. Their tax base shrank to the tune of over 1M people between 2007-2016. Adding more and more debt as you continue to lose tax payers is a recipe for disaster.

But Gavin Newsom got to smile for the cameras and that’s what’s really important here.


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British navy to Iran: Back the hell off

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Do the Iranians want a war? They nearly got one overnight, not with the US but with the United Kingdom. The British navy aimed its guns on several Iranian ships attempting to block passage through the Strait of Hormuz of a British oil tanker, which caused the smaller ships to retreat:

Three Iranian vessels attempted to stop a British tanker traveling through the Strait of Hormuz, Britain said Thursday, in the latest escalation between Iran and Western powers in recent weeks.

A British navy ship, the HMS Montrose, “was forced to position herself between the Iranian vessels and [the tanker] British Heritage and issue verbal warnings to the Iranian vessels, which then turned away,” the British government said in a statement.

“We are concerned by this action and continue to urge the Iranian authorities to de-escalate the situation in the region,” the statement said.

Last month, the Iranians shot down a US drone operating in international airspace, which nearly prompted a military strike in retaliation. The Iranians have now apparently either shifted their focus or broadened it, also in retaliation. The UK seized a Panamanian oil tanker carrying Iranian crude off the coast of Gibraltar, accusing Tehran of violating EU sanctions by selling oil to Syria’s Bashar al-Assad. Iran called it “an act of piracy” and threatened “consequences” for the seizure.

This seems to be the UK’s reminder that even consequences have further consequences. For the moment, anyway, the Iranians got the message. However, they clearly want to start a fight in the Strait of Hormuz with someone, even though it’s becoming clearer that the US and the UK are willing to shoot back now after the attacks on other shipping in the Hormuz area.

Iran may not have much choice. Their economy is collapsing again under the weight of US sanctions, and their population is growing restive. The Trump administration announced yesterday that more sanctions are coming now that Iran has openly admitted breaking past the restrictions on uranium enrichment:

The United States on Wednesday accused Iran of “nuclear extortion” and threatened further sanctions against Tehran, which has begun stockpiling and enriching uranium beyond the limits set in the 2015 accord that President Trump has abandoned.

The United States called an emergency meeting of the International Atomic Energy Agency in Vienna on Wednesday in response to the Iranian moves, while a senior French envoy was in Tehran exploring ways to reopen negotiations on compliance with the deal.

Iran called this “warfare“:

Iran says it’s prepared to return to “full implementation” of its landmark 2015 nuclear deal with world powers, but only when matched by the full compliance of “all participants.” …

Iran’s representative to international organizations in Vienna, Kazem Gharib Abadi, told a meeting of the International Atomic Energy Agency Wednesday U.S. actions were “neither legitimate nor legal” and should not be accepted by the international community.

He says that the “costly” consequences of American sanctions mean “they should be seen as weapons of warfare.”

Iran had better be careful before they find out what warfare actually would look like against the US and UK. They’ve been testing Western responses in the Hormuz area for some time, and the British navy gave the Iranians something to think about. If the mullahs are getting nervous about the misery of their population, then they should rethink their nuclear and ballistic missile programs as well as their support for Iranian proxy terror networks in the region.

The post British navy to Iran: Back the hell off appeared first on Hot Air.

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Cyrus Vance’s Office Sought Reduced Sex-Offender Status for Epstein

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The arrest of Jeffrey E. Epstein on federal sex-trafficking charges has focused attention on the lenient plea bargain that state and federal prosecutors reached with him in Florida over similar charges more than a decade ago.

But the new indictment has also unexpectedly renewed scrutiny of another prosecutor’s treatment of Mr. Epstein: the Manhattan district attorney, Cyrus R. Vance Jr.

During a hearing in 2011, a seasoned sex-crimes prosecutor from Mr. Vance’s office argued forcefully in court that Mr. Epstein, who had been convicted in Florida of soliciting an underage prostitute, should not be registered as a top-level sex offender in New York.


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A registered sex offender known for his lavish lifestyle and high-profile connections to the rich and powerful, the financier Jeffrey Epstein is facing new charges that he exploited dozens of young girls for sex acts.CreditCreditRick Friedman/Corbis, via Getty Images

Instead, the prosecutor, Jennifer Gaffney, asked a judge to reduce Mr. Epstein’s sex-offender status to the lowest possible classification, which would have limited the personal information available to the public, and would have kept him from being listed on a registry of sex offenders for life.

Justice Ruth Pickholz vehemently denied the request and expressed incredulity that the district attorney’s office would argue in support of a man accused of sexually molesting dozens of teenage girls in Florida.

“I have to tell you, I’m a little overwhelmed because I have never seen a prosecutor’s office do anything like this,” the judge told Ms. Gaffney.

Mr. Vance has said the request was a mistake and had been made by Ms. Gaffney without his knowledge.

Still, his office’s decision to take Mr. Epstein’s side in the hearing drew renewed criticism this week, as federal prosecutors in Manhattan brought new charges against Mr. Epstein, a wealthy financier whose social circle has included President Trump and former President Bill Clinton.

Bill Clinton and Jeffrey Epstein: How Are They Connected?

July 9, 2019

He was arrested on Saturday after his plane landed at Teterboro Airport in New Jersey. An indictment unveiled on Monday said he “sexually exploited and abused dozens of minor girls” from 2002 to 2005 in his palatial homes in Manhattan and Palm Beach, Fla.

It is not the first time Mr. Vance has been harshly criticized for his office’s handling of allegations against rich and influential men. He drew fire for declining to prosecute the Hollywood producer Harvey Weinstein in 2015 on charges that he groped an Italian model in his TriBeCa office. His office later charged Mr. Weinstein with sex crimes involving two other women.

Mr. Vance had also found himself under attack for declining to pursue charges against two of Mr. Trump’s children, Ivanka and Donald Jr., in 2015, after they were accused of misleading investors in a condo-hotel project.

Mr. Vance’s critics have said his office’s support of Mr. Epstein’s motion was yet another example of Mr. Vance’s office giving preferential treatment to wealthy defendants — this time to a man accused of being a serial predator who targeted minors.

Why the Trump White House Is Caught Up in the Jeffrey Epstein Scandal

July 7, 2019

In Florida, Mr. Epstein hired a cadre of high-powered lawyers to fight the charges against him. The team eventually negotiated a lenient plea bargain with federal prosecutors that allowed him to plead guilty to state prostitution charges. He spent 13 months at a Palm Beach jail and was permitted to leave the facility six days a week, 12 hours a day, for work.

One of those lawyers, Jay Lefkowitz, also lobbied Mr. Vance’s office to have Mr. Epstein’s sex-offender status knocked down.

“Was it preferential treatment at the highest level, or is it that the Manhattan district attorney’s office is not run well enough to ensure that sex crimes are investigated and taken seriously?” said Sonia Ossorio, the president of the New York City arm of the National Organization for Women. “Either way it’s unacceptable.”

For his part, Mr. Vance denied in an interview that his office had ever given preferential treatment to any defendant because of wealth or social status. He said that claim is “simply wrong and is inconsistent and opposite to what I believe in and to what the lawyers in this office believe in.”

Ms. Gaffney, who was a senior sex crimes prosecutor, argued during the hearing that Mr. Epstein did not merit the highest offender status because he had not been indicted in Florida on all of the accusations against him. Several of his accusers had refused to cooperate, she told the judge, court records show.

She made the argument even though the New York state panel that evaluates people convicted of sex crimes — the Board of Examiners of Sex Offenders — had calculated that Mr. Epstein had a high risk of reoffending. His risk assessment was 130 — “solidly above” the 110 threshold for a level 3 offender, court records show.

The board had based its decision, in part, on a 22-page affidavit from detectives in the Palm Beach Police Department that detailed complaints from minors who said Mr. Epstein had molested them — a document Ms. Gaffney also had.

Yet Ms. Gaffney argued — incorrectly it turned out — that because Mr. Epstein was indicted on only one of those crimes, the other allegations could not be considered when determining sex-offender status.

“If an offender is not indicted for an offense, it is strong evidence that the offense did not occur,” Ms. Gaffney said.

The judge said she had done many sex-offender registration hearings with defendants “much less troubling than this one” and that prosecutors “would never make a downward argument like this.”

Ms. Gaffney then told the judge she had tried to reach prosecutors in Florida to learn if they had spoken with Mr. Epstein’s accusers, but “no one was cooperative.”

“I don’t think you did much of an investigation here,” Justice Pickholz said.

Mr. Epstein’s lawyers, Mr. Lefkowitz and Sandra Musumeci, also argued for the lower rating. They noted their client had been rated a level-one sex offender in the United States Virgin Islands, his legal residence, and had received a similar rating in Florida.

Five months before the hearing, the lawyers had supplied Manhattan prosecutors with a deposition in which the lead prosecutor in Palm Beach, Lanna Belohlavek, told detectives “there are no real victims here,” Ms. Musumeci said in court.

Justice Pickholz was unmoved and labeled Mr. Epstein a level-three sex offender, which meant his name and address would be on a state registry of sex offenders for life. His lawyers appealed the decision, but an appellate panel upheld the ruling.

During the appeal, the Manhattan district attorney’s office did an about-face, admitting Ms. Gaffney had misinterpreted the law and stating there was “no basis for a downward departure” from the highest rating.

On Tuesday, Mr. Vance said he had not learned about the hearing or the subsequent appeal until well after they happened. He added he had not even heard of Mr. Epstein at the time, and he was not typically kept informed about every sex-offender status hearing.

He said in reviewing the transcript of the hearing he did not believe Ms. Gaffney “was going out on a ledge for the defendant.”

“I see the lawyer for our office arguing on a point of law where she thought she was right but she was wrong,” he said.

Ms. Gaffney, who was never disciplined for her decision, left the Manhattan district attorney’s office in September. She did not respond to messages on Tuesday seeking comment.

Jeffrey Epstein, Billionaire Long Accused of Molesting Minors, Is Charged

July 6, 2019

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Kim Darroch, U.K. Ambassador, Resigns After Leak of Trump Memos

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LONDON — Kim Darroch resigned on Wednesday as Britain’s ambassador to the United States after the leak of his candid observations on the Trump administration, a ferocious response from President Trump and the failure of the likely next prime minister, Boris Johnson, to support the British envoy.

Mr. Darroch submitted his resignation in a letter that said the situation was making it impossible for him to carry out his role. “Although my posting is not due to end until the end of this year, I believe in the current circumstances the responsible course is to allow the appointment of a new ambassador,” he wrote.

On Monday, Mr. Trump said the White House would no longer deal with Mr. Darroch after the leak of confidential emails written by the ambassador that had described the Trump administration as “clumsy and inept.” The president described the ambassador as “wacky,” a “very stupid guy” and a “pompous fool,” and called Prime Minister Theresa May “foolish” for ignoring his advice on Brexit.

The dispute has cast a shadow over ties between London and Washington and taken center stage in the Tory leadership contest to succeed Mrs. May as prime minister, which Mr. Johnson is heavily favored to win.

During a televised debate Tuesday night, Mr. Johnson, the former foreign secretary, ignited a firestorm by refusing several opportunities to say that he would keep Mr. Darroch in his post until a scheduled departure date in January. He also declined to criticize Mr. Trump, stressing his good relationship with the White House and playing down the rift.

Within hours, the ambassador had submitted his resignation.

Mr. Johnson’s failure to back the ambassador was met with withering criticism from opponents.

“The fact that Sir Kim has been bullied out of his job, because of Donald Trump’s tantrums and Boris Johnson’s pathetic lickspittle response, is something that shames our country,” said Emily Thornberry, the opposition Labour Party’s shadow foreign secretary. “It makes a laughingstock out of our government.”

She added: “Just imagine Churchill allowing this humiliating, servile, sycophantic indulgence of the American president’s ego to go unchallenged.”

Even Mr. Johnson’s rival in the leadership race, Jeremy Hunt, the current foreign secretary, described Mr. Trump’s comments as “unacceptable” and said during the debate that he would keep Mr. Darroch in his job.

Mr. Johnson said on Wednesday that he regretted Mr. Darroch’s departure, and that whoever leaked the ambassador’s messages should be “run down, caught and eviscerated.”

With Mr. Johnson intent on Britain leaving the European Union in October, the “special relationship” with Washington is of particular importance given that Mr. Tump has promised a trade agreement with Britain.

“I think the reality was that in light of the last few days his ability to be effective was probably limited,” Vice President Mike Pence’s chief of staff, Marc Short, said Wednesday morning in Washington. “So it was probably the right course.”

The controversy surrounding Mr. Darroch’s assessments has struck some members of the diplomatic corps in Washington as a broader peril: As one of his fellow European ambassadors put it, there was little in his cables that could not be found in their own.

Mr. Darroch’s descriptions of the administration as inept and chaotic, of reversed decisions and a mystifying policymaking process, differ little from myriad daily news reports and the findings of the slew of books about Mr. Trump’s tenure.

But a senior American diplomat noted, before Mr. Darroch’s resignation was announced, that the publication of the WikiLeaks trove of 250,000 diplomatic cables in 2010 had a similar result, with the resignation of the United States ambassador to Mexico.

The entire episode has left British diplomats shocked. Simon McDonald, the head civil servant in the British Foreign Office, told a parliamentary committee that he could not think of another example in his 37-year-long diplomatic career of a head of state refusing to deal with a British ambassador. That applied even to countries hostile to Britain, he said.

Equally worrying for some has been the lack of support from Mr. Johnson, amid fears that pro-Brexit politicians want to undermine civil servants and blame them for the country’s failure to leave the European Union as scheduled. Mr. Darroch, who once served as Britain’s top diplomat in Brussels, was one of a number of officials viewed with suspicion by Brexit supporters.

In response to Mr. Darroch’s decision, Mrs. May paid tribute to him in Parliament and said that the whole cabinet had rightly given him its support.

“Good government depends on public servants being able to give full and frank advice. I want all our public servants to have the confidence to be able to do that, and I hope the house will reflect on the importance of defending our values and principles, particularly when they are under pressure,” she said.

Jeremy Corbyn, leader of the opposition Labour Party, said of Mr. Darroch, “the comments made about him are beyond unfair and wrong.”

During his tenure, Mr. Darroch was a constant whirlwind of intelligence collection, political analysis, and outreach to the administration and Congress. He organized lunches and dinners for the parade of British officials who move through Washington, from trade ministers to the chiefs of the British intelligence agencies.

Because he had served as Britain’s national security adviser, Mr. Darroch had especially close ties to the American national security apparatus, and frequently played a key role in coordination on matters involving Iran, Russia and Brexit.

His parties, especially an annual New Year’s party at the Embassy, which is decorated with art from Britain’s museum collections, were among Washington’s most sought-after social events. They sometimes included Trump administration officials, including Ivanka Trump and Jared Kushner, the president’s daughter and son-in-law, both of whom are close advisers to the president.

Yet the ambassador’s access to the highest levels of government waned under Mr. Trump. In past administrations, American secretaries of state were often at the British Embassy.

But neither Rex W. Tillerson nor Mike Pompeo dealt as much with Mr. Darroch, and the National Security Council was not as welcoming a place, even to one of Washington’s most crucial ambassadors, as it had been in previous administrations, Democratic and Republican.

The State Department had no immediate comment on Mr. Darroch’s resignation. On Tuesday, the department’s main spokeswoman, Morgan Ortagus, acknowledged that the controversy had implications for Britain’s internal politics.

“There’s clearly an election going on in the United Kingdom,” she said. “We’re going to stay out of that and we will, of course, let the White House speak for the president’s tweets.”

Ms. Ortagus stressed the importance of the relationship between the two nations.

“We have an incredibly special and strategic relationship with the United Kingdom,” she said. “That has gone on for quite a long time and it’s bigger than any individual; it’s bigger than any government. It’s something that has stood the test of time and will continue to do so.”

Mr. McDonald, the head civil servant in the British Foreign Office, said he had accepted the resignation “with deep personal regret.”

“Over the last few difficult days you have behaved as you have always behaved over a long and distinguished career, with dignity, professionalism and class. The prime minister, foreign secretary and whole of the public service have stood with you: you were the target of a malicious leak; you were simply doing your job.”

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Fed, Pressed by Trump to Cut Rates, Faces Fire No Matter What It Does

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WASHINGTON — The Federal Reserve’s meeting this month was never going to be an easy one given that officials remain split over when — or whether — to cut interest rates. The last few weeks could set the Fed up for an even more difficult call.

President Trump has put the Fed under a microscope, jawboning officials for months to cut rates and calling the central bank America’s “most difficult problem” in a series of posts on Twitter on July 5.

The Fed’s chair, Jerome H. Powell, and his colleagues say they ignore politics when making decisions. But if they do reduce interest rates, as markets expect, some slice of the Fed-watching public will interpret that as a sign that they have caved under pressure even as job gains remain solid and economic growth is still strong.

If they stand pat, they’ll deliver an unwelcome surprise to markets and could incur the White House’s wrath.

Mr. Powell will get a chance to lay the groundwork for the Fed’s meeting on July 30 and 31 when he testifies before lawmakers on Wednesday and Thursday. Markets are fully pricing in a 0.25 percentage-point rate cut this month and the Fed’s pre-meeting blackout period starts July 20, so officials have just this week and next to manage expectations.

As of last reading, they seemed unsure about what to do.

The 17-member Fed policymaking committee split sharply in June over whether the central bank should cut rates this year, with eight officials projecting a cut before the end of the year and nine pointing to no change or a rate increase. Mr. Powell said many of the officials who did not project a rate cut saw the case for one strengthening.

Data since have provided little clarity — if anything, the economic snapshot may be blurrier. Job gains have rebounded after a slow May, and Mr. Trump and President Xi Jinping of China spoke at a summit in Osaka, Japan, averting an immediate escalation of the trade war between their nations.

But temporary relief is not a permanent solution, and tensions could reignite, creating uncertainty that threatens economic growth. The global economy continues to struggle, manufacturing data are flagging, and price increases in the United States remain mired below the Fed’s goal.

“They are in a bit of a bind,” said Joseph Song, United States economist at Bank of America. “It’s going to be difficult. The committee is clearly divided.”

Mr. Song said that he expected the Fed to hold off on cutting interest rates until September and that he thought Mr. Powell would need to communicate that later timing at his congressional appearance this week.

If there is a case for cutting rates sooner, it hinges on inflation data, he said. Price gains have been mired below the Fed’s 2 percent goal almost permanently since the central bank formally adopted the target back in 2012. That’s a problem because it creates a credibility issue for the Fed and increases the risks that prices could fall into economy-harming price declines in a recession. Deflation would be bad news since it could encourage consumers to hold off on purchases, knowing that they will be cheaper tomorrow, and would exacerbate a downturn.

The Fed’s preferred inflation index increased just 1.5 percent in the year through May, and June figures will be released on July 30, the first day of the Fed’s meeting.

Against that backdrop, and with trade tensions still humming in the background, the Fed may feel justified cutting rates this month even as economic growth data hold up. They set policy with an eye toward the future, since monetary policy moves take time to kick in.

“The question my colleagues and I are grappling with is whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation,” Mr. Powell said in a speech last month.

Moving now could signal the Fed’s commitment to hitting the inflation target and a willingness to proactively offset any fallout as trade tensions drag on.

The case for a rate cut “was never about the labor market, or the consumer, which seemed pretty good,” said Julia Coronado, founder of MacroPolicy Perspectives, who expects a rate cut with the message that the economy “is in a good place, and we’re going to keep it there.”

But even if the Fed delivers on a rate cut, the move is unlikely to insulate the central bank from political fire.

Mr. Trump has continued to criticize the Fed even as it has pivoted from raising rates steadily to pledging “patience” in the first half of this year and, more recently, to setting up for coming rate cuts. The president said over the weekend that “our Federal Reserve doesn’t have a clue!” and that “they raised rates too soon, too often, & tightened.”

The White House has reportedly looked into firing Mr. Powell, though that may prove legally impossible. Larry Kudlow, Mr. Trump’s National Economic Council director, said at a CNBC event Tuesday that there was no immediate move to get rid of Mr. Powell.

“I will say that unequivocally, at the present time, yes, he is safe,” he said.

Political strife makes this week’s appearance all the more important for Mr. Powell. While the president may take issue with the Fed’s policy setting, lawmakers in the House and Senate are the Fed’s bosses. They give the Fed its goals, have the ability to change the law that sets out its rules and responsibilities, and are able to support or reject the White House’s nominees for future central bank leaders.

Mr. Powell has cultivated relationships on Capitol Hill, meeting regularly with members of the Senate Banking and House Financial Services Committees. He got together with nine members in May, and has had 44 congressional meetings this year, seeing some lawmakers who oversee the Fed twice, based on his calendars.

“There’s really no way that the Fed can win with President Trump,” Ms. Coronado said. She said the Fed was concentrated on communicating with lawmakers and, importantly, making moves that could stand on merit. “Chair Powell is focused first on making careful, methodical decisions.”

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