Stability is Instability in Italy as Prime Minister Resigns

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Reuters: Italian Prime Minister Matteo Renzi is set to resign on Monday after suffering a crushing defeat in a referendum over constitutional reform, tipping the euro zone’s third-largest economy into political turmoil.

His decision to quit after just two-and-a-half years in office deals a blow to the European Union, already reeling from multiple crises and struggling to overcome anti-establishment forces that have battered the Western world this year.

Renzi’s emotional, midnight resignation announcement sent the euro lower and jolted stock and bond markets on concerns that early elections could follow, possibly paving the way for an anti-euro party, the 5-Star Movement, to come to power.

Financial markets bounced back later in the morning as European officials played down the prospect of a broader euro zone crisis, but Italy’s fragile bank sector had dropped more than 4.7 percent at 1320 GMT. [.FTIT8300]

Renzi has called a Cabinet meeting for 1730 GMT, after which he said he would tender his resignation.

European Commissioner for Economic and Financial Affairs Pierre Moscovici dismissed talk of a euro zone crisis, and German Finance Minister Wolfgang Schaeuble urged calm. Both said Italy’s institutions are capable of handling a government change, which would be its 64th since 1946.

Economy Minister Pier Carlo Padoan, who has pulled out of meetings with European finance ministers in Brussels this week, is viewed as a possible candidate to replace Renzi. Senate President Pietro Grasso and Transport Minister Graziano Delrio have also been tipped as possible successors.

It is unclear if Renzi will have enough support in his Democratic Party (PD) to remain party leader – a role that could give him a say in who becomes the next prime minister.

The government crisis could open the door to elections next year and to the possibility of the opposition 5-Star Movement gaining power in the heart of the single currency area. 5-Star, which campaigned hard for a ‘No’ vote, wants to hold a referendum instead on membership of the euro.

“I take full responsibility for the defeat,” Renzi said in his late-night speech, pledging to formally resign to President Sergio Mattarella on Monday.

“I will greet my successor with a smile and a hug, whoever it might be,” he said, struggling to contain his emotions when he thanked his wife and children for their support.

“We are not robots,” he said at one point.

SUCCESSOR

Sunday’s referendum was over government plans to reduce the powers of the upper house Senate and regional authorities but was viewed by many people as a chance to register dissatisfaction with Renzi, who has struggled to revive economic growth, and mainstream politics.

“No” won an overwhelming 59.1 percent of the vote, according to the final count. About 33 million Italians, or two-thirds of eligible voters, cast ballots following months of bitter campaigning that pitted Renzi against all major opposition parties, including the anti-establishment 5-Star.

The euro briefly tumbled overnight to 21-month lows against the dollar, as markets worried instability could deal a hammer blow to Italian banks, which are looking to raise around 20 billion euros ($21 billion) in coming months. However, by early in the European morning it had largely rebounded. [FRX/]

Italy’s banks are weighed down by more than 350 billion euros of bad loans.

Shares in Monte dei Paschi fluctuated wildly on Monday and were down almost 5 percent at 1320 GMT, as a consortium of investment bankers met to discuss a capital increase to raise 5 billion euros which the lender needs by the end of the month to avoid being wound down.

Yields on Italy’s benchmark 10-year bond initially soared to more than 2.07 percent, but then retreated back to 2.04 percent. [GVD/EUR]

Mattarella will consult with party leaders before naming a new prime minister – the fourth successive head of government to be appointed without an electoral mandate, a fact that underscores the fragility of Italy’s political system.

In the meantime, Renzi would stay on as caretaker.

The new prime minister, who will need the backing of Renzi’s PD to take office, will have to draw up a new electoral law, with 5-Star urging a swift deal to open the way for elections in early 2017, a year ahead of schedule.

“From tomorrow, we will start work on putting together 5-Star’s future program and the team of people that will make up a future government,” said Luigi Di Maio, tipped to be the group’s prime ministerial candidate.

Opinion polls put 5-Star neck-and-neck with the PD.

DEMOLITION MAN

Renzi, 41, took office in 2014 promising to shake up hidebound Italy and presenting himself as an anti-establishment “demolition man” determined to crash through a smothering bureaucracy and reshape creaking institutions.

However, his economic policies have made little impact, and the 5-Star Movement has claimed the anti-establishment banner, tapping into a populist mood that has seen Britons vote to leave the European Union and Americans elect Donald Trump president.

In a moment of relief for mainstream Europe, Austrian voters on Sunday rejected Norbert Hofer, vying to become the first freely elected far-right head of state in Europe since World War Two, choosing a Greens leader as president instead.

But elsewhere, the established order is in retreat. French President Francois Hollande said last week he would not seek re-election next year, and even German Chancellor Angela Merkel looks vulnerable as she seeks a fourth term in 2017.

Just this past July, 2016:

BusinessInsider: The economic and political crisis brewing in Italy was, until recently at least, going largely unnoticed. 

Italians will have a say on reforms to its Senate, the upper house of parliament, in October.

The proposed reforms are widespread, and if approved could improve the stability of Italy’s political set up and allow Prime Minister Matteo Renzi to push through laws aimed at improving the country’s economic competitiveness.

If denied, Renzi’s government will most likely fall, plunging Italy back into the type of political chaos last seen after the ousting of former Prime Minister Silvio Berlusconi, according to Deutsche Bank.

The country is also contending with a banking crisis, and a stagnant economy with crushingly low productivity, a history of missing growth targets, and generally underperforming the rest of Europe in recent years. All this led the International Monetary Fund to warn earlier this week of “two lost decades” for the nation.

All in all, things don’t look particularly peachy for Italy, especially when warnings that the country’s woes — and not Brexit — could be the catalyst to tear the Eurozone apart in coming years.

But what exactly are the biggest issues that present risks to Italy and its political and economic stability? Thankfully, following its recent mission to the country, the International Monetary Fund has produced a handy flow chart, or “risk matrix” showing all the threats to stability in the country.

It includes growing tensions in the Middle East, the UK’s vote to leave the EU, the rise of populism, and of course, Italy’s banking crisis which — despite steps being taken towards a solution — is still a massive threat.

For Gen. Mattis as SecDef, Mission is Iran

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Outside of all the hype of the moniker of ‘mad-dog’ and with a call sign of ‘chaos’, there is much more to be known and understood about General Mattis and what his immediate objectives will be when confirmed as Secretary of Defense.

 

Mattis served on the Board of General Dynamics and is a Visiting Fellow of the Hoover Institute. With his dedication and loyalty to all those that have and are wearing the military uniform, Mattis is also on the Advisory Board of Spirit of America, an organization dedicated to the success and conditions of all service personnel.

Mattis supports a two-state solution for Israel, something that will never in opinion be a viable peace alternative. The General has also given praise to John Kerry for his attempts at a Middle East peace program. While noble, that dog wont hunt either.

James Mattis will be assertive on matters with Pakistan, Iraq and Afghanistan. He tells us that under the management of Barack Obama and his weaning power from the Middle East, the United States is suffering from ‘strategic atrophy’,

It is notable that General Mattis has a personal library of more than 7000 books and while in active service published a reading list for his Marines. Indeed, Mattis is a scholar of history that includes previous wars, tactics, military leadership and results. That does tell us he has a wide and deep comprehension for understanding fully the past yielding probable and realistic estimates for the future of global equilibrium.

Related reading: France’s History of Terror, Murder and Iran

Through his military life, Mattis has encountered Iran intervention, terror, lies and tactics in countless war theaters. When it comes to Iran, the outset of his mission as Secretary of Defense will be the measured and required stipulations of the Joint Plan of Action (nuclear deal) with Iran and that will be coupled with Iran’s military influence and intervention in all the Middle East theaters of war but will also include Iran’s influence in Latin America and Europe.

All military leaders want talks, deal and diplomatic programs to be fully exhausted before the armed forces are called in to clean up messes where those other efforts have failed. For this reason, the General agrees in part with the Iran deal in spirit but there are countless violations and the financial infusion received by Iran at the hands of the United States under Barack Obama and John Kerry, supplemented by the trade and commerce plans have given rise to further concerns for Mattis. Not only does Israel feel minimized and threatened by Iran, but many other nations do as well due to the continued aggressive behavior of Iran so key Gulf Nations will have a robust role in coming months.

Iran is watching and doing so closely and their threats launched by words and deeds are likely to escalate. For Iran there is hard power and soft power and then power by proxy, such is the case in Latin America, Syria and Iraq, at least. Going back to 2008, Iran’s footprint across the world has not changed and in some regions has only been more stubborn, obvious and apparent. Dealing with the matter of Iran would begin to restore a balance of peace, or will it, can it?

Congress just cleared unanimous votes on sanctions for Iran. Iran has been proven to violate the terms of the JCPOA that included findings from German Intelligence.

With the ink barely dry on the deal between the U.S. and Iran to prevent the Islamic Republic from securing nuclear weapons, a new German intelligence document charges that Iran continues to flout the agreement. Germany’s domestic intelligence agency said in its annual report that Iran has a “clandestine” effort to seek illicit nuclear technology and equipment from German companies “at what is, even by international standards, a quantitatively high level.” The findings by the Federal Office for the Protection of the Constitution, Germany’s equivalent of the FBI, were issued in a 317-page report last week. German Chancellor Angela Merkel underscored the findings in a statement to parliament, saying Iran violated the United Nations Security Council’s anti-missile development regulations. “Iran continued unabated to develop its rocket program in conflict with the relevant provisions of the UN Security Council,” Merkel told the Bundestag.

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Recorded on  July 16, 2015 – Hoover fellows Charles Hill and James Mattis discuss the Iran deal and the state of the world on Uncommon Knowledge with Hoover fellow Peter Robinson. In their view the United States has handed over its leading role to Iran and provided a dowry along with it. Iran will become the leading power in the region as the United States pulls back; as the sanctions are lifted Iran will start making a lot of money. No matter what Congress does at this point, the sanctions are gone. Furthermore, the president will veto anything Congress comes up with to move the deal forward. This  de facto treaty circumvents the Constitution.

If we want better deals and a stronger presence in the international community, then the United States needs to compromise, and listen to one another other, and encourage other points of view, especially from the three branches of government. If the United States pulls back from the international community, we will need to relearn the lessons we learned after World War I. But if we engage more with the world and use solid strategies to protect and encourage democracy and freedom at home and abroad, then our military interventions will be fewer. The United States and the world will be in a better position to handle problems such as ISIS.

Foreign Threats Causing U.S. to Convert to Armored Battalions

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Army to transition Fort Stewart infantry brigade to heavy armor

A soldier with the 3rd Armored Brigade Combat Team, 4th Infantry Division, guides his vehicle onto the rail platform at Fort Carson, Colorado, Nov. 15, 2016. The 3rd Infantry Division’s 2nd Infantry Brigade Combat Team, based at Fort Stewart in Georgia, is scheduled to officially become the 2nd Armored Brigade Combat Team in October 2017. Ange Desinor/U.S. Army

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WASHINGTON — The Army will transition one of its light infantry brigades into a heavy armored brigade in the summer as it looks to bolster its ability to respond to potential military threats posed by other nations, the service announced Wednesday.

The 3rd Infantry Division’s 2nd Infantry Brigade Combat Team, based at Fort Stewart in Georgia, will begin exchanging its light infantry equipment in mid-2017 for tanks, infantry fighting vehicles with upgraded armor and self-propelled howitzer cannons, according to an Army statement. The unit is scheduled to officially become the 2nd Armored Brigade Combat Team in October.

The transition will give the Army a total of 15 armored brigades across its force. It will boast 10 armored brigades on active duty and five in the reserves.

That will give the Army more firepower to respond to the potential for full-spectrum combat operations. Top Pentagon officials, including Defense Secretary Ash Carter, have listed potential conflicts with Russia, China, Iran and North Korea as major threats for the United States.

Maj. Gen. Andrew Poppas, the Army’s force management director, said the conversion will help the Army retain its ability to “overmatch” such rivals, who in some cases have narrowed the military power gap with the United States.

The 2nd Brigade will actually be re-converting into an armored unit, after spending only about two years as an infantry brigade. The Spartan Brigade, as it is nicknamed, was an armored unit when it participated in the initial invasion of Iraq in 2003, and played a major role in the capture of Baghdad, known as the “Thunder Runs.” It transitioned into an infantry unit in May 2015, as part of the Army’s drawdown that included cutting an entire brigade from Fort Stewart.

Col. Brian Ellis, the force management division chief for Army operations, said global security challenges have changed drastically since the Army decided to convert 2nd Brigade into a lighter unit.

“As part of our Army processes, we’re always reviewing requirements based on strategic guidance to provide the right mix of capabilities to support geographic combatant commanders,” he said.

The conversion will give Fort Stewart two identical heavy armored brigades able to serve rotational deployments to areas including Eastern Europe, where the 3rd Infantry Division’s 1st Armored Brigade Combat Team has already served tours to train with NATO allies and deter Russian aggression in the region.

It will take time for the brigade to transition back into a war-ready armored combat brigade, Ellis said. The unit will not begin its initial training regimen with the heavy equipment until 2018.

 

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Related reading: Europe Spooling up Military Activities vs. Russia

U.S. Sens. Johnny Isakson (R-GA) and David Perdue (R-GA) and U.S. Rep. Buddy Carter (R-GA) lauded the move.

“The Army’s announcement is great news and exhibits a continued commitment to our nation’s defense capabilities in Georgia,” Perdue said in a statement. “The additional armored brigade at Fort Stewart provides us with a more lethal army, increasing our ability to counter the rise of Russian aggression against our European allies as well as other threats around the globe. This is a testament to the proficiency and growing capability of all the dedicated military and civilian personnel at Fort Stewart.” More here.

 

VA Secretary McDonald is an Ass

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Citizens Against Government Waste does a remarkable job as a watchdog over waste, fraud and abuse. Hat tip to this organization for their stellar work and notably this item on VA Secretary Robert McDonald.

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CAGW Names VA Secretary Robert McDonald November Porker of the Month

Citizens Against Government Waste (CAGW) named Secretary of Veterans Affairs (VA) Robert McDonald its November 2016 Porker of the Month for giving bonuses to some of the senior executives who were involved in the continuing hospital wait-times scandal.

Despite assurances by Sec. McDonald and President Obama that the wait-times scandal was isolated to Phoenix and that the department has solved the problem, numerous VA inspector general (IG) reports over the last year have confirmed that thousands of veterans still languish in the VA’s single-payer system. They are waiting for care mainly due to the department’s abject failure to solve its corrosive culture, which led to the scandal in the first place.  Data released on June 3, 2016 found that the number of patients who have waited more than a month to see a doctor exceeded a half a million since the beginning of 2016, and no improvement was seen in any month so far this year.

In the face of this continued mismanagement, an October 28, 2016 USA Today report found that the VA had provided $177 million worth of bonuses to its nearly 189,000 employees in 2015.  Included in that total were more than 300 senior executives, some of whom were intimately involved in the ongoing wait-times scandal at the Phoenix VA hospital as well as facilities nationwide.

In an April 7, 2016 USA Today investigation, some of these same officials in 19 states were exposed as routinely “zeroing out” wait times for veterans and concealing the true length of delays.  Astonishingly, VA supervisors themselves instructed schedulers to fabricate wait times at medical facilities in seven states.

Sec. McDonald’s May 23, 2016 attempt to reassure veterans and taxpayers of his focus on reform failed in an epic fashion when he compared veteran wait times to lines at Disney theme parks.  Those comments, along with the payment of bonuses to corrupt VA executives, seems to clearly illustrate Sec. McDonald’s flagrant disregard for reforming his beleaguered department.

CAGW President Tom Schatz said, “The thoughtless payment of bonuses to shady VA bosses is despicable.  Sec. McDonald was heralded as a private-sector business leader who could turn around a troubled department.  Instead, Sec. McDonald is even worse than a standard issue Washington bureaucrat.  As I said after Sec. McDonald made his callous Disney comparison, he is Frozen in the past, and perhaps the fish from Finding Nemo need to be called on to help the VA find a new leader.”

The last time Secretary McDonald testified before the Senate:

For rewarding corrupt VA bosses and failing to ensure that veterans get timely care, CAGW names VA Secretary Robert McDonald its November 2016 Porker of the Month.

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.  Porker of the Month is a dubious honor given to lawmakers, government officials, and political candidates who have shown a blatant disregard for the interests of taxpayers.

The Beltway Lawyer Chatter about the Trump Admin

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As Trump Tests Legal Boundaries, Small DOJ Unit Poised for Big Role

Zoe Tillman, The National Law Journal

President-elect Donald Trump moved quickly in naming his picks for two key legal posts, selecting a conservative politician in Sen. Jeff Sessions to run the U.S. Department of Justice and a loyal adviser in Jones Day partner Donald McGahn II to serve as White House counsel.

Washington lawyers now have their eyes on a less visible appointment, but one that could set the tone on issues ranging from how completely the incoming president separates himself from his business interests to how his administration acts on campaign promises to spike trade agreements and revive harsh interrogation policies.

The Justice Department’s Office of Legal Counsel, which handles legal questions from the White House and federal agencies, often has the last word on murky areas of law and there are plenty trailing Trump into the White House. That positions the next OLC chief to play a key role as the White House maps out its agenda but may also mean navigating delicate politics in an administration that seems bent on testing conventional legal doctrine.

Former OLC officials say the next head of the office will have to walk a fine line to be a lawyer Trump trusts and won’t try to circumvent, without being seen as a rubber stamp.

“It’s going to be an interesting time at OLC because a number of issues are going to be turned upside down,” said Walter Dellinger, a partner at O’Melveny & Myers who led the office from 1993 to 1996.

Citing Trump’s statements in favor of waterboarding, for instance, Dellinger said “the fact that the incoming president has stated in several areas that he intends not to follow existing law will make the position more challenging—and more interesting.”

The Office of Legal Counsel often has a behind-the-scenes role in controversial executive branch policies. Under President George W. Bush, the Office of Legal Counsel established the legal framework for harsh interrogation techniques such as waterboarding; under President Barack Obama, it signed off on the deferral of deportation for millions of undocumented immigrants.

Questions about Trump’s ties to his eponymous company are expected to reach the office early in the new administration. In 2009, the OLC published an opinion about Obama’s acceptance of the Nobel Peace Prize, concluding that it didn’t violate the constitutional prohibition on receiving gifts or titles from foreign governments. Trump’s business dealings overseas and ties that his U.S. properties have to foreign governments present a new set of ethics questions.

Should Trump follow through on his campaign pledges to roll back Obama’s executive actions and federal regulations on everything from immigration to climate change, the office would advise him on whether he could do it, and how.

Early in Obama’s presidency, the OLC withdrew legal opinions from the second Bush administration about the use of harsh interrogation techniques on terror suspects. Trump, who said on the campaign trail that “torture works,” could ask the office to revisit the issue.

A large part of the office’s work is resolving legal spats among agencies and interpreting federal laws and regulations. The lawyers review executive orders, and serve as an adviser to the executive branch on separation-of-powers issues. Occasionally, a big legal question—like torture or government surveillance—will come through.

John McGinnis, a professor at Northwestern University Pritzker School of Law who served as deputy assistant attorney general in the office from 1987 to 1991, cautioned against assuming that Trump’s campaign proclamations signal the policies he’ll embrace as president.

“People in campaigns, this is all politicians, do not speak in policy legal terms. I would not want to predict that what will come to OLC can be captured in the soundbites of a campaign,” McGinnis said.

Since the election, Trump has continued to express his interest in reviving the practice of waterboarding, although he said in a recent interview with The New York Times that he was intrigued by his conversation with a military general who said the practice wasn’t effective.

LEGAL CREDIBILITY

The Office of Legal Counsel is staffed by about 25 attorneys and has a budget of roughly $8 million. Yet because of its influence, it is one of the more politically contentious offices at the Justice Department. That was especially true in the years after the Sept. 11, 2001, terrorist attacks, when the office faced criticism for providing a legal rationale for torturing terror suspects. Both Bush and Obama saw nominees to lead the office stall in the Senate amid partisan opposition.

With a Republican majority in the U.S. Senate and weakened filibuster rules for executive nominees, Trump is expected to have an easier time getting his nominee through.

Some former DOJ officials questioned whether Trump might have a tough time finding a lawyer willing to serve, given the nature of the legal questions they’re expected to confront and the president-elect’s reputation as someone who doesn’t like to be told “no.”

A former top DOJ official in the second Bush administration who spoke on condition of anonymity said he knew lawyers who were hesitant about working for the department and for the OLC, given the controversial questions that office takes on. However, he said that there were many others who would want to work in government regardless of reservations they might have about the president-elect. .

The office has been a stepping stone for many influential lawyers. Among those who held the post under past Republican presidents are the late Supreme Court justices William Rehnquist and Antonin Scalia; Gibson, Dunn & Crutcher partner Theodore Olson; J. Michael Luttig, general counsel of The Boeing Co. and a retired judge on the U.S. Court of Appeals for the Fourth Circuit; and Ninth Circuit Judge Jay Bybee, who ran the office in the aftermath of 9/11 and signed the legal opinion authorizing “enhanced interrogation techniques.”

Carl Nichols, a partner at Wilmer Cutler Pickering Hale and Dorr and a former principal deputy associate attorney general during the second Bush administration, said the OLC chief is typically one of the most trusted advisers to the attorney general.

The office has “enormous legal credibility,” Nichols said. The specifics of the legal questions surrounding Trump and his agenda differ in some ways from his predecessors, Nichols said, but the ultimate task of grappling with the scope of executive power is a familiar one for the OLC.

“It’s a place where the White House and the agencies know if they have a hard question, they’ll have really terrific legal minds thinking about it,” he said.

HARD QUESTIONS

OLC lawyers aren’t the only ones who give legal advice to the executive branch. There are White House lawyers and each agency has its own legal department. During the Obama administration, a body of senior agency lawyers known as “The Lawyers’ Group” met to consider national security-related legal questions.

Harold Koh, a professor at Yale Law School who served as the legal adviser to the U.S. Department of State during the Obama administration and worked as a lawyer in the OLC, wrote in a recent blog post that he thought the interagency approach, which had been used in previous administrations, was the most effective process.

“Different agencies have different equities, perspectives, and areas of expertise and getting the input of all relevant legal arms of our vast executive branch is vital to sound decisionmaking,” Koh wrote.

But the OLC’s decisions carry significant weight, said Jonathan Adler, a professor at Case Western Reserve University School of Law, and although the president isn’t bound by the office’s conclusions, there’s strong precedent against defying them. That has led presidents to occasionally try to circumvent the office, Adler said, rather than having to deal with a contrary opinion. He cited as one example Obama’s decision in 2011 to reportedly eschew the usual OLC process in soliciting opinions about the legality of military action in Libya without congressional approval.

The office’s legal opinions “reflect, or are supposed to reflect, serious, largely neutral or as neutral as possible assessments of important legal questions about what the executive branch may or may not do,” Adler said.

A successful OLC head will take an “extremely proactive” approach to find ways for the administration to legally achieve policy goals, building up political capital for the occasions when the office has to tell the White House or an agency that they can’t do something within the bounds of the law, McGinnis said.

Dellinger said that his advice to an incoming president would be to pick an OLC head “who has a substantial career that gives him or her substantial stature and the ability to say no, and that will help keep you out of trouble.”

To the next head of the OLC, Dellinger said he would advise he or she to make sure to consult with career government attorneys, to always give an honest opinion of the law, and to have a good career to fall back on in the event of a serious disagreement with the White House.

“The job will drive you crazy if you’re not prepared to walk out the door,” he said.