Krebs Daily Briefing 30 November 2015

Thomas L. Krebs, Securities Litigation, Regulation and Compliance Attorney Lawyer (c)2014 Brandon L. Blankenship
Thomas L. Krebs


Predatory Islamic State Wrings Money From Those It Rules

Three times a month, Mohammad al-Kirayfawai hands $300 to fighters from the Islamic State for the privilege of driving his refrigerated truck full of ice cream and other perishables from Jordan to a part of Iraq where the militants are firmly in charge. The fighters who man the border post treat the payment as an import duty, not a bribe. They even provide a stamped receipt, with the logo and seal of the Islamic State, that Mr. Kirayfawai, 38, needs for passing through other checkpoints on his delivery route. Refuse to pay and the facade of normality quickly falls away. “If I do not,” Mr. Kirayfawai explained, “they either arrest me or burn my truck.” Across wide expanses of Syria and Iraq, the Islamic State, with the goal of building a credible government, has set up a predatory and violent bureaucracy that wrings every last American dollar, Iraqi dinar and Syrian pound it can from those who live under its control or pass through its territory. Interviews with more than a dozen people living inside or recently escaped from the Islamic State-controlled territory, and Western and Middle Eastern officials who track the militants’ finances, describe the group as exacting tolls and traffic tickets; rent for government buildings; utility bills for water and electricity; taxes on income, crops and cattle; and fines for smoking or wearing the wrong clothes. The earnings from these practices that mimic a traditional state total tens of millions of dollars a month, approaching $1 billion a year, according to some estimates by American and European officials. And that is a revenue stream that has so far proved largely impervious to sanctions and air raids. “They fight in the morning and they tax in the afternoon,” said Louise Shelley, the director of the Terrorism, Transnational Crime and Corruption Center at George Mason University.

At NATO, Turkey defiant over downing of Russian jet

Turkey’s premier dismissed on Monday any suggestion that Ankara should apologize for shooting down a Russian warplane in its airspace last week, after winning strong NATO support for the right to defend itself. “No country should ask us to apologize,” Prime Minister Ahmet Davutoglu told reporters following a meeting with NATO’s secretary general at the alliance headquarters in Brussels. He also warned that such incidents continued to be a risk as long as Russia and the U.S-led coalition bombing Islamic State in Syria worked separately.

The Silk Road Affair: Power, Pop and a Bunch of Billionaires

Even in post-Soviet Uzbekistan, an ancient crossroads where torture and bribery allegations are endemic, Gulnara Karimova, the president’s Harvard-educated daughter, stood out for her ruthlessness. As the U.S. embassy noted in a secret dispatch from 2005 that was later published by Wikileaks, Karimova was viewed by most Uzbeks “as a greedy, power-hungry individual who uses her father to crush business people or anyone else who stands in her way.” These days the 43-year-old former globetrotting socialite who once publicly praised God for “my face” is confined to her homeland along the legendary Silk Road, watched over by the security services of her aging father, Islam Karimov, who has ruled for a quarter century. Even in isolation, though, Googoosha, as she’s called herself in music videos, remains in the eye of a storm, the protagonist in a multibillion-dollar tale of alleged greed and graft unfolding across three continents. This story stretches back more than a decade, from the fringes of the czarist empire to the tidy streets of Oslo, via Gibraltar, Geneva and beyond. It touches companies owned by six of Europe’s richest men — five Russians and a native Norwegian — and thrusts the staid Scandinavian business world into a strange new light. It also offers a glimpse into a mercurial U.S. ally, a nation of 30 million that is ranked among the most repressive and corrupt in the world by Freedom House and Transparency International, even while providing occasional logistical support for American troops in neighboring Afghanistan. The latest chapter of the saga opened near midnight on Nov. 4, when a flight from London touched down at Oslo Airport carrying the man shipping tycoon John Fredriksen had just hired to manage his industrial and financial fortune.

On China’s fringes, cyber spies raise their game.99

Almost a year after students ended pro-democracy street protests in Hong Kong, they face an online battle against what Western security experts say are China-sponsored hackers using techniques rarely seen elsewhere. Hackers have expanded their attacks to parking malware on popular file-sharing services including Dropbox and Google Drive (GOOGL.O) to trap victims into downloading infected files and compromising sensitive information. They also use more sophisticated tactics, honing in on specific targets through so-called ‘white lists’ that only infect certain visitors to compromised websites. Security experts say such techniques are only used by sophisticated hackers from China and Russia, usually for surveillance and information extraction. The level of hacking is a sign, they say, of how important China views Hong Kong, where 79 days of protests late last year brought parts of the territory, a major regional financial hub, to a standstill. The scale of the protests raised concerns in Beijing about political unrest on China’s periphery. “We’re the most co-ordinated opposition group on Chinese soil, (and) have a reasonable assumption that Beijing is behind the hacking,” said Lam Cheuk-ting, chief executive of Hong Kong’s Democratic Party, which says it has been a victim of cyber attacks on its website and some members’ email accounts. U.S.-based Internet security company FireEye said the attacks via Dropbox were aimed at “precisely those whose networks Beijing would seek to monitor”, and could provide China with advance warning of protests and information on pro-democracy leaders. The company said half its customers in Hong Kong and Taiwan were attacked by government and professional hackers in the first half of this year – two and a half times the global average. China’s Ministry of Foreign Affairs, Public Security Bureau and the Liaison Office of the Central People’s Government in the Hong Kong Special Administrative Region did not respond to requests for comment. The Defence Ministry said the issue was not part of its remit. China has previously denied accusations of hacking, calling them groundless, and saying it is a victim. The Hong Kong police said its Cyber Security and Technology Crime Bureau works with other law enforcement agencies to combat cross-border crime, but did not respond to questions on how much information it shares with mainland Chinese authorities, the origin of the Hong Kong cyber attacks, or whether these might be a source of instability or concern. Police data show a drop in reported “unauthorized access”, which includes Internet or email account abuse and hacking, over the past two years. Many of the victims Reuters spoke to said they hadn’t bothered to report being hacked.

World’s Biggest Pension Fund Loses $64 Billion Amid Equity Rout

The world’s biggest pension fund posted its worst quarterly loss since at least 2008 after a global stock rout in August and September wiped $64 billion off the Japanese asset manager’s investments. The 135.1 trillion yen ($1.1 trillion) Government Pension Investment Fund lost 5.6 percent last quarter as the value of its holdings declined by 7.9 trillion yen, according to documents released Monday in Tokyo. That’s the biggest percentage drop in comparable data starting from April 2008. The fund lost 8 trillion yen on its domestic and foreign equities and 241 billion yen on overseas debt, while Japanese bonds handed GPIF a 302 billion yen gain. The loss was GPIF’s first since doubling its allocation to stocks and reducing debt last October, and highlights the risk of sharp short-term losses that come with the fund’s more aggressive investment style. Fund executives have argued that holding more shares and foreign assets is a better approach as Prime Minister Shinzo Abe seeks to spur inflation that would erode the purchasing power of bonds.



GOP looks to back Obama into a corner

With just two weeks left until the government runs out of money, there is increasing pressure from congressional Republicans to use a must-pass spending bill to force President Barack Obama into accepting several controversial policy riders — including new curbs on the Syrian resettlement program.

Sporting solid majorities in both chambers, Republicans are angling for some big wins in the first year-end shutdown fight since the GOP took control of Capitol Hill. But it will be a challenge to secure enough concessions from Democrats to mollify the right wing while avoiding the political risks of shutdown brinkmanship. After Obama and congressional Democrats stymied their agenda for years, Republicans see the end-of-year funding bill due Dec. 11 as their best path for achieving their top policy priorities. They reason Democrats will accept some riders — especially measures with bipartisan backing — to avoid a knock-down, drag-out shutdown fight this December. The universe of the hundreds of possible policy riders is vast, and many issues could be potential land mines. But rollbacks of Obama’s environmental and financial regulations are among some of the stickiest areas, Democratic aides said. Meanwhile, Republicans, including Senate Majority Leader Mitch McConnell (R-Ky.), are lobbying to loosen some campaign finance regulations. And there is the mounting pressure from dozens of GOP lawmakers to curb the flow of refugees fleeing war-torn Syria into the United States in the aftermath of the terrorist attacks in Paris. “Why wouldn’t it be included in the omnibus? This is not a poison pill,” said Rep. Mick Mulvaney (R-S.C.) about the provisions dealing with the Syrian resettlement program. “That’s the story of this bill, if you have a veto-proof majority in the House, despite the pressure [from the White House], how is that a poison pill?”


A Wealthy Governor and His Friends Are Remaking Illinois

The richest man in Illinois does not often give speeches. But on a warm spring day two years ago, Kenneth C. Griffin, the billionaire founder of one of the world’s largest hedge funds, rose before a black-tie dinner of the Economic Club of Chicago to deliver an urgent plea to the city’s elite. They had stood silently, Mr. Griffin told them, as politicians taxed too much, spent too much and drove businesses and jobs from the state. They had refused to help those who would take on the reigning powers in the Illinois Capitol. “It is time for us to do something,” he implored. Their response came quickly. In the months since, Mr. Griffin and a small group of rich supporters — not just from Chicago, but also from New York City and Los Angeles, southern Florida and Texas — have poured tens of millions of dollars into the state, a concentration of political money without precedent in Illinois history. Their wealth has forcefully shifted the state’s balance of power. Last year, the families helped elect as governor Bruce Rauner, a Griffin friend and former private equity executive from the Chicago suburbs, who estimates his own fortune at more than $500 million. Now they are rallying behind Mr. Rauner’s agenda: to cut spending and overhaul the state’s pension system, impose term limits and weaken public employee unions. “It was clear that they wanted to change the power structure, change the way business was conducted and change the status quo,” said Andy Shaw, an acquaintance of Mr. Rauner’s and the president of the Better Government Association, a nonpartisan state watchdog group. The families remaking Illinois are among a small group around the country who have channeled their extraordinary wealth into political power, taking advantage of regulatory, legal and cultural shifts that have carved new paths for infusing money into campaigns.


Americans: Pay Your Taxes–Or Lose Your Passport

Congress is poised to enact a law denying or revoking passports for U.S. citizens who haven’t paid their taxes. Under a new law expected to take effect in January, the State Department will block Americans with “seriously delinquent” tax debt from receiving new passports and will be allowed to rescind existing passports of people who fall into that category. The list of affected taxpayers will be compiled by the Internal Revenue Service using a threshold of $50,000 of unpaid federal taxes, including penalties and interest, which would be adjusted for inflation. The rule has been passed in similar versions by both the House of Representatives and the Senate. It is part of a highway-funding bill, H.R. 22, that is before a conference committee. Congress is expected to pass it in early December. In most cases, the passport provision would apply if a taxpayer is subject to a lien, which advises creditors of a debt to the IRS, or a levy, which gives the IRS the authority to seize assets. It wouldn’t apply if a taxpayer is in the process of resolving tax debt with the IRS, such as by paying it on an installment plan, or if the taxpayer is contesting the collection either administratively or in court, said David Kautter, a partner at the accounting firm RSM in Washington. However, the State Department could issue a passport in an emergency or for “humanitarian reasons.” Neither the State Department or Treasury Department would comment while the legislation is pending.


Two-Thirds of Americans Want U.S. to Join Climate Change Pact

A solid majority of Americans say the United States should join an international treaty to limit the impact of global warming, but on this and other climate-related questions, opinion divides sharply along partisan lines, according to the latest New York Times/CBS News poll. Two-thirds of Americans support the United States joining a binding international agreement to curb growth of greenhouse gas emissions, but a slim majority of Republicans remain opposed, the poll found. Sixty-three percent of Americans — including a bare majority of Republicans — said they would support domestic policy limiting carbon emissions from power plants. Public support for international and domestic measures to address climate change may provide a boost for American negotiators attending the major United Nations climate change conference that began in Paris on Monday. But the stark partisan divide on climate policy will still make it difficult for President Obama and his successors to put in place the energy and climate policies that will be needed to support a robust international agreement, the goal of the Paris talks.


Mental health bill collides with guns — again

 A sweeping mental health overhaul cast as a congressional response to gun violence is running afoul of … gun control. Which is precisely what happened the most recent time lawmakers tried to pass mental health legislation, after the 2012 Sandy Hook school massacre in Newtown, Connecticut. The spate of mass killings over the past year reignited mental health reform efforts in both chambers of Congress. A bipartisan bill is gaining momentum in the Senate, with the Committee on Health, Education, Labor and Pensions likely to take it up early next year. The House Energy and Commerce subcommittee on health recently approved a similar bill, and Speaker Paul Ryan this month said on “60 Minutes” that he wants Congress to move ahead on mental health. But the Senate’s No. 2 Republican, John Cornyn of Texas, has been working behind the scenes to drum up support for his own mental health legislation, which includes language endorsed by the National Rifle Association. Cornyn says his bill would boost the federal background check system to prevent guns from getting into the hands of those with serious mental illness. His critics say the legislation actually loosens restrictions on gun purchases, under the umbrella of mental health reform. “The net effect of this bill would be to weaken, not strengthen, our background check system, and make it easier for people struggling with dangerous mental illness to legally access a gun,” said Mark Prentice, spokesman for Americans for Responsible Solutions, former Rep. Gabby Giffords’ gun control advocacy group. Cornyn told POLITICO he expects a hearing in the Judiciary Committee in January — and that he believes his bill will become “the engine that pulls the train” on mental health. Any push to include guns could create a wedge in the bipartisan coalition that has been working on a mental health overhaul that doesn’t involve the politically volatile issue.

Alaska Ships A Capitol Christmas Tree With All Of The Trimmings

It started as a little tree, barely the height of an eager toddler hyped up on holiday treats, more than 90 years ago. Now, it’s all grown up — 74 feet, to be exact — and has made it to the big leagues: Washington, D.C. A Christmas tree in the capitol is nothing new. The tradition began in 1964, when then-House Speaker John McCormack (D-Mass.) proposed planting a tree on the Capitol Grounds. The Forest Service took ownership of the project in 1970. Each year, a tree is cut from a different U.S. state and brought to Washington. The first tree was from Pennsylvania, a popular choice in the early years. But, this year, there’s a twist: it’s the first time that a tree has come from a non-contiguous state, and according to organizers, the first to travel by boat. It also comes from a forest that’s notoriously hard to pronounce. “A kindergarten teacher once said that you say Chugach like it’s a sneeze, and I’ve used that comparison ever since. It’s a miracle,” says Mona Spargo, who works for the Chugach National Forest in Alaska. In a forest the size of New Hampshire, how do you pick just one tree? This one was actually found 300 feet from a highway — in a national park that’s 99 percent roadless. Trees have to pass rigorous requirements before being even remotely considered. The tree can be seen from all sides — so you can’t just hide flaws the way you do at home by stowing it in a corner. “It can’t have any thin spots or branches that stick out a lot on one side or the other. It has to be a perfect conical shape,” Ted Bechtol, superintendent of the Capitol Grounds, wrote in a blog post for the Forest Service. Perfectly conical? Check. Sixty-five to 85-feet high? Check. A uniform spread of branches, good density and rich color? Sold! After three weeks of walking, silviculturist Mandy Villwock narrowed the selection to six. Then Bechtol flew out to help make the final cut. It’s his 11th year helping to select the tree. When asked if he has a favorite, he wrote that’s like being asked if he has favorite children. Bechtol wasn’t overly enthusiastic about any of the trees — until he saw the final contender. “As soon as he saw it, he gave us a huge thumbs up. You could see that this was the one,” Spargo says. Bechtol made the decision on the spot, but that was just the beginning.

How Technology Will Transform Retirement

For the next generation of retirees, the question that will trump all others will be a simple one: How do you add life to longer lives? As people live longer, and spend more time in retirement, the challenge will be to get more out of those years. How do you find a rewarding second career? How do you stay close with friends and family? How do you maintain independence and mobility? How do you embrace new experiences? The equally simple answer: technology. The next-generation retiree will have an unprecedented array of technologies and tech-enabled services to invent a new future for working part time, remaining social, having fun, living at home, staying healthy and arranging care. Many of the solutions will be driven by the “Internet of Things”—where household objects can use Internet connections to think, talk and communicate with one another, enabling an entirely new on-demand service industry for older adults. Kitchen appliances will monitor a person’s diet and relay that information to a doctor. Older people will order up services they need to handle chores that have become too difficult, everything from housecleaning to car rides. Even clothing will connect people to a larger network of services that will monitor, manage and motivate them well into older age. This new world of retirement will come with plenty of challenges—among them, costs and possible loss of privacy. But if the challenges can be met, these innovations could transform retirement into a new and vibrant period of life that is about living better as much as it is about living longer. Here’s a closer look at some of the innovations.

Comments by Carson and Trump strike off-note for Syrian refugees in Turkey

REYHANLI, TURKEY – This town on the Syrian border may be thousands of miles from Iowa or other places where the 2016 presidential race is concentrated. But that hasn’t prevented Aisha, a 24-year-old refugee who hopes someday to become a pharmacist, from hearing what the candidates have said about people like her. As Ben Carson visited refugees in nearby Jordan over the weekend, his previous comments drew scorn here, particularly his suggestion that some Syrian refugees are “mad dogs.” And then there was some guy named “Trump,” Aisha said, who wanted to register Muslims just for being, well, Muslim. By contrast, she said, Hillary Clinton seems like a better choice. “I just compare her with another candidate who just said Syrians are like a dog … and the other one, his name is Trump, who said we have to do something for Muslims just to control them,” said Aisha, who declined to provide her surname, citing concerns for her family. The 2016 candidates may aim their comments at U.S. voters, but their words can reverberate far from U.S. shores. “If they [the candidates] think about their children, and think that they will be at risk, maybe they will change their mind,” Aisha said. “Right now, they are dealing with us as a trade in the race for the White House.” Aisha was one of 15 millennial Syrians whom POLITICO interviewed even as Carson was landing in Jordan for a surprise visit to refugee camps as part of an effort to learn more about the crisis, sparked by Syria’s civil war. Amid political debate in the U.S. over their intentions and fate, these refugees – most of them in their 20s — described what forced them from their country. And they pushed back against the worldwide perception after the Paris attacks that they are dangerous terrorists who threaten western nations.



Huntsville projected to be largest city in Alabama in less than 10 years

Huntsville could soon pass Birmingham to become the largest city in Alabama. “We believe we will be the biggest city in the state within a decade,” predicted Dennis Madsen, long-range planner for the City of Huntsville. Right now, Huntsville is fourth. It’s the smallest of the four main cities in this state. But those cities have evolved in ways that find all four at nearly the same size. And demographers with Huntsville project the city slipping past Mobile in two years, passing Montgomery in four years and growing larger than Birmingham by 2022. Birmingham is currently the largest city in Alabama with about 212,000 people. Huntsville is the smallest of the four at about 188,000. But Huntsville Mayor Tommy Battle was cautious about the prediction. “Bigger is not always better,” said Battle. “No one is in a race to be the biggest city in Alabama. Our challenge is to continue growing and still maintain the high quality of life we have.”

And Birmingham disagrees with the Huntsville projections. John Colon, director of community development with Birmingham, said the Huntsville planners didn’t appear to take into account the growth Birmingham has seen in recent years. “This Renaissance is evidenced by the 1500 new housing units currently under construction as well as those that have already been completed just this year,” wrote Colon. The Huntsville projections extend patterns of last two decades. That basically means city demographers predict that Huntsville will continue to grow, while the other three cities stay level. It’s a prediction mirrored in county projections by Center for Business and Economic Research at the University of Alabama. The Montgomery Advertiser noted the trend at the release of the 2010 Census, when proclaiming that Montgomery was likely to pass Birmingham as the state’s largest city by 2020.  But even then, Montgomery was hearing footsteps:


More Accusations Against US Sentate Candidate McConnell

MONTGOMERY—US Senate candidate John Martin has charged opponent Jonathan McConnell of offering him money to drop out of the Republican primary. If true, this would not be the first time McConnell has been accused with violating campaign rules. The Auburn Plainsman in 2003 reported McConnell violated several campaign rules in his bid for Auburn student body president, including attempting to gather students’ student ID numbers and pins to cast votes for his campaign. In 2003, SGA Sen. Michael Joffrion accused McConnell of violating seven campaign rules. The Auburn E-Board determined, “Of the seven violation categories outlined in Joffrion’s contention, E-Board found there was enough evidence to support six of the allegations,” wrote student reporter Brooklyn Noel. The E-Board found the complaints against McConnell to be valid, but determined the evidence wasn’t overwhelming enough to overturn the election. “E-Board decided by a 5-1 vote that the evidence against McConnell was not overwhelming enough to overturn the election. E-Board, however, unanimously found Joffrion’s contention was valid,” according too Noel’s report. According to the majority opinion statements released by E-Board, Joffrion’s contention included “allegations that McConnell supporters asked students for their social security numbers and PINs and offered to vote for them, and that members of McConnell’s family called students to solicit votes for McConnell.” The Auburn Plainsman Editorial Board, wrote, “There’s no doubt McConnell did violate campaign laws. SGA Board of Elections reported 10 violations during campaigns by McConnell.” Martin in a conversation with this publication confirmed that McConnell offered to pay for his campaign expenses if he exited the race. He also expressed bewilderment that that father of the ex-Marine would call to defend his son’s actions. Martin believes that McConnell’s offer was illegal under federal campaign laws but says he has not been contacted by law-enforcement. He has not filed a formal complaint with ALGOP at this time. Martin and McConnell along with Shadrack McGill and Marcus Bowman hope to unseat the State’s popular Senior Senator Richard Shelby in the March Republican primary.


With the days of high cotton over, farmers roll the dice on iconic crop

The days of high cotton are over. In fact, for farmers across the southeast, these are the days of low cotton. The crop is at its lowest price in five years, selling for around 60 cents a pound, compared to 88 cents a pound in 2011. With prices like that, farmers will be lucky to break even on this year’s crop, according to an analysis by the National Cotton Council of America. Most of them will lose money. That appears to be especially true in Alabama. On Nov. 12, Gov. Robert Bentley applied to the U.S. Department of Agriculture for emergency disaster assistance to help cotton farmers in counties hit hard by rain right at harvest time. Rain at the wrong time can delay harvest and allow time for seeds to sprout in the wet cotton before it is picked. When that happens, the value of the cotton drops dramatically. Standing on the edge of a Baldwin County cotton field, trying to get the last of his crop picked hours before another rain-bearing weather system is supposed to arrive, farmer Mark Mullek was ebullient, despite the slack prices in the market. He said he was grateful “for the chance to farm another year on land my family has worked for 70 years.” “Horrible,” he said of the price. “Cotton’s an interesting animal…. It will rebound. It’s been in a particular sort of slump the last couple of years. It will rebound.” In 2011, the cotton market was at its highest level in a quarter century. Demand in the developing world was growing, and bad weather that year devastated the cotton fields of China and Pakistan, ranked number one and number four in the world for cotton production. The United States ranks third internationally. Cotton prices this year are in a slump due in part to really good crops the last few years. “The yield this year is good, just not the price,” said Mullek. “But it is worth it to still do it. I wouldn’t say you are getting rich by doing it. But worth it implies more than the dollar signs at the end of the day. It implies a little bit more about the fabric of our society, and the fabric of our lives. As farmers, you know, even if the prices aren’t that great, to grow things that we are eating or wearing, it still needs to get done.”


Uber mapping cars spotted in Birmingham area cities

 This week, as no show city council members delayed a vote that might have allowed Uber to operate in Birmingham,Mountain Brook officials passed an ordinance that would allow the ridesharing service in that city. Also this week, pictures and reports began popping up on social media of Uber “mapping cars” being spotted in some other Jefferson and Shelby County cities. The cars seem to resemble Google mapping cars, with towers on the roof and people reportedly snapping pictures of the locations, according to some of those reports. On Thursday, someone posted to the “I Believe in Birmingham” Facebook page saying they saw one of the cars in a subdivision in Helena. “Poor guy had to drive around on Thanksgiving day snapping pictures for Uber maps,” the poster wrote. Someone replied to that post, saying they saw a Uber mapping car in the Bessemer/Hueytown area. Last week, another poster wrote that they saw an Uber mapping car in Gardendale. In replies to that post, people wrote they saw mapping cars in the Pinson area and near Brook Highlands on U.S. 280. today has heard from people who have seen the mapping cars on Hickory Hills Drive in Alabaster; near Heardmont Park in North Shelby County; on I-20/59 South near Messer Airport Highway; near Valleydale and Caldwell Mill Roads; and the Clairmont Park subdivision in the St. Clair county portion of Leeds; The ridesharing service earlier this year began using “rebranded versions of the Bing mapping cars that Microsoft had on the road before deciding it no longer wanted to collect its own map data,” The Verge reported. BuzzFeed News reported in October that Uber was “deploying contractors to drive Uber “mapping cars” around and capture 3D images of local streets (think Google Street View) using the image-capturing technology Microsoft once owned.”

Those maps, that report stated, “will help Uber make more accurate ETAs, and enhance routing technology in the driver app. The images captured by these Uber-marked cars won’t yet replace the app’s existing maps, which are a combination of Google Maps and a proprietary routing algorithm.”


State lawyers call proposed legislative districts ‘bizarre’

 The attorney general’s office said alternate legislative maps suggested by black legislators show that Alabama lawmakers made proper choices in drawing new district lines. State lawyers in a November court filing criticized the alternate maps as “bizarre” as the two sides continued a legal back-and-forth over the state’s legislative lines. Black members of the Alabama Legislature filed a federal lawsuit saying the GOP-controlled Alabama Legislature segregated and “stacked” black voters into designated districts, preventing them from influencing elections elsewhere. State Republicans said the lines, which were approved by the U.S Department of Justice, were fairly drawn so that districts were equally sized and varied in population by plus or minus 1 percent. A three-judge panel asked the plaintiffs to try their hand at their own map without increasing the variance in district population size. Attorneys for the state argued the rival plan linked unlike communities. “While Plaintiffs’ plans fall within (plus or minus 1 percent) and while some of the black-majority districts in their plans have lower black majorities, they could not reach that result without bizarre districts and retrogression to reach that point,” lawyers for the attorney general’s office wrote. The case is back before a three-judge panel after the U.S Supreme Court sent it back for additional review. Lawyers for black lawmakers in a Monday court filing said the state’s current districts were drawn to hit “unlawful racial targets.” If the map is tossed, the state will have to draw new lines and hold new elections.


Which Birmingham leaders and execs are on Hillary Clinton’s Alabama team?

Hillary Clinton‘s presidential campaign has tapped several Birmingham leaders and executives for its Alabama leadership team. Birmingham Mayor William Bell, several state lawmakers and some prominent Birmingham individuals will be leading Clinton’s campaign in the state leading up to the March 1 primary. Other key names on the list include U.S. Rep. Terri Sewell, retired Judge U.W. ClemonGiles PerkinsNatalie Kelly and Freddie Rubio. Here is the full list from the campaign:



This might be the most controversial theory for what’s behind the rise of ISIS

A year after his 700-page opus “Capital in the Twenty-First Century” stormed to the top of America’s best-seller lists, Thomas Piketty is out with a new argument about income inequality. It may prove more controversial than his book, which continues to generate debate in political and economic circles. The new argument, which Piketty spelled out recently in the French newspaper Le Monde, is this: Inequality is a major driver of Middle Eastern terrorism, including the Islamic State attacks on Paris earlier this month — and Western nations have themselves largely to blame for that inequality. Piketty writes that the Middle East’s political and social system has been made fragile by the high concentration of oil wealth into a few countries with relatively little population. If you look at the region between Egypt and Iran—which includes Syria—you find several oil monarchies controlling between 60 and 70 percent of wealth, while housing just a bit more than 10 percent of the 300 million people living in that area. (Piketty does not specify which countries he’s talking about, but judging a study he co-authored last year on Middle East inequality, it appears he means Qatar, the United Arab Emirates, Kuwait, Saudia Arabia, Bahrain and Oman. By his numbers they accounted for 16 percent of the region’s population in 2012 and almost 60 percent of its gross domestic product.) This concentration of so much wealth in countries with so small a share of the population, he says, makes the region “the most unequal on the planet.” Within those monarchies, he continues, a small slice of people controls most of the wealth, while a large — including women and refugees — are kept in a state of “semi-slavery.” Those economic conditions, he says, have become justifications for jihadists, along with the casualties of a series of wars in the region perpetuated by Western powers. His list starts with the first Gulf War, which he says resulted in allied forces returning oil “to the emirs.” Though he does not spend much space connecting those ideas, the clear implication is that economic deprivation and the horrors of wars that benefited only a select few of the region’s residents have, mixed together, become what he calls a “powder keg” for terrorism across the region.

Morning Money

SCOOP: MARK TEIXEIRA, TOM FARLEY RAISING FOR RUBIO — The battle for big NYC money continues this week as Marco Rubio holds an event Thursday at The Conrad Hotel. Among the host committee: NYSE President Tom Farley and New York Yankee first baseman Mark Teixeira. Co-chair status requires a $10K raise. Basic entry is $2,700. See the invite:

WILL THERE BE A SHUTDOWN? — Stan Collender in Forbes: “There are less than 2 weeks left before the current continuing resolution expires at midnight December 11. … The one big difference between what’s about to happen and what occurred at the end of September is that Paul Ryan (R-Wis.) has replaced John Boehner (R-Ohio) as speaker of the House. That presumably rules out the tactic Boehner used to get the CR adopted by resigning and taking away the House Freedom Caucus’ ability to threaten his continuing as speaker. …

“But these days you can’t (and absolutely shouldn’t) rule out anything that’s highly unexpected when it comes to what Congress will do so … That’s why I’m convinced we’re starting with a not insignificant 25 percent chance of a federal government shutdown in December. There are just too many imponderables, too much emotion and a hell of a lot of resentment and anger to completely dismiss the probability, as some analysts want to do”

U.S./EUROPE DIVERGE — WSJ’s Brian Blackstone and Todd Buell: “Developments in the U.S. and Europe this week are set to widen the gap between the likely path of interest rates in the two regions and add to currency-market turbulence that has produced a 12 percent increase in the value of the dollar against the euro since the start of the year. The [ECB] is expected to drive eurozone interest rates even further into negative territory when its policy-making committee meets Thursday. A day later, the U.S. jobs data for November are widely predicted to confirm the Federal Reserve’s course to raise rates as soon as mid-December, the first increase in nine years. The ECB, which began forcing institutions to pay in order to park money with it in June 2014, is expected to begin charging at least an additional tenth of a percentage point.

“The hope is that a rate of -0.3 percent or -0.4 percent will raise the cost of storing cash with the ECB to the point where banks will instead choose to put it to work in the riskier private sector, pumping life into the struggling European economy … The divergent paths for the Fed and the ECB could strengthen the dollar even further against the euro, crimping U.S. exporters while giving a leg up to European ones”

WHY DIVERGENCE is a key theme for 2016 via Mohamed A. El-Erian:

IMF TO ADD RENMINBI — FT’s Shawn Donnan in Washington and Jamil Anderlini in Hong Kong: “The International Monetary Fund is expected to admit China’s renminbi to its elite basket of reserve currencies on Monday in what would be a major vote of confidence in Beijing’s economic reforms and its bid to internationalise its currency. Confirming China’s place at the top table of the world’s economies, the IMF’s shareholders are set to vote overwhelmingly to include the renminbi as the fifth member of the basket used to value the fund’s own de facto currency, the ‘special drawing rights’. … “The move comes at a crucial time for China, which is managing a significant slowdown in growth and has suffered deep falls in financial markets as questions have mounted over the leadership in Beijing’s response and commitment to reforms. But Monday’s vote by the IMF’s board will also come amid questions over just how much the IMF has been forced to bend its own rules to make the case for the renminbi and accommodate China at a sensitive time in the relationship between the fund and Beijing.”

GOOD MONDAY MORNING — Welcome back! Hope everyone had a restful and peaceful Thanksgiving break, tragic world events not withstanding. We will have more results from the M.M. 2016 Prediction Contest later in the week. You can still send your entries to And follow me on Twitter @morningmoneyben


SPORTS BLINK — Heckuva Sunday night game in Denver, where the Broncos (with an assist from some questionable calls) ended the Patriots’ unbeaten streak at 10 with a thrilling 30-24 overtime game in the snow. Gronk went down with an ugly looking knee injury. M.M. is no Pats fan (Skins in first place!) but we are praying he’s OK. Incredible player to watch.

DRIVING THE WEEK — President Obama is in Paris for climate talks and meets Monday with President Xi Jinping of China and Prime Minister Narendra Modi of India followed by a working dinner with President Francois Hollande of France … Hillary Clinton will “highlight her economic agenda” on Wednesday in Orlando … Treasury Secretary Jack Lew on Tuesday at 7:45 delivers remarks at Treasury’s Financial Inclusion Forum … Fed governors on Monday at 8:30 a.m. hold a news conference “to discuss a final rule to implement the Dodd-Frank amendments to the emergency lending authority under Section 12(3) of the Federal Reserve Act” … ISM Manufacturing at 10:00 a.m. Tuesday expected to rise to 50.5 from 50.1 … Fed Chair Janet Yellen Speech speaks at 11:00 a.m. Wednesday to the Economic Club of Washington, D.C. … Yellen testifies on the state of the economy on Thursday at 10:00 a.m. before the Joint Economic Committee … ISM Non-manufacturing Survey at 10:00 a.m. Thursday expected to dip to 58.1 from 59.1 … November jobs report at 8:30 a.m. Friday expected to show a gain of 200K and no change to the 5.0 percent jobless rate

EU/TURKEY STRIKE MIGRANT DEAL — WSJ’s Laurence Norman and Emre Peker: “The European Union on Sunday agreed with Turkey’s government for Ankara to take steps to cut the flow of migrants into Europe in exchange for EU cash and help with its bid to join the 28-nation bloc. EU leaders hailed the agreement as a key step toward substantially reducing the number of asylum seekers entering the bloc, while Turkey’s Prime Minister Ahmet Davutoglu said Sunday’s summit marked a historic new beginning in the often fraught relations between Brussels and Ankara.

“Yet the continued lack of trust on both sides remained evident, as EU leaders made it clear there would be no shortcut in Turkey’s long-stalled bid to join the bloc. ‘The issue hasn’t changed,’ French President François Hollande said after leaving the summit to return to Paris for global climate talks. ‘There is no reason either to accelerate or to slow it down.’ And the Turks couldn’t say how effective the agreement would be in reducing the number of the migrants and refugees entering the EU via Turkey”

BIG AUDITION FOR GOP CANDIDATES — POLITICO’s Eli Stokols: “When the Republican contenders audition this week before more than 600 deep-pocketed, security-focused donors, it might seem like they’re playing for the home crowd. But the annual Republican Jewish Coalition gathering carries serious risk for candidates not fluent on the issue. … Just ask Chris Christie, who had to apologize after referring to the West Bank as ‘occupied territories’ during his remarks last year to the group. … This year’s gathering at the Ronald Reagan Building in Washington is a policy test before an influential and well-versed audience.

“[F]or Jeb Bush, this event is an exercise in damage control. Many of the RJC board members scheduled to attend have already committed to a candidate, and some are now shopping for a plan B, especially those who threw their support behind Bush early on. … Ben Carson, another outsider who was positioned near the front of the pack until the recent events overseas unmasked his lack of knowledge about foreign policy, is also scheduled to attend”

HRC TO UNVEIL INFRASTRUCTURE PLAN — Reuters: “U.S. Democratic presidential candidate Hillary Clinton plans to make job creation the focus of her campaign over the next month, beginning with a $275 billion infrastructure spending plan that will be released this week. … Clinton’s plan to increase the federal government’s spending on infrastructure by $275 billion over the next five years will be fully paid for by changing how businesses are taxed, a campaign aide said …

“Of the total amount, $25 billion will be earmarked for an infrastructure bank. Clinton’s campaign estimates her proposals could also encourage private investment that, along with government spending, would inject a total of $500 billion into rebuilding crumbling roads, bridges, buildings and other structures”

WHO CARES ABOUT BLACK FRIDAY? — NYT’s Hiroko Tabuchi: “If the lines at Target or Macy’s this Black Friday seemed shorter than in years past, shoppers have the Internet to thank. More people shopped online over the Thanksgiving weekend than in brick-and-mortar stores, according to a closely watched survey released by retail’s biggest trade group, the National Retail Federation. (Spending at physical stores still dwarfs online spending, however.) The trade group also stuck by its forecast on Sunday that retail sales this holiday season will rise 3.7 percent this year, below last year’s growth of 4.1 percent. For the first time in over a decade, however, the group did not release estimates of total spending for the holiday weekend.

“The federation’s chief executive, Matthew Shay, said big shifts in consumer behavior made Black Friday weekend sales less of a bellwether for holiday spending, or for the state of the American consumer. Shoppers are taking advantage of a deluge of sales and promotions to shop when they want, and how they want, he said. Retailers, in turn, are scrambling to offer sales earlier each year, both in stores and online. ‘Shopping has changed and the consumer has changed and retailers have changed,’ Mr. Shay said. ‘Retailers are heavily promoting starting the day after Halloween.’”

INDIA A BLOCK TO PARIS DEAL? — FT’s Pilita Clark in Paris: “India’s prime minister has issued a blunt warning that rich nations still have a moral imperative to lead the fight against global warming, highlighting the challenges facing the UN climate talks starting in Paris on Monday. Weighing into one of the most divisive issues at the talks, Narendra Modi writes in Monday’s Financial Times that advanced countries that ‘powered their way to prosperity on fossil fuel’ must continue to shoulder the greatest burden. ‘Anything else would be morally wrong,’ he says.

“Many wealthy countries insist there can be no deal unless large emerging economies take on more responsibility for fighting climate change. The Indian premier’s comments underline the difficulties confronting negotiators from nearly 200 countries at the two-week Paris meeting due to produce the first global climate accord in 18 years. Mr Modi, whose country is the world’s fourth-largest carbon emitter after China, the US and the EU, said he would launch an international alliance among 121 solar-rich countries in the tropics”

HOW PUERTO RICO WENT BUST — NYT’s Mary Williams Walsh and Michael Corkery: “If anything stands as a symbol of how Puerto Rico ended up mired in billions of dollars of debt, it is an oceanside golf resort going to seed some 15 miles east of San Juan. Known until this month as the Trump International Golf Club Puerto Rico, it was built as a for-profit venture, subsidized by federal taxpayers and backed by the island’s powerful Government Development Bank, which sold to investors and guaranteed repayment of more than $50 million in tax-exempt bonds. Despite the Trump name, which the former owners licensed from the billionaire investor … the resort failed to attract enough golfers since the first tee-off in 2004. This year, it went bankrupt. …

“Then, about a week ago, a buyer scooped up the property, wine cellar and all, for a mere $2.2 million and is rushing to get it ready for a Professional Golfers Association tournament in March, a nationally televised event and a point of pride for Puerto Rico. … But the new owner, OHorizons Global, a private investment firm based in San Juan, did not take over the existing debt. The Government Development Bank is still making payments on the bonds that are outstanding; the last one is due in 2034. The deal and how it came to be provide telling insight into the workings of the Government Development Bank, which is responsible for managing the $72 billion in debt that the island has amassed — and says it cannot hope to repay”

POTUS Events

President Obama is in Paris for the climate accord treaty talks. In the morning, the president will participate in a bilateral meeting with Chinese President Xi Jinping. Later in the morning, the President will participate in the “COP21” climate change talks opening ceremony.

In the afternoon, Obama will attend a lunch hosted by President Francois Hollande of France. This lunch will be closed press. Afterward, Obama will participate in a bilateral meeting with Prime Minister Narendra Modi of India.

Later in the afternoon, the president will participate in an event with Hollande, Prime Minister Narendra Modi of India, other leaders and members of the private sector. In the evening, Obama will attend a working dinner with Hollande.

Floor Action

The clock is ticking for Congress to move a government spending bill by the end of next week to avoid a shutdown.

A major flashpoint emerging for the catch-all spending bill, known as the omnibus, is the continuation of the Obama administration’s refugee resettlement program in the aftermath of the terrorist attacks in Paris.

The Senate could take up a bill passed by the House before the Thanksgiving break to prevent any refugees from Syria or Iraq from entering the U.S. until the government can certify none of them pose security threats. But Senate Minority Leader Harry Reid (Nev.) indicated that Democrats will filibuster the legislation and uphold President Obama’s veto threat.

Other potential policy riders attached to the omnibus could prove nettlesome for lawmakers, such as measures to roll back Wall Street and environmental regulations.

A spokeswoman for the House Appropriations Committee said late last week that timing for the omnibus text’s release had not yet been decided.

But cutting the release of the omnibus close to the Dec. 11 deadline would likely cause lawmakers to balk at the limited time given to review the legislation’s details.

Highway funding

The first imminent deadline Congress faces this week is the expiration of transportation funding on Friday.

Lawmakers approved a two-week stopgap highway funding measure before departing for the Thanksgiving holiday recess to buy time for negotiators to work out a long-term bill. Bicameral negotiators are still trying to agree on ways to fund transportation projects for at least three years without raising the gas tax.

The House and Senate committee chairmen overseeing the effort insist the two-week stopgap will be the last temporary highway funding patch.

Congress has not passed an infrastructure measuring lasting more than two years since 2005, much to the chagrin of transportation advocates.

ObamaCare repeal

Senate Majority Leader Mitch McConnell (R-Ky.) said that lawmakers would turn to the reconciliation measure after Thanksgiving and fast-tracked the House-passed bill to the Senate calendar. The move will allow it to be brought up on the floor, though it hasn’t been officially teed up.

But the Republican leader could face a battle to get the 51 votes needed to move the ObamaCare repeal package through the Senate.

Sens. Marco Rubio (Fla.) and Ted Cruz (Texas), who are both running for the Republican presidential nomination, and Sen. Mike Lee (R-Utah) have threatened to oppose any legislation that doesn’t fully repeal ObamaCare.

If the three oppose the legislation, McConnell would need the support of every other Republican senator to get the reconciliation bill passed.

McConnell also said ahead of the Thanksgiving break that he was “confident” a defunding of Planned Parenthood would be included. That, however, has raised concerns from moderate Republican Sen. Susan Collins (Maine) and blue-state senators up for reelection in 2016, including Sen. Mark Kirk (R-Ill.).

Energy votes amid Paris talks

The House is slated to consider a legislative package this week overhauling the nation’s energy laws, including an expansion of liquefied natural gas exports and updates to energy efficiency policies.

House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) said during the committee markup this fall that it would be the “first attempt at significant energy legislation” since 2007.

Also on the House calendar are two Senate-passed resolutions to overturn Obama administration greenhouse gas and carbon emissions regulations for power plants.

This week’s votes come as President Obama and other world leaders begin meeting in Paris on Monday to agree on an international accord to combat global warming.

The regulations are a major part of the Obama administration’s stance heading into the climate negotiations to cut the nation’s greenhouse gas emissions.

The White House has said President Obama would veto both resolutions if they reached his desk.