Tuesday, January 19, 2016


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Pelosi, Reid 'confident' Supreme Court will save immigration actions

Democratic leaders predicted the Supreme Court would uphold President Obama's executive actions.





"The poll comes amid a slew of other reports detailing an immense drop in the living standards of a significant section of the US population, a component of the growth of social inequality more broadly."

Survey finds a majority of Americans unable to pay for major unexpected expenses

By Nick Barrickman
9 January 2016

A new survey put out by the personal finance management site Bankrate.com on Wednesday found that more than half of Americans could not weather a sudden financial crisis without having to borrow money from friends and family or being forced to reduce the amount spent on other items such as dining out, paying cable or cell phone bills, or other basic features of a “middle class” lifestyle.

The survey, conducted last month among a pool of 1,000 Americans in conjunction with Princeton Survey Research Associates International, found that only 37 percent of those surveyed would be able to pay an emergency expense of $1,000, such as an emergency room visit or the cost of repairing a broken down vehicle, out of pocket.

Sixty-three percent of those surveyed would not be able to cover such a sudden expense without either cutting down on expenses elsewhere, borrowing or resorting to credit. The survey found that nearly four in 10 Americans had suffered such a financial setback in 2015.
“Without an adequate rainy-day fund, we are all living on a very slippery financial slope,” Gail Cunningham of the National Foundation for Credit Counseling told Bankrate.com. “The unexpected, unplanned expense is going to rear its ugly head and usually at the most inopportune time…Things as small as a flat tire or one trip to the emergency room can wreck the budgets of those who do not have an adequate amount in their savings account,” she said.

For Americans making less than $30,000 per year, only 23 percent would be able to cover such a sudden expense on their own. This was contrasted by nearly 60 percent of those making over $75,000 annually who could say the same. Nine percent making $30,000 or below stated that they did not know how they would cover such expenses, meaning that they were one expensive setback away from personal financial ruin.

The poll comes amid a slew of other reports detailing an immense drop in the living standards of a significant section of the US population, a component of the growth of social inequality more broadly.

Since the 2008 financial collapse and the subsequent economic “recovery” in 2009, 95 percent of all wealth gains have gone to the top 1 percent in society. A report released in November by the St. Louis Federal Reserve showed that Americans’ personal savings in 2015 were half of what the average was in the early 1980s.

A US Federal Reserve report released in 2014 found that nearly six in 10 Americans had lost all or part of their savings due to the financial impact of the 2008 economic crisis, while a 2015 study by GOBankingrates.com revealed that the majority of Americans have less than $1,000 in savings to their name. A report released the Pew Research firm last month revealed that the number of middle-income homes as a portion of the population had largely vanished in the span of a few decades.

The figures come as the US Federal Reserve has begun raising interest rates for banks and other financial institutions, which will likely lead to further difficulty for individuals who rely upon credit in order to finance their costs of living.
The expenses eating away at the typical individual’s savings read like essential items for living in modern society. According to Bankrate.com, the largest expense for one-third of all Americans outside of food and shelter consisted of utilities such as water, electricity or phone service. For those over the age of 50, one in five cited medical bills as their largest co

Placating Americans with Fake Immigration Law Enforcement

How our leaders create fantasy 'solutions' for our immigration-related vulnerabilities.
 By Michael Cutler
 FrontPageMag.com, December 4, 2015

Therefore the Visa Waiver Program should have been terminated after the terror attacks of 9/11 yet it has continually been expanded.

It is clear that the overarching goal of a succession of administrations and many members of Congress, irrespective of political party affiliation, is to keep our borders open and take no meaningful action to stop that flow of aliens into the United States.
. . .
The obvious question is why the Visa Waiver Program is considered so sacrosanct that even though it defies the advice and findings of the 9/11 Commission no one has the moral fortitude to call for simply terminating this dangerous program.
The answer can be found in the incestuous relationship between the Chamber of Commerce and its subsidiary, the Corporation for Travel Promotion, now doing business as Brand USA.
The Chamber of Commerce has arguably been the strongest supporter of the Visa Waiver Program, which currently enables aliens from 38 countries to enter the United States without first obtaining a visa.
The U.S. State Department provides a thorough explanation of the Visa Waiver Program on its website.
Incredibly, the official State Department website also provides a link, “Discover America,” on that website which relates to the website of The Corporation for Travel Promotion, which is affiliated with the travel industries that are a part of the “Discover America Partnership.
much more here:


New from the Center for Immigration Studies, 1/19/16

What's Happening at the Center
Last week we hosted a panel discussion on the vulnerabilities that exist in the immigration screening process. Former USCIS Director Don Crocetti joined David North, Jessica Vaughan, and Mark Krikorian to explain what steps need to be taken with regard to the admission of refugees, legal permanent residents, and visa holders to better protect public safety. The video and transcript of the discussion are available on our website.

Recent Activities

1. Remembering Barbara Jordan and Her Immigration Legacy
2. Immigration and Wages: The new debate over the Mariel boatlift

Panel Discussion
3. No Coyote Needed: U.S. national security requires fixing the immigration and visa screening process

4. Jeb Bush's Struggles and Poetic, Political Justice
5. Immigration Implications of the U.S.-Iran Prisoner Swap
6. DHS Makes Life Easier for Itself, and for Employers of Tiny Groups of Aliens
7. Feds Should Use "Blackie's Warrants" to Challenge Sanctuary Cities
8. Satire: Why EB-5 Investors Should Become Backers of Broadway Shows
9. First Cuban Migrants from Costa Rica Reach the U.S.
10. Amnesty Program for "Juvenile Court Dependents" May Elbow Out Religious Workers, Iraqi Translators
11. Moderator: "Why Increase Immigration?" Rubio: "Look, Edward Snowden! Crop Insurance!"
12. First Group of Stranded U.S.-bound Cubans Reaches Mexico
13. More on NPR in Charlotte, and a Reminder of Barbara Jordan
14. Obama's Goal: Shape Immigration System for Years to Come
15. NPR's Rachel Martin Begins to Look at the Connection Between Immigration and Income Inequality
16. One-Sided Marriage Fraud Redux
17. Medicare Scam Exposes Naturalization Fraud
18. Below-Average Applicant Tells How He Got an F-1 Visa to Attend a Below-Average U.S. University
19. Enforcing Final Orders of Removal in the Face of Civil Disobedience

Remembering Barbara Jordan and Her Immigration Legacy
By Jerry Kammer
CIS Backgrounder, January 2016

Excerpt: Twenty years have passed since the death of Barbara Jordan. On January 17, 1996, the former congresswoman and civil rights icon succumbed to complications of leukemia at a hospital in Texas. She was 59 years old, a beloved national figure who for the previous two years had been chairwoman of the U.S. Commission on Immigration Reform.

Jordan s death cut short that final public service. It represents the high-water mark of bipartisan efforts to stop illegal immigration and reduce legal immigration by asserting a vision of the national interest over the left-right coalition of ethnic, business, and political interests that seeks more immigration and less enforcement.

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Immigration and Wages: The new debate over the Mariel boatlift
By Jason Richwine
CIS Backgrounder, January 2016

Excerpt: Economic theory predicts that wages will go down when the number of competing workers goes up, at least in the short run. For immigration advocates, however, this reasoning is simplistic. Their argument that an increase in the labor supply does not lower the wage even in the short run has rested in large part on a famous 1990 analysis of the Mariel boatlift by Berkeley economist David Card, who was unable to find any wage impacts.

The Card study is ubiquitous in immigration advocacy, garnering citations in seemingly every case for loosening the borders. It is "the single greatest bit of evidence" that immigration does not harm native wages, according to Adam Davidson in a recent piece for the New York Times Magazine.Davidson argues that, based on the Mariel experience, the United States can take in 11 million immigrants per year without negative effects. And why stop at 11 million? In making a recent argument for open borders, Vox's Dylan Matthews cited the boatlift as his first piece of evidence that immigration has a "neutral or positive" effect on native workers.

The policy stakes are high, which is probably why a new paper questioning Card's classic study has generated so much attention. Harvard economist George Borjas4 reanalyzed the effects of the boatlift in September of last year, this time looking specifically at how the influx of low-skill workers affected native high school dropouts in Miami.5 He found a large drop in their wages after the boatlift, bottoming out in the mid-1980s at almost 40 percent below the wage trend in control cities.

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No Coyote Needed
U.S. national security requires fixing the immigration and visa screening process
CIS Panel, January 2016

Video: http://cis.org/Videos/Visa-National-Security-Panel

Transcript: http://cis.org/PanelTranscripts/Visa-National-Security-Panel

Don Crocetti, Former Director of USCIS
David North, Center Fellow
Jessica Vaughan, Director of Policy Studies, CIS
Moderator: Mark Krikorian, Executive Director, CIS

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Jeb Bush's Struggles and Poetic, Political Justice
By Jerry Kammer
CIS Blog, January 19, 2016

Excerpt: On Sunday, the New York Times published a story about the struggles of Jeb Bush in a Republican campaign where voters are showing a preference for Donald Trump's "visceral pugnaciousness" or the outsider anger of Sen. Ted Cruz. Contrasting such militancy with Bush's genteel and well-mannered upbringing in a family of wealth and prominence, the story declares that, "the travails of Mr. Bush's presidential campaign can be seen as perhaps the last, wheezing gasp of the WASP power structure."

That observation of the end of an era stirs a memory of a less elegiac commentary from 1995, after California voters passed Proposition 187 to deny government services to illegal immigrants. Art Torres, who served as chairman of the California Democratic Party from 1995 to 1999, told a rally, "Remember: 187 is the last gasp of white America in California."

Proposition 187, which was later overturned by a federal judge as unconstitutional, went too far. Its worst over-reach was its attempt to deny public school to children in the country illegally. The Supreme Court had determined in 1982 that these children are entitled to an education.

I think there is a connection between Jeb Bush's problems and the anger of Art Torres.

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Immigration Implications of the U.S.-Iran Prisoner Swap
By Dan Cadman
CIS Blog, January 19, 2016

Excerpt: Details of the U.S.-Iran prisoner swap have been finding their way into various media accounts, some of which I have found passing strange (the details that is, not the media, although on sober reflection the latter's probably a truism too). Note, though, that it is probably more accurate to describe this deal as a trade-off, and not a Cold War-style Checkpoint Charlie "swap", for reasons discussed below.

The abridged version: Iran has released a total of five U.S. citizens, some (perhaps all) of whom appear to have been arrested and held on trumped-up charges. In return, the United States has released, pardoned, or dropped charges against seven individuals, and agreed to withdraw Interpol "red notices" against another 14.

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DHS Makes Life Easier for Itself, and for Employers of Tiny Groups of Aliens
By David North
CIS Blog, January 19, 2016

Excerpt: Forgetting completely the old, and excellent, rule that tight labor markets are a worker's best friend, the Department of Homeland Security has just loosened the labor markets for several small groups of foreign workers.

Its press release said . . .

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Feds Should Use "Blackie's Warrants" to Challenge Sanctuary Cities
By Dan Cadman
CIS Blog, January 18, 2016

Excerpt: Serving Blackie's warrants enough times at county jails to seize custody of alien criminals might persuade at least some of these jurisdictions that their efforts to defeat federal law are doomed to be unsuccessful and lead to repeal of sanctuary rules. In other instances, an irate federal judiciary fed up with having to review and approve such applications on a routine basis simply to rein in out-of-control state or local governments can leverage corrective action against them far more readily than immigration agents ever could short of prosecution for harboring and shielding. Even failing those two ameliorating possibilities, using Blackie's warrants would at least ensure taking custody of the alien felons the president has assured us are such a high priority to his administration.

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Satire: Why EB-5 Investors Should Become Backers of Broadway Shows
By David North
CIS Blog, January 16, 2016

Excerpt: Here's an idea: Would-be immigrant investors in the embattled EB-5 program should take on new roles, as angels backing Broadway shows. Though no one has used this approach to my knowledge, the suggestion fits in neatly with the current operations of the program.

Under my scheme the immigrant investors would put up the usual half-million dollars each (thus netting them and their families a full set of green cards). The money would be placed in a specially created corporation that would invest in forthcoming Broadway productions, but it would be structured in such a way so that the other angels (the resident ones) would get the bulk of the profits should any of the shows succeed.

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First Cuban Migrants from Costa Rica Reach the U.S.
By Kausha Luna
CIS Blog, January 16,2016

Excerpt:These migrants left Cuba to take advantage of the Cuban Adjustment Act (CAA) and its "wet foot, dry foot" policy, that gives legal status to any Cuban reaching the U.S. The Obama administration has made it clear that it has no intention of changing its immigration policies towards Cubans, thus maintaining a significant incentive for Cuban migrants to illegally immigrate.

However, the United States does not have to reward illegal Cuban arrivals with the benefit of adjustment, as my colleague Dan Cadman recently explained. CAA benefits are only available to Cubans who have been paroled into the U.S.; if they're kept in detention, the provisions of the CAA do not apply and they can be repatriated if they can't demonstrate a well-founded fear of persecution.

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Amnesty Program for "Juvenile Court Dependents" May Elbow Out Religious Workers, Iraqi Translators
By David North
CIS Blog, January 15, 2016

Excerpt: It's an odd little program that has been of course expanded remarkably by the Obama administration, to the extent that it now threatens to at least delay visa issuances for such worthy groups as the Iraqi translators and other aliens who worked for the United States overseas.

It is just another indication of the growing trend to use the immigration system to help victims of various kinds, as pointed out in an earlier posting. But these victims are not people kicked around by dictators, nor are they our allies in losing wars, they are simply young illegal aliens who are now wards of the courts, because they or someone on their behalf successfully complained to the courts about the behavior of their parents. That the parents are almost all in illegal status is my surmise and is, in fact, carefully not noted by the government.

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Moderator: "Why Increase Immigration?" Rubio: "Look, Edward Snowden! Crop Insurance!"
By Mark Krikorian
CIS Blog, January 15, 2016

Excerpt: In the debate, Rubio followed this bogus diversion by making the legitimate point that Cruz had also backed increases in immigration (a position Cruz has renounced more recently). That should have led to a discussion of numbers but instead, Rubio proceeded to, as Cruz put it, dump his opposition research folder on the debate stage, talking about Cruz's views on crop insurance and Edward Snowden. There's a reason he launched this attack then, and not during their earlier discussions over, say, tax policy Rubio knows he s extraordinarily vulnerable on the immigration issue, especially on his continuing desire to double legal immigration (and triple H-1B visas), and he'll do or say anything to avoid discussing it.

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First Group of Stranded U.S.-bound Cubans Reaches Mexico
By Kausha Luna
CIS Blog, January 14, 2016

Excerpt: Despite the initial flight and the impending transfer of thousands more Cubans, the Obama administration remains unresponsive, merely reemphasizing that there are no plans to change U.S. immigration policies towards Cubans. However, the president does have options besides welcoming the Cubans with open arms or waiting for Congress to change the law. As my colleague Dan Cadman recently explained, automatic residency is only available to those Cuban illegal aliens who are paroled into the U.S.; if they're kept in detention, the provisions of the Cuban Adjustment Act do not apply and they could be repatriated if they couldn't demonstrate a well-founded fear of persecution.

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More on NPR in Charlotte, and a Reminder of Barbara Jordan
By Jerry Kammer
CIS Blog, January 14, 2016

Excerpt: I'm wondering what's beneath the surface of the story, as Martin talked with the owner of a landscaping company who is obviously enjoying both booms. How much do his workers earn? How much do they rely on public services? Is this another case of immigration having the effect of privatizing profit and socializing loss?

Martin also took a look at the political side of the immigration boom, finding an interesting debate among Charlotte Republicans. Curiously, she did not note that the central question in that debate is how federal policy should respond to the undocumented, i.e. illegal, status of many immigrants.

Instead, Martin reported on the general question of whether Republicans should welcome the boom and not ask questions about legality.

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Obama's Goal: Shape Immigration System for Years to Come
By Dan Cadman
CIS Blog, January 13, 2016

Excerpt: When interviewed for a cloying article published in New York Magazine, recently appointed Attorney General Loretta Lynch commented that "My goal is to position the department [of Justice] where it will carry on in all of these issues long after myself and my team have moved on."

One suspects that it is not just Lynch, and not just the Department of Justice (DOJ) where this effort is taking place to embed into the organs of government, on a long-term basis, left-leaning progressive policies. How, exactly, might the president and his cabinet accomplish this?

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NPR's Rachel Martin Begins to Look at the Connection Between Immigration and Income Inequality
By Jerry Kammer
CIS Blog, January 13, 2016

Excerpt: On Sunday, Rachel Martin, host of NPR's "Weekend Edition", introduced one of the most important immigration stories facing the United States: the connection between immigration and income inequality. Martin said that because of the significance of the story in the presidential race, she intends to follow the story in the coming weeks. I'm writing this post in the hope that she will have the time to dig deeper into some of the issues that local people introduced in their conversations with her for Sunday's story. I'll have another post tomorrow in the same spirit.

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One-Sided Marriage Fraud Redux
By Dan Cadman
CIS Blog, January 12, 2016

Excerpt: That those officials choose to turn a cold shoulder to such abuse without even attempting to be of help says much about their mindset, and brings me back to my earlier blog, in which I said that if this office is as non-responsive to citizens as the one in ICE, then it too should be defunded and put out of business by Congress. Equally worrying, though, is that this is exactly the reason that the agency is plagued by vetting errors of the most egregious sort, leading to admission of criminals and terrorists. The attitude seems to be, "Well, for better or worse, we've already handled that not my job any more. Talk to somebody else to fix it."

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Medicare Scam Exposes Naturalization Fraud
By Dan Cadman
CIS Blog, January 12, 2016

Excerpt: Once again it shows that the USCIS vetting standards are abysmal. This generally very low threshold doesn't just lead to increased numbers of aliens risking fraud to obtain entry and benefits and, ultimately, citizenship. Lately, it has also shown, again and again, that it makes the country less safe because when fraud is so rampant it enables hardened criminals such as cartel members, and extremists including terrorists, to hide in the midst of that mountain of systemic abuse.

This has been a problem for years, but it has gotten much worse in this administration, which looks on with a benign (if not blind) eye at the abuse, and even encourages it with foolish faux privacy rights policies, such as that restricting use of Internet searches or social media to detect miscreants, ostensibly to "protect" applicants from tiresome government meddling, even though such meddling is their job. After all, it is the applicant seeking something from the government not the other way round.

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Below-Average Applicant Tells How He Got an F-1 Visa to Attend a Below-Average U.S. University
By David North
CIS Blog, January 12, 2016

Excerpt:We rarely see detailed accounts of how a below-average applicant for an F-1 visa manages to secure the visa despite self-admitted problems with the application; in this case the applicant, an Indian national, wanted to go to what the Indian press (and apparently some American officials) regard as a borderline institution in the United States.

The line-by-line text that follows is a bit long, but it shows how one persistent F-1 applicant, planning to go to Northwestern Polytechnic University (NPU) in Fremont, Calif., a marginal but DHS-licensed university, eventually got his visa. It is a "let it all hang out" bit of reporting, albeit in sub-standard English.

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Enforcing Final Orders of Removal in the Face of Civil Disobedience
By Dan Cadman
CIS Blog, January 11, 2016

Excerpt:The recent immigration raids, which were leaked in advance for whatever reason (possibly to limit their effectiveness) and that were so much remarked upon, often with hysteria and supercharged rhetoric, have come and gone, at least for the moment, and proved to be as over-hyped as one expected that they might be. Of the thousands of scofflaws with outstanding orders of removal who might have been taken into custody, only about 350 were targeted, of whom only 121 persons were arrested.

Yet nothing this administration does that on the surface appears to be enforcement-related is really as it seems. No sooner had these aliens been picked up than the Board of Immigration Appeals ordered several released, leaving one to ponder why the Board waited until after the "raids" to act. If the members of the appellate tribunal believed there was something improper or inadequate in the hearings held by immigration judges that led to the final orders, why did they not stay them in the first place?

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SANDERS BLOWS HILLARY CLINTON OUT OF THE WATER! OBAMA'S CRONY BANKSTERS ARE MAD AS HELL!!! - New poll shows Sanders closing in on Clinton nationally

New poll shows Sanders closing in on Clinton nationally: Clinton has the support of 52 percent of Democrats and Democratic-leaning voters nationwide.

I must be an awful human being, because I am reveling in the déjà vu Hillary Clinton must be experiencing, as her presidential campaign appears to be heading toward collapse.  And this time, the humiliation – and peril &ndash...

Nine times Clinton Foundation donors got special access at State: Nine examples of State Department access Hillary Clinton granted to her foundation's top donors.

That dream is slowly crashing and burning.  Even without a criminal referral or indictment, Hillary’s chances are fading fast.

Hillary’s long goodbye

I must be an awful human being, because I am reveling in the déjà vu Hillary Clinton must be experiencing, as her presidential campaign appears to be heading toward collapse.  And this time, the humiliation – and peril – is far greater than anything 2008 dealt her.  To state the obvious, her longstanding preference for pantsuits is one thing, but the orange jumpsuits of a federal penitentiary are quite something else.

I realize I am getting way ahead of myself here, that predictions are always risky – especially about the future, as Yogi Berra reminded us.  We don’t yet know if there will be a criminal referral from the FBI, though the D.C. rumor mill is operating at full steam, averring that 50 more FBI special agents have been added to the case, making the total team well into triple digits.  That the FBI would devote that level of resources to the case suggests that they are tying up any possible loose ends, to have an airtight cases presented to Loretta Lynch.  (More on this later.)

Potential legal peril aside for the moment, the humiliations she faces are daunting for a woman of her arrogance.  Her husband’s penchant for illicit sex with women far younger and more attractive is once again being thrown in her face, and this time the trusty old injured wife gambit not only doesn’t work, but is being used against her, painting her as an enabler of a sexual abuser.

Back in the impeachment days, she could count on the mainstream media to keep a lid on negative information and portray her husband’s accusers and investigators as a bunch of sex-obsessed prudes.  Not only have the internet and cable news forever destroyed the cofferdam around embarrassing news these days, but substantial chunks of the mainstream media no longer see themselves as guardians of the Clinton empire.  For one thing, a Democrat president is not being threatened with removal from office.  For another, she is not the only game in town.  Just as in 2008 they could abandon her for a younger member of a minority, one who was a far more skillful campaigner, now they have the elderly Bernie Sanders carrying the actual torch of socialism, and drawing enthusiastic crowds.

And then there is the small matter of all the knives in the hands of members of her own party that have been sheathed all these decades since she and Bill first entered the White House as tenants.  She has made a lot of enemies over the years, snubbing some, ignoring others, and behaving with the arrogance and self-centeredness that has been a visible part of her character ever since she entered pubic life.  There is a struggle underway for the future of the Democratic Party between the Obama faction and the Clinton faction.  When she appeared inevitable, an uneasy truce prevailed.  But if she may be tied up with a criminal defense case, that would solve a lot of problems for the Obama-ites.

That is something to ponder as we await a possible criminal referral to the Department of Justice and A.G. Lynch’s response.

Meanwhile, Joe Biden very publicly “regrets every day” his decision not to run for president.

If, as speculated, Elizabeth Warren were to align herself with a Biden candidacy, perhaps as the veep nominee, it would palliate the socialist Sanders supporters.

The old certitudes about the Clintons have crumbled.  Bill no longer is a vibrant, likable, vigorous exponent of hope; he is instead a hollow shell, a creepy degenerate who reminds us of our own mortality after heart bypass operations and drastic weight loss.

I am convinced that the greatest prize of all for Hillary was not Air Force One or the other perks; it was going to be the ability to put Bill in his place.  After Hillarycare crashed and burned, she was removed from the co-presidency she believed she had won, fair and square.  And it had to rankle.  There must have been a moment when he reminded her that his name, and his name alone, appeared on the ballot, and that his decision was final.

Oh, how she must have looked forward to pulling rank on the first gentleman!

That dream is slowly crashing and burning.  Even without a criminal referral or indictment, Hillary’s chances are fading fast.  Sanders looks as though he may sweep Iowa and New Hampshire.  Once that happens, it is 2008 all over again.  The Democrat establishment may not want Sanders on the ticket, but they are fully capable of drafting Biden, Warren, Booker, or another Dem, and then changing the convention rules to nominate whomever they want.  But I doubt that will be necessary.  The gears of the FBI are turning faster and faster.  Policy requires that if a politician be accused of wrongdoing, it be done as long before an election as possible.

Time is not on Hillary’s side.

Read more: http://www.americanthinker.com/blog/2016/01/hillarys_long_goodbye.html#ixzz3xFVCi5oA

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Wave of selling hits US markets

Wave of selling hits US markets

By Nick Beams
14 January 2016
US stocks markets tumbled Wednesday as oil prices continued to fall and voices in the finance industry, together with economic commentators, warned of the potential for a major crisis.

The sell-off was across the board, the Dow falling by 365 points, 2.21 percent, the S&P 500 by 2.50 percent and the Nasdaq down by 3.4 percent. The day opened with an uptick but large-volume selling soon set in, the prevailing sentiment being that it was necessary to get out without waiting to see what would happen during the rest of the day.

Commentators said the sell-off was not just about oil, which has been touching levels as low as $30 per barrel, but the fall in prices for all industrial raw materials induced by the slowdown in China.
The sharp downturn has come in the wake of a series of assessments by banking officials that the conditions for a new financial crisis are fast developing.

On Tuesday economists at the Royal Bank of Scotland issued an assessment that said investors faced a “cataclysmic year” in which stocks could fall by 20 percent and oil could go as low as $16 per barrel.

In a note to clients, the RBS said: “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small.” It warned that the present situation recalled 2008 when the collapse of Lehman Brothers set off a global crisis. This time the trigger could be China.

The bank’s credit chief Andrew Roberts said China had set off a “major correction and it is going to snowball” with equities and credit becoming “very dangerous.” He warned that the London market was particularly vulnerable to a negative shock because of the large number of commodity companies in the UK. The prices of all industrial raw materials, not just oil, are moving sharply down, reaching lows not seen since the immediate aftermath of the financial crisis.

“All those people who are long [buyers of] oil and mining companies thinking that the dividends are safe are going to discover than they’re not at all safe,” Roberts said.

RBS’s prediction of a sharply lower oil price was matched by Morgan Stanley which said it could go to $20 per barrel. Standard Charter forecast an even bigger fall, to $10. “Given that no fundamental relationship is driving the oil market toward any equilibrium, prices are being moved almost entirely by financial flows caused by fluctuations in other asset prices, including the US dollar and equity markets. We think prices could fall as low as $10 per barrel.”

The Standard Chartered analysis points to the development of a vicious circle: a falling oil price sends down equity markets and then financial flow-on effects from the decline in stock prices lead to a further drop in the price of oil.

Following the RBS call to “sell everything,” the Guardian sought responses from a series of economists. While none went as far as the RBS, there was a distinct lack of confidence in their replies.

Erik Britton, director of Fathom Consulting, did not dispute that China would have a “hard landing.” He said it was headed for just 2 percent growth in gross domestic product, markedly less than the official government prediction of 6.5 percent for this year.

Jonathan Porter, the director of the National Institute for Economic and Social Research, said he was “worried” by current events “but not yet panicked.”

“But if the current concerns turn into a systematic meltdown on financial markets, then all bets are off,” he added.

Chris Williamson, the chief economist at the financial data provider Markit, said the worry was that the RBS warning could become a self-fulfilling prophecy and if a financial market rout led to a new recession, “policymakers are seriously lacking in tools to fight the new downturn.”

The RBS assessment was echoed by comments on Wednesday from Albert Edwards, strategist at the Societe Generale bank, who has long held the belief that equity markets are considerably over-valued. He said the West was about to be hit by a wave of deflation from emerging market economies and central banks were not aware of what was about to hit them.

He told an investment conference in London that developments in the global economy would “push the US back into recession. The financial crisis will reawaken. It will be every bit as bad as in 2008–09 and it will turn very ugly indeed.”

The US economy was in much worse shape than the Fed realised, with the US corporate sector being “crushed” by the appreciation in the value of the dollar. “We have seen massive credit expansion in the US. This is not for real economic activity; it is borrowing to finance share buybacks,” he said.
In an assessment of the significance of the fall in the markets, which in the US have experienced their worst new year opening in history, an article in the Financial Times on Monday pointed to longer-term trends. In the wake of the financial crisis, “aggressive easing” by the Fed and other central banks, coupled with a “mammoth spending binge” by China, had suppressed market volatility for an extended period and created a tide that lifted global assets prices.

“Now that liquidity is draining away and the bill for China’s spending—in the shape of overcapacity in some industries and high levels of indebtedness—is coming due,” the article noted.

“The worrying signal from the current turmoil is that the investor herd truly has become fearful and thinks the financial system is broken. Namely, that quantitative easing has merely papered over the cracks of global economic imbalances, borrowed hefty investment gains from the future and left taxpayers and company bondholders with a massive rise in outstanding debt.”

International Monetary Fund managing director Christine Lagarde also pointed to longer-term trends in a speech delivered in Paris on Tuesday. She said emerging market economies were facing a “new reality” in which their growth rates would be significantly slowed.

“Growth rates are down, and cyclical and structural forces have undermined the traditional growth paradigm,” she said.

That paradigm was based on boosting exports and attracting capital inflows. On current forecasts, she said emerging economies would move towards advanced economy incomes at less than two-thirds the pace predicted by the IMF a decade ago. “This is cause for concern,” she said.

The World Bank last week warned that these economies faced difficulties in 2016 after growing last year at their slowest pace since the financial crisis of 2008.

Lagarde said the shift by the Fed towards ending its easy monetary policies, together with the continuation of these policies by other central banks, had the potential to trigger exchange rate ructions.

“This volatility could be induced not only by the divergence in monetary policies in major advanced economies, but also by uncertainty about their overall prospects and policy action.”
In an indication of the deepening recessionary trends in the global economy, she noted that oil and metal prices were down by two-thirds from their peak and were likely “to stay low for a sustained period,” placing several developing economies “under severe stress.”
That stress is already in evidence with major economic contractions in Brazil and Russia, but it is not confined there. The economic outlook for two developed commodity-exporting countries, Australia and Canada, is also worsening.
Former US treasury secretary Lawrence Summers added his voice to those warning about the state of the global economy in a comment published in the Financial Times on Monday. He said that while markets do sometimes send out false alarms, economic and financial authorities should take notice because “the conventional wisdom never recognises gathering storms.”
“Because of China’s scale, its potential volatility and the limited room for conventional monetary manoeuvres, the global risk to domestic economic performance in the US, Europe and many emerging markets is as great as at any time I can remember,” he wrote.
It is impossible to predict exactly how the present turmoil will play out. But two certainties have been established.
Firstly, that the 2008 financial crisis was only the beginning of a breakdown of the global capitalist economy, for which the ruling elites have no economic solution. In fact, their actions have only created further wealth for the ultra-rich, increasing social inequality, while setting up the conditions for another financial meltdown.
And finally, that the renewed turbulence is going to produce even deeper attacks on the working class which, on top on those already being implemented, will bring an upsurge in social and political struggles.