Sunday, June 2, 2019

Last Call For Trump Trades Blows, Con't

If Trump's 5% tariff on Mexican goods takes effect later this month, the president's trade policies would constitute a bigger tax hike than Bill Clinton’s in 1993.

By the numbers: Tariffs already in place against Mexico will increase revenues by $69 billion, the Tax Foundation estimates — or about 0.32% of GDP. Add in the threatened 5% tax on Mexican imports, and that rises to about 0.40% of GDP.

That’s more than Clinton’s tax bill in 1993, which brought in revenues of about 0.36% of GDP after the first year, and just shy of George H.W. Bush’s increase in 1990, which amounted to 0.41% of GDP after year 1.

What to watch: If Trump follows through on his threats — 25% on all Chinese and Mexican imports — those revenues would amount to 1.45% of GDP. You’d have to go back to the 1968 tax hike for a bigger revenue measure, per data compiled by the Treasury Department.

That means 1.45% of GDP would be about $300 billion in new taxes on American consumers, or $1000 bucks per American.  That's a recipe for a GOP wipeout at the polls.

It’s no coincidence that most of the Republican senators who spoke out against Trump’s move late last week are up for reelection next year. Even many reliable Trump allies came out with rare expressions of opposition, knowing their own political survival is on the line.

Sen. Joni Ernst of Iowa, representing a state whose farming industry has already been hit by Trump’s trade policies, was one of the first Republicans to call foul on his latest tariffs. "While I support the need for comprehensive border security and a permanent fix to illegal immigration, this isn’t the right path forward," Ernst said in a statement. "The livelihoods of Iowa farmers and producers are at stake.”

Sen. Martha McSally of Arizona, who stood with Trump throughout her ill-fated 2018 campaign before being appointed to the state’s other seat, finally had enough. “While I support the President's intention of stopping unchecked illegal immigration, I do not support these types of tariffs, which will harm our economy and be passed onto Arizona small businesses and families,” she said.

The move is especially awkward for McSally, coming just days after the administration’s petty request for the Navy to keep the USS John McCain warship out of the president’s sight during his recent trip to Japan. McSally, who holds McCain’s seat, has been trying to win back moderates alienated by Trump’s actions without losing support from his sizable base of supporters back home.

Even in Texas, where Sen. John Cornyn looks to be in solid shape, the senator isn’t taking any political chances. Mexico is Texas’s top foreign trading partner, and the state would face the equivalent of $27 billion in taxes if all the threatened tariffs were implemented. “Senator Cornyn supports the president’s commitment to securing our border, but he opposes this across-the-board tariff which will disproportionately hurt Texas," a spokesman for the senator told The Dallas Morning News.

What’s notable about these defections is that two of the senators hail from border states, where fighting illegal immigration is a top priority. When a bipartisan majority of senators rebuked Trump for overreaching his authority to declare an emergency at the border, McSally and Cornyn both stuck with the president.

This time, however, the economic pain threatens to be so significant that they’re no longer willing to stand pat. With their political careers at stake, there wasn’t enough benefit to blindly stick with the president.

Again, I predict Trump will fold on these tariffs when Mitch McConnell makes it clear that even if should Trump somehow survive, he'll face a Democratic House AND Senate in 2021, and that's the end for Donald.

Democrats should already be running commercials in swing states over this.

The Drums Of War, Con't

The major Middle Eastern leader pushing for US war with Iran isn't actually Saudi Crown Prince Mohammed bin Sultan of Saudi Arabia, but his counterpart in the United Arab Emirates, Mohammed bin Zayed.  And MBZ, as he is known by, definitely wants Trump and the US to go to war with Tehran and is using his considerable political influence to move Trump towards the cliff.

Prince Mohammed is almost unknown to the American public and his tiny country has fewer citizens than Rhode Island. But he may be the richest man in the world. He controls sovereign wealth funds worth $1.3 trillion, more than any other country.
His influence operation in Washington is legendary (Mr. [Richard] Clarke got rich on his payroll). His military is the Arab world’s most potent, equipped through its work with the United States to conduct high-tech surveillance and combat operations far beyond its borders.

For decades, the prince has been a key American ally, following Washington’s lead, but now he is going his own way. His special forces are active in Yemen, Libya, Somalia and Egypt’s North Sinai. He has worked to thwart democratic transitions in the Middle East, helped install a reliable autocrat in Egypt and boosted a protégé to power in Saudi Arabia.

At times, the prince has contradicted American policy and destabilized neighbors. Rights groups have criticized him for jailing dissidents at home, for his role in creating a humanitarian crisis in Yemen, and for backing the Saudi prince whose agents killed the dissident writer Jamal Khashoggi.

Yet under the Trump administration, his influence in Washington appears greater than ever. He has a rapport with President Trump, who has frequently adopted the prince’s views on Qatar, Libya and Saudi Arabia, even over the advice of cabinet officials or senior national security staff.

Western diplomats who know the prince — known as M.B.Z. — say he is obsessed with two enemies, Iran and the Muslim Brotherhood. Mr. Trump has sought to move strongly against both and last week took steps to bypass congressional opposition to keep selling weapons to both Saudi Arabia and the United Arab Emirates.

“M.B.Z. has an extraordinary way of telling Americans his own interests but making it come across as good advice about the region,” said Ben Rhodes, a deputy national security adviser under President Barack Obama, whose sympathy for the Arab Spring and negotiations with Iran brought blistering criticism from the Emirati prince. When it comes to influence in Washington, Mr. Rhodes added, “M.B.Z. is in a class by himself.”

Prince Mohammed worked assiduously before the presidential election to crack Mr. Trump’s inner circle, and secured a secret meeting during the transition period with the president’s son-in-law, Jared Kushner. The prince also tried to broker talks between the Trump administration and Russia, a gambit that later entangled him in the special counsel’s investigation into foreign election interference.

Today, at least five people working for Prince Mohammed have been caught up in criminal investigations growing out of that inquiry. A regular visitor to the United States for three decades, Prince Mohammed has now stayed away for two years, in part because he fears prosecutors might seek to question him or his aides, according to two people familiar with his thinking. (His brother, the foreign minister, has visited.)

The United Arab Emirates’ Embassy in Washington declined to comment. The prince’s many American defenders say it is only prudent of him to try to shape United States policy, as many governments do, and that he sees his interventions as an attempt to compensate for an American pullback.

But Prince Mohammed’s critics say that his rise is a study in unintended consequences. The obscure young prince whom Washington adopted as a pliant ally is now fanning his volatile region’s flames.

Did you catch all that?  Non only is MBZ up to his neck in the Iran problem, but he tried to broker talks between Trump and Russia and the counter-intelligence investigation into the Emirati side of the Trump-Russia collusion train is still ongoing.

There's still a lot to work through, folks.  It's not over by a mile.

By arming the United Arab Emirates with such advanced surveillance technology, commandos and weaponry, argued Tamara Cofman Wittes, a former State Department official and fellow at the Brookings Institution. “We have created a little Frankenstein.”

The Reach To Impeach, Con't

The battle over impeaching Donald Trump continues for the Democrats with the focus shifting to the biggest blue state of them all, California.  This weekend marks the state's 2019 Democratic convention, and on Saturday it quickly turned into Nancy Pelosi versus everyone else.

House Speaker Nancy Pelosi (D-Calif.) was just moments into her speech Saturday when a man shouted out from the back of a convention hall stuffed with thousands of delegates to the state Democratic Party convention.

“Impeach Donald Trump!” he screamed, uttering a battle cry Pelosi has rebuffed, despite growing demands from her party’s activist wing.

“President Trump will be held accountable for his actions,” she said. The I-word never left her lips.

Less than an hour later, Sen. Kamala D. Harris (D-Calif.) stepped to the same podium to deliver a very different message. “We need to begin impeachment proceedings!” the presidential candidate bellowed. The crowd roared.

The party’s deep divisions, refreshed when last week’s remarks by former special counsel Robert S. Mueller III raised new questions about whether Trump had committed impeachable violations, played out time and again during the first full day of the weekend convention as they have across the nation.

Democrats’ dueling messages highlighted the dilemma confronting the party’s congressional leaders and presidential hopefuls: how to balance the demands of a fervently anti-Trump activist base without alienating the more moderate voters who helped hand them the House in 2018 and could deliver the presidency in 2020.

Saturday was the first of two days that in total will feature speeches by 14 Democratic presidential candidatesin the self-styled home of the Trump resistance. Sen. Elizabeth Warren (D-Mass.) electrified the crowd with a fiery address that appeared to take a swipe at former vice president Joe Biden, who did not attend. Three of the candidates are scheduled to speak Sunday, rounding out the largest gathering of 2020 presidential contenders to date.

Among activists, fury with Trump reached the boiling point after Mueller reiterated Wednesday that he could not clear the president of obstructing justice in his probe of Russian interference in the 2016 election. Trump’s defiant attitude toward congressional oversight has stoked further anger.

“That’s adding salt to the wounds,” said Maria Elena Durazo, a Democratic National Committee vice chair and California state senator.

It has also opened a fissure between Democratic congressional leadership and the party’s White House hopefuls, who were once largely united in opposition to impeachment. After Mueller’s comments, the list of presidential candidates calling for impeachment grew, even as House Democratic leaders stood firm.

Pelosi and her top lieutenants are seeking to persuade Democrats that the best action is to stay the course they have charted — to continue to investigate Trump and rely on the courts to intervene when they are stonewalled by the administration.

“Our investigations are breaking through the Trump administration’s coverup to get the truth. We want the truth for the American people,” Pelosi said Saturday. She noted two recent court victories and Mueller’s public statement. 

I understand that activists and convention delegates hardly represent the rank and file of Democratic voters across the country.  Many of us just want Trump gone and we want the person most likely to beat him as the 2020 candidate.

I understand that betting against Nancy Pelosi is a sucker move.

But I also understand that Mitch McConnell is running the show now, and that Pelosi is losing the battle with him.  House Democrats have passed dozens of progressive bills, and McConnell has killed every single one in the Senate, refusing to vote on anything Pelosi has gotten through.

The case for impeachment is strong, and I still tend to side with Pelosi: unless there's an ironclad case, impeachment will go nowhere in the Senate.  Trump will only turn to increasingly bellicose actions in order to get hearings off the front pages.

I don't know what the answer is, and it's increasingly frustrating.

Sunday Long Read: Hate The Game, Not The Players

Kotaku's Cecilia D'Anastasio takes a long look at the state of esports in 2019 and finds that increasingly, the multi-million dollar competitions and leagues popping up around competitive PC games looks more and more like the excesses of the dot-com bubble from 20 years ago.

The mainstream narrative of esports has been lovingly crafted by those who benefit from its success. There’s big money in esports, they say. You’ve heard the stories. Teenaged gamers flown overseas to sunny mansions with live-in chefs. The erection of $50 million arenas for Enders Game-esque sci-fi battles. League of Legends pros pulling down seven-figure salaries. Yet there’s a reason why these narratives are provocative enough to attract lip-licking headlines in business news and have accrued colossal amounts of venture capital. More and more, esports is looking like a bubble ready to pop.

“I feel like esports is almost running a Ponzi scheme at this point,” Frank Fields, Corsair’s sponsorship manager, told an audience at San Francisco’s Game Developers Conference last March. He smirked. The crowd laughed uncomfortably. The smile dropped from Fields’ face as he continued. “Everyone I talk to in this industry kind of acknowledges the fact that there is value in esports, but it is not nearly the value that is getting hyped these days.” Later, Fields would clarify that this value, and future value, “as of now, is optimistic at best and fraudulent at worst.”

Fields is not the only longtime esports veteran who is worried the industry is a bubble, or more accurately, an industry comprised of several bubbles. Seventeen other experts on the North American esports industry shared similar concerns with Kotaku, some describing it merely as “inflated” and others as “completely unsustainable.” Several spoke on the controversial topic because they love esports and want to see it succeed organically, in a sustainable way. There is, of course, a genuine love shared by thousands of people for playing games competitively. Right now, many who spoke to us for this story said, the stuff that makes the esports industry seem like a tantalizing investment rests on unsubstantiated claims—or blunt-force lies.

As investors pour hundreds of millions of dollars into the ballooning esports industry, many feel their way forward with statistics that indicate that paydirt is just around the corner. “League of Legends Gets More Viewers Than Super Bowl,” reads one 2019 headline from CNBC, glossing over the fact that they’re comparing apple viewership metrics to coconut viewership metrics. A 2017 Morgan Stanley report leaked to Kotaku claimed that, in its first year, the Overwatch League could conceivably generate $720 million in revenue, about the same as World Wrestling Entertainment. By 2022, says Goldman Sachs, viewership of pros playing competitive games like League of Legends, Dota 2, Overwatch or Counter-Strike: Global Offensive may be on par with the National Football League’s viewership today. But according to many people Kotakuspoke to with knowledge of the industry, a lot of these statistics are at best rosy-eyed and, at worst, inflated, unverified, or misleading.

For 12 years, Twitter never posted a profit, and until it went public, Uber lost $4.5 billion in one year. One quirk of the world of startups is that investors love investing in unprofitable companies or industries. Yet longtime esports professionals don’t want to see their beloved livelihood go the way of the dotcom bubble. The esports industry is held together with wax and string, which, sources say, hasn’t stopped it from flying too close to the sun.
Frank Fields is, to put it lightly, skeptical of the numbers that supposedly show how big the esports industry is. With an increasing sense of unease, Fields has seen stranger and stranger numbers come across his desk at the hardware manufacturer Corsair, where he handles several million dollars’ worth of outbound sponsorships. As he watched investors dump tens or hundreds of millions at once into the esports organization du jour, Fields has become concerned they’re “jumping the gun.”

“It doesn’t make sense to put that much money into an industry that’s not making that much,” he said. “The sooner we recognize that we’re fooling a bunch of non-endemic people, the better off we’ll be long-term. We’ll be able to fix this bubble before it pops.”
He’s already seen an esports bubble inflate—and burst. At 32 years old, Fields has been in esports for over half of his life, which is most of the history of esports’ existence. Speaking over the phone after GDC, Fields recalled hauling his gaming rig on a 17-hour drive from Ohio to Dallas for a Dota side event at a 2006 Counter-Strike tournament. The prize pool was $1,000, a pittance compared to last year’s $25.5 million prize pool for Dota 2’s biggest tournament, The International. It was at that event, however, that Fields noticed that entire hotels had been rented out to house Counter-Strike pros. For the first time, he could fathom the growing infrastructure of the esports industry. Prior to that, esports events were empowering conferences of high-skill fans, but undoubtedly smaller in scope. Tournaments for PC games like Quake and Starcraft were held in computer cafes in North America and Asia, especially South Korea; fighting game tournaments for games like Street Fighterwere largely held in arcades.

It was also around the mid-2000s that the first bubble of esports began to bloat. David Hill, a former president of Fox Sports, had caught a whiff of competitive gaming fever after noticing his grandson’s fierce fandom for it, according to a Dot Esports feature. Two years after joining DirectTV in 2005, Hill launched the Championship Gaming Series. It was a worldwide sports league, but for video games—a pretty cutting-edge idea at the time. This level of organization for esports was unprecedented, as was its tremendous funding. Rupert Murdoch’s News Corp. injected it with a huge $50 million investment in 2007, Dot Esports reported.

As it turns out, it was a little too huge. According to Dot Esports, one commentator for the first-person shooter Quake received a $300,000 salary in exchange for live commentary that was poorly received. Counter-Strike players received a reported $2,500 a month plus housing in Marina Del Rey. That added up to about $1.8 million in salaries per year. “I know from firsthand experience running a team that a lot of these teams have never even made that much in revenue,” Fields said.

The Championship Gaming Series burned bright and fast, only lasting until 2008, around the financial crisis. “We invested wholeheartedly in the venture and presented viewers with a top-notch production, but the economics just didn’t add up for us at this time,” it said in an announcement posted to its website. Investor confidence in esports plummeted.

“This was the first bubble of esports,” Fields says. “Players couldn’t get jobs, because the companies supporting them went bankrupt.

And it looks like we're headed that way again, only this time there's a few more zeroes at the end of the numbers, and when it blows, it's going to be ugly.  I'd like to see esports saved from itself, I enjoy playing PC games like Overwatch and League of Legends with my friends and watching really good players compete, but the level of money thrown around has me convinced that it's going to take a major meltdown to get people to be serious. 

I was just starting my IT career when the first dot-com bubble blew and I recognize the signs.  I hope Fields is right about fixing the industry.
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