Federal Reserve Announces 1st Interest Hikes Since Financial Crisis

The Federal Reserve has announced that it would raise short-term interest rates for the first time since the 2007-2008 financial crisis.  The decision is described as a vote of confidence in the American economy even as much of the rest of the world struggles.

The announcement details that the interest rate hikes will range between 0.25 percent and 0.5 percent which signals the beginning of the end for the central bank’s stimulus program.  Federal officials emphasized that they intended to raise rates gradually, and only if economic growth continues. Short-term rates will rise by about one percentage point a year for the next three years, Fed officials predicted.

Interest rates on mortgages and other kinds of loans, and on savings accounts and other kinds of investments, are likely to remain low for years to come.  The announcement came exactly seven years to the day after the central bank cut its benchmark rate nearly to zero.

The Federal Reserve is trying to tiptoe between two kinds of danger. It wants to raise rates to improve its defenses against future risks, including higher inflation or another economic downturn. But if it moves too quickly, it risks undermining the current recovery.  It faces the additional challenge of increasing domestic rates while other central banks are holding rates down.

The decision was the most important and riskiest step the Fed has taken since Ms. Yellen became chairwoman in early 2014. Every other developed nation that has raised rates since the end of the financial crisis has been forced to backtrack as growth slowed.  Ms. Yellen won the support of all 10 voting members of the Federal Open Market Committee, a victory that reflects the Fed’s tradition of maintaining the appearance of consensus on major decisions.  They cited strong job growth, and the broader backdrop of a moderate but steady economic expansion, as evidence that the economy no longer needed quite as much of its help.

Senator Bernie Sanders of Vermont, a Democratic presidential candidate, said in a statement “When millions of Americans are working longer hours for lower wages, the Federal Reserve’s decision to raise interest rates is bad news for working families,” “The Federal Reserve should act with the same sense of urgency to rebuild the disappearing middle class as it did to bail out Wall Street banks seven years ago.”

Meanwile, some Republicans, bid good riddance to the era of near-zero interest rates.  Representative Jeb Hensarling, Republican of Texas and chairman of the House Financial Services Committee, said in a statement.  “Unsustainably low interest rates clearly didn’t solve the problem, or else Americans today wouldn’t be stuck in the slowest, worst-performing economic recovery of our lifetimes.”

 

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NY State To Overhaul Solitary Confinement

New York has agreed to a major overhaul in the way solitary confinement is administered in the state’s prisons.  The goal is to significantly reduce the number of inmates held in isolation, cutting the maximum length of stay and improve their living conditions.

Currently, New York state holds 4,000 prisoners in solitary confinement in 6-foot-by-10-foot cells for 23 hours a day, often for years.  Prisoners in solitary confinement often have little, if any human contact, no access to rehabilitative programs and a diet that can be restricted to a foul-tasting brick of bread and potatoes known at the prisons as “the loaf.”

The five-year, $62 million agreement, announced on Wednesday, is the result of a lawsuit brought by the New York Civil Liberties Union over the treatment of inmates in solitary confinement in the prisons.  The new agreement seeks to reduce dramatically the number of people in solitary confinement and the length of their stay. It imposes a maximum sentence of three months in solitary for most disciplinary violations and bars the use of solitary confinement for first-time violations for drug use or possession.

The changes are expected to reduce the number of inmates in solitary confinement by at least a quarter and usher in a range of reforms, including limiting the time served to three months in most cases and providing the prisoners with certain privileges, like monthly phone calls and group recreation.  The legal settlement caps three years of negotiations between the civil liberties union and the administration of Gov. Andrew M. Cuomo, and comes at a time of intense scrutiny of the state prison system.

In June, two murderers escaped from the Clinton Correctional Facility in Dannemora, N.Y., setting off a nationwide manhunt that cost millions of dollars. But it also exposed serious dysfunction within the State Department of Corrections and Community Supervision that has been documented in a series of articles by The New York Times and The Marshall Project, a nonprofit news organization.

Mr. Cuomo saw the lawsuit as an opportunity to make New York prisons a model for the country.  While both sides say they are dedicated to a sweeping reform effort, there are still significant obstacles.  Almost two years ago, the state agreed to an interim settlement that eliminated the use of solitary confinement for pregnant women, most developmentally disabled inmates and any prisoner under age 18.

Yet during that time, the number of inmates in solitary confinement had increased. Officials attributed the rise in part to the escape in June, which prompted a crackdown throughout the prison system. More than 50 people have been in solitary confinement for longer than five years.  During this same timeframe, the average length of stay in isolation has gone down, to 190 days as of December from 225 days last year.

 

San Bernardino Shooter’s Friend Charged

The friend and former neighbor of San Bernardino attacker Syed Rizwan Farook was arrested and charged with conspiring.  He is accused of plotting attacks on a college and freeway. E nrique Marquez, 24, is accused of conspiring with Farook to provide material support to terrorism in 2011 and 2012, making a false statement in connection with the acquisition of firearms, and immigration fraud, according to a statement from the U.S. Department of Justice.

The immigration fraud charge is connected to Marquez’s “sham marriage” to Farook’s sister-in-law’s sister — Mariya Chernykh, who is Russian. They married on Nov. 29, 2014, the complaint states.  He is believed by authorities to have bought two assault rifles used by Farook and Farook’s wife, Tashfeen Malik, in the Dec. 2 mass shooting and terror attack that left 14 people dead in the Inland Empire city.

While he has not been charge with involvement in the San Bernardino attack, Marquez bought the AR-15-style rifles used in the shooting, as well as explosive material used to construct a pipe bomb that was found at the attack site. A complaint also accuses Marquez of planning terrorist attacks with Farook in 2011 and 2012 that were not carried out, the Justice Department said.

Marquez reportedly told investigators he and Farook had planned to attack the library or cafeteria at Riverside Community College. They also, allegedly, had plotted to attack State Route 91 during rush hour. Marquez told investigators that the plan was to throw pipe pipe bombs on the freeway, and then to open fire on stopped vehicles, the Justice Department said.

Neither attack took place. After 2012, Marquez purportedly stopped planning with Farook and distanced himself from his friend after the arrests of Ralph Deleon and others on terrorism-related charges.

Since the San Bernardino shootings, Marquez has waived his Miranda rights, cooperated with investigators and provided information, officials have said. He also checked himself into a mental health facility.  According to the complaint, Marquez called 911 on December 3 and told the operator that Farook was behind the San Bernardino attack and had used his gun in the attacks

Authorities are still trying to learn more about whom the killers interacted with, how they hatched and carried out the plot and why.

 

Canadians Prepare To Welcome Thousands Of Refugees

Canadians are preparing to welcome thousands of Syrian refugees set to arrive in the coming weeks even as the exact dates of the government-arranged flights remain a mystery.  Temporary processing centers have been set up to handle the waves of newcomers at Toronto’s Pearson airport and Montreal’s Pierre Elliott Trudeau airport and officials say both facilities will be ready in time for the first arrivals, some of whom could come within days.

The first refugees will arrive following promises from Trudeau’s Liberal party to take in 25,000 refugees in all ten of Canada’s provinces.   The government’s plan is to accept 10,000 refugees before the end of 2015 and 15,000 more in the first two months of 2016.

Federal officials stated that by the time the refugees leave the airports, they’ll have received permanent residency, a social insurance number and information on working in Canada, as well as a boxed meal and translators on hand to help as needed.

The goal is to make refugees’ first experiences in their new country warm and welcoming, said Heidi Jurisic, the Greater Toronto Area director for Immigration, Refugees and Citizenship Canada.  The whole process should take about three hours for those arriving on a small flight, Jurisic said.  Privately sponsored refugees will then be taken to the families awaiting them, while those sponsored by the government will be brought to temporary accommodations.

Ontario Immigration Minister Michael Chan and Health Minister Eric Hoskins held a special advisory meeting on refugees with various government and community organizations to discuss housing, education and health-care planning for the refugees.  Hoskins said Ontario has a well-established network of settlement agencies, so the province is ready to receive them. “I have confidence because we do this each year with the help of our community organizations for 12,000 refugees year after year,” Hoskins said.  “This is roughly the same number, obviously over a shorter period of time, but that’s why we’ve been doing the hard work that we’ve been doing over these past weeks.”

Martine Hebert, vice-president of the Canadian Federation of Independent Business, said about 66,000 jobs currently need to be filled in Quebec.  At a separate news conference, Montreal Mayor Denis Coderre announced a hotline for citizens wanting to help the refugees and said he expects housing to be a major concern as the refugees begin arriving.

 

 

Candidates React To Trump’s Proposed Muslim Ban

The latest pronouncement from the presidential campaign of Donald Trump calls for the U.S. to refuse to let any Muslims, from anywhere — into the United States.  It has prompted very strong criticism, including from some of his fellow Republican candidates and state party leaders.

His proposal came the day after President Obama’s Sunday night televised address from the Oval Office in which the president urged Americans to reject discrimination against Muslim Americans.  “I wrote something today that I think is very very salient, very important and probably not politically correct, but I don’t care,” Trump said at a rally on an aircraft carrier-turned-museum in South Carolina.

The statement earned him a standing ovation at an event. Trump called for “a total and complete shutdown of Muslims entering the United States until our country’s representatives can figure out what is going on.”

He cited polls as evidence of “hatred” of Americans by large segments of the Muslim population.  He highlighted a poll done by Pew Research.  The 2011 Pew Global Attitudes survey found majorities of Muslims in other countries described Westerners as “selfish,” “violent” and “arrogant.”

Although, the same poll found that Muslims across the globe are overwhelmingly opposed to the Islamic State and in 2007 that Muslims were much less likely to view suicide bombings as justified than five years prior. Pew also found a partisan split in which Republican Americans were far more likely to hold negative views of Muslims than Democrats. In 2011, they learned that U.S. Muslims almost never consider suicide bombings to be justified.”

While other presidential hopefuls all-out rejected Trump’s proposal, Ben Carson tried to draw this line: “Everyone visiting our country should register and be monitored during their stay, as is done in many countries,” spokesman Doug Watts said. “We do not and would not advocate being selective on one’s religion.”

Other candidates expressed their views with Ted Cruz saying “I believe the focus should be on radical Islamic terrorism.”  Jeb Bush called Trump “unhinged” in regards to the Muslim Ban and Marco Rubio said Trump’s plan was outlandish and offensive.  Chris Christie said Trump has no idea what he’s talking about.

During a radio appearance Dick Cheney said “Well, I think this whole nation, that we can say, ‘No more Muslims,’ that we can just ban a whole religion, goes against everything we stand for and believe in,” he said.

 

Third Bataclan Attacker Identified

Prime Minister Manuel Valls has said that French police have identified the third attacker in the Bataclan concert hall massacre where ninety people were killed in last month’s attacks.  Reports have named French national Foued Mohamed-Aggad, 23, from Strasbourg as the third attacker.

Mohamed-Aggad reportedly travelled to Syria in late 2013 as part of a group of radicalized youth from Strasbourg that included his brother.  Several of the group were arrested upon returning to France in spring last year. Mohamed-Aggad is believed to have remained in Syria.

French media say that Mohamed-Aggad was recruited by Mourad Fares, a man known to have actively recruited young Frenchmen on behalf of jihadist groups in Syria.  Fares was arrested in Turkey last year and placed under provisional detention in France in September 2014.  He is being prosecuted for a string of terrorism-related offences in France and Syria.

The three men stormed the Bataclan at around 21:40 on 13 November, during a concert by the Eagles of Death Metal rock group. They opened fire on concert-goers, repeatedly reloading their guns before police started to arrive at the scene.  One of the gunmen was killed but the two others took hostages and eventually died when elite police units launched a final assault hours later.

Mohamed-Aggad was identified late last week by police after DNA samples were confirmed to match with members of his family.  The two others who blew themselves up at the music venue were identified as Frenchmen Omar Ismail Mostefai, 29, and Samy Amimour, 28.

All three gunmen who attacked the venue wearing suicide vests have been confirmed as French nationals.  Other attackers who took part in the coordinated attacks around Paris on 13 November that killed 130 people in total have either been identified as home-grown French or Belgian extremists.

The BBC’s Hugh Schofield in Paris said we can now be sure that Mostefai, Amimour, Mohamed-Aggad, Bilal Hadfi and suspected ringleader Abdelhamid Abaaoud had all travelled to Syria. He said Mohamed-Aggad appears to have spent longer than the others in Syria.

In addition, two of the Stade de France attackers were believed to have come to Europe via the Greek island of Leros and may have been posing as Syrian refugees.  One other Paris attacker remains to be identified.

The attacks are suspected to have been masterminded by Abdelhamid Abaaoud, killed in a police raid in Saint-Denis a few days later. But another key figure,  Salah Abdeslam, is on the run. The 26-year-old French national born in Brussels has been identified as a key suspect, and he is the subject of a massive police manhunt in Belgium and beyond.  Also on the run is Mohamed Abrini.

San Bernardino Shooting

Wednesday’s deadly San Bernardino shooting at The Inland Regional Center left 14 people dead and 21 wounded. The center is a state-run facility for individuals with developmental disabilities. The attack took place in a conference area where the San Bernardino County Department of Public Health was holding a banquet, Maybeth Feild, president and CEO of the social services center, told The Associated Press.

The shooters, Syed Rizwan Farook, along with his wife, Tashfeen Malik, targeted his co-workers at a holiday party for the environmental health department held in an auditorium with about 80 people. The County had rented the conference center portion of the three building complex. Farook had attended the event earlier but it’s been reported that he had left the event abruptly.

Dressed in tactical gear, ski masks and armed with assault rifles, the two entered the building around 11am and opened fire. The entire shooting took less than four minutes and between 65 to 75 shots were fired. The shooters also left behind an explosive device that failed to detonate. The perpetrators departed the scene before police arrived.

Witnesses said they recognized Farook as one of the shooters by his voice and build. The shooters fled in a rented SUV. A witness gave Farook’s name to police, who quickly learned that a black Ford Expedition SUV with Utah license plates had been rented by Farook within four days before the attack. Officers went to the address provided and gave chase when the driver tried to flee. At least one fake explosive—a metal pipe stuffed with cloth made to resemble a pipe bomb—was thrown at the police during the pursuit.

After the SUV was stopped, the couple exchanged fire with police from inside their vehicle on East San Bernardino Avenue, about 1.7 miles away from the scene of the mass shooting. Both were killed within four hours of the shooting.

Syed Rizwan Farook was born in Chicago, Illinois,and was a U.S. citizen. His parents had immigrated from Pakistan. Tashfeen Malik was born in Pakistan but had lived for most of her life in Saudi Arabia. Malik entered the United States on a K-1 (fiancée) visa with a Pakistani passport. Malik’s application for permanent residency was completed by Farook on her behalf in September 2014, and she was granted a conditional green card in July 2015.

Investigators have said that Malik may have been the primary planner and “mastermind” behind the attack and that she was radicalized before meeting Farook. Christian Nwadike, a coworker of Farook for five years, said that Farook’s personality changed after his return from Saudi Arabia. Malik’s estranged relatives say that she had left the moderate Islam of her family and become radicalized while living in Saudi Arabia.

German Parliament Approves Non-Combat Support In Fight Against ISIS

The German Parliament has voted to provide military support to the U.S.-led fight against the self-proclaimed Islamic State in Iraq and Syria. The British Parliament recently voted to join the bombing campaign in Syria as well. Germany says it will not actively engage in combat but will provide warplanes, a tank aircraft and a warship.

Tornado reconnaissance jets, a naval frigate and 1,200 soldiers will be sent to the region for non-combat related support. Germany’s decision comes a day after British warplanes carried out their first air strikes on IS targets in Syria after the country’s parliament authorized the military operation. This will be Germany’s biggest current military operation abroad. Until now, Germany’s biggest foreign mission has been in Afghanistan, but that has gradually wound down to a force of just less than 1,000.

After the Paris attacks last month the UN Security Council adopted a French resolution calling on UN member states to “take all necessary measures” to “prevent and suppress terrorist acts” committed by IS, al-Qaeda and affiliated “terrorist” groups. France also invoked an EU Treaty clause on mutual defence – Article 42.7 – to get help from its EU partners in the fight against IS.

The United Nations security council had declared in a unanimous vote that all able states should join the fight against Islamic State in Syria and Iraq and redouble efforts to prevent further attacks by the militant group.

Isis used the chaos of Syria’s nearly five-year civil war to seize territory in Syria and Iraq, where a US-led coalition has been bombing the militants for more than a year, while Russia began airstrikes in Syria in September. The group has recently claimed responsibility for downing a Russian passenger plane in Egypt, killing all 224 people on board, and attacks in Lebanon, Turkey and Tunisia.

The council resolution also urges states to intensify efforts to stem the flow of foreigners looking to fight with Isis in Iraq and Syria and to prevent and suppress financing of terrorism. The British prime-minister, David Cameron, called the vote on the French-drafted text an important moment. “The world has united against Isil (Islamic State). The international community has come together and has resolved to defeat this evil, which threatens people of every country and every religion,” he said.

Justice Department Dismisses Manslaughter Charges For BP Employees

The Gulf of Mexico rig explosion that killed 11 workers and unleashed the nation’s worst offshore oil spill also led to criminal charges against four BP employees, who faced prison time if convicted. The Justice Department’s recent decision to drop manslaughter charges against two BP rig supervisors means it is likely that nobody will spend a day behind bars for crimes associated with the deadly disaster.

One of those rig supervisors, Donald Vidrine, pleaded guilty to a misdemeanor charge of violating the Clean Water Act after a judge agreed to dismiss 11 counts of involuntary manslaughter against him and Robert Kaluza. The cases against two other former BP employees already have been resolved — one with an acquittal and another with a sentence of probation. To convict on involuntary manslaughter, prosecutors would have had to prove that Kaluza and Vidrine acted with a “wanton or reckless disregard for life” rather than just negligence. It would have been extremely difficult for prosecutors to meet that burden of proof.

The Justice Department launched a costly criminal investigation after the April 2010 rig explosion. A task force of FBI agents and prosecutors occupied an entire floor of a high-rise building across from the federal courthouse in New Orleans for almost two years. The government did secure a landmark criminal settlement and record civil penalties against the energy giant, which BP said would cost the corporation billions of dollars. But in terms of individual criminal responsibility, only four mostly lower-ranking employees faced charges, and those cases unraveled before skeptical jurors and judges.

Former BP executive David Rainey was acquitted in June of manipulating calculations to match a far-too-low estimate of the amount of oil spewing into the Gulf. A judge dismissed a related charge, that Rainey obstructed a congressional investigation of the spill.

Former BP engineer Kurt Mix was convicted of obstruction of justice in 2013 for deleting a string of text messages, but allegations of juror misconduct led a judge to order a new trial. Mix then cut a deal with prosecutors, who agreed to drop the obstruction charge punishable by up to 20 years in prison. He pleaded guilty last month to a lesser charge and was sentenced to six months of probation.

Anthony Badalamenti, a former manager for Halliburton Energy Services Inc., BP’s cement contractor on the rig, was sentenced to one year of probation after pleading guilty to a misdemeanor: destroying evidence in the aftermath of the spill.

Pfizer Secures $150 Billion Deal With Allergan

Pharmaceutical giant Pfizer has secured a more than $150 billion merger with fellow drug maker Allergan, marking one of the largest takeovers in the history of the healthcare industry. Since Allergan is headquartered in Ireland, the deal will allow Pfizer to avoid billions in U.S. taxes. It’s believed to be the largest example to date of a so-called tax inversion – where a U.S. firm acquires a firm based overseas in order to dodge U.S. taxes.

The deal to buy Allergan, the maker of Botox, is the largest acquisition yet in a banner year for mergers. More importantly, it would be the biggest transaction aimed at helping an American company shed its United States corporate citizenship in an effort to lower its tax bill, in this case by billions of dollars.

This merger comes as the Obama administration is trying to crack down on these kinds of deals, known on Wall Street and in Washington as corporate inversions. Last week, the Treasury Department and the Internal Revenue Service announced new rules meant to further clamp down on the benefits of such mergers. The government has already lost billions of dollars in corporate tax revenue from inversions, particularly over the last couple of years.

The new rules have deterred other American companies from such inversion but the Treasury Department officials said as recently as last week that only Congress can halt inversions. Pfizer and Allergan are taking steps to sidestep the current rules altogether. Though Pfizer is significantly bigger, with a market value of $199 billion to Allergan’s $123 billion, it is Allergan that would technically be the buyer. Allergan’s headquarters are located in Dublin even though the bulk of its operations are based in Parsippany, New Jersey. The planned transaction could avoid the Treasury rules, which apply to American companies that buy foreign companies.

The deal entails that Pfizer would lead the combined company in most respects but they would move their headquarters to Dublin in order to avoid U.S. Taxes. Pfizer’s current headquarters are located in New York City, NY. President Barack Obama has called such inversion deals unpatriotic and has tried to crack down on the practice. Democratic presidential front-runner Hillary Clinton pledged to propose measures to prevent such deals. The merger was also slammed by her rival Senator Bernie Sanders as well as by Republican presidential candidate Donald Trump who referred to the tremendous loss of jobs as “disgusting”. It was not immediately known how many jobs would be lost as a result of the merger.

The merger means Pfizer would surpass Johnson & Johnson as the biggest drug maker by revenue, with more than $60 billion in sales. Its product portfolio would range from Viagra, Celebrex and pneumonia drugs to Botox and the cosmetic treatment Juvéderm. Analysts do not expect the merger to have much effect on the prices of the companies’ drugs but the company’s revenue would greatly increase with reduced taxes.