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Run-up to Flynn Sentencing Tinged with Unexpected Drama

Michael Flynn may have given extraordinary cooperation to prosecutors, but the run-up to his sentencing hearing Tuesday has exposed raw tensions over an FBI interview in which the former national security adviser lied about his Russian contacts.

 

Flynn’s lawyers have suggested that investigators discouraged him from having an attorney present during the January 2017 interview and never informed him it was a crime to lie. Prosecutors shot back, “He does not need to be warned it is a crime to lie to federal agents to know the importance of telling them the truth.”

 

The mere insinuation of underhanded tactics was startling given the seemingly productive relationship between the two sides, and it was especially striking since prosecutors with special counsel Robert Mueller’s office have praised Flynn’s cooperation and recommended against prison time. The defense arguments spurred speculation that Flynn may be trying to get sympathy from President Donald Trump or may be playing to a judge known for a zero-tolerance view of government misconduct.

 

“It’s an attempt, I think, to perhaps characterize Flynn as a victim or perhaps to make him look sympathetic in the eyes of a judge — and, at the same time, to portray the special counsel in a negative light,” said former federal prosecutor Jimmy Gurule, a University of Notre Dame law school professor.

 

Until the dueling memos were filed last week, the sentencing hearing for Flynn — who pleaded guilty to lying about conversations during the transition period with the then-Russian ambassador — was expected to be devoid of the drama characterizing other of Mueller’s cases.

Prosecutors, for instance, have accused former Trump campaign chairman Paul Manafort of lying to them even after he agreed to cooperate. Another potential target, Jerome Corsi, leaked draft court documents and accused Mueller’s team of bullying him. And George Papadopoulos, a Trump campaign adviser recently released from a two-week prison sentence, has lambasted the investigation and publicly claimed that he was set up.

 

Flynn, by contrast, has been notably silent even as his supporters advocated a more combative stance. He met privately with investigators 19 times and provided cooperation so extensive that prosecutors said he was entitled to avoid prison altogether.

 

Then came his sentencing memo.

 

Although Flynn and his attorneys stopped short of any direct accusations of wrongdoing, they took pains to note that Flynn, unlike other defendants in Mueller’s investigation, was not informed that it was against the law to lie to the FBI. They suggest the FBI, which approached Flynn at the White House just days after Trump’s inauguration, played to his desire to keep the encounter quiet by telling him the quickest way to get the interview done was for him to be alone with the agents — rather than involve lawyers.

 

They also insinuate that Flynn, of Middletown, Rhode Island, deserves credit for not publicly seizing on the fact that FBI officials involved in the investigation later came under scrutiny themselves. Former Deputy Director Andrew McCabe, who contacted Flynn to arrange the interview, was fired this year for what the Justice Department said was a lack of candor over a news media leak. Peter Strzok, one of the two agents who interviewed Flynn, was removed from Mueller’s team and later fired for trading anti-Trump texts with another FBI official.

 

Mueller’s team has rejected any suggestion that Flynn was duped, with prosecutors responding in a sentencing memo Friday that there was no obligation to warn Flynn against lying.

 

“A sitting National Security (Adviser), former head of an intelligence agency, retired Lieutenant General, and 33-year veteran of the armed forces knows he should not lie to federal agents,” prosecutors wrote.

Former FBI Director James Comey criticized the broadsides on the Flynn investigation during a Monday appearance on Capitol Hill, saying, “They’re up here attacking the FBI’s investigation of a guy who pled guilty to lying to the FBI.”

Trump has made no secret that he sees Mueller’s investigation as a “witch hunt” and has continued to lash out at prosecutors he sees as biased against him and those who help them. He’s shown continued sympathy for Flynn, though, calling him a “great person” and asserting erroneously last week that the FBI said he didn’t lie.

 

Flynn has not tried to retract his guilty plea, and there’s every indication the sentencing will proceed as scheduled.

 

Arun Rao, a former Justice Department prosecutor in Maryland, said the defense memo is striking because it’s “inconsistent” with Flynn’s cooperative stance so far.

 

“You also wonder in this very unusual situation,” he said, “whether it is a play for a pardon.”

 

It’s possible at least some of the defense arguments may resonate with U.S. District Judge Emmet Sullivan, who directed prosecutors to produce FBI records related to Flynn’s interview. That included portions of the notes from Flynn’s Jan. 24, 2017 interview with FBI agents.

 

Responding to Sullivan’s order, prosecutors filed a redacted copy of the FBI interview notes Monday evening. The notes show FBI agents interviewed Flynn about his Russian contacts, including past trips to the country and his conversations with Sergey Kislyak, then Russia’s ambassador to the U.S.

 

Last year, Flynn pleaded guilty to lying about the contents of his conversations with Kislyak during the presidential transition.

 

The notes show Flynn told agents he didn’t ask Kislyak not to escalate Russia’s response to sanctions imposed by the Obama administration over election interference. But Flynn admitted as part of his guilty plea that he did.

The notes also show Flynn told agents he didn’t ask Kislyak to see if Russia would vote a certain way on a United Nations resolution involving Israeli settlements. But last year he admitted having asked Kislyak to see if Russia would vote against or delay the resolution. Court papers show Flynn made the request at the direction of Trump son-in-law Jared Kushner.

 

Sullivan was the judge in the Justice Department’s botched prosecution of now-deceased Republican Sen. Ted Stevens of Alaska. He dismissed the case after prosecutors admitted that they withheld exculpatory evidence, prompting the judge to say that in nearly 25 years on the bench, “I’ve never seen anything approaching the mishandling and misconduct that I’ve seen in this case.”

 

In an opinion piece for The Wall Street Journal last year, Sullivan said the experience inspired him to explicitly remind prosecutors in every criminal case before him of their obligation to provide defendants with favorable evidence. He says he has encouraged colleagues to do the same.

 

But while Sullivan has proved especially sensitive to hints of government overreach, nothing about the Flynn case comes close, said Gurule, the law professor.

 

“To portray him as somehow an innocent dupe, as somehow just this innocent victim in the process, this suggestion that there was a perjury trap — it’s an absurd allegation,” he said.

GOP Waits on Trump as Clock Ticks Toward Partial Shutdown

The fight over President Donald Trump’s $5 billion wall funds deepened Monday, threatening a partial government shutdown in a standoff that has become increasingly common in Washington.

It wasn’t always like this, with Congress and the White House at a crisis over government funding. The House and Senate used to pass annual appropriation bills, and the president signed them into law. But in recent years the shutdown scenario has become so routine that it raises the question: Have shutdowns as a negotiating tool lost their punch?

Monday brought few signs of progress. A partial shutdown that could occur at midnight Friday risks disrupting government operations and leaving hundreds of thousands of federal employees furloughed or working without pay over the holiday season. Costs would be likely in the billions of dollars.

Trump was meeting with his team and getting regular updates, said White House spokeswoman Sarah Huckabee Sanders. Trump was also tweeting Monday to keep up the pressure.

Exiting a Senate Republican leadership meeting late Monday, Sen. John Thune of South Dakota said, “It looks like it probably is going to have to build for a few days here before there’s a solution.”

The president is insisting on $5 billion for the wall along the southern border with Mexico, but he does not have the votes from the Republican-led Congress to support it. Democrats are offering to continue funding at current levels, $1.3 billion, not for the wall but for fencing and other border security.

It’s unclear how many House Republicans, with just a few weeks left in the majority before relinquishing power to House Democrats, will even show up mid-week for possible votes. Speaker Paul Ryan’s office had no update. Many Republicans say it’s up to Trump and Democrats to cut a deal.

​Senate Majority Leader Mitch McConnell and Trump talk most days, but the senator’s spokesman would not confirm if they spoke Monday about a plan. McConnell opened the chamber hoping for a “bipartisan collaborative spirit” that would enable Congress to finish its work.

“We need to make a substantial investment in the integrity of our border,” McConnell said. “And we need to close out the year’s appropriation process.”

Meanwhile more than 800,000 government workers are preparing for the uncertainty ahead.

The dispute could affect nine of 15 Cabinet-level departments and dozens of agencies, including the departments of Homeland Security, Transportation, Interior, Agriculture, State and Justice, as well as national parks and forests.

About half the workers would be forced to continue working without immediate pay. Others would be sent home. Congress often approves their pay retroactively, even if they were ordered to stay home.

“Our members are asking how they are supposed to pay for rent, food, and gas if they are required to work without a paycheck,” said a statement from J. David Cox, Sr., president of the American Federation of Government Employees, the large federal worker union. “The holiday season makes these inquiries especially heart-wrenching.”

Many agencies, including the Pentagon and the departments of Veterans Affairs and Health and Human Services, are already funded for the year and will continue to operate as usual, regardless of whether Congress and the president reach agreement this week.

Congress already approved funding this year for about 75 percent of the government’s discretionary account for the budget year that began Oct. 1.

The U.S. Postal Service, busy delivering packages for the holiday season, wouldn’t be affected by any government shutdown because it’s an independent agency.

Trump said last week he would be “proud” to have a shutdown to get Congress to approve a $5 billion down payment to fulfill his campaign promise to build a border wall.

​During his 2016 presidential campaign, Trump promised that Mexico would pay for the wall. Mexico has refused.

Democratic leaders Chuck Schumer and Nancy Pelosi, in a meeting last week at the White House, suggested keeping funding at its current level, $1.3 billion, for improved fencing. Trump had neither accepted nor rejected the Democrats’ offer, telling them he would take a look.

Schumer said Monday he had yet to hear from Trump. Speaking on the Senate floor, Schumer warned that “going along with the Trump shutdown is a futile act” because House Democrats would quickly approve government funding in January.

“President Trump still doesn’t have a plan to keep the government open,” Schumer said Monday. “No treat or temper tantrum will get the president his wall.”

One option for lawmakers would be to provide stopgap funding for a few weeks, until the new Congress convenes Jan. 3, when Pelosi is poised to become House speaker.

Wyoming Sen. John Barrasso, who is in line to become the No. 3 Republican in the Senate, suggested a stopgap bill could be one way to resolve the issue or a longer-term bill that includes money for border security.

GOP leaders, though, were frustrated as the clock ticked away. Leaving the weekly leadership meeting, Sen. Roy Blunt, R-Mo., said any planning was a “very closely held thing. That’s why we should never let this happen. We should pass the bills the way we’re supposed to pass them.”

GOP Waits on Trump as Clock Ticks Toward Partial Shutdown

The fight over President Donald Trump’s $5 billion wall funds deepened Monday, threatening a partial government shutdown in a standoff that has become increasingly common in Washington.

It wasn’t always like this, with Congress and the White House at a crisis over government funding. The House and Senate used to pass annual appropriation bills, and the president signed them into law. But in recent years the shutdown scenario has become so routine that it raises the question: Have shutdowns as a negotiating tool lost their punch?

Monday brought few signs of progress. A partial shutdown that could occur at midnight Friday risks disrupting government operations and leaving hundreds of thousands of federal employees furloughed or working without pay over the holiday season. Costs would be likely in the billions of dollars.

Trump was meeting with his team and getting regular updates, said White House spokeswoman Sarah Huckabee Sanders. Trump was also tweeting Monday to keep up the pressure.

Exiting a Senate Republican leadership meeting late Monday, Sen. John Thune of South Dakota said, “It looks like it probably is going to have to build for a few days here before there’s a solution.”

The president is insisting on $5 billion for the wall along the southern border with Mexico, but he does not have the votes from the Republican-led Congress to support it. Democrats are offering to continue funding at current levels, $1.3 billion, not for the wall but for fencing and other border security.

It’s unclear how many House Republicans, with just a few weeks left in the majority before relinquishing power to House Democrats, will even show up mid-week for possible votes. Speaker Paul Ryan’s office had no update. Many Republicans say it’s up to Trump and Democrats to cut a deal.

​Senate Majority Leader Mitch McConnell and Trump talk most days, but the senator’s spokesman would not confirm if they spoke Monday about a plan. McConnell opened the chamber hoping for a “bipartisan collaborative spirit” that would enable Congress to finish its work.

“We need to make a substantial investment in the integrity of our border,” McConnell said. “And we need to close out the year’s appropriation process.”

Meanwhile more than 800,000 government workers are preparing for the uncertainty ahead.

The dispute could affect nine of 15 Cabinet-level departments and dozens of agencies, including the departments of Homeland Security, Transportation, Interior, Agriculture, State and Justice, as well as national parks and forests.

About half the workers would be forced to continue working without immediate pay. Others would be sent home. Congress often approves their pay retroactively, even if they were ordered to stay home.

“Our members are asking how they are supposed to pay for rent, food, and gas if they are required to work without a paycheck,” said a statement from J. David Cox, Sr., president of the American Federation of Government Employees, the large federal worker union. “The holiday season makes these inquiries especially heart-wrenching.”

Many agencies, including the Pentagon and the departments of Veterans Affairs and Health and Human Services, are already funded for the year and will continue to operate as usual, regardless of whether Congress and the president reach agreement this week.

Congress already approved funding this year for about 75 percent of the government’s discretionary account for the budget year that began Oct. 1.

The U.S. Postal Service, busy delivering packages for the holiday season, wouldn’t be affected by any government shutdown because it’s an independent agency.

Trump said last week he would be “proud” to have a shutdown to get Congress to approve a $5 billion down payment to fulfill his campaign promise to build a border wall.

​During his 2016 presidential campaign, Trump promised that Mexico would pay for the wall. Mexico has refused.

Democratic leaders Chuck Schumer and Nancy Pelosi, in a meeting last week at the White House, suggested keeping funding at its current level, $1.3 billion, for improved fencing. Trump had neither accepted nor rejected the Democrats’ offer, telling them he would take a look.

Schumer said Monday he had yet to hear from Trump. Speaking on the Senate floor, Schumer warned that “going along with the Trump shutdown is a futile act” because House Democrats would quickly approve government funding in January.

“President Trump still doesn’t have a plan to keep the government open,” Schumer said Monday. “No treat or temper tantrum will get the president his wall.”

One option for lawmakers would be to provide stopgap funding for a few weeks, until the new Congress convenes Jan. 3, when Pelosi is poised to become House speaker.

Wyoming Sen. John Barrasso, who is in line to become the No. 3 Republican in the Senate, suggested a stopgap bill could be one way to resolve the issue or a longer-term bill that includes money for border security.

GOP leaders, though, were frustrated as the clock ticked away. Leaving the weekly leadership meeting, Sen. Roy Blunt, R-Mo., said any planning was a “very closely held thing. That’s why we should never let this happen. We should pass the bills the way we’re supposed to pass them.”

US Senate Advances Criminal Justice Reform

The U.S. Senate advanced a bipartisan bill Monday that would decrease America’s large prison population by lowering some mandatory federal sentences and giving prisoners added opportunities to earn reductions in jail time.

With the 82-12 procedural vote, the Senate formally took up the First Step Act, which is backed by President Donald Trump but has fewer than two weeks to reach his desk before the end of the current Congress.

“This landmark legislation restores fairness in sentencing by ensuring that penalties fit their crimes, gives low-level, non-violent offenders a better chance to turn over a new leaf upon release from prison, and ultimately reduces crime and makes our streets and neighborhoods safer,” Senate Judiciary Committee Chairman Chuck Grassley, an Iowa Republican, said in a statement.

“These historic changes will make communities SAFER and SAVE tremendous taxpayers dollars,” Trump tweeted. “It brings much needed hope to many families during the Holiday Season.”

The First Step Act would retroactively end the discrepancy in federal sentences for drug offenses involving crack and the powder form of cocaine, reducing jail time for thousands of prisoners already serving time for crack offenses.

The bill also would reduce some mandatory sentences, give federal judges more flexibility to make exceptions to mandatory prison terms, and allow prisoners to earn greater sentence reductions through good behavior and vocational training.

“The vast majority of prison inmates will one day be released back into our communities after serving their sentence,” Grassley said. “It is in everyone’s best interest to equip inmates with the skills and training needed to be become productive citizens, rather than returning to a life of crime.”

Proponents say the bill aims to correct a failed 1980s-era attempt to deter illegal drug use that established long mandatory prison sentences for drug convictions.

“Since 1980, the federal prison population has grown by over 700 percent,” Illinois Democrat Dick Durbin said. “Today, the United States of America holds more prisoners by far than any country in the world, more than Russia or China.”

Durbin added that existing law has unfairly targeted people of color, saying, “The majority of illegal drug users and dealers in America are white. But three-quarters of the people serving time in prison for drug offenses are African-American or Latino.”

The House of Representatives passed a similar version of the bill earlier this year. Now, the Senate is racing to complete work on the legislation before the chamber adjourns for the Christmas holiday.

Criticism of bill

The First Step Act has robust but not universal Senate support in its current form. Arkansas Republican Tom Cotton is demanding the bill stipulate that some prisoners will be barred from early release.

“Unfortunately, the bill still has major problems & allows early release for many categories of serious, violent criminals,” Cotton tweeted. “This includes felons who commit violent bank robberies with dangerous weapons, who assault children, & who commit carjacking with the intent to cause death.”

Cotton and several other Republicans are pressing an amendment that would specify which offenders are ineligible for sentence reductions, something that proponents of the First Step Act say the bill already sets forth.

“This bill will not allow dangerous, violent criminals to be released early — that [assertion] is pure fiction,” said the Senate’s No. 2 Republican, John Cornyn of Texas. “It’s important that we look at people who are low risk of recidivism [committing more crimes] and low risk to public safety, because what we can do is use the resources — not to keep people like that behind bars unnecessarily — but to focus on the truly violent criminals.”

America’s prison population exceeds 2 million people, and incarceration consumes vast resources within the nation’s justice system. Even if it becomes law, the First Step Act would have a modest impact on incarceration numbers, as the bill only applies to federal inmates, who account for less than 10 percent of the national total. Other initiatives seek to achieve similar results at the state level.

Support for bill

A wide array of law enforcement organizations support the bill, as do both right-leaning and left-leaning advocacy groups.

Durbin hailed “the most extraordinary political coalition I’ve ever witnessed in the time I’ve been in Washington” joining forces to back the legislation.

“Every once in a while, the stars line up, and the Democrats and the Republicans, and the conservatives and the progressives, and the president and the Congress agree on something,” the Illinois Democrat said.

US Senate Advances Criminal Justice Reform

The U.S. Senate advanced a bipartisan bill Monday that would decrease America’s large prison population by lowering some mandatory federal sentences and giving prisoners added opportunities to earn reductions in jail time.

With the 82-12 procedural vote, the Senate formally took up the First Step Act, which is backed by President Donald Trump but has fewer than two weeks to reach his desk before the end of the current Congress.

“This landmark legislation restores fairness in sentencing by ensuring that penalties fit their crimes, gives low-level, non-violent offenders a better chance to turn over a new leaf upon release from prison, and ultimately reduces crime and makes our streets and neighborhoods safer,” Senate Judiciary Committee Chairman Chuck Grassley, an Iowa Republican, said in a statement.

“These historic changes will make communities SAFER and SAVE tremendous taxpayers dollars,” Trump tweeted. “It brings much needed hope to many families during the Holiday Season.”

The First Step Act would retroactively end the discrepancy in federal sentences for drug offenses involving crack and the powder form of cocaine, reducing jail time for thousands of prisoners already serving time for crack offenses.

The bill also would reduce some mandatory sentences, give federal judges more flexibility to make exceptions to mandatory prison terms, and allow prisoners to earn greater sentence reductions through good behavior and vocational training.

“The vast majority of prison inmates will one day be released back into our communities after serving their sentence,” Grassley said. “It is in everyone’s best interest to equip inmates with the skills and training needed to be become productive citizens, rather than returning to a life of crime.”

Proponents say the bill aims to correct a failed 1980s-era attempt to deter illegal drug use that established long mandatory prison sentences for drug convictions.

“Since 1980, the federal prison population has grown by over 700 percent,” Illinois Democrat Dick Durbin said. “Today, the United States of America holds more prisoners by far than any country in the world, more than Russia or China.”

Durbin added that existing law has unfairly targeted people of color, saying, “The majority of illegal drug users and dealers in America are white. But three-quarters of the people serving time in prison for drug offenses are African-American or Latino.”

The House of Representatives passed a similar version of the bill earlier this year. Now, the Senate is racing to complete work on the legislation before the chamber adjourns for the Christmas holiday.

Criticism of bill

The First Step Act has robust but not universal Senate support in its current form. Arkansas Republican Tom Cotton is demanding the bill stipulate that some prisoners will be barred from early release.

“Unfortunately, the bill still has major problems & allows early release for many categories of serious, violent criminals,” Cotton tweeted. “This includes felons who commit violent bank robberies with dangerous weapons, who assault children, & who commit carjacking with the intent to cause death.”

Cotton and several other Republicans are pressing an amendment that would specify which offenders are ineligible for sentence reductions, something that proponents of the First Step Act say the bill already sets forth.

“This bill will not allow dangerous, violent criminals to be released early — that [assertion] is pure fiction,” said the Senate’s No. 2 Republican, John Cornyn of Texas. “It’s important that we look at people who are low risk of recidivism [committing more crimes] and low risk to public safety, because what we can do is use the resources — not to keep people like that behind bars unnecessarily — but to focus on the truly violent criminals.”

America’s prison population exceeds 2 million people, and incarceration consumes vast resources within the nation’s justice system. Even if it becomes law, the First Step Act would have a modest impact on incarceration numbers, as the bill only applies to federal inmates, who account for less than 10 percent of the national total. Other initiatives seek to achieve similar results at the state level.

Support for bill

A wide array of law enforcement organizations support the bill, as do both right-leaning and left-leaning advocacy groups.

Durbin hailed “the most extraordinary political coalition I’ve ever witnessed in the time I’ve been in Washington” joining forces to back the legislation.

“Every once in a while, the stars line up, and the Democrats and the Republicans, and the conservatives and the progressives, and the president and the Congress agree on something,” the Illinois Democrat said.

Google to Spend $1 Billion on New Campus in New York

Alphabet’s Google is investing more than $1 billion on a new campus in New York, becoming the second major technology company after Amazon to pick America’s financial capital to expand and create thousands of jobs.

The 1.7 million-square-foot campus, called Google Hudson Square, will include leased properties at Hudson Street and Washington Street, the company said in a blog post Monday. The new campus will be the main location for Google’s advertising sales division, the Global Business Organization.

Google hopes to start moving into two Hudson Street buildings by 2020, followed by a Washington Street in 2022 and will have the capacity to more than double its New York headcount, currently more than 7,000, in the next 10 years.

The company’s plans to invest outside its home base mirror those of other U.S. tech giants such as Apple Inc, which said last week it would spend $1 billion to build a new 133-acre campus in Austin, Texas.

Last month, Amazon.com Inc said it would open offices in New York and the Washington, D.C. area, creating more than 25,000 jobs.

Mountain View, California-based Google’s move to invest in prime real estate on the lower west side of Manhattan also underscores the growing importance of New York as a hub for innovation and an incubator for technology companies.

With a plethora of white-collar workers and good infrastructure, the city provides a better option to other places that would require more investment.

“We’re growing faster outside the Bay Area than within it,” said Ruth Porat, chief financial officer of Alphabet and Google.

It is a “fairly sensible” move for Google given the amount of available talent pool, Atlantic Equities analyst James Cordwell said.

It also makes sense for Google as New York has been the center for their core advertising business, Cordwell added.

U.S. corporations are also under pressure from the Trump administration to create more jobs domestically. Companies that have moved jobs overseas or closed factories have drawn sharp rebukes from President Donald Trump.

The Wall Street Journal reported last month that Google was nearing a deal to buy or lease an office building in New York City that could add space for more than 12,000 new workers.

Google’s first New York office at 111 Eighth Avenue is one of the city’s largest buildings that it bought in 2010 for $1.77 billion.

Earlier this year, the company announced a $2.4 billion purchase of the Manhattan Chelsea Market. It also has leased space on Pier 57 jutting into the Hudson, which will create a four-block campus.

Google shares were down 1.7 percent at $1,032.84 amid a broader market sell-off.

Google to Spend $1 Billion on New Campus in New York

Alphabet’s Google is investing more than $1 billion on a new campus in New York, becoming the second major technology company after Amazon to pick America’s financial capital to expand and create thousands of jobs.

The 1.7 million-square-foot campus, called Google Hudson Square, will include leased properties at Hudson Street and Washington Street, the company said in a blog post Monday. The new campus will be the main location for Google’s advertising sales division, the Global Business Organization.

Google hopes to start moving into two Hudson Street buildings by 2020, followed by a Washington Street in 2022 and will have the capacity to more than double its New York headcount, currently more than 7,000, in the next 10 years.

The company’s plans to invest outside its home base mirror those of other U.S. tech giants such as Apple Inc, which said last week it would spend $1 billion to build a new 133-acre campus in Austin, Texas.

Last month, Amazon.com Inc said it would open offices in New York and the Washington, D.C. area, creating more than 25,000 jobs.

Mountain View, California-based Google’s move to invest in prime real estate on the lower west side of Manhattan also underscores the growing importance of New York as a hub for innovation and an incubator for technology companies.

With a plethora of white-collar workers and good infrastructure, the city provides a better option to other places that would require more investment.

“We’re growing faster outside the Bay Area than within it,” said Ruth Porat, chief financial officer of Alphabet and Google.

It is a “fairly sensible” move for Google given the amount of available talent pool, Atlantic Equities analyst James Cordwell said.

It also makes sense for Google as New York has been the center for their core advertising business, Cordwell added.

U.S. corporations are also under pressure from the Trump administration to create more jobs domestically. Companies that have moved jobs overseas or closed factories have drawn sharp rebukes from President Donald Trump.

The Wall Street Journal reported last month that Google was nearing a deal to buy or lease an office building in New York City that could add space for more than 12,000 new workers.

Google’s first New York office at 111 Eighth Avenue is one of the city’s largest buildings that it bought in 2010 for $1.77 billion.

Earlier this year, the company announced a $2.4 billion purchase of the Manhattan Chelsea Market. It also has leased space on Pier 57 jutting into the Hudson, which will create a four-block campus.

Google shares were down 1.7 percent at $1,032.84 amid a broader market sell-off.

Boeing Buying Stake in Brazil’s Embraer for $4.2 Billion

Boeing is buying a majority stake in Embraer’s commercial aircraft and services operations for $4.2 billion.

The joint venture, announced Monday, gives Boeing 80 percent ownership of those operations, with Embraer owning the remaining stake.

Boeing will have operational and management control of the company. Embraer will keep consent rights for some decisions, such as the transfer of operations from Brazil.

The deal still needs approval from the Brazilian government, as well as shareholders and regulators.

The companies also agreed to another joint venture to promote and develop new markets for the multi-mission medium airlift KC-390. Embraer will own a 51 percent stake in the joint venture, with Boeing owning the remaining 49 percent. The transaction is targeted to close by the end of next year.

Trump Implores Fed to Forego Another Interest Rate Hike

U.S. President Donald Trump on Monday implored the country’s independent central bank to not raise interest rates again when its policy makers meet this week.

In a Twitter message, Trump said, “It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!”

Central bank policy makers, who operate independently of White House oversight, are meeting Tuesday and Wednesday in Washington and have hinted they could again boost the key rate by another quarter percentage point, with even higher rates a possibility but not a certainty in 2019.

Trump has basked in a robust U.S. economy, the world’s biggest, even as numerous investigations engulf him and his 2016 presidential campaign and key advisers have quit his administration or been forced out.

U.S. trade disputes are ongoing with China and world stock market volatility has cut investor gains in recent weeks. But the 3.7 percent jobless rate is the lowest in the United States in 49 years, worker wages are increasing and consumers, the backbone of the U.S. economy, are spending.

But Jerome Powell, the Fed board member Trump named a year ago as chairman, has drawn the president’s ire by overseeing three interest rate hikes this year, pushing the country’s key lending rate to a range of 2 to 2.25 percent, a benchmark that helps determine other lending rates on loans for U.S. businesses and consumers and often serves as a guidepost for central banks around the world.

Trump last month said he is “not even a little bit happy” with his appointment of Powell.

Trump has said he thinks the Fed is “way off base” by raising rates, but has been powerless to stop it from boosting them. Central bank policy makers have raised interest rates to keep the inflation rate in check and keep the economy from expanding too rapidly.

“I’m doing deals and I’m not being accommodated by the Fed,” Trump told The Washington Post last month. “They’re making a mistake because I have a gut and my gut tells me more sometimes than anybody else’s brain can ever tell me.”

Some economists are predicting, however, that the decade-long improving U.S. economy could stall in the next year or so and perhaps even fall into a recession, which, if it occurs, would in most circumstances call for cutting interest rates to boost economic activity.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trump Implores Fed to Forego Another Interest Rate Hike

U.S. President Donald Trump on Monday implored the country’s independent central bank to not raise interest rates again when its policy makers meet this week.

In a Twitter message, Trump said, “It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!”

Central bank policy makers, who operate independently of White House oversight, are meeting Tuesday and Wednesday in Washington and have hinted they could again boost the key rate by another quarter percentage point, with even higher rates a possibility but not a certainty in 2019.

Trump has basked in a robust U.S. economy, the world’s biggest, even as numerous investigations engulf him and his 2016 presidential campaign and key advisers have quit his administration or been forced out.

U.S. trade disputes are ongoing with China and world stock market volatility has cut investor gains in recent weeks. But the 3.7 percent jobless rate is the lowest in the United States in 49 years, worker wages are increasing and consumers, the backbone of the U.S. economy, are spending.

But Jerome Powell, the Fed board member Trump named a year ago as chairman, has drawn the president’s ire by overseeing three interest rate hikes this year, pushing the country’s key lending rate to a range of 2 to 2.25 percent, a benchmark that helps determine other lending rates on loans for U.S. businesses and consumers and often serves as a guidepost for central banks around the world.

Trump last month said he is “not even a little bit happy” with his appointment of Powell.

Trump has said he thinks the Fed is “way off base” by raising rates, but has been powerless to stop it from boosting them. Central bank policy makers have raised interest rates to keep the inflation rate in check and keep the economy from expanding too rapidly.

“I’m doing deals and I’m not being accommodated by the Fed,” Trump told The Washington Post last month. “They’re making a mistake because I have a gut and my gut tells me more sometimes than anybody else’s brain can ever tell me.”

Some economists are predicting, however, that the decade-long improving U.S. economy could stall in the next year or so and perhaps even fall into a recession, which, if it occurs, would in most circumstances call for cutting interest rates to boost economic activity.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nissan Board Meets, no Chairman Picked to replace Ghosn

Nissan’s board met Monday but failed to pick a new chairman to replace Carlos Ghosn, who was arrested last month on charges of violating financial regulations, saying more discussion was needed.

 

Nissan Motor Co. Chief Executive Hiroto Saikawa told reporters that the board approved a special committee of outsiders to strengthen governance at the company. A date for the selection of a chairman was not decided.

 

“We plan to be cautious in this process, and I do not plan to rush this,” Saikawa said.

 

The recommendations for beefing up governance are due in March, and Saikawa said he was willing to wait until then to choose a chairman.

 

The board meeting came amid an unfolding scandal that threatens the Japanese automaker’s two-decade alliance with Renault SA of France and its global brand, and highlights shoddy governance at the manufacturer of the Leaf electric car.

 

Ghosn and another board member Greg Kelly were formally charged last week with falsifying financial reports in underreporting Ghosn’s income by about 5 billion yen ($44 million) from 2011 to 2015. They were arrested Nov. 19 by Tokyo prosecutors and remain in detention.

 

A source close to Ghosn’s family says Ghosn is innocent, as the alleged income was never decided upon or paid. Aubrey Harwell, the U.S. lawyer for Kelly, an American, says he is innocent, and that Nissan insiders and outside experts had advised him that the financial reporting was proper.

 

The chairman must be selected from among the board members. Three outside board members — race-car driver Keiko Ihara, Masakazu Toyoda, an academic, and Jean-Baptiste Duzan, formerly of Renault — are making that decision.

 

The special committee for governance includes the three outside board members and four other outsiders, including former judge Seiichiro Nishioka.

 

One candidate for chairman is Saikawa, who was hand-picked by Ghosn to succeed him as chief executive. He has denounced Ghosn and Kelly as the “masterminds” in a scheme to falsify income reports and abuse company money and assets.

 

Renault has kept Ghosn as chief executive and chairman, saying its investigation has not found wrongdoing in the awarding of Ghosn’s compensation.

 

Nissan Motor Co.’s allegations also include million-dollar homes in several nations, including France, Japan, Brazil, Lebanon and the Netherlands, purchased by Nissan or a subsidiary and used by Ghosn.

 

Wrangling over a home in Rio de Janeiro has developed into a court battle in Brazil, with Nissan seeking to block Ghosn’s family from retrieving items.

 

Ghosn was born in Brazil of Lebanese ancestry and holds French citizenship. He was sent in by Renault in 1999 to turn around Nissan from the brink of bankruptcy.

 

It’s unclear when Ghosn and Kelly may be released, with Tokyo prosecutors saying they are a flight risk.

 

 

 

Partial US Government Shutdown Looms

A quarter of U.S. government operations could shut down Friday at midnight unless the White House and lawmakers agree on a new spending plan, including whether to fund President Donald Trump’s proposed wall along the U.S.-Mexican border to thwart illegal immigration.

Spending for three-fourths of the government has already been approved through next September, but the remaining bills include 2019 funding for the Department of Homeland Security, and possible money for the wall, a favorite Trump campaign vow while campaigning for the presidency in 2016.

But the $5 billion down payment Trump wants for the $20 billion wall is adamantly opposed by Democrats and some Republicans, leaving its fate in doubt. Democrats have offered a maximum of $1.6 billion, for enhanced border security, not specifically for the wall. 

Trump last week said he would proudly shut down the government if money is not included for his wall. But to avert a Friday shutdown he also could reach agreement on some kind of stopgap spending plan to carry all government operations through the end of this year and into 2019. Aside from Homeland Security, funding is at stake for the State Department, the Department of Justice and the Interior Department.

In a meeting last week at the White House, Trump told the top two Democratic congressional leaders, House Speaker-designate Nancy Pelosi and Senate Minority Leader Chuck Schumer, that he would be happy to take responsibility for a government shutdown rather than give up any ground on the border wall issue.

​If the government is forced into a partial shutdown, it could be short, like the two that took place early this year — the first lasted three days, and the second lasted only about six hours. 

Or it could resemble the longest shutdown in U.S. history, which started December 16, 1995, and ended 21 days later. The second longest occurred in October 2013, when the government closed for 16 days, costing it $2.5 billion in wages and benefits to workers who were not allowed to do their jobs because they were furloughed, according to the U.S. Office of Management and Budget.

Results of a shutdown

With each shutdown come questions about what federal services will and will not be provided. Generally, agencies or offices funded by service fees, such as U.S. Citizenship and Immigration Services, can continue their work, so the shutdown would not affect naturalization interviews or citizenship ceremonies. 

In a new shutdown, about 380,000 federal workers could be furloughed.

National parks have shut down in the past, but during the shutdowns earlier this year, the head of the Office of Budget and Management, Mick Mulvaney, pledged that they would be kept open.

​Experts say the Internal Revenue Service may not be able to process tax refunds. Health safety inspections could be stalled. Most employees at the U.S. space agency NASA would likely be furloughed and might not get paid for that time, although Congress usually grants pay retroactively after a shutdown is over.

About 420,000 federal workers are deemed “essential” and are expected to remain on the job.

Voice of America continues to broadcast, and air traffic controllers are usually expected to keep working — along with FBI agents, members of the Transportation Security Administration, and the Secret Service agents that protect the president. Like the furloughed workers, they may not see any pay until after the shutdown concludes.

The Friday deadline is the result of a spending agreement Congress reached in September and the death of a former president. 

The September measure set a December 7 deadline for passing the seven spending bills that remain outstanding. That deadline was pushed back two weeks after the death November 30 of former U.S. President George H.W. Bush, whose funeral ceremonies were held the following week.

In one more possible hurdle, Schumer has indicated that the Democrats might block the spending bill unless Congress also approves a bill protecting special counsel Robert Mueller’s investigation of Trump 2016 campaign links to Russia and whether Trump, as president, obstructed justice by trying to thwart the probe.

A looming shutdown is not expected to affect the investigation because it is funded with an appropriation that does not require renewal.

Partial US Government Shutdown Looms

A quarter of U.S. government operations could shut down Friday at midnight unless the White House and lawmakers agree on a new spending plan, including whether to fund President Donald Trump’s proposed wall along the U.S.-Mexican border to thwart illegal immigration.

Spending for three-fourths of the government has already been approved through next September, but the remaining bills include 2019 funding for the Department of Homeland Security, and possible money for the wall, a favorite Trump campaign vow while campaigning for the presidency in 2016.

But the $5 billion down payment Trump wants for the $20 billion wall is adamantly opposed by Democrats and some Republicans, leaving its fate in doubt. Democrats have offered a maximum of $1.6 billion, for enhanced border security, not specifically for the wall. 

Trump last week said he would proudly shut down the government if money is not included for his wall. But to avert a Friday shutdown he also could reach agreement on some kind of stopgap spending plan to carry all government operations through the end of this year and into 2019. Aside from Homeland Security, funding is at stake for the State Department, the Department of Justice and the Interior Department.

In a meeting last week at the White House, Trump told the top two Democratic congressional leaders, House Speaker-designate Nancy Pelosi and Senate Minority Leader Chuck Schumer, that he would be happy to take responsibility for a government shutdown rather than give up any ground on the border wall issue.

​If the government is forced into a partial shutdown, it could be short, like the two that took place early this year — the first lasted three days, and the second lasted only about six hours. 

Or it could resemble the longest shutdown in U.S. history, which started December 16, 1995, and ended 21 days later. The second longest occurred in October 2013, when the government closed for 16 days, costing it $2.5 billion in wages and benefits to workers who were not allowed to do their jobs because they were furloughed, according to the U.S. Office of Management and Budget.

Results of a shutdown

With each shutdown come questions about what federal services will and will not be provided. Generally, agencies or offices funded by service fees, such as U.S. Citizenship and Immigration Services, can continue their work, so the shutdown would not affect naturalization interviews or citizenship ceremonies. 

In a new shutdown, about 380,000 federal workers could be furloughed.

National parks have shut down in the past, but during the shutdowns earlier this year, the head of the Office of Budget and Management, Mick Mulvaney, pledged that they would be kept open.

​Experts say the Internal Revenue Service may not be able to process tax refunds. Health safety inspections could be stalled. Most employees at the U.S. space agency NASA would likely be furloughed and might not get paid for that time, although Congress usually grants pay retroactively after a shutdown is over.

About 420,000 federal workers are deemed “essential” and are expected to remain on the job.

Voice of America continues to broadcast, and air traffic controllers are usually expected to keep working — along with FBI agents, members of the Transportation Security Administration, and the Secret Service agents that protect the president. Like the furloughed workers, they may not see any pay until after the shutdown concludes.

The Friday deadline is the result of a spending agreement Congress reached in September and the death of a former president. 

The September measure set a December 7 deadline for passing the seven spending bills that remain outstanding. That deadline was pushed back two weeks after the death November 30 of former U.S. President George H.W. Bush, whose funeral ceremonies were held the following week.

In one more possible hurdle, Schumer has indicated that the Democrats might block the spending bill unless Congress also approves a bill protecting special counsel Robert Mueller’s investigation of Trump 2016 campaign links to Russia and whether Trump, as president, obstructed justice by trying to thwart the probe.

A looming shutdown is not expected to affect the investigation because it is funded with an appropriation that does not require renewal.

HQ Trivia, Vine Co-Founder Found Dead

Colin Kroll, a tech executive who was a co-founder of the popular apps HQ Trivia and Vine, was found dead Sunday in New York.

Police said officers found the 34-year-old unresponsive in his apartment after receiving a call asking them to go check on him.

Medical examiners are working to determine his cause of death.

HQ Trivia launched in 2017 and became wildly popular, bringing users together for a nightly live game show that awarded cash prizes to winners.

The show’s host, Scott Rogowsky announced the company decided to cancel Sunday’s game out of respect for Kroll. He said because Kroll loved animals, the $25,000 that was due to be awarded would instead be donated to the Humane Society.

Rogowsky called Kroll a “visionary who changed the app game twice” by helping to launch both HQ Trivia and Vine, the service that allowed people to post six-second videos and was acquired by Twitter in 2012 before being shut down.

HQ Trivia, Vine Co-Founder Found Dead

Colin Kroll, a tech executive who was a co-founder of the popular apps HQ Trivia and Vine, was found dead Sunday in New York.

Police said officers found the 34-year-old unresponsive in his apartment after receiving a call asking them to go check on him.

Medical examiners are working to determine his cause of death.

HQ Trivia launched in 2017 and became wildly popular, bringing users together for a nightly live game show that awarded cash prizes to winners.

The show’s host, Scott Rogowsky announced the company decided to cancel Sunday’s game out of respect for Kroll. He said because Kroll loved animals, the $25,000 that was due to be awarded would instead be donated to the Humane Society.

Rogowsky called Kroll a “visionary who changed the app game twice” by helping to launch both HQ Trivia and Vine, the service that allowed people to post six-second videos and was acquired by Twitter in 2012 before being shut down.

Report to Senate: Russia Used Every Major Social Media Platform to Help Trump Win

A draft report prepared for the U.S. Senate, and seen by the Washington Post, says Russia used every major social media platform to target voters with misinformation to try to get Donald Trump elected president.

The Post said Sunday the report was done by Oxford University’s Computational Propaganda Project and network analysis firm Graphika.

The report says Russians working for a group called The Internet Research Agency (IRA) began experimenting with social media to influence local elections in 2009 and expanded its operations to U.S. elections in 2013 using Twitter.

It gradually added other popular social media sites to its campaign, including YouTube, Facebook, and Instagram.

For the 2016 presidential campaign, the report says Russians attempted to stir up conservative voters to back Trump by stressing such issues as gun rights and immigration.

At the same time, the Russian operatives sent black voters messages and other information aimed at confusing them about the electoral process, including misleading information on how to vote.

​Other groups, such as liberals, women, Muslims, Latinos, and veterans, were also targeted with similar messages either appealing to their politics or trying to discourage them from voting.

“What is clear is that all of the messaging clearly sought to benefit the Republican Party and specifically Donald Trump,” the report says according to The Washington Post. 

The newspaper says the report criticizes technology companies for what it calls their “belated and uncoordinated response” when the misinformation campaign was discovered and their delay in sharing information with investigators.

The report also warns that social media is morphing from what it says are tools for “sharing collective grievances and coordinating civic engagement,” including in the Middle East, to threats to democracy from “canny political consultants” and “politicians in democracies and dictatorships alike.”

The Post says Facebook and Google have not commented on the report. But Twitter says it has made “significant strides since the 2016 election to harden its digital defenses.”

The United States has already leveled criminal charges against Russia’s Internet Research Agency for interfering in the 2016 campaign. 

Special Counsel Robert Mueller is investigating whether the Trump campaign colluded with Russia to influence the 2016 election and whether the president has tried to obstruct justice by trying to undermine the probe.

Trump denies there was any collusion and calls the Mueller probe a “witch hunt.”

Report to Senate: Russia Used Every Major Social Media Platform to Help Trump Win

A draft report prepared for the U.S. Senate, and seen by the Washington Post, says Russia used every major social media platform to target voters with misinformation to try to get Donald Trump elected president.

The Post said Sunday the report was done by Oxford University’s Computational Propaganda Project and network analysis firm Graphika.

The report says Russians working for a group called The Internet Research Agency (IRA) began experimenting with social media to influence local elections in 2009 and expanded its operations to U.S. elections in 2013 using Twitter.

It gradually added other popular social media sites to its campaign, including YouTube, Facebook, and Instagram.

For the 2016 presidential campaign, the report says Russians attempted to stir up conservative voters to back Trump by stressing such issues as gun rights and immigration.

At the same time, the Russian operatives sent black voters messages and other information aimed at confusing them about the electoral process, including misleading information on how to vote.

​Other groups, such as liberals, women, Muslims, Latinos, and veterans, were also targeted with similar messages either appealing to their politics or trying to discourage them from voting.

“What is clear is that all of the messaging clearly sought to benefit the Republican Party and specifically Donald Trump,” the report says according to The Washington Post. 

The newspaper says the report criticizes technology companies for what it calls their “belated and uncoordinated response” when the misinformation campaign was discovered and their delay in sharing information with investigators.

The report also warns that social media is morphing from what it says are tools for “sharing collective grievances and coordinating civic engagement,” including in the Middle East, to threats to democracy from “canny political consultants” and “politicians in democracies and dictatorships alike.”

The Post says Facebook and Google have not commented on the report. But Twitter says it has made “significant strides since the 2016 election to harden its digital defenses.”

The United States has already leveled criminal charges against Russia’s Internet Research Agency for interfering in the 2016 campaign. 

Special Counsel Robert Mueller is investigating whether the Trump campaign colluded with Russia to influence the 2016 election and whether the president has tried to obstruct justice by trying to undermine the probe.

Trump denies there was any collusion and calls the Mueller probe a “witch hunt.”

Saudi Arabia Rejects US Senate Position on Khashoggi

Saudi Arabia has hit back at a U.S. Senate resolution to end U.S. military support for the war in Yemen and blame the Saudi crown prince for the death of journalist Jamal Khashoggi.

“The Kingdom condemns the latest position of the U.S. Senate that was based on unsubstantiated allegations and rejects the blatant interference in its internal affairs,” the foreign ministry said in a statement released by the official Saudi Press Agency.

The Senate delivered a rare double rebuke to U.S. President Donald Trump on Saudi Arabia last week, voting to end American military support for the war in Yemen.

It also condemned Khashoggi’s death and called Crown Prince Mohammed bin Salman, Saudi Arabia’s de facto ruler, “responsible” for it.

Riyadh warned that it would not tolerate any “disrespect” of its rulers. “This position by the U.S. Senate sends the wrong messages to all those who want to cause a rift in Saudi-U.S. relationship,” the Saudi ministry said.

The Senate resolution acknowledged that the U.S.-Saudi relations were “important,” but it called on the kingdom to “moderate its increasingly erratic foreign policy.”

Khashoggi, a contributor to the Washington Post, was killed Oct. 2 shortly after entering the kingdom’s consulate in Istanbul in what Riyadh has called a “rogue” operation.

Saudi Arabia Rejects US Senate Position on Khashoggi

Saudi Arabia has hit back at a U.S. Senate resolution to end U.S. military support for the war in Yemen and blame the Saudi crown prince for the death of journalist Jamal Khashoggi.

“The Kingdom condemns the latest position of the U.S. Senate that was based on unsubstantiated allegations and rejects the blatant interference in its internal affairs,” the foreign ministry said in a statement released by the official Saudi Press Agency.

The Senate delivered a rare double rebuke to U.S. President Donald Trump on Saudi Arabia last week, voting to end American military support for the war in Yemen.

It also condemned Khashoggi’s death and called Crown Prince Mohammed bin Salman, Saudi Arabia’s de facto ruler, “responsible” for it.

Riyadh warned that it would not tolerate any “disrespect” of its rulers. “This position by the U.S. Senate sends the wrong messages to all those who want to cause a rift in Saudi-U.S. relationship,” the Saudi ministry said.

The Senate resolution acknowledged that the U.S.-Saudi relations were “important,” but it called on the kingdom to “moderate its increasingly erratic foreign policy.”

Khashoggi, a contributor to the Washington Post, was killed Oct. 2 shortly after entering the kingdom’s consulate in Istanbul in what Riyadh has called a “rogue” operation.

Debt Threat: Business Debt, Worries About it, Are up

Homeowners appear to have learned the lesson of the Great Recession about not taking on too much debt. There is some concern that Corporate America didn’t get the message.

 

For much of the past decade, companies have borrowed at super-low interest rates and used the money to buy back stock, acquire other businesses and refinance old debt. The vast majority of companies are paying their bills on time, thanks in large part to profits that have surged since the economy emerged from the Great Recession nine and a half years ago.

 

But with interest rates rising and U.S. economic growth expected to slow next year, worries are building from Washington to Wall Street that corporate debt is approaching potentially dangerous levels. U.S. corporate debt has grown by nearly two-thirds since 2008 to more than $9 trillion and, along with government debt, has ballooned much faster than other parts of the bond market. Investors are most concerned about companies at the weaker end of the financial-strength scale _ those considered most likely to default or to get downgraded to “junk” status should a recession hit.

 

“I’ve been more worried about the bond market than the equity market,” said Kirk Hartman, global chief investment officer at Wells Fargo Asset Management. “I think at some point, all the leverage in the system is going to rear its ugly head.”

 

Consider General Electric, which said in early October it would record a big charge related to its struggling power unit, one that ended up totaling $22 billion. Both Moody’s and Standard & Poor’s subsequently downgraded GE’s credit rating to three notches above “speculative” grade, which indicates a higher risk of default.

 

GE, with about $115 billion in total borrowings, is part of a growing group of companies concentrated at the lower end of investment-grade. Other high-profile names in this area within a few notches of junk grade include General Motors and Verizon Communications. They make up nearly 45 percent of the Bloomberg Barclays Credit index, more than quadruple their proportion during the early 1970s.

 

Credit-rating agencies say downgrades for GE, GM or Verizon aren’t imminent. But the concern for them, and broadly for this swelling group of businesses, is if profits start falling or the economy hits a recession.

 

If those companies do drop below investment grade, they’d be what investors call “fallen angels,” and they can trigger waves of selling. Many mutual funds and other investors are required to own only high-quality, investment-grade bonds — so they would have to sell any bonds that get cut to junk.

 

The forced selling would lead to a drop in bond prices, which could result in higher borrowing costs for companies, which hurts their ability to repay their debts, which could lead to even more selling.

 

Even the chairman of the Federal Reserve has taken notice of the rise in corporate debt. Jerome Powell said in a recent speech that business borrowing usually rises when the economy is growing. But he said it’s concerning that, over the last year, the companies increasing their borrowing the most are those already with high debt and interest burdens.

 

To be sure, many bond fund managers say companies were smart to borrow hefty sums at low rates. And at the moment, there are no outward signs of danger. The default rate for junk-rated corporate bonds was 2.6 percent last month, which is lower than the historical average, and S&P Global Fixed Income Research expects it to fall in upcoming months.

 

Even if the economy does fall into a recession, fund managers say losses won’t be to the same scale as 2008 when the financial crisis sent the S&P 500 to a drop of nearly 37 percent and the most popular category of bond funds to an average loss of 4.7 percent.

 

In his speech, Powell said he doesn’t see the weaker parts of the corporate debt market undermining the financial system in the event of an economic downturn, at least “for now.”

 

Other investors see the market’s growing worries as premature. Companies are still making record profits, which allow them to repay their debts, and consumer confidence is still high.

 

“There is a story out there that there’s a recession coming very soon, and you had better head for the hills,” said Warren Pierson, deputy chief investment officer at Baird Advisors. “We think that’s a pretty early call. We don’t see recession on the horizon.”

 

That’s why he and Mary Ellen Stanek, who run bond mutual funds at Baird, haven’t given up on corporate bonds, even if they’ve moderated how much they own.

 

But critics see some echoes of the financial crisis in today’s loosening lending standards. Consider leveraged loans, a section of the market that makes loans to companies with lots of debt or relatively weak finances. These loans have been popular with investors in recent years because they often have what are called floating rates, so they pay more in interest when rates are rising.

 

Paul Massaro, portfolio manager for floating-rate strategies at T. Rowe Price, says he’s still positive about this market in general. But his team of analysts has been finding more warning flags in offerings, where the terms of the deal may be overly friendly to borrowers and allow them to amass more debt than they should.

 

It’s gotten to the point where Massaro is participating in about 15 percent of all offerings today, down from 30 percent a few years ago.

 

Investors have largely been willing to stomach higher risk because they’ve been starved for income following years of very low interest rates.

 

As a result, some bonds that by many accounts look like risky junk bonds are trading at prices and yields that should be reserved for higher-quality bonds, say Tom McCauley and Yoav Sharon, who run the $976.3 million Driehaus Active Income fund. To take advantage, they’re increasingly “shorting” corporate bonds, which are trades that pay off if the bonds’ prices fall.

 

They recently began shorting bonds of a packaged goods company with a “BBB” rating that borrowed to help pay for a large acquisition, for example. A “BBB” rating is at the lower end of investment grade, and a drop to “BB” would send it into junk status.

 

With so much debt, McCauley and Sharon believe that it’s at risk of getting downgraded to junk and is not paying enough in yield to compensate for its risk.

 

“As we get into the later stages of the cycle, the sins of the early stages of the cycle tend to start showing up,” said Sharon. “We think that’s where we are today.”

 

Debt Threat: Business Debt, Worries About it, Are up

Homeowners appear to have learned the lesson of the Great Recession about not taking on too much debt. There is some concern that Corporate America didn’t get the message.

 

For much of the past decade, companies have borrowed at super-low interest rates and used the money to buy back stock, acquire other businesses and refinance old debt. The vast majority of companies are paying their bills on time, thanks in large part to profits that have surged since the economy emerged from the Great Recession nine and a half years ago.

 

But with interest rates rising and U.S. economic growth expected to slow next year, worries are building from Washington to Wall Street that corporate debt is approaching potentially dangerous levels. U.S. corporate debt has grown by nearly two-thirds since 2008 to more than $9 trillion and, along with government debt, has ballooned much faster than other parts of the bond market. Investors are most concerned about companies at the weaker end of the financial-strength scale _ those considered most likely to default or to get downgraded to “junk” status should a recession hit.

 

“I’ve been more worried about the bond market than the equity market,” said Kirk Hartman, global chief investment officer at Wells Fargo Asset Management. “I think at some point, all the leverage in the system is going to rear its ugly head.”

 

Consider General Electric, which said in early October it would record a big charge related to its struggling power unit, one that ended up totaling $22 billion. Both Moody’s and Standard & Poor’s subsequently downgraded GE’s credit rating to three notches above “speculative” grade, which indicates a higher risk of default.

 

GE, with about $115 billion in total borrowings, is part of a growing group of companies concentrated at the lower end of investment-grade. Other high-profile names in this area within a few notches of junk grade include General Motors and Verizon Communications. They make up nearly 45 percent of the Bloomberg Barclays Credit index, more than quadruple their proportion during the early 1970s.

 

Credit-rating agencies say downgrades for GE, GM or Verizon aren’t imminent. But the concern for them, and broadly for this swelling group of businesses, is if profits start falling or the economy hits a recession.

 

If those companies do drop below investment grade, they’d be what investors call “fallen angels,” and they can trigger waves of selling. Many mutual funds and other investors are required to own only high-quality, investment-grade bonds — so they would have to sell any bonds that get cut to junk.

 

The forced selling would lead to a drop in bond prices, which could result in higher borrowing costs for companies, which hurts their ability to repay their debts, which could lead to even more selling.

 

Even the chairman of the Federal Reserve has taken notice of the rise in corporate debt. Jerome Powell said in a recent speech that business borrowing usually rises when the economy is growing. But he said it’s concerning that, over the last year, the companies increasing their borrowing the most are those already with high debt and interest burdens.

 

To be sure, many bond fund managers say companies were smart to borrow hefty sums at low rates. And at the moment, there are no outward signs of danger. The default rate for junk-rated corporate bonds was 2.6 percent last month, which is lower than the historical average, and S&P Global Fixed Income Research expects it to fall in upcoming months.

 

Even if the economy does fall into a recession, fund managers say losses won’t be to the same scale as 2008 when the financial crisis sent the S&P 500 to a drop of nearly 37 percent and the most popular category of bond funds to an average loss of 4.7 percent.

 

In his speech, Powell said he doesn’t see the weaker parts of the corporate debt market undermining the financial system in the event of an economic downturn, at least “for now.”

 

Other investors see the market’s growing worries as premature. Companies are still making record profits, which allow them to repay their debts, and consumer confidence is still high.

 

“There is a story out there that there’s a recession coming very soon, and you had better head for the hills,” said Warren Pierson, deputy chief investment officer at Baird Advisors. “We think that’s a pretty early call. We don’t see recession on the horizon.”

 

That’s why he and Mary Ellen Stanek, who run bond mutual funds at Baird, haven’t given up on corporate bonds, even if they’ve moderated how much they own.

 

But critics see some echoes of the financial crisis in today’s loosening lending standards. Consider leveraged loans, a section of the market that makes loans to companies with lots of debt or relatively weak finances. These loans have been popular with investors in recent years because they often have what are called floating rates, so they pay more in interest when rates are rising.

 

Paul Massaro, portfolio manager for floating-rate strategies at T. Rowe Price, says he’s still positive about this market in general. But his team of analysts has been finding more warning flags in offerings, where the terms of the deal may be overly friendly to borrowers and allow them to amass more debt than they should.

 

It’s gotten to the point where Massaro is participating in about 15 percent of all offerings today, down from 30 percent a few years ago.

 

Investors have largely been willing to stomach higher risk because they’ve been starved for income following years of very low interest rates.

 

As a result, some bonds that by many accounts look like risky junk bonds are trading at prices and yields that should be reserved for higher-quality bonds, say Tom McCauley and Yoav Sharon, who run the $976.3 million Driehaus Active Income fund. To take advantage, they’re increasingly “shorting” corporate bonds, which are trades that pay off if the bonds’ prices fall.

 

They recently began shorting bonds of a packaged goods company with a “BBB” rating that borrowed to help pay for a large acquisition, for example. A “BBB” rating is at the lower end of investment grade, and a drop to “BB” would send it into junk status.

 

With so much debt, McCauley and Sharon believe that it’s at risk of getting downgraded to junk and is not paying enough in yield to compensate for its risk.

 

“As we get into the later stages of the cycle, the sins of the early stages of the cycle tend to start showing up,” said Sharon. “We think that’s where we are today.”

 

Pistol-Packing Teachers Becoming More Common in Arkansas

Dale Cresswell keeps his gun on his hip at all times: in his classroom, at sporting events, whenever he’s at school.

Cresswell, head coach to the senior boys’ track and cross-country teams, is one of a small, but growing group of teachers around the United States who are volunteering to carry a weapon. His employer, Heber Springs School District, just came online this semester.

“It was a no-brainer. I have a daughter still in school,” said Cresswell of his decision, acknowledging that he might know any potential shooter. “I see it as, I’m protecting more than one person. I’m protecting all the other students.”

Tests and training

In order to qualify, Cresswell and other faculty, including administrators and IT professionals who can move around more easily, underwent background checks and psychological tests. They continue to go through rigorous training.

“I know that last summer there was a big movement here. We were fortunate that we had made the decision early, and we were able to secure trainers and get our time slot locked in,” said Heber Springs School District Superintendent Alan Stauffacher, noting that some other schools are “struggling” to get set up.

A semester in, the novelty of Cresswell carrying a weapon has worn off. He said that when asked, the students tell him they don’t even notice his gun anymore.

​Sandy Hook 

While there appears to have been no law prohibiting it, guns were rarely carried by teachers in Arkansas schools before a 20-year-old gunman killed 20 young children and six adults at Sandy Hook Elementary School in the northeastern U.S. state of Connecticut in 2012.

That incident prompted David Hopkins, superintendent of the Clarksville Public Schools in Clarksville, Arkansas, to begin searching for more effective ways to protect his students.

“It was just so terrible. Something like that, it makes you really pause,” Hopkins said. “I started getting calls from parents and grandparents asking, ‘What are you doing to protect our kids?’”

At that time, Hopkins wondered whether what he had in mind — arming faculty across each school in the district — was even legal. Since then, he has counseled other Arkansan schools as they follow suit.

“It’s not like we want to be cowboys, but if you stop and think about the reality of someone coming into your business or your school, don’t you want to be prepared?” he asked.

Protecting schools, students

Protecting schools from future shootings has increasingly occupied administrators and lawmakers’ time. Just this year, 113 people were killed or injured in school shootings in the U.S.

After the Parkland, Florida, school shooting in February, Arkansas Governor Asa Hutchinson tasked a committee with studying how to prevent future school shootings.

Their report, released earlier this month, stressed that individual schools need to make decisions for themselves, but recommended that “no campus should ever be without an armed presence when staff and children are attending class or a major extracurricular activity.”

A study published by Vice News in March found that at least 14 of the 50 states arm teachers and another 16 allow local school boards to decide on the issue.

But while Cresswell and Hopkins believe arming teachers serves as a deterrent for gun violence, not everyone agrees.

Following the Safety Commission report, Moms Demand Action stated that “putting guns in the hands of teachers is not the answer…” and that “research indicates that arming teachers will make children less safe.”

“As a general rule, I don’t think anyone believes that it is preventative. I think that most thoughtful individuals know that if a person sets out to do harm to themselves or someone else, they’re not gonna stop and think ‘Oh, there might be someone armed,’” said Cathy Koehler, president of the Arkansas Education Association.

Koehler stopped short of saying that faculty shouldn’t be armed, recognizing that it can take 20 minutes for police in some rural counties to respond to a situation. She stressed that schools should gain community buy-in, which superintendents in both Clarksville and Heber Springs said they did.

“Our preference is always going to be that the investment is made in the mental health services that are so desperately needed and are underfunded,” Koehler said.

Scott Gauntt, a member of the Safety Commission and superintendent of Westside Consolidated School District, said he has received no pressure to arm teachers.

Westside was the site of a deadly shooting 20 years ago, so it is often invoked in conversations about school safety. Like other superintendents interviewed, Gauntt takes his role as protector of students very seriously.

“Just about every time we hear of another shooting, we look at how that took place. How would we have combated that? Could we fix that?” Gauntt asked.

Over the years, the school has installed dozens of surveillance cameras and stronger classroom locks. Teachers undergo survival training to apply a tourniquet, for example, in order to prevent kids from bleeding out from bullet wounds. Students as young as those in elementary school are taught to be a “partner in [their] own survival.” Instead of hiding quietly under their desks, they are now taught to make loud noises and throw things.

“It’s mind boggling that I’ve gotta go down and tell a kindergartener that if a man comes in and tries to shoot you, that you need to run around and scream,” Gauntt said. “That’s not why I got into education.”

When it comes to arming teachers inside the classroom, he’s reluctant to take a hard stance but admits that he worries about guns getting loose.

Ultimately, most parties agree that despite all precautions, a motivated shooter will find a way to do harm.

“School safety is an illusion,” Gauntt said.

Pistol-Packing Teachers Becoming More Common in Arkansas

Dale Cresswell keeps his gun on his hip at all times: in his classroom, at sporting events, whenever he’s at school.

Cresswell, head coach to the senior boys’ track and cross-country teams, is one of a small, but growing group of teachers around the United States who are volunteering to carry a weapon. His employer, Heber Springs School District, just came online this semester.

“It was a no-brainer. I have a daughter still in school,” said Cresswell of his decision, acknowledging that he might know any potential shooter. “I see it as, I’m protecting more than one person. I’m protecting all the other students.”

Tests and training

In order to qualify, Cresswell and other faculty, including administrators and IT professionals who can move around more easily, underwent background checks and psychological tests. They continue to go through rigorous training.

“I know that last summer there was a big movement here. We were fortunate that we had made the decision early, and we were able to secure trainers and get our time slot locked in,” said Heber Springs School District Superintendent Alan Stauffacher, noting that some other schools are “struggling” to get set up.

A semester in, the novelty of Cresswell carrying a weapon has worn off. He said that when asked, the students tell him they don’t even notice his gun anymore.

​Sandy Hook 

While there appears to have been no law prohibiting it, guns were rarely carried by teachers in Arkansas schools before a 20-year-old gunman killed 20 young children and six adults at Sandy Hook Elementary School in the northeastern U.S. state of Connecticut in 2012.

That incident prompted David Hopkins, superintendent of the Clarksville Public Schools in Clarksville, Arkansas, to begin searching for more effective ways to protect his students.

“It was just so terrible. Something like that, it makes you really pause,” Hopkins said. “I started getting calls from parents and grandparents asking, ‘What are you doing to protect our kids?’”

At that time, Hopkins wondered whether what he had in mind — arming faculty across each school in the district — was even legal. Since then, he has counseled other Arkansan schools as they follow suit.

“It’s not like we want to be cowboys, but if you stop and think about the reality of someone coming into your business or your school, don’t you want to be prepared?” he asked.

Protecting schools, students

Protecting schools from future shootings has increasingly occupied administrators and lawmakers’ time. Just this year, 113 people were killed or injured in school shootings in the U.S.

After the Parkland, Florida, school shooting in February, Arkansas Governor Asa Hutchinson tasked a committee with studying how to prevent future school shootings.

Their report, released earlier this month, stressed that individual schools need to make decisions for themselves, but recommended that “no campus should ever be without an armed presence when staff and children are attending class or a major extracurricular activity.”

A study published by Vice News in March found that at least 14 of the 50 states arm teachers and another 16 allow local school boards to decide on the issue.

But while Cresswell and Hopkins believe arming teachers serves as a deterrent for gun violence, not everyone agrees.

Following the Safety Commission report, Moms Demand Action stated that “putting guns in the hands of teachers is not the answer…” and that “research indicates that arming teachers will make children less safe.”

“As a general rule, I don’t think anyone believes that it is preventative. I think that most thoughtful individuals know that if a person sets out to do harm to themselves or someone else, they’re not gonna stop and think ‘Oh, there might be someone armed,’” said Cathy Koehler, president of the Arkansas Education Association.

Koehler stopped short of saying that faculty shouldn’t be armed, recognizing that it can take 20 minutes for police in some rural counties to respond to a situation. She stressed that schools should gain community buy-in, which superintendents in both Clarksville and Heber Springs said they did.

“Our preference is always going to be that the investment is made in the mental health services that are so desperately needed and are underfunded,” Koehler said.

Scott Gauntt, a member of the Safety Commission and superintendent of Westside Consolidated School District, said he has received no pressure to arm teachers.

Westside was the site of a deadly shooting 20 years ago, so it is often invoked in conversations about school safety. Like other superintendents interviewed, Gauntt takes his role as protector of students very seriously.

“Just about every time we hear of another shooting, we look at how that took place. How would we have combated that? Could we fix that?” Gauntt asked.

Over the years, the school has installed dozens of surveillance cameras and stronger classroom locks. Teachers undergo survival training to apply a tourniquet, for example, in order to prevent kids from bleeding out from bullet wounds. Students as young as those in elementary school are taught to be a “partner in [their] own survival.” Instead of hiding quietly under their desks, they are now taught to make loud noises and throw things.

“It’s mind boggling that I’ve gotta go down and tell a kindergartener that if a man comes in and tries to shoot you, that you need to run around and scream,” Gauntt said. “That’s not why I got into education.”

When it comes to arming teachers inside the classroom, he’s reluctant to take a hard stance but admits that he worries about guns getting loose.

Ultimately, most parties agree that despite all precautions, a motivated shooter will find a way to do harm.

“School safety is an illusion,” Gauntt said.

Research Looks at Natural Fertilizer for Greener Agriculture, Cleaner Water

Fertilizer is made of nutrients like nitrogen and phosphorus. Chemical fertilizers require huge amounts of energy to produce. But there are other, natural and more readily available sources. 

The University of Michigan, with support from the National Science Foundation, is working at making our water cleaner, and our agriculture more sustainable, by capturing one of those sources, rather than flushing it down the toilet.

On a hot summer afternoon near Brattleboro, Vermont, farmer Dean Hamilton has fired up his tractor and is fertilizing his hay field — with human urine. 

It takes a bit of time to get used to, says environmental engineer Nancy Love.

“I’ve been surprised at how many people actually get beyond the giggle factor pretty quickly,” she said, “and are willing to listen.”

Fine-tuning the recycling

Rich Earth Institute, a nonprofit, is working with Love and her team. Abraham Noe-Hays says they are fine-tuning new methods to recycle urine into fertilizer.

“There’s a great quote by Buckminster Fuller about how pollution is nothing but the resources that we’re not harvesting, and that we allow them to disperse because we’ve been ignorant of their value,” he said.

Harvesting the resource of urine — which is, after all, full of the same nutrients as chemical fertilizer — will fix two problems at once: eliminate waste and create a natural fertilizer.

The Rich Earth Institute has been using urine as fertilizer since 2012. Kim Nace says they collect about 26,000 liters a year, thanks to a loyal group of dedicated donors.

“We now have people who have some source-separating toilets in their homes. We also have people who have 55 gallon (200-liter) barrels where they collect and then we transport to our farms, and we’ve also got a large urine depot,” Nace said.

They pasteurize the urine to kill any microbes, and then it is applied directly onto hay fields like Hamilton’s.

Next level of project

Now that they’ve partnered with the University of Michigan, Love says they’re looking to take their project to the next level.

“There are three things we really are trying to do with the urine in this kind of next phase. We’re trying to concentrate it. We’re trying to apply technologies to reduce odor, and we’re trying to deal with trace contaminants like the pharmaceuticals,” she said.

Dealing with pharmaceuticals is an important issue. Heat urine kills germs but has no effect on chemicals like drugs that pass through our bodies.

“We know pharmaceuticals are a problem for aquatic organisms and water systems,” Love said. “It’s debatable about the impact on human health at very, very low levels. Independent of that, I think most people would prefer that they not be in their food.”

21st century infrastructure

For Love, this is all about redesigning our wastewater infrastructure for the 21st century. Too many nutrients in the water leads to poor water quality by causing hazardous algal blooms.

“Our water emissions are going into very sensitive water bodies that are vulnerable to these nutrient loads,” she said. “We need to change that dynamic. And if we can capture them and put them to a beneficial use, that’s what we’re trying to do.”

Their efforts could make agriculture greener and our waterways cleaner.