The Daily Visionary: Friday, November 16, 2018

Photo Credit: Evening Standard

Photo Credit: Evening Standard

Four U.K. Cabinet Ministers resign, and PM May faces letters of no confidence

 

Read the full Brexit Update

Despite winning Cabinet support Wednesday to accept her Brexit deal, U.K. Prime Minister Theresa May faced the resignations of four Ministers and several high-level party members on Thursday following a three-hour debate in the House of Commons. Many Conservative MPs openly called for PM May’s resignation and publicly confirmed that they had submitted letters of no confidence to Sir Graham Brady, Chairman of the Conservative’s backbench 1922 Committee.

 

MP Jacob Rees-Mogg spoke out against PM May’s deal, saying he believed she should "stand aside". In his no confidence letter submitted to Sir Brady, Rees-Mogg stated PM May’s Brexit deal "has turned out to be worse than anticipated” and it “fails to meet the promises given to the nation by the Prime Minister, either on her own account or on behalf of us all in the Conservative Party manifesto".

 

MP Rees-Mogg is Chairman of the European Research Group (ERG), which represents about sixty pro-Brexit Conservative MPs. Following debate in the House, two meetings took place within three hours. ERG sources say they expect the threshold of forty-eight letters of no confidence to be passed as early as Friday, triggering a vote on PM May's future as early as Monday.

 

Resigned: Brexit Secretary Dominic Raab; Work and Pensions Secretary Esther McVey; Northern Ireland Minister Shailesh Vara; Education ministerial aide Anne-Marie Trevelyan; Justice ministerial aide Ranil Jayawardena; Vice-Chairman of the Conservative Party Rehman Chishti; and Director of Legislative Affairs Nikki da Costa. Environment Secretary Michael Gove was offered the now-vacant position of Brexit Secretary, but will only accept if he can renegotiate the deal and is expected to resign tonight.

 

Resignations from the following individuals are also anticipated: International Aid Secretary Penny Mordaunt; Transport Secretary Chris Grayling; Home Secretary Sajid Javid; Leader of the House of Commons Andrea Leadsom; Chief Secretary to the Treasury Liz Truss; Attorney General Geoffrey Cox QC; and Foreign Secretary Jeremy Hunt.

 

Chancellor Merkel opens Germany to U.S. LNG imports following President Trump push

 

German Chancellor Angela Merkel has offered government support to open Germany to American natural gas, a key concession to U.S. President Donald Trump as he aims to loosen Russia's grip on Europe's largest energy market. In October, Chancellor Merkel announced to a small meeting of lawmakers that the German government will co-finance a €500 million liquefied natural gas (LNG) shipping terminal in northern Germany, a project that has been stalled for years. Chancellor Merkel said she didn't think an LNG terminal would break even for at least a decade and would require long-term government support. Less than a week after the meeting an international consortium filed its first official bid for state support for a terminal in the northern town of Stade, near Hamburg. The German government is fast-tracking application reviews and expected to make a decision by the end of the year.

 

Germany gets most of its natural gas cheaply from Russia and has been under increasing pressure to pull the plug on Nord Stream 2, a planned natural gas pipeline that would link Russia and Germany that would double Russia’s existing gas export capacity to Germany. The Trump administration has threated to sanction Nord Stream 2 and has intensively lobbied Europe to buy significant amounts of American LNG in an effort to renegotiate terms of trade relations. Accepting LNG from the U.S. will open Germany’s energy market providing a long-term economic benefit and diversification for the country. Critics have accused the German government of ignoring the interests of its allies by filling Russia's coffers at the time of a diplomatic conflict. In July 2018, President Trump said Germany was "captive to Russia" due to its energy policy, and "Pipeline dollars to Russia are not acceptable!" he tweeted.

 

A ceremony marking the formal announcement took place on a terrace overlooking Berlin's landmark Brandenburg Gate in the presence of senior politicians and U.S. Ambassador Richard A. Grenell, a confidant of Mr. Trump and the president's main conduit in his lobbying effort. “We're creating jobs and we're also deepening the trans-Atlantic relationship. The U.S. is totally committed to bringing U.S. LNG to Europe and to Germany," Mr. Grenell said.

 

U.S. LNG is mostly mined from underground rock formations, turned into liquid and shipped in 300-meter-long tankers. It requires special terminals for unloading, storing and converting it back into gas. The complex process means it remains around 20 percent more expensive than Russian gas, which is delivered straight to Germany mainly via the Nord Stream pipeline.

 

U.S. President Trump backs historic prison reform

 

President Donald Trump is calling on Congress to support the bipartisan prison reform legislation, the FIRST STEP Act. Many of the reforms included in the legislation passed the House in an overwhelming, bipartisan vote of 360 – 59 in May 2018. Afterward, Republicans and Democrats in the Senate worked with the White House to craft a bipartisan sentencing reform compromise, which has since been added to the legislation.

 

Since 1980, the American federal prison population has increased by more than 850 percent, from 25,000 to a peak of more than 208,000. Federal prison spending has increased from USD $330 million to more than USD $7 billion per year, consuming approximately one-quarter of the Justice Department’s entire budget. One-in-three American adults today has some type of criminal record, and more than 2 million Americans are in prison, including 181,000 in Federal penitentiaries. More than 95 percent of these inmates will eventually leave prison and face the challenge of restarting their lives. Roughly 77 percent of State inmates and 38 percent of Federal inmates are rearrested within five years of release.

 

In 2011, the House Appropriations Committee reported that, despite skyrocketing spending, “reincarceration rates for people released from prison are largely unchanged. This trend is both financially and socially unsustainable,” however, “[C]ase studies of innovative, evidence-based practices provide a strong indication that [the trend] can be reversed.

 

Our whole Nation benefits if former inmates are able to re-enter society as productive, law-abiding citizens,” President Trump said in an announcement at the White House. The FIRST STEP Act aims to make communities safer by making our justice system work better in three key ways: provide incentives for low-risk inmates to receive crucial support services, including vocational training and faith-based programs to ease re-entry; house more prisoners in facilities closer to their own communities, allowing for family visitation and greater local support; and roll back certain provisions of former President Clinton’s infamous crime law, reforming mandatory minimums that have led to racially discriminatory outcomes and increased prison overcrowding and costs.

 

Under the FIRST STEP Act, prisoners will be able to gain job skills, drug treatment, and education, and earn credits that reduce the amount of time spent in prison (though not reducing the sentence) that they could cash in toward the end of their sentence. This may allow them to be released from prison to a lower-cost alternative of community supervision, such as home confinement or a half-way house, to serve out the remainder of their sentence. The legislation also seeks to place Federal inmates closer to their communities in order to facilitate family visitation.

 

Tesla to deliver new Model 3 orders by year end

 

Tesla’s Chief Executive Officer Elon Musk announced that Model 3s ordered in the United States by the end of November will be delivered by December 31, having previously said orders placed by October 15 will be delivered by the end of the year.

 

"Tesla just acquired trucking capacity to ensure Model 3 can be delivered in U.S. by Dec 31 if ordered by Nov 30," Musk tweeted on Thursday, “Skipping rail saves over a month for East Coast deliveries. All things considered, it’s better to use trucks. Single load/unload & direct to owner location.”

 

The electric carmaker has until the end of the year to hand out tax credits of USD $7,500 to customers. The credits are available for six months after an automaker hits the 200,000-delivery mark, which Tesla did in July. The incentives then reduce by 50 percent every six months until it phases out.

 

Tesla anticipates a profit for its fourth quarter, saying the company booked USD $189.5 million in automotive regulatory credits in its third quarter, which contributed to nearly half of the profit.

 

Ontario Government cuts spending to tackle CAD $14.5 billion deficit

 

Ontario is the world’s most indebted sub-sovereign borrower, with three major credit rating agencies moving their outlooks to negative earlier this year. Canada’s most populous province has a net debt at about CAD $347 billion, the highest of any sub-sovereign borrower rated by Moody’s Investors Service.

 

Premier Doug Ford and the Progressive Conservative Party won the election in June 2018 and formed a majority government, pledging to bring finances into balance over time. On Thursday, Finance Minister Vic Fedeli announced the new Progressive Conservative’s plan to cut government spending by CAD $3.2 billion in an effort to bring down the province’s CAD $14.5 billion projected deficit for the fiscal year ending March 31, which is more than double what the previous Liberal government’s forecast.

 

Ontario will cut spending, reduce taxes for low-income workers, launch a program to boost housing supply, cancel a development-charges rebate program (saving CAD $100 million over four years), and exempt new housing units from rent controls to bring its finances in order. Revenue will drop by CAD $2.7 billion from previous projections as the government scraps a carbon trading plan and offers relief to families and businesses. “We will restore fiscal balance on a timetable that is reasonable, modest and pragmatic,” Minister Fedeli said in the provincial legislature, “We will put in place a meaningful debt reduction strategy.

 

The economy is projected to grow 1.8 percent in 2019 and 1.7 percent in 2020, down from 2 percent in 2018. Canceling the Liberals’ cap-and-trade system will cost CAD $1.5 billion this year. A tax break for 1.1 million low-income workers will cost about CAD $495 million in the 2019 tax year. The minimum wage will be kept at CAD $14 an hour until 2020 and tied to inflation thereafter.