What’s Next for Wall Street After Monday’s Selloff?

Updated on August 25 at 4:08 p.m. ET

U.S. stocks reversed their gains Tuesday, as a market rally faded in the last hour of trading. The Dow Jones industrial average—which at one point was up 441 points—shed more than 200. The S&P 500 and Nasdaq also closed sharply lower.

The Dow fell 205 points, the S&P 500 closed below 1,900, and the Nasdaq shed 0.44 percent. It was a second straight day of losses for the markets and it comes amid growing unease about the health of the Chinese economy. Stocks had a roller-coaster Monday, with the Dow shedding more than 1,000 points at the opening bell before closing down 3.5 percent.

It was a different story at noon on Tuesday.  At one point, the Dow was up 441 points. The Nasdaq rose 3.2 percent, and the S&P spiked 2.5 percent, out of correction territory. It ended back there Tuesday evening.

“Whatever triggered the consternation in the last few trading sessions is likely to be replayed again,” Mark Luschini, chief investment strategist at Janney Montgomery Scott, told CNBC. He said a negative close “would be a set up to grind sideways to work out this process, if this rally and enthusiasm can’t last I think it’s an indicator (of that consternation).”

The Dow is now on track for its biggest monthly percentage loss since February 2009. For the S&P 500, it’s the worst month since May 2010.

Stock markets around the world were all healthier Tuesday—except in China. There, the Shanghai composite index, which fell 8.5 percent on Monday, declined a further 7.6 percent. It is now firmly in negative territory for the year.

“Bothering markets yesterday were China and collapsing commodity prices and both of those have given us some relief,” James Meyer, chief investment officer at Tower Bridge Advisors, told CNBC. “And when I look at China I don’t look at the Shanghai market. I look at the Hong Kong market.”

Indeed, the Hang Seng, the index in Hong Kong, closed up 0.72 percent Tuesday.

China’s central bank, which devalued the yuan two weeks ago, showed Tuesday that it was willing to take more steps to bolster the country’s sagging economy. It cut its main interest rate by 0.25 percentage points to 4.6 percent. In apparent response, stocks rallied elsewhere. Most European stocks rose. They closed down 5 percent on Monday.

“It’s encouraging in the sense that they’re [the Chinese] trying to mitigate the impact of the decline,” Peter Dixon, a global economist at Commerzbank AG in London, told Bloomberg. “Investors panicked yesterday, concerned about of the lack of reaction, and this might help.

“Markets are beginning to realize this is a Chinese problem, not a European one. These are specific issues which refer to fundamentals in other markets and do not reflect the situation in Europe.”

Views From Israel on the Iran Deal

The lobbying against the Iran deal continues. I’ve heard from readers in the following states about a blitz of anti-deal ads, aimed at Democratic senators who have not yet declared: Washington (where both Maria Cantwell and Patty Murray are still officially undecided), Colorado (same for Michael Bennet, who for the record is the older brother of our editor in chief James Bennet), Oregon (where Ron Wyden is assumed to be looking for a way to avoid voting ‘yes’), Maryland (Ben Cardin and Barbara Mikulski undeclared), and Michigan (Debbie Stabenow announced ‘yes’ today, but Gary Peters is still undeclared). I’ve heard about ads running even in Texas, which can’t be a very shrewd media buy (Ted Cruz and John Cornyn?). The image at top is a tweet sent out by Israeli Prime Minister Benjamin Netanyahu last week and retweeted by Israeli embassies in the United States and elsewhere.

Meanwhile the list of pro-deal commitments by senators and representatives continues to mount, in a way that makes the deal’s survival seem all but assured. With that prospect in view, here are some responses from readers in Israel. They are reacting to this item last week, in which Donald Pryce, an emeritus history professor, challenged the anti-deal assertion that modern Iran can sensibly be likened to Nazi Germany.

* * *

A crucial part of Pryce’s argument was that Iran’s leaders show, through their actions, that they recognize a distinction between anti-Zionist and anti-Semitic stances. Their rhetoric about Israel has been scorched-earth and eliminationist, while their treatment of the Jewish population of Iran has been harsh but nothing comparable. As Peter Beinart put it  earlier this month (Jeffrey Goldberg has also addressed this issue):

Three and a half decades after the Islamic Revolution, Iran boasts perhaps 60 functioning synagogues, along with multiple kosher butchers and Jewish schools …

Huckabee, Cruz, and Netanyahu claim Tehran is so desperate to murder Jews that it will use a nuclear weapon against Israel despite the likelihood that Israel would retaliate with its own much larger nuclear arsenal. Yet inside Iran itself sits a largely defenseless Jewish population. If the Iranian regime is genocidally anti-Semitic, why has it made no effort to wipe them out?

Sunday on Fareed Zakaria’s GPS broadcast, Larry Cohler-Esses of The Forward disagreed with some parts of Beinart’s analysis but overall reported similar findings. He had recently visited Iran, as the first reporter from a Jewish media organization to be given a visa in many decades. Samples of his talk with Zakaria:

COHLER-ESSES: Among the hardliners, they make a kind of rigid compartmentalization between Jews, who they consider people of the book under Islam, and Zionists, who are a maligned international force that has nothing whatever to do with Jews or Judaism …

ZAKARIA: Is it your sense that the Jews of Iran are living fulfilled lives or are they embattled and miserable, I guess would be the simplest way to put it?

COHLER-ESSES: They’re not miserable. But they have discriminations. One of the leaders who I quoted in my story said, we’re not oppressed, but there are limitations. And that’s true and it has many specific multiple meanings.

Under sharia, if a Muslim murders a Jew, I was told by this Jewish leader, the price is blood money. That’s the penalty. But if a Jew murders a Muslim, the price is execution. They were very proud because they are pushing back against these limitations in their own way. But they do not challenge in any way the legitimacy of sharia that gives them many disadvantages, which they then try to figure out ways around and ways to fight.

* * *

With that set-up, here are some responses on the anti-Zionist-vs.-anti-Semitic theme. The first is from a reader who asks to be identified as “an American Jewish journalist” who recently spent 10 months in Israel. He refers both to my previous reader and to the Cohler-Esses piece for The Forward:

Your professor of history does not seem very familiar with Iran’s persecution of its Jews, or how it uses “anti-Zionism” as a flimsy cover for anti-Semitism. A few relevant data points:

The Forward recently sent [Cohler-Esses] to Iran, who came back with a largely favorable piece towards the complex country and particularly its people. Nonetheless, the piece noted, as is well established—and as Beinart no doubt was referencing in his piece—that:

“The Iranian Jewish community, whose members are today free to stay in the country or emigrate, currently numbers anywhere from 9,000 to 20,000, depending on whom you talk to, and down from 80,000 to 100,000 before the revolution. …

“The Jews, who felt free to complain to me openly about these areas of discrimination, as they do to the government, are basically well-protected second-class citizens—a broadly prosperous, largely middle-class community whose members have no hesitation about walking down the streets of Tehran wearing yarmulkes.”

The indisputable fact that 75%+ of Iran’s Jewish community (to take the most conservative estimate) left the country in the years following the revolution should tell you all you need to know about how welcome Jews feel there. Imagine what conclusions we’d draw if 75% of Muslims felt compelled to leave the US.

Moreover, though the Forward does not note this, the Iranian regime regularly uses “Zionist” as a code word for Jew, in an effort to place a thin veneer over its otherwise obvious anti-Semitism. Indeed, Khamenei’s public rhetoric and social media accounts are rife with classical anti-Semitic imagery and claims masquerading as anti-Zionism. (A classic example.)

In other words, the regime does not really distinguish between hating Judaism and hating Zionism, contrary to your correspondent’s odd assertion that ‘Iran does not oppose Jews for what they will not change, their identity, it opposes Israel for what it does, something that is subject to change.’ Given the regime’s Holocaust denial, attacks on the Talmud, and denial of basic rights to Jews because they are Jews, this claim is undeniably false.

I bring this up not to nitpick, but to make a broader, crucial point: There’s no need to whitewash the Iranian regime’s anti-Semitism to support the nuclear deal. On the contrary, a clear-eyed understanding of that regime will be key to overseeing and enforcing the deal and ensuring the regime is not tempted to cheat. Pretending it is something it is not, on the other hand, will lead to overlooking things we shouldn’t, and the likely failure of the deal, which is in no one’s best interest.

I wrote back to ask the reader whether I could use his real name (he said he’d prefer not), and to add that I thought he had missed the point both Peter Beinart and the history professor were making. My note to him:

The logic of the “existential threat” argument is that Iran’s regime cares more about being able to kill Israelis and Jews than anything else, including its own survival. Thus it would be willing to contemplate national suicide in a nuclear retaliatory strike, if it could destroy Israel in the process.

That they’ve harassed, discriminated against, and forced-into-exile significant parts of their own Jewish population is undeniable. But if the drive to eliminate either Israelis or Jews were as powerful as assumed, wouldn’t they have moved further against the groups where they could do that with virtually no immediate risk to themselves?

He replied:

This is a better argument than the professor’s. He’s basically saying the regime isn’t so anti-Semitic, when it demonstrably is. You’re saying it is, but that doesn’t mean we can’t deal with it, recognizing anti-Semitism is not the only impulse at work within the regime.

That’s exactly the logic Israel itself has relied on when striking peace accords with countries whose clerics, politicians and state media remain viciously anti-Semitic (Egypt, Jordan). To me, that’s the more interesting argument, and one that gets to the heart of the disagreement between deal critics and deal supporters: namely, is Iran’s state anti-Semitism categorically different from the state anti-Semitism of other countries that Israel has successfully negotiated with? Deal opponents say yes, backers say no.

* * *

Next, on the same theme, a note from Shlomo Somerstein in Israel, whose name I am using with his permission:

I’ll just pose a few questions for you,  since this seems to be your preferred way of arguing for the deal.

If the Iranian regime is merely anti-Zionist and not anti-Semitic,  why do they couch their opposition in terms of “death to Israel”?  That sounds like a lot more than simply policy opposition.

Also,  why is America the “great Satan”?  Just because of her support for Israel?

Why does the Iranian regime support hizballah in Lebanon?  What do they have to do with treatment of Palestinians?

Assuming that Iran was in fact behind the bombing in Argentina,  why?

The answers to the first few questions are implicit in the exchange with the American Jewish journalist, above. On the ones about Hezbollah, Palestine, and Argentina my reply would be: that’s not what the deal is about. It’s a negotiation with one goal only: to reduce the chance that Iran will develop a nuclear weapon. It leaves many other issues unaddressed, except that they would be even harder to solve if Iran were nuclear-armed.

* * *

And finally, from a medical doctor in Beer-Sheva:

Ah, I feel so relieved after reading the esteemed Professor Pryce’s article, Khamanei couldn’t have expressed it any better. Anti-Semitism? We love and respect Jews! It’s only what they DO that we oppose. Now I understand, silly of me.

The Iranians (and Muslims in general) long for the good old days when the Jews were dhimmi, a “protected” underclass who were permitted to live and worship their religion in Islamic countries as long as they realized their place—including paying a high tax to the ruler. But when Jews do things like returning to their ancestral homeland to establish a statethat is over the top. Let’s get realif a peace treaty with the Palestinians is signed tomorrow, Iran would (perhaps even could) still not stomach the thought of a “Zionist” entity in the Middle East.

Sorry for the reality check. Perhaps another professor will submit a treatise saying that the Iranians are not homophobes—they are only against what homosexuals do!

Reminds me of the days when our Arab neighbors used to say: How could we be anti-Semitic? We are Semites ourselves!

As far as the Professor’s theses that there is an important distinction between anti-Zionism and anti-Semitism—fifty years ago Martin Luther King said “don’t talk to me about anti-Zionism—you’re talking anti-Semitism!”

In any case, the argument about whether Iran is anti-Semitic should not be the deciding factor whether to be in favor of the agreement or not. Let us just stick to the facts.

On the last point, I agree. The agreement should be judged on whether it does more to obstruct Iran’s nuclear ambitions than any real-world alternative. You can find a full index of posts on that topic here.

A Tale of Two Legislative Chambers


Can the British House of Lords and Canadian Senate be fixed?

Yui Mok / Reuters

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It’s been an exciting summer for fans of parliamentary reform in the Anglosphere. On July 26, a British tabloid published front-page photos of Lord John Sewel, a 69-year-old member of the House of Lords, wearing an orange bra and little else as he allegedly used cocaine with sex workers. He resigned from the Lords two days later and now faces criminal investigation. On the other side of the Atlantic, the ongoing trial of Canadian Senator Mike Duffy in connection with an alleged bribery and expenses scandal threatens to foil Prime Minister Stephen Harper’s bid for a fourth term. The scandals have raised an old question for both countries: What should be done with these troublesome upper chambers?

We start first with Britain’s ancient second house. Few modern democracies have less democratic legislative bodies than the House of Lords. In theory, its members are the “Lords Spiritual” and the “Lords Temporal” of the British realm—archaic terms for high-ranking clergy and landowning nobles. In practice today, most of its membership consists of “life peers” like Sewel. They are appointed by British prime ministers, serve for life, and receive the title “baron,” but their descendants don’t inherit it. The Lords also still seat 26 Church of England bishops and 92 hereditary peers from the aristocracy, to the British left’s constant scorn. None of its members are elected.

Another obvious flaw is its size. “With 781 members entitled to vote, the Lords enjoys the dubious title of the world’s largest legislative chamber outside China,” The New York Times noted Saturday. (The National People’s Congress, whose stamp is only slightly more rubbery than the Lords’s, seats a whopping 2,987 delegates.) Some of its members rarely participate in Lords business but enjoy its privileges nonetheless. According to The Telegraph, twenty peers claimed over £1.6 million in expenses without voting or contributing to debates.

Despite these problems, nobody quite knows what should be done with the House of Lords. Major reforms first began in 1911, when a constitutional crisis ended the Lords’ power to veto Commons legislation. Tony Blair’s government stripped most of the hereditary nobles of their seats in 1999, thereby giving non-hereditary “life peers” like Sewel control of the chamber. Until 2009, the House of Lords also acted as the de facto supreme court of the United Kingdom before Parliament established an actual SCOTUK. Further reforms largely stalled under the Cameron government, except for a 2014 bill that allowed for Lords members to resign, retire, or be removed for criminal behavior.

Most of the British electorate agrees that something should be done about the Lords. A 2012 Ipsos-MORI poll found that 79 percent of British voters supported “the idea of House of Lords reform.” But everyone has a different opinion on what “the idea” should be in practice. In the most recent set of election manifestos, Labour proposed replacing the Lords with an elected “Senate of the Nations and Regions” to address regional and democratic concerns. Liberal Democrats suggested a smaller, partly elective second chamber. The Scottish National Party called for full abolition. The Conservatives, who won an outright majority, simply noted that an elected House of Lords was “not a priority” for the current government.

Things aren’t much better across the Atlantic in Canada’s Senate. A 2012 investigation into parliamentary expenses implicated four senators for improper claims, three of whom received criminal charges. After the revelations became public, Harper’s then-chief of staff Nigel Wright gave Senator Mike Duffy a $90,000 personal check to help cover the expenses. Duffy is currently on trial for bribery and fraud in relation to the expenses, and the scandal now threatens Harper and the Conservatives’ re-election campaign.

Compared with Britain’s House of Lords, the Canadian Senate has all of the scandal but none of the grandeur or history. It has a regionalist element like its American counterpart: 105 seats are allocated to specific provinces, with Quebec and Ontario each holding 24 seats. Senators are appointed to those seats by the Canadian prime minister and serve until the mandatory retirement age of 75. Unlike the Lords, the Senate can block and propose legislation, not merely delay it.

Because of its undemocratic nature and habit for scandal, public opinion is strongly against the Senate’s current form. 45 percent of Canadians support reform and another 41 percent support abolition, according to an Angus Reid Institute poll in April. Past constitutional amendments would have made it an elective body or allowed provincial legislatures to select candidates for appointment. Liberal leader Justin Trudeau supports a non-partisan Senate and expelled all Liberal senators from his party in January 2014. The left-leaning New Democratic Party, which currently leads in most polls for the October election, wants to abolish it altogether.

Bicameralism is ultimately a balancing act against the popular will, so it’s not surprising that upper houses arouse some resistance. “If a second chamber dissents from the first, it is mischievous; if it agrees, it is superfluous,” quipped the Abbé Sieyès during the French Revolution. Some British and Canadian constitutional thinkers defend their respective upper houses as providing a “sober second look” to legislation from the people’s chambers. In 2008, Gordon Brown’s government scrapped a proposal to detain alleged terrorists for 42 days without trial after the Lords overwhelmingly rejected it. Canada’s Senate also largely exists to balance the country’s disparate regional interests, especially in the less populous Western and maritime provinces.

So, what is to be done? For some countries, the easiest answer to the upper-house question is to stop asking it. Greece, Portugal, South Korea, Sweden, Turkey, and other countries abolished their second chambers; Israel, Lebanon, and Ukraine never created one after independence. The rest of the Anglosphere seems to have achieved a stable legislative structure to balance popular and regional will. Each of the 50 American states gets two federal senators, regardless of size. Australia elects 12 senators from each of its six states and two senators from its two autonomous territories. Strict unicameralism isn’t alien to the Westminster system, either: New Zealand abolished its upper Legislative Council in 1950, and most Canadian provincial legislatures consist of a single house.

Despite popular sentiment, reforming either the British or Canadian upper house would be an uphill battle. Britain’s Conservative government already ruled out major reforms for the House of Lords until the next election in 2020. The Supreme Court of Canada unanimously ruled in 2014 that major reforms to the Senate must be approved by seven provinces containing more than half of Canada’s population. (The balancing scheme prevents either a minority of provinces or a minority of Canadians from changing the constitution.) Full abolition of the Senate would require unanimity from all ten provinces, the court added.

Even if reform proponents could easily impose their will, they still lack any consensus on what those reforms would look like. Would an elective upper chamber resolve the undemocratic tension, or would it decrease the legitimacy of the British and Canadian Houses of Commons by creating two popular mandates? Would abolition solve the upper-chamber question once and for all, or would it remove a vital check on the lower chambers’ power? Until British and Canadian reformers decide these ends, the means won’t really matter.

Paris Is Facing a Baguette Shortage


Because labor reforms have lifted restrictions on bakers’ vacations

Baguettes at the Grand Prix de la Baguette de la Ville de Paris (Best Baguette of Paris competition) Charles Platiau / Reuters

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PARIS—It’s a ubiquitous French icon, often spotted on picnic blankets and in the arms of commuting Parisians, cradled gingerly to avoid jabbing those who pass by.

But this August, the beloved baguette—that slender loaf with a crackling crust and chewy middle—may be elusive for some. For the first summer in more than two centuries, Parisian bakers can go on vacation whenever they choose.

The French government recently passed legislation intended to “simplify corporate life,” including the elimination of rules mandating that Paris bakers stagger their summer vacations, a legacy of the French Revolution. The prefectoral decree that governed bakery off-days dated to 1790, and the rule ensured that every neighborhood would maintain continuous access to the golden loaves.

Updated in 1995 and renewed every year until now, the law required half of Paris’s 1,100 bakeries to stay open in July and the other half in August. Bakers who violated the mandate were subject to a daily fine of 11 euros ($12) a day. But now that lawmakers have lifted the edict, more bakeries seem to have opted to shutter this month.


The law change has provoked British press to sound the alarms of a “baguette crisis.” Others in the French media have dismissed the alarmism spread by their neighbors across the channel, some noting that rather than a shortage, France’s real problem might be that people are consuming less and less bread. With the regulations gone, no official numbers exist on how many bakers remain open.

Vice President of the Professional Chamber of Parisian Bakers Pascal Barillon recently told journalists that bakers had “no interest in all leaving simultaneously.” Even though many bakers are taking a break, “you can still find bread pretty easily in Paris,” Barillon assured listeners.

On a recent weekend the queue snaked out the door of Coquelicot, one of the few bakeries still open in the heart of Montmartre, a quaint neighborhood swarming with tourists that overlooks the rest of the city. A mix of travelers and native Parisians fidgeted impatiently as they waited, the harried workers behind the counter rushing to fill orders.

Coquelicot owner Sylvie Fourmond told me she never closes during the vacation period, and this year was no different. “Making bread—it’s a service,” she said. “You’ve got to feed the Parisians.”

But while the deregulation of bakers’ vacations offers greater flexibility, it may well be making August harder on those who choose to stay open. Fourmond said keeping up with the demand has been exhausting her and her staff. “Making bread—it’s a service,” she said. “You’ve got to feed the Parisians.”

This past weekend, in particular was “infernal,” Fourmond said.

“There was a moment when we ran out of bread, there’s nothing I could do about it. But people don’t understand. People have this idea that we make bread in five minutes,” she said.

Fourmond doesn’t necessarily consider a constant stream of customers an advantage. She fears the quality of her products isn’t as high when she faces the pressure of annoyed customers tapping their feet in line, demanding faster turnaround.

Fourmond said she would welcome even more coordination among colleagues to make August run more smoothly. “We passed so many years with a Napoleonic law that meant the prefecture told us when we could close,” she said. “And now, all of a sudden, people are taking off when they want for the first time. Maybe we need to organize amongst ourselves a little better.”

Neighborhood resident Patrick Lucas approached Coquelicot unfazed by the line, saying that fresh baked goods were still worth a wait. More importantly, he added, even though bread is a French national right, so is time off.

“We’re in France, and there are also laws requiring that all people deserve vacation,” Lucas told me as he waited. “Even if commerce shuts down, it’s absolutely fair.

The current French government is socialist in name, but its actions have leaned closer to the center-right by French standards. The “simplification of corporate life” law that includes the end of bakery vacation rules is the most recent in a line of reforms intended to cut France’s notorious bureaucratic red tape. It followed a package of pro-business economic reforms forced through by President Francois Hollande and the economically conservative Prime Minister Manuel Valls, both socialist party representatives.

Many of the bakeries that remained open throughout August are in touristic areas, as is the case for Coquelicot. Lucas lives nearby, so it’s easy for him to procure his daily loaf. Still, he encouraged his fellow Parisians—and any anxious visitors—to savor August’s slower pace and embrace the fact that they might need to stroll a block or two further to find bread.

Even at the height of summer, a good baguette, bien-cuit of course, is still easier to find in Paris than anywhere else.

Photos of the Week: 8/15-8/21

Cleanup work at the site of the Tianjin explosions, red sprites in the sky above Mexico, wildfires in the American West, filming Game of Thrones in Northern Ireland, the most recent selfie from the surface of Mars, topless performers in New York’s Times Square, migrants’ clash with police on the Greek-Macedonian border, and much more.