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John Paulson brushes aside Wall Street worries about Donald Trump’s tariff plan

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John Paulson brushes aside Wall Street worries about Donald Trump’s tariff plan

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Billionaire hedge fund manager John Paulson has brushed aside Wall Street worries that Donald Trump’s plans to raise tariffs will harm the economy, calling for the US to “decouple” from China.

In a shift from his own earlier criticism of the Republican presidential candidate’s trade policy, the Trump megadonor said “strategic tariffs” would be a valuable negotiating tool to “level” the playing field.

“We’re not in the period of free trade,” Paulson said in an interview with the Financial Times. “It’s very one-sided.”

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“That’s why I respect Trump because he says these things,” said Paulson, a Wall Street titan who has been mentioned as a possible Treasury secretary if the Republican wins November’s election.

“Maybe he doesn’t articulate them so well all the times but when I listen and look into it, I find he’s absolutely correct,” he added.

Trump this month threatened to impose tariffs of 100 per cent on imports from countries that shifted away from using the dollar.

Some economists have warned increased tariffs would hit consumers, slow growth and stoke inflation.

The Tax Foundation — which favours lower taxes and a simpler code — has said Trump’s formal proposals for a 60 per cent tariff on Chinese goods and 10 per cent to 20 per cent duties on most other imports would increase costs for US businesses and shrink the economy.

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Paulson’s comments contrast with his remarks in April, when he described tariffs as a “blunt tool” to fix trade imbalances and said “we don’t want to decouple from China”.

In this week’s interview, he said Beijing “has become more adversarial towards the US” and driven foreign investment out of China.

“There’s certainly been a decoupling on an economic basis,” Paulson said. “I think there’s a desire, a need to decouple from China.”

John Paulson: ‘We need to stand up and protect American manufacturers’ © Spencer Platt/Getty Images

Paulson, who made his fortune shorting the housing market before it crashed in 2008, said that, while he previously subscribed to the “economic orthodoxy” that free trade benefits the globe, trade is not “implemented fairly”.

Paulson said one of his investments — Steinway Musical Instruments — had been hit by a 30 per cent tariff for selling woodwind instruments in China, while the US imposes a tariff of just 3 per on such instruments.

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“I’m living this every day,” he said. “We are decimated.”

“Other companies I’m involved in — they’re planning on closing the US factories and going to Mexico or going offshore, and so it’s come to a point where it’s really affected us,” he added. “We need to stand up and protect American manufacturers.”

When asked about Trump’s pledge to carry out the largest deportation in US history, Paulson said the former president would enact his plan in stages. “I believe in immigration, but I believe in fair immigration,” he said. “I totally support deporting criminals.”

Paulson hit out at plans by Democratic presidential nominee Kamala Harris to increase corporate taxes and capital gains tax, as well as a proposed new levy on unrealised gains for those whose net worth exceeds $100mn.

“No question, the combination of these things would result in a market crash and immediate recession,” he said.

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Despite the suggestions of a possible Treasury role, Paulson said it was “not so easy” for him to take on an administration post because of his holdings.

One potential conflict of interest would involve his preferred shares in Fannie Mae and Freddie Mac, the state-backed groups that guarantee most US mortgages, which Paulson said should revert to being private companies.

As a shareholder, he would stand to gain from a sale.

“Now they are in a position to be released,” he said of the mortgage giants. “They have sufficient capital to stand on their own and become private companies and support the housing sector.”

Paulson argued a Trump presidency would unleash natural gas production, boost manufacturing and make government more efficient. The Republican nominee has said he will appoint Elon Musk to head a commission to audit the administration and make “drastic reforms” to regulation.

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Israel strikes Beirut as US urges truce with Hizbollah

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Israel strikes Beirut as US urges truce with Hizbollah

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Israel’s military launched new strikes on Beirut and expanded its bombing campaign to the Lebanon-Syria border despite a last-minute diplomatic push for a ceasefire to prevent full-blown war with Hizbollah.

The Israel Defense Forces did not immediately provide details of who the strikes had targeted, but residents of the city said they had heard three blasts in the southern suburb of Dahiyeh, which Hizbollah controls.

The strikes are part of a massive escalation launched by the Israeli military in Lebanon over recent days, which has fuelled fears that the year-long hostilities between Israel and the Lebanese militant group are on the verge of spiralling into a broader regional conflict.

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In an effort to defuse tensions, US President Joe Biden and his French counterpart Emmanuel Macron on Wednesday put forward a proposal for a 21-day ceasefire between the two sides.

US officials hope that the truce will allow time to negotiate a more durable ceasefire between Israel and Hizbollah, and also put pressure on Hamas to accept the terms of a ceasefire-for-hostages deal with Israel in Gaza.

But Israeli officials quickly poured cold water on hopes of a breakthrough. In a brief statement issued as he headed to New York to address the UN General Assembly, Prime Minister Benjamin Netanyahu said he had not yet responded to the proposal and ordered the Israeli military to keep fighting “at full force”.

Israel’s foreign minister Israel Katz said there would be no ceasefire until Israelis displaced by the fighting had returned home. Bezalel Smotrich, Israel’s ultranationalist finance minister, said the country’s campaign should “end in one scenario: crushing Hizbollah and removing its ability to harm the residents of the north”.

“The enemy must not be given time to recover from the heavy blows he received and to reorganise for the continuation of the war in 21 days’ time,” he wrote on X on Thursday morning.

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Their comments were echoed by a string of other far-right members of Israel’s government with settlements minister Orit Strock saying there was “no moral mandate for a ceasefire, not for 21 days and not for 21 hours”.

Netanyahu depends on the far-right members of his coalition to remain in power. Ministers from his Likud party also spoke out against the plan.

While the US-French proposal, which was backed by the G7, EU, Australia, Saudi Arabia, United Arab Emirates and Qatar, did not set a deadline for the two sides to respond, US officials had previously said that they expected the Israeli and Lebanese governments to do so “in the coming hours”.

People familiar with the situation said the US hoped that Netanyahu would use his speech at the UN to announce that Israel’s war in Gaza was moving into a new phase, which might persuade Hizbollah — which has insisted it will not stop firing at Israel until the war in Gaza is over — to agree a temporary truce.

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French President Emmanuel Macron shakes hands with US President Joe Biden
Emmanuel Macron, left, and Joe Biden at a meeting on the sidelines of the UN General Assembly on Wednesday © Ludovic Marin/AFP/Getty Images

The burst of diplomatic activity follows a major Israeli offensive against Hizbollah. The militant group initiated the hostilities when it began firing rockets at Israel on October 8 in support of Hamas, which had launched its attack on Israel the previous day.

But over the past week, Israel has assassinated a string of senior Hizbollah commanders, and on Monday it launched a broad bombing campaign targeting what it said were the militant group’s weapons stores in Lebanon, killing more than 600 people. On Wednesday, the head of Israel’s army told troops to prepare for a possible ground operation in Lebanon.

The military said on Thursday morning that it had conducted further strikes overnight, hitting 75 Hizbollah targets in Lebanon’s Bekaa Valley.

Lebanon’s health ministry said 20 people were killed, 19 of them Syrian nationals, in an Israeli attack that levelled a building in the town of Younine in the Bekaa Valley. That was the deadliest strike in a day of bombings that also killed seven others elsewhere in Lebanon’s south, according to a Financial Times tabulation of health ministry statements.

Until this week Israel had rarely targeted the Bekaa Valley, a Hizbollah stronghold along Lebanon’s eastern border with Syria, previously concentrating most strikes in the south.

The IDF said it had also struck targets on Lebanon’s border with Syria relating to Hizbollah weapons transfers, while a Lebanese minister said at least one of the strikes landed on the Syrian side of a bridge connecting the two countries.

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Hizbollah has also begun firing deeper into Israel. On Wednesday, it fired a ballistic missile at Tel Aviv, Israel’s commercial hub, for the first time, which was shot down by air defences. On Thursday, it fired a barrage of about 45 rockets at Israel, according to the Israeli army, most of which were intercepted.

Additional reporting by Polina Ivanova in Jerusalem

Data visualisation by Steven Bernard and Alan Smith

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What we know about the ‘victory plan’ Zelensky is presenting to Biden today

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What we know about the ‘victory plan’ Zelensky is presenting to Biden today

Ukrainian President Volodymyr Zelensky is expected to present the victory plan to his U.S. counterpart Joe Biden at the White House on Sept. 26, a potentially pivotal moment in the long-running saga of Washington’s support for Ukraine.

Zelensky, who is visiting the U.S. this week, has said that the plan is designed to push Russian President Vladimir Putin into a fair peace agreement by boosting Ukraine’s firepower and giving it an upper hand two and a half years into Russia’s full-scale invasion. Zelensky has not publicly specified how it will achieve this.

Here’s what we know so far…

The timing

The announcement that Kyiv was preparing a victory plan came as Ukraine gained momentum following its surprise incursion into Russia’s Kursk Oblast. The ongoing operation, the first significant invasion of Russian territory since World War II, was a significant blow to the Kremlin and Putin.

It exposed Russia’s inability to defend its own territory and challenged Putin’s so-called “red lines” aimed at deterring Ukraine’s Western allies from stepping up weaponry supplies. It also showed Ukraine’s backers that Kyiv could still seize the initiative on the battlefield.

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As well as riding the momentum of the Kursk operation, events in the U.S. could also be a big factor in Kyiv’s push to present the plan — the November U.S. presidential election that might bring former President Donald Trump back to the White House and jeopardize the U.S. support for Ukraine.

The content

The fine details of the plan are yet to be made public. It is expected to address military, political, diplomatic, and economic strategies.

A source close to Zelensky told the Kyiv Independent last week that it aims “to create such conditions and such an atmosphere that Russia will no longer be able to ignore the peace formula and the peace summit.”

But some elements have been revealed. The head of the Presidential Office Andriy Yermak earlier this week said that an invitation to join NATO is part of the plan.

According to the information obtained by the Kyiv Independent on Sept. 22, Ukraine would ask for NATO membership within the months, not years.

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Speaking at the Council on Foreign Relations in New York, Yermak also said that the five-point victory plan includes both diplomatic and military components.

US President Joe Biden shakes hands with Ukrainian President Volodymyr Zelensky at an event with world leaders launching a Joint Declaration of Support for Ukrainian Recovery and Reconstruction on the sidelines of the 79th Session of the United Nations General Assembly in New York, US on Sep. 25, 2024. (Andrew Caballero-Reynolds / AFP via Getty Images)

“I also urged our partners to ignore Russia’s threats of escalation,” he said.

One element certain to be in the plan is the U.S. and other allies’ approval for Ukraine to use long-range weapons including Western-provided missiles to target military sites deep inside Russia.

Kyiv has long been pushing for restrictions to be lifted as it would enable Ukraine to destroy the airfields from which Russian aircraft are taking off to attack Ukrainian civilian infrastructure as well as degrade Russian air defenses.

And we also know one thing that won’t be in the plan – a partial ceasefire.

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After a German media report suggested otherwise, Zelensky personally refuted the claim.

“There is not and cannot be any alternative to peace, no freezing of the war or any other manipulations that will simply move Russian aggression to another stage,” Zelensky said in his evening address on Sept. 18.

How has it gone down so far?

The first reports aren’t too positive.

The White House is concerned that Zelensky’s plan lacks a clear strategy to win against Russia, the Wall Street Journal (WSJ) reported on Sept. 25, citing U.S. and European officials.

Some officials familiar with the plan’s outlines said it focuses too heavily on requesting more weapons and lifting restrictions on long-range missile strikes.

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“I’m unimpressed, there’s not much new there,” one senior official told the WSJ.

White House officials are worried that Zelensky’s plan does not offer clear, actionable steps that Biden can support in his four remaining months in office, the WSJ reported.

U.S. and European officials told the WSJ that parts of the plan remain underdeveloped, and that requests related to weapons are the most specific and detailed.

What happens if Biden rejects the plan?

“That’s a horrible thought,” Zelensky said when asked this question by The New Yorker in an interview, published on Sept. 22.

“It would mean that Biden doesn’t want to end the war in any way that denies Russia a victory,” he said.

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“And we would end up with a very long war—an impossible, exhausting situation that would kill a tremendous number of people. Having said that, I can’t blame Biden for anything,” Zelensky added.


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New York mayor Eric Adams indicted after corruption probe

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New York mayor Eric Adams indicted after corruption probe

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New York City mayor Eric Adams has been indicted by federal prosecutors following a months-long corruption probe that has engulfed City Hall and prompted a string of resignations and retirements from high-ranking members of the Democrat’s administration.

The charges against Adams, 64, will be unsealed by the Southern District of New York attorney’s office on Thursday, according to multiple US media reports. It would make him the first modern New York mayor to be indicted while in office.

In a statement, Adams said: “I always knew that if I stood my ground for New Yorkers that I would be a target — and a target I became.”

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The former police officer, who was elected in 2021 vowing to be tough on crime, added: “If I am charged, I am innocent, and I will fight this with every ounce of my strength and spirit.”

In a short video released soon after, Adams said he expected to be charged and that the allegations were “entirely false, based on lies”. He accused investigators of attempting to undermine his credibility.

Adams, a centrist Democrat and former Brooklyn borough president, had campaigned on a law-and-order platform and pledged to crack down on homelessness in New York.

His time in office has been marred by accusations of cronyism, as well as growing criticism of his administration’s haphazard handling of migrants bussed in from the southern border.

Adams has also been facing a corruption investigation involving his 2021 election campaign.

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Last year, agents raided the Brooklyn home of his 25-year-old chief campaign fundraiser Brianna Suggs, reportedly as part of a probe into donations from the Turkish state. Adams was stopped on the street soon after by the FBI, who seized his phone and laptop.

A series of other raids, some apparently unrelated to the investigation into the campaign, followed. They targeted the first deputy mayor and deputy mayor for public safety, among others.

This month, New York police commissioner Edward Caban, whose phone was reportedly seized by law enforcement, resigned, saying “the noise around recent developments” had made his work impossible. The home of Caban’s interim replacement was also searched by investigators.

Meanwhile, City Hall was rocked by the resignation of one of its senior lawyers and the unexpected retirement of David Banks, who is in charge of New York’s public school system and whose phones were also seized in the probe.

Adams has consistently claimed he has “nothing to hide” and said he was co-operating with the investigations, while prominent Democrats have called for his resignation.

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New York congresswoman Alexandria Ocasio-Cortez joined those calls on Wednesday, saying she could “not see how Mayor Adams can continue governing New York City”. Brad Lander, the city comptroller who is also running for mayor, said Adams should step down.

Adams on Wednesday evening was spotted at a reception attended by President Joe Biden at the Metropolitan Museum of Art.

A spokesperson for the US attorney’s office for the Southern District of New York did not respond to a request for comment.

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