Thursday, March 31, 2016

The Looming Government Pension Crisis

Updated December 2016

We all know that debt, particularly government debt, is becoming an increasingly worrying problem, especially since interest rates dropped to near-zero in the developed economies of the world.  This has led to both developed and advanced economies around the world increasing their total debt levels (i.e. corporate, household and government) as shown on this graphic:


Over the period from 2007 to 2014, government debt has increased from $33 trillion to $58 trillion, an increase of 9.3 percent on a compounded annual growth rate.  In the case of the United States, the federal debt has risen from $9.2 to its current level of $19.2 trillion since the beginning of 2008, an increase of 109 percent over slightly more than 8 years.   While this should be of concern, there is a government indebtedness problem that is even worse; underfunded and unfunded government pension liabilities.  A recent report from Citigroup shows us just how dangerous the problem has become.

In the past, workers believed that, once they stopped working at or about age 65, their defined benefit pension plan would be there to provide for them through to the end of their lives.  In addition to a company or government pension, retired workers could count on a pay-as-you-go pension scheme like Social Security, Canada Pension or other state-sponsored pensions.  However, given the demographic shifts which include longer life expectancies and an increase in the number of retired baby boomers, a significant strain is developing in the state-sponsored pension systems of the world's advanced economies.

Here are some demographic statistics showing how the population of people 65 years and older are expected to grow between 2015 and 2050:

Globally - 8 percent in 2015 compared to 15 percent in 2050

Europe - 17 percent in 2015 compared to 26 percent in 2050

China - 12 percent in 2015 compared to 24 percent in 2050

Japan - 26 percent in 2015 compared to 33 percent in 2050

Japan's demographic problem is the "canary in the coal mine" for the rest of the world.  When a nation has significant growth in the size of its elderly cohort accompanied by a declining fertility rate, it means that there fewer workers supporting a greater number of retirees as shown on this graphic which shows the dropping dependency ratio of workers aged 15 to 64 to the number of retirees aged 65 plus over the years between 2015 and 2050:


As the dependency ratio falls (the ratio of young workers to pensioners), it becomes increasingly difficult for the economy to support a growing number of pensioners, a situation that can result in a cut in benefits or a collapse of the pension system.

We can quite clearly see the growing problem with an aging population on these two population pyramids where the working age population is highlighted in red:

  
With that background, let's look at government pension liabilities.  Most of the world's largest governments have pension plans for their public sector workers and for the general public through state-sponsored pension plans.  While these pension commitments are not the exactly the same as public debt, they still form a part of a nation's long-term liabilities.  As dependency ratios fall, there is a unsustainable pressure on future tax payers to fund a growing population of pensioners.  Given the current indebted state of government coffers around the world, this will create additional pressure on governments with growth in government pension payments as a proportion of GDP as shown on this graphic:


Here is the estimated increase in government pension expenditures from 2015 to 2050 as a percentage of GDP:


As you can see, for some governments, the dependence on government pension plans will grow significantly over the period between 2015 and 2050.  On average, OECD nations currently spend an average of 9.5 percent of GDP on public pensions.  The combination of an aging population and a rising ratio of pensioners to workers will push this up to 12 percent of GDP by 2050 even with the implementation of measures to limit future pension costs.

Given this information, there are obviously looming problems with underfunded or unfunded public sector and state-sponsored social security pension plans.  These long-term commitments are spread over a long period of time and are not treated in the same fashion as public debt, however, the political consequences of negating on these social commitments would be difficult.  This means that these liabilities should be treated as "contingent".  Here is a chart showing the contingent government pension liabilities as a percentage of GDP for OECD nations, divided into public sector and social security pension plans along with the conventional public debt-to-GDP ratio (grey line): 


This is a rather frightening chart.  The average weighted contingent public pension liability to GDP ratio for the 20 OECD nations is 190 percent of GDP.  This outstrips the average public sovereign debt-to-GDP ratio which comes in at 109 percent of GDP.  These same 20 nations have sovereign debts that total $44 trillion; by comparison, the same 20 nations have unfunded or underfunded government pension liabilities of $78 trillion.

Obviously, this pension funding liability crisis is unsustainable.  Governments will have to take steps to reduce their underfunded and unfunded pension liabilities by taking one or more of these steps:

1.) Increasing retirement age: While this seems to be the simplest reform, it is the one that is most fraught with political backlash.  Not only is the increase in the number of years to retirement important, the speed at which this reform is undertaken is key to meaningful reductions in liability.  Using the example of Portugal, by raising the retirement age by 2 years within the next 10 years, pension liabilities would be reduced by 5 percent.  

2.) Reducing or freezing retirement benefits: This is easiest to enact when it is put into place for new, young entrants into the workforce rather than for older workers.  

3.) Increasing pension-specific taxation levels (i.e. increase worker contributions to pension plans).

4.) Increase the length of working careers by putting incentives into place that increase the pension entitlements.  This will keep workers contributing to the pension system for longer.

5.) Improved administrative efficiencies through central management of public pension schemes.

From the Citigroup study, we can see that the current government pension scheme is going to prove to be problematic over the next three decades as the number of baby boomers retirees grows faster than the number of young workers and improvements to health mean that these retirees live far longer than retirees from previous generations.  Given the recent and ongoing election cycles in OECD nations, it is interesting to note that there is rarely any serious discussion  about the looming public pension plan crisis that dwarfs the size of the public debt.    

Wednesday, March 30, 2016

The High Cost of Enforcing Current Immigration Laws

Updated January 2017

With Donald Trump and his anti-immigration mantra now occupying the Oval Office, an analysis by the American Action Forum (AAF) looks at the budgetary and economic costs that addressing illegal immigration would place on the U.S. economy.  With an estimated 11.2 million undocumented immigrants currently living in the United States, as you will see, the costs are extremely high.  We will divide this posting into two parts; first looking at the budgetary cost to taxpayers associated with the enforcement of current immigration laws and then look at the costs to the economy should undocumented immigrants be deported.  Please note that all cost estimates are in 2013 dollars; the impact of inflation on these costs will push them significantly higher over the 20 year period necessary to implement the enforcement of current immigration laws.

1.) The Budgetary Cost of Enforcing Current Immigration Laws:  As I noted above, according to Pew, there are approximately 11.2 million undocumented immigrants living in the United States, making up 3.5 percent of the U.S. population and 26 percent of foreign-born Americans.  About 66 percent of these undocumented immigrants have lived in the United States for at least 10 years and almost half were parents of minor children as shown here:


In 2012, 6.9 percent of all pre-college aged students had at least one undocumented immigrant parent.  On the employment front, as many as 8.1 million of these undocumented immigrants or 5.1 percent of the total labour force were either working or looking for work in 2012.

Many Americans, politicians and aspiring politicians among them, unequivocally state that the United States needs to fully enforce current immigration law which would ultimately lead to the deportation of all 11.2 million undocumented immigrants.  Assuming that 20 percent would leave the United States on a voluntary basis, the remaining 80 percent would have to be forcibly removed.  To help us better understand the budgetary costs of such enforcement, AAF has made two key assumptions:

a.) As I noted above, 20 percent would leave voluntarily including the 15 percent of undocumented adult immigrants who have been in the United States for less than 5 years.  This would leave approximately 8.96 million immigrants who would have to be forcibly deported.

b.) The Department of Homeland Security's Immigration and Customs Enforcement (ICE) is the federal agency with the primary responsibility of deporting illegal immigrants.  In 2013, ICE deported 330,651 unlawful immigrants and Ice has stated that it currently only has the capacity to remove a maximum of 400,000 immigrants on an annual basis.  This means that it would take nearly 20 years to deport all 8.96 million remaining undocumented immigrants, a situation that would change should funding levels increase substantially.

There are four stages necessary to enforce current immigration law.  Here is a summary of each stage and its associated costs:

a.) Apprehension costs:  These included the costs of criminal arrests where ICE agents pursue and arrest undocumented immigrants as well as the cost of administrative arrests where undocumented immigrants are arrested based on another violation (i.e. a traffic violation) after which ICE agents are contacted.  In fiscal 2013, administrative arrests accounted for the vast majority of the total arrests made by ICE, totalling 241,694 out of the 330,651.  Based on the high percentage of less expensive (to ICE) cost of administrative arrests, on average, in 2013, ICE's apprehension costs averaged $4,856 per arrest.  In 2013, ICE used its own investigators and Fugitive Operations Teams to arrest a further 43,218 immigrants at an average cost of $27,155 per immigrant.  Using these figures, AAF concludes that:

- ICE would need $43.5 billion to make a majority of the 8.96 million arrests administratively.
- ICE would need $243.3 billion to make a majority of the 896 million arrests criminally.

b.) Detention costs:  ICE is required to detain undocumented immigrants until their fate is determined by a judge.  In fiscal 2013, ICE had 34,000 bed spaces and immigrants were detained by ICE for an average of 33.5 days prior to their court date.  It cost ICE an average of $118.88 per day to detain a single undocumented immigrant; carrying this forward, it would cost about $35.7 billion to detain all 8.96 million undocumented immigrants over the next 20 years.

c.) Legal costs: Once ICE detains undocumented immigrants, it must legally process them.  It costs the Justice Department's Executive Office of Immigration Review an average of $1,495 to legally process each undocumented immigrant in 2013; as a result, it would cost $13.4 billion to legally process all 8.96 million undocumented immigrants.

d.) Transportation costs: Once undocumented immigrants have been apprehended, detained and legally processed, ICE must transport them back to their country of origin.  In 2012, 52.4 percent were from Mexico, 15.2 percent were from Central America, 12.4 percent were from Asia and 6.3 percent were from South America.  In 2013, 9.6 percent of departing undocumented immigrants left on their own without any financial assistance from ICE.  This would leave about 8.1 million undocumented immigrants that would require transportation; using the 2013 average of $1,400, it would cost $11.3 billion to transport 8.1 million undocumented immigrants.

If we sum up the costs for each stage of enforcement, it would cost U.S. taxpayers between $103.9 and $303.7 billion to remove 8.96 million undocumented immigrants.

That's not all.  In order to keep future undocumented immigrants from entering the United States while the system is trying to deport those currently living in America, increased enforcement would be required.  AAF estimates that to budgets for both ICE and the Customs and Border Protection would have to rise from their total of $15.8 billion in fiscal 2013, however, just using the 2013 budgetary numbers, the federal government would have to spend $316 billion over the next 20 years to keep new undocumented immigrants from crossing the American border.

2.) The Economic Costs of Enforcing Current Immigration Laws:   

As I noted above, about 5.1 percent of the U.S. workforce is undocumented immigrants.  In some industries, they form a substantial portion of overall workers as shown on this graphic from Pew:


By removing all undocumented immigrants, the total size of the labor force would shrink by 11 million workers by 2034.  As a result, over the first ten years, average economic growth would shrink by 0.5 percent annually and, in 20 years, the economy would be 5.7 percent smaller than it would have been had the government not removed all undocumented workers.  This suggests that real GDP in 2034 would be $1.6 trillion lower than the Congressional Budget Office's (CBO) baseline estimates.  On top of the shrinking GDP, removing undocumented immigrants would have a negative impact on federal tax revenues.  Estimates from the CBO and the Social Security Administration show that 50 percent of undocumented immigrants pay federal taxes and are not users of social services meaning that their departure would result in a let loss of federal revenue.  The Bipartisan Policy Center calculates that removing all undocumented immigrants would result in a deficit increase of $800 billion over the next 20 years.

To summarize, here is a table showing the total costs of enforcing America's current immigration laws:


Obviously, from a cost standpoint, the ongoing debate about undocumented immigrants in the United States is far from clear cut.  The costs to taxpayers and the negative impact on the economy and the federal budgetary balance are substantial and would suggest that decision-makers in the Trump Administration need to carefully consider all of the repercussions of implementing a harsher immigration climate in the United States.    

Tuesday, March 29, 2016

The Ghost of Ben Bernanke

You may think that Ben Bernanke, architect of the Federal Reserve's $4.5 trillion balance sheet, had faded into obscurity, but he's still alive and well and blogging on the Brookings Institute website that you can find here.  In a recent posting, he looks at the Federal Reserve's monetary toolkit and what ammunition it has left, particularly negative interest rates and their potential impact on the economy.  Here are the highlights.

Mr. Bernanke opens by noting that the U.S. economy is growing and creating jobs (no doubt, thanks to trillions of dollars worth of untested monetary policy experimentation), however, he notes that there is a "possibility" that the economy will "slow, perhaps significantly".  At that suggestion, he asks "What tools remain in the (Federal Reserve's) toolbox?".  That, indeed, is a very good question considering that the Fed has used three rounds of quantitative easing, the Twist and forward guidance to prod the reluctant economy back to life.  In this posting, he discusses the implementation of a negative interest rate policy, an as yet untried policy at least on this side of the Atlantic and Pacific Oceans.

Mr. Bernanke goes on to state the obvious:

"Given where we are today, how would the Fed respond to a hypothetical economic slowdown? Presumably the central bank’s first response, after dropping any plans to raise rates further, would be to cut short-term interest rates, perhaps to zero. Unfortunately, with the fed funds rate (the Fed’s target short-term rate) now between ¼ and ½ percent, and likely to remain relatively low, moving to zero provides much less firepower than in the past. For comparison, the Federal Open Market Committee (FOMC), the Fed’s monetary policy-making body, cut the short-term interest rate by 6.8 percentage points in the 1990-91 recession and its aftermath, by 5.5 percentage points in the 2001 recession, and by 5.1 percentage points at the beginning of the Great Recession in 2007-2008." (my bold)

He suggests the following solutions to the Federal Reserve's "painting itself into its current policy corner":

1.) Further Forward Guidance: The Federal Reserve could communicate to the markets and the public that short term rates will stay low for a much longer period of time.  This could allow long-term rates for such things as mortgages to drop closer to short-term rates although the outcome is far from certain.

2.) Further Quantitative Easing: By purchasing additional long-term assets for the Fed's already bloated portfolio, additional reserves are created in the banking system.  This would encourage borrowing and spending.  Let's see how well the unprecedented and highly experimental $3.6 trillion worth of QE did for mortgage borrowers since the beginning of the Great Recession:


Mortgage debt is down from its 2008 high of $14.8 trillion to its current level of $13.8 trillion after hitting a low of $13.2 trillion in early 2013.  So much for encouraging the banking system to lend to homeowners.  Obviously, further QE will be like pushing on a string.

3.) Negative Interest Rates:  Negative interest rates are the new buzzword among central bankers around the globe and have been implemented by the Bank of Japan, the ECB and a handful of European national central banks as well as being threatened by both the Federal Reserve and the Bank of Canada.  In the negative interest rate scenario, the banking system is charged interest on the reserves that they hold at their local central bank.  To minimize the impact of these fees on their bottom lines, the banking system will reduce their holdings at central banks and invest in other short-term assets that will drive the yields on short-term investments into negative territory as well as driving down the yields on longer term securities that have an impact on mortgage and business loans.  While this sounds like a great deal, let's see what has happened to the excess reserves that the American banking system has stockpiled at the Federal Reserve since the Fed started actually paying banks 0.50 percent to store their "money":

    
At $2.36 trillion, the American banking system is doing exactly the opposite of what the Fed needs it to do to get the economy borrowing and spending.

Mr. Bernanke goes on to explain why we should not be afraid of negative interest rates.  He notes that economists are accustomed to dealing with negative real interest rates (interest rates that have been corrected for inflation) as we can see on this graph which shows a 60 year history of the real effective Federal Funds Rate:


As you can see, for most of the period up to the Great Recession, the Federal Reserve had substantial monetary headroom to lower nominal interest rates during recessions.  This changed in 2008 as the Fed pushed nominal interest rates to the zero lower bound, totally removing any hope that they could lower interest rates further...unless, of course, they lowered nominal rates into negative territory.

Mr. Bernanke then explains the practical issues behind lowering interest rates into negative territory:

1.) Does the Fed have the authority to impose negative interest rates on the reserves that banks hold with it?  According to the Act which governs the Federal Reserve's operations, the Fed's fees must reflect the actual cost of providing the service over the long-run.  Since the cost of holding bank's reserves is low, it may not be legal for the Fed to charge banks for holding their reserves.

2.) How negative should rates go?  When rates become excessively low and punitive, Mr. Bernanke shows some contact with the real world by noting that consumers will simply hold/hoard currency.  Banks could profit by holding customers' cash for a fee or (and this is a big or), cash could be abolished or have an expiry date linked to its serial number.  Federal Reserve research shows that the interest rate paid on bank reserves in the United States could not be lower than -0.35 percent, however, rates in Europe are as now as low as -0.75 percent and there has been no sign of currency hoarding.  I'd add that this is likely because cash is becoming increasingly less utilized in some nations across Europe that have implemented negative rates.

3.) The effect on money market funds (MMF) could be problematic given that MMF investors have traditionally been promised that they can withdraw at least the full amount that they have invested because MMFs are widely regarded as completely risk-free.  When investors do not get their entire investment back, as very nearly occurred in 2008, it is termed "breaking the buck".  Implementing a negative interest rate policy could alter the MMF landscape, reducing an important source of short-term funding for the financial industry.

4.) The effect on the profits of the banking sector could be substantial if banks do not pass along negative interest rates to their customer base.  I suspect that this is highly unlikely to be a problem since banks are very creative when it comes to implementing new fee structures to ensure that their profits remain intact.  As well, Mr. Bernanke notes that interest rate margins would likely continue to remain positive in a negative interest rate environment because interest rates charged on long-term loans such as mortgages would most likely remain in positive territory.

Let's look at Mr. Bernanke's closing comments on negative interest rates:

"Overall, as a tool of monetary policy, negative interest rates appear to have both modest benefits and manageable costs; and I assess the probability that this tool will be used in the U.S. as quite low for the foreseeable future. Nevertheless, it would probably be worthwhile for the Fed to conduct further analysis of this option. We can imagine a hypothetical future situation in which the Fed has cut the fed funds rate to zero and used forward guidance to try to talk down longer-term interest rates. Suppose some additional accommodation is desired, but not enough to justify a new round of quantitative easing, with all its difficulties of calibration and communication. In that scenario, a policy of modestly negative interest rates might be a reasonable compromise between no action and rolling out the big QE gun." (my bold)

In closing, as was pointed out to me, I find two sentences in the second paragraph of his posting rather interesting and a bit puzzling.  Here's sentence one:

"I’ll conclude in these two posts that the Fed is not out of ammunition, and that monetary policy could help cushion a possible future slowdown." (my bold)

Here's the second sentence:

"That said, there are signs that monetary policy in the United States and other industrial countries is reaching its limits, which makes it even more important that the collective response to a slowdown involve other policies—particularly fiscal policy" (my bold)


Does this not sound like a contradiction?  A rather frightening contradiction given that over seven years of Federal Reserve "monetary medicine" has accomplished rather little given the risks that were taken?  The possibility that the Fed will dive further into uncharted monetary territory should give us good reason to ponder the wisdom of today's central bankers.

Monday, March 28, 2016

Hillary Clinton, Syria and the Deep State

Updated July 2016

I would like to open by apologizing for the length of this posting but I want to make certain that I cover all pertinent information in a single posting.

Earlier this month, I posted an article on the Deep State, the unseen quasi-governmental group that has the real control over the American federal government.  In that article, I mentioned that Silicon Valley is heavily involved in Washington's business and one of the 30,000 plus emails that Hillary Clinton has released from her private, non-secure email server has shed a bit of light on the connection between the federal government and the tech sector.

Thanks to Wikileaks, here is the email in question:

"UNCLASSIFIED U.S. Department of State Case No. F-2014-20439 Doc No. C05795577 Date: 01/07/2016 
RELEASE IN PART B6


From: H  
Sent: Saturday, August 4, 2012 1:51 PM 
To: 'monica.hanley 

Subject: Fw: Syria  
Attachments: Defection Tracker.pdf 
  
Pis print. 



From: Sullivan, Jacob J [mailto:SullivanJJ©state.gov ] 
Sent: Wednesday, July 25, 2012 06:20 PM 
To: H Subject: FVV: Syria 

FYI — this is a pretty cool idea. 
From: Jared Cohen [mailto Sent: Wednesday, July 25, 2012 1:21 PM 
To: Burns, William J; Sullivan, Jacob J; ale.ross 
Subject: Syria 
Deputy Secretary Burns, Jake, Alec,  Please keep close hold, but my team is planning to launch a tool on Sunday that will publicly track and map the  defections in Syria and which parts of the government they are coming from. Our logic behind this is that while many people are tracking the atrocities, nobody is visually representing and mapping the defections, which we  believe are important in encouraging more to defect and giving confidence to the opposition. Given how hard it is to get information into Syria right now, we are partnering with Al-Jazeera who will take primary ownership  over the tool we have built, track the data, verify it, and broadcast it back into Syria. I've attached a few visuals that show what the tool will look like. Please keep this very close hold and let me know if there is anything eke you think we need to account for or think about before we launch. We believe this can have an important  impact. 
Thanks, 

Jared 

Jared Cohen I Director of r't ": •Tel"

Who is Jared Cohen and why is he contacting then Deputy Secretary of State William Burns who served part of his tenure under Hillary Clinton?  Jared Cohen is currently the president of Jigsaw, which was previously known as Google Ideas.  Jigsaw is Google's think-tank, a technology incubator that is tasked with the following mission:

"...to use technology to tackle the toughest geopolitical challenges, from countering violent extremism to thwarting online censorship to mitigated the threats associated with digital attacks."

I will bet that you had no idea that Google was active in the fight against terrorism, did you?

Jared Cohen has a long history of working with the Department of State as an advisor to both Condoleezza Rice and Hillary Clinton.  As well, he is an Adjunct Senior Fellow with the Council on Foreign Relations (CFR), an "independent, non-partisan membership organization, think tank and publisher" that many people believe is a "public organ of the Deep State".  The CFR counts America's elite politicians, academics and media personalities among its members and publishes research that are used in decision-making by Washington.  For your information, you can find a complete listing of the group's membership here; note that the membership includes William and Chelsea Clinton, Richard Cheney  and Colin Powell among others.      In addition to his duties for the Council on Foreign Relations, Mr. Cohen serves as a member of the National Counterterrorism Center's director's advisory board.  The NTCC was established by Executive Order in 2004 and serves as the"...primary organization in the U.S. government for integrating and analyzing all intelligence pertaining to counterterrorism.".  He serves on the board of advisors for companies including ASAPP, Rivet Ventures, SineWave and QSI.  He has authored four books and was named as one of the "Top 100 Global Thinkers" by Foreign Policy.  Obviously, this is a very well connected man.

Interestingly, Mr. Cohen had travelled to Syria in September 2010 with Alec Ross, Senior Advisor for Innovation in the Office of the Secretary of State.  Here is an email from Alec Ross to the same William Burns who was Deputy Secretary of State:

"From: Ross, Alec 

Sent: Friday, September 24, 2010 3:04 PM 
To: Burns, William 3; Feltman, Jeffrey D; Sullivan, Jacob J; Crocker, Bathsheba N; Mills, Cheryl D 

Subject: 1st known case of a successful social media campaign in Syria   

When Jared and I went to Syria, it was because we knew that Syrian society was growing increasingly young (population  will double in 17 years) and digital and that this was going to create disruptions in society that we could potential harness for our purposes.  In what is the 1st of what I predict will be many interesting cases in the future, this past week a campaign went viral on  Facebook in Syria (even though Facebook is outlawed in Syria it is widely accessed through proxies) showing teachers in Syria abusing their pupils. Thousands of Syrians made public their support on Facebook (the fact that people made their  identities known is notable) for the campaign to remove these teachers, and the Ministry of Education intervened and fired the teachers.  This is the first known case of a successful social media campaign in Syria. 

More will come. 

Alec 

Alec Ross 
Senior Advisor for Innovation Office of the Secretary of State
(202) 647-6315 
RossAJ@State.gov" (my bold)

"...potential (sic) harness for our purposes..."?  And what purposes would those be?

As well, to help you put the first email into context, Jacob J. Sullivan (aka Jake) who noted that this was a "pretty cool idea" served as Hillary Clinton's Deputy Chief of Staff and Director of Policy Planning and now serves as her top foreign policy adviser to her current presidential campaign

Now, let's go back to the email dated July 25, 2012 and put it into context of what was happening in Syria at the time and some history, focussing on the United States connection to the ongoing civil war.  Syria's homegrown version of the Arab Spring began on March 15, 2011 when Syria's government met peaceful protests against the Assad regime in several towns and cities, particularly Damascus and Homs, with force.  In April 2011, hundreds were killed in Daraa and Damascus by government forces and by May 2011, the United States had imposed sanctions on Bashar al Assad and some of his senior government officials.  In June 2011, more than 120 soldiers were killed by armed rebels which may have been partially composed of defected members of the security forces.  In July 2011, the U.S. government stated that Assad has lost his legitimacy as head of state and military defectors formed the Free Syrian Army.  In August 2011, the United States, EU and United Kingdom demanded that Assad step down and the Syrian National Council, an anti-Assad coalition formed in Istanbul, Turkey, an avowed enemy of Assad.  In October, 2011, The United Nations Security Council attempted to pass a resolution condemning Assad and his government, however, Russia and China vetoed it.  In January 2012,  the Arab League called for Assad to step down and Jabhat al-Nusra, al-Qaeda's affiliate in Syria, is formed to fight against the regime.  In February 2012, the United Nations once again tabled a resolution requesting that Assad step down but it is vetoed by China and Russia.  The United States closed its embassy.  In March 2012, Syrian troops retake Homs from the Free Syrian Army.  In April 2012, Kofi Annan brokered a ceasefire and Assad stated that he had regained control of Syria.  The United States pledged to provide communications equipment to rebel forces.  In May 2012, free parliamentary elections are held and are boycotted by opposition forces with Assad and his allies winning the majority of the seats.  In June 2012, Assad warned that his nation faces war and tensions between Turkey and Syria rose after a Turkish reconnaissance jet is shot down in Syrian airspace.  In July 2012, the same month that the aforementioned email by Jared Cohen crossed the desk of Hillary Clinton, a bomb attack by the Free Syrian Army killed the defence minister and his deputy, Assad's brother-in-law.  High profile defections from the Assad government rose.  Rebels took control of eastern Aleppo and the United Nations once again threatened sanctions against Syria but these are vetoed by China and Russia.  Assad announced that he will use chemical and biological weapons if Syria is attacked by a foreign power.

As you can see from this timeline the United States was increasingly involving itself in actions that would have seen the end of Bashar al-Assad, similar to what happened in the cases of Saddam Hussein and Muammar Qaddafi.  The Obama Administration was willing to stoop to any level to rid Syria of Bashar al-Assad and a system of tracking defectors and feeding that back to Syria using the broadcasting capabilities of al-Jazeera would have been a very useful tool to destabilize the Assad regime.  What the current administration seems to have forgotten is that destabilizing the Libyan and Iraqi regimes ended up creating a geopolitical vacuum that resulted in the rise of ISIS and various al-Qaeda proxies.  Thanks to the ongoing geopolitical meddling in the region, the world is definitely not a safer place. 

This single email from Hillary Clinton's once private collection gives us a surficial but interesting glimpse into the Deep State and the connection between the private sector (in this case, Silicon Valley) and the American security and state apparatus.  We should not forget that there are thousands upon thousands of unelected Americans who have significant control over the direction that Washington takes, particularly on issues that impact national security.