Noah Feldman writes:   The New Jersey public, not to mention Governor Chris Christie, wants to reinstate sports gambling in Atlantic City in the hopes of reversing the trajectory of a place that has totally cratered.

The nominal justification for the federal law that effectively banned sports gambling in the U.S. was protecting professional and amateur sports against the taint of gambling, and hence of point-shaving or game-throwing.

The law exempted Nevada’s legalized sports gambling. It also grandfathered sports lotteries in three states. Finally, it gave New Jersey the option of reinstating sports gambling in Atlantic City — provided that it did so within a year from the passage of federal law. New Jersey didn’t take advantage of the option within the time limit.

Whatever its original motives, Paspa today serves as guarantor of Nevada’s pre-eminent position in the vast U.S. sports gambling industry. 

New Jersey’s efforts to allow sports gambling included a 2011 statewide referendum that endorsed a change in the laws; Christie signed a bill decriminalizing such betting in 2012. The 2013 decision blocking that initial effort grew out of litigation by the National Collegiate Athletic Association, as well as the National Football League, the National Hockey League and Major League Baseball to block  that law. 

In response, New Jersey argued that Paspa violates the Constitution. They put most of their eggs in the wrong basket, emphasizing the claim that Congress lacked the authority to “commandeer” state resources for federal objectives.

Roberts’s argument was that such differential treatment of states required a strong justification, which existed when the Voting Rights Act was passed in 1965 but no longer existed today. This claim was strongly criticized, and the eminent and acerbic Judge Richard Posner commented that he’d never heard of the “equal sovereignty” doctrine because it didn’t exist. But equal sovereignty is now the law of the land.

Paspa treats states differently from one another by enshrining Nevada’s special gambling preserve — and hence violates the equal sovereignty of New Jersey voters by denying them the right to do what Nevada does. This isn’t just a matter of constitutional doctrine. It also makes constitutional common sense. 

Many laws may have differential effects in the real world. A coal mining regulation will affect West Virginia more than it affects Hawaii. And the courts shouldn’t be in the business of reviewing every federal law to see whether it helps some states over others.

But a law that explicitly gives some states rights that others lack goes too far. And it’s worse when the public in one state wants to change its laws to compete with another state — and is denied that right by the federal law in question.

Barry Ritholts writes:  The Federal Reserve says the timing of its first interest rate hike in nine years depends on the data, but that doesn’t mean the Fed will be digging through the jobs, growth and inflation reports for the all-clear signal.

Instead, the Fed will be doing what millions of people have been doing for the past couple of weeks: Watching the stock market.

Many investors have assumed that the recent selloffs in markets from Shanghai to New York meant that the Fed definitely won’t pull the trigger on a rate hike at its Sept. 16-17 meeting.

From 1987 to today, the Fed has reacted to nearly every market hiccough and tantrum by flooding markets with liquidity and reassurances. They’ve given the markets rate cuts, quantitative easing and promises that easy-money policies will continue for a long time, if not forever.  This “Greenspan put” means investing in the stock market is a one-way bet.

New York Fed President Bill Dudley seemed to close the door on a September rate hike when he said that,a rate hike next month no longer seemed as “compelling” as it once did. 

What sort of additional information would make a rate hike more compelling? Dudley said the Fed is looking at more than the economic data, widening its scope to examine everything that might impact the economic outlook. They are looking at the value of the dollar, the price of commodities, the risk of contagion from Europe, from China, and from emerging markets. And, above all, the U.S. stock market.

The market selloff has made a September rate hike even more compelling than it was before, because it gives Fed Chair Janet Yellen the opportunity she needs to kill the “Greenspan put” once and for all.

Leonid Bershidsky writes: Google has lost patience with its soft approach to the European Union’s bureaucracy in Brussels, showing a new fighting spirit in its answer to antitrust charges against the company. This is a path that led Microsoft nowhere and cost it more than a billion dollars in fines.

The company’s general counsel, Kent Walker defends the way Google prominently displays results from its own shopping comparison service, but not from its competitors — a practice at the heart of the European Commission’s case:  

Walker also reveals that Google hired Bo Vesterdorf, the former president of the General Court, part of the EU’s judicial branch, to write a separate response. This argues that Google has no duty to supply its own rivals, as if it controlled an input that was both essential and not available anywhere else. That just isn’t the case on the Internet, Vesterdorf said.

Before reaching this stage, Google had tried a more pliant approach, seeking to satisfy the antitrust commissioner and avoid the large fine that would come with an adverse ruling.

Last year, Google doubled its EU lobbying budget to 3.5 million euros ($3.9 million).  That isn’t much less than Deutsche Bank or ExxonMobil is spending. According to data on the same site, Google has held more meetings with EU officials than any other company since last November — 32 in all.

In the comparison shopping case, though, Google’s competitors and the European Commission remained unhappy. So the company stopped smiling and nodding and decided to get tough: It’s no longer proposing any compromises, just boldly stating that the way it displays offers from various online merchants is within the law and good for users. .

Older tech companies know it’s useless to tell the EU — and, inevitably for such a strategy, European courts — that they don’t understand what they’re doing. The bureaucrats and judges may be unable to produce another Google, but they are good at listening to experts and far from dumb. And they often hate what they see as American arrogance.

Microsoft can tell Google exactly what happens next; indeed, Google’s lawyers realize there will be other antitrust investigations. One, concerning the Android operating system and its links to Google services, is already in the works, although no official charges have been brought. Another may soon hit Google where it really hurts, challenging its dominance in online advertising. Google will fight and probably lose, because Europe doesn’t like big U.S. companies to dominate its markets. 

Lobbying and complying with whatever demands still can’t be avoided is a less painful path. Microsoft spent 4.5 million euros last year, a million more than Google, on efforts to get EU officials to see its points on issues such as data protection and cloud computing. 

It’s admirable that Google now wants to fight for its principles and against the dilution of its superior offering. It makes me cringe, however, to think of the time and money that will be burned in this hopeless battle.

Shaping up the way governments do business, the US Defense Department has formed an alliance with Silicon Valley businesses.

Defense Secretary Ash Carter is back in Silicon Valley to sell his vision for a collaboration between fast-moving tech giants and the more “traditional” Pentagon bureaucracy. In his second trip there in four months, Carter will unveil the $171 million FlexTech Alliance award, a collaboration between a consortium of tech companies and the Pentagon whose goal is to produce flexible sensors that can be stretched over clothing or fitted on ships and airplanes.

Backed by 162 companies, universities, and research labs, the alliance includes names like Apple and Lockheed Martin and will be managed by the Air Force Research laboratory. Overall, it’ll receive $75 million in Defense Department funding over the next five years, along with $96 million from the civilian sector.

The Rocky Road to Globalization:

Immigration as an economic issue.  Who gets the immigrants out of their countries?  Who benefits?  How do destiny countries pay for services to immigrants in tough economic times?

Janosch Delcker writes:  After keeping a studied silence about the anti-migrant violence in eastern Germany the past week, Angela Merkel went to visit this town near Dresden on Wednesday to show her sympathy with the asylum seekers. The locals gave her a rough reception, indicating that her open-door policy on immigration is running into stern resistance.

“Politicians, lowlifes!” yelled one man among the booing crowd when the normally popular German chancellor descended from her limousine and turned to wave — from a safe distance — to locals in Heidenau.

After a spate of arson attacks this year against asylum shelters, anti-immigrant protesters last Friday clashed with police in Heidenau during a demonstration against the imminent arrival of a new batch of refugees.

The incident sparked another outpouring of angst about how to respond to a record influx of refugees, which is expected to quadruple this year to 800,000, testing the country’s liberal laws on asylum.

Overall in Germany, the population appears to support the idea of providing shelter to people fleeing persecution or violence in their homeland. In a poll by public broadcaster ZDF, 60 percent said they believed the country could cope with the arrivals.

Another right-wing party, Alternative for Germany, which was founded in 2013, has won seats in the European Parliament and German state assemblies, especially in the former communist east, mixing Euroskepticism with calls for restrictions on immigration.

Saxony and other eastern states where the far-right thrives are also redoubts of nostalgia for the days of the German Democratic Republic, when the state provided jobs, housing, health care and schooling and immigration was almost unknown.

Jennifer Carpenter and Robert Whitelaw write:  The government promise of investor protection runs deep in China. To stand by and let the stock market seek its own level will take a strong stomach. In a country where markets are routinely managed and defaults are rare, investors may feel betrayed by the government’s lack of direct stock market intervention to mitigate the 15 percent drop this past Monday and Tuesday, especially after the propping up we saw last month. To let the market reveal new pessimism about China’s growth prospects will even further test the nerves of a government accustomed to managing information flow.  Does China Protect Investors

However, while this week’s monetary policy measures targeted at the broader economy may be warranted, direct stock market intervention causes more problems than it solves. If China’s regulators can stand their ground, this week’s turmoil will provide them with an opportunity to clarify their stock market regulatory stance, reduce distracting policy uncertainty, let China’s stock prices find their fundamental value, and continue on the promised reform path to more sustainable economic growth.

Stock markets are messy and the price discovery process can be roiled by exuberance on the upside and panic on the downside. But these same emotions are precisely what underlie the market’s ability to generate new information so effectively. Greed and fear drive investors to produce private information about potential gains and losses and buy and sell stocks accordingly. The clearing of these trades then aggregates this diffuse information into public signals to corporate managers and other investors, leading to more efficient corporate investment and capital allocation across firms.

Our research suggests that, contrary to perception, China’s stock prices have been surprisingly informative about future corporate earnings and have been generating useful signals for managers.

Bloomberg writes:  For years, China’s leaders have wanted the world to acknowledge their economy’s leading role in the global system. This week they got their wish. Sadly, the circumstances weren’t ideal.

The crash in global stock markets began with gloom about China’s prospects and muddle over what the authorities in Beijing intend. Global markets may be calming down, but the confusion hasn’t gone away. The Chinese government and its critics all need to think a bit more clearly about what is going on.

In the past few days, China has been a whipping boy for everyone from Japan’s finance minister to U.S. Republican presidential hopefuls.  Its central bank is accused of waging a currency war with its devaluation of the yuan two weeks ago. Before that, critics chided Chinese authorities for perpetuating a stock-market bubble by intervening extensively in equities; this week’s sell-off accelerated when the government declined to prop them up.

The world doesn’t seem quite sure what it wants from China’s leaders. Critics scold Beijing for boosting stocks, then panic when they don’t. They insist market forces be allowed to set the yuan, then howl when those forces push it down. They tell China to accept slower growth as the price of rebalancing its economy, then clamor then for stimulus when the economy slows.

To be sure, there’s confusion in Beijing as well. Leaders have promised to shift the economy onto a more sustainable growth path that’s based less on exports and more on services and domestic demand. But they’ve held to an unreasonably high growth target.

There’s an underlying tension in that mix: The leadership is sincere about its desire for markets to allocate capital more efficiently, yet mostly in order to preserve the power and position of the Communist Party. Party needs come first.

Beijing’s reluctance to surrender more fully to market discipline is understandable given the daunting list of challenges leaders face. But they’re only storing up problems for the future.

The government is paying the price now for having artificially boosted stocks earlier. The central bank is thought to be spending an estimated $40 billion a month to keep the yuan from falling further and prevent capital flight. Authorities are reportedly considering raising an additional $161 billion in bonds to fund new infrastructure projects. Some of these may make good sense, but the fact that Beijing is directing the program raises doubts..

More forthrightness now would buy China goodwill from markets when the government really does need to intervene — as the U.S., Japan and the European Union have all repeatedly judged to be necessary. Chinese leaders should remember that the currency that matters most is their credibility.

The Rocky Road to Globalization

Throughout the world, desirable advanced economies who provide services to their citizens are being hammered by waves of immigrants from less developed and supporting economies.  Germany’s Chancellor Merkel says that we must welcome these people who are endangered in their home countries.   In the US whether or not to welcome immigrants and embrace people who have come to this country without going through the required legal channels is one of the prime these of the 2016 Presidential debate.

Ian Traynor writes:  Thousands of refugees were heading towards Hungary and the EU border as the German chancellor, Angela Merkel, said the union’s member states must fairly share the burden of dealing with Europe’s biggest migration crisis since the second world war.

Merkel said Europe needed to act together to deal with the chaotic scenes in Greece and the western Balkans as desperate migrants tried to reach the EU. “The current situation troubles us greatly,” she said.

Germany and France are to draft common proposals on immigration and security to deal with the worsening emergency. On Monday, Merkel said they could include building new registration centres in Greece and Italy to be run and staffed by the EU as a whole by the end of the year.

She said: “Time is running out. EU member states must share costs relating to this action.”

The two leaders also said that the EU must draw up a unified list of safe countries of origin. Asylum seekers arriving from these countries should be swiftly returned.

Berlin is increasingly determined to push a new system of mandatory quotas for refugees across the EU despite the issue being rejected by EU leaders.  Many immigrants spend three days on Greece’s northern border after Macedonia refused to allow them to enter.

At the Serbian border crossing of Miratovac, refugees walked three miles to a reception centre in the southern town of Preševo. Most carried their belongings in rucksacks and men carried small children on their shoulders. In Preševo, they received medical aid, food and papers legalising their transit through the country.

Germany is warning of reintroducing national border controls unless other countries step up to the plate and share the refugee burden more equitably. Proposals from Brussels in May to introduce mandatory refugee quotas across the EU on a small initial scale were rejected by Spain and most of eastern Europe. At their June summit, leaders debated until 3.30am and agreed nothing.

Since then, the number of migrants entering Greece, Italy and the Balkans has soared, with Germany predicting the arrival of 800,000 asylum seekers this year and the figures for the EU projected to triple compared with 2014.