Tuesday, November 4, 2014

Downward Trending Crude Oil Prices: Good For The Global Economy?

Even though crude oil producing countries had voiced their “howls of derision” over plunging crude oil prices, but is downward trending crude oil prices good for the global economy? 

By: Ringo Bones 

Crude oil producing countries and multinational crude oil extraction companies had been complaining since the 2008 global credit crunch that if crude oil prices fall below 100 US dollars per barrel, there would be no economic incentive anymore for crude oil exploration and develop new finds. But most economists beg to differ that a downward trending crude oil prices will be good for the global economy and primarily benefits the developing economies. Both premises can’t be true, right? 

After Operation Desert Storm, economists around the world noticed that heavy crude oil dependent countries with still developing economies – like Bangladesh for example – experiences a 1 percent rise in GDP for every 10 US dollar per barrel fall in crude oil prices. Though why these countries haven’t moved away from crude oil may be blamed on conservative business think tanks in Capitol Hill making their economies more crude oil dependent every decade after Operation Desert Storm. 

During the start of 2014, crude oil was trading at 110 US dollars per barrel and by October 20, 2014, it was already down to 85 US dollars per barrel. Bond and hedge fund pundits are already predicting crude oil prices to fall to 70 US dollars per barrel before the end of 2014 while 50 US dollars a barrel crude oil prices is not out of the question during the first quarter of 2015. Would the Rockefeller Foundation moving away from crude oil sourced funding near the end of September be playing a part of this downward trending crude oil trading price? Who knows, at least downward trending crude oil prices  has a geopolitically advantageous effect of curbing the deleterious military adventurism plans of fascist-leaning crude oil producing states like Iran and the recent Vladimir Putin run Russia. 

Tuesday, September 23, 2014

Rockefeller Foundation Quitting Crude Oil: Not Economically Viable?

Some might see it as a cheap publicity ploy taking advantage in the wake of the upcoming UN Climate Change Summit but do we all benefit from the Rockefeller Foundation quitting crude oil?

By: Ringo Bones 

As someone who experienced the hardships that resulted from both Operation Desert Shield and Operation Desert Storm first hand, it seems that the Rockefeller Foundation suddenly deciding to quit their hedge fund funding from crude oil and other non-renewable fossil fuels almost cold turkey 23 years after Operation Desert Storm seems like a cheap publicity ploy taking advantage of the upcoming UN Climate Change Summit this September 23, 2014 and in the wake of the very recent Climate Change action demonstrations in New York City back in Sunday, September 21, 2014 that also took place almost simultaneously in other 160 countries like the UK, Afghanistan to Australia over world governments’ lack of action on tackling the root cause of climate change – i.e. excessive fossil fuel usage. If the Rockefeller Foundation – a charitable foundation largely funded by the big crude oil boom of the 20th Century – quits crude oil and other non-renewable fossil fuels and switch to greener renewable energy sources, will it benefit the rest of us, the lowly 99-percent?

Given that the United States is now the world’s leading producer of crude oil – and it has been since the middle of January 2013 – America’s Big Oil heir, the Rockefeller Foundation - suddenly quitting crude oil almost cold turkey could send anyone beholden to Capitol Hill’s “Crude Oil Lobby” in a suicidal panic. Fortunately, it hasn’t, but to those in the know and who have no control whatsoever on how their pension funds are invested are now doubtful of the future of their pension funds now that the Rockefeller Foundation has quit crude oil, coal and other fossil fuel based hedge fund funding almost cold turkey. Will the Rockefeller Foundation quitting crude oil cold turkey prove to be not economically viable in the long run?

Thursday, September 18, 2014

Alibaba IPO: Caveat Emptor?

Even though it may have an estimated stock market value of 170 billion US dollars when it debuts at the NYSE this Friday, should potential investors be wary of Alibaba?

By: Ringo Bones

Started by Jack Ma, a former English teacher from Mainland China, back in 1999 as a way for small to medium scale manufacturers in The People’s Republic of China access to the global retail market, Alibaba is now poised to debut its IPO on the New York Stock Exchange this Friday, September 19, 2014. With an estimated stock market value of 170 billion US dollars, should investors be wary of investing in Alibaba?

Even though the Hong Kong Stock Exchange had forbade the entry of Alibaba on its trading floor earlier this year, it has managed to displace both eBay and Amazon when it comes to e-commerce on Mainland China back when eBay had 80 percent of the Mainland Chinese e-commerce market. At present, Alibaba now has 80 percent of all Mainland Chinese e-commerce in the bag, but why did the regulators at the Hong Kong stock Exchange denied its entry?

Emerging markets investing guru Joseph Mark Mobius of Franklin Templeton Investments recently cited his misgivings on the upcoming IPO of Alibaba in the NYSE due to the “nebulous” legalese surrounding investor by-laws when they buy a share of Alibaba. Is this based on the old adage of “a law is seldom enforced the further it is from its point of legislation”? Investing guru Mobius cites it could be and would be a problem.

According to Mark Mobius, even though Alibaba might become the United States’ biggest IPO for 2014, he recently cites the “inherent risks” that might be involved if one is so inclined in buying their piece-of-the-pie of Alibaba. The fly-in-the-ointment involves the still nebulous legalese that’s still to be resolved about how much control shareholders have on Alibaba. Currently, investors virtually don’t have a say when it comes to governing Alibaba and according to Mobius, CEO Jack Ma and his inner circle could leave late investors high-and-dry when they decide to no longer give them their fair share of dividends from Alibaba’s profits due to the fact, at the moment, Jack Ma and his inner circle could legally could under Mainland Chinese laws.

Saturday, September 6, 2014

The European Union’s Russian Sanctions: Not Economically Viable?

Even though there’s been an incremental ratcheting up of sanctions ever since Russian President Vladimir Putin unlawfully annexed Crimea after the Sochi Winter Olympics, are the EU sanctions against Russia economically viable? 

By: Ringo Bones 

Maybe the question could have been “economically viable to whom?”But ever since the E.U.’s economic sanctions against Russian President Vladimir Putin unlawfully annexing Crimea and secretly supporting the armed insurrection by ethnic Russians in the eastern part of Ukraine that eventually resulted in the Malaysian Airlines Flight MH17 as the “collateral damage” of the conflict had been incrementally ratcheted up in order to bring Putin’s regime back from the brink, it seems that not all of the European Union countries are unified against Putin’s ongoing military adventurism in eastern Ukraine. 

While the sanctions now centers on the ban of the Russian government exporting “dual-use” technologies that can potentially be used by its ongoing military adventurism in the eastern part of Ukraine, Russia will undoubtedly react to the E.U. sanctions by restricting the country’s natural gas imports to Western Europe given that the chill of winter is only a couple of months away. But many “well-off” E.U. states that are dependent of cheap Russian natural gas are still “sticking to their guns” when it comes to carrying on the economic sanctions until the rule of law returns to the Russian – Ukraine territorial dispute. 

Even though majority of E.U. countries favor economic sanctions against Russia despite of the resulting overall economic slowdown, the Czech Republic and Hungary seems to be leaning towards Vladimir Putin’s Russia. From the agricultural trade perspective, Russia comprises 10-percent of the overall purchase of all agricultural goods produced in the E.U. that’s worth around 15.8 billion U.S. dollars and it initiated a “slight” worry by Poland’s apple producers who exports most of their produce to Russia. By way of comparison, the United States only sells 1.3 billion U.S. dollars worth of its agricultural products to Russia. During the last few weeks, the E.U. Agricultural Commission had launched a task force to analyze the long-term economic impact of the Russian trade sanctions. Would the E.U. decide to continue to ratchet up the sanctions against Russia to bring it back from the brink – or will the E.U. decide to do a more pro-active response if it finds out that a decisive military strike is more economically viable to end the East Ukraine conflict than trade sanctions? 

Could Ebola Ruin The Global Chocolate Industry?

With West Africa’s 2014 cacao harvest just a few weeks away, could the “Ebola lockdown” ruin the global chocolate industry? 

By: Ringo Bones 

The world’s travel advisory powers-that-be had been telling everyone planning to visit Western African countries to avoid unnecessary trips in order to avoid catching or inadvertently spreading the Ebola virus, with the West African 2014 cocoa harvest just a few weeks away will the planned “Ebola lockdown” not only ruin local economies in West Africa like major cocoa / cacao producers like Ivory Coast but could eventually skyrocket global chocolate prices? Given what’s happening during the last few days in Guinea, Liberia, Sierra Leone and Nigeria and the planned 4-day Ebola lockdown by Sierra Leone scheduled for September 18 to 21, it looks like Ebola could negatively affect all business activity within the region. 

Even though Medicines Sans Frontiers have stated that the Ebola lockdown could only have a marginal effectiveness in halting the spread of Ebola within the region and to other parts of Africa, it seems that various governments in the region will be implementing their own lockdown procedures nonetheless. This spells doubly bad for the Ivory Coast where the entire country’s economy is virtually cocoa based and very dependent of not just buyers from nearby countries, but also of buyers overseas as well. It looks like the ongoing Ebola tragedy could have a negative impact on our upcoming Christmas chocolate consumption as well. 

Wednesday, July 30, 2014

BNP Paribas: Unfairly Targeted?

With the US government’s on-going campaign to make the global financial business more ethical and socially responsible, was the French banking giant PNB Paribas unfairly targeted? 

By: Ringo Bones 

The very “punitive” fine of 8.9 billion US dollars to be paid by the Paris based French banking giant BNP Paribas for dealing with countries and entities blacklisted by the US government seem to be over-the-top when it comes to punitive fines recently paid by financial institutions who either never disclosed the full extent of the risk of their iffy financial instruments they are peddling or their dealings with business and/or government entities blacklisted by the US government. And also, BNP Paribas’ license / permit to trade in US dollars is also suspended. But is the almost 9 billion US dollar fine of BNP Paribas rather excessive and make one think that BNP Paribas is unfairly targeted by US financial authorities? 

In monetary terms, 8.9 billion US dollars is about four times the annual profit of BNP Paribas and the very amount – according to financial pundits – seems very excessive when it comes to fines for violating sanctions that are not mutually ratified between the US Congress and the French government. Although in the eyes of every citizen closely following news events since the September 11, 2001 Terror Attacks, BNP Paribas dealing with US government blacklisted entities like Iran and Sudanese strongman Omar al Bashir – especially during the time of the Darfur Region Genocide – an 8.9 billion US dollar fine seems justifiable for such a morally reprehensible act by a large global financial institution. 

But justifiable as the 8.9 billion US dollar fine may be, financial pundits are concerned over America’s “dollar power” –i.e. the US dollar being the world’s de facto universal currency since the end of World War II and the US government's sole ability to choose or deny whatever country can trade it. Often termed as America’s strategic weapon that’s more powerful than the country’s thermonuclear weapons arsenal, America’s “dollar power” – the US government’s ability to chose and suspend which government is able to trade in US dollar funds - is widely criticized due to the fact that it is prone to abuse and has almost nonexistent appeals process that has been recently exploited by “vulture fund” managers.

Tuesday, July 29, 2014

Is Barclays’ Reputation At Risk Again?

Given the ongoing cleaning up process by the US government in order to make the way Wall Street conduct its business more ethical will, the international banking giant Barclays’ reputation at risk again? 

By: Ringo Bones 

The US government has been very busy inflicting punitive fines on major Wall Street financial firms who apparently had forgotten how to run their business in an ethical manner that eventually lead into the 2008 global financial crisis. But will the recent lawsuit by the New York Attorney General Eric Schneiderman of Barclays for not fully disclosing the extent of the risk of its financial instruments to its investors make Barclays wish that it had really good reputational risk insurance? 

The lawsuit centers on what is called Dark Pool Trading where 40 percent of the trading is done away from the public. Far from being fair under existing financial trading laws, the Dark Pool trading scheme put those who are using superfast computers that enable them to perform high-frequency trading at an unfair advantage over their competition. Even though it is extremely profitable, it exposes investors to increased risk of losing all of their investment. Hedge fund managing schemes that use the pension funds of their trusted investors in the Dark Pool Trading scheme are more often than not aren’t warned of the risks involved. 

Unfortunately at present, 40 percent of US shares are traded outside of the normal public trading channels – that is via Dark Pool Trading. And due to its much lower transactional overhead, this is the very characteristic that is used by Barclays as a “unique selling point” of Dark Pool Trading while not fully disclosing the full extent of the risks involved. Will a lawsuit on Barclays centered on the bank’s inability to warn and protect their clients from aggressive high frequency trading ever make the business at Wall Street more ethical again?