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? 

The JP Morgan Chase 13 billion US Dollar Fine: Way Excessive Mea Culpa?

With a very punitive 13 billion US dollar fine to be paid by JP Morgan Chase for making millions of Americans loose their life savings does the punishment truly fit the crime? 

 By: Ringo Bones 

The US Government finally made JP Morgan Chase to pay a 13 billion US dollar fine after misleading millions of retail investors out of their “life savings” via mortgage back securities that eventually resulted to the 2008 global credit crunch and the September 15, 2008 “financial chaos” of the United States. Given that the action of JP Morgan Chase is clearly morally reprehensible from a corporate social responsibility standpoint, but is the 13 billion US dollar fine rather way too excessive and over the top? 

Back in 2012, JP Morgan Chase earned a profit of 20 billion US dollars and will likely to do better before the end of 2013 – which during at that time, the US government reached the decision to make JP Morgan Chase pay the 13 billion US dollar fine. And during the last quarter of 2013, JP Morgan Chase share prices where in a 10-year high so the fine may be commensurate with the financial companies earnings. And JP Morgan Chase is still currently under investigation for LIBOR Rate manipulation, global FOREX rate fixing and conducting business with firms in Mainland China that are in unfriendly terms with the United States government. But has JP Morgan Chase always conducted its business in a morally deplorable manner? 

When Hitler’s NAZI Germany started its military adventurism in the Sudetenland in order to bring back the territories that historically belonged to Germany, JP Morgan (a few decades before they merged with Chase Manhattan) continued to deal with the Third Reich that also bolstered Adolf Hitler’s ability to underwrite his military adventurism across Europe. It wasn’t until then US President Franklin D. Roosevelt forbade JP Morgan from dealing with the then NAZI Germany that the financial institution stopped dealing with the evil regime. 

Friday, July 25, 2014

Google’s Pornography Advert Ban: Not Economically Viable?

Given that pornography is already a multi-billion US dollar industry in America alone, is Google shooting themselves in the foot in implementing a pornography advert ban?

By: Ringo bones 

Ever since the then US President Ronald Reagan cracked down on America’s pornography industry during the 1980s, the move only inadvertently made it bigger and thus turning it into a multi-billion corporate colossus today that can gamely compete with the aerospace and defense industries. But with the recent decision for an online pornography advert ban, are the powers-that-be at Google shooting themselves in the corporate foot? 

If you follow closely on the goings-on at Google, you couldn’t be blamed if you conclude that Google’s recent decision to ban pornography themed online adverts are driven both politically and emotionally – rather than an economically driven move. After all, the “Meese Report” – As in that big, blue 1,960-page July 1986 Ronald Reagan Pornography Final Report that almost nobody ever reads anymore - has already shown that pornography is not at all harmful to normal level-headed individuals. Could it be that other factors are making the top-tier policymakers at Google decide to implement a pornography advert ban? 

The “alleged” murder of Google executive Forrest Hayes by a high-end prostitute named Alix Tichelman during one of their “heroin orgies” cold be a probably explanation on why Google – a company that chose to run their business in a largely “Bohemian” manner suddenly “turned Republican” almost overnight. This seems like the most plausible explanation of Google suddenly “going GOP” almost overnight. Only time will tell if the “Do No Evil” Google’s recent move could inadvertently transform it into a “Conservative Evil Empire” relatively overnight. 

Wednesday, July 23, 2014

Could Malaysia Airlines Go Bankrupt?

With two very high profile tragic accidents in less than six months, could Malaysia Airlines go bankrupt within 3 years?

By: Ringo Bones 

With passenger compensation that could probably total in the hundreds of millions of dollars due to two very high profile tragic accidents less than six months apart, the long-term economic viability of Malaysian Airlines seems now in doubt. With the still unexplained disappearance of Malaysia Airlines Flight MH370 Boeing 777 that vanished over the southern Indian Ocean last March 8, 2014 and the recent Malaysia Airlines Flight MH17 Boeing 777 shootdown over the pro-Russia separatist controlled part of Ukraine back in July 18, 2014 many in the airline business wonder if Malaysia Airlines would sill be around in the next 5 years. After all, Pan Am went bankrupt and closed its doors back in 1991, three years after the downing of Pan Am Flight 103 over Lockerbie, Scotland. 

According to IATA, Malaysia Airlines only has 15 Boeing 777 that it has recently acquired to its fleet of planes. And in less than 6 months two of them had been involved in very high profile tragic accidents involving the death of all hands on board and the expected compensation payouts that could reach in the hundreds of millions of US dollars. It is safe to say that the future economic viability of Malaysia Airlines is now in doubt. And the airline company’s latest tragic incident had inadvertently diverted press coverage of the 2014 Farnborough International Air Show in southern England where there are new planes on offer that promise lower fuel consumption, lower operating cost – as in more profits for airline companies. It would probably take an extraordinary revamp on how Malaysia Airlines is run could save it from permanently closing its doors in a few years time.