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. 

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.

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.