Monday 30 June 2014

BNP gets a dose the new American financial medicine

When a nation state is on its knees, it often is reduced to petty theft and abuse of law to try to raise revenues. Where possible, the best targets are 'foreginers' who never get a decent press back home, are seen as easy pickings and due to the lack of any real international law, have limited cause for redress.

In recent years, the USA has been very much at this game. As I wrote last month, the US was in the process of fining Credit Suisse for its activities. At least with Credit Suisse, one could argue that US taxes had been avoided by their citizens and Credit Suisse had been helpful to these citizens in a way detrimental to Uncle Sam. Again, with the large fine for HSBC last year, it was for facilitating money laundering on the behalf od Mexican Drug cartels, again an existential threat to the US.

This proposed fine for BNP Paribas is of a different order though. The fine may well come out at a full years profits or $11 billion. This is for facilitating trade with Iran. This is not illegal in France or Iran, only in America. None of the trades were through American businesses. So this law is pure extraterritoriality. The price of non-compliance is losing your New York Banking licence.

America may argue it has a big interest in keeping Iran down, but as of last week there is strong speculation that Iran and the US are going to end up as Allies against ISIS in Iraq (in fact, this has already happened on the ground in effect). But again, the fine is a shakedown of a foreign bank in the US. For balance is should be noted that the US has also levied large fines on its own banks - but this BNP Paribas one smacks of pure greed. President Hollande phoned President Obama to complain and was give short shrift.

I can only see a future where the US uses this financial power ever more which is bad for the health of world markets and world capitalism as the markets are bent to the will of the State. In the long-term this is very bad for the US, as it undermines the Capitalist ethic that served the Country so well over the past 3 centuries.


Nick Drew said...

the roles of both Obama and Bush Jr in undermining the rule of law have been extraordinary

disproportionate US military muscle is begining to look ever more bizarre, some cartoon pea-brained monster: very depressing

decline & fall: all the Chinese need to do is play things very long - and they are just the people to do it

phil5 said...

Also see BP

Blue Eyes said...

Danegeld. Or Rent.

Budgie said...

CU, I have many times before now observed that Jonny Foreigner looks after himself, so I am not surprised by this.

The fact is that it is perfectly possible for a free market, like democracy, to exist within a nation. Not least because the law can apply, and be seen to apply, fairly and universally to all.

But much though some of our masters want it, there is no NWO, no global demos, no global democracy, no global universally accepted law, and therefore no real global free market.

Nations like the UK that try to practice global, non-national, free market trading just get trampled on.

Anonymous said...

They do it because they can. If you don't like it the answer is simple, roll up your sleeves and out-grow or out-military America, then you can make the realpolitik. As an old soldier said 'you can't fart against thunder'. Irritating maybe but them's the rules and no good whining if you get caught. As for greed, I doubt it, more the Big Willy syndrome. Ultimately self defeating as you say. I note BTW that China has no difficulty at all buying oil from Iran - probably with dollars.

One solution might be to abandon electronic communication and return to gentlemen in top hats marching round the City - and on the Eurostar - carrying handwritten paper.

Anonymous said...

Roger: " If you don't like it the answer is simple, roll up your sleeves and out-grow or out-military America,"


The UK has spent the last sixty years developing a sclerotic command economy, run by civil service clowns and cheap politicians with big but stupid ideas.

If we were ever to have a chance of actually competing with our international rivals, including the US or Germany, we'd have to utterly dismantle the UK command economy that was put in place during the 1914 - 1918 war and never removed.

Blue Eyes said...

To be fair, the US economy is on its arse and the UK has better long-term prospects than Germany. Roger is right though, if you want to set the agenda, you need to be the one whose threat to withdraw a trading licence carries weight. A system which requires licences to trade will always end up corrupt. It's the guild system all over again. Ultimately the US will suffer.

The 1950s thinking was that European countries need to merge to be big enough to wield influence. I prefer the Singapore option.

Anonymous said...

BE: "the UK has better long-term prospects than Germany."


BE: "I prefer the Singapore option."

Yea, but that only works in a scenario where there is a pax. Pax Americana is on the retreat - if only because they have so screwed their economy that they will no longer be able to maintain the military they have.

Blue Eyes said...

Anon: yes, and it is not a controversial or particularly secret proposition. The big problem for shouty internetters is that we are not all DOOOOOOOMED.

The UK can defend itself from Chinese marauders for a while yet.

CityUnslicker said...

We are all doomed BE, a little over three score and ten I believe.

Anonymous said...

BE: "The UK can defend itself from Chinese marauders for a while yet."

Yea, we could probably do so indefinitely too if we radically reformed our economy. That is about 10% or less government operated and 90% private and or real charities.

Singapore though? China may have something to say about that.

Bill Quango MP said...

When Britannia ruled the waves the navy was the size of our next two rivals combined. So we could fight anyone, anywhere.

Rivals, though they tried, could never outbuilding the British empire as the empire had a 100 ship head start, gifted from Trafalgar.

It was only financial power that allowed this. Once that power was in decline it was impossible to maintain the military at the size considered optimal. So it went to optimal. Then acceptable. Then .. Then we looked round for treaties and allies to cement our power.
Which didn't work too well.

The USA is currently classifying all sorts of odds and sods tankers, support ships, repair ships, floating stores ships, hospital ships and patrol craft & coastguard ships too I shouldn't wonder as front line vessels.

They never have before.

The us is very sensitive to 'ship numbers' and needs to keep 280 on active service.

But for the first time they have fudged the figures to keep the per strength at 280 as ships are retired.

It's a trick we ourselves did many years ago. Adding all sorts of junk to the frontline fleet to bolster numbers.
Doubt it fooled the Russians. Certainly didn't the Argentinians.

Anyway pax America may be unwinding. But they have a long way to go yet. Like our old empire, or the old Spanish one, they start with such huge advantages built up over decades.
Take more than one Bad politician to ruin it.

But then they've now had three, two term, nation destroyers in a row.

Blue Eyes said...

BQ I reckon Gordoom would have a pretty good stab at screwing America in one term

CityUnslicker said...

Bit harsh on Clinton there BQ. By US standards easily the best President they have had in my lifetime alone with Reagan.

Bush and Obama though, yuck.