Saturday, May 31, 2014

Bank Robbery

We earlier commented on the improvised foray into foreign policy on the part of the NYPD, backed by an unlikely alliance of local Erinnyes and the New York Post.   The result was a tremendous disruption of French politics, of which most Americans are unaware, nor do they care.
This week, another drama has been playing out, scarcely reported save in the usual bland manner of the fleeting financial bulletins (BNP stock falls on the news; meanwhile in Malaysia …), and analyzed from a political and legal perspective, almost not at all.   

In brief:  The Justice Department is demanding payment from the French bank Paribas, roughly equal to twice its annual income last year (and enough to tip it into the red for the present), for conduct that was quite legal in Europe, where the transactions in question were conducted, but which runs afoul of US regulations.   The purported legal basis for this:  the transactions were denominated in dollars (libellés en dollars).   That is rather as though we were to demand damages from some Indian pop-star, claiming jurisdiction simply on the grounds that the song in question was sung in English, over which we claim a kind of worldwise conservatorship.

Outre l'amende, BNP Paribas a fait appel aux meilleurs avocats de Wall Street pour éviter une autre sanction potentiellement lourde: la suspension temporaire de son droit à mener des transactions en dollars. Une telle limitation, outre son caractère humiliant, affecterait sérieusement nombre d'activités de la banque, pas simplement aux États-Unis. La loi de l'État de New York interdit à une banque de maquiller la documentation de transactions en dollars qui viennent se dénouer auprès de la Fed de New York, même si elles ont eu lieu hors des États-Unis. Or BNP Paribas est accusée d'avoir caché aux autorités américaines de multiples transactions en dollars, pourtant conformes au droit européen.

Adding spice to the ragout is the detail that the regulations in question, far from being an application of generally recognized ethics or equity, were pushed through by particular political lobbies, whose agendas are purely their own, and do not align with American interests save now and then by accident.   To wit:  the pariah status of Nation X (pushed through by partisans of what, during Iran-Contra, might not be named, other than as “Country A”), and of Nation Y (in obeissance to an even tinier but quite violent core of operatives bent upon restoring the Casino Culture to Country C).
Upon these narrow fanaticisms, the tip of the world’s inverted financial pyramid  now wobbles.

 “Nice little bank y’got there…
Be a shame if somefing was to happen to it.”

That this development goes uncommented at home -- a nation with a historically casual attitude towards breaking other people’s china -- is unsurprising; but foreign reporting has likewise been surprisingly muted.   We must delve into the Readers Comments section  to find opinions of the sort we might seek on the editorial page, though they be mentioned only to refute them:

Wie lange noch wollen sich die Banken der Welt von den USA vorführen lassen, und mit welchem Recht? So lange jede Bank für sich kuscht, werden die USA ihre Erpressungen fortsetzen können. Vielleicht hören wir ja aber bald mal: Banken aller Welt, vereinigt Euch...

Il y a une chose très pourri sur le fond (indépendamment que certaines transactions de la BNP soient condamnables ou non).
Les Américains nous ont imposé dans le passé le dollar US comme monnaie de référence après l'abandon du standard or (Bretton-Woods) en forçant ainsi, tous les banques de travailler en USD. Maintenant, ils prétendent que toute transaction en USD tombe sous le coup de leur justice. Le moindre chose qu'on puisse dire, que cette manipulation est extrêmement hypocrite.
Monsieur Hollande ferait bien d'annuler l'invitation officielle de M Obama pour le 6 Juin (s'il veut venir à titre privé, c'est son affaire). C'est la seule chose qui ferait réfléchir tout le monde.

There have long been grumblings about replacing the dollar as the unique reserve currency;  this sort of overreach may hasten the day.

A Suisse financial journalist comments here:

"We'd like to make a withdrawal."

~  Posthumous Endorsement ~
"Seems like I had it all backwards:
Don’t rob a bank from the sidewalk like I did;
rob it from the boardroom.
Oh well, too late now.
But never too late for an exciting mystery --  "
(My name is Jesse James, and I approved this message.)
~         ~

Ten billion big ones  is not chump change.  One reader puts it in perspective:

10 Milliarden Dollar, das entspricht dem Jahreseinkommen von 400.000 arbeitenden Otto-Normalverbrauchern.

 [Note:  "Otto-Normalverbraucher" = Joe Bloggs.]

Ah well -- A deadbeat raises the lolly however he can.  And ten billion is just about what Britain has just awarded itself, with some creative accounting:

The British Government has just announced, through the statistics office the ONS, that they will be adding around £10 billion to estimates of what the UK’s GDP actually is. This is to account for the activity going on in the drugs and prostitution sectors.

[Update]  It now appears that, in addition to a whopping fine, the U.S. is demanding that Paribas fire certain employees that have displeased their foreign masters.   The demand seems extraordinary -- what possible jurisdiction could apply? -- but a parallel does spring to mind, from the current offering of “24”, “Live Another Day”.  Here, some terrorists have hijacked a fleet of drones and have threatened to incinerate thousands unless U.S. President Heller give himself up.
Not a pleasant parallel.

[Flash update]  This just in!
The Supreme Court of China has found the U.S. banking sector guilty of doing business with Taiwan, and has assessed damages of ten trillion yuan.  Failure to promptly comply will result in an immediate cessation of Chinese purchase of T-bills, and calling-in all its loans, resulting in a swift collapse of the American economy.
In other news, OPEC has determined that the United States is guilty of commercial dealings with Israel, contrary to Islamist law.    Oil exports have been halted until the guilty parties are turned over to Hizballah for trial.

Sauce for goose, is gander-sauce

In another unexpected development, the Neighborhood Association of Monogamy Lane, Littletown USA, where Dr Justice and his bride and their companion-hamster make their home, has assessed the worldwide media the round figure of 10 quadrillion euros, for having repeatedly violated the airspace above their sylvan cul-de-sac with unauthorized transmission of electromagetic waves.  Early analysis suggests that the Association might be willing to settle for a lower figure in return for lifetime free streaming of “Leave it to Beaver”.

[Classroom assignment:  Figure out which portions of this post are satire, and which are straight news.  Harder than you might think.]

[Update 1 June 2014]  Finally, some politically alert commentary is appearing in the mainstream press, to probe beneath the lid.  Turns out the Credit Suisse shakedown was also questionable:

In Europe, people are beginning to question the continual stream of investigations, indictments and regulatory fines involving European banks. Some even go so far as to accuse US regulators of pursuing a “vendetta” against European banks to appease public anger about the banking industry without harming the US industry. The dominance of European banks on the US regulators’ hit list is indeed noticeable, and not just for sanctions-busting: European banks also feature prominently in regulatory investigations into rigging of benchmark rates.

But the US regulators don’t need to be “picking on” European banks for those banks to feature prominently in criminal prosecutions for sanctions breaking and tax evasion. Internationally, there is no consistency of law. The offenses for which these banks have been fined are not necessarily offenses in their countries of origin.

Consider Credit Suisse’s recent conviction for “conspiracy to evade taxes”. Credit Suisse helped US citizens to evade tax. Under US law, both Credit Suisse and the customers involved were guilty of a crime. But Credit Suisse is a Swiss bank, and tax evasion is not a crime in Switzerland – but disclosing customer information is.

In these two cases,  then, the United States is not merely acting as international traffic cop, but as enforcing its own local regulations abroad -- ticketing Englishmen for driving on the left, as it were.
Now, I am not arguing from any position of blanket anti-interventionism. There are indeed a few unfortunate nations that seem perennially incapable of managing their own affairs.   But France and Switzerland are not among them.

[Update D-Day]   A disparity in press coverage across the Atlantic:

Une amende atteignant 16 milliards de dollars a été évoquée dans le cadre des débuts des négociations entre BNP Paribas et les autorités américaines, rapporte ce vendredi Reuters. De son côté, la presse américaine continue d'évoquer un montant compris entre 8 et 10 milliards de dollars.

And an interesting reader’s-comment on that page:

Déjà le 16 avril 2014 ( Le "diktat" du président américain oblige Renault à cesser toute activité en Iran. Faute de quoi, l'Alliance Renault-Nissan risquerait de ne plus pouvoir commercer avec les Etats-Unis. Renault a produit à travers ses partenaires 100.000 voitures en Iran l'an dernier... Déjà, PSA avait dû se retirer en 2012 sous la pression de GM. Un manque à gagner pour l'industrie tricolore!
Après 14 ans à l’Elysée et juste avant de mourir Mittérand écrivait:
« la France ne le sait pas, mais nous sommes en guerre avec l’Amérique. Oui une guerre permanente, une guerre vitale, une guerre économique, une guerre sans mort, apparement.
Oui, ils sont très durs les Américains, ils sont voraces, ils veulent le pouvoir sans partage sur le monde.
C’est une guerre inconnue, une guerre permanente, sans mort apparemment et pourtant une guerre à mort ». 27/1/97 le dernier Mitterand de Georges Marc Benamou.


We commented here on the bizarre American mishandling of the reparations and interallied-debt question after WWI.  (Usually this issue is depicted with France as the intransigent, and Wilson as the voice of reason.  Wilson was the voice of reason on this issue, but the rest of the country was not.)  This was more than a fleeting kerfuffle;  a distinguished chronicler who worked much of his life in France and Germany during the crucial years, summarizes the matter thus:

For more than a decade, the wrangling over war debts blew ill-feeling to and fro across the Atlantic.  By the time Hitler came to power in Germany at the beginning of 1933, the great alliance of the three Western democracies, which had humbled the Nazi dictator’s predecessors in 1918, was in ashes.  It was not to be revived, so far as the Americans were concerned, until Hitler had conquered France, put Britain in mortal peril, and declared war on the United States.
-- Wm Shirer, The Collapse of the Third Republic (1969), p. 152

Have a care, gentlemen;  have a care …

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