Category Archives: Finance

Panama Papers: The case of the silent watchdog


Back in the fictional London of 1897, if criminals struck the prominent, there was only one person to call, Sherlock Holmes.

In The Adventure of Silver Blaze, Arthur Conan Doyle wrote about the case of a famous racehorse, abducted before a major race.

After visiting the scene of the crime, a rural farm, Holmes discusses his findings with Inspector Gregory of Scotland Yard, when the Inspector asks a question:

“Is there any point to which you would wish to draw my attention?”

“To the curious incident of the dog in the night-time.”

“The dog did nothing in the night-time.”

“That was the curious incident,” remarked Sherlock Holmes.

Needless to say, as Holmes had correctly inferred, the case was an inside job.

Fast forward 119 years and the same question is equally relevant in the wake of the Panama Papers leak, that massive cache of data revealing the names of the members of the global elite — including some of the planet’s mpost powerful drug cartels and criminal syndicates — who available themselves of the services of a Panamanian law firm specializing in create covert tax shelters hidden under a bizarre network of pseudonyms and false fronts.

It’s been three months since the documents were first leaked to journalists and findings were reported in some of the planet’s leading publications and many governments have requested their own copies.

Many governments, except the government of the world’s richest nation, where no requests have come from the Department of Justice of those committees of the House of representatives and Senate charged with oversight of the institutions of power.

From the McClatchy Washington Bureau:

The inaction raises questions about the response by Congress and the Obama administration to the unprecedented leak that rocked governments in Iceland, Pakistan and the United Kingdom and prompted investigations worldwide.

“The biggest financial scandal involving offshores is greeted with a yawn by U.S. law enforcement officials?” said Charles Intriago, a former federal prosecutor and money-laundering expert in Miami. “It doesn’t make any sense that a pot of evidentiary gold is going unpursued by the U.S. Department of Justice.”

In the weeks following the April 3 publication of stories across the globe about hidden offshore fortunes, President Barack Obama vowed to work with Congress to tackle reform aimed at offshore companies. His Justice Department declared that it “takes very seriously all credible allegations of high-level, foreign corruption that might have a link to the United States or the U.S. financial system.”

Yet as of June 23, Panama said it had not received a single request from the United States for access to the data seized by Panamanian authorities from Mossack Fonseca, the law firm at the heart of the Panama Papers, said Sandra Sotillo, spokeswoman for Panamanian Attorney General Kenia Porcell.

On Capitol Hill, there is also little movement.

Obama’s proposed legislation to change reporting on the true owners of companies does not appear to have found any sponsor. The White House did not respond to questions.

Odd, ain’t it?

Or maybe not, considering all that dark money that fuels the American political machine. . .

The Brexit Boogie: A vote that shook the world


Is the world headed into another Great Recession even before that shockwaves of the last one have settled down?

When one of the world’s two major financial centers pulls out of its continental base, there’s good cause for concern.

But that’s just one of the issues raised by Thursday’s vote.

Here’s a roundup of rumbles. . .

British buyers remorse?

Even before the dust settled, Brits were flocking online to sign a petition for a do-over.

From Agence France-Presse:

More than two million people have signed a petition calling for a second referendum, after a shock vote to pull Britain out of the EU, an official website showed Saturday.

The website of the parliamentary petition at one point crashed due to the surge of people adding their names to the call for another nationwide poll following Thursday’s historic vote.

“We the undersigned call upon HM Government to implement a rule that if the remain or leave vote is less than 60 percent based (on) a turnout less than 75 percent there should be another referendum,” says the petition.

The blame game begins

Guess who’s catching the heat?

Hint: He’s already resigned his job in disgrace.

From euronews:

Blame for the failure to convince British voters to remain in the European Union lies at the door of David Cameron, European Commissioner Günther Oettinger told Euronews.

The Commissioner for the Digital Economy and Society told Euronews that the decision by the Prime Minister to “order” the Commission to stay “out of the game” was a mistake.

Asked whether Cameron was to blame, Oettinger responded: “ I think so, yes. What he did is not acceptable.”

The Commissioner insisted that Scotland and Northern Ireland, which both voted overwhelmingly for ‘remain’, could only rejoin the European Union as independent nations. He predicted that Scotland would “probably” split from the rest of the United Kingdom.

And fear runs rampant

Shrinks call it Separation Anxiety Disorder, and it’s an ailment running rampant these days, especially in Berlin.

From Sky News:

Germany fears France, Austria, Finland, the Netherlands and Hungary may follow the UK and leave the EU, a government paper says.

The finance ministry strategy paper expresses concern that the UK’s historic vote may trigger a Brexit domino effect across Europe, according to the German newspaper Die Welt.

It recommends that the EU enters into negotiations aimed at making the UK an “associated partner country” for the remaining 27 nations.

As it stands, the UK’s exit may cause Germany’s contribution to the EU’s budget to rise by 3bn euros (£2.44bn) a year, the paper adds.

And there’s good cause to worry, reports Reuters:

Britain’s vote to leave the European Union fired up populist eurosceptic parties across the continent on Friday, giving fresh voice to their calls to leave the bloc or its euro currency.

Right-wing and anti-immigrant parties in the Netherlands, Denmark, Sweden and France demanded referendums on membership of the union, while Italy’s 5-Star movement said it would pursue its own proposal for a vote on the euro.

Geert Wilders, leader of the Dutch anti-immigrant PVV party, said he would make a Dutch referendum on EU membership a central theme of his campaign to become prime minister in next year’s parliamentary election.

“I congratulate the British people for beating the political elite in both London and Brussels and I think we can do the same,” Wilders told Reuters. “We should have a referendum about a ‘Nexit’ as soon as possible.”

After the jump, Boldness in Bratislava, a British downgrade, trillions in losses, the pain in Spain, grief in Greece, troubles in Tokyo, and a Schadenfreude alert. . . Continue reading

Headline of the day II: And the echoes continue


From the Guardian:

FTSE 100 closes 4% lower in global market sell-off as Brexit recession looms – live

World markets have slumped in Europe, America and Asia, as economists predict that Brexit vote will push UK into recession

Climate change poses Caribbean drought threat


Continuing with our Thursday drought theme comes a stark warning a dry times ahead for the Caribbean as climate change intensifies.

From the United Nations News Center:

Climate change is expected to increase the intensity and frequency of droughts in the Caribbean, so countries in the region must enhance their capabilities to deal with this and other extreme weather-related challenges to ensure food security and hunger eradication, the United Nations Food and Agriculture Organization (FAO) has said in a new report.

The report, Drought Characteristics and Management in the Caribbean, found that the Caribbean region faces significant challenges in terms of drought, FAO said.

“Drought ranks as the single most common cause of severe food shortages in developing countries, so this is a key issue for Caribbean food security,” said Deep Ford, FAO Regional Coordinator in the Caribbean.

The Caribbean region already experiences drought-like events every year, with low water availability often impacting on agriculture and water resources, and a significant number of bush fires, FAO noted.

The region also experiences intense dry seasons, particularly in years when El Niño climate events are present. FAO said that the impacts of this are usually offset by the next wet season, but wet seasons often end early and dry seasons last longer, with the result that annual rainfall is less than expected.

The Caribbean region accounts for seven of the world’s top 36 water-stressed countries, while one of them – Barbados – is in the top 10, according to FAO.

Impacts of drought on agriculture and food security

With droughts becoming more seasonal in nature in the Caribbean region, agriculture is the most likely sector to be impacted, with serious economic and social consequences, FAO emphasized.

This is particularly important because most of Caribbean agriculture is rainfed. With irrigation use becoming more widespread in the region, countries’ fresh-water supply will become an increasingly important resource, FAO said.

Small-scale, family farmers, are particularly vulnerable to drought – low rainfall threatens rainfed crops and low water levels result in increased production costs due to increased irrigation.

Extensive droughts also cause increased vulnerability in livestock as grazing areas change in nutritional value, with more low quality, drought tolerant species dominating during such dry spells. In addition, the potential for livestock disease outbreaks also increases, FAO said.

There’s more, after the jump. . . Continue reading

Another Brazilian scandal, plus a dead candidate


The continuing disaster that is Brazilian politics has taken yet another troubling twist.

From teleSUR English:

Brazilian federal police made several arrests Tuesday, dismantling a money laundering network linked to both corruption in the state-run Petrobras and a plane crash in August 2014 that killed presidential candidate Eduardo Campos.

After over six years of investigation, police arrested four accused of laundering a total of US$176.4 million.

The plane transporting Campos was allegedly bought with laundered money based on suspicious transactions. The crash killed six others along with Campos, who at the time was polling third in opinion polls, trailing eventual winner, Dilma Rousseff.

Police seized ships, aircrafts and helicopters that were also believed to have been purchased by the network.

The shell companies that the network used also paid companies under investigation in the Petrobras scandal, thought to be used for bribes to politicians.

Hermes, the handbags to wear during the class war


Next up, a story that’s so revolting that you may be revolting by the time you’ve finished watching. . .

What’s the ultimate in plutocratic investments?

One that consistently outperforms all the rest?

Diamonds? Private islands? Picassos?

Nah, it’s purses.

Really.

From the Wall Street Journal:

The iconic bags made by Hermes that trade for a quarter of a million dollars.


The details from Barron’s:

Baghunter, an online platform trading in luxury handbags, compared an investment in Hermès Birkin handbags with the Standard & Poor’s 500 and gold between 1980 and 2015. Birkin’s equestrian-inspired bags had an average annual return of 14.2%, compared with 8.65% for the S&P 500 and 1.9% for gold. Incredulous? The Wall Street Journal reports that a billionaire paid $298,000 in March for a fire-engine-red crocodile Birkin with 18-karat white-gold hardware and 10.08 carats of brilliant-cut diamonds. In 2008, that bag was purchased at an Hermès boutique for $160,000, and, in 2015, Christie’s sold a similar, fuchsia version for $222,928. Leather Birkins start at about $10,000 when purchased at an Hermès boutique, although only top clients are given the chance to do so. When they hit the secondary market, they usually trade at two to three times that price.

Diane D’Amato, director of luxury accessories at Heritage Auctions, says her firm scours the world in search of the bags, and will even hunt a specific model requested by a client for a private sale. The next Heritage auction is in September. Pristine special-order bags (bicolor or tricolor) in addition to exotic skins (crocodile, alligator, lizard) and select colors (“So Black”) are in highest demand. “The best bags to invest in are unusual or unique pieces, either limited editions or special orders,” D’Amato says. We wonder if it’s time to short the carryall.

Quote of the day: Obama’s nuclear madness


While Barack Obama holds the Nobel Peace Prize, he’s one of the most bellicose presidents in recent history

As the New York Times reported last month, “the current administration has reduced the nuclear stockpile less than any other post-Cold War presidency,” a trend confirmed by this graphic analysis from the Federation of American Scientists:

BLOG Nukes

But it doesn’t stop there. Barack Obama has also launched a drive to replace the entire American nuclear arsenal, a process that could cost American taxpayers an astounding one trillion dollars.

But to what end?

That brings us to the QOTD from Andrew Cockburn, writing for TomDispatch:

[I]n the Cold War as today, the idea of “nuclear war-fighting” could not survive scrutiny in a real-world context. Despite this self-evident truth, the U.S. military has long been the pioneer in devising rationales for fighting such a war via ever more “modernized” weapons systems. Thus, when first introduced in the early 1960s, the Navy’s invulnerable Polaris-submarine-launched intercontinental missiles — entirely sufficient in themselves as a deterrent force against any potential nuclear enemy — were seen within the military as an attack on Air Force operations and budgets. The Air Force responded by conceiving and successfully selling the need for a full-scale, land-based missile force as well, one that could more precisely target enemy missiles in what was termed a “counterforce” strategy.

The drive to develop and build such systems on the irrational pretense that nuclear war fighting is a practical proposition persists today.  One component of the current “modernization” plan is the proposed development of a new “dial-a-yield” version of the venerable B-61 nuclear bomb. Supposedly capable of delivering explosions of varying strength according to demand, this device will, at least theoretically, be guidable to its target with high degrees of accuracy and will also be able to burrow deep into the earth to destroy buried bunkers. The estimated bill — $11 billion — is a welcome boost for the fortunes of the Sandia and Los Alamos weapons laboratories that are developing it.

The ultimate cost of this new nuclear arsenal in its entirety is essentially un-knowable. The only official estimate we have so far came from the Congressional Budget Office, which last year projected a total of $350 billion. That figure, however, takes the “modernization” program only to 2024 — before, that is, most of the new systems move from development to actual production and the real bills for all of this start thudding onto taxpayers’ doormats. This year, for instance, the Navy is spending a billion and a half dollars in research and development funds on its new missile submarine, known only as the SSBN(X). Between 2025 and 2035, however, annual costs for that program are projected to run at $10 billion a year. Similar escalations are in store for the other items on the military’s impressive nuclear shopping list.