Mish's Global Economic Trend Analysis

---

• French Bank BNP Paribas Pleads Guilty Criminal Conspiracy Charges, Fined Record $9 Billion; Anyone Headed to Prison?
• Last Minute Concessions and Unreasonable Demands
• Kurds Deputy PM Calls for Decentralized Iraq and Removal of Prime Minister Nouri al-Maliki

French Bank BNP Paribas Pleads Guilty Criminal Conspiracy Charges, Fined Record $9 Billion; Anyone Headed to Prison? Posted: 30 Jun 2014 05:30 PM PDT Today, French bank BNP Paribas plead guilty Monday to criminal money-laundering laws by helping clients dodge sanctions on Iran, Sudan and other countries. As part of the settlement, BNP will pay a record penalty of close to $9 billion. Former ECB president Jean-Claude Trichet said the fine was neither fair, just, nor proportionate and carries risks for the global financial system. CCN Money has the synopsis in BNP Paribas to Pay Nearly $9 Billion Penalty. On Monday in an agreement with the Manhattan District Attorney Cyrus Vance the bank pleaded guilty to falsifying business records and conspiracy in Manhattan Supreme Court. On Tuesday it is expected to plead guilty for violating money laundering laws in federal court with U.S. Attorney Preet Bharara. The bank also agreed to a sanction by the New York department of financial services. It will suspend certain U.S. dollar clearing transaction services through its New York branch for one year. About 30 employees will leave BNP Paribas as a result of the investigation, including several who have gone already, according to the U.S. official.  The fine dwarfs HSBC (HSBC)'s $1.9 billion penalty in 2012 for similar offenses, and the $2.6 billion Credit Suisse (CS) paid in May to settle tax evasion claims. The Wall Street Journal said BNP Paribas would have to slash its dividend and raise billions of euros by issuing bonds. Standard and Poor's has warned it could cut the bank's long term credit rating once it reviewed the size of the fine and the nature of any additional penalties. Curious Thing Curiously, no one goes to prison for money laundering, falsifying business records, or conspiracy charges. But New York Times Deal Book reports Prosecutors Ask at Least 8 Years for Martoma in Insider Trading Case. Federal prosecutors are recommending that Mathew Martoma, a former trader who worked for the billionaire investor Steven A. Cohen, be sentenced next month to at least eight years in prison for insider trading, if not significantly more. That would be at the upper end of prison sentences for hedge fund traders convicted of insider trading in recent years, but by no means the stiffest punishment handed down during the long-running investigation. In February, a federal jury in Manhattan convicted the former SAC portfolio manager of helping the hedge fund generate profits and avoid losses totaling $275 million in 2008. To date, the 11 years given to Raj Rajaratnam, the co-founder of the Galleon Group hedge fund, is the longest sentence anyone in the investigation has received. Mr. Rajaratnam was convicted by a jury in May 2011 on 14 counts of insider trading — more than Mr. Martoma's three criminal charges. But the illicit trading by Mr. Rajartnam generated about $63 million, compared with the $275 million in illegal profits and avoided losses for Mr. Martoma. Questions of the Day Rajartnam was sentenced to prison for 11 years based on illicit profits of $63 million. Here's the question of the day: Did BNP Paribas make more than $63 million in money laundering and other conspiracies? Bonus question: Is insider trading worse than falsifying records? Answer: Apparently, insider trading is worse than money laundering, falsifying business records, and various other conspiracies. Martha Stewart knows this as well, via obstruction of justice charges related to insider trading. Addendum: The CATO institute has the absurd details in Martha Stewart in Prison? Meanwhile, insider trading by Congress is perfectly legal, even when Congressmen know who a big defense contract will be awarded to (and act on it in advance). Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Last Minute Concessions and Unreasonable Demands Posted: 30 Jun 2014 01:28 PM PDT The EU threatens more sanctions on Russia unless Russia meets three verifiable demands. One of the demands is reasonable, the other two aren't. For starters, the EU wants Russia to halt the flow of weapons into Eastern Ukraine, and it wants that process verified. That appears to be a reasonable demand. Secondly, the EU demands pro-Russia militants return control of Izvarino, Dolzhanskiy and Krasnopartizansk (three border checkpoints) to Ukraine. The militants refuse to surrender, arguing that theirs is now a sovereign state. Returning control of three Ukrainian checkpoints is an unreasonable, if not idiotic demand on Russia. Short of invading Ukraine and taking over the checkpoints, there is absolutely no way for Russia to comply with the resolution. Finally, the EU demands "launch of substantial negotiations on the implementation of President Poroshenko's peace plan". Once again, Russia is not in control of militants who may or may not wish to negotiate anything. Of the three demands, the Financial Times reports the first has been met as Moscow Makes Last-Minute Concession to Ukraine on Border Controls. "President Vladimir Putin has proposed that Ukrainian border guards be granted access to those crossing points from the Russian side as observers for joint control of the border, and that observers from the [Organisation for Security and Co-operation in Europe] also be admitted to those crossing points from the Russian side," said Russian foreign minister Sergei Lavrov. "We hope that this initiative of the Russian president will allow all responsible parties to take a decision to extend the ceasefire, to extend the truce," Mr Lavrov said. Russia agreed to the first demand after "Vladimir Putin discussed the crisis by telephone with Germany's Chancellor Angela Merkel and President François Hollande of France and Petro Poroshenko, their Ukrainian counterpart." At this point, there is little else Russia can do, and it would be very unreasonable to impose more sanctions on Russia for a situation in Ukraine that Russia has no fundamental control over. Anyone but a bureaucrat under heavy influence of US meddling would rapidly come to that conclusion, but don't count on it. In politics, stupidity frequently trumps common sense. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Kurds Deputy PM Calls for Decentralized Iraq and Removal of Prime Minister Nouri al-Maliki Posted: 30 Jun 2014 12:22 PM PDT The Kurds played their cards in the Iraqi mess exceptionally well. They never threatened independence until Baghdad was too unstable to do anything about it. Even now, the Kurds offer one last olive branch of sorts, an offer for a "decentralized" Iraq as opposed to independent nations, but only on condition that Prime Minister Nouri al-Maliki steps down, and Sunnis get more control. Please consider Kurds' Deputy PM Talabani Calls for Decentralized Iraq Iraq and its foreign backers must abandon a centralised system of governance if the country is to survive, Iraqi Kurdistan's deputy prime minister has said, warning that his semi-autonomous region would gain de facto independence if the slide into chaos continues. "We have to get our minds off of this notion that a strong central government can govern this country, because it can't," he [Qubad Talabani] told the Financial Times in an interview. "We're past that. We tried that. We had some competent Sunni ministers in the government . . . it didn't provide adequate representation to the people in those [Sunni] territories." KRG president and head of the region's dominant Kurdistan Democratic party, Masoud Barzani, openly stated last week that Kirkuk would remain under Kurdish control and that independence could be near, hinting it may be time for a referendum on the issue. Mr Talabani, who is from the rival Patriotic Union of Kurdistan party, was more circumspect, saying the Kurds still hoped to make a deal in Baghdad. The two main parties in Kurdistan have a power-sharing agreement where they alternate between the premiership and deputy posts. Kurds and Sunni are adamant that their participation depends on an end to Mr Maliki's eight-year rule, and the appointment of a new premier who will negotiate. It is not yet clear if majority Shia politicians will agree on an alternative candidate. Even if Maliki goes along, Masoud Barzani, the Kurds president favors independence. Expect a referendum on independence soon if  Maliki does not step down, and perhaps even if he does. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

You are subscribed to email updates from Mish's Global Economic Trend Analysis To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610