Common Cents

Net debt

Ralph Murphy

(10/2016) The Transatlantic Trade and Investment Partnership (TTIP) is a proffered import-export treaty accord between the United States and what remains of the European Union (EU) collective trade organization. An early 1990's Transatlantic Declaration between the United States and Europe was a post-Cold War security accord that quickly took on economic issues as well. It lead to the Transatlantic Business Dialogue (TABD) of1995 that sought decreased trade barriers between member nations. By 2013 the TABD had merged with the European American Business Council of 1997 to form the Transatlantic Business Community (TABC). There were over 70 private sector businesses represented and the goal was still general trade barrier reduction amid confusing cross national policies. The trade system then became dangerously eclipsed by illegal agents who stole or misdirected stored funds. These funds reflected over half of the world's working and stored capital. TTIP would have probably advanced those concerns.

The world finance and trade links changed dramatically in 2008 as the Bank for International Settlements (BIS) merged central bank assets of the member nations. This action included all of the major economies- effectively affording a "two track" finance system. There were extensive TTIP "table" or negotiating issues, but the accord was sidetracked in 2014 and will likely not be signed as it is due for review through 2020 and the EU is faltering. Vast amounts of conventional trade in goods and services would be affected with its passage. They would include investment at 2012 levels of $2.102 trillion dollars from the EU to the United States and $1.538 trillion US to the EU. The tangible goods reflected about $500 billion total bilaterally, services another $400 billion and the rest of the $4 trillion was a non-service, foreign direct investment (FDI) money transfers across borders.

The TTIP sought "promotion of trade and multi lateral economic growth". The expressed objectives of TTIP would be afforded through "market access, specific regulation, and broader rules and modes of cooperation." The main focus was on lowering the already low trade barriers. Specifically the "tariffs or import fees and non tariff barriers as quotas, subsidies, customs decrees, or technical barriers" that would affect cross-Atlantic trade. If passed, it was estimated that TTIP would affect about 2% of the total trade. It appears that the Basel, Switzerland- based BIS was able to undermine the treaty's spirit by sending the nation's working and stored capital abroad.

This BIS dealing also appears to have been reversed in the emerging markets of the BRIC alliance (Brazil. Russia, India and China) where there was almost no historic infrastructure for the capital inflow that the nations reported as earnings. They all have recently experienced recessionary pressures that, combined with political turmoil, has led to changes all the way to the top. China and Russia are now both increasingly erratic as to their defense concerns given military deployments to peripheral interests on a large scale. What's bad for the relatively primitive, commodity- producing BRICs - appears good for the real capital owners to include the American Treasury. It was effectively "robbed" by internal elements and BIS-access, internal and foreign agents. Clearly the Federal Reserve must have been concerned if not directly involved in the bank theft as with the "safe crackers" who sent their money out perhaps with an intelligence role.

While the money does appear released from the emerging markets it is less clear as to whether it has been returned from more established or conventional ones- especially France’s stored earnings reports. French banks are notoriously porous as corruption is a real problem there. Despite that- the now private sector banks are reported as among the top capital holders in the world. Paris- based BNP Paribus had over $2.792 trillion in assets as the world's largest bank in recent dealings. Credit Agricole (for agriculture) was listed at $2.236 trillion and Societe General at about $1.59 trillion. BPCE followed at $1.532 trillion. There are others that are holding hundreds of billions of dollars. BNP Paribus is majority owned by the Brussels government that "houses" the EU. It also has vast holdings for other nations such as Luxembourg.

That bank holding pattern is very similar to the Chinese that became almost impossible to project because of its earnings and product bases. It does imply an outside source is being accessed and the nations of the region- except for Germany- are too poor to afford it. German banks are more regional, except for the ECB, and that appears a drain on their earnings. Germany’s GDP or national income ranks number 3 in the world behind the United States and Japan, but the banking interest does appear weak although its internal investment is strong. Whoever is behind the BIS "theft" of Treasury funds seems to carve a finance pocket in nations of very light resistance and it implies internal elements of the Japanese, Americans and Germans are transferring the cash with inadequate oversight and suspect purpose. It may even be helping the failing EU given their direct bank links to the French- among others.

It has to be made clear that central bank funds cannot be pooled with those of competitors, or any others- as it is then often lost or misdirected and difficult to retrieve. Investment strategies and actions should be a private sector prerogative and that should be done by those with established expertise in the field. Regulatory functions are still needed as bankers are poor at self enforcement. Any investment must be measured by the objective of quantifiable financial gain as opposed to unquantifiable, political objectives.

The system works fairly well when disciplined experts work within a regulated framework with profit as their goal. It almost collapses with sharing of interest actions directly access corporate internal dealings as opposed to external actions for apparent reward. Given debt and dislocations- the EU is a failed merger of competitors and the BIS is very similar. The TTIP is too broad in scope to effectively assess varied trade interests by one trade standard. It must be neutralized as should other intrusive organs- in the interest of global growth.

Ralph Murphy is a former member of the CIA Headquarters Staff in Langley, VA.