Bitcoin

• Vocal billionaire activist IRR - 150x: Icahn bought $1 billion of AAPL stock, seeks $150 billion buyback (BBG)
• BlackBerry Said to Have Sought Buyers Since 2012 (BBG) - for a phone or the entire company?
• IPhone Fingerprint Reader Talk Boosting Biometric Stocks (BBG) - also, the NSA will need to grow its Utah data center
• UPS Jet Crashes in Birmingham, Ala. (WSJ)
• America's Farm-Labor Pool Is Graying (WSJ)
• Hong Kong Lowers Storm Signal as Typhoon Closes on China (BBG)
• Indian submarine explodes in Mumbai port (FT)
• BofA Banker Sued by Regulator Later Joined Fannie Mae (BBG)
• Software that hijacks visits to YouTube uncovered (FT)
• Chinese Billionaire Huang Readies Iceland Bid on Power Shift (BBG)
• China to launch fresh pharmaceutical bribery probe (Reuters)
• Defeat at J.C. Penney Hurts Ackman as Performance Trails (BBG)

Whether or not BitCoin actually wants to be regarded as an accepted currency, and thus subject to US government regulation, remains to be seen. However, one thing is certain: a currency is not a currency, until it gets its own Bloomberg ticker. Just recall the confusion that followed the appearance of XGD, or the GREEK DRACHMA (POST EURO), BBG currency ticker in June 2012 caused a panic tsunami across Europe when everyone started asking what does Bloomberg know that nobody else does.

Enter XBT Curncy <GO>

To understand Bitcoin’s role in the first half of 2013, one must understand the macro trends driving its recent more widespread adoption. From Capital Controls to Currency Wars and Monetary Easing, the 'freedom' offered by Bitcoin has garnered a great deal of attention as these topics have recently re-emerged to the forefront of global attention. The following in-depth review (and outlook) of the Bitcoin environment covers trading, exchanges, venture capital, mining, and regulatory developments of the crypto-currency. The past six months may one day prove to be among the most important in bitcoin’s history. As global events sparked increasing need for frictionless wealth transfers, Bitcoin’s popularity ballooned and ignited a conversation that will likely continue to flourish in the years to come.

The SEC alleges that Trendon T. Shavers, who is the founder and operator of Bitcoin Savings and Trust (BTCST), offered and sold Bitcoin-denominated investments through the Internet using the monikers “Pirate” and “pirateat40.”  The SEC alleges that Shavers, who lives in McKinney, Texas, paid 507,148 Bitcoin in investor withdrawals and purported interest payments.  He transferred at least 150,649 Bitcoin to his personal account at an online Bitcoin currency exchange.  Shavers suffered a net loss from his day trading, but realized net proceeds of $164,758 from his sales of 86,202 Bitcoin.  Shavers transferred $147,102 from his personal account at the online Bitcoin currency exchange to accounts he controlled at an online payment processor as well as his personal checking account.  He used this money to pay his rent, utilities, and car-related expenses as well as for food and retail purchases and gambling.

Trends in motion tend to stay in motion. Monetary collapse is a near certainty, but here's one way to profit from crypto-currencies.

History shows us that panic follows a loss of trust. The financial house of cards we've built today is ripe for a panic-causing event.

• India Joins Brazil to China in Efforts to Tighten Liquidity (BBG)
• Seven dead as police and protesters clash in Egypt (Reuters)
• U.S. senators fail to cut deal, head for showdown on filibuster (Reuters)
• Gasoline Tankers Beating Crude for First Time on Record (BBG)
• Smithfield's China bidders plan Hong Kong IPO after deal (Reuters)
• Bitcoin ETF plan struggles to find support (FT)
• Big Home Builders Gobble Up Rivals Starved for Cash (WSJ)
• Putin wants Snowden to go, but asylum not ruled out (Reuters)
• Zimmerman's lawyer calls prosecutors 'disgrace' to profession (Reuters)
• McDonald’s to bring Big Mac to Vietnam (FT)
• Korean Pilots Avoided Manual Flying, Former Trainers Say (BBG)

That a BitCoin-based ETF is a horrible idea for those who believe in what BitCoin stands for, i.e., a status-quo regime-remote monetary process which is naturally also independent of existing capital markets, is quite clear. Yet a BitCoin-based ETF prospectus, namely the Winklevoss BitCoin Trust, with a proposed offering of 1 million shares at a price of $20 each, is precisely what the Winklevi filed today with the SEC. We can only assume this idiotic idea is proposed simply to entice the habitual gambling momentum-chasers, who seek a conventional method of pursuing the momentous volatility that only Bitcoin can offer now that regular BitCoin exchanges are being shut down by the US and other governments, as absolutely nobody else would be interested. That, or just another expression of the identical twins' megalomania who enjoy nothing more than seeing their name in lights or in the title of a security. Because once one reads the risk factors, among which we find the following, we doubt even said habitual gamblers will be interested: "It may be illegal now, or in the future, to acquire, own, hold, sell or use Bitcoins in one or more countries, and ownership of, holding or trading in Shares may also be considered illegal and subject to sanction." Well, you have been warned.

• Scalpel in Hand, Chinese Premier Li Stirs Reform Hopes (Reuters)
• Obama Sets Conditions for Keystone Pipeline Go-Ahead (FT)
• World’s Most Indebted Households Face Rate Pain (BBG)
• SAC Probers Weighing 'Willful Blindness' Tack (WSJ)
• Draghi Says ECB Ready to Act, Calls for Investment Over Tax (BBG)
• U.S. Tops China for Foreign Investment (WSJ)
• Basel Presses Ahead With Plans to Limit Bank Borrowing (FT)
• Gillard Ousted as Australia PM by Rival Rudd (FT)
• Japan Economic Strength Will Show in Stocks, Nishimura Says (BBG)

In remarks given late last week to the curiously named United States Institute for Peace, the head of the Treasury’s Financial Crimes Enforcement Network (FinCEN) vociferously denied any attempts at regulating digital currency... specifically Bitcoin. But that doesn’t mean they can’t spread fear, uncertainty, and doubt. Bitcoin, being completely decentralized,  is nearly impossible to regulate. And the government at least seems to understand this point. Which is why the director so emphatically denies attempting to regulate the digital currency. But in this short 4-page speech, the Director twice made a connection between Bitcoin and (you guessed it) terrorism. Twice more connected Bitcoin to those who would exploit children. And four times linked digital currency to ‘criminals’ in general. It’s certainly enough to scare most people away.

In our first Chart of the Day we present the Caracas stock exchange performance since 2012. It puts the action in the Nikkei (and BitCoin) to shame. It also explains why anyone selling $29.95 newsletters equating the "market" with the economy is a charlatan. Finally, it shows that in the great race to achieve a "wealth effect" utopia, one may not have toilet paper, but one will always have a soaring stock market.

Virtual currencies were hailed as revolutions. They were the way forward., the way to overhaul the system and the way to replace the Dollar, Sterling, the Euro and the rest of them.  But, just last week Liberty Reserve was closed down for illicit transactions and money-laundering activities that could have nothing more than repercussions for the rest of the companies living quietly in the auspices of cyberspace doing more or less the same sort of activity.

In the wake of the financial collapse of 2007, central banks around the world run by Keynesian zealots religiously applied the formulas they had been taught would boost aggregate demand and rescue the economy from the brink of total catastrophe. Easy money, going under the euphemistic moniker of “quantitative easing” was supposed to stimulate borrowing, spending and growth through the mechanism of historically low interest rates. Predictably, this approach failed miserably, as these kind of policy decisions largely miss the point of how the economy really works. As long as central banks continue to meddle with the money supply, investments will not be made efficiently and the economy as a whole will suffer.

Jim Rogers was recently interviewed by GoldMoney and had plenty to say (as usual):

On Bernanke: "He doesn’t want to be around for the consequences of what he’s doing."

 

On Fiat: "Paper money doesn’t have a very glorious history, but again, nothing imposed by the government has a very long and glorious history."

 

On Europe's Crisis: "You can postpone it all you want, but the problems just mount."

 

On Capitalism: "You are not supposed to take money away from the competent people and give it to the incompetent so that the incompetent can compete with the competent people with their own money. That’s not the way capitalism is supposed to work."

For all the grief BitCoin (and so often gold and silver) get during times of excess volatility, especially by those Keynesian prophets who urge everyone to adopt the one true FIATH and put all their cash in stocks (and more please: just use margin) we hear precious little about the ridiculous volatility farce that nationalized mortgage lender Fannie Mae has become: from opening above $4, trading up to $5.50, and now plunging to under $3.00, the stock is nothing but concentrated heatmap of every E*trade momentum chasing baby and dart-throwing monkey in the world (ignoring the fact that all "swing traders" merely respond to "price action" whatever that means and are thus all making money, no matter what happens). As for the fact that the swing in the stock price in the past hour wiped out nearly $15 billion in market cap, or nearly half of the total, on absolute no news (which is also substantially larger than the entire BitCoin market) well... we'll just leave it at that.