http://www.zerohedge.com/fullrss2.xml/sites/default/files/images/user3303/imageroot/2011/09/20110926 en A Gold Guy's View Of Crypto, Bitcoin, And Blockchain http://www.zerohedge.com/news/2017-12-12/gold-guys-view-crypto-bitcoin-and-blockchain <p><a href="https://medium.com/@alex.stanczyk/a-gold-guys-view-of-crypto-bitcoin-and-blockchain-26e42eeab6b7"><em>Authored by Alan Stanczyk via Medium.com,</em></a></p> <p class="graf graf--p graf-after--h3" id="b401"><em><strong>Bitcoin was on my radar far back as 2011, but for years, I didn&rsquo;t think much of it.</strong></em></p> <p class="graf graf--p graf-after--p" id="3ae6"><em>It was a curiosity. Nothing more.</em></p> <p class="graf graf--p graf-after--p" id="5135"><em>Sort of like the virtual money you use in World of Warcraft or something. <strong>In 2015, looking deeper, I slowly (not the sharpest tool in the shed) arrived at that &ldquo;aha&rdquo; inflection point that most advocates of honest money arrive at. I realized that a distributed public ledger has the power to change, well, everything.</strong></em></p> <h3 class="graf graf--h3 graf-after--p" id="1efb"><u><strong class="markup--strong markup--h3-strong">Changing All The&nbsp;Things</strong></u></h3> <p class="graf graf--p graf-after--h3" id="95c2">One aspect of crypto that appealed to me was that this technology had the potential to bring &ldquo;un-banked&rdquo; people from around the world into the modern financial system. It potentially granted access to digital transactions without the use of banks for billions of people that were formerly excluded from transacting in the modern economy. People could be rewarded for their labor and have access to opportunities in ways which would not exist otherwise.</p> <p class="graf graf--p graf-after--p" id="e974">In places like Afghanistan, the local people do not go to their neighborhood super-mall to buy laptops and ipads. Much of the developing world has ever growing access to smart phones, with market penetration reaching into the billions. Developing countries are skipping the entire computer-laptop-tablet phase and moving straight into much more affordable smart/feature devices with internet access. In the Middle East and Africa, nearly all internet users are on mobile devices. Combined with crypto, all of these devices making up the internet of things grants access to a new global financial paradigm that is potentially owned by the people themselves.</p> <p class="graf graf--p graf-after--p" id="b8f0"><strong><em>Imagine a world where a teenage girl in India can start a business, sell her wares or services, and then through her phone, internet, and crypto-currency store the fruit of her labor. She can then buy an item on Amazon and have it shipped to her half-way around the world without ever having to open a bank account. This is the future that crypto-currency promises.</em></strong></p> <p class="graf graf--p graf-after--p" id="9bd4">Having transactions validated with cryptography means we can trust the math, and not have to rely on a human intermediary or the bank. The only way to compromise the cryptography requires computing power that no private (or sovereign) entity in the world can bring to bear. I have heard one crypto expert assert that the current hashing power of the voluntary nodes processing the bitcoin algorithm has more power than all of the world&rsquo;s supercomputers combined. Because it is a distributed public ledger, it means that no single entity controls it, but everyone gets to see the transactions in it. This performs the primary function of every bank since Medici, which is keeping track of where the money goes. Only now, you don&rsquo;t need the bank. The technology has the potential to dis-intermediate the banks, and therefore the political class, from having total control of every aspect of peoples financial lives.</p> <p class="graf graf--p graf-after--p" id="c548">This is not to suggest that there will be no future need for banks. There is close to $200 Trillion USD value of fiat currency issued by governments around the world, and that has to find its way into crypto somehow. <strong>The existing financial system will not all of a sudden fold up and disappear. </strong>There should be ample opportunities for financial services moving forward, but there is no doubt disruption is coming.</p> <p class="graf graf--p graf-after--p"><strong><em>[ZH: Gold up 7.5% YTD, Bitcoin +1675% YTD]</em></strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171212_alt5.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171212_alt5_0.jpg" style="width: 600px; height: 316px;" /></a></p> <p class="graf graf--p graf-after--p" id="4918"><strong>If crypto continues on its current path,</strong> the political and financial elites who have an interest in maintaining the current system of Central Banks, taxation, and fractional reserve banking created over the last hundred years <strong>will not take it lying down</strong>.</p> <p class="graf graf--p graf-after--p"><u><em><strong>It is my view that once political elites realize the true threat cryptocurrency poses to their control, they will do everything in their power to delay, derail, and destroy it.</strong></em></u></p> <p class="graf graf--p graf-after--p" id="a671"><strong>Believers in honest money have known this for millenia.</strong></p> <blockquote class="graf graf--blockquote graf--startsWithDoubleQuote graf-after--p" id="a4f8"><p>&ldquo;A &ldquo;gold war&rdquo; is an attempt by the government upon the constitutional rights of the individual. Why do governments resort to gold wars? Sometimes they want to wage shooting wars without raising taxes; at other times they want to indulge in &ldquo;social engineering: through the redistribution of income. But in every instance there is one common thread: governments have correctly identified gold as the only antidote against their effort to build the Tower of Babel of irredeemable debt.&rdquo;?</p></blockquote> <blockquote class="graf graf--blockquote graf--startsWithDoubleQuote graf-after--p"><p>- ?Ferdinand Lips 1972 - Former Founding Director of Rothschilds Bank Switzerland</p></blockquote> <p class="graf graf--p graf-after--blockquote" id="cc31"><strong>Over the years the push by politicians and financial elites towards total control of the financial system and therefore the financial lives of every person on the planet has progressed seemingly unimpeded.</strong> There is a long litany of offenses which I will not attempt to catalogue here. Anyone can probably relate to increasing taxation, financial regulatory interference in their lives, and continually worsening purchasing power. When I was a kid a movie ticket was $1.50. I just bought tickets to Stars Wars The Last Jedi for $20.50 each, and for a family of five that starts to get pricey.</p> <p class="graf graf--p graf-after--p" id="54a9">This insidious process is the basis for many of society&rsquo;s ills. <strong>The honesty of the money system is the first foundation upon which a free society is built</strong>. It is the most sacred and basic means of storing one&rsquo;s labor and the only hope for a future better than the one we have now. For countless millions, the hope for a better future has been slowly eroded, until only the most optimistic among us can see the light, if only dimmed through the fog of battle on an endless hamster wheel of wealth chasing required in a financial system that targets a 2 pct level of inflation. Capital formation historically precedes diversification of labor, and a prolonged contraction of labor (loss of higher paid work) is a symptom of a sickly structure that disproportionately benefits rent seekers versus wage earners. These are symptoms of a broken and dishonest money system.</p> <p class="graf graf--p graf-after--p" id="4c44">In the United States today, the traditional family unit has two working parents, some of which hold two jobs, and still have a lower standard of living than the generation that came before it. Average annual incomes have been in decline for close to 40 years. Combined with the inflation that has destroyed the buying power of the US dollar, many Americans find themselves with dwindling hope.</p> <p class="graf graf--p graf-after--p" id="c769">Our children are not blind to this. All of my kids, in their teenage years now, recognize that the system we are leaving to them is broken. They are not stupid. They are observant, and they can see the trends in motion, even if we, the supposed adults here, are unwilling to admit to it.</p> <p class="graf graf--p graf-after--p" id="04e3"><strong class="markup--strong markup--p-strong">But still, with all the potential that crypto promised, I was unconvinced.</strong></p> <p class="graf graf--p graf-after--p" id="9aaa">I will address some of the challenges I see, and some of the current memes that are clouding the benefits crypto has to offer to people who are looking at it for the first time.</p> <p class="graf graf--p graf-after--p" id="41d9"><u><em><strong>Bear with me if you are a crypto-advocate. These are my own concerns, and I point them out not as a critic, but because it might be prudent to consider them. If you stick with me to the end of this article you will see I am not anti-crypto, but rather see it as an opportunity.</strong></em></u></p> <h3 class="graf graf--h3 graf-after--p" id="27f2"><u><strong class="markup--strong markup--h3-strong">Crypto is the new&nbsp;gold</strong></u></h3> <p class="graf graf--p graf-after--h3" id="beaf"><strong>It is fascinating to me that Bitcoin is always being compared to gold, as if in order for it to be legitimate, it must somehow dethrone man&rsquo;s most ancient form of money. Almost every visual rendering of Bitcoin I have ever seen is in the form of a gold coin.</strong></p> <p class="graf graf--p graf-after--p" id="6919">What I don&rsquo;t understand is why? Crypto has made its own place in the world by making an amazing leap forward as a medium of exchange, with thus far unrivaled capabilities. But crypto is not gold, and can never be gold. I suggest that BTC and Crypto are better as a medium of exchange, while gold is a better medium for storing value.</p> <p class="graf graf--p graf-after--p" id="601a">This is not because of some dogma I have for the metal. Some will trot out &ldquo;you are just talking your book&rdquo; when I mention this.</p> <p class="graf graf--p graf-after--p" id="434e">The simple fact is, out of the near 185,000 tons of estimated above ground gold, someone owns, <strong class="markup--strong markup--p-strong">all of it</strong>. Every fine gram of gold above ground belongs to someone already, whether that be in the form of bars, coins, jewelry, the thin layer on astronauts helmets that protect them from solar radiation, or the gold plated contacts in the mining rigs used to mine crypto. New gold mined from the ground is usually spoken for before it ever hits a refinery. My job as a physical gold fund manager is not to convince people to buy gold, that job has already been done.</p> <h3 class="graf graf--h3 graf-after--p" id="f053"><u><strong class="markup--strong markup--h3-strong">The reason crypto can never replace gold lies in physics: Gold cannot be destroyed</strong></u></h3> <p class="graf graf--p graf-after--h3" id="81db"><strong><em>Everything else can. Computers. Exchanges. Mining Pools. Wallets. Powergrids. Internets. Nations. You name it. If you blew up the planet earth, the gold atoms would still be there.</em></strong></p> <p class="graf graf--p graf-after--p" id="c9bd">I continue to find that in the financial professional space, gold&rsquo;s utility value is widely misunderstood or isn&rsquo;t understood at all. For purposes of common ground, let&rsquo;s approach this from first principles. Let&rsquo;s start with what we absolutely know to be true, and go from there.</p> <p class="graf graf--p graf-after--p" id="594c">Wealth is created at its most basic level, when a person expends their labor, i.e., invests human energy and creates a good or service that some entity is willing to exchange an agreed token of value for. In other words, anything in excess of what we pay for where we live, what we eat, the clothes on our back, or basic necessities to survive, is wealth, or a surplus of energy.</p> <p class="graf graf--p graf-after--p" id="abe5"><strong>Once wealth is created, and we have a little bit of surplus energy, what do we do with that surplus energy? We can either invest it or store it in money.</strong></p> <p class="graf graf--p graf-after--p" id="ff38">What is money? Going back to basic economics textbooks, money is a few different things?&mdash;?a medium of exchange, a unit of measure, and a store of value.</p> <p class="graf graf--p graf-after--p" id="e9be">I suspect many crypto-advocates will dis-like this, but I would suggest that being a medium of exchange is not the foremost utility value of money, a store of value is. There are plenty of people in Venezuela right now who have access to Bolivars as a medium of exchange, but when the value of those units of exchange plummet to near zero, they are worthless for practical purposes. If money does not retain its value, it is useless for all practical purposes of deploying ones stored labor for future use, and no amount of awesomeness as a medium of exchange will change that.</p> <p class="graf graf--p graf-after--p" id="b222">This is where gold&rsquo;s true utility comes into play. Not only does gold store value, it&rsquo;s the <strong class="markup--strong markup--p-strong">way</strong> gold stores value. Gold stores energy in a form that is indestructible. That is the key, right there, in a nutshell. I&rsquo;ll say it again; gold&rsquo;s utility value is the fact that it stores energy in a form that is indestructible. Unlike anything else you can invest or store money in, gold doesn&rsquo;t rely on any external force for this to continue to be true over time. It is sort of like a battery with no expiration date.</p> <p class="graf graf--p graf-after--p" id="7f31"><strong class="markup--strong markup--p-strong">Gold exists as atomic number 79 on the periodic table. It is chemically inert and does not interact with oxygen. It is the only element with properties that make it completely immune to the forces of entropy. The only way to destroy it would be to fire it into the sun, or somehow put it in the middle of an equivalent fusion reaction that took the atoms apart at a subatomic level.</strong></p> <p class="graf graf--p graf-after--p" id="166b">I have heard some say that &ldquo;someday no one will value gold, so it does not matter.&rdquo; Not only do we have almost 5000 years of data to show that has never occurred, but there is literally nothing on the planet earth in accessible quantities with gold&rsquo;s physical properties that can replace that utility.</p> <p class="graf graf--p graf-after--p" id="bcc1">In a recent Twitter exchange someone said to Jim Rickards, &ldquo;Jim, AI systems won&rsquo;t be using gold,&rdquo; and he answered back, &ldquo;Gold won&rsquo;t be using the power grid.&rdquo; This a humorous way to make the point, but I would even take it a step further than saying <strong class="markup--strong markup--p-strong">gold is not just good money, it is the only form of money that is completely resistant to financial entropy</strong>. By financial entropy I mean that every other thing one can hold or invest money in requires human effort and interaction in some way or another to maintain. Bitcoin requires electricity, the internet, computers, developers, miners. Companies and fiat-issued currencies require human force of will to maintain. Stocks, bonds, and commodities all will erode over time without effort to the contrary. All of these require human will and interaction to resist the forces of entropy, otherwise they slowly self-destruct over time. The only thing that doesn&rsquo;t do that as far as I know is gold</p> <p class="graf graf--p graf-after--p" id="5eaa">A little challenge if you will humor me: <strong><em>Can you think of any form of storing wealth, whether it be an investment in stocks, bonds, companies, real estate, Bitcoin or anything, that is not subject to entropy (self destruction if left alone) over time?</em></strong></p> <p class="graf graf--p graf-after--p" id="9453">Finally, gold remains a critical base component of the entire global financial system. The entire above ground global stock of gold is worth approximately $7.5 Trillion in US Dollar terms, while all crypto is coming in at approx $300 Billion (grant me some leeway here, the price is moving faster than a flaming marmot).</p> <p class="graf graf--p graf-after--p" id="65b3">Central banks do not hoard coffee, sugar, copper, or Bitcoin, but they do hoard gold. The US Central Intelligence Agency classifies gold as a reserve asset. ( cia.gov/library/public&hellip; ) So do top level institutions such as the IMF. At the highest levels, financial elites who manage our global financial structure know the truth of this, and you can find it buried in the details, even if they deny it in public. Watch the commentary of former Central Bank Governor&rsquo;s regarding gold after they leave office for clues. More or less, they acknowledge gold is the emergency reset button if fiat loses confidence.</p> <p class="graf graf--p graf-after--p" id="5f0b"><strong>Crypto-currency is not gold, and can never replace the indestructibility of gold, but the two can work side by side in a new global paradigm of financial freedom and independence.</strong></p> <h3 class="graf graf--h3 graf-after--p" id="c21c"><u><strong class="markup--strong markup--h3-strong">You can&rsquo;t confiscate crypto but you can confiscate gold</strong></u></h3> <p class="graf graf--p graf-after--h3" id="b2a3">While partially true, this does not take into account the fact that at every point where crypto touches the fiat eco-system, it is subject to government confiscation.</p> <p class="graf graf--p graf-after--p" id="3be2">Politicians figured out almost a decade ago that by controlling the chokepoints (see FATCA) such as banks, exchanges, and financial intermediaries, they are able to control the global financial system.</p> <p class="graf graf--p graf-after--p" id="ede2">Crypto was designed to circumvent this, but the vast majority of the trading volume in Bitcoin is arguably for speculation. Until crypto is adopted for commercial exchange as its primary function, then touchpoints to the fiat ecosystem are a requirement. That&rsquo;s called a chokepoint.</p> <p class="graf graf--p graf-after--p" id="ab7d"><strong>This is already in play. Check out S.1241. </strong>If this bill passes, Title 31 will redefine financial institutions to include issuers or exchangers of crypto, and they aren&rsquo;t writing these new laws solely for the laughs. This is foundational law that will empower financial regulators to directly attack crypto users at key fiat-system chokepoints. Many regulations are already on the books which grant regulators authority to do this even if S.1241 fails. If you think that is conspiracy, I recommend &ldquo;Treasury&rsquo;s War&rdquo; by Juan Zarate. Using such chokepoints is not only a matter of fact, it is a standard tool in the modern sovereign financial warfare arsenal.</p> <p class="graf graf--p graf-after--p" id="61c6">Like gold, crypto can survive 100% off the grid, meaning that if it is stored and used completely apart from touching the fiat ecosystem it cannot be confiscated, but to assume its current use value is somehow immune to confiscation at any level is naive at best.</p> <h3 class="graf graf--h3 graf-after--p" id="2d75"><u><strong class="markup--strong markup--h3-strong">You are too dumb to understand the technology? - people don&rsquo;t ride around on horses anymore&nbsp;dude</strong></u></h3> <p class="graf graf--p graf-after--h3" id="67c3">For those of you doing it, please stop taking this position. It is not a logical argument. It also alienates the people you are trying to convince, and is not bringing more people over to crypto.</p> <p class="graf graf--p graf-after--p" id="4a50">16 years in IT, and I am still a bit of a nerd when it comes to technology. I managed wide area networks, ran datacenters, etc. Today I ordered the parts for a 12 GPU mining rig I intend to build as a science project and Christmas gift to me. I have read a half dozen books and dozens of articles and whitepapers on blockchain and distributed ledger technology. I am not a cryptographer, but I get it.</p> <h3 class="graf graf--h3 graf-after--p" id="231a"><u><strong class="markup--strong markup--h3-strong">Most other common memes of crypto vs gold revolve around faith based arguments</strong></u></h3> <p class="graf graf--p graf-after--h3" id="b386">These vary widely, but range from &ldquo;we will soon mine asteroids and gold will become worthless&rdquo;, to &ldquo;when fiat fails it is crypto&rsquo;s destiny to take over the smouldering remains of our financial system&rdquo;&hellip;.like&hellip; in accordance with the prophecy. To be fair, I know plenty of folks who think that is a role destined for gold, but saying that doesn&rsquo;t make it a fact.</p> <p class="graf graf--p graf-after--p" id="aa19">I have heard the argument of mining asteroids so many times it is becoming like the sand in your shorts at the beach. It is not relevant, but you still have to go rinse it out to avoid chafing. This flying unicorn idea has zero credibility because it defies basic physics. Launching spacecraft isn&rsquo;t free, nor is anything else about this idea. There are cost inputs to all resource extraction activity which requires a market price to support, or it simply isn&rsquo;t economic to do. Just ask the frackers. Hell, Just ask the crypto miners.</p> <h3 class="graf graf--h3 graf-after--p" id="8941"><u><strong class="markup--strong markup--h3-strong">Real Challenges Facing&nbsp;Crypto</strong></u></h3> <p class="graf graf--p graf-after--h3" id="4617">I am not going to deep dive these issues, you can find ample data to support these concepts without extraneous effort.</p> <ul class="postList"> <li class="graf graf--li graf-after--p" id="4a7f">Not yet proven able to withstand substantial liquidity events. The first time a hedge fund bails out of Bitcoin to the tune of a hundred million usd, we will find out how deep this rabbit hole really goes.</li> <li class="graf graf--li graf-after--li" id="7100">Automated Wash trading on some of the worlds largest exchanges. There are videos available which show automated wash trades occurring on one of the world&rsquo;s largest crypto exchanges. For those of you not familiar with wash trades, they are paired trades where buys happen to precisely match offer&rsquo;s and intentionally trend the price higher. I don&rsquo;t claim to know if these are legitimate, but they sure look that way.</li> <li class="graf graf--li graf-after--li" id="fe42">The entire tech stack is riddled with single points of failure, and technical chokepoints subject to interference by political elites. As with most man-made systems, there are choke points. Routers DNS TCP/IP Packet level inspection culling, etc. There are ways to circumvent most of what may be thrown at crypto on these levels, but the average person has no idea how to use them, and may react adversely when they are employed.</li> <li class="graf graf--li graf-after--li" id="0e1a">Community consensus driving policy changes. I admit I am no expert on how this works, but the idea of the community deciding policy sort of short circuits the idea of this thing being driven completely by math and not depending on humans for trust.</li> <li class="graf graf--li graf-after--li" id="7b8f">Hacking. The theft of crypto from exchanges, mining pools, and wallets is becoming common. The average person is not technically literate enough to secure their crypto, and this needs a solution.</li> <li class="graf graf--li graf-after--li" id="c1f6">The need for more robust infrastructure. Blockchain transaction clearing vs current transactional infrastructure such as visa is not even in the same ballpark yet. There is currently a backlog of 106478 unconfirmed transactions on the BTC blockchain. (See the number as of this instant here <a class="markup--anchor markup--li-anchor" href="https://blockchain.info/unconfirmed-transactions" rel="nofollow noopener" target="_blank">https://blockchain.info/unconfirmed-transactions</a> )&nbsp;. Key exchanges are a limiting and centralized potential point of failure. During periods of heavy trade volume, the largest exchanges are down and or error 404 for extended (days) periods of time.</li> <li class="graf graf--li graf-after--li">The Dawn of Quantum Computing. Quantum computing, if claims are to be believed, has the potential to make all existing cryptography obsolete.</li> </ul> <p class="graf graf--li graf-after--li">Twitter conversation:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="graf graf--p graf-after--p" id="d662">Koos Jansen [gold]<br />@KoosJansen<br />Replying to @alexstanczyk @sujitnambath<br /><strong>Some say BTC can survive quantum (if there&rsquo;s time), others say Ethereum will be quantum-proof, yet others say there is already resistant Distributed Ledger Technology.</strong></p> <p class="graf graf--p graf-after--p">&nbsp;</p> <p class="graf graf--p graf-after--p">Alex Stanczyk<br />@alexstanczyk<br />Replying to @KoosJansen @sujitnambath<br /><strong>Yes, but to outrun the theoretical speeds of these Quantum computers, crypto keys would have to be massive. I read one article claiming like 1 terabyte, or larger. Try storing that on a thumb drive.</strong></p> </blockquote> <p class="graf graf--p graf-after--p" id="6bfb">And finally,</p> <h3 class="graf graf--h3 graf--startsWithDoubleQuote graf-after--p" id="6384"><u><em><strong class="markup--strong markup--h3-strong">&ldquo;There is only one Lord of the Ring, only one who can bend it to his will. And he does not share power.&rdquo;&nbsp;-Gandalf</strong></em></u></h3> <p class="graf graf--p graf-after--h3" id="5588">The biggest risk to the success of crypto as free market money owned by the people is entrenched political and financial elites. There is a non-zero probability that political elites will simply get together, declare crypto currency illegal, and issue their own blockchain based (non distributed) cryptocurrencies which they declare to be fiat. People may be able to use crypto as a black market (see illegal) means of exchange after that, but the powers that be will do their best to make their lives hell.</p> <p class="graf graf--p graf-after--p" id="de31">I had a brief exchange with the well known Founder &amp; CIO of Morgan Creek Capital Management Mark Yusko, that went:</p> <blockquote class="graf graf--blockquote graf-after--p" id="7b44"><p>Mark: &ldquo;They banned alcohol and made drugs illegal and that worked really well&rdquo;</p></blockquote> <blockquote class="graf graf--blockquote graf-after--blockquote" id="936f"><p>Me: &ldquo;To be fair, alcohol and drugs were never a threat to the gov sovereign control of the financial lives of billions of their subjects. We may all be well served if we do not underestimate the lengths gov may go to in order to retain control of the money we use.&rdquo;</p></blockquote> <blockquote class="graf graf--blockquote graf-after--blockquote" id="3c65"><p>Mark: Twitter Like</p></blockquote> <h3 class="graf graf--h3 graf-after--blockquote" id="4e7c"><u><strong class="markup--strong markup--h3-strong">For Years The Answer Was Always&nbsp;Gold</strong></u></h3> <p class="graf graf--p graf-after--h3" id="112c">For a decade I have believed that the only way to extract ourselves from this systemically corrupt morass of modern financial slavery, was to go back to an honest form of money. Coming from a gold background, and having studied monetary history, the answer to me was obviously gold.</p> <p class="graf graf--p graf-after--p" id="1bf9">At the end of the day, when it comes to money the common thread throughout all of human history has been confidence in mutually agreed future value?&mdash;?whether the money was shells, wood sticks, 4 ton wheels of stone?&mdash;?the people using it agreed it had value, and the asset with the 5000 year track record is gold.</p> <p class="graf graf--p graf-after--p" id="3ab6">So I marked time, waiting for the day that the masses would come to the conclusion that we are being collectively screwed. Only it never happened. The average person has not at any point been consciously aware of how central banks and fractional reserve banking systems extract their wealth, and maybe only vaguely aware that the political parasite has gorged itself on the people to the point where it is killing the host.</p> <p class="graf graf--p graf-after--p" id="ab57">Something had to change, and gold still wasn&rsquo;t teaching people the way out.</p> <h3 class="graf graf--h3 graf-after--p" id="2349"><u><strong class="markup--strong markup--h3-strong">Enter The Mother Of All Bubbles Large and Small&nbsp;(MOABLS)</strong></u></h3> <p class="graf graf--p graf-after--h3" id="d14f">Bitcoin passed the $1000 per Bitcoin mark in the first part of the year. It seemed obvious to me, and to many others not heavily vested in Bitcoin, that it was showing all the signs of a classic bubble.</p> <p class="graf graf--p graf-after--p" id="f76f">Bartenders were bragging about being crypto investors. Strippers in Denny&rsquo;s parking lots were giving Bitcoin investing tips. Conversation at Thanksgiving Dinner became grandpa asking grandson how to invest in &ldquo;this Bitcoin thing&rdquo;. The leading Cryptocurrency exchange in the USA exploded with new accounts, adding hundreds of thousands of new users per day, eventually exceeding the number of brokerage accounts held by Schwab and Etrade.</p> <p class="graf graf--p graf-after--p" id="61e8">By early December of 2017, Bitcoin had gone as high as BTC/USD $19,000 in intraday trading on GDAX. Not only was this absolutely meteorically mind numbingly bubble red flag territory to anyone looking at the space without a choker chain of confirmation bias, but it may just turn out to be the biggest bubble in percentage and time terms of any bubble in all of recorded human history.</p> <p class="graf graf--p graf-after--p" id="4860">Some advocates claim that the USD price of Bitcoin is a result of its value derived from use as a superior medium of exchange. But is this really true? Instead of charting the price, it might be informative to chart transaction volume for commercial use isolated from speculative buying. That is the data I really want to see.</p> <p class="graf graf--p graf-after--p" id="9824">No, I knew with every fiber of my being that this thing was a bubble of cosmic proportions. I knew it had to crash and burn, and that it was going to happen at any moment. Woe be it to the industry when regulators came to the rescue of all the crying grandma&rsquo;s who lost their money.</p> <h3 class="graf graf--h3 graf-after--p" id="8660"><u><strong class="markup--strong markup--h3-strong">But what if this was no ordinary&nbsp;bubble</strong></u></h3> <p class="graf graf--p graf-after--h3" id="e19d"><em><strong>Unlike the Tulip Mania, the South Seas bubble, or many of history&rsquo;s other mania&rsquo;s, this one is uniquely different in one important way.</strong></em></p> <p class="graf graf--p graf-after--p" id="8ebb">Cryptocurrency, as a bubble, is serving an incredibly rare and important purpose. <strong class="markup--strong markup--p-strong">For the first time in over a hundred years, there is now a discussion going on with average people about what money really is, and what we want it to be.</strong> It is causing people to examine our financial system in ways that people normally never would. The typical person carries on each day with nary a thought to how our monetary system is constructed. If you were to ask 1000 random people if they knew when the Federal Reserve System was created, who owns it, and what it really does I would be surprised if one in a thousand could tell you.</p> <p class="graf graf--p graf-after--p" id="2c7e">For people to cross this threshold of once again examining what we use as the basis for all economic activity, it could be the single most important influence of the entire cryptocurrency phenomenon.</p> <p class="graf graf--p graf-after--p" id="0793">Do I think Bitcoin is in a bubble? Yes, absolutely. I think there is a high likelihood we are not done seeing huge corrections in the BTC/USD price. But I also think it does not end there.</p> <p class="graf graf--p graf-after--p" id="4aea"><strong>It seems likely to me that Bitcoin and the entire cryptocurrency eco system has a ways to go before it is all grown up. </strong>The next major scare will likely send much of the grandma capital fleeing the space, with attendant repercussions from regulators.</p> <p class="graf graf--p graf-after--p" id="458e">But what will come after, may not be just another burst bubble. What will come after, I hope, is an awareness that we need to examine what our money is. That we will begin to consciously consider whether printing endless amounts of fiat currency that flows into the hands of the financial elite, widening the wealth gap and sowing the fields for future crisis is a good thing or not.</p> <p class="graf graf--p graf-after--p" id="0e8d"><strong>It seems we are on the cusp of a once in a millenia chance to discuss and think about what free and honest money is. A chance, that peoples labor could once again, just maybe, be their own.</strong></p> <p class="graf graf--p graf-after--p graf--trailing" id="48ae"><u><strong>Crypto&rsquo;s ascendancy will hopefully serve as a wake up call.</strong></u> Perhaps, there is room in the future for a global decentralized system that is owned by the people, where transactions transit the globe at the speed of light, unshackled from the entrenched financial edifice, where gold too plays a role as an indestructible hedge for storing wealth. <em><strong>This may be the opportunity to bring awareness and discourse to what our money is, and what it is to become.</strong></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="965" height="509" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171212_alt5.jpg?1513093715" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-12/gold-guys-view-crypto-bitcoin-and-blockchain#comments Afghanistan already resistant Distributed Ledger Technology Alternative currencies artificial intelligence Bitcoin Bitcoin Bitcoin algorithm blockchain and distributed ledger technology Blockchains Capital Formation Central Banks Coinbase Copper Cryptocurrencies Cryptography cryptography Currency DNS E-commerce ETC Federal Reserve Fractional Reserve Banking India International Monetary Fund Jim Rickards Legality of bitcoin by country or territory Middle East Middle East mobile devices Money Purchasing Power radiation Real estate smart phones Switzerland TCP/IP Twitter Twitter U.S. Central Intelligence Agency US Federal Reserve Virtual currency Virtual currency law in the United States Tue, 12 Dec 2017 21:53:10 +0000 Tyler Durden 608991 at http://www.zerohedge.com WTI/RBOB Higher After Surprisingly Large Crude Draw http://www.zerohedge.com/news/2017-12-12/wtirbob-higher-after-surprisingly-large-crude-draw <p><strong>WTI/RBOB tumbled today after fears about cracks in one of the world&#39;s most important oil pipelines faded</strong>. Prices were below last week&#39;s pre-API levels as hope was high that last week&#39;s big surprise product build was a fluke but once again we saw notable product builds, but<strong> prices popped higher as a 7.382mm crude draw was much bigger than expected</strong>.</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>API</strong></span></p> <ul> <li><span style="color:#00ff00;"><strong>Crude -7.382mm (-2.89mm exp) - biggest draw in 4 months</strong></span></li> <li>Cushing -2.704mm (-2.5mm exp)</li> <li>Gasoline +2.334mm</li> <li>Distillates +1.5384mm</li> </ul> <p>Hope was high that last week&#39;s unexpectedly large product build was a one-off</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/api2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/api2_0.jpg" style="width: 600px; height: 313px;" /></a></p> <p>WTI/RBOB prices were below the pre-API levels from last week heading into the print..</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/api1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/api1_0.jpg" style="width: 600px; height: 290px;" /></a></p> <p><strong>The Forties outage is &ldquo;a measurable disruption that the market can apparently cope with,&rdquo;&nbsp;</strong>Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida, said by telephone. <strong>After the Brent-WTI spread widened to more than $7 a barrel, &ldquo;the ability to cover shortfalls with U.S. crude is pretty easy.&rdquo;</strong></p> <p>But after the API data hit, prices moved higher...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/api3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/api3_0.jpg" style="width: 600px; height: 480px;" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1026" height="536" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/api2.jpg?1513114531" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-12/wtirbob-higher-after-surprisingly-large-crude-draw#comments API Benchmark Crude Economy Energy economics Florida Price of oil Pricing Primary sector of the economy West Texas Intermediate Tue, 12 Dec 2017 21:36:22 +0000 Tyler Durden 609021 at http://www.zerohedge.com Republicans Reach Tentative Tax Agreement: Raise Corporate Tax To 21%, Cut Individual Tax To 37% http://www.zerohedge.com/news/2017-12-12/republicans-reach-tentative-tax-agreement-raise-corporate-tax-21-cut-individual-tax- <p>One month ago, we speculated that in order to pass the GOP tax plan, Congress would end up having to raise the proposed corporate tax rate from 20% to 25%, because as it stands now, there is simply not enough sources of funding.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">In the end corp tax will be agreed upon at 25% starting 2018, as per the Goldman plan</p> <p>— zerohedge (@zerohedge) <a href="https://twitter.com/zerohedge/status/928721465809227777?ref_src=twsrc%5Etfw">November 9, 2017</a></p></blockquote> <script src="https://platform.twitter.com/widgets.js"></script><p>And while it's not at 25% yet, it's slowly getting there, because as The Hill report as part of the ongoing negotiations between the House and Senate, <strong>Republican negotiators have reached a tentative agreement to raise the corporate tax rate in their joint House-Senate tax bill from 20 to 21 percent.</strong>&nbsp; The modestly higher corporate tax rate end a "furious debate" within the GOP conference, even as both conservatives inside and outside the conference, not to mention the president, have fought to keep the 20 percent rate originally approved in separate bills by the House and Senate.</p> <p>And speaking of the president, it is unclear if Trump is aware that his much-trumpeted 20% corporate tax rate is about to go up by (at least) 1%. </p> <p>Even with the revisions, it is premature to declare victory, as one conferee noted that there has been no formal vote for conferees to sign off on any provisions in a final bill. “We have not yet a vote on any of these policies," said Sen. Tim Scott (R-S.C.). "There’s certainly a lot of interest in what we do with the corporate rate.”&nbsp; </p> <p>While the centerpiece of House and Senate bills is a reduction in the corporate tax from 35% to 20%, there's been a push to hike the rate in order to pay for additional changes to the bill that might benefit more middle class families and smaller businesses.</p> <p>In addition to raising the corporate rate, <strong>another key change under discussion on the tax reform bill is lowering the top rate for individuals from 39.6% to 37%, </strong>although this too is a two-edged sword, as lowering the top income rate for individuals might fuel criticism from Democrats that they bill gives too much tax relief to high-income earners. However, it would also solve several problems, such as providing more help to the owners of pass-through businesses and reducing the disparity between those entities and corporations. It could also help people living in high-tax states deal with the loss of higher deductions for local, state and property taxes. The tax-cut bill previously approved by the House keeps the top rate of 39.6%, while the Senate-passed bill would reduce it to 38.5%.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“We are very close to having people on the same page,” said Scott, a member of the Senate-House conference committee. </p> <p>&nbsp;</p> <p>Scott said “there is discussion” about setting the top individual rate at 37 percent, noting “it helps business and it’s also an additive as it relates to SALT,” referring to proposals to limit the deductibility of state and local taxes. </p> <p>&nbsp;</p> <p>But the idea is not sitting well with all Senate Republicans. “This is not the Senate bill,” said one Republican senator who confirmed the discussion of the 37 percent rate and expressed concern.&nbsp; </p> </blockquote> <p>On the issue of SALT, the Hill says that there’s also strong support for giving residents in New York, California and other high-tax states a choice about whether to deduct their state and local property or income taxes, up to a $10,000 cap. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Giving taxpayers greater flexibility to deduct the state and local taxes (SALT) is an idea promoted by Majority Leader Kevin McCarthy (R-Calif.), who is No. 2 in GOP leadership. </p> <p>&nbsp;</p> <p>Sen. Susan Collins (R-Maine), a pivotal swing vote, has advocated for setting the corporate rate at 21 percent instead of 20 percent. She says business leaders have told her it would not affect investment significantly. Collins, who supports keeping the top individual tax rate at 39.6 percent for families earning over $1 million, declined to comment on the prospect of lowering it to 37 percent.</p> </blockquote> <p>Earlier in the day, Senate Republicans signaled that members of the House-Senate conference committee are on a edge of locking down a final deal as soon as Tuesday, in the process sending stocks to new all time highs.&nbsp; </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Senate Majority Whip John Cornyn (R-Texas) told reporters it was possible negotiators could reach a verbal commitment as early as Tuesday. “I think it could, and I hope it is,” said Cornyn, one of the Senate negotiators. </p> <p>&nbsp;</p> <p>Sen. John Thune (R-S.D.) said it was "possible" negotiators could reach an agreement on Tuesday, but noted they are still working.&nbsp; "It would be nice to be done today. That might be a little bit ambitious but probably possible," he said.</p> </blockquote> <p>Of course, the fact that the accelerated conclusion would mean billions in lost net income in the form of the difference between 20% and 21% effective tax rate, was not lost on stocks which then closed near the lows, while the US-heavy Russell turned red. And for those who say the difference between 20 and 21% is negligible, keep in mind that the effective tax rate of US corporations is already only 27%. Which means that every 1% increment is roughly equivalent to a 14% change in how much more, or less, effective taxes US corporations will end up paying.</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/effective%20tax%20rate_0.jpg" width="500" height="397" /></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="600" height="366" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/trump%20tax%20teaser_9.jpg?1513113990" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-12/republicans-reach-tentative-tax-agreement-raise-corporate-tax-21-cut-individual-tax-#comments Business Capital gains tax in the United States Congress Economy Income tax in the United States John Cornyn Politics Presidency of Barack Obama Republican Party Senate Tax Tax Cuts and Jobs Act Tax incidence Tax rate Taxation in the United States Value-added tax Tue, 12 Dec 2017 21:26:37 +0000 Tyler Durden 609020 at http://www.zerohedge.com Bitcoin, Bonds, & Bullion Bounce As Rand Paul Ruins Today's Tax-Deal Ramp http://www.zerohedge.com/news/2017-12-12/bitcoin-bonds-bullion-bounce-rand-paul-ruins-todays-tax-deal-ramp <p>Cliffhanger indeed...</p> <p><iframe allow="encrypted-media" allowfullscreen="" frameborder="0" gesture="media" height="315" src="https://www.youtube.com/embed/ZEVMv_WOoxg" width="560"></iframe></p> <p>&nbsp;</p> <p>From Rand Paul&#39;s somewhat confusing tweets, the divergence between bond and bullion and the dollar and stocks is clear...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD10.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD10_0.jpg" style="width: 600px; height: 290px;" /></a></p> <p>&nbsp;</p> <p>On the day, Nasdaq and Small Caps were worst, The Dow best and Trannies tumbled into the red into the close...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD12.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD12_0.jpg" style="width: 600px; height: 330px;" /></a></p> <p>&nbsp;</p> <p>VIX was trampled early on but after Rand Paul&#39;s comments started to roll higher...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD11.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD11_0.jpg" style="width: 600px; height: 285px;" /></a></p> <p>&nbsp;</p> <p>And, once again &#39;High Tax&#39; companies continue to underperform &#39;Low Tax&#39; companies...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD1_0.jpg" style="width: 600px; height: 307px;" /></a></p> <p>&nbsp;</p> <p>Notably a big divergence is starting again in the Momentum and Value factors...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD9.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD9_0.jpg" style="width: 600px; height: 309px;" /></a></p> <p>&nbsp;</p> <p>Despite the notable rally after Rand Paul&#39;s comments, treasury bond yields ended higher on the day (if marginally)...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD4_0.jpg" style="width: 600px; height: 318px;" /></a></p> <p>&nbsp;</p> <p>But once again the long-end outperformed, <strong>flattening the curve...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD3_0.jpg" style="width: 600px; height: 310px;" /></a></p> <p>&nbsp;</p> <p><strong>The Dollar is up for the 7th straight day (longest streak since Jan 2016)</strong>, retracing the losses from the Nov 1st FOMC...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD6.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD6_0.jpg" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>Bitcoin futures undeperformed Bitcoin Spot on the day, narrowing the premium...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD5.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD5_0.jpg" style="width: 600px; height: 325px;" /></a></p> <p>&nbsp;</p> <p>Gold and Bitcoin both rallied together from the early morning...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD2_0.jpg" style="width: 600px; height: 317px;" /></a></p> <p>&nbsp;</p> <p>Bitcoin was not alone today as Ethereum and Litecoin exploded higher...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD7.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD7_0.jpg" style="width: 600px; height: 602px;" /></a></p> <p>&nbsp;</p> <p>Crude was the standout today in commodity-land as it gave back yesterday&#39;s pipeline-crack gains...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD8.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_EOD8_0.jpg" style="width: 600px; height: 314px;" /></a></p> <p>&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="600" height="86" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171212_EOD.jpg?1513111982" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-12/bitcoin-bonds-bullion-bounce-rand-paul-ruins-todays-tax-deal-ramp#comments Alternative currencies Bitcoin Bitcoin Bond Business Crude Cryptocurrencies Currency Foreign exchange market Litecoin NASDAQ South African rand Tue, 12 Dec 2017 21:01:39 +0000 Tyler Durden 609016 at http://www.zerohedge.com Not A Bubble? http://www.zerohedge.com/news/2017-12-12/not-bubble <p><u><strong>Meet The Crypto Company</strong></u> - up almost 20,000% since inception in September...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171212_crcw1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171212_crcw1_0.jpg" style="width: 600px; height: 316px;" /></a></p> <p><strong>To a market cap of over $12.6 billion...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171212_crcw.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171212_crcw_0.jpg" style="width: 600px; height: 315px;" /></a></p> <p><a href="https://www.grantspub.com/resources/commentary.cfm"><strong>Grant&#39;s Interest Rate Observer </strong></a>drew the world&#39;s attention to this &#39;company&#39; yesterday...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Shares in over-the-counter name The Crypto Company, which listed in May and <strong>traded around $20 as recently as Dec 1st, have gone on a parabolic run in the last ten days - trading as high as $642.</strong></p> <p>&nbsp;</p> <p>That gives the Malibu, California-based business a <strong>market capitalization of $12.6 billion.</strong></p> <p>&nbsp;</p> <p>Valuing the Crupto Co. is somewhat difficult, as the only public filing on Edgar (the SEC website), is its securities offering document, in which it ticks the box <strong>&quot;decline to disclose&quot; under revenue range.</strong></p> <p>&nbsp;</p> <p><a href="https://www.thecryptocompany.com/">The company&#39;s website </a>does note that it&#39;s <strong>in the business of providing &quot;institutions and individuals direct exposure to the growth of global blockchain developments.&quot;</strong></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171212_crcw13.jpg"><strong><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171212_crcw13_0.jpg" style="width: 600px; height: 346px;" /></strong></a></p> </blockquote> <p>And today it is down 75%.</p> <p><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/08/20171212_crcw12_0.jpg" style="width: 600px; height: 420px;" /></p> <p><em>h/t @RudyHavenstein</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1175" height="90" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171212_crcw11.jpg?1513101033" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-12/not-bubble#comments Blockchain Blockchains Business Computing Cryptocurrencies EDGAR Information Technology U.S. Securities and Exchange Commission U.S. Securities and Exchange Commission Tue, 12 Dec 2017 20:49:42 +0000 Tyler Durden 609003 at http://www.zerohedge.com These Were The Biggest Market Shocks In 2017... And What 2018 Has In Store http://www.zerohedge.com/news/2017-12-12/these-were-biggest-market-volatility-shocks-2017 <p>With 2017 almost entirely in the rearview mirror, the most memorable - and we clearly use the term loosely - and certainly historic feature of the past year was the complete collapse in volatility. In fact, as <a href="http://www.zerohedge.com/news/2017-12-06/moment-market-broke-behavior-volatility-changed-entirely-2014">Bank of America noted last week</a>, by one measure the <strong>Dow traded in its tightest trading range in all history in 2017</strong>.<strong></strong> </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/vol%20chart%202.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/vol%20chart%202_0.jpg" width="500" height="355" /></a></p> <p>By other, more conventional measures, <a href="http://www.zerohedge.com/news/2017-10-10/october-realized-volatility-now-lowest-record">volatility in 2017 has been the lowest on record</a>, with the <a href="http://www.zerohedge.com/news/2017-11-25/you-are-here-citis-stunning-vix-chart">following "stunning" VIX chart from Citi hardly needing an explanation</a>: it shows the number of days with a sub-10 close in any 6 month window.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/23/vix%20citi%202.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/23/vix%20citi%202_0.jpg" width="500" height="333" /></a></p> <p>No matter how one quantifies it, hoiwever, one thing is certain: as DB said in its 2018 derivative outlook, "<strong>events produced very little vol in 2017. </strong>Vol spikes were few and shallow, and so technical<br />market risks were never truly triggered."</p> <p>Which is not to say there was no vol: there were a handful of events that did manage to push VIX briefly into the mid-teens... if only for a day or two. Indeed, VIX spikes <strong>"were few and short lived during 2017, with none lasting more than a week or even a day.</strong>"</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/VIX%20spikes%20DB%202017.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/VIX%20spikes%20DB%202017_0.jpg" width="500" height="202" /></a></p> <p>And here is another perspective, this time from Bank of America, which shows 2017 through the lens of various asset class volatilities:</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/BofA%20vol%20chart%20historical.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/BofA%20vol%20chart%20historical_0.jpg" width="500" height="515" /></a></p> <p>The paradox, of course, is that despite the record low volatility, we showed earlier that market fragility and instability is at an all time high. As <a href="http://www.zerohedge.com/news/2017-12-12/bofas-derivatives-wizards-reveal-top-17-themes-remember-2017">BofA showed</a>, "<strong>2017 stands out for generating an unprecedented number of 5 sigma 1-day SPX drawdowns, suggesting US equities are unusually fragile today by historical standards."</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/bofavol6.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/bofavol6_0.jpg" width="500" height="433" /></a></p> <p>So is 2018 the year vol finally snaps? As usual, it will depend on central bankers. Remember last week we showed that "<a href="http://www.zerohedge.com/news/2017-12-06/bofa-every-market-shock-2013-central-banks-have-stepped-protect-markets">In Every Market Shock Since 2013 Central Banks Have Stepped In To Protect Markets</a>"</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/market%20shock%20bofa.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/market%20shock%20bofa_0.jpg" width="500" height="247" /></a></p> <p>While it remain unknown if this will change, one thing clear: never before have the market technicals been as stretched as they are now along 4 key metrics including i) VIX ETP vega to buy in a 5 vol VIX move, ii) Vol control funds forced to dump stocks in a 3% S&amp;P seloff; iii) the S&amp;P net gamma positioning of dealers and iv) CTA leverage and exposure to risk.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/vol%20control%20selling.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/vol%20control%20selling_0.jpg" width="500" height="116" /></a></p> <p>Looking at the above, some may argue that a massive, market-reseting crash may be precisely what the (non-PhD) doctor ordered to flush the "market" of nearly a decade of central planning, capital misallocation, artificial supply and demand, and fake price discovery, and that when it finally does come, it would be warmly greeted by the grateful investing public. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1275" height="514" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/VIX%20spikes%20DB%202017.jpg?1513110711" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-12/these-were-biggest-market-volatility-shocks-2017#comments Bank of America Bank of America Central Banks Mathematical finance None S&P Technical analysis VIX Volatility Volatility Tue, 12 Dec 2017 20:32:24 +0000 Tyler Durden 609015 at http://www.zerohedge.com Small Business Optimism Spikes To Highest Since 1983, There's Just One Thing... http://www.zerohedge.com/news/2017-12-12/small-business-optimism-spikes-highest-1983-theres-just-one-thing <p>The NFIB Small Business Optimism survey hit this morning and it surged to near record highs...</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_nfib3_0.jpg" width="600" height="317" /></p> <p>&nbsp;</p> <p><strong>With Small Businesses having never been so excited to hire people ever...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_nfib2.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_nfib2_0.jpg" width="600" height="317" /></a></p> <p>Construction, manufacturing and professional services registered notable increases in planned hiring. The figures indicate the recent solid pace of job growth will be sustained and help extend the economic expansion.</p> <p>And, of course, President Trump was over the moon...</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Consumer Confidence is at an All-Time High, along with a Record High Stock Market. Unemployment is at a 17 year low. MAKE AMERICA GREAT AGAIN! Working to pass MASSIVE TAX CUTS (looking good).</p> <p>— Donald J. Trump (@realDonaldTrump) <a href="https://twitter.com/realDonaldTrump/status/940588025964265472?ref_src=twsrc%5Etfw">December 12, 2017</a></p></blockquote> <script src="https://platform.twitter.com/widgets.js"></script><p>Which leaves us wonder, <strong>if everything's so awesome,</strong> why are only a net 17% of firms expecting compensation to grow in the next year...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_nfib1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/12/12/20171212_nfib1_0.jpg" width="600" height="324" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="928" height="501" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171212_nfib1.jpg?1513107090" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-12/small-business-optimism-spikes-highest-1983-theres-just-one-thing#comments American people of German descent Business Business Climate change skepticism and denial Consumer Confidence Donald Trump Economy of the United States Labor NFIB The Apprentice Unemployment Unemployment United States WWE Hall of Fame Tue, 12 Dec 2017 20:11:11 +0000 Tyler Durden 609012 at http://www.zerohedge.com The 30-Years Bubble - Why America Ain't That Rich http://www.zerohedge.com/news/2017-12-12/30-years-bubble-why-america-aint-rich <p><a href="http://davidstockmanscontracorner.com/the-30-years-bubble-why-america-aint-that-rich/"><em>Authored by David Stockman via Contra Corner,</em></a></p> <div class="article-content"> <p><strong>The entire financial and economic narrative in&nbsp;today&#39;s&nbsp;Bubble Finance world&nbsp;is virtually&nbsp;context- and history-free; it&#39;s all about the short-term deltas and therefore exceedingly misleading and dangerous.</strong></p> <p>So when a big trend or condition is&nbsp;negative and unsustainable, you generally&nbsp;can&#39;t even get a glimpse of it from the so-called&nbsp;&quot;high-frequency&quot; weekly, monthly and even quarterly data on which the financial press and its casino patrons thrive. And that&#39;s&nbsp;not merely because most of the data from the government statistical mills is heavily massaged and modeled and often&nbsp;&quot;adjusted&quot; beyond recognition over 3-5 year intervals&nbsp;of statistical&nbsp;revision.</p> <p>Beyond that,&nbsp;however, even medium term trends get largely ignored. That&#39;s because<strong>&nbsp;the purpose of economic and financial data today&nbsp;is to facilitate&nbsp;daily (and hourly) trading in the casino---not inform long-term investors about underlying trends, conditions and prospects.</strong></p> <p>The&nbsp;investor class of yore, in fact, has largely&nbsp;been destroyed by the last&nbsp;30-years of monetary central planning and the Wall Street deformations it has fostered----meaning that, increasingly, headline reading algo-traders and trend-following speculators&nbsp;are the main consumers of the &quot;incoming data&quot;.</p> <p>For&nbsp;instance, scratch a talking head today&nbsp;and you get the &quot;strong economy&quot; meme as purportedly reflected in two&nbsp;back-to-back quarters of&nbsp;<em><strong>3%</strong></em> real GDP growth. Yet there is absolutely nothing &quot;strong&quot; about the picture below or compelling about the last two quarters.</p> <p>After all, during Q2 and Q3 2014 there were back-to-back growth quarters&nbsp;of<em><strong> 4.6%</strong></em> and <em><strong>5.2%</strong></em>, respectively. But that didn&#39;t last long----nor did the<em><strong> 3.1%</strong></em> and <em><strong>4.0%</strong> </em>growth rates of Q3 and Q4 of 2013 or the three-quarter average of <em><strong>3.0%</strong></em> in Q2-Q4 of 2010.</p> <p>All of those &quot;strong&quot; quarters seem to have disappeared from the groupthink narrative, as well as the punk quarters strewn in-between. In part, that&#39;s because most of them were reported at&nbsp;far lower or higher levels&nbsp;at the time, meaning that the underlying trend has simply disappeared from the high-frequency narrative about good deltas and excuses for ones which are not.</p> <p><strong>Still,&nbsp;the heart of the problem is the foolishness of&nbsp;annualizing 90 days worth of&nbsp;preliminary data with seasonal adjustment factors that are rarely up to the task.</strong></p> <p>Moreover, the large aggregates like GDP are inherently buffeted by short-term&nbsp;shocks ( e.g. severe hurricanes not embedded in the seasonals), inventory stocking and destocking mini-cycles and the ebb and flow of global trade,&nbsp;exchange rates&nbsp;and credit impulses. These,&nbsp;in turn,&nbsp;reflect the machinations of what has now become a worldwide&nbsp;convoy of hyper-interventionist Keynesian central banks.</p> <p><img class="alignnone size-medium" src="https://fred.stlouisfed.org/graph/fredgraph.png?g=gzP9" style="width: 600px; height: 332px;" /></p> <p><strong>Even modest adjustments to deal with some of these disabilities give a starkly different picture.</strong>&nbsp;For example, consider what happens when you&nbsp;remove the inventory contribution to quarterly&nbsp;GDP----which washes to essentially zero over time---and also set aside the highly volatile impact of net import/export trade, which has actually&nbsp;averaged a <em><strong>-0.28%</strong></em> contribution to GDP growth over the last 11 quarters.</p> <p>What remains might be termed &quot;core GDP&quot; and includes consumer spending, fixed investment and government output. On that basis,&nbsp;growth was <em><strong>2.4%</strong> </em>in Q4 2016;<em><strong> 2.4%</strong></em> and <em><strong>2.8%</strong></em> in Q1 and Q2&nbsp;2017, respectively;&nbsp;and just<em><strong>&nbsp;2.0%</strong></em>&nbsp;in Q3 2017. That is, the latest quarter showed the <em><strong>weakest</strong> </em>annualized expansion rate in the last year and there was no &quot;3&quot; in it or any of the previous three periods.</p> <p>In fact, a true long-term investor would only need to know whether the trend of year-over year growth in <em><strong>real final sales</strong></em>---which removes the volatile inventory component---is accelerating or decelerating and where&nbsp;the economy&nbsp;stands in the business cycle.</p> <p>The chart below answers that question and there is no awesome 3% about it:&nbsp;Real final sales growth&nbsp;during the&nbsp;current so-called recovery <em><strong>peaked 10 quarters ago;</strong></em> has always been exceedingly weak given the unusual depth of the Great Recession; and is now constrained by an&nbsp;expansion cycle that is&nbsp;exceedingly long in the tooth by all historic standards at 102 months.</p> <p>Even on a near-term basis, it&#39;s pretty hard to say that the<em><strong> 2.3%</strong></em> year-over-year expansion of real&nbsp;final sales&nbsp;in Q3 2017 was meaningfully different from the<em><strong> 2.2%</strong></em> year-0ver-year rate of gain recorded in Q1 2016.</p> <p>Indeed, the contrast&nbsp;between the alleged&nbsp;&quot;strengthening&quot;&nbsp;direction of the last <em><strong>four</strong></em>&nbsp;<em><strong>green bars</strong> </em>in the chart above (quarterly GDP SAAR)&nbsp;and the actual&nbsp;&quot;weakened&quot; position represented by the&nbsp;last<em><strong> four</strong> </em><strong>blues bars</strong> on the chart below (Y/Y real final sales growth)&nbsp;highlights why the Wall Street narrative is so chronically incomplete and misleading. The stock peddlers who moonlight as&nbsp;&quot;strategists&quot; and &quot;economists&quot; at Goldman, Morgan Stanley etc are essentially&nbsp;selling a short-term trading &quot;edge&quot; to fast money clients, not proffering fundamental analysis about the state of the&nbsp;business cycle and&nbsp;its implications for PE multiples and stock prices.</p> <p>That&#39;s more than evident in the fact that when the real final sales&nbsp;growth trend peaked at <em><strong>3.8%</strong></em> in Q1 2015, the S&amp;P 500 stood at 2070 and was valued at <em><strong>20.8X</strong> </em>LTM reported earnings, compared to 2660 today, which represents <em><strong>24.9X</strong> </em>reported earnings.</p> <p>That is, there has been a&nbsp;<em><strong>40% downshift</strong> </em>in the real final sales growth rate accompanied by a <em><strong>400 basis point expansion</strong> </em>of the PE multiple---and from what was already the nosebleed section of history<strong>.&nbsp;And the current PE&nbsp;inflation is occurring at a&nbsp;point when the business expansion is approaching the longest one in recorded history.</strong></p> <p><img class="alignnone size-medium" src="https://fred.stlouisfed.org/graph/fredgraph.png?g=gzU3" style="width: 599px; height: 313px;" /></p> <p><strong>Indeed, this late cycle PE expansion is all the more ludicrous when the current condition of the US economy is placed in full historic context.</strong>&nbsp;Given the depth of the 2008-09 downturn and the tepid cumulative gains since then&nbsp;(there should have been a strong rebound), the handwriting is on the wall, emblazoned in red letters.</p> <p>To wit,&nbsp; even if the current expansion should last another 12 or even 24 months, there still is no conceivable set of quarterly&nbsp;gains&nbsp;that could significantly&nbsp;elevate the <em><strong>1.2%</strong> </em>peak-to-peak real final sales growth rate for this cycle to date&nbsp;(i.e. it already embodies 108 months of actual results). But as&nbsp;shown below, that&#39;s&nbsp;just <em><strong>half</strong> </em>the level of the Greenspan housing boom, and barely <em><strong>one-third</strong> </em>of the 1980s and 1990s expansions.</p> <p>So why are PE multiples (i.e. honest ones based on reported GAAP, not Wall Street ex-items forward hockey sticks) rising to historic highs, when the US economy&#39;s&nbsp;trend growth capacity has succumbed to&nbsp;Ross Perot&#39;s famous &quot;sucking sound to the south&quot;, and when on top of that profit margins are at all-time highs and will eventually also succumb to mean-reversion towards the south?</p> <p><em><strong>We think the answer is patently obvious:&nbsp;Namely, the&nbsp;casino is not capitalizing the true&nbsp;facts of the US economy or even of reported earnings. The latter came in a&nbsp;$107 per share for the September LTM period----exactly $1 thin dollar above the $106 per share level recorded 36 months ago in September 2014 when the US&nbsp;economy was entering its cyclical high (blue bars above).</strong></em></p> <p>Instead,&nbsp;the stock market&nbsp;is essentially deliriously chasing the price action and pure momentum. So doing, it is implicitly&nbsp;capitalizing an omnipotent central bank that has purportedly&nbsp;vanquished the business cycle and ushered in an era of endless full employment and low bond yields, world without end.</p> <p><img class="alignnone size-medium wp-image-127102" src="http://davidstockmanscontracorner.com/wp-content/uploads/2016/11/Capture-480x333.png" style="width: 600px; height: 416px;" /></p> <p><em><strong>But that gets us to the 30-years bubble. Stock market capitalization of perpetual full employment is another way of saying that the economic and financial foundation of the US economy is rock solid; and is&nbsp;capable of sustained expansion like no other time in history---while also being completely immune to external shocks such as, say, a crash of the Red Ponzi or the bankruptcy of Italy and consequent break-up of the Eurozone and&nbsp;collapse of the euro.</strong></em></p> <p>That presumption is&nbsp;preposterous, of course, but is nonetheless embedded in the Wall Street/Washington narrative. Otherwise, they would not be celebrating the chart below and last week&#39;s news that household net worth in Q3 2017 posted at a breathtaking historic high of <em><strong>$97 trillion</strong></em>. Yes, with a &quot;T&quot;!</p> <p>The excitement, of course, was that the number was up by&nbsp;<em><strong>$7.3 trillion</strong> </em>or <em><strong>8.1%</strong></em>&nbsp;from Q3 2016 (i.e. the eve of Trump&#39;s election), and by <em><strong>$42 trillion</strong> </em>from the post-crisis low in Q1 2009.</p> <p>Who would have thunk it? A&nbsp;whopping <em><strong>$42 trillion</strong> </em>of new&nbsp;national riches that absolutely no one could have imagined in the dark days of a purported near-armageddon 100 months ago.</p> <p>Then again, the reason that the impossible has morphed into a quarterly&nbsp;celebrati0n on bubblevision is that no one is paying attention to the trend, its implications for the future and the economic logic embedded therein.</p> <p>As to the latter, consider this. During the 30 years of halcyon prosperity in America between Q2 1957&nbsp;and Q2 1987, real GDP grew at a<em><strong> 3.54%</strong></em> compound annual rate, while real household net worth rose at a nearly identical<em><strong>&nbsp;3.42%</strong></em> annualized&nbsp;rate.</p> <p>The one tracked the other, of course, because during any sustained period of time, the real wealth of a society cannot grow any faster than the growth of production and income. Not surprisingly, therefore, household net worth weighed in at <em><strong>3.70X</strong> </em>GDP in 1957 and the very same&nbsp;<em><strong>3.68X</strong> </em>GDP on the eve of Alan Greenspan&#39;s arrival at the Fed.</p> <p>But that&#39;s where the skunk in the woodpile comes in. In a word, the regime of Keynesian monetary central planning or Bubble Finance ushered in by the Maestro, and then aggravated by Bernanke and Yellen during and after the Fed induced Great Financial crisis, caused the iron linkage between long-term growth of production and wealth to be temporarily suspended.</p> <p>Consequently, household wealth---which soared from<em><strong> $18 trillion</strong> </em>to <em><strong>$97 trillion</strong> </em>between Q2 1987 and Q3 2017, as shown in the orange bars below, grew far faster than GDP. Accordingly, it now stands at an off-the-charts <em><strong>5.0X</strong> </em>nominal GDP of <em><strong>$19.5 trillion</strong></em>.</p> <p><strong>Stated differently, even though the trend growth rate has fallen sharply during the last 30 years, the wealth capitalization rate of the household sector has soared into the wild blue yonder compared to all prior history.</strong></p> <p>These ratios are both expressed in nominal numbers, of course,&nbsp; but when the chart below is re-priced into constant dollar terms by the GDP deflator, the disconnect is made all the more dramatic. Namely, even as the thirty-year real GDP growth rate fell from <em><strong>3.54%</strong></em> during 1957-1987 to <strong>2.54%</strong> during the last thirty year period, the real growth rate of household net worth actually accelerated.</p> <p><strong>Since the Greenspan instigated era of Bubble Finance commenced in 1987, real household net worth has nearly tripled in today&#39;s dollars (from $33 trillion to $97 trillion), representing a <em>3.6% </em>annual growth rate.</strong></p> <p>\<img class="alignnone size-medium" src="https://fred.stlouisfed.org/graph/fredgraph.png?g=gwnb" style="width: 600px; height: 401px;" /></p> <p>Then again, the chart below suggests why these staggering gains in purported household wealth are not what they are cracked-up to be.</p> <p>To wit, real median household income during the same 30-year period has crept higher at just a <em><strong>0.4%</strong> </em>annual rate. That means, in turn, that real wealth, as reported by the Fed&#39;s flow-of-funds series, has grown <em><strong>nine times</strong> </em>faster than real&nbsp;median household&nbsp;incomes in America.</p> <p><u><em><strong>To be sure, on the surface that reflects the reverse Robin Hood effect of Bubble Finance at work. The inflation of financial and real estate assets have overwhelming gone to the top 1% and 10% of households.</strong></em></u></p> <p><u><em><strong>But at the end of the day, that giant gap cannot be explained away by the notion that there has been a permanent redistribution of the wealth to the top of the economic&nbsp;latter.</strong></em></u></p> <p>To the contrary, the truth of the matter is that the <em><strong>$97 trillion</strong> </em>of household wealth reported last week is neither real nor sustainable; it&#39;s merely another flashing red warning sign that financial asset inflation has reached dangerous asymptotic&nbsp;heights.</p> <p>For instance, if the household net worth-to-GDP ratio had remained at its historic&nbsp;<em><strong>3.7X </strong></em>level<em>&nbsp;</em>through the present, household net worth today would be just&nbsp;<em><strong>$72 trillion</strong></em>, implying that the Fed has generated at least <em><strong>$24 trillion</strong> </em>of bottled air since 1987.</p> <p><img class="alignnone size-medium" src="https://fred.stlouisfed.org/graph/fredgraph.png?g=gzMW" style="width: 600px; height: 297px;" /></p> <p><strong>In fact, the overstatement of household net worth is far larger than even that. The burgeoning demographic/fiscal crisis in America will actually grind economic growth toward the zero bound during the decade of the&nbsp;2020s as massive public sector borrowing forces bond yields dramatically higher.</strong></p> <p>And that will reveal the&nbsp;ugly underside&nbsp;of last week&#39;s flow-of-funds report. To wit, the nation is now saddled with <em><strong>$68 trillion</strong> </em>of public and private debt compared to <em><strong>$10.7 trillion</strong> </em>when the era of Bubble Finance incepted back in October 1987.</p> <p>In combination with 85 million retirees (by the end of the next decade), this debt albatross will smother American capitalism in high taxes, high interest rates and battered balance sheets in both the household and business sectors.&nbsp;As that outcome&nbsp;unfolds, the current absurdly inflated stock market PE multiples&nbsp;will get monkey-hammered by the reality of&nbsp;stagnant growth and struggling profits.</p> <p>That is to say, <strong>America ain&#39;t nearly&nbsp;so rich as the Fed&#39;s fantasy figures suggest</strong>.</p> <p>And that&#39;s a&nbsp;truth you can<strong> take to the bank by getting out of the casino now!</strong></p> </div> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="477" height="255" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20171212_stockman_0.jpg?1513107699" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-12/30-years-bubble-why-america-aint-rich#comments Alan Greenspan Bond Business Central Banks Economic policy of the George W. Bush administration Economy Economy of Canada Economy of the United States ETC Eurozone Financial crisis of 2007–2008 fixed GAAP Great Recession Gross domestic product Italy Macroeconomics Morgan Stanley Nominal GDP PE Multiple Presidency of George W. Bush Price Action Real estate Reality Recession Recession recovery S&P 500 Unemployment US Federal Reserve World economy Tue, 12 Dec 2017 19:52:25 +0000 Tyler Durden 609013 at http://www.zerohedge.com McCabe Cancels Testimony, Something "Far More Sinister" With Fusion GPS http://www.zerohedge.com/news/2017-12-12/mccabe-cancels-testimony-something-far-more-sinister-fusion-gps <p>FBI Deputy Director Andrew McCabe abruptly cancelled his closed door testimony in front of the House Intelligence Committee&nbsp;as <strong>news emerged that <a href="http://www.zerohedge.com/news/2017-12-11/senior-doj-officials-wife-worked-oppo-research-firm-produced-trump-dossier">the wife of Senior DOJ official Bruce Ohr worked for Fusion GPS</a></strong><a href="http://www.zerohedge.com/news/2017-12-11/senior-doj-officials-wife-worked-oppo-research-firm-produced-trump-dossier"></a>, the opposition research firm which assembled the infamous "Trump dossier." Ohr was demoted last week after allegedly trying to conceal his contacts with Fusion.&nbsp;</p> <p><em><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/FBI-Deputy-Director-Andrew-McCabe-at-the-Cambridge-Cyber-Summit-thumbnail.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/FBI-Deputy-Director-Andrew-McCabe-at-the-Cambridge-Cyber-Summit-thumbnail_0.jpg" width="500" height="281" /></a><br />FBI Deputy Director Andrew McCabe</em></p> <p><em>Fox News </em>reporter Chad Pergram's sources tell him "<strong>McCabe has an Ohr problem,</strong>" and they believe <strong>"FBI DepDir McCabe not coming to Hse Intel Cmte tomorrow because he'd be asked about Bruce Ohr &amp; Ohr's wife Nellie who worked for Fusion GPS</strong>," adding <strong>"something far more sinister.</strong>"&nbsp;</p> <p>Pergram also tweeted "<strong>Expect subpoenas to compel McCabe to appear this wk."&nbsp;</strong></p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">FBI’s McCabe was expected to appear before Hse to Intel Cmte Tues. Now told he’s not coming. Expect subpoenas to compel McCabe to appear this wk. Source: “McCabe has an Ohr problem”</p> <p>— Chad Pergram (@ChadPergram) <a href="https://twitter.com/ChadPergram/status/940428289063124992?ref_src=twsrc%5Etfw">December 12, 2017</a></p></blockquote> <script src="https://platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet"> <p dir="ltr" lang="en">Congressional sources tell Fox they believe FBI DepDir McCabe not coming to Hse Intel Cmte tomorrow because he’d be asked about Bruce Ohr &amp; Ohr’s wife Nellie who worked for Fusion GPS. <br />something far more sinister.</p> <p>— Chad Pergram (@ChadPergram) <a href="https://twitter.com/ChadPergram/status/940428751434809344?ref_src=twsrc%5Etfw">December 12, 2017</a></p></blockquote> <script src="https://platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet"> <p dir="ltr" lang="en">Fox is told Hse Intel Cmte will likely subpoena FBI DepDir McCabe to appear this wk. In addition, will subpoena documents/emails related to McCabe’s appearance</p> <p>— Chad Pergram (@ChadPergram) <a href="https://twitter.com/ChadPergram/status/940429034323922944?ref_src=twsrc%5Etfw">December 12, 2017</a></p></blockquote> <script src="https://platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet"> <p dir="ltr" lang="en">Source tells Fox they think McCabe scheduling snafu before Hse Intel arose after Fox rpt tonight about wife of DoJ’s Bruce Ohr. Nellie Ohr worked for Fusion GPS thru last fall. Firm is connected to anti-Trump dossier.</p> <p>— Chad Pergram (@ChadPergram) <a href="https://twitter.com/ChadPergram/status/940429728854560769?ref_src=twsrc%5Etfw">December 12, 2017</a></p></blockquote> <p>Of note, House Intel Committee chairman <a href="http://www.zerohedge.com/news/2017-12-05/more-anti-trump-messages-reportedly-sent-members-muellers-team-lot-more-going-come-o" target="_blank">Devin Nunes (R-CA) announced last week</a> that they were <strong>prepared to hold McCabe and assistant Attorney General Rod Rosenstein in contempt for the DOJ's failure to comply with a previous subpoena</strong>. He also accused the FBI and the DOJ of willfully refusing to comply with an Aug. 24 subpoena in part by refusing the committee's request "<strong>for an explanation of Peter Strzok's dismissal from the Mueller probe.</strong>"</p> <p><em><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/Bruce-Ohr-Nellie-Ohr.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/Bruce-Ohr-Nellie-Ohr_0.jpg" width="500" height="302" /></a><br />Bruce and Nellie Ohr</em></p> <p>As we reported <a href="http://www.zerohedge.com/news/2017-12-11/senior-doj-officials-wife-worked-oppo-research-firm-produced-trump-dossier" target="_blank">yesterday</a>,&nbsp;Nellie Ohr, the wife of disgraced DOJ official Bruce Ohr, was employed at Fusion GPS last year. <strong>Her term of employment overlapped with the period when the Trump dossier was being compiled.</strong> Though Fox was unable to discern the exact nature of her role at the firm, its reporters discovered that she has done extensive research on Russia-related topics for think tanks based in the Washington, DC area.</p> <p><em><a href="http://www.foxnews.com/politics/2017/12/11/wife-demoted-doj-official-worked-for-firm-behind-anti-trump-dossier.html" target="_blank">Fox News</a></em>&nbsp;reports:&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>A senior Justice Department official demoted last week for concealing his meetings with the men behind the anti-Trump “dossier” had even closer ties to Fusion GPS,</strong> the firm responsible for the incendiary document, than have been disclosed, Fox News has confirmed: The official’s wife worked for Fusion GPS during the 2016 election.</p> <p>&nbsp;</p> <p>Contacted by Fox News,<strong> investigators for the House Permanent Select Committee on Intelligence (HPSCI) confirmed that Nellie H. Ohr, wife of the demoted official, Bruce G. Ohr, worked for the opposition research firm last year. </strong>The precise nature of Mrs. Ohr’s duties – including whether she worked on the dossier – remains unclear but a review of her published works available online reveals Mrs. Ohr has written extensively on Russia-related subjects. HPSCI staff confirmed to Fox News that she was paid by Fusion GPS through the summer and fall of 2016.</p> </blockquote> <p style="font-size: 13.008px;">Also notable is the fact that Bruce Ohr's wife <strong>not only worked for Fusion GPS, but also represented the CIA's "Open Source Works" group&nbsp;</strong>in a 2010 "<a href="https://www.ncjrs.gov/pdffiles1/nij/230846.pdf" target="_blank">expert working group</a> report on international organized crime" <strong>along with&nbsp;Bruce Ohr and Fusion GPS co0founder Glenn Simpson</strong>.&nbsp;</p> <blockquote class="twitter-tweet" style="font-size: 13.008px;"><p dir="ltr" lang="en">Nellie Ohr, the wife of demoted DOJ official, Bruce Ohr, not only worked for Fusion GPS, but has also represented the CIA's "Open Source Works" group.&nbsp;<a href="https://t.co/u5HPgJwvWd">https://t.co/u5HPgJwvWd</a>&nbsp;<a href="https://t.co/ZPhAIzR6wv">pic.twitter.com/ZPhAIzR6wv</a></p> <p>— Josh Caplan (@joshdcaplan)&nbsp;<a href="https://twitter.com/joshdcaplan/status/940444559468892160?ref_src=twsrc%5Etfw">December 12, 2017</a></p></blockquote> <p style="font-size: 13.008px;">Of note <strong style="font-size: 13.008px;">Open Source Works</strong>&nbsp;is described as the "<strong style="font-size: 13.008px;">CIA's in-house open source analysis component, devoted to intelligence analysis of unclassified, open source information."&nbsp;&nbsp;</strong>So - Nellie Ohr, the wife of recently demoted DOJ official Bruce Ohr - <strong style="font-size: 13.008px;">worked for both Fusion GPS and the CIA</strong>.&nbsp;It is unclear whether her time at Fusion overlapped with her time at the CIA.&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Open Source Works, which is the CIA’s in-house open source analysis component, is devoted to intelligence analysis of unclassified, open source information.&nbsp; Oddly, however, the directive that established Open Source Works is classified, as is the charter of the organization.&nbsp; In fact, CIA says the very existence of any such records is a classified fact. <strong>“The CIA can neither confirm nor deny the existence or nonexistence of records responsive to your request,” </strong>wrote Susan Viscuso, CIA Information and Privacy Coordinator, in a November 29 response to a Freedom of Information Act request from Jeffrey Richelson of the National Security Archive for the Open Source Works directive and charter. </p> <p>&nbsp;</p> <p>“The fact of the existence or nonexistence of requested records is currently and properly classified and is intelligence sources and methods information that is protected from disclosure,” Dr. Viscuso wrote. This is a surprising development since Open Source Works — by definition — does not engage in clandestine collection of intelligence.&nbsp; Rather, it performs analysis based on unclassified, open source materials. -<em><a href="https://fas.org/blogs/secrecy/2011/12/cia_osw/" target="_blank">FAS</a></em></p> </blockquote> <p><a href="http://www.foxnews.com/politics/2017/12/07/top-doj-official-demoted-amid-probe-contacts-with-trump-dossier-firm.html" target="_blank">House investigators</a> determined that&nbsp;<strong style="font-size: 13.008px;">during the 2016 election, Bruce&nbsp;Ohr met with former MI6 spy Christopher Steele, and shortly after the 2016 election he met with Glenn Simpson, the co-founder of Fusion GPS -&nbsp;</strong>who commissioned Steele to assemble the dossier.&nbsp;</p> <p><em><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/Ron-Desantis.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/Ron-Desantis_0.jpg" width="500" height="281" /></a><br />Ron DeSantis (R-FL)</em></p> <p><strong>Another factor in McCabe's sudden cancellation</strong>&nbsp;is a report from <em>The Hill</em>'s John Solomon that&nbsp;Rep. Ron DeSantis (R-FL)&nbsp;recently interviewed a retired FBI supervisor who told him <strong>he was instructed by Deputy Director Andrew McCabe <a href="http://www.zerohedge.com/news/2017-12-07/fbi-deputy-director-mccabe-told-agents-lie-about-benghazi-investigation-says-gop-law" target="_blank">not to call the 2012 Benghazi attack an act of terrorism</a></strong> when distributing the FBI's findings to the larger intelligence community - despite knowing exactly who conducted the attack.&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The agent found the instruction concerning because his unit had gathered incontrovertible evidence showing a major al Qaeda figure had directed the attack and the information had already been briefed to President Obama, the lawmaker said. -<a href="http://thehill.com/homenews/administration/363666-gop-lawmakers-cite-new-allegations-of-political-bias-in-fbi" target="_blank">The Hill</a></p> </blockquote> <div><strong>If true, it means McCabe lied for the Obama administration in a clear, partisan violation of the FBI's mandate to "detect and prosecute crimes against the United States," not "lie for the President so as not to offend Islam." </strong>As Rep. DeSantis told <em>The Hill:</em>&nbsp;</div> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <div>"<strong>What operational reason would there be to issue an edict to agents telling them, in the face of virtually conclusive evidence to the contrary, not to categorize the Benghazi attack as a result of terrorism?</strong> By placing the interests of the Obama administration over the public's interests, <strong>the order is yet another data point highlighting the politicization of the FBI."</strong></div> </blockquote> <div>Whether McCabe cancelled&nbsp;over his "Ohr problem," or for instructing a retired FBI supervisor to lie about the Benghazi attack, or because he doesn't want to talk about Peter Strzok's dismissal from the Mueller probe - one thing is for sure; Devin Nunes can't be happy, and we can probably expect subpoenas to start flying off his desk as soon as this morning.</div> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="500" height="281" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/FBI-Deputy-Director-Andrew-McCabe-at-the-Cambridge-Cyber-Summit-thumbnail.jpg?1513083579" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-12/mccabe-cancels-testimony-something-far-more-sinister-fusion-gps#comments al-Qaeda Central Intelligence Agency Christopher Steele Competitive intelligence Department of Justice DOJ Donald Trump–Russia dossier Espionage FBI Federal Bureau of Investigation Federal Bureau of Investigation Fox News Freedom of Information Act Fusion GPS Government House Intel Committee House Intelligence Committee International relations Law national security Obama Administration Obama administration Permanent Select Committee President Obama Russian interference in the 2016 United States elections Russia–United Kingdom relations SPY Testimony Twitter Twitter United Kingdom–United States relations United States intelligence agencies Tue, 12 Dec 2017 19:50:06 +0000 Tyler Durden 608976 at http://www.zerohedge.com Revolutionary Guard Commander Says Iran Will Support Palestinian Forces In Fight Against Israel http://www.zerohedge.com/news/2017-12-12/iran-revolutionary-guard-commander-says-will-support-palestinian-forces-fight-agains <p>With US forces in the middle-east in chaos and disarray, with Saudi Arabia unsure if it wants to side with Israel or other Arab nations, and with its ally Russia increasingly more influential in the region, Iran is not only increasingly flexing its muscles, but is hardly ashamed to show it off. </p> <p>Over the weekend, we <a href="http://www.zerohedge.com/news/2017-12-09/irans-revolutionary-guard-sends-formal-message-us-military-leave-syria-or-else">reported that according to source information, </a>the commander of the Iranian Revolutionary Guards Corp, Brigadier General Qassem Soleimani sent a formal verbal message, via Russia, to the head of the US forces command in Syria, advising him to pull out all US forces to the last soldier “<strong>or the doors of hell will open up</strong>”.</p> <p>“My message to the US military command: when the battle against ISIS will end, no American soldier will be tolerated in Syria. I advise you to leave by your own will or you will be forced to it,” said Soleimani to a Russian officer. Soleimani asked the Russian officer to make known the Iranian intentions towards the US: that they will be considered as forces of occupation if these decide to stay in northeast Syria where Kurds and Arab tribes cohabit together.</p> <p> <em><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/07/iran.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/12/07/iran.jpg" style="width: 400px; height: 456px;" /></a></em></p> <p><em>IRGC commander Qassem Soleimani <br /></em></p> <p>Soleimani’s message to the US clearly indicated the promise of ‘surprise measures’ against the US:&nbsp; "<strong>You shall face soldiers and forces you have not experienced before in Syria and you will leave the country sooner or later.</strong>" Furthermore, Russia conveyed to the US that Iran will stay in Syria as long as President Assad desires, and he insists on liberating the entire territory from all forces without exception (although Russia confirmed to the US its intention to refrain from offering any air support to Iran and its allies in the case of attacks on US forces).</p> <p>The exchange took place days after CIA Director Mike Pompeo said last week that he <a href="http://www.newsweek.com/cia-director-pompeo-message-iran-political-stunt-730555">had sent a letter to Soleimani </a><strong>expressing his concern about Iran’s intention to attack American interests and “will hold Soleimani and Iran accountable for any attack in Iraq</strong>.”</p> <p>If the threat was meant to spook the veteran Iranian general, it failed to do that, and on Tuesday, Soleimani expanded his preemptive war message, <strong>saying his nation is ready to support Palestinian forces in the Gaza Strip, days after the U.S. recognized Jerusalem as Israel’s capital unleashed anti-Israel and anti-US violence uniformly around the world</strong>. As a reminder, Palestinians claim Jerusalem’s eastern sector, where the mosque stands, as the capital of a future state, and they oppose the U.S. move. As we reproted last week, Hamas has repeatedly called for another Intifada against Israel in response, though so far protests have been limited.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/IRGC%20troops.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/11/30/IRGC%20troops_0.jpg" width="400" height="275" /></a></p> <p>According to <a href="https://www.bloomberg.com/news/articles/2017-12-12/iran-guards-commander-says-ready-to-back-palestinian-forces">Bloomberg</a>, Soleimani made the offer in a phone call late Monday with leaders of groups in Gaza, according to the Revolutionary Guard Corps’ website, Sepah News, which didn’t give details of the assistance proffered. Other forces in the region are ready to defend the Al-Aqsa mosque in Jerusalem, Soleimani also told the Gaza faction leaders, without identifying them. The mosque is Islam’s third-holiest shrine and a frequent flashpoint for tensions between Israel and the Palestinians.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Soleimani spoke a day after the head of Lebanon’s Hezbollah movement, <strong>Hassan Nasrallah, called on all “resistance” groups in the region to come up with a unified strategy to take back Jerusalem</strong>. Iran’s Quds force operates beyond the country’s borders and has fought Islamic State in Iraq and backed President Bashar al-Assad in Syria. <strong>Iran also supports proxies such as Hezbollah and Hamas that have warred with Israel. </strong></p> </blockquote> <p>Meanwhile, Robert Gates, the former U.S. defense secretary in the administrations of George W. Bush and Barack Obama, sided with Iran, noting that Trump’s decision is “counter-productive to the administration’s own objectives,” Gates told Bloomberg News. “There was a sense this administration really thought it had a shot at making some real progress,” he said in an interview in Dubai. This announcement “makes it much tougher to try and get any kind of political progress” between Israel and the Palestinians. Gates concurred with European and Arab leaders who say it is liable to fuel more conflict in the Middle East. The international community doesn’t recognize Israeli sovereignty over Jerusalem, whose eastern sector Israel captured in the 1967 Middle East war.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="800" height="551" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/IRGC%20troops.jpg?1513106740" /> </div> </div> </div> http://www.zerohedge.com/news/2017-12-12/iran-revolutionary-guard-commander-says-will-support-palestinian-forces-fight-agains#comments Barack Obama Bloomberg News Central Intelligence Agency Dubai Foreign relations of Iran Hamas Hamas Hezbollah Hizballah Iran Iranian people Iraq Irregular military Islam Islam and antisemitism Israel Middle East Middle East northeast Syria Persian people Politics Qasem Soleimani Quds Force Revolutionary Guard Corps Robert Gates Saudi Arabia Terrorism Twelvers War Tue, 12 Dec 2017 19:30:55 +0000 Tyler Durden 609011 at http://www.zerohedge.com