en America's Decline And The Neglect Of Luther's Principles Of Liberty <p><a href=""><em>Authored by S.T.Karnick via,</em></a><em>&nbsp;</em></p> <p class="drop-caps"><strong><em>Freedom requires a sense of personal responsibility if it is to survive.</em></strong></p> <p class="drop-caps"><a href=""><img alt="" src="" style="width: 599px; height: 282px;" /></a></p> <p class="drop-caps">With the nation&rsquo;s news dominated by reports of political corruption (most recently, the Clintons&rsquo; apparent use of &ldquo;pay to play&rdquo; schemes during Hillary Clinton&rsquo;s tenure as U.S. secretary of state), sexual harassment scandals pandemic among the nation&rsquo;s elites, extreme vulgarization of political speech and the common culture, riots against freedom of speech on the nation&rsquo;s college campuses, paralyzing partisanship in Congress, death threats and open assassination attempts against government leaders and police officers, and the rest of the dismaying parade of moral shortcomings on display among the nation&rsquo;s leaders in all walks of life, <u><em><strong>it appears that we are in the midst of a war not just between political and cultural factions, but over the very definition of our civilization.</strong></em></u></p> <div class="print-only"> <p>The primacy of individual liberty versus rule by elites is at the heart of this conflict, but with a twist: <em><strong>The undermining of personal responsibility is creating a backlash against liberty as people rampantly abuse their freedoms.</strong></em> A half-millennium ago, the German monk and theologian Martin Luther set the foundations for the modern world by redefining the relationship between people and their institutions, shattering the legal structures that insulated elites from the consequences of their misdeeds.</p> <p>Writing in&nbsp;the<em> Wall Street Journal</em>&nbsp;on the eve of the 500th anniversary of the beginning of the Protestant Reformation, King&rsquo;s College history professor Joseph Loconte insightfully<strong> traces the sources of&nbsp;<a href="">Martin Luther&rsquo;s ideas about freedom of the individual will</a>&nbsp;and the world-changing effect those thoughts would have over the subsequent half-millennium.</strong></p> <p>Although Luther was committed to the spiritual authority of the Catholic Church, his religious views about spiritual elitism would eventually affect political attitudes throughout the West, introducing &ldquo;a radical egalitarianism that helped lay the foundation for modern democracy and human rights.&rdquo; Loconte writes,</p> <div class="code-block code-block-4 ai-viewport-1 ai-viewport-2" style="float: right; margin: 8px 8px 8px 8px;">&nbsp;</div> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Luther came to despise every form of spiritual elitism. He sought to replace rigid church hierarchies with &ldquo;the priesthood of all believers,&rdquo; </strong>the proposition that there are no qualitative differences between clergy and laity. &ldquo;Just because we are all priests of equal standing,&rdquo; he wrote in &ldquo;An Open Letter to the Christian Nobility&rdquo; (1520), &ldquo;no one must push himself forward and, without the consent and choice of the rest, presume to do that which we all have equal authority.&rdquo;</p> </blockquote> <p><strong>Luther&rsquo;s &ldquo;message of freedom&rdquo; has not lost its power after five centuries, Loconte notes, providing a useful example for those who today oppose the many leaders of modern U.S. institutions who abuse their offices for personal gain:</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Luther took an ax to the legal culture that shielded priests and bishops from criminal prosecution simply because they held church offices. &ldquo;It is intolerable that in canon law, the freedom, person, and goods of the clergy should be given this exemption, as if the laymen were not exactly as spiritual, and as good Christians, as they, or did not equally belong to the church.&rdquo;</p> </blockquote> <p>Loconte observes that Luther&rsquo;s concept of liberty included a deep awareness of the responsibilities that accompany freedom:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;A Christian has no need of any work or law in order to be saved,&rdquo; [Luther] insisted, &ldquo;since through faith he is free from every law and does everything out of pure liberty and freely.&rdquo; Christian liberty of this kind provided no excuse for libertinism. Just the opposite: &ldquo;I will therefore give myself as a Christ to my neighbor, just as Christ offered himself to me.&rdquo;</p> </blockquote> <p>Our nation&rsquo;s founders&nbsp;<a href="">universally acknowledged this view</a>, evident in observations such as this from Benjamin Franklin:&nbsp;<strong>&ldquo;Only a virtuous people are capable of freedom. As nations become more corrupt and vicious, they have more need of masters.&rdquo;</strong></p> <p><strong>Similarly, the rise and proliferation of such masters undermines virtue, both by making choice impossible (one cannot earn moral credit for actions done under compulsion) and by creating&nbsp;<a href="">moral hazard</a>, artificial reduction of the risks associated with making choices.</strong></p> <p>Thus, the enormous growth of government in the United States over the past 125 years both reflects and generates the loss of the idea of liberty, which has made national greatness possible.</p> <p><strong>We are seeing the results in economic stagnation, the takeover of the nation&rsquo;s institutions by thieves and tyrants, the decline of U.S. power in the world, and the dizzying array of stories of personal corruption among the nation&rsquo;s leaders in all walks of life.</strong></p> <p><em><u><strong>The fall of today&rsquo;s political and cultural icons cannot arrive too soon.</strong></u></em></p> </div> <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="625" height="294" alt="" src="" /> </div> </div> </div> Apocalypticists Catholic Church Christian mystics Christianity Congress Corruption Democracy Egalitarianism King’s College Liberty Lutheran theology Martin Luther Moral Hazard Politics Politics Protestant theology Protestantism Religion Universal priesthood Wall Street Journal Tue, 12 Dec 2017 04:35:00 +0000 Tyler Durden 608962 at Chinese Banks Push Back On Shadow Banking Regulations - Expose "Catch-22" For Financial System <p>In November, we discussed how <strong>the post-Party Congress measures to deleverage and crackdown on the worst abuses in China&rsquo;s credit bubble took an important step forward with the announcement of a new era of regulation for China&rsquo;s $15 trillion shadow banking and asset management industry.</strong> See <a href="">&quot;A New Era In Chinese Regulation Means Turmoil For $15 Trillion In China&#39;s Shadows&quot;</a>. In particular, the authorities turned their sights on wealth management products (WMPs).</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 279px;" /></a></p> <p>On the way out are &ldquo;guaranteed returns&rdquo; and &ldquo;capital pools&rdquo; which had turned the $4 trillion sector into a leveraged Ponzi scheme. <strong>We joked that in a &ldquo;radical and shocking&rdquo; departure from the norm, financial institutions would have to offer yields based on the risk and returns of the underlying assets</strong>. Paying out guaranteed returns with new funds from depositors would no longer be allowed.</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 306px;" /></a></p> <p>Commentators at the time described it as &ldquo;a new era of regulation&rdquo; which would lead to tighter risk control and slower but higher quality growth in the Chinese economy, blah, blah. However, our interest was piqued by the implementation date for the new rules. This is slated for the end of June 2019, providing Chinese banks and the entire shadow banking system a grade period to get their house in order. As we suggested.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>We can only guess the delay reflects the enormity of the problems discovered by China&rsquo;s regulators when they finally looked under the hood.</p> </blockquote> <p><strong>We didn&rsquo;t have to wait long for confirmation that our cynicism was justified.</strong> It turns out that there was a &ldquo;closed-door meeting&rdquo; last week during which Chinese banks laid out the systemic risk if the regulators pursue their reform plan. According to <a href="">Reuters</a>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Ten Chinese banks have raised strong objections to the central bank&rsquo;s recent move to tighten rules on the asset management sector, saying it may cause a rush of redemptions among other risks, three sources with knowledge of the matter told Reuters.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Senior executives from the joint-stock banks said during a closed-door meeting in Shanghai last week that the rules would have a big impact on financial markets and could even &ldquo;trigger systemic financial risks&rdquo;, according to the sources, who declined to be identified due to the sensitivity of the matter. The executives also said the new rules on removing implicit guarantees for wealth management products (WMPs) could spark liquidity risks and increase market volatility, the sources said late on Thursday.</p> </blockquote> <p><strong>Unlike the Big Four state-owned banks, the smaller banks have limited scope to increase lending in the absence of WMP funding...and that&#39;s ignoring the &quot;black holes&quot; hidden beneath the surface.</strong></p> <p><a href=""><img alt="" src="" style="width: 500px; height: 319px;" /></a></p> <p><u><strong>In short, the entire Chinese financial system, from depositors to banks to asset management companies, has become addicted to the WPM model.</strong></u> Reforming it will only advance the crystallization of losses and bankruptcies, never mind largescale protests from investors who have always assumed that, somehow, the banks would make good on their promises. On a small scale, the clearest example of the near-impossibility of reforming WMPs without threatening China&rsquo;s financial system, was the example of Foresea Life Insurance in May this year. This report from <a href="">Fortune</a> captured Ponzi nature and risk of civil unrest.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>A Chinese insurer has warned the country&rsquo;s regulators of defaults in the billions and possible unrest unless it is allowed to launch new products again. Foresea Life Insurance asked the China Insurance Regulatory Commission (CIRC) in a letter dated Apr. 28 to lift its ban, &ldquo;in order to avoid inciting mass incidents by clients and localized and systemic risks, producing greater damage to the industry,&rdquo; reports the Financial Times. It further warned that, with an expected redemption of $8.7 billion this year, the insurer might not be able to meet payouts without selling new products.</p> </blockquote> <p><a href=""><img alt="" src="" style="width: 500px; height: 333px;" /></a></p> <p>The Bloomberg article portrays the feedback they gave to regulators on the new regime as &ldquo;a rare protest by Chinese bankers as pressure mounts amid a government campaign to de-leverage and de-risk the country&rsquo;s massive and increasingly complex financial system&rdquo;. However, it&rsquo;s much more than that, it&rsquo;s essentially a plea for the survival on the part of smaller banks. Without large pools of deposits, smaller banks have relied on WMP and other shadow banking conduits for funding. In the absence of guaranteed returns, leverage and fraud, that might not have been a problem.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The new rules will pose a direct challenge to a business model that small- and mid-tier banks have been relying on to drive asset expansion and profit growth, bankers told Reuters earlier. &ldquo;Every time when the regulators announce tighter regulations it would almost always benefit the large state banks and hurt the smaller ones, because they (the latter) are taking much bigger risks,&rdquo; said a senior executive at one of the country&rsquo;s big four state-controlled lenders.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The joint-stock banks, which are unable to compete against large state banks for public deposits, have depended on selling WMPs with implicit guarantee of fixed returns to attract retail funds. In turn, they invest the money they manage into stocks, bonds and non-standard debt assets to generate profit. Bank executives said at the meeting the 28.38 trillion yuan of banks&rsquo; WMPs, part of the so-called shadow banking sector, have allowed them to bypass regulatory restrictions on credit expansion and capital constraints.</p> </blockquote> <p><strong>The problem for Xi Jinping and his cronies is that they left the situation to fester for way too long before attempting to intervene.</strong> In an effort to dissuade the authorities, here is Reuters on more <strong>warnings from the threatened banks.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>If the current draft of the rules takes effect, banks will be forced to offload assets beforehand, including selling bonds, stocks and other liquid assets at a discount and asking clients to repay loans before time, the sources said. &ldquo;No matter which solution we choose, it will hit financial markets,&rdquo; they added.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The banks also said rules on strictly limiting bank WMP investments in non-standard debt assets and private equities would reduce their support for the real economy and increase financing costs for companies, the sources said. They also suggested the central bank remove certain rules and extend the transition period for the new rules - currently up to June 2019 - to three years to smooth the impact, the sources said.</p> </blockquote> <p><strong>&hellip;which basically amounts to a &ldquo;Catch-22&rdquo; situation for China&rsquo;s financial system</strong>.</p> <p>Meanwhile, it&rsquo;s worth highlighting a (very) recent example of fraud in the Chinese banking system which encompassed the WMP sector. Last Friday, the <a href="">South China Morning Post</a> (SCMP) reported on the 722 million yuan ($109 million) fine &ndash; the industry&rsquo;s biggest penalty - served on Guangfa Bank, the largest bank in Guangzhou city. The bank covered up the default of two bonds issued by phone maker, Cosun Group, which had ben sold on an Ant Financial Holdings&rsquo; WMP platform. As the SCMP explains.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Ant Financial and 10 other banks sought compensation for investors from Zheshang Property and Casualty Insurance, which had provided insurance coverage on the debt, only to discover that the insurer had been issued fake letters of guarantee by Guangfa&rsquo;s branch in Huizhou city. The fraudulent documents were created using counterfeit corporate seals made by branch staff. The case involved as much as 12 billion yuan, as the bank tried to channel money to cover its mounting bad loans and operational losses.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;Guangfa did everything that regulators hate the most,&rdquo; said Chen Shujin, chief financial analyst at Huatai Securities. &ldquo;They gave an under-the-table guarantee, and made illegal interbank investments to cover up a non-performing loan.&rdquo;</p> </blockquote> <p><em><strong>The epidemic of fraud across China&rsquo;s financial system has been obvious for years. The Catch-22 situation faced by the Chinese authorities boils down to a timing preference. With Xi&rsquo;s position cemented for the next five years, the authorities can bring on the <strike>&ldquo;Minsky moment&rdquo;</strike> adjustment, knowing that the economy can recover by 2022. Or they can postpone it, leading to a truly catastrophic collapse down the road.</strong></em><br />&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="920" height="520" alt="" src="" /> </div> </div> </div> Bank Banking Business China China Insurance Regulatory Commission Chinese financial system Congress crystallization default Economic systems Economy Finance Financial crises Financial crisis of 2007–2008 fixed Money Reuters Shadow Banking Shadow banking system South China Systemic risk Too big to fail Volatility Yuan Tue, 12 Dec 2017 04:15:00 +0000 Tyler Durden 608931 at "It Will Impact The Life Of Every Single Human Being" - The Cryptocurrency Revolution Documentary <p>The latest&nbsp;short film from Jonathan Roth discusses the <strong>advent of the blockchain, where it goes next and how the technology will impact every single human being on the planet.</strong></p> <p>Featuring investment powerhouses like Frank Giustra and&nbsp;<a href="" target="_blank">Frank Holmes</a>, as well as mathematician and finance entrepreneur Marco Streng:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>The blockchain will disrupt nearly every industry from purchasing groceries to heating your home... everyone from banking to government is racing to develop the technology.</strong></em></p> </blockquote> <p>Watch the full movie:</p> <p><iframe allow="encrypted-media" allowfullscreen="" frameborder="0" gesture="media" height="315" src="" width="560"></iframe></p> <p><a href=""><em>Source:;s Mac Slavo</em></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="1247" height="608" alt="" src="" /> </div> </div> </div> Blockchains Computing Cryptocurrencies Entertainment Frank Giustra Information Technology Technology Tue, 12 Dec 2017 03:55:00 +0000 Tyler Durden 608961 at "Millennials Don't Care About Logos": How Collapsing Brand Loyalty Will Allow Amazon To Dominate Apparel <p>Despite daily affirmations from the White House that "everything is awesome" with the economy, 2017 has been a miserable year for retailers.&nbsp; As Reorg First Day points out, over 30 retailers, with debt aggregating into the billions of dollars, have filed for bankruptcy so far this year...</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">After Shiekh Shoes' filing today, at least 30 retail chains have filed for chapter 11 relief thus far in 2017: <a href=""></a></p> <p>— Reorg First Day (@ReorgFirstDay) <a href="">November 29, 2017</a></p></blockquote> <script src=""></script><p>..<strong>.with over half of them coming from the apparel industry.&nbsp; </strong></p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Apparel companies account for 52% of retail chain chapter 11 bankruptcies this year: <a href=""></a></p> <p>— Reorg First Day (@ReorgFirstDay) <a href="">November 10, 2017</a></p></blockquote> <script src=""></script><p>Of course, as we discuss frequently, this trend is attributable to, among other things, collapsing mall traffic courtesy of a persistent shift of consumer spending to online retailers like Amazon and others.&nbsp; And while apparel was always expected, or at least hoped, to be somewhat immune from the "Amazon Effect," one of the derivative results of lower mall traffic, and one that is only becoming more apparent now, is the collapsing brand loyalty of millennials.</p> <p>As <a href="">Bloomberg </a>points out today, <strong>a whole generation of millennial Americans,</strong> who are just now starting to obtain financial self-sufficiency, <strong>couldn't care less about polo ponies, crocodiles or any of the other clever logos that retailers have spent billions on over the years to convince you that you should pay $125 for a shirt that would sell for $15 absent the logo on the breast...</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>“Every new generation is becoming less and less brand-loyal,”</strong> Bahulkar says. <strong>“Millennials don’t care as much about logos. They will buy anything from anywhere at any price point, and that is a big change.”</strong></p> <p>&nbsp;</p> <p>The erosion of brand loyalty has been a boon for Target, the cheap-chic retailer that made its name in apparel via partnerships with top designers Isaac Mizrahi and Jason Wu more than a decade ago. It’s leveraged that success to create its own private labels in recent years, most notably Cat &amp; Jack, a kids’ apparel line whose sales surpassed $2 billion after a little more than a year on the shelves. Target’s winning formula has emboldened Wal-Mart, which recently hired a veteran of Saks Fifth Avenue and Ralph Lauren Corp. to boost its fashion game.</p> </blockquote> <p>...which is great news if you're an online retailing giant and want to get into apparel but haven't spent decades dumping billions of dollars into now-useless brand development.&nbsp; </p> <p>&nbsp;<a href=" - PL.JPG"><img src="" style="width: 600px; height: 508px;" /></a></p> <p>According to Wells Fargo estimates, Amazon will leapfrog T.J. Maxx and Macy’s in 2017 to become the second-biggest seller of apparel and footwear in the United States and it has everything to do with how they've managed to transform the shopping habits of consumers.</p> <p>For those of you who are old enough, consider how you planned out your apparel shopping trips in the late 90s.&nbsp; For many of you it probably included a trip to the mall with predetermined stops at the specific stores you liked for any number of different reasons...not the least of which was brand recognition.&nbsp; </p> <p>Now, contrast that to today when apparel shopping often begins with an online search...a search which consultants at Bain &amp; Co. recently found to often exclude any mention of a brand at all...consumers just enter “yoga pants” and see what comes up.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Searching for generic product categories on Amazon turns up plenty of private-label options. </strong>More than one-quarter of first-page Amazon search results in categories such as men’s button-down shirts were private labels, Bain says. <strong>That helps explain why almost 40 cents of every dollar spent online on clothing and footwear in the U.S. will go to Amazon this year, according to data tracker Euromonitor, up from 23 cents in 2014.</strong></p> <p>&nbsp;</p> <p>In some categories—like the active wear that Americans increasingly wear all day, whether or not they hit the gym—private labels combined account for 20% of the market, according to researcher NPD. That makes store brands in aggregate larger than any single brand, which should strike fear in the executive suites of Lululemon Athletica, Nike, and Under Armour.</p> <p>&nbsp;</p> <p><strong>“Active wear is going like wildfire,”</strong> Wilson says, for the simple reason that <strong>“you don't have to try on spandex pants. If I was in those categories, I would be worried.”</strong></p> </blockquote> <p>Of course, not everyone, including Candace Corlett of WSL Strategic Retail, thinks Amazon will be successful in apparel, saying "I don’t know anyone who is jumping up and down about buying clothes on Amazon...They’ve put together a lot of midpriced, uninteresting stuff."&nbsp; Somehow, we suspect the CEO of whichever apparel giant is forced into bankruptcy next just might disagree.</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="650" height="365" alt="" src="" /> </div> </div> </div> Bain Business Business E-commerce Economy Retail Saks Twitter Twitter Wells Fargo White House White House Tue, 12 Dec 2017 03:35:00 +0000 Tyler Durden 608945 at The Fed's "Magic Trick" Exposed <p><a href=""><em>Authored by Jeff Thomas via,</em></a></p> <p><strong>In 1791, the first Secretary of the Treasury of the US, Alexander Hamilton, convinced then-new president George Washington to create a central bank for the country.</strong></p> <p>Secretary of State Thomas Jefferson opposed the idea, as he felt that it would lead to speculation, financial manipulation, and corruption. He was correct, and in 1811, its charter was not renewed by Congress.</p> <p>Then, the US got itself into economic trouble over the War of 1812 and needed money. In 1816, a Second Bank of the United States was created. <strong>Andrew Jackson took the same view as Mister Jefferson before him and, in 1836, succeeded in getting the bank dissolved.</strong></p> <p><strong>Then, in 1913, the leading bankers of the US succeeded in pushing through a third central bank, the Federal Reserve. </strong>At that time, critics echoed the sentiments of Messrs. Jefferson and Jackson, but their warnings were not heeded. For over 100 years, the US has been saddled by a central bank, which has been manifestly guilty of speculation, financial manipulation, and corruption, just as predicted by Mister Jefferson.</p> <p><strong>From its inception, one of the goals of the bank was to create inflation. </strong>And, here, it&rsquo;s important to emphasise the term &ldquo;goals.&rdquo;<strong> Inflation was not an accidental by-product of the Fed - it was a <em>goal</em>.</strong></p> <p>Over the last century, the Fed has often stated that inflation is both <em>normal</em> and <em>necessary</em>. And yet, historically, it has often been the case that an individual could go through his entire lifetime without inflation, without detriment to his economic life.</p> <p><strong>Yet, whenever the American people suffer as a result of inflation, the Fed is quick to advise them that, without it, the country could not function correctly.</strong></p> <p>In order to illustrate this, the Fed has even come up with its own illustration &ldquo;explaining&rdquo; inflation. Here it is, for your edification:</p> <p><img src="" style="max-width: 550px; width: 100%; height: auto;" /></p> <p>If the reader is of an age that he can remember the inventions of Rube Goldberg, who designed absurdly complicated machinery that accomplished little or nothing, <strong>he might see the resemblance of a Rube Goldberg design in the above illustration.</strong></p> <p><strong>And yet, the Fed&rsquo;s illustration can be regarded as effective. </strong>After spending several minutes taking in the above complex relationships, an individual would be unlikely to ask, &ldquo;What did they <em>leave out</em> of the illustration?&rdquo;</p> <p>Well, what&rsquo;s missing is the Fed itself.</p> <p>As stated above, back in 1913, one of the <em>goals </em>in the creation of the Fed was to have an entity that had the power to create currency, which would mean the power to create inflation.</p> <p>It&rsquo;s a given that all governments tax their people. Governments are, by their very nature, parasitical entities that produce nothing but live off the production of others. And, so, it can be expected that any government will increase taxes as much and as often as it can get away with it. The problem is that, at some point, those being taxed rebel, and the government is either overthrown or the tax must be diminished. This dynamic has existed for thousands of years.</p> <p><u><strong>However, inflation is a bit of a magic trick. </strong></u>Now, remember, a magician does no magic. What he does is create an <em>illusion</em>, often through the employment of a distraction, which fools the audience into failing to understand what he&rsquo;s <em>really</em> doing.</p> <p>And, for a central bank, inflation is the ideal magic trick. The public do not see inflation as a tax; the magician has presented it as a <em>normal</em> and even <em>necessary</em> condition of a healthy economy.</p> <p><strong>However, what inflation (which has traditionally been defined as the increase in the amount of currency in circulation) really accomplishes is to devalue the currency through oversupply. And, of course, anyone who keeps his wealth (however large or small) in currency units loses a portion of it with each devaluation.</strong></p> <p>In the 100-plus years since the creation of the Federal Reserve, the Fed has steadily inflated the US dollar. Over time, this has resulted in the dollar being devalued by over 97%.</p> <p>The dollar is now virtually played out in value and is due for disposal. In order to continue to &ldquo;tax&rdquo; the American people through inflation, a reset is needed, with a new currency, which can then also be steadily devalued through inflation.</p> <p>Once the above process is understood, it&rsquo;s understandable if the individual feels that his government, along with the Fed, has been robbing him all his life. He&rsquo;s right&mdash;it has.</p> <p><strong>And it&rsquo;s done so without ever needing to point a gun to his head.</strong></p> <p>The magic trick has been an eminently successful one, and there&rsquo;s <strong>no reason to assume that the average person will ever unmask and denounce the magician.</strong> However, the individual who understands the trick can choose to mitigate his losses. <strong>He can take measures to remove his wealth from any country that steadily imposes inflation upon him and store it in a country where this either does not occur, or occurs to a lesser degree.</strong></p> <p>*&nbsp; *&nbsp; *</p> <p><em>Moving a portion of your wealth overseas sounds daunting... like something only the ultra-rich can or even should do. In reality, it&rsquo;s one of the most important steps anyone can take to protect his wealth from an out of control government. Now Doug Casey is sharing practical ways to get started in his timely special report Getting Out of Dodge. <a href="" target="_blank">Click here to download your free PDF copy now.</a></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="606" height="312" alt="" src="" /> </div> </div> </div> Business Central bank Chronic inflation Congress Corruption Economy fed Federal Reserve Financial economics Inflation Macroeconomics Monetary policy Money Money supply pdf Reality US Federal Reserve Tue, 12 Dec 2017 03:15:00 +0000 Tyler Durden 608960 at Top Crypto-Mining Executive Explains Why "We're Hoarding The Coins" <p><a href=""><em>Authored by Mac Slavo via,</em></a></p> <p>If the price action in crypto currencies over the last several months has proven anything, it&rsquo;s that the blockchain&nbsp;has gone&nbsp;fully mainstream with global investors, major financial institutions and governments showing significant interest in the space.&nbsp;While a number of blockchain projects are moving onto the stage, the primary focus for investors has been Bitcoin, which has seen an increase of over 1,600% in 2017. And according to Frank Holmes, there is much more to come.</p> <p>In an <strong><a href="" target="_blank">interview with SGT Report</a></strong>, Holmes,&nbsp;the Chairman of <strong><a href="" target="_blank">Hive Blockchain Technologies</a></strong>, the world&rsquo;s only publicly traded blockchain mining company&nbsp;explains that, while roughly 78% of the available 21 million Bitcoins, or about 16.4 million, have been mined up to this point, there are probably <em>only about 10 million coins in actual circulation</em> around the world because somewhere on the order of 25% have been lost forever due to misplaced wallet access keys and other issues. Moreover, of those 10 million or so available coins, it has been widely reported that about 1000 &ldquo;whales,&rdquo; or high net worth investors, <strong><a href="" target="_blank">own some 40% of the coins</a></strong>, creating a scarcity in the market that has left millions of global investors chasing a limited supply of BTC.</p> <p>Holmes suggests that this limited availability works to the advantage of cryptocurrency miners who use&nbsp;expensive computer hardware mining rigs&nbsp;to process transactions on the blockchain, because with so much investment capital moving into the space they can hoard the coins they mine and sell into the market during price spikes while loading up on more coins when markets dip. Hive currently mines Ethereum, Ethereum Classic, Bitcoin and will soon move into Litecoin and other popular cryptocurrencies using the same strategy:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>We&rsquo;re hoarding the coins&hellip; we mine virgin coins and in fact we are getting offered premiums for our coins because they&rsquo;ve never been tainted. </strong></p> <p>&nbsp;</p> <p><strong>We never buy the coins&hellip; anytime it has a huge surge we will sell one, two or three percent&hellip; and as soon as it corrects we just mine more and replenish ourselves&hellip; </strong></p> <p>&nbsp;</p> <p><strong>We want to wait until we get at least 20,000 coins and then we can turn around and use our quant models, so we&rsquo;re doing things very unique&hellip;</strong></p> </blockquote> <p style="text-align: left;"><iframe allow="encrypted-media" allowfullscreen="" frameborder="0" gesture="media" height="315" src="" width="560"></iframe></p> <p style="text-align: left;">Most crypto currencies have a maximum supply of coins that can ever be mined. As Bitcoin demonstrates, a percentage of those already-mined coins will be lost. Another percentage will be locked up by high net worth and long-term investors. These mechanics create a situation where, perhaps only a little over half of the actual listed circulation of coins is actually circulating.</p> <p style="text-align: left;">With this being the case it&rsquo;s not difficult to see why, as tens of billions of dollars, and perhaps even trillions as has been suggested by investment gurus, continue to pile into these assets, prices for top tier <strong><a href="" target="_blank">crypto currencies could continue to rise exponentially</a></strong> in coming months and years.</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="250" height="123" alt="" src="" /> </div> </div> </div> Alternative currencies Bitcoin Bitcoin Blockchains Business Coin Cryptocurrencies Currency Decentralization Ethereum Finance Legality of bitcoin by country or territory Litecoin Money Price Action Æternity Tue, 12 Dec 2017 02:58:00 +0000 Tyler Durden 608952 at Measuring the Mania of Crypto <p><em><strong>From the <a href="" target="_blank">Slope of Hope</a></strong></em>:&nbsp;<span style="color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">It seems everyone is talking about Bitcoin these days. On ZeroHedge, I'd say easily half the articles are crypto-related. And why not?</span><span style="color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">&nbsp;</span><strong style="color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">The equity market has become a bore</strong><span style="color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">. How much can you say about a market which basically</span><span style="color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">&nbsp;</span><strong style="color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">goes up about half a percent day after day</strong><span style="color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">&nbsp;</span><span style="color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">until the end of time? I've anchored my life to discussing equity markets, God help me, so having something that actually moves up AND down is exciting and novel after the past eight years.</span></p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">Of course, daring to predict ANYTHING about cryptos is a fool's errand. Just a few months ago, a&nbsp;<strong>Bitcoin trader and "expert" offered up this prediction</strong>&nbsp;for the second half of the year:</p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;"><img src="" width="602" height="394" style="height: auto; max-width: 100%; border-radius: 3px; box-shadow: rgba(0, 0, 0, 0.2) 0px 1px 4px;" class="alignnone" /></p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">So - - basically down to "S3" at about $1200 and then a tremendous rally to $3,000 by about now.&nbsp;<strong>Of course, nothing like that took place.</strong>&nbsp;As I'm typing this, we're around $17,000 or so (click&nbsp;<a href="$BTC" target="_blank" style="color: #21759b; outline: none;">here</a>&nbsp;to see the latest chart) and there was never any big dip - - except maybe for the chap who created the aforementioned chart in the first place.</p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">Some predictions - - maybe even wild guesses - - have been closer to the mark. Way back in December 2013,<strong>&nbsp;the Winklevoss twins</strong>&nbsp;(of Social Network fame) made&nbsp;<a href="" target="_blank" style="color: #21759b; outline: none;">the lunatic prediction that Bitcoin would rise to $40,000</a>&nbsp;(it was $1,000 at the time). Surely&nbsp;<strong>that seemed to be stark raving mad</strong>, and also quite self-serving, since they had bought $11 million of Bitcoin.</p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">And<strong>&nbsp;how foolish they must have looked</strong>&nbsp;(and felt) when just weeks after their ridiculous prediction,&nbsp;<strong>Bitcoin fell 90%</strong>&nbsp;- - NINETY PERCENT!! - - which made it look like it was a ruinous choice. I confess, I'd have been the first one laughing.&nbsp;<strong>But he who laughs last laughs loudest,</strong>&nbsp;and the Winklevii are laughing their assess off now, since their stake is approaching $2 billion.&nbsp;<strong>Their $40,000 prediction is, to some, looking conservative.</strong></p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;"><a href="" style="color: #21759b; outline: none;" rel="attachment wp-att-71833"><img src="" alt="BTC" width="679" height="436" style="height: auto; max-width: 100%; border-radius: 3px; box-shadow: rgba(0, 0, 0, 0.2) 0px 1px 4px;" class="alignnone size-full wp-image-71833" /></a></p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">The now-super-rich WInklevoss twins have&nbsp;<strong>updated their crazy prediction with, of course, something even crazier</strong>, stating that even with the incredible rise we've seen so far, it's going to&nbsp;<a href="" target="_blank" style="color: #21759b; outline: none;">go up another twenty-fold</a>. In other words, about&nbsp;<strong>$300,000</strong>&nbsp;per Bitcoin (let's all remember this launched at a value of 1 penny in 2009, so that's&nbsp;<strong>a rise of 30-million-fold in value</strong>).</p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">The ascent of cryptos is, of course, unprecedented. People keep talking about tulips. Look, I wrote a&nbsp;<a href=";camp=1789&amp;creative=9325&amp;creativeASIN=111868432X&amp;linkCode=as2&amp;tag=prophet-20" target="_blank" style="color: #21759b; outline: none;">book</a>&nbsp;about financial manias, and tulips went up about ten-fold during its mania. Bitcoin has already gone up hundreds-of-thousands-of-fold, so&nbsp;<strong>it's not even close</strong>. Instead, let's compare it to the one mania we experienced in our lifetimes, which was the hottest stocks of the Internet bubble.</p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">To give us a baseline, let's try to think of a "base" for Bitcoin. It isn't a penny. Instead, I like to think of the price where Bitcoin stabilized after its first big crash (see chart above), which is around $160 to $200 (see two arrows pointing out the double bottom).<strong>&nbsp;Let's split the difference and call it $180.</strong>&nbsp;So that'll be our starting point.</p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">There were&nbsp;<em>hundreds</em>&nbsp;of new stocks during the initial Internet&nbsp;era, but the two I want to use for this little thought experiment are&nbsp;<strong>Amazon</strong>&nbsp;and&nbsp;<strong>Yahoo</strong>, both of which&nbsp;had&nbsp;breathtaking ascents in price. When people remember the Internet bubble, they might think stocks had insane P/E ratios of 100, 200, or 300. Not so. Yahoo, for instance, had<strong>&nbsp;a P/E of nearly 2,200</strong>&nbsp;before the bubble burst. (Of course, Bitcoin has a P/E of&nbsp;<em>infinity</em>, but let's not get distracted with the fact it actually isn't a business that could ever produce a profit someday).</p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">So, starting off with&nbsp;<strong>Amazon</strong>.............</p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;"><a href="" style="color: #21759b; outline: none;" rel="attachment wp-att-71832"><img src="" alt="AMZN" width="846" height="643" style="height: auto; max-width: 100%; border-radius: 3px; box-shadow: rgba(0, 0, 0, 0.2) 0px 1px 4px;" class="alignnone size-full wp-image-71832" /></a></p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">The red arrow from the late 1990s show its incredible explosion from about $1.31 to $113, a rise of about<strong>&nbsp;90-fold</strong>. Using our base of $180, that gives us a target "bubble peak" of&nbsp;<strong>$16,200.</strong>&nbsp;Well, although Bitcoin does seem to be stalling and struggling at around the $17,000 level, it seems to me we've already smashed by this lofty target. In other words,&nbsp;<strong>Bitcoin has outperformed Amazon's 1990s bubble phase.</strong></p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">Turning&nbsp;our attention to the late&nbsp;<strong>Yahoo</strong>&nbsp;(now a funky holding company with the unfortunate moniker of Altaba.......):</p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;"><a href="" style="color: #21759b; outline: none;" rel="attachment wp-att-71834"><img src="" alt="YHOO" width="837" height="633" style="height: auto; max-width: 100%; border-radius: 3px; box-shadow: rgba(0, 0, 0, 0.2) 0px 1px 4px;" class="alignnone size-full wp-image-71834" /></a></p> <p style="line-height: 1.71429; margin-top: 0px; margin-bottom: 1.71429rem; color: #444444; font-family: &quot;Open Sans&quot;, Helvetica, Arial, sans-serif; font-size: 14px;">Its rise was even crazier, from .70 to 125, which is&nbsp;<strong>180-fold</strong>, giving us a target price of about&nbsp;<strong>$30,600.</strong>&nbsp;And, since one guess is as good as any other, l<strong>et's go with that</strong>. It's a mere 1/10th what the Winklevii are calling for, and who knows, they may well be right. But at least loony Yahoo in the late 1990s give us SOME basis for just how high the public might bid up a totally new financial instrument before greed gives way to fear, and it all comes tumbling down to something a little less&nbsp;tethered&nbsp;to stark, raving madness.</p> Alternative currencies Bitcoin Bitcoin Cryptocurrencies Currency Digital currencies Economics of bitcoin Equity Markets Exonumia Numismatics Slope of Hope Winklevoss twins Tue, 12 Dec 2017 02:55:02 +0000 Tim Knight from Slope of Hope 608968 at HSBC Shares Surge As US DoJ Removes "Sword Of Damocles" On Money Laundering <p><strong>On Monday, HSBC announced its deferred prosecution agreement with the US Department of Justice (DoJ) had expired, removing the threat of criminal prosecution for money laundering which had been hanging over the company for five years.</strong> From the <a href="">Financial Times</a>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The US Department of Justice has given HSBC a major boost by seeking dismissal of the deferred criminal charges that have been hanging over the bank since it was fined for money laundering and sanctions breaches five years ago. The move by the DoJ lifts the threat of criminal prosecution that had been a &ldquo;sword of Damocles&rdquo; hanging over London-headquartered HSBC, as its new management team looks to put its misconduct-plagued past behind it.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>HSBC said the DoJ would file a motion with the US District Court for the Eastern District of New York seeking the dismissal of the charges deferred by the agreement it reached as part of a settlement with the bank in December 2012.The deferred prosecution agreement meant the DoJ could have reopened the criminal case against HSBC if the bank had been caught breaching the rules again during that period.</p> </blockquote> <p><a href=""><img alt="" src="" style="width: 500px; height: 337px;" /></a></p> <p><strong>To recap, in December 2012, HSBC agreed to pay the largest fine ever - &pound;1.2 billion ($1.9 billion) - to settle charges of money laundering after a US Senate investigation concluded that the bank had acted as a conduit for &ldquo;drug kingpins and rogue nations&rdquo;.</strong> HSBC was found to have violated the Bank Secrecy Act, the International Emergency Economic Powers Act and the Trading with the Enemy Act. From the <a href="">DoJ&rsquo;s press release</a>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;HSBC&rsquo;s blatant failure to implement proper anti-money laundering controls facilitated the laundering of at least $881 million in drug proceeds through the U.S. financial system.&nbsp; HSBC&rsquo;s willful flouting of U.S. sanctions laws and regulations resulted in the processing of hundreds of millions of dollars in OFAC-prohibited transactions.</p> </blockquote> <p><strong>The bank admitted to poor money laundering controls and its CEO, Stewart Gulliver apologised, stating &ldquo;We accept responsibility for our past mistakes&rdquo;. </strong>At the time, the <a href="">BBC</a> summarised the key points from the Senate&rsquo;s report.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>HSBC in the US had not treated its Mexican affiliate as high risk, despite the country&#39;s money laundering and drug trafficking challenges<br />The Mexican bank had transported $7bn in US bank notes to HSBC in the US, more than any other Mexican bank, but had not considered that to be suspicious.</p> <p>It had circumvented US safeguards designed to block transactions involving terrorists drug lords and rogue states, including allowing 25,000 transactions over seven years without disclosing their links to Iran.</p> <p>Providing US dollars and banking services to some banks in Saudi Arabia despite their links to terrorist financing.</p> <p>In less than four years it had cleared $290m in &quot;obviously suspicious&quot; US travellers&#39; cheques for a Japanese bank, benefiting Russians who claimed to be in the used car business.</p> </blockquote> <p>HSBC&rsquo;s share price surged up to 2.1% after trading opened in London on Monday, hitting an intra-day peak of 748.9 pence. In its 2016 annual report, the bank had warned that an independent assessor appointed by the DoJ had expressed &ldquo;significant concerns&rdquo; about the pace of HSBC&rsquo;s attempts to address the shortcoming highlighted in the Senate report. The media is portraying the announcement as a victory for outgoing CEO, Stuart Gulliver, an HSBC lifer, and the recently appointed Chairman &ndash; never mind that the bank has paid $13-14bn of fines for all manor of misconduct since 2011. From Bloomberg.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The expiry of the DPA is a vindication for Stuart Gulliver, who is due to hand over his role as chief executive to his retail banking and wealth management head John Flint after the bank&rsquo;s full-year results in February. Mr Gulliver said: &ldquo;HSBC is able to combat financial crime much more effectively today as the result of the significant reforms we have implemented over the last five years.&rdquo;</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The move also provides an early success for Mark Tucker, who took over as non-executive chairman of HSBC in October having been chief executive of Asian insurer AIA for almost a decade.</p> </blockquote> <p><a href=""><img alt="" src="" style="width: 500px; height: 342px;" /></a></p> <p><strong>HSBC was &ldquo;lucky&rdquo; to receive a deferred prosecution after DoJ prosecutors recommended criminal charges.</strong> In 2013, the Financial Services Committee of the U.S. House of Representatives, led by Jeb Hensarling, a Republican of Texas, investigated the 2012 decision to settle with HSBC. We will leave readers to ponder on this July 2016 report from <a href="">CNBC</a>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Senior U.S. Department of Justice officials overruled internal recommendations to prosecute global bank HSBC for money-laundering violations because of concerns about the stability of the financial system, according to a congressional report released on Monday.</p> <p>The report, which relies on internal records from the Department of the Treasury, said the U.S. attorney general at the time, Eric Holder, &quot;misled&quot; Congress about the Justice Department&#39;s reasoning for declining to prosecute.</p> <p>Internal emails cited in the report show the Justice Department&#39;s Asset Forfeiture and Money Laundering Section, represented by then-chief Jennifer Shasky Calvery, was &quot;considering seeking a guilty plea from HSBC&quot; as early as September 2012. Shasky Calvery earlier this year joined HSBC in a senior global financial crime-fighting role, a source familiar with her plans told Reuters in April.</p> <p>Senior leadership at the Justice Department, including Holder, ultimately overruled criminally charging the bank, even though Holder had testified in front of Congress that &quot;banks are not too big to jail,&quot; the report said.</p> </blockquote> <p><u><em><strong>Too big to fail, too big to jail, plus ca change.</strong></em></u><br />&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="518" height="298" alt="" src="" /> </div> </div> </div> Bank secrecy Business Congress Department of Justice Department of Justice Department of the Treasury Department of the Treasury Eric Holder Fail Finance Financial services Financial Services Committee HSBC HSBC Mexico Investment banks Iran Law Money Money laundering Reuters Saudi Arabia Senate Stephen Green, Baron Green of Hurstpierpoint Too Big To Fail U.S. Department of Justice United States Senate US District Court for the Eastern District of New York US House of Representatives Tue, 12 Dec 2017 02:55:00 +0000 Tyler Durden 608916 at Is Bitcoin, Millennial's "Fake Gold"? <p><em><a href="">Authored by Vitality Katsenelson via,</a></em></p> <p>I&rsquo;ve been asked about Bitcoin a lot lately. I haven&rsquo;t written anything about it because I find myself in an uncomfortable place in agreeing with the mainstream media: It&rsquo;s a bubble.<strong> Bitcoin started out as what I&rsquo;d call &ldquo;millennial gold&rdquo; &ndash; the young (digital) generation looked at it as their gold substitute.</strong></p> <p><img alt="" src="" style="width: 600px; height: 346px;" /></p> <p><strong>Bitcoin is really two things: a blockchain technology and a (perceived) currency. </strong>The blockchain element of Bitcoin may have enormous future applications: It may be used for electronic contracts, voting, money transfers &ndash; and the list goes on. But there is a very important misconception about Bitcoin: <strong>Ownership of Bitcoin doesn&rsquo;t give you ownership of the technology. I, without owning a single bitcoin, own as much Bitcoin technology as someone who owns a million bitcoins; that is, exactly none.</strong> It&rsquo;s just like when you have $1,000 on a Visa debit card: That $1,000 doesn&rsquo;t give you part ownership of the Visa network unless you actually own some Visa&rsquo; stock.</p> <p>Owning Bitcoin gives you a right to &hellip; what, actually? Digital bits?</p> <p>I can understand gold bugs and the original Bitcoin aficionados. <strong>The global economy is living beyond its means and financing its lifestyle by issuing a lot of debt.</strong> Normally this behavior would cause higher interest rates and inflation. But not when you have central banks. Our local central bankers simply bought this newly issued debt and brought global interest rates down to near-zero levels (and in many cases to what would have been previously unthinkable negative levels). If you think investing today is difficult, being a parent is even more difficult. I tried to explain the above to my sixteen-year-old son, Jonah. I saw the same puzzled look in his eyes as when he found out where babies come from. I also felt embarrassed, for my inability to explain how governments can buy the debt they just issued. The concept of negative interest rates goes against every logical fiber in my body and is as confusing to this forty-four-year-old parent as it is to my sixteen-year-old.</p> <p>The logical inconsistencies and internal sickness of the global economy have manifested themselves into a digital creature: Bitcoin. <strong>The core argument for Bitcoin is not much different from the argument for gold: Central banks cannot print it. </strong>However, the shininess of gold has less appeal to millennials than Bitcoin does. They are not into jewelry as much as previous generations; they don&rsquo;t wear watches (unless they track your heartbeat and steps). Unlike with gold, where transporting a million dollars requires an armored track and a few body builders, a nearly weightless thumb drive will store a dollar or a billion dollars of Bitcoin. Gold bugs would of course argue that gold has a tradition that goes back centuries. To which digital millennials would probably say, gold is analog and Bitcoin is digital. And they&rsquo;d add, in today&rsquo;s world the past is not a predictor of the future &ndash; Sears was around for 125 years and now it is almost dead.</p> <p>A client jokingly told me that his biggest gripe with me in 2016 and 2017 was that I didn&rsquo;t buy him any Bitcoin. I told him not so jokingly that if I bought him Bitcoin, he&rsquo;d be right to fire me. Maybe I&rsquo;m a dinosaur; but, like gold, Bitcoin is impossible to value. <strong>What is it worth? It has no cash flows.</strong> Is a coin worth $2, $200, or $20,000? But Wall Street strategists have already figured out how to model and value this creature. Their models sound like this:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;If only X percent of the global population buys Y amount of Bitcoin, then due to its scarcity it will be worth Z&rdquo;.</p> </blockquote> <p>On the surface, these types of models bring apparent rationality and an almost businesslike valuation to an asset that has no inherent value. You can let your imagination run wild with X&rsquo;s and Y&rsquo;s, but the simple truth is this:<strong> Bitcoin is un-valuable.</strong></p> <p>In 1997, when Coke&rsquo;s valuation started to rival some dotcoms, bulls used this math:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;The average consumer of Coke in developed markets drinks 296 ounces of Coke a year. These markets represent only 20% of the global population.&rdquo;</p> </blockquote> <p>And then the punchline:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;Can you imagine what Coke&rsquo;s sales would be if only X% of the rest of the world consumed 296 ounces of Coke a year?&rdquo;</p> </blockquote> <p><strong>Somehow, the rest of the world still doesn&rsquo;t consume 296 ounce of Coke. Twenty years later, Coke&rsquo;s stock price is not far from where it was then &ndash; but on the way it declined 60% and stayed there for a decade. </strong>Coke, however, was a real company with a real product, real sales, a real brand and real tangible, dividend-producing cash flows.</p> <p>If you cannot value an asset you cannot be rational. With Bitcoin at $11,000 today, it is crystal clear to me, with the benefit of hindsight, that I should have bought Bitcoin at 28 cents. But you only get hindsight in hindsight. Let&rsquo;s mentally (only mentally) buy Bitcoin today at $11,000. If it goes up 5% a day like a clock and gets to $110,000 &ndash; you don&rsquo;t need rationality. Just buy and gloat. But what do you do if the price goes down to $8,000? You&rsquo;ll probably say, &ldquo;No big deal, I believe in cryptocurrencies.&rdquo; What if it then goes to $5,500? Half of your hard-earned money is gone. Do you buy more? <strong>Trust me, at that point in time the celebratory articles you are reading today will have vanished. </strong>The awesome stories of a plumber becoming an overnight millionaire with the help of Bitcoin will not be gracing the social media. The moral support &ndash; which is really peer pressure &ndash; that drives you to own Bitcoin will be gone, too.</p> <p>Then you&rsquo;ll be reading stories about other suckers like you who bought it at what &ndash; in hindsight &ndash; turned out to be the all-time high and who got sucked into the potential for future riches. And then Bitcoin will tumble to $2,000 and then to $100. Since you have no idea what this crypto thing is worth, there is no center of gravity to guide you or anyone else to make rational decisions. With Coke or another real business that generates actual cash flows, we can at least have an intelligent conversation about what the company is worth. We can&rsquo;t have one with Bitcoin. The X times Y = Z math will be reapplied by Wall Street as it moves on to something else.</p> <p><strong>People who are buying Bitcoin today are doing it for one simple reason: FOMO &ndash; fear of missing out.</strong> Yes, this behavior is so predominant in our society that we even have an acronym for it. Bitcoin is priced today at $11,000 because the fool who bought it for $11,000 is hoping that there is another, greater fool who will pay $12,000 for it tomorrow. This game of greater fools is not new. The Dutch played it with tulips in the 1600s&ndash; it did not end well. Americans took the game to a new level with dotcoms in the late 1990s &ndash; that round ended in tears, too. And now millennials and millennial-wannabes are playing it with Bitcoin and few hundred other competing cryptocurrencies.</p> <p>The counterargument to everything I have said so far is that those dollar bills you have in your wallet or that digitally reside in your bank account are as fictional as Bitcoin. True. Currencies, like most things in our lives, are stories that we all have (mostly) unconsciously bought into. (I highly encourage you to read my favorite book of 2015: Sapiens, by Yuval Harari.) Of course, society and, even more importantly, governments have agreed that these fiat currencies are going to be the means of exchange. Also, taxation by the government turns the dollar bill &ldquo;story&rdquo; into a very physical reality:<strong> If you don&rsquo;t pay taxes in dollars, you go to jail. </strong>(The US government will not accept Bitcoins, gold, chunks of granite, or even British pounds).</p> <p>And finally, governments tend to look at Bitcoin and other cryptocurrencies as a threat to their existence. First, governments are very particular about their monopolistic right to control and print currencies &ndash; this is how they can overpromise and underdeliver. No less important, the anonymity of cryptocurrencies makes them a heaven for tax avoiders &ndash; governments don&rsquo;t like that. The Chinese government outlawed cryptocurrencies in September 2017. Western governments are most likely not far behind. If you think outlawing a competitor can happen only in a dictatorial regime like China&rsquo;s, think again. <strong>This can and did happen in a democracy like the US. With Executive Order 6102 in 1933, US President Franklin D. Roosevelt made it illegal for the US population to &ldquo;hoard gold coin, gold bullion, or gold certificates.&rdquo;</strong></p> <p>However, nothing I have written above will matter until it does. <em><u><strong>Bitcoin may go up to $110,000 by the end of the 2018 before it comes down to &hellip; earth. That is how bubbles work. Just because I called it a bubble doesn&rsquo;t mean it will automatically pop.</strong></u></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="714" height="412" alt="" src="" /> </div> </div> </div> Alternative currencies Bitcoin Bitcoin Blockchain technology Blockchains Central Banks China Chinese government Cryptocurrencies Currency Decentralization Economics of bitcoin Finance Global Economy Gold Bugs Legality of bitcoin by country or territory Money None Reality Sears US government Tue, 12 Dec 2017 02:35:00 +0000 Tyler Durden 608957 at Senior DOJ Official's Wife Worked At Oppo Research Firm That Produced "Trump Dossier" <p><strong>In what looks to be another embarrassing blow to the FBI&rsquo;s (already dubious) credibility,</strong><a href=""><strong> </strong>Fox News</a> reported Monday night that the senior DOJ official who was demoted last week after allegedly trying to conceal his contacts with the firm that compiled the infamous &ldquo;Trump dossier&rdquo; has deep ties to the firm through his wife.</p> <p>As it turns out, 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. 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.</strong></p> <p><a href=""><img alt="" src="" style="width: 500px; height: 233px;" /></a></p> <p>Ohr is the second senior DOJ official involved in the DOJ&rsquo;s probe into Trump&rsquo;s Russia ties to be demoted this year for suspected bias pertaining to the investigation. The other official, Peter Strzok, allegedly exchanged text messages expressing anti-Trump sentiments with another DOJ official with whom he was having an affair. <strong>And as if that weren&rsquo;t enough to signal a conflict of interest, Strzok, it was revealed, possibly saved then-presidential candidate Hillary Clinton from prosecution by making a crucial change to the language in the now-infamous letter excusing Clinton for her suspected crimes. Specifically, Strzok changed language in Comey&rsquo;s letter to &quot;extremely careless&quot; from the original language of <u>&quot;grossly negligent.&quot;</u></strong></p> <p>House Republicans &ndash; led by Intel Committee Chair Devin Nunes &ndash; have spent the better part of this year investigating how the dossier &ndash; which is loaded with salacious and unverified claims about Trump &ndash; played into the DOJ&rsquo;s decision to launch the probe that eventually morphed into the Mueller investigation.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>A senior Justice Department official demoted last week for concealing his meetings with the men behind the anti-Trump &ldquo;dossier&rdquo; had even closer ties to Fusion GPS, the firm responsible for the incendiary document, than have been disclosed, Fox News has confirmed: The official&rsquo;s wife worked for Fusion GPS during the 2016 election.</p> <p>&nbsp;</p> <p><strong>Contacted by Fox News, 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&rsquo;s duties &ndash; including whether she worked on the dossier &ndash; 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>In a statement, Nunes said his committee &ldquo;is looking into all facets of the connections between the Department of Justice and Fusion GPS, including Mr. Ohr,&rdquo; which suggests that more details fleshing out the exact nature of his wife&rsquo;s involvement with the dossier could be forthcoming in the near future.</p> <p>While the DOJ has refused to release any information about Ohr&rsquo;s role in the investigation, it&rsquo;s notable that he was demoted shortly after Fox began asking questions about his dual responsibilities: Not only was Ohr responsible for supervising the DOJ&rsquo;s organized-crime prosecutions, but he also held the position of deputy attorney general. That position came with an office on &ldquo;Main Justice&rdquo; &ndash; a floor in the DOJ building where many senior officials have their offices.</p> <p><script type="text/javascript" src=""></script></p><p><noscript>Watch the latest video at <a href=""></a></noscript></p> <p>According to <a href="">Fox</a>, Ohr&#39;s office was situated just a few doors down from Deputy AG Rod Rosenstein, the official who is nominally in charge of supervising the Mueller probe. Rosenstein&rsquo;s reluctance to provide information about the dossier to Nunes and his committee nearly led to him being subjected to a contempt of Congress order, along with FBI Director Christopher Wray, a Trump appointee who has nevertheless insisted that the bureau&rsquo;s agents have acted fairly and professionally in carrying out their investigation into Trump and his associates&rsquo; ties to Russian entities.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Until Dec. 6, when Fox News began making inquiries about him, Bruce Ohr held two titles at DOJ.</strong> He was, and remains, director of the Organized Crime Drug Enforcement Task Force; but his other job was far more senior. Mr. Ohr held the rank of associate deputy attorney general, a post that gave him an office four doors down from Deputy Attorney General Rod Rosenstein.</p> <p>&nbsp;</p> <p><strong>The day before Fox News reported that Mr. Ohr held his secret meetings last year with the founder of Fusion GPS, Glenn Simpson, and with Christopher Steele, the former British spy who compiled the dossier, the Justice Department stripped Ohr of his deputy title and ousted him from his fourth floor office at the building that DOJ insiders call &ldquo;Main Justice.&quot;</strong></p> <p>&nbsp;</p> <p><u><strong>The Department of Justice has provided no public explanation for Ohr&rsquo;s demotion.</strong></u> Officials inside the Department have told Fox News his wearing of two hats was &ldquo;unusual,&rdquo; but also confirm Ohr had withheld his contacts with the Fusion GPS men from colleagues at the DOJ.</p> </blockquote> <p>Nellie Ohr was described as a &ldquo;Russia expert&rdquo; at the Wilson Center, a Washington think tank where she was employed before joining Fusion.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>A review of open source materials shows Mrs. Ohr was described as a Russia expert at the Wilson Center, a Washington think tank, when she worked there, briefly, a decade ago. The Center&rsquo;s website said her project focused on the experiences of Russian farmers during Stalin&rsquo;s collectivization program and following the invasion of Russia by Nazi forces in 1941. <strong>She has also reviewed a number of books about twentieth century Russia, including Reconstructing the State: Personal Networks and Elite Identity in Soviet Russia (2000), by Gerald Easter, a political scientist at Boston College, and Bertrand M. Patenaude&rsquo;s The Big Show in Bololand: The American Relief Expedition to Soviet Russia in the Famine of 1921 (2002).</strong></p> </blockquote> <p>Unsurprisingly, Adam Schiff, the top-ranking Democrat on the committee refused to comment about Ohr specifically. Instead, he insinuated that Nunes was trying to deliberately discredit the DOJ, which, according to Schiff, did nothing wrong.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>&ldquo;I think there&#39;s a hope that if they can impeach Christopher Steele, and they can impeach the FBI and DOJ, maybe they can impeach the whole Russia investigation,&rdquo; </strong></em>Schiff told MSNBC in September.</p> </blockquote> <p>Of course, nearly every shred of information pertaining to the dossier that&rsquo;s been publicly revealed in recent months would appear to counter this claim. Back in September, it was revealed that the dossier was jointly financed by the Clinton campaign and the DNC. Then it was revealed that Mueller had managed to interview Christopher Steele, the agent in charge of assembling the document. But apparently that interview did little to help the investigation verify its claims (if it had, we probably would&rsquo;ve heard about it by now).</p> <p><strong>These revelations followed months of stonewalling by both the bureau and Fusion GPS, the firm that hired Steele, a former MI6 agent who worked in Russia for years.</strong></p> <p>All of this would seem to support the notion that the Mueller probe is hopelessly compromised, because many of the staffers who&rsquo;ve worked on the investigation have anti-Trump leanings.</p> <p>The only question now is: Will this be the final straw that prompts Trump to fire Mueller and put an end to his witch hunt. Though, as we pointed out, Mueller&rsquo;s decision to secure a guilty plea from Michael Flynn might ultimately help salvage his investigation by providing much needed cover.</p> <p>Regardless, one thing is clear: <em><strong>These repeated lapses in judgment have seriously damaged the bureau&rsquo;s credibility, as Nunes and several of his Republican peers have suggested.</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="701" height="326" alt="" src="" /> </div> </div> </div> Boston College Christopher Steele Congress Department of Justice Department of Justice Devin Nunes Director of the Federal Bureau of Investigation DOJ Donald Trump–Russia dossier FBI Federal Bureau of Investigation Foreign relations Fox News Fox News Fusion GPS Government International relations James Comey MSNBC Organized Crime Drug Enforcement Task Force Permanent Select Committee Politics Russian interference in the 2016 United States elections SPY United States House Permanent Select Committee on Intelligence Tue, 12 Dec 2017 02:15:00 +0000 Tyler Durden 608958 at