Bitcoin

• From the guy who said the market is not overvalued: Q&A with Fed’s Williams on Upbeat 2014 Outlook and What Keeps Him up at Night (Hilsenrath)
• Obama Readies Revamp of NSA (WSJ)
• Indian envoy leaves U.S. in deal to calm diplomatic row (Reuters)
• China overtakes US as largest goods trader (FT)
• Wall Street Predicts $50 Billion Bill to Settle U.S. Mortgage Suits (NYT)
• Low-End Retailers Had a Rough Holiday: Family Dollar, Sears Struggle as Lower-Income Customers Remain Under Pressure (WSJ)
• ECB charts familiar course as Japan, US and UK begin to diverge (FT)
• Housing experts warn of hiccups as new U.S. mortgage rules go live (Reuters)
• It's a HFT eat HFT world: Infinium ex-employees sue over $4.1m loss (FT)
• Slowing China crude imports to challenge exporters (FT)

Pleased to announce that #Bitcoin is live at #Overstock.com! http://t.co/mx9TFc8KNQ

— Overstock.com (@Overstock) January 9, 2014

First Janet Yellen makes the cover of Time, and concurrently so as not to be left behind, Businesweek, well-known for its suggestive covers (housing, hedge fund managers, the Tea Party), has posted an even more provocative creature on its own cover: a Unicorn - one which is supposed to symbolize, you guessed it, Bitcoins - and serves as the anchor for the Bloomberg-owned magazine's extensive profile of the digital currency, with the following teaser: "Why are investors so crazy for an alterantive currency invented by a phantom?"

A few days ago it was revealed that numerous European users of Yahoo, as many as two million, had gotten infected with malware from virus-laden ads served by Yahoo's homepage during the period from December 31 to January 3. The company admitted as much when it revealed that "From December 31 to January 3 on our European sites, we served some advertisements that did not meet our editorial guidelines – specifically, they spread malware." Users in North America, Asia Pacific and Latin America weren't affected, Yahoo said. Nor were users of Apple Macs or mobile devices. "We will continue to monitor and block any advertisements being used for this activity," the company added. "We will post more information for our users shortly." What was not clear is just what function the ad virus served. According to the Guardian, the purpose of the most prevalent virus spread by the website was to convert the infected computers into Bitcoin mining slaves.

As I step ever closer to the advent of a new monetary system...

If Americans in particular want to pursue any solution to the threat of globalism or dollar collapse, they are going to have to start with themselves, and the community around them. Online trade is the last thing they should be worried about. Only when neighborhoods, towns, and counties become producers and self suppliers will they be safe from financial instability. Only when those same communities band together for mutual aid and self defense will they be safe from tyrannical political entities. Bitcoin accomplishes nothing in either of these categories, making it possibly the most popular non-solution for liberty to date. Bitcoin is consistently touted as a superior option to precious metals as a way to decouple from central bank fiat. Under examination, though, it appears to me that bitcoin is instead a deliberate distraction away from gold and silver, and other tangible solutions; in other words, we believe it to be a form of controlled opposition.

With Russian, Chinese, and Argentinian (with a record low in the blue dollar today) money washing ashore (in USD or Bitcoin) under the Status of Liberty, the 'prices' of upscale apartments in New York City have simply exploded. We thought some context for this apparent 'price' vs 'value' discrepancy was useful... presenting 6 castles that cost less than an apartment in NYC (and given the number of bedrooms, not to mention moats, dungeons, vineyards, ramparts and drawbridges - dramatically less in terms of per-capita spend).

"Paper and digital markets levitate, central banks pull out all the stops of their magical reality-tweaking machine to manipulate everything, accounting fraud pervades public and private enterprise, everything is mis-priced, all official statistics are lies of one kind or another, the regulating authorities sit on their hands, lost in raptures of online pornography (or dreams of future employment at Goldman Sachs), the news media sprinkles wishful-thinking propaganda about a mythical “recovery” and the “shale gas miracle” on a credulous public desperate to believe, the routine swindles of medicine get more cruel and blatant each month, a tiny cohort of financial vampire squids suck in all the nominal wealth of society, and everybody else is left whirling down the drain of posterity in a vortex of diminishing returns and scuttled expectations."

The predictions of Blackstone's octogenarian Byron Wien (born in 1933) have been all over the place in the past 10 years, some correct, most wrong (with a recent hit rate of about 25%) - his 2013 year end S&P forecast was for 1300 - yet always entertaining. Which is the only value in the latest release of his 10 forecasts for 2014. Naturally, take all of these with a salt mine.

With Trader Monthly magazine having, ironically, gone out business long ago, all those traders whose egos demanded that their insider trading connections put them at least in one of the iconic "Top X under X" league tables, pardon, rankings, had to bide their time in expectation of one day when their prowess to frontrun others or move markets with repeated calls to 555-7617 (with or without references to Anacott Steel) would be appreciated by such sterling Wall Street "experts" as Anthony Scaramucci. Well, for this year's crop of some 30 traders under 30, the day has arrived. And while Forbes may not be Trader Monthly, the amusement, the hubris and the behind the scenes dealing to appear in such a list, sure are still the same...

UPDATE: Gold futures are back in the green for the day... (and Bitcoin is back under $1000)

Rumors of a 'fat finger' abound from the gold futures pits but the precious metals complex just collapsed instantaneously... and the market was halted for the now traditional 10 seconds as circuit breakers were triggered, only this time instead of Stop Logic the event was "Velocity Logic" or lack thereof. Of course, the timing is perfect as it occurs right before the first POMO of the new year.

It seems the adoption of major US-based vendors of the digital currency is trumping the Chinese clamp-down on Bitcoin as first Overstock and now Zynga confirm their adoption of the crypto-currency. For the first time since the PBOC issued its statement, Bloomberg reports Zynga is partnering with BitPay to test Bitcoin payments. As ConvergEx's Nick Colas notes, "Bitcoin has been remarkably resilient in the face of all the bad news out of China. The strength shows a continued interest, which is a very positive sign."

From this point on I start demonstrating to those who can't see the benefits of smart digital money over dumb fiat currencies. Now, you can short bitcoin and hedge against volaitlity using same tools the big boys use for USD/EUR/CNY, etc.

Having doubled off the post-PBOC-ban-and-Fed-Taper lows, Bitcoin, trading at USD910 currently is becoming increasingly ubiquitous as a payment method for many businesses. The latest, as NY Post reports, is Manhattan-based real-estate broker Bond New York, is "using Bitcoins to help facilitate transactions." With overseas money-laundering as a key support, and Manhattan apartment sales setting a record in Q4 for volume of transactions (+27% YoY), we suspect the acceptance of Bitcoin will merely ease the Chinese (or Russian) ability to transfer funds directly into NYC housing - blowing an even bigger bubble.

Ever since President Nixon broke the US dollar's last link to gold, the world has been set adrift on a sea of fiat currencies that have been increasingly debased, serving the interests of governments and financial elites. While crypto-currencies remain insulated from central bank manipulation, governments have thus far been tolerant, perhaps because their capability to track transactions is more advanced than Bitcoin believers admit. Nevertheless, the advent of crypto-currencies represents the increasing popular demand for a currency insulated from political debasement and bank profiteering. Crypto-currencies represent a legitimate attempt by private citizens to reassert their sovereignty over such government actions. We appreciate the effort, and we believe it holds much promise. But for now, we will stay with the traditional store of value, gold.