The 'Real' Peak Complacency

Authored by John Rubino via,

Stocks are at record highs while volatility is at a record low. Which is another way of saying that investors aren’t as worried as they probably should be about the coming year.

That’s okay. Price corrections (with their attendant volatility spikes) are normal and natural ways for markets to teach overconfident investors a little humility. Think of them as the financial word’s forest fires, clearing out the underbrush of misconception, malinvestment, and hubris.

But there’s another area of Peak Complacency that is neither natural nor benign. And that’s cyberspace.

Americans – and Europeans and Japanese – have moved most of their financial lives online just as hackers and other cyber-enemies get the upper hand.


  • Credit rating agency Equifax – apparently through its own incompetence – allowed hackers to access and presumably copy and sell “sensitive personal information” of 146 million Americans.
  • Online portal Yahoo upped the number of accounts that were hacked in 2013 to – get this — 3 billion.
  • The National Security Agency admitted that its state-of-the-art hacking tools were stolen by hackers and are now available for sale on the dark web.
  • The Federal Deposit Insurance Corporation (FDIC) suffered more than 50 data breaches between January 2015 and December 2016, exposing “personally identifiable information (PII) of U.S. citizens.”
  • The U.S. Securities and Exchange Commission EDGAR database of corporate documents was hacked, leading to illegal insider trading that the SEC is still trying to unravel.

And then there’s bitcoin, where online exchanges are being hacked with apparent impunity and zero recourse for victims:

Cryptocurrencies: How hackers and fraudsters are causing chaos in the world of digital financial transactions

(Independent) – There have been at least three dozen heists of cryptocurrency exchanges since 2011 and more than 980,000 bitcoins stolen, worth about $4 billion.


Dan Wasyluk discovered the hard way that trading cryptocurrencies such as bitcoin happens in an online Wild West where sheriffs are largely absent.


Mr Wasyluk and his colleagues raised bitcoins for a new tech venture and lodged them in escrow at a company running a cryptocurrency exchange called Moolah. Just months later the exchange collapsed; the man behind it is now awaiting trial in Britain on fraud and money-laundering charges. He has pleaded not guilty.


Mr Wasyluk’s project lost 750 bitcoins, currently worth about $3m, and he believes he stands little chance of recovering any money.


“It really was kind of a kneecapping of the project,” said Mr Wasyluk of the collapse three years ago. “If you are starting an exchange and you lose clients’ money, you or your company should be 100 per cent accountable for that loss. And right now there is nothing like that in place.”


Cryptocurrencies were supposed to offer a secure, digital way to conduct financial transactions but they have been dogged by doubts. Concerns have largely focused on their astronomical gains in value and the likelihood of painful price crashes. Equally perilous, though, are the exchanges where virtual currencies are bought, sold and stored. These exchanges, which match buyers and sellers and sometimes hold traders’ funds, have become magnets for fraud and mires of technological dysfunction, posing an underappreciated risk to anyone who trades digital coins.

The obvious conclusion is that our bank, brokerage and bitcoin accounts aren’t safe from hackers and/or cyber-attacks that shut down settlement systems and power grids.

In the aftermath of Hurricane Maria, for example, much of Puerto Rico is still without power, which means ATM machines aren’t working. See Puerto Rico is now a cash-only economy.

So physical cash – always a good thing to have on hand – is a crucial part of disaster planning. And precious metals in the form of small denomination gold and silver coins are if anything even more important, since who knows what a large-scale cyber event and the subsequent central bank money printing will do to fiat currency values.


ByTheCross ebworthen Tue, 10/10/2017 - 11:15 Permalink

The Internet is speech - as in freedom of speech - a law of nature, not a privilege granted by a 'benevolent' government.It is therefore a priori not private from those connected to it.One may obfuscate one's speech, and thus impede the ability for others to understand it, but this is neither privacy nor security.

In reply to by ebworthen

balanced ByTheCross Tue, 10/10/2017 - 12:26 Permalink

I, like many here, have been waiting for the crash for over a decade now. It doesn't come.

I used to think that PMs were the answer, but then I realized that they are completely controlled as long as fiat can be used to naked short them, and that after the "crash of fiat", they are not viable in a world of digital trade, not to mention that most people wouldn't accept them because so few even know their value.

Then I thought Bitcoin was the future. But then I read about D-link computers, already in production and being used by companies like Google and others, and I realized the the security currently attained via encryption is to be short lived.

Then I realized that, due to the emergence of quantum computers, all on-line security (as addressed in this article) will soon be a thing of the past. That means banking, Bitcoin, and all digital forms of exchange.

The idea that, in this digital age, we will somehow go back to handing bits of metal back and forth is a pipe dream.

When you zoom out, and look at the 30-thousand foot perspective, there's no way around it. The concept of money and wealth will soon be a thing of the past.

I realize that very few are able to accept this, so bring on the down votes. But when encryption has become obsolete, nothing digital can be or represent anything of value. When you have to hand someone a piece of metal to pay for something, all digital trade comes to an end. One way or another, this paradigm is going to end.

In reply to by ByTheCross

ByTheCross balanced Tue, 10/10/2017 - 17:19 Permalink

Trade has always been about the contingent delivery of physical goods from one party to another. The contingency is expressed via speech (orally, literally, digitally, sign language, smoke signals, etc), and the Internet is simply another communications medium.That some people attempt to use cryptography to simulate wampum should not confuse you into thinking that trade cannot occur without such a 'digital currency'.It's like the notion that artists cannot trade with their audience unless digital copies of their art can be made uncopyable.If you have something to sell, that others want to buy, you only need a means of communication and a means of exchange.The only failure is your imagination. 

In reply to by balanced

LawsofPhysics Tue, 10/10/2017 - 10:54 Permalink

So long as true price discovery is NOT ALLOWED, the "markets" will do whatever your fuedal lords in banking and finance want it too!!!!"Full Faith and Credit"same as it ever was you dumb fucks!!!

affirmed_78 Tue, 10/10/2017 - 11:06 Permalink

Bitcoin is perfectly safe if you hold the keys yourself.  Leave your money on an exchange and yes you're at risk - just like leaving money at the bank.  When you own something you have to take responsibility to protect it - regardless of whether it's a physical or digital asset.

shuckster Tue, 10/10/2017 - 11:13 Permalink

VIX is a piece of garbage. Avoid at all costs. Some how the Fed got it in their heads that VIX traders were political dissidents that needed to be crushed

Calculus99 Tue, 10/10/2017 - 11:17 Permalink

Smart crooks learned along time ago that a digital footprint is an easy route to the slammer. Same with all the 'terrorists' around the world. So typical US, invests billions in targeting them when they cannot even be targeted.No different from Vietnam, massive firepower against an enemy that was made up of ghosts. And on the Bitcoin thing, expect more cyber crime as this is the golden age of cyber crime. It's too easy for those that know what they're doing as the boardrooms are full of grey haired men who have trouble setting up the latest Samsung TV. Try explaining to them that the firm's cyber security budget has to be increased by 2,000% starting yesterday - their reply will probably be 'can't we just buy back some more stock instead'.  

menchivist Tue, 10/10/2017 - 11:27 Permalink

Why cant Zerohe dge correcty call market moves. I do think a lot of investors here have gone broke trying to be bearish. The articles always give the idea they have all the answers for a market sell off and the markets keep gong up.   Shep Wave has been calling the market moves in stocks oil n gold so that is good.  Thanks for that. 

zerotohero Tue, 10/10/2017 - 12:52 Permalink

booze and weed are always great when you need to barter - ANY form of "currency" whether fiat, crypto or pm's can be manipulated (and I own pm"s) - TPTB will cut you a new one anytime they like.