- Censorship World: New Zealand Fisheries Want Grisly Images Of Dead Penguins Caught In Nets Banned
Authored by Eleanor Ainge Roy via The Guardian,
The seafood industry in New Zealand has asked the government to withhold graphic video of dead sea life caught in trawler nets as they are potentially damaging to fisheries and to brand New Zealand.
A letter from five seafood industry leaders to the Ministry of Primary Industries highlights the fisheries’ growing unease with the government’s proposal to install video cameras on all commercial fishing vessels to monitor bycatch of other species and illegal fish dumping.
The letter requests an amendment to the Fisheries Act, so video captured onboard cannot be released to the general public through a freedom of information request, frequently used by the media, campaign groups and opposition parties.
“They [the proposed videos] also raise significant risks for MPI and for ‘New Zealand Inc’,” the letter reads, also citing concerns about invading the privacy of employees onboard, and protecting commercial and trade secrets.
There are no reliable figures on the numbers of penguins, sea lions, dolphins and seals that die in fishing nets or longlines in New Zealand, but according to some researchers and environmental groups the commercial fishing industry is the main culprit for declining populations of endangered sea lions and yellow-eyed penguins.
Only 25% of deepwater trawlers in New Zealand have government observers onboard to record bycatch and discards, according to the National Institute of Water and Atmospheric Research [Niwa], which relies on statistical modelling techniques to generate bycatch estimates for the 75% of boats that work unobserved.
Niwa estimates for every kilogram of reported target catch (what the fishing boat aims to catch ) there is 0.2 kg of bycatch.
“These are the images the fishing industry doesn’t want you to see,” said Forest & Bird’s chief executive Kevin Hague.
“What they [the seafood industry] are saying is catching endangered penguins, dumping entire hauls of fish overboard and killing Hector’s dolphins looks really bad on TV. Well, the solution is to stop doing it, not to hide the evidence. It’s hard to think of a more credibility damaging activity than trying to change the law so the rest of us can’t see what’s really happening out there,”
Deepwater fishing vessels account for 80% of New Zealand’s annual catch and earn NZ$650m per annum in export dollars.
Stuart Anderson, director of fisheries management for MPI, said no decision had been made regarding the seafood industry’s proposed changes to what information the government should release about their practices at sea.
“There are many elements to consider carefully in balancing the responsibilities of transparency and public interest while protecting privacy and other sensitive information” Anderson said.
* * *
Brings a whole new meaning to the term ‘net neutrality’…
- FBI Investigating Millions Of "Mishandled" Dollars Funneled From Australian Govt To Clinton Foundation
The FBI has asked retired Australian policeman-turned investigative journalist, Michael Smith, to provide information he has gathered detailing multiple allegations of the Clinton Foundation receiving tens of millions of mishandled taxpayer funds, according to LifeZette.
“I have been asked to provide the FBI with further and better particulars about allegations regarding improper donations to the CF funded by Australian taxpayers,” Smith told LifeZette.
Of note, the Clinton Foundation received some $88 million from Australian taxpayers between 2006 and 2014, reaching its peak in 2012-2013 – which was coincidentally (we’re sure) Australian Prime Minister Julia Gillard’s last year in office.
Hillary Clinton and former Australian PM Julia Gillard Smith names several key figures in his complaints of malfeasance, including Bill and Hillary Clinton and multiple Australian government officials – including senior diplomat Alexander Downer, whose conversation with Trump aide George Papadopoulos that Russia had ‘dirt’ on Hillary Clinton allegedly launched the Trump-Russia investigation (as opposed to the Fusion GPS dossier, of course).
Within hours of the NYT publication, the paper was immediately shredded as the information Papadopoulous told Downer was already public.
The materials Smith is giving to the FBI focus on a 2007 memorandum of understanding (MOU) between the Clinton Foundation’s HIV/AIDs Initiative (CHAI) and the Australian government.
Smith claims the foundation received a “$25M financial advantage dishonestly obtained by deception” as a result of actions by Bill Clinton and Downer, who was then Australia’s minister of foreign affairs.
Also included in the Smith materials are evidence he believes shows “corrupt October 2006 backdating of false tender advertisements purporting to advertise the availability of a $15 million contract to provide HIV/AIDS services in Papua New Guinea on behalf of the Australian government after an agreement was already in place to pay the Clinton Foundation and/or associates.”-Lifezette
As a reminder, the Australian government announced that they would stop pouring millions of dollars into accounts linked to the Clinton charities in November of 2016 – right after Hillary Clinton lost the election.
The federal government confirmed to news.com.au it has not renewed any of its partnerships with the scandal-plagued Clinton Foundation, effectively ending 10 years of taxpayer-funded contributions worth more than $88 million.
The Clinton Foundation has a rocky past. It was described as “a slush fund”, is still at the centre of an FBI investigation and was revealed to have spent more than $50 million on travel.
Despite that, the official website for the charity shows contributions from both AUSAID and the Commonwealth of Australia, each worth between $10 million and $25 million.
(Norway, coincidentally, also reduced its $20 million / year donations to the Clinton Foundation right after Hillary’s loss.)
A third complaint by Smith revolves around a “$10 million financial advantage dishonestly obtained by deception between April 1, 2008, and Sept. 25, 2008, at Washington, D.C., New York, New York, and Canberra Australia involving an MOU between the Australian government, the “Clinton Climate Initiative,” and the purported “Global Carbon Capture and Storage Institute Inc.”
When asked why the Clinton Foundation was chosen as a recipient of Australian taxpayer dollars, a spokesman for the Department of Foreign Affairs and Trade said that all funding was used “solely for agreed development projects” and Clinton charities have “a proven track record” in helping developing countries.
- Brandon Smith: Is The Olympic Games In South Korea A Perfect Opportunity For A False Flag Attack?
Authored by Brandon Smith via Alt-Market.com,
The war rhetoric surrounding North Korea on both sides of the Pacific has never been more aggressive than it has been the past year (at least not since the Korean War). There are some people that see the entire affair as a “distraction,” a distraction that will never amount to actual conflict. I disagree with this sentiment for a number of reasons.
North Korea is indeed a distraction, but still a distraction in the making. That is to say, the chest beating and saber rattling are merely a prelude to the much more effective distraction of live combat and invasion in the name of regime change and “national security.” As I noted in my article “Korean War Part II: Why It’s Probably Going To Happen,” the extensive staging of military assets to the region that has not been seen in over a decade, the extremely swift advancement of North Korean missile technology to include ICBMs capable of reaching the mainland U.S., the strange and unprecedented language by China indicating that they will not intercede against an invasion of North Korea by the U.S. “if Pyongyang attacks first….” All of this and more shows a clear movement of chess pieces into place for a sudden action.
According to these factors, I am led to believe that a false flag event blamed on North Korea, or a prodding of North Korea into taking an attack posture, is likely.
The purposes behind such a war would be many-fold. Primarily, the final implosion of the vast financial bubbles created by central bank stimulus measures could be undertaken while the banks themselves escape public blame or prosecution.
A geopolitical crisis large enough would provide a perfect scapegoat for an economic crisis that was going to develop eventually anyway. And, if this geopolitical crisis were initiated by a “rogue state,” along with the poor decisions of a conservative “populist” president (Trump), then the historical narrative would be complete. Future generations would talk about the “great blunder” of sovereign states and nationalists and how hubris and greed and ego led to a global fiscal disaster and unnecessary destruction. The rationale for a one world governmental authority would be planted in the minds of the populace.
Will a war in North Korea be the trigger event for this narrative? It’s hard to say, as there are so many potential geopolitical powder kegs around the world. However, ample assets to initiate this kind of event are present around North Korea. And, unlike hot spots like Syria and Iran, North Korea offers the most immediate and tangible threat in the minds of many people with its nuclear arsenal.
The pure panic and mindless reactionary thinking that can be provoked in the unprepared when the danger of nukes is present is quite powerful. This could not have been made more clear than this past week when an “accidental” warning of a live ICBM launch occurred in Hawaii.
The Hawaii Emergency Management Agency now claims that this false alarm was started by a single employee, who has not been named. How? They somehow “pushed the wrong button” … twice!
I find this explanation absurd. I can only find one example of a false alarm similar to the one in Hawaii, and this took place way back in 1971 with a mix-up of tapes leading to a broadcast warning of imminent attack on the U.S. After this event, the alert system was subject to streamlining and stopgaps designed to prevent it from ever happening again. During the false alarm of 1971, over six attempts were made for cancellation broadcasts, the first one within about ten minutes of the initial false alarm. In Hawaii, no cancellation was attempted for nearly 40 minutes.
To add to the overall strangeness, there was yet another false missile alarm in Japan within the same week! Yet again, this alert was immediately attributed to North Korea, but at least this time the alert was corrected 5 minutes later instead of 40.
To me, this smells of a psyop; a test to gauge public reactions to a threat, as well as planting preconceived notions of a particular bogeyman. The public did not disappoint.
Eye witnesses described people “running and crying in the streets,” completely bewildered as to what to do. An associate of mine (who is also experienced in preparedness) was in Hawaii at the time of the event. She related to me that her family decided to shelter in place because there were no indications that fallout shelters were available anyway. Other people tried to lower their children into the sewers in an effort to escape a nuclear blast. Here is a video showing the false missile alert causing hysteria in Hawaii:
(As a side note, sheltering in a sewer during an actual nuclear event is the height of stupidity. Nuclear blasts send irradiated particulates into the air. These particulates then settle in the streets or are washed out of the air by rainfall. This water becomes a highly concentrated dose of irradiated particulates which are then drained down into the sewers. You might survive the initial blast, you might not, but you are certain to die from radiation if waiting out the attack in a sewer. Shelter in a dry basement instead with as much matter density between you and the outside as possible. Keep in mind that whatever place you choose to shelter is where you will likely have to stay for at least two weeks, or until the nuclear half life of the particulates has run its course.)
Obviously the average American is completely unprepared for a real attack of a minor magnitude, let alone the magnitude of a nuclear blast. Perhaps this reaction in Hawaii was so prevalent because Hawaii tends to be left leaning to the extreme, and leftists are generally poorly prepared for anything beyond a cancellation by their manicurists. That said, the fact that this “mistake” happened to take place in Hawaii and Japan which are already under stress due to the ballistic missile tests of North Korea is an interesting coincidence indeed.
Seeing what the reaction in Hawaii was like, a real attack presents an alluring opportunity for the establishment. The pure terror involved in just the potential of a nuclear attack is palpable, and this fear makes the masses easy to manipulate. Should a real attack take place, either by North Korea or by other agencies through false flag, when is the most advantageous time?
The history of Korean conflict suggests a surprise attack is a probable strategy. North Korea is a nation trapped in time, and North Korean authorities remember the success of the surprise attacks they used to launch the first Korean war in June 1950. These attacks allowed North Korea communists to overrun South Korean forces within days.
In terms of a false flag event, these seem to occur in the midst of other “training exercises” or distracting events. I can’t think of anything more distracting for South Korea than the Winter Olympics, set to take place February 9-25 in Pyeongchang.
I would note the sudden friendly demeanor between North Korea and South Korea just before the Olympics, including the offer by North Korea to participate in a joint women’s hockey team during the games (something that has never happened before). Would it not be a shame if this ember of goodwill was snuffed out by a North Korean missile test or attack of some kind? The “betrayal” would be excellent war fuel, like a new Pearl Harbor.
As Secretary of State Rex Tillerson stated recently, the threat of war with North Korea is “growing” despite the recent “thaw” in relations due to the Olympic Games. The thaw is partially predicated on the North Korean demand that all South Korean and US military exercises be cancelled during negotiations.
The typical response by skeptics will be that any attack by North Korea would be met with massive nuclear response. I would point out that a full-scale nuclear response is unlikely in the region.
First, a nuclear onslaught on North Korea also puts its neighbors (our allies) at risk of considerable radiation exposure. The argument may be made that only a conventional assault would be safe for the surrounding countries, not to mention the Pacific U.S., which could see radiation exposure as well.
Second, a nuke attack is not necessarily going to prevent the need for a ground invasion. North Korea has more than 8,000 underground facilities that we know of and has been preparing for bombardment for over 60 years. Its mountainous terrain also presents serious doubts as to the effectiveness of bombardment. This is not just my assessment but the assessment of the Department of Defense. The idea that one big nuke button is going to solve the problem is childish delusion by people who watch too many movies.
Hopefully, the Olympics will conclude without incident and the skeptics are proven correct on North Korean tensions being nothing more than a sideshow amounting to a lot of bluster. But for now the level of conflict staging over the past year should be taken seriously, and the panic that could develop if a war does erupt should be concerning to us all. In times of crisis, people act stupidly and they beg for help from anyone offering, even if it is someone with malicious intent. Fearful individuals will give up almost anything to escape uncertainty, including their freedom and their common sense. And nothing causes fear quite so much as thoughts of war and mushroom clouds.
- California's Homeless Problem Revealed In One "Incredible" Video
Despite the record stock market and unemployment at 4.1% (despite a December jobs miss), the socialist utopia known as California is home to an ever-sprawling tent city which estimated to contain over 1,000 residents.
After a ZeroHedge report last March on the sprawling tent cities, a 10-minute video, dubbed by some as “incredible” has emerged showing the shocking growth of the encampment near Angels Stadium in Anaheim, CA along the Santa Ana river.
Locals have become increasingly alarmed by the rapid spread of unregulated squatters and their belongings and their waste.
As a cyclist who uses the trail to ride to the beach often, over this last year it has gotten substantially worse. It is unsafe and unsanitary with loose dogs everywhere and human fecal matter scattered on the trail.
The area is disgusting and reeks of trash and feces.
He reports that the bike trail, once popular with outdoors enthusiasts and families which runs for miles to beaches along the Pacific Ocean, has become unsafe as miscreants plot assaults and robberies on passing riders, even laying tripwires across the path. –Dan Lyman
Domestic Migration
As we pointed out last March, California’s Democrats aren’t just failing the poor people that have been relegated to tent cities (see “Americans Fleeing Expensive, Over-Taxed Metro Areas In Pursuit Of Affordability“). In fact, people of all income brackets are fleeing the state in droves. Not surprisingly, these domestic migrants are flocking to areas with a lower cost of living, lower/no state income taxes, less regulations and higher job growth (aka “Red” states).
Ironically, the dark areas on the map above seem to match perfectly with the dark areas on this map which indicate those with the highest state income tax rates.
What an odd coincidence…
- Is Bitcoin A Reaction To US Dollar Hegemony?
Authored by Federico Pieraccini via The Strategic Culture Foundation,
Blockchain technology and the birth of the so-called cryptocurrencies finds deep roots in three contributing factors:
- the advance of technology:
- the manipulation of global economic and financial rules;
- and the persistent attempt to weaken the national economies of countries that geopolitically challenge the US power system.
In this first article I address these issues from a financial point of view, in the next analysis I intend to dive into the geopolitical aspects and broader the perspective on how Russia, China and other nations are taking advantage of a decentralized financial system.
Many national economies seem to have begun the process of protecting themselves from what seems like an inevitable economic trend. De-dollarization — dumping dollars for other goods of value — has become popular not only with countries but also with ordinary individuals as a result of global technological growth and increasing access to the Internet. The financial markets are generally reflecting this same trend.
The US dollar is the world’s most dominant reserve currency. The planning and financial rules that accompany this situation are decided in the United States for the benefit of Washington and a few of her allies. This has been reflected in the creation of the petrodollar, the abolition of the gold standard, and the most recent financial crisis of 2008, with the senseless process of quantitative easing. All these economic decisions have been made with the precise aim of prolonging American domination of the global economy, artificially propping up an unsustainable financial system.
The practical consequences of this unsustainability have led over time to thoughts of a practical alternative, both to escape from the domination of the dollar and to re-anchor the economy to real value. The need to circumvent this situation has become especially urgent for countries with a large amount of dollar-denominated debt, or where they face the prospect of being excluded from the SWIFT international payment system.
It is therefore not accidental that countries like Iran and Venezuela, but also Russia and North Korea, have resorted to alternative methods to operate in the global economic space. Washington’s political decision in 2012 to remove Iranian banks from SWIFT immediately set off alarm bells for several countries. The need to escape from the possibility of being excluded from SWIFT became urgent for countries under the threat of Washington. An alternative payment system was thus born in 2015, christened the Cross-Border Interbank Payments System (CIPS), unsurprising founded by China. Basically a copy of the SWIFT system, it serves the role of being a backup system should the Americans seek to exclude from SWIFT recalcitrant countries. A more radical solution has been sought by Venezuela, with the country creating its own virtual currency. President Maduro has announced the creation of a crypto state currency based on the value of oil and supported by barrels of oil worth over five billion dollars. Venezuela has been forced to take this step because of a scarcity of US dollars in the country brought on by the economic warfare visited on the it by Washington, which has succeeded in driving the country into a deep crisis.
This search for fresh liquidity is a gamble for Maduro, who even hopes to be able to trade with allied countries in the new currency, thus circumventing international bans. Even North Korea is said to operate in bitcoin, thereby circumventing the international system of prohibitions and blockades.
The sanctions on Russia, and the influence that Washington exerts with the dollar on the global economic system, has led Moscow and Beijing to a de-dollarization agreement, establishing the yuan gold standard. Russia sells hydrocarbons to China, which pays for them in yuan, then Russia immediately converts the yuan into gold at the Shanghai Gold Exchange, in the process bypassing Washington’s sanctions.
This situation is being replicated in country after country. The United States increases financial and economic pressure on countries through such international bodies as the IMF and the World Bank, then these countries organize amongst themselves to push back against the interference. Technology has facilitated this strategy of decentralization against the center that is London and Washington, the financial heart and primary cause of manifold global problems. Firstly, the possibility of the unlimited printing of dollars has distorted global economies, inflating stock markets and causing national debts to grow out of control. Even the gold markets are manipulated by virtue of the abundance of easy money and such ponzi-scheme tools as derivatives and other forms of financial leverage. All too predictably, as seen in 2008, if it all comes crashing down, the central banks are going to bail out their partners through the mechanism of quantitative easing, guaranteeing unlimited cashflow and leaving taxpayers, along with the small players in the financial markets, to carry the burden.
It is probably too early for the common man to understand what is happening, but in fact the dollar is depreciating in relation to some more tangible assets. But gold continues to be corralled by parallel financial mechanisms and other financial instruments created for the sole purpose of manipulating the financial markets on which the common man depends in search of modest gains. As with others, the gold market suffers from the combine power of the US dollar, centralized financial institutions and market manipulation. Entities such as the FED (and their owners), criminally colluding and working with private banks, hedge funds, rating agencies and audit companies, have made immense wealth by driving the world into a debt scam that has stripped normal citizens of their future.
What is happening in the cryptocurrency markets in not only occurring in parallel with the spread of the Internet, smartphones and the increasing ability to operate in the digital world, but is also seen as a safe haven from centralized financial regulators and central banks; in other words, from the dollar and fiat currencies in general. Whether bitcoin will prove to be a wise long-term investment is yet to be seen, but the concept of cryptocurrencies is here to stay. The technology behind the idea, the blockchain, is a definitive model for decentralized economic transactions without any intermediary that can manipulate and distort the market at will. It is the antidote to the debt virus that is killing our society and spreading chaos around the world.
Washington is now left to deal with the consequences of its demented actions against its geopolitical adversaries. The decision to remove Iran from the SWIFT system, and the ongoing economic war against Russia and Venezuela, have pushed the People’s Republic of China to obviate any direct attacks on its financial system by creating an alternative economic system. The goal is to warn the United States and her allies that an economic alternative exists and is already operational, ready to be opposed to the Euro-American system if necessary. Washington does not seem to want to renounce the role of manipulator and ruler of world speculative finance, and the obvious result of this is the creation of a financial system that is slowly working against the current one. Lack of anonymity and the centrality of systems seem to be the two fundamental elements of the current financial system that orbits around London and Washington. An anonymous, decentralized and technologically reliable system could be exactly what Washington’s geopolitical adversaries have been looking for to end the US-Dollar hegemony.
- "The Sex Was Textbook Generic" – Stormy Daniels Dishes On Trump Hookup
Stormy Daniels – the former porn star who claims to have had an affair with President Trump back in 2006, shortly after his marriage to First Lady Melania Trump – is refusing to go away. On Wednesday, In Touch, the glossy supermarket tabloid, published excerpts from an interview that Daniels – real name Stephanie Clifford – gave to the magazine back in 2011.
In the excerpts, Daniels discusses her, uh, liaison with Trump in intimate detail. The affair took place in a Lake Tahoe Nevada hotel suite. In Touch corroborated the story with Daniels’s good friend, Randy Spears. Her ex-husband, Mike Moz, also confirmed the story.
Daniels also reportedly took and passed a polygraph test administered by In Touch at the time of the interview.
The most salacious details included in the story was Daniels’s description Trump’s bedroom demeanor.
Stormy told In Touch, “[The sex] was textbook generic,” while discussing the fling they had less than four months after Donald’s wife, Melania, gave birth to their son, Barron. “I actually don’t even know why I did it, but I do remember while we were having sex, I was like, ‘Please, don’t try to pay me.’”
Trump met Daniels at the American Century celebrity golf tournament in July 2006. Trump asked her to dinner, to which she readily agreed…
When she met with Trump, she was greeted by a bodyguard named Keith – presumably former Oval Office Director of Operations and Trump Organization Security Chief Keith Schilller…
It all started at the American Century celebrity golf tournament in July 2006. “[Trump] was introduced to everybody. He kept looking at me and then we ended up riding to another hole on the same golf cart together,” Stormy recalled, adding that the business mogul later came to the gift lounge her adult-film company, Wicked Pictures, sponsored and asked for her number, which she gave him, before they posed for a photo together.
“Then he asked me if I wanted to have dinner that night. And I was like, ‘Yeah, of course!’” she told In Touch. Stormy, dressed up to go out on the town, arrived at Trump’s hotel room, where she says she was greeted by a bodyguard named Keith, who let her inside. Stormy claims Trump was sprawled on the couch watching TV, wearing pajama pants. “We ended up having dinner in the room,” she revealed to In Touch.
After the deed, Daniels said the two hung out for a bit. Then Trump promised to call her – though it’s unclear whether he ever did.
At one point, Stormy told In Touch, she excused herself to go to the bathroom.
“When I came out, he was sitting on the bed and he was like, ‘Come here.’ And I was like, ‘Ugh, here we go.’ And we started kissing.” After having sex, Stormy said, “We hung out for a little while and he just kept saying, ‘I’m gonna call you, I’m gonna call you. I have to see you again. You’re amazing. We have to get you on The Apprentice.’”
Trump has vigorously denied having an affair with Daniels, and the White House has contested a Wall Street Journal story claiming Trump lawyer Michael Cohen paid Daniels $130,000 to stop her from sharing her story with Slate and Good Morning America in October 2016, shortly after the Access Hollywood tape leaked.
Of course, this is just an excerpt. Daniels was pretty active in sharing her story about five years ago, it seems, back when Trump was the star host of NBC’s “Celebrity Apprentice.” In Touch will publish a 5,000 word interview with Daniels later in the week…
- Cryptocurrencies – Questioning The Value Proposition
Authored by Stephen Englander via Rafiki Capital Management,
Bitcoin is deciding whether this is the moment to crash and burn.
My conjecture is that cryptocurrency holders are trying to decide whether to abandon Bitcoin because its limitations mean it will be superseded by better products or bet that it can thrive despite them.
The dilemma is that once you stop pricing Bitcoin and its derivatives as new assets that will head to the moon, the pricing model is more conventional and much less breathtaking.
We discuss these issues below.
Below we go through some of the questions on why Bitcoin and cryptocurrencies have certain characteristics, and whether these characteristics are needed or even desirable.
- Is Bitcoin Netscape?
- How limited is the supply of cryptocurrencies?
- If Bitcoin crashes what happens to other alt-currencies?
- What asset market lacunae do cryptocurrencies fill?
- Why mine?
- Why distribute the ledger?
- Do cryptocurrency transactions need coins or tokens?
- Can you make cryptocurrencies KYC and AML compliant?
1) Is Bitcoin Netscape?
Bitcoin emerged in the shadow of the financial crisis, when the reputations of the financial and economic policy community was at a post-1930s low. It is designed for a world in which there is no confidence in major fiat currencies. Bitcoin gives you pseudonymity
New York, 16th January 2018 (albeit imperfect), the distributed ledger means that transaction records are unlikely to disappear, the mining can take place anywhere and there are built-in incentives for miners to keep mining.The question is whether there is a problem that the original Bitcoin solves in developed economies. Some Bitcoin characteristics superficially suit a ‘Mad Max/Hunger Games’ world, but add little now. My suspicion is that even in the Mad Max world, the value of Bitcoin will be de minimis since hard assets will be the currency, not an abstract string of code.
Bitcoin may nonetheless be optimized for parts of the world that have harsh capital controls or dysfunctional governments, and for illicit transactions (although even here better versions exist). The characteristics listed above are helpful in preserving capital where security of capital and asset ownership does not exist.
Pseudonymity, a distributed ledger and mining do not seem essential in developed economics and may even be drawbacks for many useful applications of the technology. It seems straightforward to design a cryptocurrency that is optimized for enabling cheaper transactions and recording of asset transfers and other transactions within the developed economy financial system. Some of these already exist and may be gaining on Bitcoin. Over time they may well supersede Bitcoin.
There are paths by which Bitcoin could remain dominant, helped by its first mover advantage. However, there are likely many more paths by which it becomes a footnote either by cryptocurrencies that have functionality in transactions but not as a store of value, or because competitor alt-currencies are just better.
2) How limited is the supply of cryptocurrencies?
One of the weakest element of the Bitcoin/cryptocurrency origin mythology is the limited supply. That argument is still used to justify pricing Bitcoin off gold and other stores of value. As if Bitcoin cannot be replicated cheaply and indefinitely. Forks are increasingly popular because it feels like you are getting additional cryptocurrency for free. But some may notice that is an arbitrary supply increase.
There are no barriers to entry on the crypto space, other than a good story about the niche that your coin is filling. The number of ICOs tells you that it is easy and cheap. There are big incentives to get in on the ground floor of a cryptocurrency that has even moderate acceptance.
3) If Bitcoin crashes what happens to other alt-currencies?
The possibility that Bitcoin is superceded by better alt-currencies has important implications for the class. In fact, it likely determines the future pricing structure of these currencies.
Bitcoin’s price does not have a floor because it does not have a fundamental pricing model like equities and bonds. If its price starts falling because other products are available and better, there is little to stop it. As a thought experiment, say Bitcoin was trading today at $14k and stayed there for three months. Six months from now it dropped to $14 and stayed there for three months. What would you look at to figure out which was the right price? The run-up in Bitcoin created a mystique of one-way trading which is being shaken but the pricing requires faith that there will always be demand. This is far from guaranteed given the existence of alternatives with better characteristics.
If Bitcoin crashes, investors in other alt-currencies will likely become more demanding in terms of the value proposition and link value to functionality, rather than faith. I can value a cryptocurrency that collects a fee for performing or recording transactions, but that value is likely to be different than as an alternative to gold or fiat money. This means pricing alt-currencies off credit card companies, depositories and other companies that provide similar transactions and recording services. That valuation is likely to be much more prosaic than the valuation now attached to cryptocurrencies as assets.
4) What asset market lacunae do cryptocurrencies fill?
If you are not afraid of a financial breakdown, confiscation of your assets or the feds, can you pin down the asset characteristics of a cryptocurrency that give them value? Do they allow you to hedge risk, choose a preferred point on the asset market risk-return curve, give you a share in some productive asset, or shift consumption from now into the future in a reliable way?
There are assets that are not much good in transactions (gold, the S&P ETF that you own) and transactions vehicles that are not great as assets (your VISA card, cash, the ATM at the corner dive that spares you the trouble of going to the bank). For now focus on the asset side and ask how capital in developed economies is better allocated because cryptocurrencies exist. (We discuss transactions functionality below.)
Enabling young people to invest in human capital without the rationing, naivete and moral hazards of current student loan programs would concretely improve savings-investment efficiency. I am trying to think of an analogous asset market problem that crypto assets help resolve.
The blockchain and other innovations associated with Bitcoin potentially could make transactions quicker, cheaper and less risky. However, this relates to their transactional functionality but is not here or there with respect to their desirability as an asset.
If you believe that capital controls are immoral, you can argue that coin and other cryptocurrencies allow you to protect your assets by skirting such controls. That is not a big issue in G10 economies, but there could be a genuine debate elsewhere. If you believe that taxes are not moral or that arms/drug dealing is, you can make a similar case for cryptocurrencies link. Most of us need a lot of convincing before we swallow that.
So I still struggle to determine a DM asset market problem that it solves. South Korea and a couple of other countries are rumored to be taking actions to limit or stop speculation in cryptocurrencies on the view that it is a waste of time and resources and does not contribute to the public good.
A similar motivation was behind Montreal banning pinball in public for decades after 1955. I was a personal victim of the ban in my youth. There is an element of paternalism in limiting a very narrow and specific set of transactions, while allowing you to blow your fortune on horse races or at the casino. However, most of us have a hard time discussing our ‘investments’ at the race track or casino.
5) Why mine?
Mining in Bitcoin and its clones provides incentives to maintain the distributed ledger. It is also extends the analogy between Bitcoin and gold, which is a very effective marketing device. It is clear there is a colossal waste of energy link.
Digiconomist estimates that USD2bn worth of energy is being consumed to mine USD14bn of BTC. That means that the electricity cost is 14% of maintaining the blockchain and almost 1% of the Bitcoin market cap and likely to rise. It looks increasingly that cryptocurrency mining will be heavily concentrated in the locations where electricity is grotesquely mispriced.
Originally the mining was probably intended to deal with the collapse of fiat currencies. You would have a bunch of miners and maintaining a bunch of blockchains and manipulation would be close to impossible. Mining has now become so concentrated that there is a possibility that the transaction record could become corrupted by collusion among big miners, or that transactions costs could be artificially elevated.
Talking about large numbers of independent, decentralized cryptocurrency miners is like talking about the family farm in US agriculture. It’s a nice image but nowhere close to reality. Stories of individuals buying power plants to mine cryptocurrencies further weaken the narrative of a decentralized system that is coalition-proof link.
The only reason to have mining now is because it has become a defining characteristic of cryptocurrencies, even though it has no real purpose, except to jump start interest in new currencies by offering high returns to the initial miners. Given the huge built-in inefficiency of mining process, the question is can you get the benefits of a cryptcurrency without the mining process. Some altcoins do not have mining and this is likely the direction future coins will take.
6) Why distribute the ledger?
The distributed ledger solves the problem of how to maintain the integrity of a decentralized system. It doesn’t establish a need for such a decentralized system or justify the costs that are associated with it.
What is the marginal benefit of the 51st ledger out there? You must fall back on the Mad Max world to really need so many replicative ledgers. Then you must believe that computer systems will be running.
One of the selling points on public blockchains is that their dispersion would make them impervious to hacking and corruption. With mining operations so specialized and concentrated, that argument has gone be the boards. I have seen discussions in which it is argued that the gaming the blockchain would be self-defeating and will not happen, but that is not the same as demonstrating that it cannot happen.
For many purposes private blockchains are likely to be more efficient. The need for replication is limited. Whether the security of the distributed blockchain exceeds that of private blockchains is unclear, as are the relative costs. Especially when there are a lot of transactions concentrated among a small number of participants, we are likely to see private rather than public blockchains dominate. My expectation is that we will come to see blockchains as clubs, rather than villages.
7) Do cryptocurrency transactions need coins or tokens?
My credit card enables me to transact across states and countries. But it doesn’t require that I buy a credit card asset or token. Say cryptocurrencies make cross-border transactions or asset transfers less expensive, or we use a blockchain to record transactions and contracts. It is obvious that fees will be charged for this service, just as the credit card company charges. But do we need a tradable asset with a fluctuating price as the medium for such transactions or records You can simply pay a fee to have the sale of your house or your employment contract put in the registry? Having a coin or token associated with these transactions doesn’t improve functionality.
Once you accept the view that cryptocurrencies will make it easier to execute and record transactions, but are not themselves assets or a store of value, coins or tokens have as little inherent value as the token used by children to establish their right for a ride on the merry-goround. The firms that perform the transactions will have a value, just as credit card companies do, but that doesn’t mean that the coin linked to the service will have anything but a momentary value.
8) Can you make cryptocurrencies KYC and AML compliant?
Cryptocurrency exchanges within developed economies all have some form of AML and KYC compliance. There are some AML compliant cryptocurrencies but my sense is that the ones that promise complete anonymity are far more popular. It appears that Bitcoin and most clones are not quite as anonymous as once advertised, but it also takes some effort to de-anonymize. So, if you are trying to hide from your partner how much you paid for the Rangers playoff tickets, you are pretty safe. However, if the authorities were interested in your particular transaction, they are likely to be able to figure it out as well.
Outside of DM economies it is likely that KYC and AML are not observed meticulously. Public blockchains record these transactions so they are not invisible, but they are harder to track than those made within organized DM exchanges with strict KYC and AML vetting. The question is whether the coexistence of a legitimate DM core and potentially shady non-DM spokes (or maybe a shady core and legitimate spokes) is feasible in the long term. My conjecture is that the coexistence will break down and that there will be a growing distinction between cryptocurrencies that operate fully within the global financial system and those that facilitate outside the system transactions.
Concluding comments
Cryptocurrency technology is likely to serve as the basis for executing asset transfers and storing the record of transactions and contracts. Mining, anonymity, and the distributed ledger are not relevant for most of these purposes. The case is not really made that cryptocurrencies are assets and that means that the current pricing proposition is shaky. It is possible that a private issued ‘fiat’ cryptocurrency will trade alongside other assets, but it is still not clear what would give it value.
The underlying proposition is like the Marxist interpretation of history. The intellectual breadth and audacity are breathtaking. The ability to think through ex ante how a new, decentralized currency asset could be constructed and maintained is remarkable. But that doesn’t mean that the underlying premises are correct, or that it solves a problem anyone really worries about.
- Here's What Caused Today's Bond Selloff, And Why It Makes No Sense
Today just after 1pm, Apple unveiled that as part of its capital investment plan over the next 5 years (which aims to spend $30 billion and create 20,000 jobs in the US), the company expects to make a $38 billion tax payment to repatriate some/all of its offshore cash.
The news coincided with an abrupt reversal in 10Y Treasurys, which sold off…
… accelerating the ramp in stocks, slamming gold and at the same time put in a bid for dollars, halting the greenback’s latest pounding, which earlier in the day had tumbled to three year lows.
And while many – including us – speculated that news of the Apple repatriation was the catalyst for this sharp intraday reversal, Morgan Stanley’s rate strategist Matthew Hornbach confirmed that was indeed the case, in his Wednesday EOD market commentary, to wit: “News about Apple’s repatriation plan fueled a sell-off in USTs led by the 7y point.”
Even so, the market’s reaction to the Apple news left quite a few rates strategists, Hornbach including, puzzled. puzzled: “We don’t find the sell-off warranted by the headline since Apple’s marketable security holdings have a short maturity and are concentrated in corporate bonds.“
He explains further:
By 8:00 AM New York, 10y yields were unchanged from the London open at 2.56%. Strong industrial production data at 9:15 AM failed to push yields higher and 10y yields hit the session low of 2.54% shortly before 11:00 AM. From there, rates were in the 2.55% to 2.56% range until a Bloomberg headline hit the tapes at 1:02 PM about Apple expecting a tax payment of $38bn for planned repatriated earnings.
It was not clear over what period Apple planned to repatriate earnings, but the headline fueled speculation that the firm might have to sell some Treasury and corporate bond holdings to pay the tax liability, leading to a sell-off in UST yields for the rest of the afternoon. It is not clear to us that the headline warrants a sell-off since
- According to Apple’s 10-K filings the “maturities of the Company’s long-term marketable securities generally range from one to five years.” That is, the best guess about the average maturity of their UST holdings would be 2.5 years. Yet, the sell-off was led by the 7y point and the 2s7s curve steepened by 2.5bp from the time the data was released until the close.
- Apple holds $55bn of Treasury securities compared to $152bn in corporate securities. So, it is not clear why UST yields sold off, while corporate spreads barely widened on the news. That is particularly puzzling since USTs constitute 15% of Apple’s assets, a value that is roughly in line with the share of USTs in their assets since 2010. Corporate bond holdings however have increased from 23% in 2010 to 41% in 2017, so it could be argued that Apple would be more inclined to sell corporate bonds to free up any needed cash.
Another aspect of the market reaction to the headline that is puzzling is the strengthening of the US dollar. “Offshore cash” or unremitted earnings do not have to be physically offshore and can be invested in US dollar securities such as US Treasuries and unrelated corporate equities and bonds according to the tax code. As a result, unless Apple and other firms with unremitted earnings were intentionally running an unhedged short USD position that they now intend to close out, there should be no impact on the US dollar.
In other words, the market was responding as if the algos reacting to the AAPL news were programmed by 22-year-old math Ph.D. who had no idea what they were doing. In other words, perfectly inefficiently.
So will Morgan Stanley’s explanation be sufficient to send yields lower, the dollar sliding, bond spreads surging and reverse much of today’s market spike, all of which took place in erroneous response to the AAPL repatriation announcement? Of course not.
- US Deploys Tactical Communications-Scrambling Plane To Korean Peninsula
South Korea’s deal to allow North Korean athletes and dignitaries to attend the Winter Olympics in PyeongChang appeared to ease tensions on the peninsula earlier this month. Still, it appears the US air force has been expanding its presence in South Korea.
Local media reported Monday that an EC-130H Compass Call aircraft, an advanced plane capable of denial of service attacks on enemy plane’s communication systems, was deployed to South Korea’s Osan Air Force Base by the US Air Force earlier this month.
According to Sputnik, it’s unclear why the state-of-the-art tactical aircraft was deployed to the base. Some critics have speculated that it may be used to collect data on North Korea’s military during the Games, which are set to begin Feb. 9.
The plane, based at Arizona’s Davis-Monthan Air Force Base, the aircraft reportedly made its way to South Korea after stopping at Japan’s Yokota Air Base.
The US Airforce only has 14 of these advanced aircraft in its entire arsenal, according to Sputnik.
The planes have recently been used to keep Daesh fighters from coordinating attacks.
“If we can shut down or deny their communication,” Lt. Col. Chris Weaton of the Electronic Combat Squadron said in a statement, “then we are causing chaos.”
An estimated four of the 13 EC-130Hs are operating in Iraq and Syria.
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