Friday, July 25, 2014

Why Bitcoin Merchant Adoption Is Driving the Bitcoin Price Down

I have made this point several times: The more merchants that start using Bitcoin, the more downward pressure will occur on the price of bitcoins, since merchants who receive bitcoins  are not holding on to them but selling them immediately. In other words, more merchant adoption gives confused Bitcoin fanboys more venues through which to liquidate bitcoins, without them realizing they are doing so.

The Bitcoin price has now broken below $600. Here is Smaulgld, earlier this year when Bitcoin was at $650, discussing the declining Bitcoin price since Overstock started accepting it as a form of payment:
Bitcoin has Dropped over 25% since Overstock Starting Accepting it as Payment

Wider Bitcoin adoption recently has not led to a higher Bitcoin price. In the past three months we have seen an acceleration in the number of merchants accepting Bitcoin, including online retailer Overstock. During this time there has also been a 40% drop in the price of Bitcoin. This is because most of the Bitcoin accepting merchants are also large sellers of Bitcoin as they are not really accepting Bitcoin; they are processing Bitcoin purchases through companies like Coinbase who immediately convert the Bitcoins into dollars for the merchants. It makes sense for merchants today to accept Bitcoin in this fashion as they avoid the Bitcoin fluctuation risk and they can sell merchandise to early Bitcoin adopters sitting on small Bitcoin fortunes that need to spend them before the price falls further.

If merchants don’t require Bitcoin use, no additional demand is created and therefore acceptance of Bitcoin by more merchants will not cause the price of Bitcoin to rise. Indeed additional merchant adoption might accelerate the dumping of Bitcoins and drive the price down.

Former Bear Stearns CEO Alan Greenberg dead at 86

Greenberg was CEO from 1978 to 1993 and was chairman of the board from 1985 to 2001. He was chairman of the executive committee when the firm collapsed in 2008 and was sold to J.P. Morgan Chase & Co.

Another Wenzel 'Water Shortage' Confrontation at the Gym

It's Friday, so early this morning (5:AM), I was off to the gym for my regular, Monday, Wednesday, Friday workout routine.

After my workout, I continued my routine by heading to the sinks to shave. While having a relaxing shave, with the water blasting, for the second time this year, another gym member approached me and told me there was a water shortage. I replied:
If there is a water shortage, why is it that at the grocery store I can buy all the Evian, Fiji, Crystal Geyser and Arrowhead water that I want?

The only quote-unquote shortage is in government controlled water supplies. The government regulations in the water sector cause centrally planned communist-like distortions of price signals relative to supply and demand.  
It's too bad the Soviet Union collapsed because, if you are into following commie price distrtion rules and regulations, you would have loved it there.
He walked away.


Maximum Obamacare Fine Set at $2,448 Per Person

Federal officials have capped the amount of money individuals will be forced to pay if they don't buy insurance this year under the new health care law.

The caps are $2,448 per person and $12,240 for a family of five. The amount is equal to the national average annual premium for a bronze-level health plan, reports AP.

The penalty for the first year starts at $95 per person and can rise to as much as 1 percent of annual income. The latest figure limits what the government can charge people using the personal income computation. The penalty is due when people file their 2014 taxes.

Communist Equality

Castro wearing two Rolexes.

(via Rothbardian)

Yellen: Where No Man Has Gone Before

By Peter Schiff

Although Fed Chairwoman Janet Yellen said nothing new in her carefully manicured semi-annual testimony to Congress last week, her performance there, taken within the context of a lengthy profile in the New Yorker (that came to press at around the same time), should confirm that she is very different from any of her predecessors in the job. Put simply, she is likely the most dovish and politically leftist Fed Chair in the Central Bank's history.

While her tenure thus far may feel like a seamless extension of the Greenspan/Bernanke era, investors should understand how much further Yellen is likely to push the stimulus envelope into unexplored territory. She does not seem to see

LOL: Lady de Rothschild sues think-tank over funds from ‘caring capitalism’ summit

So much for 'caring capitalsm'. I am not making this up.

A London summit on “caring capitalism” that attracted Prince Charles and Bill Clinton as speakers is now embroiled in a bitter legal dispute.

Lady Lynn Forester de Rothschild says the think-thank that staged the event turns out to be not very caring. And she is suing for breach of trust and fiduciary duty.  In a court claim, she says the one-day conference was her idea and that the Henry Jackson Society acted only as “secretariat” and “agents” for the May 27 Conference and that  she raised all the funds.

Lady de Rothschild,who is married to billionaire Sir Evelyn de Rothschil, claims HJS, a UK registered charity, and its executive director Alan Mendoza are holding £137,000 of “surplus funds” from the conference that should be returned to the couple’s investment company EL Rothschild.

A further £44,000 of invoices connected with the conference are outstanding because “HJS refuses to pay”, says her legal claim, which also refers to another £6,000 in unspecified bills.

It also says HJS must give her control of websites connected with the conference and other assets such as a contacts database which she says “does not belong to” HJS.

Political Correctness Has Evolved into Comedy

By Robert Ringer

There is a fundamental misconception about dignity in our age of artificially created “rights.” Political-action groups love to babble about being treated with dignity, as though dignity were a right. But dignity is no more a right than love or friendship.

The reality is that no one can be forced to treat you with dignity. Through a variety of applied pressures, someone might feel that it’s in his best interest to pretend to treat you with dignity, but such false dignity breeds only hatred and resentment.

So-called political correctness is a perfect example of this, so much so that it has evolved from resentment to comedy. When a concept is no longer taken seriously, where’s the dignity?

Am I missing something?

ROBERT RINGER is a New York Times #1 bestselling author who has appeared on numerous national radio and television shows, including The Tonight Show, Today, The Dennis Miller Show, Good Morning America, ABC Nightline, The Charlie Rose Show, as well as Fox News and Fox Business. His books includeMillion Dollar Habits: 10 Simple Steps to Getting Everything You Want in Life and To Be or Not to Be Intimidated?: That is the Question 

To sign up for a free subscription to his mind-expanding daily insights, visit
Copyright © 2014 Robert Ringer

The Federal Reserve's Risky Reverse Repurchase Scheme That Could Crash the Economy

In the EPJ Daily Alert, I have been warning for sometime about the bizarre Overnight Reverse Repurchase Facility created during the reign of Ben Bernanke as head of the Federal Reserve. The facility was created as a "tool" to siphon  funds from the monetary system, specifically to be used should the $2.6 trillion that is now sitting as excess reserves begin to rapidly enter the system.

The idea is that the facility would allow money market funds to drain some of the new funds entering the system and place them at the Federal Reserve via reverse repo operations with the Fed. The problem with this is that the money markets don't have anywhere near the cash on hand to do any large scale operations of this type. They would have to sell off other securities they hold or somehow suck in more funds from other parts of the economy. There are many moving parts to such an operation and no one knows the outcome of such a massive exercise.

Sheila  Bair, a former chairwoman of the Federal Deposit Insurance Corp, does an excellent job of discussing in WSJ some of the dangers of this Fed tool. In fact, she understands that under certain circumstances use of the facility in a big way could crash the economy. She writes:
[T]oo little attention is being paid to a Federal Reserve program called the Overnight Reverse Repurchase Facility, also referred to as ON RRP. This program, while well-intentioned, could be a new source of financial instability. It needs a closer look.

The Federal Reserve Bank of New York operates the reverse repurchase facility as part of the central bank's open-market operations. The Fed "sells" securities that are part of its enormous, $4.4 trillion balance sheet to a host of financial institutions, while it simultaneously agrees to "repurchase" those assets the next day while paying the institutions a slight return (currently 0.01% to 0.05%). In effect, the Fed's counterparties are giving a secured loan to the most creditworthy borrower on the planet. They get a supersafe place to put their money and a little interest as well. Not a bad deal.

The Fed began the program in September as a way to test a potential new tool for raising interest rates whenever that day arises. Obviously, no counterparty would be willing to lend funds into the market at a rate cheaper than that paid by the Fed. So by raising the overnight reverse repurchase rate, the Fed can raise the floor rate at which their counterparties are willing to lend to other, less safe, borrowers.

I applaud the Fed's desire to eventually return interest rates to historical norms, but it is far from clear that its existing tools are insufficient to do so. The Fed can always sell government securities as part of its normal open-market operations. And Congress has given it authority to pay interest on bank reserves to set a floor on the rate at which banks will lend.

Moreover, the reverse repurchase program doesn't look like a temporary experiment. Large institutional investors, notably including money-market funds and government-sponsored entities (such as Fannie Mae   and Freddie Mac ) are using it regularly. The facility hit an overnight high of $242 billion at the end of the first quarter of 2014. The Fed has raised the overnight allotment cap for individual buyers from $500 million in September to $10 billion today.

The mere existence of this facility could exacerbate liquidity runs during times of market stress. Borrowers in the short-term debt markets will have to compete with it for investment dollars and all, to varying degrees, will be viewed as higher risk than lending to the Fed. Even a relatively minor market event could encourage a massive flow of funds to the Fed while contributing to a flow away from other short-term borrowers.

Nonfinancial companies could find themselves unable to find buyers for their commercial paper. Banks could confront a sudden outflow of deposits, particularly those which are uninsured. Even the U.S. Treasury—traditionally viewed as the safest harbor—could see its borrowing costs spike as investors decide that the Fed is even safer.

Ironically, faced with a more acute liquidity crisis, the Fed would likely have to use the funds it is borrowing through reverse repos to provide a lifeline to the very markets that suffered. For investors seeking safety, the Fed would become the borrower of first resort. For borrowers affected by the resulting diversion of funding, the Fed would become the backstop lender..

Finally, the reverse repurchase facility seems to be at cross-purposes with the Fed's own efforts to address systemic risks emanating from money-market funds, which were subject to disruptive runs after Lehman Brothers collapsed in September 2008. Market pressure should be causing this unstable sector of the financial system to shrink, particularly in today's near-zero interest-rate environment. But by giving money funds a de facto insurance program, the Fed has thrown them a lifeline.

Fortunately, the Fed has made no decisions about whether to make its reverse repurchase facility permanent. At least two Federal Reserve Bank presidents—New York's Bill Dudley and Boston's Eric Rosengren —have publicly acknowledged some of the risks that it poses and the need for caps on the use of the facility. In my view the Fed should lock up the reverse repurchase facility in its toolbox and throw away the key. We need less, not more, government intervention in the financial markets.


FBI Tried to Snare SF Mayor and a Former SF 49ers Quarterback in a Sting

Government versus government battles, we need more of this.

The FBI tried to trap San Francisco Mayor Ed Lee in a public corruption case involving suspended state Senator Leland Yee.

According to the San Francisco Chronicle that the FBI had undercover agents contribute $20,000 to Lee's 2011 mayoral campaign.

The donations were part of a sting operation that culminated with the indictments of St. Senator Leland Yee, D-San Francisco, and others in March.

According to SFC, undercover agents also met with former 49ers quarterback turned developer Joe Montana.

The FBI came up empty in the case involving Lee and Montana,according to the report.

Thursday, July 24, 2014

The Fed Fueled SF Tech Boom Has Pushed Up Office Rents 81% in Four Years

The Information reports:
In 2010, when the average rent for top grade office space fell to $34.02 a square foot, there were 22 blocks—real estate lingo for office spaces of 100,000 square feet or more—on the market. The city scrambled to alter its local tax laws to keep Twitter in town and generally worked to make itself more attractive to tech companies.
Today, with San Francisco displacing Silicon Valley as the location of choice for many tech companies, the average price per square foot for so-called Class A office space in San Francisco is $64.45, according to the real estate company CBRE. That's close to the dot-com bubble peak of $67.20 in the third quarter of 2000.
One non-profit, the In-Home Supportive Services Consortium, recently had their rents raised from $18 to $45 per square foot. According to the San Francisco Chronicle, the only way for the organization to stay in the city was to move into a basement with no windows.
"They are turning our old offices into tech space. I get it - everybody wants to be across the street from the Twitter building," at Market and 10th streets, [Deputy Director Mark Burns] says. "As much as we hate to be underground, I feel fortunate to be here for the next 10 years."
Note Well: This Federal Reserve manipulated boom will eventually crash, like they all do. Murray Rothbard explained why in Austrian School Business Cycle Theory. There are both cyclical and secular trends to this SF boom, so it won't be an entire loss, but,when it comes. it will be very, very ugly.


French Fleeing High Taxes Find Haven in Portugal (Something US Citizens Can't Do)

“The French president’s taxes are prompting many to flee their country,” says Lisbon real estate agent Paulo Silvac. “Many of these wealthy French are coming to Portugal to take advantage of a series of tax benefits that are better than in other countries,”  reports Bloomberg.

Among Francois Hollande’s first steps after winning power in May 2012 were to push through a tax of 75 percent on annual incomes of more than 1 million euros and to raise the capital-gains tax.

Sotheby’s International Realty has seen scores of French investors buying up Portuguese luxury real estate, the company’s managing director in Portugal, Gustavo Soares, said.

Sotheby’s International Realty has seen scores of French investors buying up Portuguese luxury real estate, the company’s managing director in Portugal, Gustavo Soares, said.

“The French are finally coming to Portugal,” Nuno Durao, head of real estate company Fine & Country, said in an interview. “They like our country but they like our tax regime even more.”

Under Portugal’s so-called non-habitual-resident program, foreign pensioners who come to live in the country may have their pension income exempt from taxes as long as it’s paid from a foreign source. But don't think that if you are an American you can pull this off. Unlike the US, France only taxes its citizens who actually live in the country. For US citizens, all income is taxed, even if you happen to be living outside the and earn your income from non-US sources.


A (Proven) Freelancer’s Guide to Growing Your Business

By Paul Jarvis

Most freelancers start out their business like this:

  • They get great at what they do.
  • They build a website that talks about their expertise
  • They set up their social media profiles and start promoting at people.
  • They wait for clients to come to them.

When it’s laid out like that, you can see the obviously flaws. And yet, this is how a lot of freelancers try to start working for themselves. They think that simply being good at what they do is enough to have clients knocking down their door.

There’s a better way:

Start by getting into the head of the people you want to get hired by.

Read the rest here.

It Turns Out Elizabeth Warren Loves Subsidizing Big Businesses and Wall Street

Veronique de Rugy writes:

In the little time she’s been in Congress, Senator Elizabeth Warren has made a name for herself as a populist who talks tough about Wall Street and other large corporations. But is she going to do more than just talk about it?

At the end of last week, Warren confirmed that she still supports the Ex-Im Bank — a government agency that hurts many U.S. employees of companies not lucky enough to benefit from it and consumers who face higher prices as a result of the subsidies, all for the sake of lining the pockets of the biggest corporations in the country. Here’s what her office told Bloomberg:
Senator Warren believes that the Export-Import Bank helps create American jobs and spur economic growth, but recognizes that there is room for improvement in the bank’s operations. She looks forward to reviewing re-authorization legislation if and when it is introduced.
Her position was confirmed when she turned down an invitation from the conservative group Heritage Action to talk about “ending the Export-Import Bank and the political favoritism it engenders.”...

Warren’s support for the Ex-Im Bank is totally inconsistent with her otherwise populist stands, and it’s hurting the people she represents.

The biggest Ex-Im beneficiaries are U.S. giant corporations like Boeing, GE, and Caterpillar and their very wealthy foreign buyers. These companies don’t need the bank, but they love it. It allows a select number of U.S. exporters to increase their profits and transfer onto taxpayers risk that the companies should be shouldering. 

Where Have the Job Prospects Exploded in the U.S.?

Infographic: ADP Regional Employment Report - Florida, Texas and California Show Growth Above National Average

Justin Raimondo: "Rand Paul Is Quickly Losing My Support"

Good for Justin. Rand's establishment, interventionist views are becoming too obvious to ignore.

Where Ron Paul Might Be Wrong

Ron Paul has said that he thinks some people are born libertarians and that he himself was born such.

There is an understandable natural tendency for life-long libertarians to agree with Ron's claim. I think he may be wrong.

If it is true that most libertarians are born libertarians, the libertarian movement is in a lot of trouble. At best, I estimate that maybe 5% of the population is libertarian. If you become a libertarian at birth and we have the percentage that are libertarians, then there is little chance we will ever see a libertarian society.

But, as I say, I do not believe people are born libertarians. I believe some people are born with a healthy brain balance between reality, logic and emotions (as contrasted with, for example, pathological altruists). That is, they do not allow emotions to interfere with their understanding of the real world. They recognize reality for what it is and don't try to emotionally block out clear thinking or go into denial about some things in the world.

Freedom and libertarianism are very logical things. If you have an open mind (no blocking mechanisms operating) and think things through logically, you are going to be a libertarian. But, it's the thinking logically, and having a correct balance with reality and emotions that people may be born with. Thus, it is very easy for such people to become libertarians early in their life. But it is the logical thinking that we are born with that begins the process, not an inherent libertarian philosophy.

I have talked to many adults who have only come to libertarianism in recent years. They all tend to be very logical, thus, it is not surprising that they would be attracted to libertarianism. In fact, most tell me that in the past, although they might not have been full-fledged libertarians, they had libertarian "instincts." To me this means that they likely were simply thinking logically about events and society without having a full libertarian perspective presented to them early on. That is, it may just be that while they weren't exposed to libertarian ideas at an early age, their logical way of thinking was always pushing them in that direction--always suspicious of interventionist and government propaganda.

Thus, if the key to being a libertarian is logical thinking and a healthy balance between emotions and thinking, and exposure to libertarian ideas, then there is a lot more hope for a libertarian society, since the number of current libertarians is certainly only a subset of generally logical thinkers. The more logical thinkers that can be made aware of libertarian logic, the better.

Further, many of those, who let emotions get in the way of their thinking logically, are always attempting to improve themselves. Thus, an introduction to the logic of libertarianism can be a step in their growth process.

In other words, I hope Ron Paul is wrong on the point of how people become libertarians but I hope he keeps on spreading the logic of the libertarian message, because he is the master at it.


Government And Its Endless Pleas For "Unity"

By Chris Rossini

In Indonesia, president-elect Jokowi pleas:
"With humility, we ask the go back to a united Indonesia."
Meanwhile, back here at Empire Central, a little more panache is added to the same request:
Government always wants "unity". It's like a mugger who wishes his victim would just stay still for a second so that the wallet can be removed much easier. Resistance is nothing but a pain in the behind!

Fortunately, it's no dice for the State. There can never be total unity. Those who are expropriated will always seek to resist those who are doing the expropriating. The best that the current gang of looters can hope for is to squeeze out whatever they can during their terms.

Unity resides in peace. No one is legally allowed to expropriate and aggress against anyone else.

On the other hand, government that has the ability to use aggressive force, is by definition conflict. And as the last several hundred years have proven, the most vile conflict that anyone can imagine.

Business Oriented 'Anarchist Calisthenics'

As a follow up to Have You Done Your 'Anarchist Calisthenics' Today? ,an EPJ reader writes:
Jaywalking as an example is good & undermining with low risk, but let us contemplate for a moment also some financial beneficial ways for business people to exercise their anarchistic muscles in a way to make themselves more money.

So here are some personal things I've done that helps us all undermine the state while also making money:

1. Ignore regulations by governments(state, Fed, etc.) that inhibit money making. The people that compete against the truffle entrepreneur without getting the 'proper' license to sell truffles are a perfect example of this that you posted a couple of weeks ago.

In my case, I've ignored the following regulations that not only help to make/save me money, but have a very low fine if I'm caught, and I doubt I ever will be:

1. I moved my business to an area that wasn't zoned for my type of business. Why? It was in a less trafficked area (location isn't super important for my business) but more importantly, it had a more stable supply of 207 voltage, which is very important to my business.(stable electrical voltage is more difficult to find in industrial parks)

2. I ignored all the sign requirements within the city limits. The code required me to first pay someone to create a design, submit it for approval to the city(which accompanied a fee) and only after approval could I build it. Instead, I made the sign and put it up on my building. It's been four years now and no bureaucrats have stopped by to fine/complain me. I've researched the fine if they ever catch up, it's $50. (a lot less than the design & approval fees)

3. I routinely disable the safety devices on my machines(against OSHA regs) to do jobs more efficiently than otherwise possible. Also, since I started refusing entry to OSHA on visits(which is perfectly within your right to do, you force them to get an administrative warrant), they have only gone through the trouble once since and never been back(6 years and counting now)...I used to get a visit from them every year with around $1000/fine to go with it(once I was fined $500 for not having a spray bottle of water labeled "water")

3A. I routinely ignore building code in doing electrical work in my building, not in a dangerous way, but in a practical way. It saves me huge time and money. When I used to let OSHA in my building, they never once caught any of said work and if they do, those type of issues are usually a correction memo, not a fine.

4. I buy LLC's for my semi-retired employees. I've bought several of them. I go on to "legal zoom" and for a couple hundred bucks do all the paperwork myself for them and then have them do work for me and send invoices. It is sporadic work for them and it saves me substantial sums of money versus payroll tax obligations, it also happens to put more money in their pockets as well.

Pro tip: Are you unemployed and having a tough time finding a job? Buy yourself an LLC and sell yourself to a potential employer as a "sub contractor", it's a huge factor for many employers to reduce the risk of trying out new people and you make yourself far more marketable.