Wednesday, January 31, 2018

Swiss Central Banker Goes On Murder-Suicide Rampage

Swiss National Bank building
For the record.

A risk manager at the globally important central bank of Switzerland, the Swiss National Bank, murdered his neighbor, a high profile lawyer Micahel Wagner, and then himself on Sunday,

The banker, who has only been identified as Marin G, was part of a team of around 15 specialists, who take care of the huge positions on the balance sheet of the SNB.  Only, the ECB, BOJ and the Fed have larger balance sheets.

Police believe the neighbor suspected Wagner of having an affair with his wife and that the murder-suicide is not connected to G's work at SNB.


(ht Zero Hedge)

Facebook Bans All Bitcoin Ads

Facebook is banning all ads that promote cryptocurrencies, including bitcoin, in an effort to prevent people from advertising what the company is calling “financial products and services frequently associated with misleading or deceptive promotional practices.”

That means no advertiser — even those that operate legal, legitimate businesses — will be able to promote things like bitcoin and other cryptocurrencies, initial coin offerings — ICOs for short — or binary options, according to a Facebook blog post.

(via Recode)

Setting Elizabeth Warren Straight

By Colin Grabow
Writing in the pages of USA Today last week, Senator Elizabeth Warren (D-Massachusetts) criticized President Trump for taking insufficient action to arrest the flow of jobs from U.S. factories to foreign countries such as Mexico. Labeling Trump the “King of Offshoring,” Sen. Warren called for U.S. negotiators participating in the renegotiation of the North American Free Trade Agreement to take “bold actions that will stop the offshoring of American jobs.”
That would be a mistake. In fact, outsourcing helps to boost productivity—the art of doing more with less—which is the sine qua non of improvements in living standards.
Although it is perhaps understandable when casual observers are seduced by the notion that the outsourcing of jobs to overseas locales is a sign of weakness, more should be expected of a sitting United States senator. In fact, both theory and experience teach us that

BREAKING: No Fed Rate Hike

As expected the Federal Reserve at its monetary policy meeting completed today did not raise the interest rates it controls but did indicate a likely rate hike in March.

This is a breaking story. Return to this post for updates.



The full Federal Reserve Open Market Committee statement is here.

U.S. Regulators Subpoena Crypto Exchange Bitfinex, Tether

U.S. regulators are scrutinizing one of the world’s largest cryptocurrency exchanges as questions mount over a digital token linked to its backers, reports Bloomberg.

The U.S. Commodity Futures Trading Commission sent subpoenas on Dec. 6 to virtual-currency venue Bitfinex and Tether, a company that issues a widely traded coin and claims it’s pegged to the dollar, according to Bloomberg.

The firms share the same chief executive officer.

Tether’s coins have become a popular substitute for dollars on cryptocurrency exchanges worldwide, with about $2.3 billion of the tokens outstanding as of Tuesday. While Tether has said all of its coins are backed by U.S. dollars held in reserve, the company has yet to provide conclusive evidence of its holdings to the public or have its accounts audited. Skeptics have questioned whether the money is really there.

Bloomberg continues:
While Tether and Bitfinex don’t disclose on their websites or in public documents where they’re located or who’s in charge, Ronn Torossian, a spokesman for the firms, said in a Dec. 3 email that Jan Ludovicus van der Velde is the CEO of both. Phil Potter is a Tether director, according to documents -- dubbed the Paradise Papers -- recently leaked by the International Consortium of Investigative Journalists. He’s also the chief strategy officer at Bitfinex....

A document on Tether’s website, compiled by accounting firm Friedman LLP, shows it had $443 million and 1,590 euros ($1,970) in bank accounts as of Sept. 15. Tether tokens were valued at $420 million that day, according to Tether hasn’t identified the banks where that money was held, and their names were blacked out in the document.

Friedman said in its report that it didn’t investigate the reliability of Tether’s records. The accounting firm and Tether have recently cut ties, Tether said in a separate statement Monday.
Given all this, I would never put any money with these guys. This is an extremely opaque operation with more questions than answers.


STOCKMAN: Trump's Colossal State of the Union Error

David Stockman writes:
Trump's planned drastic shrinkage of immigration is a colossal error. It will extinguish the only source of additional workers to grow the US economy in the decades ahead, as well as the new Tax Mules that will be urgently required in order to shoulder the massive Welfare State fiscal burden of 100 million prospective retirees by 2060.
At the same time, the Donald's planned borrowing spree is sure to be almost entirely wasted. We don't need any more national security than the $600 billion Trump inherited---so the $1 trillion extra he's requesting over the next decade is sheer economic waste, as is the Mexican Wall and border control.
As to the latter, if you want less crime and violence at the border, repeal the War on Drugs. If you want "legal" immigrants, give them a guest worker permit and a route to earning citizenship by paying taxes for a decade or longer.

Stockman, Cutting Taxes and the Deficit

Mitch Black emails:
Regarding Mr. Stockman's correlating the receipt of plunder (taxes) and the federal deficit: I don't and never have observed much of a correlation at all. These sanctimonious, tunnel brained, greedy politicians will spend regardless of receipts.

Is there any evidence that Mr. Stockman's assertion about this is correct?

Even if it was correct, I have always felt (as Cavuto mentioned) that ANY money in the hands of politicians and bureaucrats is dangerous and at the very least, wasteful. That money kept in private hands, much better spent. But Stockman felt differently about this as well. He's a smart guy, so I am wondering if I'm missing something.
RW response:

I am not sure Stockman was making a correlation. He is simply looking at the fact that government spending is not being cut but taxes are. This means that the deficit will have to go up. That's his point with the further point that the spike in the deficit is not going to be small, it is going to explode.

Under these circumstances, when government spending isn't cut, the money is taken out of the economy via a much more circuitous route--but it is taken out. Either the government borrows on the open market, thus crowding out private sector borrowing (so less goods are produced) or the Fed monetizes the debt (meaning the Fed prints more money for the government to bid goods away from those of us in the private sector.)

Think of it this way.

Say there is an economy with a GDP of $10 million.

The government taxes 30% and spends the $3 million which leaves $7 million for the private sector.

Now along comes Trump. he cuts taxes by $500,000.

So things look like this: Government takes $2.5 million which leaves $7.5 million for the private sector.

But the government still spends $3 million. This will result in a deficit of $500 000.

 If the government goes to the open market to borrow the money to finance the deficit, it will crowd out $500,000 in private sector borrowing, so the $7.5 million in the private sector shrinks to the same $7 million that existed before the tax cut and government funding goes back up to $3 million/.

Things get quite a bit more complicated if the $500,000 is monetized by the Fed. There are a series of rounds that take place in the monetization scenario. The government will get back, in phase one, to $3 million because the Fed buys $500,000 to support the government debt issuance to cover the deficit. But because of the fractional reserve system even more money gets created pushing the number of dollars in the private sector above $7.5 million. Thus a bidding price war will develop with the explosion in the money supply. This will mean a further shortfall in government funds to finance budgeted activities as costs rise, which will explode the deficit further and we are caught in what Hayek pointed out in a slightly different context was a tiger by the tail situation---that makes it very difficult for the private sector to save or plan. As more funds are funneled to the government by even more Fed deficit monetization (or the crowding out of the private sector).

I do not find any of these alternatives attractive. A cut in government spending is the only sound solution, a tax cut without spending cuts is just getting hit by a train that you don't hear until it hits you.

Tuesday, January 30, 2018

Stockman Reveals the Huge Mistake Trump is Making


Trump to Go Full Infrastructure Idiot in Sate of the Union Address

President Donald Trump, in his State of the Union speech tonight, plans to discuss a $1.5 trillion infrastructure improvement plan, White House economic advisor Gary Cohn told CNBC.

In an interview on CNBC's "Squawk Box," Cohn called infrastructure "the next leg of the stool in our economic agenda."

"He's going to talk about a trillion and a half dollars of investment, but more importantly, he's going to talk about streamlining the approval process on infrastructure," Cohn said. "Right now, we have an infrastructure approval process that takes seven to 10 years to build relatively simple roads. We need to streamline that to less than two years."

Aside from the fact that infrastructure should be taken out of the hands of government and privatized (See:The Privatization of Roads and Highways: Human and Economic Factors), as David Stockman has pointed out (See: The Perennial Myth Of Crumbling Infrastructure) there is no infrastructure crisis.

Trump is just a street hustling dumb statist.


Krugman Gives Bitcoin Advice to His Barber

I actually think Paul Krugman is going to be right on this one (well. at least the part I quote of a recent column of his).

He writes:
The other day my barber asked me whether he should put all his money in Bitcoin. And the truth is that if he’d bought Bitcoin, say, a year ago he’d be feeling pretty good right now. On the other hand, Dutch speculators who bought tulip bulbs in 1635 also felt pretty good for a while, until tulip prices collapsed in early 1637.

So is Bitcoin a giant bubble that will end in grief? Yes...

Oh, and Bitcoin’s untethered nature also makes it highly susceptible to market manipulation. Back in 2013 fraudulent activities by a single trader appear to have caused a sevenfold increase in Bitcoin’s price. Who’s driving the price now? Nobody knows...

When it comes to cryptocurrencies there’s an additional factor: It’s a bubble, but it’s also something of a cult, whose initiates are given to paranoid fantasies about evil governments stealing all their money (as opposed to private hackers, who have stolen a remarkably high proportion of extant cryptocurrency tokens). Journalists who write skeptically about Bitcoin tell me that no other subject generates as much hate mail.

So no, my barber shouldn’t buy Bitcoin. This will end badly, and the sooner it does, the better.

Thanks Trump: Washing Machine Prices Will Go Up By About 15%

Thanks to new tariffs implemented by the Trump Administration om washing machines, Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, estimates price hikes on washing machines will range around 15 percent.

And that doesn't include the increases in prices of other products as workers are pulled off other jobs to produce washing machines domestically.

Trump is a statist clown.


The Economists' Diet: Advice From Two Formerly Fat Economists on How to Lose Wight

Rob Barnett, before and after
Economists Christopher Payne and Rob Barnett are out with a new book, The Economists' Diet: The Surprising Formula for Losing Weight and Keeping It Off.

From the blurb:
Combining the authors’ personal weight-loss stories with their passion for economics, this bold new behavioral approach to dieting recommends micro habits and meta-rules that will enable dieters to control their impulses to overeat, approach food in a healthier way, and lose weight once and for all.

Chris Payne and Rob Barnett are two formerly obese economists who met while working at Bloomberg. They faced the same obstacles to healthy living that so many others face today: long hours, endless stress, constant eating out, and snacking out of boredom. When they finally decided to do something about it, they lost weight by applying what they know best—economics—to their waistlines.

The Economists’ Diet outlines a straightforward, sustainable path for changing your eating habits. By combining economic principles, real-world data, and their own personal experiences, this guide teaches you how to control your impulses to overeat and learn how to approach food in a healthier way. Payne and Barnett provide simple solutions that you can use to achieve lasting results, without extreme dieting or giving up your favorite foods. By applying economic concepts, such as supply and demand, budgeting, and abundance, The Economists’ Diet is a unique and effective way to lose weight—and successfully keep it off.

Here are some tips in the book via Business Insider:
Use meta-rules to minimize the chance of making bad choices ...

A meta-rule is a

Monday, January 29, 2018

The Best and Worst Months to Rent An Apartment examined rental trends across the top 10 cities in the U.S. to find the best and worst times to rent, and found that in general the "best," or cheapest months to rent, tended to be between December and March, while the worst, or most expensive months to rent, are from May through October.

For example, in New York City, the best deal for a 1-bedroom apartment could generally be found in February, for a median of $3,000. The worst month to find a deal is in July, where rent median is $3,171. That's a 5.4-percentage difference amounting to about $170.

But the best time to rent (or buy a house) is when, surprise, the demand is lowest and that can mean different times of the year for different seasons..

If I am looking for a place in Chicago, say, I would look when the temperature is near zero. You will have little competition and a landlord who needs to rent at that time is going to be very flexible.

On the other side of the spectrum, I would look for a place in Palm Springs in August when half the town is closed down and temperatures are over 100 degrees.


Paul Leroy-Beaulieu: A Warning Voice of the Socialist Tragedy to Come

Richard Ebeling emails:

Dear Bob,

My latest article on the website of the Future of Freedom Foundation is on, “Paul Leroy-Beaulieu: A Warning Voice of the Socialist Tragedy to Come.”

The Russian Revolution, which occurred 100 years ago, left a legacy of terror, tyranny, mass murder and economic disaster over the last century. There were, however, some voices in the decades before the communist takeover in Russia that anticipated most of what happened in the attempted building of the socialist utopia.

One of them was the French classical liberal, free market economist, Paul Leroy-Beaulieu, who in his book, “Collectivism” (1885) explained what to expect from socialism-in-practice, and all said 30 years before Lenin and his communist accomplishes came to power in Russia. Anticipating much of the later arguments made by Ludwig von Mises and Friedrich A. Hayek, Leroy-Beaulieu explained the economic chaos that would follow from the abolition of private property in the means of production and an end to a market-based competitive price system to guide private enterprisers into coordinating changing supplies and demands.

He also warned of the forms and degree of personal, social and cultural tyranny that would follow from the establishment of the absolute socialist state, as the individual had no way to escape from the control, command and coercion of the central planning system. Civilization and its achievements would all be threatened with the coming of collectivism-in-practice. Anyone who read Paul Leroy-Beaulieu in the decades before the First World War could have no illusions about the socialist tragedy to come.



STOCKMAN: What Trump Accomplished in His First Year

David Stockman writes:
Donald has managed to do essentially nothing during his first year except emit a fulsome stream of pugnacious tweets, what he has done mostly has made the big problems worse.

We are referring to his $80 billion DOD boondoggle; his $1.5 trillion red-ink funded tax cut; $800 billion of net borrowing since inauguration day; utter silence and inaction on the $2.5 trillion entitlement monster; the seconding of foreign policy to a passel of discredited generals and recycled neocon interventionists; and most especially his relentless attacks on the very immigrant workers that America will desperately need as the 80-million strong Baby Boom ages-out into Welfare State dependency.

But above all else, the Donald has whiffed entirely on what is really killing the American economy. That is, the nation's out-of-control central bank.

Via its massive falsification of financial asset prices, the Fed has turned Wall Street into a gambling casino, the corporate C-suites into financial engineering joints and Washington into a profligate den of debt addicts.

Likewise, its idiotic pursuit of more inflation (2%) through 100 straight months of ZIRP (or near zero interest rates) has savaged retirees and savers, enriched gamblers and leverage artists, eroded the purchasing power of stagnant worker paychecks and unleashed virulent speculation and malinvestment throughout the warp and woof of the financial system.

Of course, we did not really expect the Donald to take on the money printers--notwithstanding his campaign rhetoric about "one big, fat, ugly bubble". After all, Trump has always claimed to be a "low interest man" and he did spend 40 years getting the worst financial education possible.

To wit, he rode the Fed's easy money fueled real estate bubble to a multi-billion net worth, or so he claims, and pronounced himself a business genius----mostly by virtue of piling cheap debt upon his properties and reaping the windfall gains.

Stated differently, the Donald came to office wholly unacquainted with any notion of sound money and free market financial discipline. And now he has spent a year proving he is completely clueless as to why Flyover America has been shafted economically.

Jordan Peterson: How to Effectively Ask for a Pay Raise


Trump Administration Considering Government Takeover of 5G Mobile Networks

The Trump administration apparently wants to turn part of the U.S. communications system into a government controlled monopoly.

Trump national security officials are considering an unprecedented federal takeover of a portion of the nation’s mobile network, allegedly to guard against China, according to sensitive documents obtained by Axios.

The online news service reports:
We’ve got our hands on a PowerPoint deck and a memo — both produced by a senior National Security Council official — which were presented recently to senior officials at other agencies in the Trump administration.

The main points: The documents say America needs a centralized nationwide 5G network within three years. There'll be a fierce debate inside the Trump administration — and an outcry from the industry — over the next 6-8 months over how such a network is built and paid for.

Two options laid out by the documents:

  1. The U.S. government pays for and builds the single network — which would be an unprecedented nationalization of a historically private infrastructure.
  2. An alternative plan where wireless providers build their own 5G networks that compete with one another — though the document says the downside is it could take longer and cost more. It argues that one of the “pros” of that plan is that it would cause “less commercial disruption” to the wireless industry than the government building a network.
Between the lines: A source familiar with the documents' drafting says Option 2 is really no option at all: a single centralized network is what's required to protect America against China and other bad actors.

The source said the internal White House debate will be over whether the U.S. government owns and builds the network or whether the carriers bind together in a consortium to build the network, an idea that would require them to put aside their business models to serve the country's greater good.
A Silicon Valley executive's response when I relayed the above to him replied, "What dumb bastards, they don't realize that a decentralized system would be the most difficult for China to crack in its entirety."

I have written before, but feel compelled to write once more, Trump is nothing but a dumb statist and, I must now add, that he seems to be getting sea legs in his efforts to introduce more central planning programs in the United States.

Yes, Trump wants to end competition and bring TSA-style government "protection" to your cell phone. What an idiot.



Sunday, January 28, 2018

Donald Trump: Economic Analyst

Oh yeah,  his policies started the trend. Serious street hustling BS.

What a clown.


Video Bio on the New Boring Man That is About to Become Federal Reserve Chairman

I do not believe fate will be as kind to Jay Powell as it has been to Janet Yellen.

I expect accelerating price inflation, a very weak dollar and a bond market collapse, at the least, early under his watch.


A New Directional Attack: The Nouriel Roubini Slam of Bitcoin

In part of a long essay economist Nouriel Roubini writes:
[C]ryptocurrencies in general are based on a false premise. According to its promoters, bitcoin has a steady-state supply of 21 million units, so it cannot be debased like fiat currencies. But that claim is clearly fraudulent, considering that it has already forked off into three branches: bitcoin cash, litecoin, and bitcoin gold. Besides, hundreds of other cryptocurrencies are invented every day, alongside scams known as “initial coin offerings,” which are mostly designed to skirt securities laws. So “stable” cryptos are creating money supply and debasing it at a much faster pace than any major central bank ever has.

As is typical of a financial bubble, investors are buying cryptocurrencies not to use in transactions, but because they expect them to increase in value. Indeed, if someone actually wanted to use bitcoin, they would have a hard time doing so. It is so energy-intensive (and thus environmentally toxic) to produce, and carries such high transaction costs, that even bitcoin conferences do not accept it as a valid form of payment...

Since the invention of money thousands of years ago, there has never been a monetary system with hundreds of different currencies operating alongside one another. The entire point of money is that it allows parties to transact without having to barter. But for money to have value, and to generate economies of scale, only so many currencies can operate at the same time.

In the US, the reason we do not use euros or yen in addition to dollars is obvious: doing so would be pointless, and it would make the economy far less efficient. The idea that hundreds of cryptocurrencies could viably operate together not only contradicts the very concept of money; it is utterly idiotic.

The Crazed Anti-Family Position President Trump Took in Davos

I have regularly pointed out here at EPJ that President Trump thinks like a statist.

This was on full display when he delivered his speech on Friday at the annual World Economic Forum in Davos, Switzerland.

His most troubling comments came when he discussed immigration. He actually uttered these words:
We must replace our current system of extended family chain migration...
How anti-family can you get? The problem with immigration is not extended families migrating. The problem is government coddling of immigrants with government handout privileges.  As with most everything else, with immigration, Trump has spotted a government created problem but instead of eliminating the spot where the problem exists ( advocating for a welfare wall that prevents immigrants from handouts), he takes a statist route and, in this case, simply declares who, and who can not, come into the country.

As Friedrich Hayek guides us to think, What conceit!

But Trump didn't stop there, he continued his statist perspective at the podium in Davos with this call for specific kind of centrally planned managed immigration. Stating that he wants:
a merit-based system of admissions that selects new arrivals based on their ability to contribute to our economy, to support themselves financially, and to strengthen our country.
How exactly is Trump going to determine who contributes to the economy based on some kind of "merit-based system" that is somehow better than the market? Again, this is central planning conceit. Perhaps what we need in the United States is more low-skilled individuals to cut our grass and clean our offices so that higher skilled Americans are free to do more complex tasks, rather than those that can pass some kind of merit test--or maybe we need both.

It's obvious this specific kind of anti-family, merit-based immigration nonsense that Trump is spouting is being designed by Stephen Miller, clearly a Trump control. He is ignorant when it comes to the economics of immigration, as I have discussed in The Problem with Stephen Miller, but he sure knows how to control Trump.


Saturday, January 27, 2018

Patients Are “Dying in Corridors" of Britain’s Socialised Health System

By George Pickering

“Patients dying in hospital corridors.” So went the headline which appeared on the BBC’s website last week, detailing the newest outrages which have emerged from Britain’s crisis-beset healthcare system. This most recent revelation came as a result of an open letter sent to the prime minister by 68 senior doctors, offering details of the inhuman conditions which have become common in the National Health Service’s hospitals.
The letter, which collected statistics from NHS hospitals in England and Wales, found that in December alone over 300,000 patients were

Billionaire Saudi Prince al-Waleed Is Released From Detention

A noticeably thinner and aged Prince al-Waleed bin Talal sits in the office of the suite where he had been detained at the Ritz-Carlton in Riyadh. 

Saudi authorities on Saturday released billionaire Prince al-Waleed bin Talal more than two months after he was detained, reports The Wall Street Journal.

Prince al-Waleed is already at his house in Riyadh and is expected to resume his business activities as normal, reports WSJ.

Sources claim, Saudi authorities demanded at least $6 billion from Prince al-Waleed to free him. It wasn’t clear if Prince al-Waleed agreed to any settlement for his release.

Saudi Arabia has secured about $100 billion in total after many of the more than 200 detained, many cousins of the Crown Prince Muhammed bin Salaam agreed to settle and were released, Saudi officials said.

The public prosecutor’s office said Wednesday that officials were moving ahead with plans to prosecute 95 people who were still detained and have declined to pay what the government describes as financial settlements.

Prince al-Waleed is one of the world’s richest men and holder of stakes in companies including Twitter Inc. and Four Seasons Hotel & Resorts.


Trump Administration to Ask for Massive Defense Spending Increase

Trump and his generals.
There goes the budget.

The Trump administration is expected to ask for a major increase of $716 billion in defense spending next month in its proposal for the 2019 budget, officials tell The Washington Post. That’s an increase by more than 7% over the 2018 budget.

And it's more evidence the generals are in charge and loving it.

Notes WaPo:
The proposed budget is a victory for Defense Secretary Jim Mattis, who recently unveiled a strategy that proposes retooling the military to deter and, if necessary, fight a potential conflict with major powers such as China and Russia.
And it represents a setback for deficit hawks such as Mick Mulvaney, director of the Office of Management and Budget, who last year pressed for an increase in defense spending that could be offset by cuts to domestic programs...
The proposed increase is “a huge deal,” said Mark Cancian, a defense analyst with the Center for Strategic and International Studies (CSIS). “It’s a big jump in defense and means that the Trump administration is putting resources against an extremely aggressive defense strategy.”

Holding My Nose and Forming an Alliance with Elizabeth "Pocahontas" Warren

This is how you form an alliance, not by necessarily supporting an individual but supporting a position an individual holds that aligns with your own.

Up until now, I can't think of any issue that Senator Elizabeth Warren has held that I could support. But now one has emerged.

She is absolutely dead set against the confirmation of  Marvin Goodfriend to the Federal Reserve Board of Governors. I am completely in sync with this position, though we both hold different reasons why the Goodfriend confirmation should be derailed.

During his recent confirmation hearing by the Senate banking committee, Warren took him to task for calling on the Fed to tighten monetary policy when the unemployment rate was still as high as 7%.

"I’m concerned because these wrong predictions are not outliers for you — they have been part of your overall approach to monetary policy which effectively ignores the Fed’s full employment mandate and instead focuses solely on speculative concerns about inflation," Warren said.

"Based on the kind of judgment that you have demonstrated, American families are very lucky that you weren’t on the Fed board over the past several years and I think it would be a mistake to put you on the Fed board now," she said.

I don't believe the Fed should be manipulating interest rates at all, so I disagree with Warren on that point but, still, Goodfriend should be stopped.

He is in favor of negative interest rates. That is, he believes the money in your checking account should be taxed forcing you to spend it to create Keynesian-type stimulus during a recession.

This is absolute nonsense, during a recession the more savings that are held, the quicker the economy recovers from a recession.

Negative interest rates will promote the opposite, They are one of the most evil economic policies that could be advocated by a government official. It's taking money from people when they are trying to build up a cash reserve during difficult times.

Maybe Warren can get something done here. The Wall Street Journal reported on Goodfriend's hearing:
Mr. Goodfriend on Tuesday faced much tougher questioning from committee Democrats than Mr. Trump’s first two nominees to the Fed board... Mr. Goodfriend didn’t appear to win over any of the panel’s Democrats, suggesting his path to Senate confirmation could be more difficult.

Friday, January 26, 2018

Massive E-Currency Theft

Concerned traders gathered outside Coincheck headquarters on Friday.

E-currency exchange Coincheck has confirmed that some 58 billion yen ($534 million) in customers' virtual currency holdings were taken from its wallets Friday, in what appears to be the biggest virtual currency heist to date, reports Nikkei.

At around 3 a.m. Friday, essentially all NEM -- a type of virtual currency -- held by the Tokyo-based exchange was illicitly transferred out of its digital coffers. Coincheck discovered the breach after 11 a.m., and soon halted withdrawals in all currencies.

Coincheck "deeply regrets" the incident, CEO Koichiro Wada told reporters Friday night.

Boy, it sure is great e-currencies don't face any third party trust problems! Delusion.


Hey Donald, Have you ever encountered trade that is not reciprocal?

26 January 2018

Mr. Donald Trump
1600 Pennsylvania Ave., NW
Washington, DC  20500

Mr. Trump:

In your Davos speech today, you said about trade that “it needs to be fair and it needs to be reciprocal.”

About the “fair” part: me being an unconditional free trader, I’m delighted to hear it!  Trade that is fair is trade that each party voluntarily agrees to in the absence of artificially imposed barriers, penalties, or requirements.  In short, when trade is free, trade is fair.  The only trade that is unfair is trade that is artificially obstructed.

About the “reciprocal” part: I’m confused.  Have you ever encountered trade that is not reciprocal?  Each and every trade, by its nature, is an exchange – that is, each and every trade involves reciprocity.  (To obtain property by some method that doesn’t involve reciprocity is to receive a gift, to get a bequest, or to steal through either force or fraud.)  Because trade necessarily is reciprocal, to worry that our trading partners might engage with us in trade that is non-reciprocal is akin to worrying that you might be served a glass of water that is non-wet filled with ice that is non-frozen.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

The above originally appeared at Cafe Hayek.

The Gold Standard on Jeopardy

Tom Dilorenzo reports:
“The Gold Standard” was a category of questions on “Jeopardy” last night. The questions involved knowing what “fiat” money is, how the gold standard stifles inflation, and FDR’s thieving confiscation of privately-owned gold in the 1930s. (Citizens had to give up almost all their gold to the government at about $21/ounce or face a $10,000 fine and ten years in prison. The government then sold the gold for $35/ounce for a tidy profit).

What Frequency Are You On, Donald?

25 January 2018

Mr. Donald Trump
1600 Pennsylvania Ave., NW
Washington, DC 20500

Mr. Trump:

ABC News reported this morning that while in Davos you will encourage other countries to invest in the United States.

I’m pleasantly surprised!  Foreign investment in the United States is indeed splendid for us Americans.  But such investment also increases America’s trade deficit – a phenomenon that you’ve famously pledged to reduce.

Have you changed your mind about the trade deficit?  Will we hear no more of the economically ignorant squawking about the alleged horrors of the trade deficit that, until now, issued routinely from you and your administration?  Or – pardon my asking – do you simply not understand that every cent that foreigners invest in America is a cent that foreigners don’t spend on American exports and, hence, is a cent that raises America’s trade deficit?

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

The above originally appeared at Cafe Hayek.

Thursday, January 25, 2018

Venezuelan Price Inflation Jumps By 1,000% in One Day!!

Prof Steve Hanke reports:
Yesterday, Venezuelan inflation surpassed 6,000% for the first time. Today, it has surpassed 7,000%, sitting at 7,155%. #Venezuela is in an economic free fall.

Banks Begin Restricting Customers’ Purchases of Bitcoin

This month, Capital One Financial Corp.decided it would no longer let its customers use credit cards it issues when buying bitcoin or other cryptocurrencies such as Ethereum “due to the limited mainstream acceptance and the elevated risks of fraud, loss and volatility.” The bank said it would “regularly evaluate the decision as cryptocurrency markets evolve,” reports The Wall Street Journal.

Bank of America Corp. allows bitcoin purchases with the credit cards it issues. “At this point there is nothing that would block a transaction, but we are carefully reviewing our policy,” said a bank spokeswoman.

Citigroup Inc. which allows bitcoin purchases with its credit cards, is also reviewing its policy, according to a person familiar with the matter. TD Bank, the U.S. unit of Toronto-Dominion Bank ,  said that as a result of security measures some bitcoin transactions aren’t being processed.

According to WSJ, with bitcoin, some 18% of buyers funded their purchases with a credit card, according to a survey released in December from lending marketplace LendEDU. Of those, 22% said they didn’t pay off their credit-card balance after the purchase. Nearly 90% of that group expected to eventually pay off their balance using profits from the investment, the survey found.

(Original source: Lend Edu)


Guess Who Trump is Having a Private Dinner with in Davos?

The globalists.

The White House has released the names of those that will be attending a private dinner hosted by President Trump:


Here are the Main Players That are is in Davos as Part of the Massive Trump Official Entourage

  • Treasury Secretary Steven Mnuchin
  • Commerce Secretary Wilbur Ross
  • Labor Secretary Alexander Acosta
  • Transportation Secretary Elaine Chao
  • Energy Secretary Rick Perry
  • Homeland Security Secretary Kirstjen Nielsen
  • U.S. Trade Representative Robert Lighthizer
  • U.S. Agency for International Development Administrator Mark Green
  • National Institutes of Health Director Francis Collins
  • Food and Drug Administration Commissioner Scott Gottlieb
  • Homeland security advisor Tom Bossert
  • White House advisor and Trump son-in-law Jared Kushner
  • White House advisor Chris Liddell
Other officials who will go to Switzerland but are not part of the official delegation include White House chief of staff John Kelly, Secretary of State Rex Tillerson, national security advisor H.R. McMaster and Cohn.
(via CNBC)

These Are the Toys R Us Stores On the Closure List

Toys R Us plans to close 182 of its stores about 20% of the chain. The closings are part of its bankruptcy reorganization plan.

Going-out-of-business sales are scheduled to begin in February and be completed in April at the following stores.

Tuscaloosa, 2600 McFarland Blvd. East
Birmingham, 335 Summit Boulevard
Yuma, 801 W. 32nd Street
Paradise Valley, 12801 North Tatum Blvd. 
Scottsdale, 9139 Indian Bend Rd.
Tucson, 4619 N. Oracle Rd.
Scottsdale, 7000 E. Mayo Blvd.
Mesa, US 60 and Signal Butte Rd.

The Wild Parties of Davos

The Brisbane Times spills the beans on World Economic Forum nightlife:
At night...Davos typically shrugs off the mantle of responsible capitalism....there are the evening drinks parties, known in Davos-speak as "nightcaps"...

As for the parties, chief among the perennial hot ticket events is the bash thrown by Russian billionaire Oleg Deripaska and British financier Nat Rothschild at the oligarch's palatial chalet, a 15-minute chauffeur-driven car ride up the mountain from Davos. 
A former assistant to US economist Nouriel Roubini has described Deripaska's parties as "endless streams of the finest champagne, vodka and Russian caviar amid dancing Cossacks and beautiful Russian models". In 2015, things became so raucous that the police were called in to calm it down.

Then there is the shindig hosted by Matthew Freud, the British PR guru, in a private chalet behind the art nouveau Schatzalp Hotel, a former sanatorium reached by a funicular from the centre of Davos. Last year, David Cameron, George Osborne and Bill Gates were all spotted rubbing shoulders there.
Prior to his spectacular downfall last summer, Anthony "The Mooch" Scaramucci, the investor turned short-lived adviser to Donald Trump, hosted a regular reception at the Hotel Europe, which was renowned for the eye-wateringly expensive bottles of Krug and Bordeaux he served... 
"It is getting more decadent with each passing year," says one Davos regular, who has attended for the past five. "More money is spent and more companies want to promote themselves."
A Davos wife reports:
There are always a lot of men who become “geographically single” when they arrive, and even the nerdiest expert in anti-malarial bed nets or obscure financial instruments fancies himself a player the moment he steps foot in the Zurich airport. Late at night, these men can be found eyeing the local talent, and there are rumors of at least one baby being born nine months after a night of passion at Davos.

THEY GOT HIM: World Bank Chief Stepping Down

Outspoken chief economist Paul Romer is leaving the World Bank after just 15 months on the job, the bank’s president told staff in an internal announcement seen by the Financial Times.

Romer had heroically challenged the globalist institution he worked for and now he has been forced to fall on his sword.

This is a man that who is not afraid to speak truth to power and the establishment.

Just months before joining the World Bank, he wrote a powerful paper that trashed macroeconomics as a math-obsessed pseudoscience.

More recently while at the bank, he claimed the World Bank repeatedly changed the methodology of one of its key economic reports over several years in ways it now says were unfair and misleading.

At the bank, Romer declared several positions redundant and enforced term limits on senior managers. Romer said he cut more than $1 million in annual expenses from the group’s budget.

In a message to staff sent on Wednesday, Jim Yong Kim, the World Bank’s president said, according to FT, that Romer had told him he had decided to step down “effective immediately” and return to his position as a professor at New York University.

“Paul is an accomplished economist and insightful individual, and we have had many good discussions on geopolitical issues, urbanisation, and the future of work. I appreciated Paul’s frankness and honesty, and I know he regrets the circumstances of his departure,” Kim said.

Let us hope that at NYU he becomes even more aggressive in his exposures of elitist folly.


Davos Attendees Hate Bitcoin

Joseph Stiglitz
As they gather in Davos, Switzerland for the 2018 World Economic Forum, it is clear attendees hate bitcoin.

On the sidelines of the event, Cointelegraph reported that Swiss National Bank chairman Thomas Jordan argued for "traditional" regulation of cryptocurrency in line with existing financial instruments. That, of course, would mean the end of anonymous bitcoin transactions.

And the crony Nobel economist Joe Stiglitz was in full attack mode in Davos when he discussed bitcoin. He told Bloomberg that illicit use of bitcoin would see governments “regulate it out of existence.”

“We have a good medium of exchange called the dollar…we can trade in that. Why do people want bitcoin? For secrecy. The banking system can and is already moving toward greater use of digital payments, but you don’t need bitcoin for that,” said Stiglitz.

He could be right as far as suffocating regulation is concerned.


Wednesday, January 24, 2018

WOW Stripe Abandons Bitcoin

This is big.

Stripe, a San Francisco-based payment processor for more than 100,000 businesses, said yesterday  that it will stop processing bitcoin transactions on April 23. Stripe product manager Tom Karlo said the firm, which has accepted bitcoin for payments since 2014, had hoped the digital coin would become a “universal, decentralized substrate for online transactions” that helps users in places where credit cards are less available or too expensive.

He said that Bitcoin was becoming less useful for payments and that transaction confirmation times have risen substantially; this, in turn, has led to an increase in the failure rate of transactions.

Empirically, there are fewer and fewer use cases for which accepting or paying with bitcoin makes sense, he said, therefore, starting today, we are winding down support for bitcoin payments.

"Transaction processing difficulties," is one of the four pillars that I previoulsy identified as potentially causing problems for bitcoin.


Dollar Plunges to 3-Year Low After Mnuchin Talks

The economic ignoramus policies of the Donald Trump administration are on full display in Davos at the World Economic Forum.

The U.S. dollar suffered a renewed selloff this morning, with a key dollar index falling to a three-year low after U.S. Treasury Secretary Steven Mnuchin said in Davos that a weaker dollar is good for trade.

The dollar was already falling early on Wednesday, but was put under increased selling pressure after Mnuchin s said he wasn’t concerned about the currency’s recent decline. Instead, he said a weaker greenback “is good for us as it related to trade and opportunities,” breaking with the usual strong dollar policy.

What a clown, a weaker dollar will do only one thing, put added upward pressure on domestic prices. This at a time when price inflation is starting to accelerate anyways.


(via MarketWatch)