Nov 282017
 
 November 28, 2017  Posted by at 9:33 am Finance Tagged with: , , , , , , , ,
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Stanley Kubrick High Wire Act 1948

 

Millennials Will Have Similar Pensions To Baby Boomers – Thinktank (G.)
The Perfect Storm – Of The Coming Market Crisis (Roberts)
Markets Get Wake-Up Call From China’s Post-Congress Deleveraging Moves (R.)
Chance Of US Stock Market Correction Now At 70% – Vanguard (CNBC0
Exit Sign (Jim Kunstler)
Bitcoin Bubble Makes Dot-Com Look Rational (BBG)
London Homes Are Now Less Affordable Than Ever Before (BBG)
£300 Million A Week: The Output Cost Of The Brexit Vote (VoxEU)
The Irish Question May Yet Save Britain From Brexit (G.)
The Fat Cats Have Got Their Claws Into Britain’s Universities (G.)
Prince Harry Can Bring His Foreign Spouse To UK – 1/3 Of Britons Can’t (Ind.)
Wells Fargo Bankers Overcharged Clients For Higher Bonuses (CNBC)
Sao Paulo’s Homeless Seize The City (G.)

 

 

Think tanks will say anything if you pay them enough. But still this is quite the ‘report’. And it’s about Britain of all places!

Millenials will get NO pensions. They may get a UBI when the time comes, but people will have to wake up for that to happen.

Millennials Will Have Similar Pensions To Baby Boomers – Thinktank (G.)

Young adults will have retirement incomes similar to today’s pensioners, according to analysis which rejects widespread pessimism about the financial prospects for millennials. Men in their 40s will suffer a fall in their retirement incomes compared with today’s pensioners, but the generation behind them will see their incomes recover, analysis by the Resolution Foundation found. It said the average pension for a man will be about £310 a week in 2020, taking into account state and private pensions. This will fall to about £285 in the mid 2040s in real terms “before building again to about £300 a week by the end of the 2050s”.

For women, there will be no dip in pension income but a small improvement over time. The thinktank forecasts that average pensions incomes for women, typically lower than those of men because of lower pay and career breaks, will be about £225 a week in 2020, then rising to about £235 by the mid-2030s and staying at that level going forward. The analysis defies the popular view that today’s pensioners are a “golden generation” who benefited from final-salary pensions. It said that while pensioner incomes have risen sharply this century to match or even surpass those of working people, these levels can be broadly maintained in the future. The upbeat assessment is in sharp contrast to other a stream of reports which paint Britain’s pensions as among the worst in the developed world, with young workers facing penury in retirement.

Resolution said “auto enrolment”, the government scheme in which workers are automatically defaulted into paying into a private pension scheme, will be the chief driver behind a recovery in pension income. But the thinktank acknowledged that today’s younger generation are unlikely to build up the housing wealth acquired by baby boomers – people born between the early 1940s and mid-1960s – from the huge increase in house prices, and will not be entitled to a state pension until they are older than the current generation of retirees.

Read more …

Margin calls. Coming soon to a theater near you.

The Perfect Storm – Of The Coming Market Crisis (Roberts)

Of course, as investors begin to get battered by the “volatility and junk bond storms,” the subsequent decline in equity valuations begins to trigger “margin calls.” As the markets decline, there will be a slow realization “this decline” is something more than a “buy the dip” opportunity. As losses mount, the anxiety of those “losses” mounts until individuals seek to “avert further loss” by selling. There are two problems forming. The first is leverage. While investors have been chasing returns in the “can’t lose” market, they have also been piling on leverage in order to increase their return. It is often stated that margin debt is “nothing to worry about” as they are simply a function of market activity and have no bearing on the outcome of the market.

That is a very short-sighted view. By itself, margin debt is inert. Investors can leverage their existing portfolios and increase buying power to participate in rising markets. While “this time could certainly be different,” the reality is that leverage of this magnitude is “gasoline waiting on a match.” When an “event” eventually occurs, it creates a rush to liquidate holdings. The subsequent decline in prices eventually reaches a point which triggers an initial round of margin calls. Since margin debt is a function of the value of the underlying “collateral,” the forced sale of assets will reduce the value of the collateral further triggering further margin calls. Those margin calls will trigger more selling forcing more margin calls, so forth and so on.

Read more …

Imposing a 70% loss on creditors sounds like a confidence breaker to me.

Markets Get Wake-Up Call From China’s Post-Congress Deleveraging Moves (R.)

The pace at which Beijing is announcing deleveraging reforms following last month’s Communist Party Congress is a wake-up call for investors in Chinese markets: risk just got real. Sweeping new rules for the asset management industry, a crackdown on micro loans and losses imposed on the creditors of the state-owned Chongqing Iron & Steel are not yet a “Big Bang” of reforms. Some of the measures were well flagged and will only kick in 2019. But they are sending a signal to markets that policymakers are serious about deleveraging, something that has been urged by the INF and ratings agencies for years and flagged as a top priority by President Xi Jinping at the party congress.

Debt markets reacted first, with benchmark 10-year borrowing costs hitting three-year highs above 4% and yield spreads between government and corporate debt widening as policymakers appear more tolerant of defaults. Last week, the debt sell-off spilled over into equities, which saw their worst day in 19 months, and markets have since weakened further. [..] Two weeks ago, the central bank and the top regulators for banking, insurance, securities and foreign exchange announced unified rules covering asset management. The aim was to close loopholes that allow regulatory arbitrage, reduce leverage levels, eliminate the implicit guarantees some financial institutions offer against investment losses and rein in shadow banking.

Last week, a top-level Chinese government body issued an urgent notice to provincial governments urging them to suspend regulatory approval for new internet micro-lenders in a bid to curb household debt, which is currently low but rising rapidly. In the meantime, creditors of Chongqing Iron & Steel took a 70% loss in a debt-to-equity swap restructuring of nearly 40 billion yuan ($6 billion) of debt. [..] Debt-to-equity swaps are complex operations that are harder to undo than a missed bond payment and analysts say the move signals a clear path for tackling high corporate debt levels, which the BIS estimates at 1.6 times the size of the economy. “If you own the wrong stuff you’re in trouble because they are not going to bail you out any more,” said Joshua Crabb at Old Mutual Global Investors.

Read more …

Round it off to an even 100%, why don’t you.

Chance Of US Stock Market Correction Now At 70% – Vanguard (CNBC)

Don’t panic, but there is now a 70% chance of a U.S. stock market correction, according to research conducted by fund giant Vanguard Group. There is always the risk of a correction in stocks, but the Vanguard research shows that the current probability is 30% higher than what has been typical over the past six decades. Vanguard, which manages roughly $5 trillion in assets and is a proponent of long-term investing, isn’t sounding the alarm bells to scare investors out of the market. But according to Vanguard’s chief economist Joe Davis, investors do need to be prepared for a significant downturn.

“It’s about having reasonable expectations,” Davis said. “Having a 10% negative return in the U.S. market in a calendar year has happened 40% of the time since 1960. That goes with the territory of being a stock investor.” He added, “It’s unreasonable to expect rates of returns, which exceeded our own bullish forecast from 2010, to continue.” In its annual economic and investing outlook published last week, Vanguard told investors to expect no better than 4% to 6% returns from stocks in the next five years, its least bullish outlook since the post-financial crisis recovery began. Contributing to that outlook are market indicators that suggest “a little froth” in the market, according to the Vanguard chief economist.

“The risk premium, whether corporate bond spreads or the shape of yield curve, or earnings yields for stocks, have continued to compress,” Davis said. “We’re starting to see, for first time … some measures of expected risk premiums compressed below areas where we think it can be associated with fair value.” Many market participants have worried in recent months about the flattening in the yield curve — the spread between 2-year note yields and 10-year yields — at the lowest level since before the financial crisis. Meanwhile, the spread between junk bond yields and Treasurys recently has moved closer to the level before the financial crash than the long-term historical average.

Read more …

Bitcoin at the water cooler.

Exit Sign (Jim Kunstler)

I’m not so sanguine about Bitcoin’s supposed impregnability, nor about many of its other appealing claims. The Mt. Gox affair of 2014 must be forgotten now, but back then some sharpie hacked 850,000 Bitcoins (valued over $450,000,000) out of the exchange, which was processing almost two-thirds of all the Bitcoin trades in the world. Mt. Gox went out of business. Bitcoin tanked and then traded sideways for three years until (coincidentally?) the Golden Golem of Greatness was elected Leader of the Free World. Hmmmm….. Not many readers understand the first thing about block-chain math, your correspondent among them. But I am aware that the supposed safety of Bitcoin lies in its feature of being an algorithm distributed among a network of computers world-wide, so that it kind of exists everywhere-and-nowhere at the same time, a highly-valued ghost in the techno-industrial meta-machine.

However, the electric energy required for “mining” each Bitcoin — that is, the computations required for updating the block-chain network — is enough to boil almost 2000 liters of water. This is happening world-wide, and a lot of the Bitcoin “mining” is powered by coal-burning electric plants, making it the first Steampunk currency. If Bitcoin were to keep rising to $1,000,000 per unit, as many investors hope and pray, there wouldn’t be enough electric power in the world to keep it going. Pardon me if I seem skeptical about the whole scheme. Even without Bitcoin bringing extra demand onto the scene, America’s electrical grid is already an aging rig of rags and tatters. There are a lot of ways that the service could be interrupted, perhaps for a long time in the case of an electric magnetic pulse (EMP). I’m not convinced that crypto-currencies are beyond the clutches of government, either.

Around the world, in their campaign to digitize all money, there must be a deep interest in either hijiking existing block-chains, or creating official government Bit-monies to seal the deal of total control over financial transactions they seek. Anyway, there are already over 1300 private cryptos and, apparently, a theoretically endless ability to create ever new ones — though the electricity required does seem to be a limiting factor. Maybe governments will shut them down for being energy-hogs. My personal take on the phenomenon is that it represents the high point of techno-narcissism — the idea that technology is now so magical that it over-rides the laws of physics. That, for me, would be the loudest “sell” signal. I’d just hate to be in that rush to the exits. And who knows what kind of rush to other exits it could inspire.

Read more …

No problem is you think bitcoin is not a bubble.

Bitcoin Bubble Makes Dot-Com Look Rational (BBG)

Even compared with some extreme bubbles, bitcoins, which continued its climb toward $10,000 Monday afternoon, look bloated. Take dot-com stocks, which were the biggest bubble of the past few decades, and likely the largest in stock market history. At the height of the dot-com stock bubble, the technology-heavy Nasdaq stock index had a price-to-earnings ratio of 175. In the past year, bitcoins have generated transaction fees of nearly $219 million. And at $9,600 a piece, the total value of all bitcoins – their market cap – now tops $155 billion. That gives bitcoins the equivalent of a trailing P/E ratio of 708. That means based on valuation, bitcoins are four times more expensive than dot-com stocks were at the height of their bubble.

Valuation, though, is not what pops bubbles. Supply does. The dot-com bubble, like all bubbles, was driven by the fact that there were relatively few publicly traded internet stocks in the mid-1990s, just as investors were getting excited about them. So prices of the stocks that were public soared. Companies not actually in the internet business added “.com” to their names, or announced a web strategy, and those stocks rose as well. But from 1997 to 2000, there were $44 billion in initial public offerings of new dot-com stocks. Eventually the supply of dot-com companies became large and dubious enough that the bubble burst and the hot air holding up all the stocks rushed out.

The same will happen with bitcoin. The question is when. The combined market value of all digital currencies is just $300 billion. As my colleague David Fickling pointed out, that relatively tiny market cap of bitcoin compared with other asset classes means that a small amount of money coming out of say U.S. stocks, which have a market cap of more than $20 trillion, could send the price of bitcoin soaring. Just a 5 percentage point shift away from gold and into bitcoin could drive the price of the digital currency up by another 33%. But it’s not clear that the people who want the protection of owning gold would be comfortable with bitcoin instead. The percentage of stock investors interested or able to invest their 401(k) in bitcoin is likely small as well, though surely, as in all bubbles, growing.

Read more …

Britain is a class society. Might as well have castes.

London Homes Are Now Less Affordable Than Ever Before (BBG)

London homes are less affordable than ever before, despite slowing price growth and government attempts to cut the cost of housing for first-time buyers. It now costs the average Londoner 14.5 times their annual salary to purchase a home, the highest level on record, according to a report Tuesday by researcher Hometrack. Cambridge, Oxford and the English seaside town of Bournemouth also have price-to-earnings ratios in the double digits, the report shows. “Unaffordability in London has reached a record high, despite a material slowdown in the rate of house-price growth over the last year,” Richard Donnell, research director at Hometrack, said in an interview. “The gap between average earnings and house prices in the capital has never been wider.”

Even with the recent slowdown, the average cost of a first home in the U.K. capital is still up 66% since 2012 as supply fails to meet the demand from domestic buyers and overseas investors. Spiraling values have caused the number of younger buyers in the capital to fall, something that Chancellor of the Exchequer Philip Hammond sought to address last week when he abolished stamp duty for first-time buyers of homes worth up to 300,000 pounds ($400,290). London house prices rose an average 3% in the year ending October to 496,000 pounds, less than half the 7.7% growth rate of a year earlier, Hometrack said. The researcher defined London as the 46 boroughs in and around the U.K. capital.

Read more …

Not sure a comprehensive study is even possible.

£300 Million A Week: The Output Cost Of The Brexit Vote (VoxEU)

There is huge variation in the estimated cost of Brexit. Most studies forecast that a reduction in trade or a fall in foreign direct investment (FDI) – or both – will reduce output. For instance, HM Treasury (2016) uses a gravity model to assess the economic impact in several scenarios, and concludes that losses could be up to 6% of GDP in the long term. Yet the future relationship between the UK and the EU is highly uncertain (Baldwin 2016). As a result, estimating the cost of Brexit is difficult. Different assumptions about the deal that the UK will lead to different cost estimates.

That’s why we take a different approach in a recent paper (Born et al. 2017). Rather than making set of assumptions which are bound to be controversial, and using them to forecast the economic costs of Brexit, we measure the actual output loss from the UK’s decision to leave the EU. Our approach does not depend on having the right model for the British, the European, or even the global economy. We do not assume a particular Brexit deal, or construct specific scenarios for the outcome of the negotiations. Instead we create a transparent, unbiased, and entirely-data driven ‘Brexit cost tracker’ that relies on synthetic control methods (Abadie and Gardeazabal 2003).

[..] We then use the doppelganger of the pre-Brexit UK economy to quantify the cost of the Brexit vote. As the doppelganger is not treated with the Brexit vote, it will continue to evolve in a similar way to how the pre-Brexit economy would have evolved if the referendum had never happened. It shows, in other words, the counterfactual performance of the UK economy, and the divergent output paths between the UK economy and its doppelganger capture the effect of the referendum. This ‘synthetic control method’ has been successfully applied to study similar one-off events, such as German reunification and the introduction of tobacco laws in the US (Abadie et al. 2010, 2015).

Figure 2 zooms into the post-Brexit period. We find that the economic costs of the Brexit vote are already visible. By the third quarter of 2017, the economic costs of the Brexit vote are about 1.3% of GDP. The cumulative output loss is £19.3 billion. As 66 weeks have passed between the referendum and the end of the Q3 2017 (our last GDP data point), the average output cost is almost £300 million on a per-week basis.

Read more …

The Tories are not going to win this.

The Irish Question May Yet Save Britain From Brexit (G.)

It was always there for all to see, the great Celtic stone cross barring the way to Brexit. Finally, as crunch day nears, the government and its Brextremists have to confront what was always a roadblock to their fantasies. They pretended it was nothing. Reviving that deep-dyed, centuries-old contempt for the Irish, they have dismissed it with an imperial fly-whisk as a minor irritation. No longer. On 14 December, the time comes when the EU decides whether the UK has made “sufficient progress” on cash, citizens’ rights … and the Irish border. This roadmap was long ago agreed, and yet as the day approaches there is no plan for that 310-mile stretch with its 300 road crossings. The Irish government, which never wanted the UK to leave, demands, as it always did, that no hard border disrupts trade and breaks the Good Friday agreement.

Why would they expect anything else, when Theresa May herself made that one of her “red lines”? But she made three incompatible pledges: no single market, no customs union and no hard border, an impossible conundrum no nearer resolution than the day she uttered it. Labour’s Keir Starmer keeps pointing to the needless trap she jumped into: why not, like Labour, keep those options on the table? The Brexiteers turn abusive: the Irish are holding Britain to “ransom” and “blackmail” by conducting an “ambush”. The Sun leader told the taoiseach, Leo Varadkar, to “shut your gob and grow up”, and to stop “disrespecting 17.4 million voters of a country whose billions stopped Ireland going bust as recently as 2010”.

Brexit fanatic Labour MP Kate Hoey yesterday adopted a Trump-style demand that Ireland builds a wall and pays for it – for a border they never wanted. The Ukip MEP Gerald Batten tweeted: “UK threatened by Ireland. A tiny country that relies on UK for its existence …” and: “Ireland is like the weakest kid in the playground sucking up to the EU bullies.” Brexiteers, thrashing around, accuse the Irish of using the border crisis as a devious plot to further a united Ireland. But Varadkar rightly says he is not using a veto. There is complete unity among the EU 27: no hard border, loud and clear. He is right not to let this slip to the next stage without a written-in-blood pledge.

Read more …

Class society.

The Fat Cats Have Got Their Claws Into Britain’s Universities (G.)

Scandals aren’t meant to happen in British universities. Parliament, tabloid newsrooms, the City … those we expect to spew out sleaze. Not the gown-wearing, exam-sitting, quiet-in-the-library surrounds of higher education. Yet we should all be scandalised by what is happening in academia. It is a tale of vast greed and of vandalism – and it is being committed right at the top, by the very people who are meant to be custodians of these institutions. If it continues, it will wreck one of the few world-beating industries Britain has left. Big claims, I know, but easily supportable. Let me start with greed. You may have heard of Professor Dame Glynis Breakwell. As vice-chancellor of Bath University, her salary went up this year by £17,500 – which is to say, she got more in just one pay rise than some of her staff earn in a year.

Her annual salary and benefits now total over £468,000, not including an interest-free car loan of £31,000. Then there’s the £20,000 in expenses she claimed last year, with almost £5,000 for the gas bill – and £2 for biscuits. I knew there had to be a reason they call them rich tea. Breakwell is now the lightning rod for Westminster’s fury over vice-chancellor pay. As the best paid in Britain, she’s the vice-chancellor that Tony Blair’s former education minister, Andrew Adonis, tweets angrily about. She’s the focus of a regulator’s report that slams both her and the university. She’s already had to apologise to staff and students for a lack of transparency in the university’s pay processes – and may even be forced out this week.

But she’s not the only one. The sector is peppered with other vice-chancellors on the make. At Bangor University, John Hughes gets £245,000 a year – and lives in a grace-and-favour country house that cost his university almost £750,000, including £700-worth of Laura Ashley cushions. Two years ago, the University of Bolton gave its head, George Holmes, a £960,000 loan to buy a mansion close by. The owner of both a yacht and a Bentley, Holmes enjoys asking such questions as: “Do you want to be successful or a failure?” Yet as the Times Higher Education observed recently, he counts as a failure, having overseen a drop last year in student numbers, even while being awarded an 11.5% pay rise.

Read more …

The marriage meant to make you forget Brexit.

Prince Harry Can Bring His Foreign Spouse To UK – 1/3 Of Britons Can’t (Ind.)

Prince Harry is in a privileged position as he celebrates his engagement to US-born Meghan Markle, not only because he is royalty, but because he is part of a percentage of the population who can afford to marry a spouse from outside of the European Economic Area (EEA). Immigration rules introduced in 2012 under then-Home Secretary Theresa May set a minimum earnings threshold of £18,600 for UK citizens to bring a non-EEA spouse or partner to live here with them. The Migration Observatory in Oxford estimates that 40 per cent of Brits in full or part-time employment don’t earn enough to meet this threshold, narrowing the marriage choices of a significant proportion of the population.

The income requirement doesn’t just disadvantage minimum wage earners, but also the young, women and those with caring responsibilities, who are less likely to meet the threshold. Where you live matters too; Londoners earn higher salaries than those living outside the south-east of the country. But even within London, there are disparities – around 41 per cent of non-white UK citizens working in London earn below the income threshold compared to 21 per cent of those who identify as white. Consider that before hailing the dawn of a new post-racial era in the UK with Meghan Markle, who is mixed race, marrying into the Royal family. The £18,600 figure was calculated as the minimum income amount necessary to avoid a migrant becoming a “burden on the state”.

This makes sense in theory, but economics cannot be the only metric in a system that deals with people’s lives. The committee tasked with setting the amount was not asked to take into account other metrics, such as the wellbeing of UK citizens, permanent residents and their families. The question we need to ask ourselves is, should love have a price tag? Is it right or fair that Prince Harry and those who earn above the minimum wage are a select percentage of the population who can marry whoever they choose? The price of bringing your spouse to the UK rises with every child you include on your application, giving rise to “Skype families” who cannot afford or are otherwise unable to reunite and have to stay in touch over Skype. In 2015, the Children’s Commissioner reported that up to 15,000 children are affected by this rule, most of whom are British citizens. Families are put under immense stress and anxiety.

Read more …

This is what you call organized crime. There are laws covering that.

Wells Fargo Bankers Overcharged Clients For Higher Bonuses (CNBC)

Evidence that embattled bank Wells Fargo had swindled some of its clients emerged in a June conference call led by its managers, according to two employees who were present during the call, The Wall Street Journal reported Monday.The revelation, based on an internal assessment, reportedly came following years of rumors within the bank. Of the approximately 300 fee agreements for foreign exchange trades reviewed internally by Wells Fargo, only about 35 firms were billed the price they had been quoted, the employees told the Journal.

Wells Fargo charged one of the highest trading fees — at least two to eight times higher than industry standards, according to the bank’s employees and others in the sector, the Journal reported. The latest case shares important similarities to Wells Fargo’s ongoing sales scandal: Under a highly unusual policy, employees’ bonuses were tied to how much revenue they brought in, the report said. The practice reportedly led retail employees to open as many as 3.5 million fake accounts, in a controversy first brought to light last year.

Read more …

I kid you not: this article is ‘supported by the Rockefeller Foundation”.

Sao Paulo’s Homeless Seize The City (G.)

On the wall of an abandoned and occupied hotel in central Sao Paulo is a mural of a fiercely feral creature – part cat, part rat, part alien – that bears a red revolutionary banner with a single word: Resistencia! The surrounding courtyard is daubed with slogans of defiance – “10 years of struggle!”, “Whoever doesn’t struggle is dead” – and the initials MMLJ (the Movement of Residents Fighting for Justice). Young boys kick a ball against a wall decorated with a giant photograph of masked, armed protesters. In the surrounding blocks, 237 low-income families talk, cook, clean, watch TV, shop, practice capoeira, study literacy, sleep and go about their daily lives in Brazil’s most famous illegal squat.

This is the Maua Occupation, a trailblazer for an increasingly organised fair-housing movement that has reignited debate about whether urban development should aim at gentrification or helping the growing ranks of people forced to live on the street and in the periphery. When the Santos Dumont hotel was first taken over on the 25 March 2007, there were very few organised squats in South America’s biggest city. But recession, inequality and increasing political polarisation have turned the occupation movement into one of the most dynamic forces in the country. There are now about 80 organised squats in the city centre and its environs, including high-rise communities and centres of radical art.

The periphery is home to many more, such as the giant “Povos Sem Medo” (People Without Fear) cluster of 8,000 tents in the Sao Bernardo do Campo district. The burst of energy and activism has been compared to the key transitional periods for other major cities in the 1970s, 80s and 90s. “We are now seeing a boom of squatting in Sao Paulo that is like those once seen in New York, Berlin and Barcelona,” said Raquel Rolnik, a former UN Special Rapporteur and architect who has worked in the housing sector for more than three decades. “What is happening here is not unique but it is happening on a very wide scale.”

Read more …

Home Forums Debt Rattle November 28 2017

This topic contains 16 replies, has 8 voices, and was last updated by  Boogaloo 2 weeks, 1 day ago.

Viewing 17 posts - 1 through 17 (of 17 total)
  • Author
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  • #37330

    Stanley Kubrick High Wire Act 1948   • Millennials Will Have Similar Pensions To Baby Boomers – Thinktank (G.) • The Perfect Storm – Of The Comin
    [See the full post at: Debt Rattle November 28 2017]

    #37331

    V. Arnold
    Participant

    Kunstler; love him or hate him; he nails this (crypto-currency) perfectly:
    “My personal take on the phenomenon is that it represents the high point of techno-narcissism — the idea that technology is now so magical that it over-rides the laws of physics.” JK
    The west, generally, seems to be overtaken by magical thinking; a very dangerous way to live one’s life, IMO.
    And then there is this;
    And at $9,600 a piece, the total value of all bitcoins – their market cap – now tops $155 billion. That gives bitcoins the equivalent of a trailing P/E ratio of 708.
    If that is not insanity, then truly, I don’t know what is…

    #37332

    oxymoron
    Participant

    The banks and energy giants that own coal must love cryptocurrencies – you’d be forgiven for thinking shadow banks in china haven’t financed these huge bitcoin mining warehouses full of computers. And given cryptos are no where near as valuable in the real world as people think they are (like shares and likes on social media) then I think bubble is gonna pop.
    But not just yet. A lot of crazy people chasing yield and a lot more who like the idea of easy money.

    Wonder what the govt or tax office will do about them

    #37333

    V. Arnold
    Participant

    oxymoron
    Yeah; I too think the bubbles going to pop;but just when is the question.
    These things seem to go to extremes; so probably pretty serious as well, no?

    #37334

    Bitcoin becomes the playing field of the rich, who spend billions to set up mining facilities. Is that what Satoshi had in mind? Just another elite?
    http://www.zerohedge.com/news/2017-11-28/meet-world%E2%80%99s-most-powerful-bitcoin-backers

    Maybe the environmental movement will put an end to the craze?
    https://www.nakedcapitalism.com/2017/11/bitcoin-energy-pollution.html

    #37335

    zerosum
    Participant

    I don’t own bitcoin.
    The rich own bitcoin.
    When the bitcoin bubble breaks, how will that hurt me?

    Who got hurt when the tulip bubble broke?

    #37336

    Diogenes Shrugged
    Participant

    It would be humorous were it not so tragic. Bitcoin is the only WORLD currency that’s ever existed. And it has arisen in a world that’s going to be downsized and made more local! Please don’t tell me you’re putting all your hopes on the SDR. Haven’t you had enough of criminal banking systems?

    People think money should have backing. Sorry, that makes it a proxy for what is commonly viewed as barter. Money itself should be divorced entirely from tangible value because its sole kinetic function is intermediation / facilitation of trade. Bitcoin can’t be devalued, can’t be inflated, can’t be confiscated because control is permanently decentralized.

    Dollars are said to be worthless — just digits in accounts and paper slips. But that’s not true. Dollars have negative value, not zero value. They’re debt instruments. Bitcoin is not a debt.

    I commented yesterday that all mediums of exchange are forms of barter. That’s not precisely correct. Cryptocurrencies may indeed be the first forms of actual “money” ever devised.

    Look, kids, you can have a centrally controlled money supply or you can have a money supply nobody controls. Take your pick. Millennia of central controls have brought us to our current predicaments, but you still tout that as “viable?” You’re still stuck in the Matrix. So inured to controls and controllers that you can’t handle the wild west of free markets? Like animals that spend their lives in cages, and when the door is opened, can’t bring themselves to step out into the sunshine.

    What you’re witnessing here is actual free-market price discovery in an otherwise rigged world. And you’re all casting aspersions at it. P/E ratios don’t apply here. There is no bubble. Mark my words, we’re witnessing the slowly accelerating abandonment of all historical economic and political systems. Distributed ledger technologies are the future. The old systems are no match for what’s coming. See the one-minute video:

    Ankorus


    You will soon be able to trade the FX from your home computer. Well, maybe not you, but I will.

    Rothschilds and Rockefellers are headed for the dustbin of history. A new elite is rising. Their value systems are not predicated on dominion over mankind. “Give me control of a nation’s money and I care not who makes its laws” — Mayer Amschel Bauer Rothschild. We don’t have to kill the dinosaurs; all we have to do is abandon them. We certainly don’t want to replace them with bigger dinosaurs, do we?

    Distributed ledger technologies ARE the invisible hand. The tables of the Moneychangers are being overturned once and for all. My only concern is that the rush to cryptos will eventually overwhelm the existing systems. The curve is clearly parabolic. If Venezuelans are buying Bitcoin, they’re going to be richer than you. Don’t wait ten years to finally figure this out.

    #37337

    olo530
    Participant

    In the past year, bitcoins have generated transaction fees of nearly $219 million. And at $9,600 a piece, the total value of all bitcoins – their market cap – now tops $155 billion. That gives bitcoins the equivalent of a trailing P/E ratio of 708.

    Since when commodity trading fees are counted under earnings? WTF?

    #37338

    oxymoron
    Participant

    Diogenes, I love your enthusiasm – you are a true believer and a lot of what you are on about I agree with entirely except that until a currency goes beyond the blockchain we are screwed. If any of these ideological and altruistic solutions to the current mess (control by guys with muscle and guns – through debt) doesn’t move from the technological to the biological then what hope have we. The more I run it through my brain the more I end up with long term solutions aligned with Holmgren, Orlov, Foss/Meijer etc. In the crypto world of exchange we have the chance to move away from debt slavery but get slammed right into energy slavery and that is a game over situation – we are seeing it already with huge Chinese bitcoin mining operations running coal out of the ground and into the air faster than ever before. And if anyone tries to jump on me to explain that climate change is a non issue – then how about no more trees or waterways you can drink from. It doesn’t matter if it’s climate change! It’s environmental disaster anyway you look at it.
    Good grief I’m going back to making beeswax candles and making love by an open fire!

    #37339

    olo530
    Participant

    Diogenes Shrugged, what makes you think that distributed ledger technology cannot be used to keep track of debt? What does it matter if you owe your bank 10,000 dollars or 1 bitcoin, whether the transaction is in bank’s books or in some distributed ledger?
    And that claim that bitcoin can’t be confiscated… Well… It’s only as true as that gold can’t be confiscated – if you hide it well enough. You have records of your private keys and once those are discovered – your bitcoin is gone.

    #37340

    Diogenes Shrugged
    Participant

    olo530:

    It’s certainly possible to lose your Bitcoin or altcoin in various ways, and a ZH article the other day estimated 4 million Bitcoin lost forever already. So the total BTC supply when it’s all mined out will not be 21 million, but something less than 17 million coin. (That’s 1,700,000,000,000,000 Satoshis).

    You’re correct that blockchain will be used to keep track of debts, but that will merely be a function of smart contracts. Blockchain is used for currencies (Bitcoin and Litecoin, among others), but also for smart contracts (Ethereum, for instance). Bitcoin isn’t set up for smart contracts, and therefore functions exclusively as a currency. Of course, a lot of people have been buying Bitcoin with bank credit, but that has nothing to do with Bitcoin.

    Confiscation is simply impossible unless you’re careless with your private key(s). There are several highly secure software wallets available, several highly secure hardware wallets (e.g. Trezor), and a paper wallet properly hidden cannot be discovered by anybody — even you, if you forget where you put it.

    Oxymoron:

    There are remedies in the works for the growing electricity consumption by “mining” operations. Lightning Network, for one. Forking to a fee-based system based on proof-of-stake rather than proof-of-work, for another. It isn’t an insurmountable concern. Nassim has posted enough about AGW here, mostly unchallenged, to show that CO2 generation from BTC mining shouldn’t be a concern, either.

    This doesn’t address energy consumption, but it’s important. David and Goliath.
    http://www.zerohedge.com/news/2017-11-03/all-worlds-money-and-markets-one-visualization

    Your activities with bees wax and open fires sound enviable, but I’m tellin’ ya, she’s gonna someday demand Bitcoin.

    Life Cycle For Men And Women

    I really wish everybody here would spend their evenings all next month investigating and learning, if for no other reason than to become conversant. Some say this is the biggest advance for mankind since the Internet. I personally see distributed ledgers (decentralized control) as the biggest advance for our species EVER. The technologies are also becoming more secure and easier to use, so you’ll know the transition is complete when your shoeshine boy says he only accepts Bitcoin.

    #37341

    olo530
    Participant

    There are remedies in the works for the growing electricity consumption by “mining” operations… It isn’t an insurmountable concern.

    I don’t see it happening, since the main branch is selected based on mining power (or number of nodes, which is the same thing). Energy cost is the only thing keeping distributed ledgers from getting hijacked by malicious participants.

    #37343

    Diogenes Shrugged
    Participant

    olo530:

    Nodes are the computers that remain updated with the full blockchain. Most nodes aren’t involved with mining. The energy-intensive mining nodes use very expensive computers built specifically to mine cryptos. At $10,000 per BTC “earned,” their energy cost isn’t as much of an issue as the heat they generate.

    I don’t know what a malicious participant could possibly do to hijack the blockchain. He’d need to control 51% of all outstanding BTC to have any affect at all, and then it would be against his interest to engage in mischief. Anybody trying to buy 51% of BTC will drive the price up dramatically along the way. I suppose it could happen, but sellers would exit rich and the buyer would be left with millions of BTC for which there would be no bid.

    https://www.investopedia.com/terms/b/blockchain.asp

    Again, Bitcoin might yield market share to better-designed cryptocurrencies as time goes on. When you sense that possibility, trade your BTC for one of the others. There are well over a thousand altcoins available now, mostly Initial Coin Offerings (ICO’s). A lot of those are scams, and most don’t exhibit any new or superior features. Shop wisely.

    https://coinmarketcap.com/

    #37344

    olo530
    Participant

    He’d need to control 51% of all outstanding BTC

    You need 51% of mining power (25% in some scenarios) to double spend to your heart’s content. If you can interfere with message exchange between nodes then it’s even less.

    #37345

    oxymoron
    Participant

    Diogenes, thnaks for the men women life cycle – cracked me up – the comments were gold – that rooster must have had a lousy attorney So funny.
    I think you may be still missing one of my points that I don’t really care about carbon so much – I got a wood fire after all, but if you think energy generation doesn’t come at some serious environmental cost you are caaa-raaayzee man.
    Having said that I think you are right – the technology is here to stay and for better or for worse we are gonna get involved someway or another. So I perhaps should not have sold my Bitcoin? I dunno – got a bit of Ethereum and I have probably spent far too long looking into crypto currencies (had waves, litecoin, ripple tenx and a few others till I freaked out about my environmental credentials going out the window. I run a permaculture business and it JUST AINT COOL. Right now.
    Oh and I like you so I’m not being antagonistic or judgy when I say – No one is shining my shoes except me. I’m just saying.

    #37347

    Nassim
    Participant

    “The Fat Cats Have Got Their Claws Into Britain’s Universities (G.)”

    I follow my old college, Imperial College alumni, on LinkedIn.com

    https://www.linkedin.com/groups/87488

    When I went there, they were quite rigorous about science and we had lectures to explain how it works. Criticism of any hypothesis was encouraged. Now, they have some lady who is the gatekeeper to their comment section of LinkedIn. I believe she got there education elsewhere. Regularly, they publish some piece of nonsense that would have been laughable a generation ago and any critical comments are systematically deleted with no explanation.

    Here is an example:

    “Do you have a break-through technology or business idea to combat climate change?”

    https://www.linkedin.com/groups/87488/87488-6334343250723246080

    Anyone who points out that life on earth requires CO2 and that it is not a bad thing would have the message deleted.

    “How Renewable Energy Can Accelerate the Microgrid Revolution”

    https://www.linkedin.com/groups/87488/87488-6318831701053239302

    If you point out that “Renewable Energy” is a boondoggle and explain why, your comment will be deleted.

    #37348

    Boogaloo
    Participant

    If you really think about it, buying Bitcoin is not so crazy if you own the printing press for ordinary fiat currency. If you can produce an endless supply of fiat and buy a finite number of bitcoins, why not? It’s trading one form of ethereal money for another. A dollar is no more real than a bitcoin, but at least the world will not see more than 22 million bitcoins.

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