Month: December 2017

Authored by Peter St.Onge via The Mises Institute,

The value of cryptocurrencies like bitcoin, just like any other kind of money, comes fundamentally from what you can do with it. As a follow up to What Backs Bitcoin, I want to dig into that value.

The idea, which comes from Austrian economist Carl Menger, is that just as a shovel’s value comes from its ability to dig, a currency’s value comes from its ability to help you do two things: transactions and savings.

Think of transactions as the money you carry in your wallet or checking account, and savings as the rest of what you have in the bank or buried in the yard. It’s worth mentioning here that that vast majority of money demand is indeed savings, making up 90% or more of all money demand.

The reason this matters is because if we know what transactions cryptocurrencies are good at, we can estimate how much money demand they’ll start pulling from fiat or gold, and therefore how much those cryptos will increase in price.

For transactions, some features that matter are cost and speed of transaction, anonymity, reversibility, counter-party risk, regulatory treatment. For savings demand, those factors are overwhelmed by the specific question of how well the currency keeps its price.

Supply and Demand Determine Price — Always

Price, as always in economics, is simply a matter of demand and supply. When demand is rising faster than supply, the currency will go up in price. And if demand is rising slower than supply, price will go down.

Since bitcoin was born in 2009, it has generally enjoyed demand rising much faster than supply, hence price has soared. While the US dollar, say, has gone down — has “price inflated” — because demand failed to keep up with dollar creation.

Those are the features, now what are the applications: what are people using money for?

When we’re looking at a currency’s price, because we’re looking at total demand we don’t care about the number of transactions rather the total amount transacted.

And here, the vast majority of money moving around in the economy is not goods and services — buying a cup of coffee, or a plane ticket — rather financial movements. Paying salaries, buying and selling stocks or bonds, investments and dividends. These occur mostly by bank transfer, which account for 80% of all money moved in the US. Another 15% goes by check, leaving just 3% for credit or debit cards, and 4% for paper cash.

Bitcoin Still under 0.01% of Global Transactions

A final part of the puzzle, what’s the competition to cryptocurrencies? Most money payments worldwide are, of course, denominated in fiat currency like dollars or yen — about 99% by amount. With the remaining 1% made in gold.

Note that fiat has both physical and electronic forms, such as credit cards and bank transfers. Even gold payments can be made with paper rather than physically moving the gold, including gold-based securities that trade in financial markets (so-called “paper gold”).

Now we’re ready to go through those features for each currency. On cost of transaction, bitcoin’s fees nowadays average about $1, and don’t vary by amount you transfer.

You can send one bitcoin, worth $5,000, or 1,000 bitcoins, worth $5 million, and the fees are still a dollar. In contrast, banks typically charge a percentage of the transaction, which adds up on million-dollar transfers.

Meanwhile, on speed bitcoin is much faster than banks; between 10 minutes and an hour to confirm a transaction, while banks take days.

So bitcoin beats on the most important application of money: financial transfers. The one caveat here is exchange costs. Just as you pay fees and spreads when you exchange your dollars for yen, every time you convert dollars into bitcoin you’ve got to pay fees and spreads.

This means that bitcoin’s low fees only really dominate if both the sender and receiver are keeping the money in bitcoin.

Bitcoin’s Exchange Rate Woes

On the other hand, if you have a bunch of dollars and want to buy a house from somebody who likes to keep dollars in the bank, then you’ll have to convert your dollars into bitcoin, send the bitcoin for a buck, then the other guy converts the bitcoins into dollars again. You saved on the transfer itself, but you had to exchange the money twice.

So, bitcoin as a technology is superior for the main type of transaction by value, but in reality that advantage is eroded if people are keeping their wealth in fiat. This isn’t really a flaw of cryptocurrencies per se, it’s just a standard penalty suffered by any minority currency — having to pay for conversion into the dominant currency.

To finish up on cost and speed, obviously physical cash or physical gold are fantastic on both cost and speed, but only if buyer and seller are touching each other. Given paper cash has only a 4% share today, touchable buyers and sellers is a very small part of demand.

For remote orders, then, bitcoin carries lower fees than credit and debit cards, but again with that double-exchange problem unless both buyer and seller are staying in bitcoin.

Bitcoin’s Potential to Outperform

Next up are some secondary benefits: anonymity, reversibility, counter-party risk, regulatory treatment.

Briefly, bitcoin is nearly anonymous unless the US government cares enough about you to put some serious people on you. In this sense it’s essentially like using cash, but with the advantage you can use it over long distances with those low fees.

In practice, the closest alternative is probably a pre-paid debit card that you buy at 7/11, which can cost several dollars in addition to the merchant fees, and isn’t going to work for large amounts nor overseas.

As for reversibility, the question is whether the buyer can cancel his payment. A problem for online vendors who get scammed by people who buy the product, get it in the mail, cancel the order and keep the goodies.

Credit card companies or Paypal famously always side with the customer, which can suck for the honest vendor getting ripped off online. Bitcoin, again like cash, is irreversible once it’s confirmed — so about 10 minutes to an hour. That’s slower than cash, but faster than Paypal or credit cards where buyers can reverse months later.

Fourth characteristic is counter-party risk; the idea that your bank could go under, taking your money with it. Remember bitcoin was invented in the wake of the 2008 financial crisis, where bank failures were common.

Because bitcoin is distributed across many computers and isn’t managed by a central organization, it has no single point of failure. On the other hand, cryptocurrencies do still have potential technical glitches that probably more than make up for that risk.

Regulation: Not If but When

Finally, regulatory treatment. This is where we’ll probably see a lot of change over the next couple years, as governments digest cryptocurrencies like bitcoin.

So far cryptos have enjoyed mostly benign neglect from regulators; tolerated, neither discouraged nor encouraged. On the bright side this has meant little regulatory burdens or fees, although this is changing in places like New York.

On the down-side, this regulatory grey-zone has meant a lot of companies and institutional investors are afraid to use, or even to buy, bitcoin. So increasing regulations could actually boost bitcoin demand, as those regulated users become unafraid to play.

As for what happens in the future, countries are gradually drifting into two camps: broadly enthusiastic (Japan, Dubai, Taiwan, Switzerland), broadly skeptical (China, Korea), with the USA and European Union still lurching between the camps.

Cryptos: For now, Only for Adrenaline Junkies

Now, given how much savings dominate money use, the elephant in the room is would you feel comfortable keeping your life savings in bitcoin.

As we mentioned, the key point here is how its price will hold up, meaning will demand grow faster than supply. While bitcoin has knocked the socks off dollars or even gold, rising 800% in the past year alone, even this soaring growth has come with the major downside that bitcoin also fluctuates a lot — easily up or down 50% in a month.

However, as with any product, service, or medium of exchange, the value of cryptocurrencies will depend on the future choices of countless users and consumers — based on their subjective valuations of the currencies themselves. Those who can successfully guess what will become more valuable in the future will become wealthy. But risks always remain.

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A police detective in Illinois has faced disciplinary action this week, after he was recorded on video telling a teenager he was being detained because he’s white.

Footage of the controversial encounter surfaced on Facebook on Monday, and has since gone viral with more than 85,000 views.

Dezi Baczek,18, who recorded the video, was among a group of teens who went to the local pawnshop in Lake Villa, a suburb of Chicago, to sell an ‘item’ so the group could buy her brother a book that he wanted to read…How thoughtful…

When the group of millennials exited the shop, they found Detective Gomez waiting out in the parking lot for them. Immediately, the group of teens were ordered to sit down or face being arrested. 

Baczek told NBC 5, “I was yelled at to sit down”.

When asked ‘what for?.. That is when she started filming.

Police said the detective was conducting a theft investigation at the time and was questioning the group of teens. One unseen teen in the video questions why he’s being detained— he asked Gomez, “Is it because I’m a teenager? Because I have baggy pants on?”

Detective Gomez was seen storming off, then spun around and yelled back, ”because you’re white."

In response to the incident,  Lake Villa Police Chief Craig Somerville said such behavior will not be tolerated, said the Daily Herald.

“We are a professional department with high standards and we value our relationship with the public, particularly our youth,” Somerville said in a statement.

 

“Our relationships are built upon mutual understanding and trust and this type of behavior contradicts that.”

Somerville said Gomez became suspicious of the group when they were accompanied by the suspect of a theft investigation at the pawn shop and another member gave officers a fake name. That person was charged with obstructing police.

The chief did not directly acknowledge what was said in the video, but he did note it as inappropriate and unprofessional.

Somerville said in a statement, “Gomez admitted his words were poorly chosen and insensitive and he immediately regretted what he had said. The Lake Villa Police Department does not condone this type of behavior of its officers.Gomez has been disciplined for behavior unbecoming an officer. He will be assisting me with speaking to the parents and teens involved in this incident.”

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Authord by Alex Thomas via SHTFplan.com,

Despite losing the 2016 election largely because the Democrat Party refused to move away from divisive identity based politics they have apparently not learned their lesson, with at least one powerful female Democrat deciding to piggyback off the wave of sexual assault allegations sweeping the country by openly telling Michigan voters to vote for her because she is a women.

Democratic candidate for Michigan’s Attorney General, Dana Nessel, has released an ad for her campaign that directly implies that voters should choose her simply because she does not have a penis and therefore cannot sexually assault someone she works with like many male politicians (on both sides of the aisle) have been accused of over the past month.

“Who can you trust most not to show you their penis in a professional setting? That would be the candidate who doesn’t have one,” Nessel says with a straight face as headlines of male sexual harassment play across the screen.

Nessel attempted to explain the fact that she is now attempting to guilt voters into voting for her as a way to show that they are against sexual harassment in an interview with a local news outlet.

“If you get more women in office, if you get more women in positions of authority, you’re less likely to have issues where someone is pulling out their penis at an inappropriate time in the the workplace,” she told WWJ’s Charlie Langton.

 

“I’m not saying that all men harass and I’m certainly not saying that women are incapable of sexually harassing, but I know from many years serving as an assistant prosecutor prosecuting sex crimes, honestly, the vast, vast majority of those cases do involve men. So I thought that point needed to be made.”

So there you have it.

The Democrats apparently plan to run on a platform that uses guilt to force Americans to vote for them or risk making it look as if they do not care about the issue of sexual harassment.

Absolutely disgusting.

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Regulators may be skeptical of the burgeoning ICO market, where outright fraud isn’t uncommon, but that isn’t stopping some of the world’s largest audit and consulting firms from trying to win their business.

PWC revealed that it will begin accepting payment for its consulting services in bitcoin because it is increasingly working with startups in the city involved in cryptocurrencies and blockchain, the open-ledger technology that processes bitcoin transactions by logging them on a public record. The firm also noted its advisory work for initial coin offerings – which typically collect payment in bitcoin and Ethereum – along with crypto exchanges and crypto funds, according to the Wall Street Journal.

“This decision helps illustrate how we are embracing new technology and incorporating innovative business models across our full range of services,” Raymund Chao, chairman of PwC Asia-Pacific, said. “It is also an indication that bitcoin and other established cryptocurrencies have now developed into more broadly accepted forms of settlement."

ICOs have two important characteristics that would pique PwC’s partners’ interest: Plenty of cash on hand, and many intractable problems.

Of course, PwC isn’t the first major company to accept bitcoin: Overstock.com has been accepting payment in bitcoin for years. Dish Network and Microsoft also accept payment for some services in bitcoin.

The US has taken steps to crack down on ICOs, with the SEC having recently opened several civil actions against them. Meanwhile, China has banned them entirely. As the large pots of money accumulated have spurred internal conflict and in some cases outright embezzlement, some of the largest offerings are already crumbling.

But they’re on track to raise as much as $4 billion this year alone. And despite the bad press and regulatory scrutiny, the market hasn’t cooled.

Overstock.com claims it’s building a trading platform that will help legitimize the market, and at least one other company is building what’s essentially an exchange for ICO tokens.

The move also makes sense from a trend-following standpoint. Bitcoin has climbed more than 950% this year alone. And with several new derivatives products hitting the market, PwC will have more options for hedging its exposure.

However, on Thursday, the price of a single coin had fallen 16% to $9,400 a coin, well below its recent peak above $11,000.

 

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Authored by Charles Hugh Smith via OfTwoMinds blog,

It now seems evident that the Neoliberal Camp of the U.S. Deep State is highly vulnerable on an individual basis.

I tend to notice things like a year-old blog entry suddenly getting thousands of page views. The essay that received a surge of recent interest: Is the Deep State at War–With Itself? (December 13, 2016).

I'm reprinting the essay below for those interested, as nothing has emerged to change the conclusions.

That in itself reveals that the internecine war within America's Deep State is if anything heating up as those attempting to hang a "Russian collusion" narrative on their Deep State opponents have failed to produce any proof of this collusion despite a year of effort.

Then all of a sudden big political donor Harvey Weinstein gets taken down for behaviors that have been well-known within the circles of power for 20+ years. So what changed? Why did Mr. Weinstein's protective wall suddenly fail after serving him so effectively for decades?

But Mr. Weinstein was only the first to fall. Now high-profile figures across the mainstream media are toppling like dominoes. Doesn't it seem a bit peculiar that all these Protected Privileged are suddenly being exposed, disgraced and removed from positions of influence and power?

Maybe it's just random coincidence, but I doubt it. It has the scent of an intentional covert campaign. It's well known that the mainstream media and Hollywood has been in bed with the security agencies for decades, and so it seems non-random that suddenly all these big-shots have lost their Protected Privileged Status more or less at once.

Not to put too fine a point on it, but it looks like those who played on the losing side's team (or cheered from the sidelines) just had their privileges revoked.

Were we to speculate on the meaning of this first-sweep of the media: how about a campaign to strip the failed narrative of its media supporters? Now that everyone sees the lay of the land, the Second Stage will be to collect all the dirty laundry that's been hidden away out of fear, and then methodically expose, disgrace and remove the next layer of media/entertainment supporters of the failed narrative.

Stage Three will be to collect and release the same sort of evidence against the political class. We can discern evidence for this campaign in the number of candidates who suddenly declare they won't be running for re-election for personal reasons, or to "move on to other projects," etc.

As this campaign moves up the wealth-power pyramid, we'll see more big shots resigning or retiring. Those that resist will find all their dirty laundry is suddenly being made public.

Isn't it interesting that PBS and the rest of the mainstream media went all out to support Hillary Clinton's recent media campaign to revive the "Russian collusion" narrative via her new book, yet the campaign fell flat with the American public?

This is remarkable: a highly coordinated, massive media campaign failed to re-energize the "Russian collusion" narrative, and may have actually backfired by drawing renewed interest in Russian dealings with the Clinton Foundation during Hillary's term as Secretary of State.

I hesitate to draw a military analogy, but it certainly feels like a replay of the Battle of Midway, in which an over-confident Japanese Imperial Navy was poised to declare victory until the cream of its fleet, four aircraft carriers, were sunk or disabled in the space of a few moments by U.S. Navy dive bombers.

The grand attack that was supposed to reverse these catastrophic losses–Hillary's book and accompanying media blitz–fizzled, and that failure clearly eroded the defenses of those who supported this counter-attack by the demoralized but still powerful Neoliberal Camp of the Deep State.

It now seems evident that the Neoliberal Camp of the U.S. Deep State is highly vulnerable on an individual basis: all too many over-confident big-wigs appear to have counted a bit too much on their Protected Privileged Status being permanent.

Collectively, they appear to have forgotten, perhaps as a result of their titanic hubris, that only the paranoid survive.

Various cliques within the 3-Letter Agencies are frantically trying to protect their satraps and benefactors, but the tide has turned and all the threats and pay-offs that defended the Protected Privileged so effectively for decades are no longer working.

Now the Protected Privileged are running scared, as well they should, for the opposing camp within the 3-Letter Agencies has all the dirty laundry it needs to bring down the Neoliberal Camp, one disgraced big-shot at a time.

The way of the Tao is reversal.

Here's last year's essay on the Deep State conflict:

Is the Deep State at War–With Itself?

December 14, 2016

 

The recent pronouncement by the C.I.A. that Russian hackers intervened in the U.S. presidential election doesn't pass the sniff test–on multiple levels. Let's consider the story on the most basic levels.

 

1. If the report is so "secret," why is it dominating the news flow?

 

2. Why was the "secret report" released now?

 

3. What actual forensic evidence is there of intervention? Were voting machines tampered with? Or is this "secret report" just another dose of fact-free "fake news" like The Washington Post's list of 200 "Russian propaganda" websites?

 

4. The report claims the entire U.S. intelligence community is in agreement on the "proof of Russian intervention on behalf of Trump" story, but then there's this:

 

"The C.I.A. presentation to senators about Russia’s intentions fell short of a formal U.S. assessment produced by all 17 intelligence agencies. A senior U.S. official said there were minor disagreements among intelligence officials about the agency’s assessment, in part because some questions remain unanswered."

 

Given that the N.S.A. (National Security Agency) was so secret that its existence was denied for decades, do you really think the NSA is going to go public if it disagrees with the C.I.A.?

 

Given the structure of the Deep State and the intelligence community, "minor disagreements" could well mean complete, total disavowal of the C.I.A.'s report.

 

That this is the reality is suggested by the F.B.I.'s denunciation of the report's evidence-free, sweeping conclusion: FBI Disputes CIA's "Fuzzy And Ambiguous" Claims That Russia Sought To Influence Presidential Election

 

5. The supposed interventions clearly fall under the purview of the NSA. So why is the C.I.A. going public in what is clearly a politicized report intended to influence the public via massive, sustained coverage in the mainstream media?

 

6. Notice the double standard: so when the U.S. attempts to influence public opinion in other nations, it's OK, but when other nations pursue the same goal, it's not OK?

 

7. What are we to make of the sustained campaign to elevate "Russian hackers and propaganda" from signal noise to the deciding factor in the U.S. election?

 

8. Russian hacking and attempts to influence American public opinion are not new. The intelligence agencies tasked with protecting American cyberspace have long identified state-sponsored hacking from Russia and China as major threats. So why, all of a sudden, are we being told the Russians successfully influenced a U.S. election?

 

What changed? What new capabilities did they develop?

 

9. And most importantly, what evidence is there that Russian efforts affected the election? Were digital fingerprints found on voting machine records? Were payments to American media employees uncovered?

 

Shouldn't statements purported to be "fact" or the "truth" be substantiated beyond "trust us, an agency with a long history of failed intelligence, misinformation and illegal over-reach"?

 

10. Doesn't it raise alarms that such a momentous accusation is totally devoid of evidence? If you're going public with the conclusion, you have to go public with at least some of the evidence.

 

Here's the media blitz and some skeptical response:

 

CIA: Russia intervened to help Trump win

Secret CIA assessment says Russia was trying to help Trump win White House

Former UK Ambassador Blasts "CIA's Blatant Lies", Shows "A Little Simple Logic Destroys Their Claims"

Longtime readers know I have proposed a major divide in the Deep State–the elements of the federal government which don't change regardless of who is in elected office. This includes the intelligence community, the Pentagon, the diplomatic and trade infrastructure, Research and Revelopment, and America's own organs of media "framing" and "placement."

Is the Deep State Fracturing into Disunity? (March 14, 2014)

More recently, I wondered if the more progressive elements of the Deep State recognized the dangers to U.S. security posed by the neocons and their candidate, Hillary Clinton, and had decided to undermine her candidacy:

Could the Deep State Be Sabotaging Hillary? (August 8, 2016)

In other words, it's not the Russians who sabotaged Hillary–it's America's own Deep State that undermined her coronation. It wasn't a matter of personalities; it was much more profound than that. It was about the risks posed by the neocon strategies and policies, and just as importantly, the politicization of the intelligence network.

And this is precisely what we discern in the C.I.A.'s unprecedented and quite frankly, absurd "secret report:" a blatantly politicized "report" that is not supported by any evidence, nor is it supported by the other 16 intelligence agencies. (Silence doesn't mean approval in this sphere.)

We can now discern the warring camps of the Deep State more clearly. On the one side is the C.I.A., the mainstream media, and the civilians who have feasted on wealth and power from their participation in the neocon's Global Project.

On the other side is the Defense Department's own intelligence agencies (D.I.A. et al.), the N.S.A., the F.B.I. and at least a few well-placed civilians who recognize the neocon agenda as a clear and present danger to the security of the nation.

From this perspective, the C.I.A.'s rash, evidence-free "report" is a rear-guard political action against the winning faction of the Deep State. The Deep State elements that profited from the neocon agenda were confident that Hillary's victory would guarantee another eight years of globalist intervention. Her loss means they are now on the defensive, and like a cornered, enraged beast, they are lashing out with whatever they have in hand.

This goes a long way in explaining the C.I.A's release of a painfully threadbare and politicized "report."

*  *  *

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The Brooklyn prosecutors who won a guity verdict against former pharmaceutical CEO Martin Shkreli over the summer are demanding the “Most Hated Man in America” forfeit $7.4 million in cash and assets as part of his punishment.

In order to do this, Bloomberg says Shkreli will likely need to surrender the $5 million bail he posted in late 2015, and the one-of-a-kind Wu Tang Clan album he purchased for more than $2 million shortly before his former company, Turing Pharmaceuticals, was exposed for hiking the price of Daraprim, a live-saving AIDS drug, by 5,000%.

Shkreli tried to sell the album on eBay back in September. He managed to secure a winning bid of more than $1 million, but was abruptly jailed before he could work out the details with the winning bidder. Prosecutors asked that Shkreli’s bail be revoked after he published messages about Hillary Clinton that prosecutors felt were threatening in nature. Shkreli maintained that they were satirical.

Shkreli was convicted in August on three counts of fraud related to a scheme where he tried to make investors in his two failed hedge funds whole by hiring them as “consultants” at Retrophin, the pharmaceutical company Shkreli founded before Turing.

In their filing, the prosecutors list assets they could possibly take. Among them are the Wu-Tang Clan album, a Picasso painting, an Enigma machine from World War II, and Shkreli’s remaining interest in Turing.

Long before his conviction, Shkreli’s purchase of the album sparked outrage among music fans. The former biotech CEO played short excerpts while live-streaming himself in his Manhattan apartment after President Donald Trump’s election and his conviction. These are the only known instances where the album was heard publicly. Furthermore, some Wu Tang associates have raised doubts about whether the album is a true Wu-Tang release.

"We will vigorously oppose the government motion," Shkreli’s lawyer, Benjamin Brafman, said in an email. "Our position is clear. None of the investors lost any money and Martin did not personally benefit from any of the counts of conviction. Accordingly, forfeiture of any assets is not an appropriate remedy."

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Authored by Patrick Buchanan via Buchanan.org,

In the morning darkness of Wednesday, Kim Jong Un launched an ICBM that rose almost 2,800 miles into the sky before falling into the Sea of Japan.

North Korea now has the proven ability to hit Washington, D.C.

Unproven still is whether Kim can put a miniaturized nuclear warhead atop that missile, which could be fired with precision, and survive the severe vibrations of re-entry. More tests and more time are needed for that.

Thus, U.S. markets brushed off the news of Kim’s Hwasong-15 missile and roared to record heights on Wednesday and Thursday.

President Donald Trump took it less well.

“Little Rocket Man” is one “sick puppy,” he told an audience in Missouri.

U.N. Ambassador Nikki Haley told the Security Council that “if war comes … the North Korean regime will be utterly destroyed.”

She then warned Xi Jinping that “if China does not halt the oil shipments” to North Korea, “we can take the oil situation into our own hands.”

Is Haley talking about bombing pipelines in North Korea — or China?

The rage of the president and bluster of Haley reflect a painful reality: As inhumane and ruthless as the 33-year-old dictator of North Korea is, he is playing the highest stakes poker game on the planet, against the world’s superpower, and playing it remarkably well.

Reason: Kim may understand us better than we do him, which is why he seems less hesitant to invite the risks of a war he cannot win.

While a Korean War II might well end with annihilation of the North’s army and Kim’s regime, it would almost surely result in untold thousands of dead South Koreans and Americans.

And Kim knows that the more American lives he can put at risk, with nuclear-tipped missiles, the less likely the Americans are to want to fight him.

His calculation has thus far proven correct.

As long as he does not push the envelope too far, and force Trump to choose war rather than living with a North Korea that could rain nuclear rockets on the U.S., Kim may win the confrontation.

Why? Because the concessions Kim is demanding are not beyond the utterly unacceptable.

What does Kim want?

Initially, he wants a halt to U.S.-South Korean military exercises, which he sees as a potential prelude to a surprise attack. He wants an end to sanctions, U.S. recognition of his regime, and acceptance of his status as a nuclear weapons state. Down the road, he wants a U.S. withdrawal of all forces from South Korea and international aid.

Earlier administrations — Clinton, Bush II, Obama — have seen many of these demands as negotiable. And accepting some or even all of them would entail no grave peril to U.S. national security or vital interests.

They would entail, however, a serious loss of face.

Acceptance of such demands by the United States would be a triumph for Kim, validating his risky nuclear strategy, and a diplomatic defeat for the United States.

Little Rocket Man would have bested The Donald.

Moreover, the credibility of the U.S. deterrent would be called into question. South Korea and Japan could be expected to consider their own deterrents, out of fear the U.S. would never truly put its homeland at risk, but would cut a deal at their expense.

We would hear again the cries of “Munich” and the shade of Neville Chamberlain would be called forth for ritual denunciation.

Yet it is a time for truth: Our demand for “denuclearization of the Korean peninsula,” is not going to be met, absent a U.S. war and occupation of North Korea.

Kim saw how Bush II, when it served U.S. interests, pulled out of our 30-year-old ABM treaty with Moscow. He saw how, after he gave up all his WMD to reach an accommodation with the West, Moammar Gadhafi was attacked by NATO and ended up being lynched.

He can see how much Americans honor nuclear treaties they sign by observing universal GOP howls to kill the Iranian nuclear deal and bring about “regime change” in Tehran, despite Iran letting U.N. inspectors roam the country to show they have no nuclear weapons program.

For America’s post-Cold War enemies, the lesson is clear:

Give up your WMD, and you wind up like Gadhafi and Saddam Hussein.

 

Build nuclear weapons that can threaten Americans, and you get respect.

Kim Jong Un would be a fool to give up his missiles and nukes, and while the man is many things, a fool is not one of them.

We are nearing a point where the choice is between a war with North Korea in which thousands would die, or confirming that the U.S. is not willing to put its homeland at risk to keep Kim from keeping what he already has — nuclear weapons and missiles to deliver them.

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– ‘Technical issue’ at Fidelity blocks access to online accounts, stops online trading
– Fidelity is 3rd largest brokerage by client assets: $1.7 trillion at the end of 2016
– NatWest, RBS, Ulster Bank  have experienced online banking “issues” in November
– Clients left without access to funds & failed payments & little to no recourse
– Social media exposing the banks’ and online trading platforms’ shortcomings
– Reminder that online accounts can be rendered non-viable and vulnerability of absolute dependence and digital cash, digital gold etc

Editor: Mark O’Byrne

Yesterday, customers of Fidelity, the third largest brokerage in the world, found themselves unable to access their online accounts.

The company is responsible for an estimated 8% of total US wealth management. With such a huge responsibility, Fidelity,  like most companies, works hard to ensure clients have access to online accounts at all times.

Yet it still happened, reminding investors of the risks posed by digital assets – be they stocks, gold or indeed deposits – held solely through online accounts and platforms – the ‘Single point of failure’.

Fidelity is just one of many online “outages” or “glitches” reported by financial institutions in the last year. In Europe, particularly the United Kingdom, banking customers have found themselves regularly facing bank account ‘glitches’. It is thanks to social media that some of these even come to the fore, with many organisations keen to sweep them under the carpet.

Investors, savers and, in fact, any user of online services needs to be aware of the risks and how to protect themselves in the case of a sudden ‘access denied’ message or worse, a prolonged period of not being able to access, trade and or withdraw funds from an online account.

Not like the old days…

Prior to online accounts it rarely occurred to users that they could suddenly be without access to funds, unable to make transactions or even receive their wages. Sadly, with the dawn of the internet and growing cyber security risks this is something no-one can afford to be without a plan-B for.

Outages can happen for a number of reasons, but many result in customers being unable to transact and being without funds.

In the case of Fidelity, it appears to have been an internal error, which also seems to be the common thread among many banking outages. However, cyber security is a major threat to any account that involves personal data and financial information.

Just this week Uber finally admitted exposing hackers to over 2.7 million customers’ data, putting savings and futures at risk.

We must also consider what happened in Puerto Rico for a lesson in how vulnerable we are should natural disasters impede access to much needed personal funds for days and weeks.

Absolute reliance on online accounts and digital cash and digital gold is not prudent. When such accounts can be rendered non-viable in a matter of seconds, there is little recourse for the digital saver and investor should they not also own some tangible assets.

Social media prevents cover-up

Online account failures are becoming more common. We are increasingly aware of this thanks to social media. Whilst the majority of outages experienced in the West are resolved within a few hours (in the case of Fidelity it was hours) or days, customers are left feeling nervous and frustrated and in some cases they experience real repercussions. Rents are not paid, important direct debits fail and charges are incurred.

This last month Lloyds and Halifax Bank of Scotland experienced major issues with accounts. Some account holders not only found transactions weren’t processed but also logged in to be told they no longer had an account with their bank.

Many customers in the recent Natwest outage were particularly frustrated at the bank’s lack of communication and failure to alert account holders to the problem.

“Not just an online problem, my bank card is not working now as well for online payments! People have bills to pay, how much longer?”

“You were acknowledging this problem over an hour ago but only to those that tweeted you directly. Why has it taken so long for a public tweet?”

Also this week Nationwide customers found themselves embarrassed when their funded accounts suggested they had no money:

Banking outages are becoming so common that we no longer hear reports in the mainstream media of them. Users report to feeling ’embarrassed’ but the reality and severity of the situation and can have far-reaching complications.

One would have thought that banks would have learnt from the 2012 disaster that was seen in the summer of 2012 for customers of RBS, NatWest and Ulster Bank. Users found they could not access funds for a week or more as account balances had to be manually updated. RBS was fined £56m for the inconvenience and risk placed on account holders.

Complacency amongst bank and online account users

I don’t think I am aware of a single person who has not experienced problems with bank or financial account services. Whether access to, payment issues or information failure everyone I know has come up against such issues in the past.

Concern regarding the risks to online customers is so high that the European Banking Authority this week mentioned the growing reliance on online digital platforms as a major risk to customers.

What do the majority of people do? Get a bit annoyed then shrug their shoulders and make some comment about ‘banks today’. The same goes for the likes of Fidelity, Uber and TalkTalk, non-banks who have also exposed their customers with little to no recourse for the end user.

The lethargy regarding customers’ switching banks is astonishing when one considers the problems that have been caused in recent years. This is for two reasons, the first is because there is little knowledge of the alternatives out there and secondly, because there is a belief that this is just what you have to put up with these days.

This is a sad state of affairs. Those who earn and save money have every right to be able to access their funds at all times, for whatever purpose. It is tragic that the digital, online economy has made many feel otherwise. For something that was heralded as giving customers so many more options, it is instead making many feel trapped and without options.

Cyber-attacks, natural disasters and technical errors are all very good reasons for those who wish to hold money and data with an organisation to seek out ways to diversify their investments. This is not just in terms of spreading the risks between digital accounts, but also away from solely digital assets.

Non digital gold cannot be exposed to ‘glitches’ 

Gold and silver often get a bad rap when it comes to discussions about their role as money. Both are pushed to the bottom of the pile when you consider the convenience of spending on a card, paying out wages or making quick gains when trading stocks and shares.

But one thing that is guaranteed with physical, allocated and segregated gold and coins and bars for delivery as offered by GoldCore, is that you know you will always have access and liquidity due to outright legal ownership of bullion. Either with bullion in your possession or with direct ownership in some of the safest vaults in the world. That is not the case with fiat electrons bank accounts or online trading accounts, whether in times of crisis or technical outages.

In addition many such platforms force you to only buy and sell through their online account and their online platform and website. Such digital platforms are “closed loop systems” where liquidity and pricing are dependent on a single platform, website and large corporation. A buyer can only buy and sell through that one online platform. An investor is in effect “captive” and massively dependent on that one counter party and a single point of failure.

No matter the town, city or country you find yourself in, times such as these pose multiple threats whether military, natural or just digital.

Today we still assume banks, companies and governments are competent and will look after our accounts. We cannot bring ourselves to imagine electricity systems and our banking systems including ATMs going down and not having access to our hard earned savings. This is despite it clearly happening increasingly frequently.

News and Commentary

Gold volatility ‘breakout’ coming soon to ‘eerily quiet’ market – Metals Expert (CNBC.com)

Gold inches up as dollar weakens after U.S. Senate tax bill stalls (Reuters)

Dollar Dips as Tax Bill Hits Snag; Stocks Decline: Markets Wrap (Bloomberg.com)

U.S. Mint American Eagle gold, silver coin sales fall sharply (Reuters)

Turkish gold trader implicates Erdogan in Iran money laundering (Reuters)

Source: City AM

“There will be pain”: Bank of England’s Carney warns against no deal Brexit (City AM)

Chance of US stock market correction now at 70 percent: Vanguard Group (CNBC)

4 habits that will make you poor (SBCH)

How central banks paved the way for bitcoin’s birth (MoneyWeek)

Sharia-compliant gold standard – Response from Muslim investors has been positive (The National )

Gold Prices (LBMA AM)

01 Dec: USD 1,277.25, GBP 946.57 & EUR 1,072.51 per ounce
30 Nov: USD 1,282.15, GBP 952.64 & EUR 1,084.06 per ounce
29 Nov: USD 1,294.85, GBP 965.70 & EUR 1,092.46 per ounce
28 Nov: USD 1,293.90, GBP 972.75 & EUR 1,088.95 per ounce
27 Nov: USD 1,294.70, GBP 969.73 & EUR 1,084.83 per ounce
24 Nov: USD 1,289.15, GBP 967.89 & EUR 1,086.37 per ounce
23 Nov: USD 1,290.15, GBP 969.93 & EUR 1,089.40 per ounce

Silver Prices (LBMA)

01 Dec: USD 16.42, GBP 12.16 & EUR 13.80 per ounce
30 Nov: USD 16.57, GBP 12.32 & EUR 14.00 per ounce
29 Nov: USD 16.90, GBP 12.60 & EUR 14.26 per ounce
28 Nov: USD 17.07, GBP 12.84 & EUR 14.36 per ounce
27 Nov: USD 17.10, GBP 12.81 & EUR 14.32 per ounce
24 Nov: USD 17.05, GBP 12.80 & EUR 14.38 per ounce
23 Nov: USD 17.10, GBP 12.84 & EUR 14.43 per ounce

Recent Market Updates

– Low Cost Gold In The Age Of QE, AI, Trump and War
– Own Gold Bullion To “Support National Security” – Russian Central Bank
– Bitcoin $10,000 – Huge Volatility of Cryptocurrencies and Risky Fiat Making Gold Attractive
– Financial Advice from Dr Wayne Dyer
– Buy Gold As Fed Shows Uncertainty And Concern Over Financial ‘Imbalances’
– Brexit Budget – Grim Outlook As UK Economy Downgraded
– Geopolitical Risk Highest “In Four Decades” – Gold Demand in Germany and Globally to Remain Robust
– Gold Versus Bitcoin: The Pro-Gold Argument Takes Shape
– Money and Markets Infographic Shows Silver Most Undervalued Asset
– Is New Fed Chief A “Swamp Critter Extraordinaire”?
– Deepening Crisis In Hyper-inflationary Venezuela and Zimbabwe
– UK Debt Crisis Is Here – Consumer Spending, Employment and Sterling Fall While Inflation Takes Off
– Protect Your Savings With Gold: ECB Propose End To Deposit Protection

Related Reading

Puerto Rico Without Electricity, Wifi, ATMs Shows Importance of Cash, Gold and Silver

Massive Equifax Hack Shows Cyber Risk to Deposits and Investments Today

Internet Shutdowns Show Risk of Digital Gold Platforms

Yahoo Hacking Highlights Cyber Risk and Increasing Importance of Physical Gold

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

via http://ift.tt/2zHW2Tg GoldCore

We have to admit we didn’t know anything about Mark Zuckerberg’s sister, Randi, before she created a media storm by complaining about a sexual harassment incident she suffered while travelling on Alaska Air.

Feeling disgusted & degraded after an @AlaskaAir flight where the passenger next to me made repeated lewd sexual remarks. The flight attendants told me he was a frequent flier, brushed off his behavior & kept giving him drinks. I guess his $ means more than our safety? My letter: http://pic.twitter.com/xOkDpb0dYU

— Randi Zuckerberg (@randizuckerberg) November 30, 2017

Randi Zuckerberg worked at advertising giant, Ogilvy & Mather, before joining her brother at Facebook for ten years from 2004-14. These days she has various media interests, including founding Zuckerberg Media.

Alaska Airlines has launched an investigation into the incident after Zuckerberg complained in a letter that the man to her right….

“began making explicit, lewd, and highly offensive sexual comments to me, immediately upon boarding the aircraft. He started talking to me about touching himself, kept asking me if I fantasized about the female business colleague I was travelling with, rated and commented on the women’s bodies boarding the aircraft as they walked by us, and many more equally horrifying and offensive comments.”

It seems that the Alaskan Air cabin crew didn’t exactly ride to the rescue of this damsel in distress, who got caught up in this “silent epidemic. According to Bloomberg…

Mark Zuckerberg’s sister isn’t the first to complain about sexual misconduct on jetliners — a problem a prominent flight attendants’ union called a “silent epidemic” that airlines have failed to solve. Randi Zuckerberg, a media executive, said this week that a male passenger on an Alaska Air Group Inc. flight made repeated harassing comments to her and airline employees did nothing about it. In a letter to the carrier posted on social media, the sister of the Facebook Inc. founder said the crew members continued to serve the abusive customer alcoholic drinks and told her not to “take it personally.”

Zuckerberg’s description of the incident on a trip from Los Angeles to Mazatlan, Mexico, drew widespread media attention and Alaska Airlines temporarily revoked the passenger’s travel privileges, pending an investigation.

The flight attendants union is asking the airlines to address the harassment issues, using a zero tolerance approach. Bloomberg continues…

Still, airlines must take stronger action to crack down on in-flight sexual harassment and assault, said Sara Nelson, international president of the Association of Flight Attendants-CWA.

“Let’s be clear that this is not an Alaska problem,” Nelson said in a statement Thursday. “It is an issue at the forefront of national awareness and it is a critical time for the airline industry to examine the steps necessary to take this on.”

Nelson said she is seeking a zero tolerance policy and specific regulations to address the issue. “For too long unacceptable sexual innuendo, harassment advances, and assault have been a silent epidemic in our society and certainly on our planes,” she wrote.

Showing a degree of foresight, the flight attendants union conducted a survey in 2016 as to whether its members had any knowledge of how to deal with the type of problem Zuckerberg found herself in. Very few, as Bloomberg explains. 

Such incidents across all industries are under heightened scrutiny as more women go public with allegations against powerful men, from film producer Harvey Weinstein and actor Kevin Spacey to U.S. Representative John Conyers and U.S. Senate candidate Roy Moore. NBC fired “Today” show host Matt Lauer this week after allegations of sexual misconduct surfaced.

The AFA conducted a member survey last year that showed the majority of flight attendants had no knowledge of written guidance or training on this specific issue available through their airline, Nelson said. Sexual harassment training is only mandatory in California, Connecticut and Maine, although most large companies have training for at least some of their employees.

The survey of about 2,000 attendants also found that 20 percent of crew members had experienced a report of a mid-flight sexual assault by a passenger against another passenger, and in those cases law enforcement was contacted or met the plane only about 40 percent of the time.

Zuckerberg pointed out the irony that the passenger who harassed her remarked on the recent flurry of cases in the media and how “these Millennial women just aren’t willing to give some booty to get a job anymore”. While clearly a very reprehensible character, it was also obvious from Zuckerberg letter what contributed to his lewd tirade as she noted that at one point he was drinking “three alcoholic beverages”. Another airline passenger who was assaulted last year confirmed how poorly the cabin crew dealt with her incident, which is still being investigated.

Allison Dvaladze said she was assaulted while flying to Amsterdam in April of last year. The incident, which is still under investigation, prompted her to start the Facebook page, “Protect airline passengers from sexual assault.” She also worked with U.S. Senator Robert Casey, from Pennsylvania, to introduce the “Stopping Assault while Flying Enforcement Act of 2017,” which was referred to committee in July, she said. The law would require crew training and better data collection on assault in the air.

“I travel a lot, I had never heard of this before it happened to me,” said Dvaladze, who flies as part of her work to bring cancer screening to under-represented groups. “It was a real shock to me when it happened. But what was more of a shock to me was that it wasn’t a surprise to the crew, yet at the same time they had no idea what to do. If the crew isn’t armed with the right tools, they can’t handle it.”

Meanwhile, Alaska Air is, unsurprisingly in full-on damage limitation mode, and the industry in general is stirring into action.

In a Thursday blog post on Alaska Airlines’ website, Vice President of People Andrea Schneider addressed a case of sexual harassment on an Alaska flight from Los Angeles to Mazatlan. Schneider called the report “very disturbing” without identifying the accuser.

"The safety and well-being of our guests and employees is our number one priority,” Schneider wrote. “As a company, we have zero tolerance for any type of misconduct that creates an unsafe environment for our guests and our employees.”

Carriers take the issue seriously, said Vaughn Jennings, spokesman for trade group Airlines for America. “Employees receive extensive customer-service training to ensure the safety and well-being of all our passengers,” he said in a statement.

Bloomberg notes that Zuckerberg’s disclosure on Twitter and (of course) Facebook prompted “thousands of comments and shares, many from women who said they had been harassed on flights and ignored by flight crews and the airlines”.

While Zuckerberg said on Facebook that she wasn’t going to identify the passenger because she didn’t want to make it a “personal vendetta”, she did note he was sitting in “seat 4C”.

The question is how long will it take the media to “out” him.

via http://ift.tt/2zVjbWz Tyler Durden