Author: admin

In what’s being hailed as a game-changer in the region, the United Arab Emirates will receive up to 50 F-35 advanced stealth fighter jets from the United States.

The deal also includes 18 battle-ready MQ-9B aerial drones and air-to-air and air-to-ground munitions in a deal worth nearly $24 billion, according to the AP.

Secretary of State Mike Pompeo announced the Trump administration formally notified Congress on Tuesday following its authorization by the State Department.

It marks the most concrete major step to have followed the historic normalization of ties between Israel, the UAE and Bahrain known as the Abraham Accords, which was brokered by the White House and finalized on September 15.

“This is in recognition of our deepening relationship and the UAE’s need for advanced defense capabilities to deter and defend itself against heightened threats from Iran,” Pompeo said in in making the announcement.

“The UAE’s historic agreement to normalize relations with Israel under the Abraham Accords offers a once-in-a-generation opportunity to positively transform the region’s strategic landscape,” Pompeo continued.

When rumblings of the major F-35 transfer to an Arab state first began late summer into September, a number of Congressional leaders (not to mention Israel itself) worried this could breach the US official policy of Israel’s Qualitative Military Edge (QME). Essentially this says that by law Washington must ensuring Israel has military superiority over its neighbors.

Mike Pompeo approves sale of F-35s to the UAE. A regional game changer. pic.twitter.com/vH0x3haEnB

— Ranj Alaaldin (@RanjAlaaldin) November 10, 2020

Pompeo addressed both the concern over QME as well as the ‘counter Iran’ angle in his statement. “Our adversaries, especially those in Iran… will stop at nothing to disrupt this shared success,” he stated. 

“The proposed sale will made the UAE even more capable and interoperable with US partners in a manner fully consistent with America’s longstanding commitment to ensuring Israel’s Qualitiative Military Edge.”

Meanwhile Amnesty International and other human rights groups are protesting the transfer, given the UAE’s role in executing the war in Yemen, currently considered by the UN to be the biggest humanitarian disaster on the planet.

Authored by Dave DeCamp via AntiWar.com,

One area where a Biden administration is not expected to differ from President Trump’s policies is concerning China’s claims to the South China Sea. While Joe Biden and his cabinet may cool down the rhetoric towards Beijing, experts and analysts believe actual policy will not change.

Experts told the South China Morning Post that Biden would not soften the US’s stance on the South China Sea, pointing out it was the Obama administration that began challenging Beijing’s claims to the waters.

The experts said Biden would likely continue sailing warships near Chinese-claimed islands in the South China Sea, operations known as Freedom of Navigation Operations (FONOPs). FONOPs to challenge Beijing’s claims in the waters started under the Obama administration in 2015, shortly after Chinese President Xi Jinping publicly pledged not to militarize islands and reefs China claimed in the South China Sea.

During the final presidential debate, Biden bragged about the Obama administration’s tough stance against China’s claims to the South China Sea.

“When I met with Xi, and when I was still vice president, he said ‘we’re setting up air identification zones in the South China Sea, you can’t fly through them.’ I said, ‘we’re gonna fly through them. We just flew B52/B1 bombers through it. We’re not going to pay attention,'” Biden said at the debate.

This year has seen a significant uptick in US military activity in the South China Sea. US aircraft carriers have regularly drilled in the disputed waters throughout the year, and a Beijing-based think tank recorded a sharp rise in US military flights in the region.

The South China Sea Strategic Situation Probing Initiative (SCSPI) recorded 67 flights of US reconnaissance aircraft in the South China Sea in July, compared with 49 in June and just 35 in May. In September, the SCSPI recorded 60 US flights in the region.

Meanwhile there remains huge uncertainty surrounding the Taiwan issue…

My Chinese relatives say the talk of Chinese social media is that a Biden win will almost certainly mean a Chinese attempt to invade Taiwan — a move 80 percent of Mainlanders support, per polls.

— Sohrab Ahmari (@SohrabAhmari) November 1, 2020

In July, the US formally rejected most of China’s claims to the waters. The Trump administration has also sought cooperation from Asian countries to counter China in the region, something a Biden administration will likely continue.

Bill Gross and his neighbor-turned-nemesis, Mark Towfiq, faced off in civil court for the first time this week after a dispute between the two Laguna Beach, Calif., residents exploded into the press.  The proceedings offered the public the first concrete glimpse into the feud between the two extraordinarily wealthy belligerents, and its gensis. As it turns out, the battle that drove Gross to blast Mariachi music and the theme from “Gilligan’s Island” at such intense volumes that it “drowned out the traffic from the nearby Pacific Coast Highway” all started with a multimillion-dollar sculpture purchased by Gross.

Bill Gross

According to Bloomberg, the statue was a 22-foot-long blown glass sculpture by artist Dale Chihuly, and belonged to Gross. Mark Towfiq, Gross’s neighbor, was annoyed by the statue, and apparently filed a complaint with the city.

It’s sometimes hard to feel sympathy for the megarich, and the way Towfiq handled this particular problem – by whinging to the town about his billionaire neighbor’s ugly statue – doesn’t reallly do him any favors in the PR department. The complaint infuriated Gross, who immediately responded by frequently blasting loud music from his $32 million home. It started with pop music – rap, hip hop – before escalating to mariachi and finally TV show theme songs.

The tactics only escalated after Gross received a citation for the alleged violations from the town. Here’s what one town officer said during her testimony.

Laguna Beach Police Officer Ashley Krotine testified Monday that she arrived at Gross’s home about 9 a.m. on Oct. 22, responding to a complaint about loud music. “When you say there was ‘loud Spanish music,’ was it louder than the ocean?” Jill Basinger, a lawyer for Gross, asked the officer.

“Yes,” Krotine said.

“How much louder?” Basinger asked.

“I couldn’t tell you,” the officer said.

“Louder than PCH?” Basinger asked.

“Yes, louder than PCH,” Krotine said.

Towfiq and his wife are suing Gross for harassment and emotional torment, with Towfiq’s lawyer claiming Gross and his girlfriend, former Tennis pro Amy Schwartz, had inflicted untold psychological damage and made their lives “a living hell”. Of course, Gross counter-sued, also claiming harassment, accusing Towfiq of being a “peeping Tom” who installed security cameras in an effort to sneak peaks at Schwartz when the two are out skinny dipping in their pool.

“Enough is enough,” Gross said in a court filing. The billionaire says he “should not have to live tormented by the presence of cameras trained” on him because of “one man’s prurient obsessions.”

Oh, and Gross also noted that “somebody” apparently threw a rock at his sculpture, causing damage that necessitated a $50k repair bill.

The trial will resume Nov. 16.

Authored by The Saker,

I need to begin with the obvious: in spite of all the deep state, propaganda and “deep empire” (transnational) resources being used to declare that “Biden” (i.e. Harris) has won, as of right now nobody knows who got most votes and where.

I would even suggest that we will never really find out who won, because who won depends on a large number of local laws and regulations and because it will probably never be possible to separate the fake votes from the legal ones.

Finally, neither side will ever gracefully admit to having lost the contest. So now the country will enter a profound crisis.

That is the bad news.

But there is also very good news.

First, it has now become clear to the entire planet that the US “democracy” is anything but: the USA is an oligarchic plutocracy, plagued with a myriad of antiquated laws and corrupt to the bone. The special “trick” of this US oligarchic plutocracy is that is masquerades as an ochlocracy: there is *pretend* mob rule which serves as the microscopically small fig leaf hiding the real nature of the regime.

Second, while the Dems did their best to hide this, and they still are, it is now becoming evident that the sheer magnitude of the fraud made it impossible to conceal it. Now if we think of how the AngloZionist Empire has handled equally non-believable nonsense (9/11, Syrian gas attacks, Skripal, Navalnii, etc.) we know what they are going to do next: double down, which will reassure the brainwashed zombies, but will even further infuriate those still capable of critical thought.

Third, the behavior of the US media in this entire operation is so obviously disgraceful that nobody will ever take them seriously again (at least amongst the thinking people, the zombies glued to the Idiot Tube are beyond any rational arguments anyway). This is particularly important in regards to FoxNews who has shown that it was a pseudo-conservative propaganda outlet which, in reality, is completely committed to the political agenda of Rupert Murdoch and his family.

At this point in time, it is impossible to predict what will happen next, but the murder of JFK or the 9/11 false flag strongly suggest that the US deep state will win.

There seems to only be one way for Trump to stay in power and it will probably look similar to this:

Giuliani, who I was told won over 4’000 lawsuits in his career, is a very tough guy (look at what he did to the mob in NY!) and he must realize that the lawsuits he will file this week will be the most important ones in his career. They will even probably define his legacy. The notion that he would go to the courts with no solid evidence in his files is simply ridiculous. I don’t see any mechanism which can stop Giuliani now, so the ball will now go to the state and federal courts next and, after that, to the Supreme Court. There the situation is hard to predict.

In theory, Trump probably has enough conservative Justices, especially with Ruth Bader Ginsburg gone and Amy Coney Barrett replacing her. That’s only in theory. In reality, things are much more complex. On one hand, the pressure of the deep state on the Justices will be immense, but on the other hand, once you are a SC Justice you cannot be attacked, at least not legally. Amy Coney Barrett will also face immense pressure to “prove” her “independence” (meaning, if she sides with Giuliani’s side she will be called a Trump shill and even much worse than that!). One thing is certain, any Justice siding with Giuliani will face immense pressures followed by a vicious denigration campaign. Who knows how many Justices would have the courage to face this?

However, there is also the possibility that any Justice siding with Giuliani’s conclusions will go down in history as yet another “profile in courage”, so I would not completely discard that possibility either.

[Sidebar: during my student years in the USA I had the chance to meet, and study with, such US officials as Paul Nitze or Admiral Zumwalt and I was always amazed at how candid former US officials were, but only once they retired. USSC Justices are not retired, of course, but, like retired officials, they are beyond the reach of any legal reprisals, and that might strengthen their willingness to honestly follow their conscience and speak their minds]

Giuliani will certainly fight hard, but looking at the political correlation of forces I can’t see an outcome where Trump would successfully defeat a much stronger opponent. Think about it, the only possible ally for the Trump campaign would be the Supreme Court: the GOP, Congress, the Deep State, the legacy ziomedia, and even members of the Trump Administration (think Bolton or Esper here) all hate him with a passion. And now that Trump appears to be losing, they are not shy about it.

Still, as the proverb says, we need to hope for the best but prepare for the worst.

That is, obviously, a Harris Administration in control of the Executive.

So what can we expect from these folks?

First and foremost, a sustained campaign to completely negate the First and Second Amendments to the Constitution. Considering how truly sacred these two cornerstones of the US Constitution are for millions of US Americans, we can expect a lot of resistance from the “deplorables”, both legal and violent.

Second, the control of both the Executive and all the major IT giants will mean that free speech will be driven even further underground. This new reality will require a lot of thinking in the development of a strategy to protect the voices which the regime in DC will now openly try to silence.

[Sidebar: possibly the dumbest mistake made by Trump was not to create his own TV channel. He had the money, he could have found allies, but he simply lacked the intelligence to see the danger. Instead, this narcissistic fool thought that Twitter was the way to bypass the legacy media. Is there a possibility that if he is thrown out of the White House we might finally understand that what the USA now so urgently needs is, at the very least, a free TV channel and at least one free social media option? Maybe, but I am not holding my breath, Trump always had this ability to disappoint…]

Third, on the international front, we can expect even more hysterical Russia bashing (the Dems all hate Russia with a passion, especially since they have brainwashed themselves for four years that “Putin” had “attacked” the US elections). But there is really nothing the USA can do to Russia, it is way too late for that. So I would expect even more hot air than from the Trump Administration, and probably not much more action, although that is by no means certain, since a braindead nominal President like Biden would not have Trump’s intelligence to understand that a war against Russia, China or Iran would end in a disaster: Dems always start wars to try to convince the public that they are “tough” (Dukakis in his M-1 tank). Now that they not only appears as weak, but also illegitimate and even senile (did you see Biden trying to run to the podium?), they will have to prove their “virility” and send some cruise missiles flying somewhere (that kind of attack is what these cowards always use first).

As I mentioned in the past, the outcome of this election will not have much of an impact on US foreign policy: first, the US elites more or less all agree on continuing a policy of violent imperialism; but even more crucial is the fact that the Empire is as dead as the Titanic was when it hit the iceberg: not all passengers realized what was taking place, but that did not affect the outcome in the least.

Furthermore, as those familiar with Hegelian dialectics know, each action eventually results in a reaction and the notion that 70’000’000+ voters will simply accept what is self-evidently a coup against not only Trump, but also the US Constitution itself, is ridiculous. If anything, these people will now come to realize that while the US is facing no real foreign threats at all (except those it created itself), there is most definitely an internal threat, in the sense of the United States Uniformed Services Oath of Office, and that this reality gives them the right, and even duty, to “resist tyranny”.

You have probably heard Joe Biden declaring that he wants to heal the wounds, restore unity, rule for all US Americans and the like. I don’t think that this is only empty political rhetoric, though that is part of it too. Mostly, I believe that the Dems are terrified because they know for a fact that they stole the election and this is why after four years of the most divisive and irresponsible rhetoric against Trump, “the racist system” and all the rest of the crap, they are now making a 180 (they are experts at that!) and pleading for calm, peace and unity.

That ain’t going to happen.

Finally, a word to those who like to say that there is no difference between the Dems and the GOP, that this is all a fake conflict: friends, you are both right and massively wrong. You are right when you say that the DNC and the RNC are like indistinguishable twins. But what you are missing are two crucial things:

1. Factions inside one party can actually go after each other much harder than against their common enemies. I think of the SS vs the SA in Nazi Germany or the Trotskysts vs the Stalinists in the Soviet Union and during the Spanish Civil war.

2. But, even more crucially, this is not a contest between the Democrats and the Republicans, it is a contest between a “rejected outsider” and both the DNC and RNC!

Conclusion: not the RNC vs the DNC but the Deep State vs the deep country

A quick look at a map tells the story: this struggle is most one of the deep state vs the deep (real) country. Yeah, I know, Trump is hardly a miner from West Virginia or a farmer in Alabama. But that doesn’t matter one bit.

What does matter is that the deplorables from the “overfly country” felt that Trump speaks for them and that he is all that stands between them and the (pseudo-) Liberals of CNN, the Antifa/BLM thugs and the destruction of the United States as we all knew them.

And yes, this is a simplistic view, but it is fundamentally correct one nonetheless.

A vast majority of Republicans – 70% – believe the 2020 election was not ‘free and fair,’ according to a new poll by Morning Consult.

Broken down further, 48% of Republicans polled say the election was “definitely” not free and fair, while 22% say it “probably” was not – over twice the percentage of Republicans who thought it wouldn’t be fair when polled just before the election.

​

Morning Consult also found:

• Republicans are most skeptical of the Pennsylvania results: Just 23 percent of Republican voters say they believe the results in the Keystone State are reliable, and no more than 3 in 10 say the same about the results in Arizona, Georgia, Michigan, Nevada and Wisconsin. Additionally, even for states like Texas and Florida, where Trump is projected to safely win, Democrats are more likely than Republicans to say the results are reliable. 

• Overall trust in elections plummets among Republicans: Prior to the election, 68 percent of GOP voters said they had at least some trust in the U.S. election system. Post-election, that dropped to 34 percent. Democratic trust, meanwhile, jumped from 66 percent to 78 percent.

​ 

• Among voters who doubt the 2020 election’s validity, mail-in voting is seen as the main culprit: Nearly 4 in 5 voters who say they don’t believe the election was free and fair cite widespread voter fraud caused by mail-in voting as a reason why. Additionally, 72 percent cite ballot tampering as a reason and 51 percent say the media gave the candidates unequal attention. 

​

• Despite outstanding concerns, most voters don’t expect the results to be overturned: 63 percent of registered voters, including 75 percent of Democrats and 45 percent of Republicans, say it is unlikely that the election results will be overturned.

 
​

By The Fintech Blueprint

Welcome to the new world.  The symptoms have shifted. What we see prioritized now is different. We welcome the return of respect for expertise, the love of rigor and curiosity, and a pursuit of dignified equity. A lot of calories have gone into this transformation. Our mental map of the territory is remade. Let’s mark things to market so that we are able to walk forward again.

Yet, underneath it all is still the human swirl of chaos, organized only briefly into flashes of coherence and structure. The virus gorges on the social animal. The sovereign beasts continue to threaten each other with geopolitical, economic, and technological dominance. Markets still reflect financial constructions and schemes decoupled from the experience of the average person. High tech firms continue to build into software their addictive digital nation states. The vectors of change for software and money remain deeply anchored to the fractal of blockchain.

The election’s end – and perhaps its reminder of the fragility of political governance – has reinforced the value of Bitcoin. When the old world wobbles, the new one seems more safe by comparison. The price of the cryptocurrency rose to over $15,000, breaking again the $250 billion market capitalization barrier. You can compare that $250 billion to the M1 money supply of a number of countries (link here) — Poland, Belgium, or Austria.

Perhaps this was also driven by the much discussed move from PayPal, the payment processor, to finally incorporate Bitcoin into its currency options. PayPal connects to something like 25 million merchants and 350 million users. Reminder that Ant Financial has 80 million merchants and 1.3 billion users — more on that later. We think the PayPal news is interesting and promising, but still in early stages. Allowing the purchase and sale of a commodity using a third party trust company (Paxos) is quite different from using a currency for economic activity. But we are getting there.

For comparison, Visa today sits at about $420 billion in market capitalization, representing the discounted cash flows of owning a payment network. Its deal with Plaid, the data aggregation company, is on the rocks as the US Department of Justice files an anti-trust lawsuit to prevent the acquisition. Our prior write-up on the deal (link here) agreed with the logic of monopoly as it relates to Visa taking out a black-swan competitor. But we find the concept of blocking this deal on those grounds fairly absurd. A $100 million revenue data aggregation company is many steps away from offering a global payments network.

Let’s think about industry structure for a moment. The card network provides the payments infrastructure in the sense that it allows for money to move around on its network of nodes. Those nodes are financial or economic in nature, and speak in the language of money — banks, card issuers, e-commerce sites, point of sale terminals, regulators, and so on. You can send a little bit of messaging around, but primarily you are sending a financial instrument. And you don’t ask questions about the financial instrument. It simply is sovereign fiat. Value accrues to the network shareholder due to the small rent you take across all transactions.

Therefore, your incentive as Visa is to maximize the organizational share of all transactions by broadening the network across the world and into every technological sphere. Through scale, your network gets better for participants. You start saying “network of networks” and paying $5B for start-ups. A naturally occurring monopoly, like Facebook and Google.

PayPal is one layer higher up the stack. It is the check-out experience for a meaningful portion of the Internet. Square is the check-out experience for a meaningful portion of terrestrial small business. And so on. You can talk about payment processing and payment gateways and points of sale until everyone is confused. What’s nice about PayPal, and Stripe, and Square and generally that footprint of modern payments companies, is that they are software-native and have APIs and UIs. They integrate into things, and are part of the modern world. Most still ride the Visa or Marstercard “rails” and all prioritize the financial instrument of sovereign money. Their value accrues from aggregating the consumer or merchant footprint, and giving economic activity a way to flow in novel patterns.

So what comes next, and how does it relate to the above?

Central Bank Digital Currencies

ConsenSys has been on a tear recently announcing 4 different CBDC projects on Ethereum infrastructure. Let’s briefly highlight those:

• Bank of Thailand to use enterprise Ethereum for retail CBDC prototype with ConsenSys

• Australia’s central bank announces CBDC project with ConsenSys

• Societe Generale selects ConsenSys for CBDC experiments

• ConsenSys wins Hong Kong central bank digital currency project

The discussion of CBDCs is often a stark reaction to the development of Facebook’s Libra private stablecoin / USD network, and the Chinese deployment and expansion of their national digital currency. The discussion often splits into (1) wholesale CBDCs, which largely reinforce and optimize the role of banking institutions relative to the central bank’s money management authority, (2) retail CBDCs, which would bypass the banks and go directly into the wallets of consumers. The first option is about efficiency and industry cost mutualization. The second is more deeply transformative, and analogizes more closely to owning Bitcoin and using it to transact.

In many of the projects above, there is a combination of a financial institution, a technology consulting firm, and a blockchain company coming together. ConsenSys brings forward enterprise Ethereum, which is a variant of the open source programmable blockchain optimized for a permissioned deployment with large transaction throughput. Unlike public Ethereum, which just launched the first phase of its scalability upgrade (Eth2), private permissioned networks scale more easily because you do not start with an open adversarial environment. Other examples of such enterprise networks would be IBM and Hyperledger Fabric, or R3 and its Corda technology, as the chassis for digital value transfer and settlement.

How should we contextualize Ethereum-based CBDCs relative to Bitcoin, Visa, and PayPal?

First, there is the actual network itself. Much of the current thinking is about the software protocol as the ledger. Where does the information actually live? Who hosts it? Who processes it? In the previous world, data centers and servers run by some firm (e.g., Visa or a cloud-provider like Google / AWS) hold a copy of the information and run software which performs computation about the transactions. In the current world, the blockchain is itself a set of some large number of duplicates of the data set, held by each of the network participants. In the case of programmable blockchains, those network participants are also each executing software programs, which are then synced across the entire system.

Making sure this network functions and reflects the requirements of a central bank, or other constituents, is a key part of standing up a CBDC. This is, we think, what most industry participants are really thinking about. But it is missing a large part of the story.

Take China. Its digital yuan has over 20 companies involved in development and launch, with a preferred spot given to the state-run banks (a detailed overview here). The state has been giving out free money to citizens in the form of the new currency to prove the viability of the concept. Yes, there can be discussion about the software architecture, centralization, and trying to combat the dollar. But the part that stood out most to us is a defensive posture towards WeChat and Alipay.

The digital yuan is the money — when it sits in a wallet on the phone, it is *merely* a financial instrument. When you transfer it around between participants, you are reconciling financial data with the data hosted by the central government. Financial institutions hold accounts at central banks and do this all the time, already. Don’t get us wrong, it is certainly disruptive. You could build taxation directly into consumer transaction flows, or implement universal basic income, or deliver Covid-related distributions with ease.

Still, it is an instrument.

The Smart Money Economy

Let’s come back to Ant Financial. The world’s largest IPO of $34 billion was 870x oversubscribed. Ant is a fantastic story of innovation, global technology and payments progress, and the digital growth of Chinese small business. And yet, the Chinese authorities shut it down and are forcing the company to return money to investors.

Quite the surprise! Perhaps it was Jack Ma, the country’s wealthiest private business man ($50+ billion net work), not sufficiently following the party line about regulation.

Or, perhaps, as the country tries to launch a national digital money, one must flex against the largest digital storefront in which that money must be used. As a reminder, Ant opened up its platform to many third parties across the banking, wealth management, and insurance industries in order to position itself as an impartial distributor (while taking distribution fees). An example of this open approach would be Western asset manager Vanguard coming in to offer its roboadvisor to the Ant audience. If the Chinese government is trying to close down competition related to its digital yuan, removing stablecoins and other cash equivalents in order to scale out its national solution, having Tencent and Ant under clear instruction becomes paramount.

This brings us back to Ethereum. Public Ethereum already has a money on it — it is the digital dollar. And there is now $22 billion of it on the Ethereum chain.

What is interesting about money supply is not the money, but what you can do with it. Bringing back the discussion of the card networks and payment processors, we find that a programmable chain is able to incorporate into its software stack the gateways and business logic that used to sit outside of the network. Instead of adding PayPal on top of Visa, you can run all the software you need onchain — assuming scaling works out of course. This is why the “layer 2” developments for Ethereum, whether as part of Ethereum or adjacent to it, merit continued research and watch.

Further, the applications with which the money would interact eventually live on the network as well. Today, that primarily points to decentralized finance, crypto art, and various virtual worlds. Over time and with deeper maturity, more commerce can become incorporated into the digital network itself.

Remember that this happened to the Internet on a 20 year time horizon. The trillion dollar valuations supported by emergent business models — the operating system of the iPhone (30% on all commerce) and the shopping footprint of Amazon (the digital value chain) — give us the necessary patience and proof. Neither commercial path was yet available when people were trying to figure out the protocols to stitch together the Web. And who could have imagined that proprietary media production, like the Amazon exclusive “The Boys”, would be the axis for competition that locks users into a subscription for the walled gardens. You couldn’t even stream an MP3!

What is a CBDC really?

Ant Financial succeeded by aggregating 80 million merchants on a payment rail with an operating system. PayPal succeeded by pulling together 25 million merchants across the Web. Apple succeeded by keeping a share of economic transactions across the mobile applications that it powered. What matters is not just the money, but what people do with it. And what they do with it is creativity, and the free exchange of goods and services.

The CBDC projects today ask the question of how to move money around. Bitcoin has answered this question, and perhaps an applied architecture like permissioned Ethereum will solve this for national currencies.

The deeper question is — what does an economy connected to a CBDC look like? What is the shape of merchants and applications that accept digital currency? Where do they perform their economic functions? If we think the venue for computing will increasingly be on blockchains, that suggests that CBDC rails should come not just with pre-installed national money, but also pre-installed applications for the use of that money. A payment rail will only be adopted if it is useful, and if it is applicable to a meaningful portion of human economic activity.

Would you rather store value, or create it?

Some traders were confused by the market’s volcanic response to yesterday’s news that Pfizer has a covid vaccine with 90% effectiveness. Well, as DB’s Jim Reid explains today, “it’s easy to see why there is so much excitement over Pfizer’s news yesterday. When we compare the average 10 year effectiveness of the flu vaccine (44%) with vaccines for other diseases it falls well short and expectations were benchmarked around trying to beat this rather than compete with the most successful vaccines.”

However, the early Pfizer number – which one must take with a ton of salt as it appeared not in a peer reviewed journal but in a corporate press release, and was oddly timed to hit just after the election – puts the vaccine effectiveness up there with that seen for Chickenpox, Mumps, Polio and Whooping Cough, which as Reid notes, is “a long way to go but very encouraging.”

Or said otherwise, of the 94 cases of covid contracted by participants in the Pfizer study, 86 occurred in the control group. If you tossed a coin 94 times, the chances of getting 86 or more heads is infinitesimally small so its safe to say the vaccine works.

Of course, Pfizer is just one of many companies rushing to come to market with a working vaccine (whether the population will voluntarily take it is an other matter entirely). However, one thing is certain: as vaccine news permeates over the coming weeks and months the world will move on to discussing how to rebuild the world post covid; in this context any future push by administrations to enforce more mandatory quarantines and shutdowns will not be greeted well by the broader population.

Authored by Simon Black via SovereignMan.com,

In late 2018, after more than seven fantastic years of living in Chile, I decided to move to Puerto Rico to take advantage of the island’s incredible tax incentives.

By moving to Puerto Rico, I traded my right to vote in US federal elections for a 4% tax rate. And I’m pretty confident I got the better end of that deal.

I’ve written about this quite extensively– but stick with me, because there’s a new twist to the story.

As we’ve covered before, Puerto Rico is a territory of the United States.

This means that the island falls under the jurisdiction of the US government for certain matters, like immigration and national defense.

But it operates independently in other matters– like taxes.

In fact, taxes is probably the most important one: Puerto Rico has its own tax system that’s completely independent from the United States.

So residents of Puerto Rico can disconnect entirely from the US tax system, as long as their income is generated from Puerto Rican sources.

This is a critical point: what constitutes Puerto Rican income?

According to the tax code, this includes dividends paid by a Puerto Rican business, as well as capital gains from certain investments like stocks and bonds.

So if you live in Puerto Rico and make most of your money from your Puerto Rican business, or you trade stocks, commodities, crypto, etc., then in most cases your income would be considered Puerto Rican in origin.

If that’s the case, you are generally no longer required to pay US federal taxes on that income. In fact you might not even have to file a federal tax return at all.

Instead, you would pay Puerto Rican taxes. And that’s where the incentives come in.

Several years ago the Puerto Rican government established a number of extraordinary tax incentives, specifically targeted at those two cases–

Traders, whose primary source of income is capital gains from their financial investments, literally pay ZERO tax.

And entrepreneurs with qualifying businesses are only required to pay a 4% corporate tax rate (plus a tiny municipal rate that’s just a fraction of a percent, depending on which city you live in.)

Plus, any dividends that your company pays to you are tax free as long as you live in Puerto Rico.

This is an enormous benefit.

If you live in the US mainland and operate an LLC, you’d pay, say, a 25% to 40% average tax rate on business income, not counting self-employment tax.

If you run your business through a corporation, you’d pay 21% corporate profits tax, plus an additional 15% to 20% dividend tax, plus the 3.8% Obamacare surtax, plus state and local tax.

In Puerto Rico it’s just 4%. Call it 4.5% to account for the local municipal tax. But that’s it. No extra dividend tax. No Obamacare surtax.

You put more than 95% of your earnings in your pocket.

This isn’t some obscure loophole or shady tax shelter. It’s the law.

Section 933 of the United States federal tax code specifically exempts US citizens from federal tax on their Puerto Rican sourced income, as long as they are bona fide Puerto Rico residents .

(Note that if you have US-sourced income, or income from foreign countries, that income would still be taxable by the IRS. Section 933 only excludes Puerto Rican income from US federal tax.)

And in Puerto Rico, the incentives are also codified by law.

In fact, once your tax incentive application is approved, you actually sign a contract with the government and are issued an individual tax decree.

So even if they change the law later, you’d still be grandfathered in under the old rules, and continue to enjoy your current tax benefits.

Now, here’s the twist: there are very, very few events that could trigger a problem with your tax incentives. But one of them just became more likely:

Puerto Rico is currently a US territory. But there’s been a movement for quite some time for Puerto Rico to become a state… similar to how there’s a statehood movement for Washington DC.

Just like DC, Puerto Rico tends to skew quite liberal politically. So the blue party in the US is very much in favor of Puerto Rico and DC becoming states.

(I hate breaking down the world into red and blue, but in this case, it’s relevant.)

It means they would likely pick up 2 more senate seats for each one, nearly guaranteeing the Democrats control of the United States Senate.

Several months ago, in fact, the House of Representatives passed a bill authorizing DC to become the 51st state. It was killed in the Senate.

But it shows the movement is real.

Last week, Puerto Ricans had their own election. And statehood was on the ballot.

The final tally showed that a majority of Puerto Ricans want to become a state. The Democratic party wants them to become a state.

And if that happens, the benefits would go away. Sure, your company would still be subject to a 4% tax rate in Puerto Rico. But then you’d have to pay US federal income tax on top of that.

So statehood pretty much kills the deal.

But does last week’s vote mean that Puerto Rico will become a state?

No, not necessarily.

Statehood would require approval by the US House of Representatives. Then the Senate would have to approve it.

And in order for that to happen, the Democrats would need to take control of the Senate AND agree to eliminate the filibuster.

Then the President would need to sign it into law.

So, it’s possible this could happen, but it’s not especially likely.

And even if it did happen, there would still be several years of a transition process.

So, bottom line, the tax incentives in Puerto Rico are still valid and extremely valuable.

And even if they only exist for another 3-5 years, they’re still definitely worth considering.

*  *  *

On another note… We think gold could DOUBLE and silver could increase by up to 5 TIMES in the next few years. That’s why we published a new, 50-page long Ultimate Guide on Gold & Silver that you can download here.

Despite the fact that the MTA and NJ Transit can’t seem to get their acts together with the infrastructure they already have, why should we let that stop us from doling out more cash to them for more projects?

That seems to be the thought process of first term New Jersey Governor Phil Murphy, who took to Bloomberg yesterday to tell the world he is “highly optimistic” that a Biden administration would approve funding for a new Hudson River rail tunnel.

He said the tunnel is more likely to move forward under a Biden administration after the plans failed to materialize under the Trump administration.

Perhaps offering some insight as to his acumen when it comes to financing such a project, he also said he “expects the Biden administration to flood the U.S. with cash” to fight Covid-19. There was nary a mention of where this magic cash is going to materialize from – though, we can take a guess. Brrr. 

Meanwhile, Murphy’s state is about to issue $4.28 billion in debt, representing 13% of its fiscal 2021 budget, to deal with a revenue shortfall that saw New Jersey hit with its second credit rating downgrade since Murphy has been in office in 2018. 

Murphy said: “I’m highly optimistic that will get green-lighted — President-elect Biden knows this project very well. Literally it is shovel-ready. You could envision putting a shovel in the ground, first quarter of next year.”

Murphy has hinted about imposing new Covid restrictions heading into the winter. Last week, he suggested that Thanksgiving meals on November 26 should be limited to “small groups of family”. Murphy said: “It’s hard for us to find a huge set of outbreaks in schools or restaurants or gyms. It’s really overwhelmingly private settings.”

He then hilariously concluded: “The big plea is to not let your hair down. That’s exactly what this virus wants us to do, including when you’re at your house with your own family.”

That’s some rock solid reasoning there, Phil. Thanks.