Category: MK

While people remain focused on Russia’s annexation of Crimea and fears that Putin may make aggressive moves in eastern Ukraine, it may be a barter deal between Russia and Iran for oil that takes tensions between the U.S. and Russia to a whole other level.

For example The Washington Post reports that:

As Russia seems poised to extend its land grab into eastern Ukraine, Vladimir Putin is also edging toward a deal with Iran that would make a mockery of the P5+1 interim agreement with Iran. News reports confirm that ”Russia could exchange non-monetary goods for up to 500,000 barrels of Iranian petroleum each day under the possible arrangement, which may ultimately pave the way for as much as $20 billion in trade, insiders told [Reuters] for a Wednesday report.” Mark Dubowitz of the Foundation for the Defense of Democracies, a sanctions guru, is quoted as saying, “If Washington can’t stop this deal, it could serve as a signal to other countries that the United States won’t risk major diplomatic disputes at the expense of the sanctions regime.” Even the State Department acknowledges that the deal would violate the interim deal.

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Decentralization is a trend I have discussed on many, many occasions in the past. My personal attraction toward the movement comes from a political and social perspective, rather than merely an appreciation of its economic implications. My most recent piece on the subject highlighted the importance of worker owned co-ops. If you missed it the first time around, I suggest checking it out: The Co-Op Movement – A Decentralized Solution to Solving Inequality and Avoiding Serfdom?

Last night, I came across a phenomenal 30 minute video in which famed venture capital investor Fred Wilson discusses what he thinks are the mega trends of our time. In a nutshell, he thinks decentralization is the biggest trend, which he partly defines as “networks replacing traditional bureaucratic, pyramidical hierarchies.”

In this way, “the crowd” decides what it is important and what is popular, whether it is a news story, a documentary film or music. We are still in early days of this process, but it is inevitable.

This is simply a must watch for anyone interested in the dynamic world around them.

In Liberty,
Michael Krieger

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Video of the Day – Famed Venture Capitalist Discusses How Decentralization is the Current Mega Trend originally appeared on A Lightning War for Liberty on April 8, 2014.

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I’m currently at the Javits Convention Center in New York City attending the Inside Bitcoins Conference. In keeping with the spirt of the day, I want to highlight this story of a NYC resident who just completed a real estate rental transaction entirely in Bitcoin.

While I previously highlighted the fact that Alvic Property Management in NYC had announced it would accept BTC, this is the first instance I can recall of someone paying rent, security deposit and a broker fee all in Bitcoin. The total was $18,000.

From Crain’s:

The head of a bitcoin-friendly real estate firm based in SoHo late last month completed what it is billing as the first real estate transaction in the country to fully use the virtual currency.

Nick Spanos, founder of Bitcoin Center NYC, an advocacy organization that promotes the use of the currency, who also happens to be the head of real estate brokerage Bapple, said that on March 24 a tenant paid in rent and deposit to a unnamed landlord in NoLita and commission to the brokerage for a total of nearly $18,000. The lease began on April 1.

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In a further demonstration of the socially destructive and ever widening gap between the haves and have nots, we see that the affluent are buying second homes at an ever increasing clip (up 30% last year), while first home buyers recede into the abyss as private equity and Chinese buyers make purchasing a home unaffordable for the average American.

Specifically, a recent study from Zillow showed that more than half the homes in seven major American cities are unaffordable based on historical standards. Those cities are: Miami, Los Angeles, San Diego, San Francisco, Denver, San Jose and Portland, Ore. Nationwide, it found that 1 in 3 homes were unaffordable. The results seem to back up housing analyst Mark Hanson’s recent conclusion that despite low interest rates, housing is even less affordable than the most bubbly year ever, 2006.

This also appears to be a primary reason behind Zillow now actively pitching its U.S. real estate listing to the Chinese, many of whom are corrupt and looking to launder ill gotten gains.

First, from Housing Wire:

More than half the homes currently on the market in seven major American metros are currently unaffordable for local residents, and one-third of homes for sale are unaffordable by historic standards.

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It appears the U.S. government is doing its best to ensure that nobody anywhere in any corner of planet earth will ever trust American technology again (or U.S. aid for that matter). This process of distrust first really got going with the Edward Snowden revelations, which demonstrated that essentially all major U.S. tech firms are mere wards of the state with little to no privacy protections, and absolutely zero backbone.

This story of the U.S. government covertly creating a “Cuban Twitter” called ZunZuneo in order to overthrown the regime there has enormous long-term ramifications on many, many levels, which I will address throughout the following excepts and at the end.

From the AP via The Washington Post:

WASHINGTON — In July 2010, Joe McSpedon, a U.S. government official, flew to Barcelona to put the final touches on a secret plan to build a social media project aimed at undermining Cuba’s communist government.

McSpedon and his team of high-tech contractors had come in from Costa Rica and Nicaragua, Washington and Denver. Their mission: to launch a messaging network that could reach hundreds of thousands of Cubans. To hide the network from the Cuban government, they would set up a byzantine system of front companies using a Cayman Islands bank account, and recruit unsuspecting executives who would not be told of the company’s ties to the U.S. government.

McSpedon didn’t work for the CIA. This was a program paid for and run by the U.S. Agency for International Development, best known for overseeing billions of dollars in U.S. humanitarian aid.

Now we can pretty much guarantee that foreign nations will forever be skeptical of any U.S. “aid”. Great work morons.

Documents show the U.S. government planned to build a subscriber base through “non-controversial content”: news messages on soccer, music, and hurricane updates. Later when the network reached a critical mass of subscribers, perhaps hundreds of thousands, operators would introduce political content aimed at inspiring Cubans to organize “smart mobs” — mass gatherings called at a moment’s notice that might trigger a Cuban Spring, or, as one USAID document put it, “renegotiate the balance of power between the state and society.”

At its peak, the project drew in more than 40,000 Cubans to share news and exchange opinions. But its subscribers were never aware it was created by the U.S. government, or that American contractors were gathering their private data in the hope that it might be used for political purposes.

“There will be absolutely no mention of United States government involvement,” according to a 2010 memo from Mobile Accord, one of the project’s contractors. “This is absolutely crucial for the long-term success of the service and to ensure the success of the Mission.”

The program’s legality is unclear: U.S. law requires that any covert action by a federal agency must have a presidential authorization. Officials at USAID would not say who had approved the program or whether the White House was aware of it. McSpedon, the most senior official named in the documents obtained by the AP, is a mid-level manager who declined to comment.

“The program’s legality is unclear”, as if that matters!

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Zillow Opens the Floodgates to Chinese Buyers in Order to Keep Housing Bubble 2.0 Inflated originally appeared on A Lightning War for Liberty on April 2, 2014.

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So what exactly is a reverse mortgage?

In a nutshell, it’s a specific type of home equity loan available only to people aged 62 and over, which has the added benefit of not carrying any interest payments and is only due upon death or once the homeowner is no longer using it as a primary residence. As you can see, this might viewed as an attractive cash flow option for older Americans who didn’t save for retirement. That could be a lot of people, considering that Fidelity estimates 48% of baby boomers have not put away enough to retire.

While I have covered the various ways in which Americans are scraping by in the current feudal economy, from food stamps and disability fraud, to student loans and living in mom and pop’s basement, this reverse mortgage thing is a piece of the puzzle I have been missing.

These mortgages are not insignificant either. According to Inside Mortgage Finance, originations were up 20% in 2013, hitting $15.3 billion. So when you see that older guy working the cashier at Wal-Mart and wonder to yourself how he is surviving, the answer may increasingly be a reverse mortgage.

Oh, and since the FHA is originating many of these loans, you the taxpayer will be on the hook!

Let’s start out with some excerpts from the U.S. Department of Housing and Urban Development’s post: Frequently Asked Questions about HUD’s Reverse Mortgages.

The Home Equity Conversion Mortgage (HECM) is FHA’s reverse mortgage program, which enables you to withdraw some of the equity in your home.  The HECM is a safe plan that can give older Americans greater financial security. Many seniors use it to supplement Social Security, meet unexpected medical expenses, make home improvements and more.

1. What is a reverse mortgage?

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you.  However, unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage.  You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

5. What are the differences between a reverse mortgage and a home equity loan?

With a second mortgage, or a home equity line of credit, borrowers must make monthly payments on the principal and interest.  A reverse mortgage is different, because it pays you – there are no monthly principal and interest payments.  With a reverse mortgage, you are required to pay real estate taxes, utilities, and hazard and flood insurance premiums.

See there really is a magic money tree. Thanks FHA!

6. Will we have an estate that we can leave to heirs?

When the home is sold or no longer used as a primary residence, the cash, interest, and other HECM finance charges must be repaid.  All proceeds beyond the amount owed belong to your spouse or estate.  This means any remaining equity can be transferred to heirs.  No debt is passed along to the estate or heirs.

Moving along, we learn from the New York Post that:

Cash-strapped baby boomers, taking the TV advice of the Fonz and former US Sen. Fred Thompson, have opted for reverse mortgages in increasing numbers.

Inside Mortgage Finance, a trade publication covering the housing industry, said borrowers took out some $15.3 billion of these loans last year, an increase of 20 percent over 2012.

Reverse mortgages, which let homeowners age 62 and up borrow money against the value of their homes, have become a popular way for boomers without significant assets to fund retirement.

Is this something you’d expect to see five years into a genuine economic recovery, or it is a reaction to a ponzi consumption based economy plagued with zero income growth?

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It’s been a wild 2014 so far for Bitcoin. On the one hand, there has been some very bad news in the space. We’ve had the Mt. Gox disaster and the potential overhang those stolen coins have on the market, as well as rumors of an effective Chinese ban (we still don’t have confirmation of anything).

On the other hand, there has been a lot positive news as well. We have seen some of the most brilliant venture capitalists in the world continue to put a great deal of time and money into crypto-currency related enterprises, as well as continued merchant adoption, with the biggest news being Overstock.

One of the leaders in the Bitcoin space, helping people spend their BTC at a wide range of traditional stores ranging from Target and Whole Foods Market, to the recent addition of Wal Mart is Gyft, led by its CEO Vinny Lingham. I’ve known for some time now how intelligent and entrepreneurial Vinny is, but as of today I have also discovered he is also a strong writer.

With his permission I am republishing his excellent piece, Finding Equilibrium: Searching for the true value of a Bitcoin, below.

I agree with pretty much all of Vinny’s main points. I have been on record saying the recent surge and plunge is eerily similar to the 2013 surge and plunge. If that pattern repeats, we should see the next big move this summer. Vinny thinks the price may flatline for longer than that before moving strongly again.

Enjoy.

Finding Equilibrium: Searching for the true value of a Bitcoin.
by Vinny Lingham

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Nothing like being close allies with one of the most despotic, Medieval and backwards societies on planet earth.

Never forget, the USA brings democracy to the world!

With the exception of puppet governments sitting on billions of barrels of oil reserves and disturbing ties to the 9/11 attacks. Those governments we love.

From the UK Independent:

Saudi Arabia has introduced a series of new laws which define atheists as terrorists, according to a report from Human Rights Watch.

In a string of royal decrees and an overarching new piece of legislation to deal with terrorism generally, the Saudi King Abdullah has clamped down on all forms of political dissent and protests that could “harm public order”.

Article one of the new provisions defines terrorism as “calling for atheist thought in any form, or calling into question the fundamentals of the Islamic religion on which this country is based”.

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Oligarchs are ruining America. They are ruining the economy through their rampant theft and corporate welfare handouts. They are ruining our social structure with their billions used to buy and sell politicians as well as entire Presidential elections. They represent an existential threat to the Republic and the cancer needs to be addressed at once.

Oligarchs now control both phony political parties. On the Democratic side, we have Warren “tax loophole” Buffett and George Soros. On the Republican side, we must become increasingly aware of casino mogul Sheldon Adelson, who boasts an estimated net worth of around $37 billion.

For those still daydreaming that the GOP may nominate a more libertarian-leaning candidate in 2016, rather than the typical big government, warmongering neo-con, the biggest obstacle in your way is Sheldon Adelson and his billions. This threat was on clear display this past weekend in Vegas when Chris Christie, Paul Walker and Jeb Bush all made the pilgrimage to “kiss his ring.”

The serious threat to our political system posed by Adelson was covered by both “left-leaning” and “right-leaning” commentators (although I hate those terms). First, Juan Cole writes at Bill Moyers that:

A series of pro-corporation Supreme Court decisions and the latter’s disingenuous equation of money with speech, including Citizens United, have turned the United States from a democracy to a plutocracy. It is not even a transparent plutocracy, since black money (of unknown provenance) has been allowed by SCOTUS to flood into elections. These developments are not only deadly to democracy, they threaten our security. It is increasingly difficult to exclude foreign money from US political donations. We not only come to be ruled by the billionaires, but even by foreign billionaires with foreign rather than American interests at heart.

The perniciousness of this growing plutocracy was on full display on Saturday, as GOP governors Scott Walker, Chris Christie and John Kasich trekked off to Las Vegas in an attempt to attract hundreds of millions in campaign donations from sleazy casino lord Sheldon Adelson. Since Adelson is allegedly worth $37 billion, he could fund the Republican side of a presidential election (which costs $1 billion) all by himself. In the last presidential election he is said to have donated $100 million.

One important thing he thing he failed to mention was that Jeb Bush was also there, featuring prominently at a private dinner with Adelson and others.

The case of Adelson exhibits all these issues of corruption and eccentricity. Much of his current fortune is recent and derives from the Macao casino, and Adelson has admitted to “likely” breaking Federal rules against using bribes to do business in other countries. (A reference to allegations that his company was involved in rewarding legislators of the Chinese Communist Party for supporting his Macao project.) There was a time when this admission alone would put the donor off limits for mainstream politicians.

 Adelson has a right to vote and advocate for his candidates. But the idea that he and his like should choose the next president is too awful to contemplate. One person, one vote isn’t one person, $100 million worth of votes. That isn’t democracy…

CBS has also chimed in with some interesting commentary:

Both Christie and Bush are cut from the same mainstream Republican cloth: well liked by the donor class and viewed suspiciously by conservative activists. If they both compete in 2016 — and to be clear, neither has decided on a bid — they’ll be fighting for the roughly same slice of the Republican pie, and perhaps more importantly, many of the same donors.

But as Christie stumbled, Bush soared. The former governor was feted at a private dinner on Thursday to kick off the weekend. The dinner was held at Adelson’s private airplane hangar.

Bush delivered brief remarks at the dinner, and after one attendee urged him to run for president, the crowd of donors burst into applause, according to a report in the Washington Post.

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