If you google “London moats”, you’ll probably alight on a link which will take you to “London’s Top 10 Moats: A Spotter’s Guide”. We had no idea there were so many and could only think of the “obvious” one surrounding the Tower of London, even if it’s waterless these days. According to the guide, a defensive ditch has surrounded the Tower since its origins in the eleventh century. The moat, which contained water from the thirteenth century until the 1840s, helps to protect the roughly cuboid “White Tower” keep, which gives the Tower of London its name. Built by William the Conqueror in 1078, the White Tower was resented as a symbol of oppression inflicted on London by the new ruling elite. 

Yesterday saw the press launch for the new US embassy in London which is situated on the south bank of the River Thames in the re-developed – albeit unattractively – part of the city near to Battersea Power Station. During the “celebrations”, architect James Timberlake, of Philadelphia-based firm Kieran Timberlake, described the new building as “the embodiment of peace and security”. The Daily Mail reported a spokesperson saying the glass structure “gives form to the core democratic values of transparency”. The lobby looks a bit “imperial” to us, but we’re probably mistaken.

Like us, the Financial Times sees paradoxes. Here is its take.

It is central London’s first new moated building since the medieval era. The new US embassy in Nine Elms is a paradox, a heavily defended delicate glass box. Its architect calls it a “crystalline radiant beacon”; in fact, it resembles a corporate cube. It is also one of the world’s most expensive embassies, costing a cool $1bn.

 

It is not as sophisticated as its predecessor. Architect Eero Saarinen’s Mayfair building may not have been his finest work but it exuded a certain urbane, mid-century chic. It was huge yet it made efforts to blend in and completed one side of the 18th century square. By contrast, the new building stands alone, a 12-storey box in a field of ill-conceived and poorly planned towers. With two sides wrapped in a flimsy film of appliqué lampshades, it resembles a temporary Expo pavilion. Its glazing as metaphor for transparency and openness is unsettled by the inevitable heavy security apparatus.

The FT reports that the occupiers of the new building see it symbolising the “special relationship” between the two nations.

US Ambassador Woody Johnson was keen, as were all the other speakers, to refer to the so-called “special relationship”. “This is not just a new office building,” he said “it’s a symbol of friendship between our two countries.”

As if that wasn’t enough, there is also good news for US taxpayers and anybody concerned with climate change. the $1 billion cost of the building was covered by two real estate sales, primarily the old embassy in Grosvenor Square, London. It’s also has “green credentials”, since its running is “carbon neutral” (actually it’s “nearly” self-sufficient in energy production) with the roof being clad in solar panels. Outside there is a lawn and inside there are internal gardens which “evoke different ecologies” of the US.

So if we summarise the excessive propaganda and shameless “spin”, the new embassy embodies. Peace;

• Democratic values;
• Transparency;
• The “special relationship” with Britain; 
• Low-cost; and
• Green credentials. 

The Washington Post got it right, saying “The U.S. Embassy here will exude openness while hiding all the clever ways it defends itself from attack…One assumes there is a CIA station, but that was not on the tour.”
Moving on the security features, here are some descriptions from a selection of media sources.

The Daily Mail: Fortress America on the banks of the Thames, featuring a security moat”.

 

Financial Times: A section of its grounds facing the river are publicly accessible and a cascade billed as a “water feature” actually conceals a massive concrete base resistant to every form of attack.

 

The Telegraph: Buffered by an 8ft-deep, crescent-shaped moat and surrounded by armed guards, London’s new US embassy appears like Fort Knox amid a tangle of cranes and construction work.

 

Fox News: It is a high-tech high-security fortress in London. At $1 billion, the new U.S. embassy in the UK is the most expensive ever. The walls are blast-resistant. The glass is shatter-proof. It is diplomacy in the age of terror…Suspicious vehicles near the site triggered controlled detonations earlier this year.

 

Evening Standard: Ramparts: the embassy includes a multi-level garden to act as a security barrier.

The paradoxes in the new embassy building mirror the paradox in the way that the America sees itself, the leadership anyway, which is increasingly diverging from the way its seen by many in the rest of the world these days. One question which had puzzled us since the location of the new US embassy was announced several years ago, was didn’t they choose a more attractive part of London? Mayfair to Nine Elms was a strange move. Now we know the answer thanks to the Telegraph.

The Americans chose that site as it was one of a few in central London that had enough space to contain all the security measures necessary, including being at least 100ft from all buildings.

Which is very sad given the principles that the nation claims to embody. The Telegraph again.

At a press conference, the ambassador said he was not worried that anti-Trump demonstrations might dampen the optimistic mood the building represents. “The great thing about being in London, and the great thing about being in the US, is the ability to express your point of view,” he said. “That’s an important part of who we are.”

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Are You Ready For The Next Rally?

Written by Craig Hemke, Sprott Money News & TF Metals Report

 

 

 

Each of the last three years have begun with gold rallies of over 10%. The stage is set for another such move in 2018. Are you prepared?

 

Many folks have written about how the current selloff in gold and silver was predictable. Whether it was expected due to tax-loss selling, seasonality, CoT-washing or the expected FOMC rate hike, the majority of analysts were expecting price weakness in November and December and, this time, the majority was correct.

 

But if this current selloff was so easily predictable, then why can’t the coming rally to begin the year be just as foreseeable and certain?

 

Below is a weekly chart of Comex gold going back to this time in 2014. Note the bottoms found in December of each of the past three years and then be sure to note the January-February rallies in 2015, 2016 and 2017:

 

 

At TFMR we have an old adage that applies here: “When trading gold and silver, you must always be prepared to sell a little when things look rosiest and buy a little when things look the darkest”. I don’t think that anyone would argue that December 2017 feels like the darkest period in recent memory.

 

And this “darkness of sentiment” is reflected in the Relative Strength Indices for gold, silver and the shares. If you’re unfamiliar with this important technical indicator, you can read more about it here: http://ift.tt/2CnP87B…

 

Generally speaking, rallies exhaust and price begins to turn lower as the RSI exceeds 70. In selloffs, short-term capitulation is usually seen when the RSI drops below 30. For example, after 17 consecutive down days
for Comex silver last spring, price turned and rallied 10% in under four weeks from an RSI extreme low of 18.

 

 

A look at the current charts only serves to reinforce the view that prices are oversold, near a bottom and ready for the usual late-December rebound and rally.

 

Comex Gold is near strong support of $1220 and its 200-week moving average near $1231. Also note, however, that its current RSI is 31 and near the previous 2017 lows seen at the turns in May and July.

 

 

Comex silver is in its support zone of $15.50-$16.00 and its RSI is even lower at 26!

 

 

And the mining shares, as measured by the GDX, are clearly near a low, too. The price level of $21 has previously held as support on several occasions, tax loss selling in Canada will be finished by the end of next week and the RSI is at a 2017 low of 27.

 

 

Again, successful investing in the metals requires the ability to buy a little when things look darkest. To that point though, these buying opportunities don’t often clearly present themselves. The only question remaining for December of 2017 is…are you prepared to take advantage this time?

 

 

Questions or comments about this article? Leave your thoughts HERE.

 

 

 

Are You Ready For The Next Rally?

Written by Craig Hemke, Sprott Money News & TF Metals Report

 

 

Check out these other articles by our contributors:

Eric Dubin: Buying Into A Collective Economic Delusion – Rory Hall

 

Bitcoin Hyper-Deflation – Keith Weiner

 

Friday’s COT Report: A WTF Moment For the Ages? – Ed Steer

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Via Oriental Review,

On Monday, Vladimir Putin unexpectedly interrupted his journey to Egypt, stopping off at Russia’s Hmeymim airbase in Syria and announcing the windup of Russia’s most successful military campaign abroad.

Thousands of combat sorties have been flown, tens of thousands of terrorists and their infrastructure have been destroyed, and hundreds of Syrian cities and towns have been liberated. We have previously published accounts of how Russian pilots, special ops, marines, doctors, and diplomats spent two years helping the lawful president of Syria, Bashar al-Assad, hold his country together and rid it of terrorists.

Russia enters the conflict

By the fall of 2015, the war in Syria had already dragged on for four long years. The mass anti-government demonstrations that began in March 2011 had quickly escalated into skirmishes with the military. And terrorist factions immediately “hijacked” these popular protests. Soon, the leading role in the battle against the ruling regime was being played by extremists from the Islamic State, Jabhat Al Nusra, Al-Qaeda, and many factions within what has been called the “moderate opposition” – mainly in the Free Syrian Army that has been so championed by the West.

From the very beginning, Russia provided diplomatic support to Syria. Back in the spring of 2011, Vitaly Churkin, the late Permanent Representative of the Russian Federation to the UN, vetoed the draft Security Council resolutions being proposed by some Western and Arab countries that were anti-Syrian in nature.

In addition, Russia backed the government of Bashar al-Assad by supplying arms, military equipment, and ammunition, in addition to training officers and providing military advisers.

But as the terrorist organizations and forces of the “moderate opposition” continued to make territorial gains, it became clear that this support was not enough. The Syrian Arab Army was running out of steam. Huge losses, shortages of the most essential materials, plus low morale forced those soldiers loyal to Assad to cede more and more territory, retreating as far as the coastal province of Latakia and the city of Damascus. By September 2015, it looked like Syria’s leader had only a few weeks left in power.

Areas of control in Syria in September 2015

So that month, at the request of President Bashar al-Assad, Russia’s Federation Council approved Vladimir Putin’s decision to move Russian troops into Syria. On Sept. 30, a Russian military operation began in that country.

The composition of the Russian air fleet

The composition of the air fleet often changed in accordance with the tasks assigned to it. Based on the data at hand, at various times it included:

• Up to ten multi-role Su-35S fighter jets
• Up to four Su-27SMs
• From 12-16 two-seater Su-30SM fighter jets
• Up to 12 Su-34 fighter-bombers
• Up to 30 Su-24M front-line bombers
• Up to 12 Su-25SM close-support aircraft
• Up to 15 multipurpose Mi-8 helicopters in various modifications
• Up to 15 Mi-24 and Mi-35 attack helicopters
• Up to five Ka-52 attack helicopters

Strikes were even launched against the terrorists’ base camps from inside the Russian Federation.

• Six supersonic Tu-160 missile carriers
• Five Tu-95MS strategic bombers
• From 12-14 Tu-22M3 long-range bombers-missile carriers

The A-50 early warning and control aircraft, the Tu-214R, and the Il-20M1 radio reconnaissance plane coordinated air operations, carried out reconnaissance missions, and pinpointed targets for the strike formations.

Russian forces in Syria

Air and naval activities

Russian aviation really ran the show in Syria. Militant training camps, command posts, weapons and ammunition depots, oil fields, and convoys of gasoline tankers found themselves decimated by massive attacks launched from the Hmeymim airbase, the staging bases for air strikes, and the Admiral Kuznetsov aircraft carrier. Bombers, close-support aircraft, and fighter planes, taking advantage of their total mastery of the air, managed to destroy more than 100,000 different terrorist facilities. The first wave of the massive air strikes against IS came at the end of 2015. That was when Russian planes pulverized a buried IS command post, underground bunkers, and warehouses in the province of Hama.

During their high-profile mission to “seek and destroy” gasoline tankers, Su-34 fighter-bombers managed to sniff out approximately 500 tanker trucks carrying petroleum products, plus dozens of oil refineries, grinding them into the sand. That was a punch to the gut of the IS war chest, as its main source of income was the illegal sale of black gold.

In late 2015, the Syrian desert was rattled by the most powerful blow yet – strategic Tu-160 bombers, Tu-95MSs, and long-range Tu-22M3s dropped more than three dozen missiles and a multitude of bombs, destroying the command posts of IS detachments in the Idlib and Aleppo provinces, as well as training camps for suicide bombers. In the summer of 2016, long-range Tu-22M3 bombers took off from Hamadan Airbase in Iran and blew out their bomb bays over militant targets in Aleppo, Deir ez-Zor, and Idlib. Regular air sorties supported the Syrian operation from beginning to end.

In addition to aircraft, Russia also put its combat ships, submarines, and coastal missile systems to effective use in Syria. Some types of weapons got their first test under battle conditions. In November 2016, to be exact, the Russian military employed its Bastion coastal-defense missile systems to spectacularly obliterate a large warehouse belonging to the militants with the help of its Onyx anti-ship missiles.

In October 2015, the Russian Navy was responsible for a widely reported cruise-missile attack from the Caspian Sea that annihilated militant positions with an unprecedented show of strength. The Dagestan, a missile-armed frigate, and the Grad Sviyazhsk and Veliky Ustyug small missile patrol ships released an enormous swarm of Kalibr cruise missiles that flew over several countries to blow up more than a dozen targets in militant-controlled territory. In June 2017, the Russian Navy’s Admiral Essen and Admiral Grigorovich frigates, as well as its Krasnodar submarine, used Kalibr cruise missiles to inflict a powerful blow from the Mediterranean Sea against terrorist command posts and ammunition depots in Hama province.

The capture of Aleppo marked the final turning point for the government forces in Syria, after which it was possible to withdraw about half of the air formations from the Hmeymim airbase in May 2017 and send them home.

The makings of victory

Russian aircraft were able to administer continuous, nonstop strikes against targets belonging to terrorist groups in Syria. From the onset of the military operation until September 2017, over 30,000 sorties were flown and about 92,000 attacks on terrorists were carried out.

Russian planes bashed terrorists with the active support of the most elite force in the Russian military, the soldiers from the Special Operations Forces, who conducted reconnaissance missions, corrected the moves of aircraft and artillery, trained Syrian soldiers and officers, conducted raids deep into enemy territory, set up countless ambushes along the routes of terrorist convoys, and neutralized the leaders of outlaw gangs. The ships and airplanes of the Syrian Express had an important role to play, supplying weapons, armored vehicles, and ammunition to the embattled country. Russian doctors were responsible for true acts of heroism, treating the civilians and servicemen who had suffered injuries in the war.

And a huge role in the resolution of the Syrian crisis was played by the Russian diplomats who set in motion the negotiations in Astana. Those made it possible to establish the de-escalation zones in Syria that are still operating effectively today.

Syrian peace talks in Astana

But of course it was the Syrian people who won the real victory – the Russian military just helped to remind them that the enemy can be defeated even if it enjoys the unconditional support of the West.

What comes next

It was revealed in late November that the Russian forces currently stationed at the Hmeymim airbase near Latakia and the naval base in Tartus would remain there. Their presence will clear the path for Russia to fend off any threat in the Eastern Mediterranean and to thus ensure the strategic parity that guarantees long-term peace in this volatile region. While the Syrian peace process is under its way the situation in the country and around is very fragile. The key game players and war profiteers are still on the ground and they are not to leave the Syrian territory. So the primary goal is to prevent anybody from the “defeated party” to undermine the talks and to secure desperately needed reconstruction programs, renovation and stabilization of normal social, economic and political life in Syria.

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Even though Sweden’s property bubble is not the longest running (that accolade goes to Australia at 55 years), it is probably the world’s biggest with prices up roughly 6-fold since starting its meteoric rise in 1995.

Of course, as we noted last month when the SEB’s housing price indicator, which measures the difference between those who believe prices will rise and those who expect them to drop, took its first substantial tumble, the era of the steadily inflating housing bubble in Stockholm may finally have come to an end.

Now, it seems that the “hard data” is aligning with the “soft data” as Swedish home prices across the Nordic country posted their first decline since the spring of 2012, down 0.2% year-over-year and 2.9% sequentially.  Per Bloomberg:

The property market in the largest Nordic economy is rapidly cooling after years of price increases that were driven largely by housing shortages and ultra-low interest rates. Supply is now outstripping demand and stricter mortgage rules, as well as growing apprehension among households, are driving prices lower. The drop is being led by high-end apartments in Stockholm.

 

According to Maklarstatistik’s number, nationwide apartment prices fell a monthly 3 percent in November, adding to October’s 1 percent drop. House prices fell 1 percent in the month, after being unchanged in October. Apartment prices in greater Stockholm fell 3 percent in the month and were down 4 percent from a year earlier, the first such decline in almost six years.

Worse yet, the slump in Stockholm specifically is even more dramatic with apartment prices down 4.2% sequentially, the steepest since October 2008, and 6.0% year-over-year, the biggest June 2009.

Not surprisingly, the sudden pricing collapse has sparked a bit of a panic supply boost as sellers attempt to beat the bursting of the bubble.  Of course, we’re sure this strategy will work out perfectly, as it always does, because nothing helps correct an over-supplied market like a massive flood of even more supply. 

Greater supply “has resulted in buyers having more to choose from and taking longer before buying,” Hans Flink, head of sales and business development at Maklarstatistik, said in a statement. “The sellers are therefore starting to adjust their prices to the tougher competition, which is pushing prices down somewhat.”

Luckily, Bloomberg was able to find at least one economist who dug up some “rather encouraging” signs amongst the wreckage…

But there may be glimmers of hope. Andreas Wallstrom, an economist at Nordea Bank AB in Stockholm, said data for the last few weeks from property-listings website Booli “are rather encouraging,” as they indicate that prices have leveled out since mid-November and up until the first week of December. Average prices per square meter have even increased somewhat in both Stockholm and in the country as a whole in that period, he said.

 

“Our tentative call for December is that home prices will stay unchanged compared to November,” Wallstrom said. “In all, we forecast relatively stable home prices from here. To see a sustained downturn in prices, it will likely require a change in households’ housing costs. As long as mortgage rates remain low, which we expect, it is difficult to see a marked decline.”

Of course, we remember some Bear Stearns analysts who saw similarly “rather encouraging” signs in the U.S. housing market back in 2008…

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Authored by Pepe Escobar via The Asia Times,

China's Belt and Road Initiative heralds a new era with mega infrastructure projects dotting the landscape…

If  you are looking for the latest breakthroughs in trans-Eurasian geoeconomics, you should keep an eye on the East – the Russian Far East. One interesting project is the new state-of-the-art $1.5 billion Bystrinsky plant. Located about 400 kilometers from the Chinese border by rail and tucked inside the Trans-Baikal region of Siberian, it is now finally open for business.

This mining and processing complex, which contains up to 343 million tonnes of ore reserves, is a joint venture between Russian and Chinese companies. Norilsk Nickel, Russia’s leading mining group and one of the world’s largest producers of nickel and palladium, has teamed up with CIS Natural Resources Fund, established by President Vladimir Putin, and China’s Highland Fund.

But then, this is just the latest example of Russian and Chinese cooperation geared around the New Silk Roads or the Belt and Road Initiative (BRI). Beijing is the world’s largest importer of copper and iron ore, and virtually the entire output from Bystrinsky will go to the world’s second largest economy.

Naturally, to cope with production, a massive new road and rail network has been rolled out, as well as substantial infrastructure, in the heart of this wilderness. Yet there is another major BRI initiative about 1,000km east of Bystrinsky. Work started on the Amur River Bridge, or Heilongjiang as the Chinese call it, in 2016 and the road and rail links should be finished in 2019.

The project is being developed by Heilongjiang Bridge Company, a Russia-China joint venture, along a crucial stretch of the Russian-Chinese border. It will also be part of a huge trade corridor, which will transport iron ore to China from the Kimkan mine, owned by Hong Kong’s IRC Ltd,  in Russia.

The Amur River Bridge, linking Heihe, in Heilongjiang province, with Blagoveshchesnk in the Russian Far East, is a natural part of the New Silk Roads program. It is well connected to one of BRI six major corridors – the China-Mongolia-Russia Economic Corridor, or CMREC, via the Trans-Siberian Railway all the way to Vladivostok.

CMREC’s additional importance is that it will connect BRI with the Russia-led Eurasia Economic Union, or EAEU, as well as the Mongolian Steppe Road program. CMREC has two key links. One involves China’s Beijing-Tianjin-Hebei to Hohhot before winding on to Mongolia and Russia. The other is from China’s Dalian, Shenyang, Changchun, Harbin and Manzhouli to Chita in Russia, where the Bystrinsky plant is located.

Numerous aspects of the Russian-Chinese intranet were extensively discussed at the Third Eastern Economic Forum in Vladivostok in September. CMREC involves closer cooperation, especially in energy, mineral resources, high-tech manufacturing, agriculture and forestry. Chinese Vice-Premier Wang Yang had already announced even closer economic cooperation with Russia, including a $10 billion China-Russia Investment Cooperation Fund in yuan for BRI and EAAU projects.

Monetary integration

Part of this will include Russian-Chinese investment funds, known as Dakaitaowa, or “to open a matryoshka doll”. Monetary integration and energy cooperation are all part of an ambitious Russian-Chinese package. This will allow trade to be settled in yuan, instead of US dollars, in Moscow via the Industrial and Commercial Bank of China. Products promoted under the http://ift.tt/2iVtK0B “Made in Russia” brand are bound to get a boost.

According to the China General Administration of Customs, Russia continues to be the country’s leading crude oil supplier, exporting more than one million barrels per day, ahead of Saudi Arabia and Angola. Exports of Russian oil to China have more than doubled during the past six years.

Last month, the Russian parliament approved the draft of a conservative 2018-2020 Russian federal budget at $279 billion. This included increased spending in the social sector, a higher minimum wage, and increased salaries for teachers and healthcare workers.

Manufacturing in Russia has actually grown in absolute terms during the past decade along with a slight rise in GDP. Contrary to Western perceptions, energy revenue in Russia amounts to only around 30 percent of the federal budget. In absolute terms, it actually fell from 2014 to 2016, while non-oil and gas income has increased steadily since 2009.

Those were the days when Saudi Arabia and the Gulf petro-monarchies were dumping excess capacity on the oil market in a price war that was bound to ruin Russia’s finances. The draft budget assumes the price of oil will stay around at least $40.80 a barrel during the next few years. In fact, it may actually rise from its current $61.03 for the OPEC basket. Of course, that would boost Russia’s reserves.

Natural resources

As for exports, oil accounts for around 26 percent of Russia’s GDP. Oil and gas as a percentage of total exports fell during the past two years from 70 percent to 47 percent, but they are still the country’s top export money earners. When you add other commodities, such as iron, steel, aluminum and copper, revenue from natural resources come to more than 75 percent of Russia’s total exports.

But the key problem ahead for the country is the debt of provincial governments, and not defense, which is much lower than during Gorbachev’s reign in the late 1980s. Still, the integration of BRI and EAEU now offers excellent opportunities for Russia.

To put this into context, we have to go back to the 1689 Treaty of Nerchisk at a time when Manchus, an ethnic minority in China and the people from whom Manchuria derives its name, were deeply concerned about Cossack incursions into their lands.

Nerchisk was the first Chinese treaty with a European power, and it safeguarded borders and regulated relations between the two neighbors for nearly two centuries. For the first time, Russians could trade directly with the Middle Kingdom and negotiate as equals. No Russian or Manchu was spoken, but Latin, via two Jesuit interpreters. They were well positioned in the Qing court by supplying the Kangxi emperor with weapons, as well as advanced courses in geometry and astronomy.

Century of humiliation

Now, compare this with the “unequal treaties” of the 19^th century with England, France, the United States and Germany, known as the “century of humiliation” in China. It is true that Russia gobbled up Chinese lands back then, as well as securing the Amur basin and the eastern side of the Sikhote-Alin mountains, which denied the country access to the Sea of Japan.

At the time, the Qing dynasty was helpless. Everything was later formalized by, well, treaties. China lost what was known as Outer Manchuria and Eastern Tartary. Today this whole region is known as Primorsky Krai, Russia’s Maritime Province. Then in 2006, President Putin solemnly announced the resolution of all border disputes with China along the Amur. Beijing de facto agreed.

Now, with the integration of BRI and the EAEU, Russia has a great chance of fulfilling part of its Pacific Destiny, first envisaged when the Trans-Siberian rail link was finished in 1905. Today, that vision is alive with gold and timber in the mountains north of the Amur, fish in the Sea of Okhotsk and the Bering Sea, and gas reserves from Sakhalin island all part of a modern export chain.

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The clock is ticking down and there are only about three weeks to go before the dreaded MiFID II regulatory structure is implemented on 3 January 2018. While it’s been difficult to judge the industry’s preparedness for the change, several aspects of the new regulations have attracted the most debate and concern. These have included transaction reporting, unbudling of research costs and whether institutional investors will absorb the costs or pass them on to their clients and trade identifiers. As the deadline nears, one of these issues – Legal Entity Identifiers (LEI) – has assumed more significance than the others. 

The enforcement of LEI’s to identify legal entities is targeting increased market transparency via audit trails. Each market participant will need its own 20-character “alphanumeric code” and the relevant codes for buyers, sellers and issuers of the security will be required to complete a trade.

As we discussed yesterday in “UBS Is Using Ethereum Technology To Soften The Impact Of MiFID II”, a group of financial institutions, led by UBS, are building a compliance system based on the blockchain which manage LEI requirements. Briefly, reference data hashed to the Etheruem blockchain will mutualize the application of LEI’s for the buyer, seller and issuer in financial market transactions in real-time. While bankers are becoming increasingly upbeat on the capabilities of blockchain technology…

In a presentation obtained by CoinDesk, Christian Nolting, also the bank’s (UBS) global head of wealth, and Marcus Muller, global head of the CIO office, explained digital currencies and blockchain to their fellow bankers. In the presentation, the bankers asserted that the “opportunities associated with blockchain technologies are huge,” and could be fully put into practice within the next few years. And in what's possibly one of most grandiose predictions about blockchain's impact on the global economy, the bankers predicted that roughly 10% of the global gross domestic product (GDP) would be tracked or otherwise "regulated" by a blockchain by 2027.

…the new system is not going to rescue thousands of investors and corporate issuers who are unlikely to have their LEIs ready in time for the MiFID II deadline. For example, Thomson Reuters estimates that only about two thirds of the roughly 15,000 companies listed on European exchanges have an LEI.

If the regulators don’t budge, a large number of entities will be shut out of the markets.  Something is going to have to give, quickly, as the Financial Times reports.

Banks are pushing for an eleventh-hour reprieve for a key part of new European markets rules because about a fifth of their clients do not have the vital tag they will need to continue trading. They are worried that some investors could be shut out of deals from the start of January because thousands of counterparties or corporate issuers will not have their unique trade identifiers.

In recent weeks the banks, which play a critical role in the market organising trades, have undertaken campaigns to raise awareness among customers before the arrival of the new Mifid II rules on January 3. At the same time they have been pressing for regulators to ease their hardline stance and are growing increasingly confident authorities are set to grant a grace period of several months.

Speaking to a senior executive at a large investment bank, the FT reports that “15 to 20 per cent” of his clients do not yet have LEIs and that is not expected to change much in the next three weeks. Executives at three other banks told the FT they were is a similar, or worse, situation while a fourth remarked that it would be a “s*** show” if his bank was forced to refuse to do business with clients without LEIs from January 3. Neil Robson, a lawyer at Katten Muchin Rosenman in London, told the newspaper that “Asian applications for LEIs are lagging way behind those from European entities and US entities.” If the banks are to win their reprieve, it could happen today, as the FT explains.

Market participants are hoping a meeting by the European Securities Markets Authority (Esma) on Thursday will give them breathing space, and a two-month grace period in which they can retrospectively report deals once the client has its LEI. Esma declined to comment. The UK’s Financial Conduct Authority (FCA), like Esma, has frequently told the industry it will take a tough “No LEI, no trade” stance for Mifid.

 

However, three people who have discussed the issue with the FCA say they detect signs of its position softening. “They (the FCA) are effectively saying they’re not in a position to take differing views (to Esma),” one banker said, adding that he hoped Thursday’s Esma meeting would yield a “pragmatic solution”.

MiFID II has been termed a “Big Bang” for financial markets. This author started working in financial markets, in equities, shortly after the last “Big Bang” in 1986. We remember a big-hitting salesman, who'd married into a family controlling a major retailing company, was sat next to another salesman who specialised in selling retailing equities to institutional investors (synergy). In turn, the specialist retail salesman sat next to the trader in retail equities whose wife was, coincidentally, a big trader in retail and other equities – we could monitor her trading account on the in-house system (transparency). Moving jobs to the pre-eminent investment bank in London some years later, the head of compliance would stand behind a market-maker and ask him why he had a particular position in a stock, while sucking in air through his teeth. That was the signal for the trader to flatten his book. It's sad that despite the tsunami of strangulating regulation ever since, abuses – e.g. rate rigging, money laundering, front running, etc, have only got bigger – while no senior management from the banks have been charged (except in Iceland). There is a link there, obviously, which the regulators choose to ignore. Consequently, MiFID or not, things aren't going to change.
 

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It’s difficult not to empathize with South Korea right now: The country is preparing to host the Pyeongchang winter games in February – a moment of immense national pride – as the risks of a terrorist attack (not to mention nuclear annihilation) have intensified.

To wit, Reuters reports that the South Korean government is taking precautions to assuage the international community’s fears. Police conducted a series of security drills on Tuesday to prepare against terror attacks ranging from a hostage situation, a vehicle ramming a stadium and a bomb-attached to a drone.

South Korea Police and firemen were among around 420 personnel participating in the exercise, held in front of the Olympic Stadium at Pyeongchang, just 80 km (50 miles) from the heavily fortified border with North Korea as SWAT team members rehearsed a scenario where they shot down a drone with a bomb attached that was flying toward a bus carrying athletes.

In another situation, a terrorist takes a bus full of tourists hostage and tries to ram the vehicle into the stadium before being gunned down by police. Officers in gas masks also practiced removing a chemical bomb.

Anxiety on the Korean Peninsula has been rising in recent months due to a series of missile tests by North Korea as it continues its pursuit of nuclear weapons in defiance of UN sanctions and warnings from the US.

“Please keep in mind that accidents always happen where no one has expected,” South Korean Prime Minister Lee Nak-yon said.

 

“Please check until the last minute whether there are any security loopholes."

Lee did not mention North Korea, but South Korea’s Defense Ministry on Friday flagged risks that North Korea could resort to terrorist or cyber attacks to spoil international events.

Some 5,000 armed forces personnel will be deployed at the Winter Games, according to South Korean government officials and documents reviewed by Reuters.

Hacking is also a risk that the South Korean government is preparing for.

Pyeongchang’s organizing committee for the 2018 Games (POCOG) has also hired a private cyber security company to guard against a hacking attack from the North, tender documents show.

To minimize the risk of provoking an aggressive North Korean reaction during the games, South Korea has asked Washington to delay regular joint military exercises until after the Olympics, the Financial Times reported. The latest headlines suggest this request has been accepted and joint drills have been delayed until April.

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Sweden’s Riksbank, the world’s oldest central bank, is exploring the possibility of a digital register-based e-krona; the Reserve Bank of New Zealand is researching whether its physical currency could be replaced by a digital alternative; the Bank of England is trialling blockchain-like systems; the Monetary Authority of Singapore is examining the use of distributed ledger technology for clearing and settlement of payments; and the PBoC said in October that it had completed tests on algorithms for a prototype of its own digital currency.

Now the Reserve Bank of Australia (RBA) has entered the fray with an all too familiar refrain.

We’re paraphrasing…Bitcoin is bad, the realm of criminals and little more than a speculative mania, but the technology underlying Bitcoin has great potential, which we can exploit in time with our own “superior” digital currency.

This is what Philip Lowe, the RBA’s Governor, actually said about Bitcoin at the Australian Payment Summit, which took place today at the Hyatt Sydney Regency in Sydney Harbour.

When thought of purely as a payment instrument, (Bitcoin) seems more likely to be attractive to those who want to make transactions in the black or illegal economy, rather than everyday transactions. So the current fascination with these currencies feels more like a speculative mania than it has to do with their use as an efficient and convenient form of electronic payment.

No surprise there, just more of the same from banking Mafiosi like Lowe, the ECB’s Constancio (“tulip”) and most notably, JPM’s Dimon. The Financial Times article outlining the RBA’s thinking sets out the case for blockchain/distributed ledger technology.

Central banks, commercial banks and other financial institutions are exploring how to use private distributed ledgers to make financial transactions cheaper, more transparent, and less vulnerable to fraud. Banks and settlement systems currently use central electronic ledgers to track money transfers. But these systems can be slow, often rely on manual input and are open to hacking. Distributed ledger records transactions through a network of computers rather than a single central party…The attractions of the technology include the ability to make fast digital money transfers that do not carry the cost of handling cash, tracked securely by the network.

But…there’s just one thing missing, which is where we “need” our central banking friends.

However, a potential drawback of bitcoin-style systems is the lack of a central entity standing behind the liability, Mr Lowe said.

Philip Lowe’s and his RBA colleagues are examining the potential for an eAUD, which would be issued alongside physical banknotes – although the FT article neglects to add the word “initially” (if you’ll excuse our cynicism).

Australia’s central bank is exploring creating electronic banknotes using the technology underpinning bitcoin, as major central banks around the world race to bring cash into the digital age. Philip Lowe, governor of the Reserve Bank of Australia, said in a speech on Wednesday that the bank was analysing the benefits and drawbacks of issuing an electronic form of the Australian dollar — the “eAUD” — alongside traditional banknotes.

Speaking at the Australian Payment Summit, Mr Lowe said: “It is possible that the RBA might, in time, issue a new form of digital money…perhaps using distributed ledger technology.” He added that although the RBA has “no immediate plans” to issue digital dollars, the central bank is “continuing to look at the pros and cons”. The central bank also is exploring a new digital dollar settlement system based on the use of distributed ledger technology, or blockchain, the technology behind bitcoin. Digital dollars could take the form of a “token” that is issued and stored in consumers’ digital wallets, which can then be used for payments in a similar way to physical bank notes.

Perhaps in a classic case of “problem, reaction, solution”, we’re speculating of course, the RBA will introduce an eAUD and phase out physical currency during the next financial crisis. In the case of Australia we may not have too long to wait as we discussed last month in “The Party’s Over For Australia’s $5.6 Trillion Housing Frenzy”. However, we noted the best analogy for the “Down Under” economy in “Why Australia’s Economy Is A House Of Cards” in which Matt Barrie and Craig Tindale argued that the three decades long expansion was mostly the result of “dumb-luck”.

As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble.

Browsing through the speaker biographies at the Australian Payment Summit, besides being RBA Governor, Philip Lowe is also (we can’t help but smile) a member of Australia’s Financial Stability Board and “spent two years at the Bank for International Settlements working on financial stability issues”. On a serious note, we know the direction which central banks want to lead us, as we argued a week ago with regard to the nomination of Marvin Goodfriend as Fed governor.

It’s clear from reading between the lines that although central bankers are not engaging in a public discussion, the architects of the boom-bust cycles are considering their policy options for the next crisis…the one where their latest credit/asset bubble bursts in horrendous fashion. It’s also clear that the preferred solution is negative interest rates and either abolishing paper currency or taxing it in line with a depreciating digital currency standard.

The RBA’s Philip Lowe is another minion seeking to control the narrative for the banking Mafiosi.

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Authored by Paul Craig Roberts,

Criminalizing a bit of Christmas fun has to make you wonder…

Is there any aspect of our life left into which the police state does not intrude?

Parents are regulated as to how they discipline their children. Spankings that were the tool of choice in my day are now illegal. Spanking is considered child abuse and can result in state seizure of the child and prosecution of the parent.

The state prescribes the terms on which children can be transported in cars. The cars themselves can only be designed within safety and fuel economy parameters determined by the state.

The unsupervised children at play of my generation no longer exist outside of small towns. Not that long ago I reported on the arrest of a mother on the grounds that she permitted an underage kid to play unsupervised in the front yard of the home on a cul-de-sac. The arrest was made on the false report of a neighbor. The police seized the opportunity to arrest a mother on the basis of “failure to supervise an underage child.” The family was traumatized. The mother was put in jail, the child in Child Protective Custody, and the father rushed home from work to see if he could rescue his family from the intrusion of the American Police State. It has happened to many, and Americans sit there sucking their thumbs, hoping the lion will choose another antelope.

The parents, grandparents, and aunts and uncles of my day would all have been locked up. My entire generation would have been raised in orphanages.

When the state substitutes its judgment for that of parents, it takes the job away from them. Even within the same family children differ. Parents have to find the best approach for each child. Moreover, children who are always supervised never grow up. They learn neither responsibility nor street smarts. Children are even regulated how they can play. No pointing the finger and saying “bang, bang.” Even words are policed, some words no longer being permissible.

Perhaps someone has studied the impact on culture of such intense state intrusion into private life. And there are other culture-changing factors. Consider Identity Politics. The other day I listened to a recording of Barbara Streisand singing “A Woman In Love” from 1980, and Celine Dion’s “The Power of Love” from years ago. Both of these performers are gifted with beautiful and powerful voices. I wondered if they have a counterpart today.

I haven’t time to listen to much music, so I do not know. But the thought occurred to me that these are songs about love between a woman and a man. Moreover, in the official videos, the man is white.

Identity Politics is gradually delegitimizing heterosexual relationships, especially if the male is white, as Identity Politics defines the white heterosexual male as the oppressor of all other races and genders.

Having heard that in “advanced circles” women are subjected to peer pressure not to have relationships with “white, sexist, racist males,” I was wondering if today Streisand would have to have a black lover in her video and whether Dion would have to pitch her song to a lesbian lover.
Otherwise, would they be the hits they were during their time? Indeed, could Dion survive using the politically incorrect word, “lady”?

People are born into what exists. They have no experience of what previously existed. Therefore, they do not know what has been lost. This generational effect is the best ally of the police state.

People born into a country, in which unaccountable police can brutalize and murder and steal, born into a country, the government of which declares itself above both domestic and international law and the US Constitution, a country that ignores constitutional protections such as habeas corpus and due process of law, a country that based on a false claim that the country is indispensable and exceptional claims the right to destroy entire countries whose governments refuse to follow Washington’s orders, a country that claims the right to control explanations and that brands those who tell the truth to be conspiracy theorists, Russian agents, anti-semites, and enemies of the people, know no different. What to my generation is totalitarian horror is normal to them.

That country is the United States of America. It is the most shameful country on earth. The United States is a country whose rulers regard their hegemony as more important than the wellbeing of people and the life of the planet.

If the world is to survive America and if America is to survive as a country in which citizens are permitted free thought, free speech, to make their own decisions, to raise their own children and otherwise to be a free people, Americans will have to get angry at those who are destroying them and reply to the everyday violence that they experience in many different forms with violence of their own.

There are two forces in history. One is ideas. The other is violence. Karl Marx said that ideas, although sometimes effective, such as his own, can become the control mechanism of the ruling class. In contrast, Marx said that violence is the effective force in history.

In Marx’s analysis violence serves the working class, but this is no more than Marx’s assumption. Violence serves those who use it most forcefully.

Today Washington’s violence has brought America up against Russia, China, Iran, and North Korea. Washington has outmatched itself.

US President Trump, by seeking protection from Israel against his own government, has re-ignited Arab hostility to Israel and to the US.

Today Israel is alone, defended only by Washington whose own stupidity has created powerful enemies.

Washington has proved itself incapable of leadership. Russia, China, and Iran have proven that they are capable of leadership, and they are also making it clearer by the day that they are fed up with Washington.

It is past time for Americans to get fed up with Washington, its lies and its abuse of power.

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Giant Network Chairman Shi Yuzhu has invested tens of millions of dollars in cryptocurrency trading platform OkCoin, according to local media reports citing unidentified people familiar with the matter. According to local media sources, the investment was widely anticipated.

According to Bloomberg, it’s unclear whether the investment took place before or after China halted domestic Bitcoin exchanges. OKCoin CEO Star Xu declined to comment to QQ.com.

Xu Mingxing, founder and CEO of OKcoin, apparently confirmed Shi’s investment. Xu also confirmed that Lei Jun, another celebrity billionaire – though it’s unclear whether the two men made their investments before or after China introduced regulations banning active trading of ICO tokens and cryptocurrencies on local exchanges, forcing many customers to migrate to South Korean, Hong Kong or Japanese exchanges. Lei had previously denied his investment.

Back in 2014, OKCoin raised around ten million dollars in Series A funding from investment institutions (Ceyuan Venture Capital, Mandra Capital, Ventures Lab) and venture capitalists (prominent angel investor Cai Wensheng, founder of e-commerce site Xiu.com Huang Jin, founder of developer community CSDN Jiang Tao, chairman of Chinese Yough Angel Investor Leader Association Yang Ning, founder of angel investor Pre-Angel Wang Lijie, founder of tech media Leiphone Lin Jun, etc.).

In September, Chinese authorities shocked the bitcoin market when they abruptly banned exchanges from actively trading ICO tokens and digital currencies like bitcoin. Exchange-based trading volume in the country immediately plummeted as domestic investors turned to exchanges based in Japan, South Korea or Hong Kong to conduct business.

But local exchanges are apparently surviving after tweaking their business model.

They now facilitate peer to peer transactions, a business model pioneered by website LocalBitcoins.

Since the exchanges shuttered active trading, peer-to-peer trading volume in the country has exploded…

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