What Bond Boycott: Foreign Demand In 10Y Auction Soars

Earlier today, Bill Gross claimed that there is “recent evidence showing that China is liquidating treasuries.”  Well, we have yet to see where that evidence is – it certainly isn’t on the Fed’s custody holdings of Tsys which in December hit an all time high. And it certainly wasn’t in the just concluded reopening auction of 9Y-10Month, where foreign demand was nothing short of stellar.

With the When Issued trading at 2.584% ahead today’s 1pm auction, the sale of $20 billion in 10Y Notes stopped out at 2.579%, stopping through by 0.5 bps, confirming that today’s sharp revulsion was promptly met with a desire to load up on US paper by foreign purchasers. The strength of the auction was also confirmed by the surging Bid to Cover, which jumped from 2.37 to 2.69, the highest since June 2016.

Finally, looking at the internals showed a remarkable spike in the Indirect, or foreign, award, which surged from 57.2% to 71.4%, the highest since August 2016, as foreigners seemingly couldn’t get enough. Directs ended up with 6.5% of the final takedown while Dealers were left holdings a paltry 22%, the lowest Dealer award since March 2017.

Overall, if anyone wanted proof that foreign demand for US Treasurys is as strong as ever, then today’s auction was the place to find it.

 

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CBO to Estimate That Repealing Obamacare’s Individual Mandate Will Have a Smaller Effect on Health Insurance Coverage

The individual mandate is less important to maintaining health insurance coverage levels than previously estimated, according to a new report from the Congressional Budget Office (CBO). The new report suggests that the GOP tax bill will have a smaller effect on insurance coverage, but a bigger effect on the deficit, than official figures have indicated so far.

The mandate, which imposes a penalty for failing to maintain health coverage, was repealed as part of the tax reform legislation that passed in December. But it proved a sticking point for congressional Republicans earlier in the year as they attempted to pass legislation overhauling Obamacare, the health law that included the insurance requirement.

CBO estimates showed that repealing the mandate as part of the overhaul would reduce health coverage by about 15 million people, a figure that was later reduced to 13 million as a result of a change in the CBO’s baseline. CBO also estimated that this would result in about $340 billion budgetary savings, as a result of reduced government spending on health insurance.

Critics argued that the coverage loss estimate was far too high, in part because it assumed a significant reduction in Medicaid coverage as a result of eliminating the mandate. In most cases, Medicaid does not charge premiums.

After the health care effort stalled, reports surfaced indicating that CBO was at work on a revised estimate of the mandate’s impact, one that would show a much smaller coverage effect. CBO confirmed in November that it was at work on revising its methodology.

A presentation published by CBO today indicates that the new estimate will show that repealing the mandate will result in fewer people losing coverage than previously estimated.

The report, which looks at how cost estimates are produced for legislative proposals affecting health insurance, says that CBO and its sister organization, the Joint Committee on Taxation, have “undertaken considerable work to revise and update their methods” estimating the cost and coverage effects of the mandate. “The preliminary results of analysis using revised methods indicates that the estimated effects on health insurance coverage will be smaller” than previously estimated.

We don’t yet know what the new tally will be. It’s unlikely to be zero. It is possible and even likely that CBO will still estimate that repealing the mandate will result in millions fewer people with coverage. But it does strongly hint that the impact on health coverage will be smaller than official numbers have shown so far.

It also means that the GOP tax bill, which was estimated to increase the deficit by a little more than $1.4 trillion over a decade, will likely be shown to increase the deficit even more than previously estimated, because when the coverage loss figure shrinks, so do the budgetary savings.

In short: The tax law is shaping up to have a larger than estimated impact on the deficit, and a smaller impact on health care.

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Second Developer Of WikiLeaks-Inspired “SecureDrop” Commits Suicide At 36

A second member of a three-man team who created a secure system for whistleblowers to submit information to news outlets has committed suicide at the age of 36, reports the Freedom of the Press Foundation. Software engineer James Dolan took his own life nearly five years to the day after the death of “SecureDrop” co-creator and Reddit co-founder Aaron Swartz.

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James Dolan

Dolan, a former Marine, helped create the system in 2012 along with Swartz and Wired editor Kevin Poulsen – who spearheaded the project first known as “StrongBox” and later “DeadDrop.” The trio’s secure submission system has been used by The New Yorker, the Washington Post, The New York Times, the Associated Press and Gizmodo – allowing “highly secure communication between journalists and sources in possession of sensitive information or documents,” per Gizmodo

Co-creator Kevin Poulsen described Dolan’s role in the project’s creation in the New Yorker in 2013:

In New York, a computer-security expert named James Dolan persuaded a trio of his industry colleagues to meet with Aaron to review the architecture and, later, the code. We wanted to be reasonably confident that the system wouldn’t be compromised, and that sources would be able to submit documents anonymously—so that even the media outlets receiving the materials wouldn’t be able to tell the government where they came from. James wrote an obsessively detailed step-by-step security guide for organizations implementing the code. “He goes a little overboard,” Aaron said in an e-mail, “but maybe that’s not a bad thing.”

Co-creator Aaron Swartz committed suicide on January 11, 2013 at the age of 26. Swartz left no suicide note in his New York apartment, however some have noted that he was depressed and was facing jail time under the Computer Fraud and Abuse Act for hacking into MIT’s computer network and stealing copies of 4.8 million academic papers

Swartz’s father believes the government “indirectly killed” Swartz, while his girlfriend at the time, Taren Stinebrickner-Kauffman think Swartz was driven to suicide by a two-year prosecution over the MIT hacking case which had “drained all of his financial resources”  – despite not fitting any of the signs of clinical depression and associated disorders.

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Aaron Swartz

After Swartz’s death, co-creator Kevin Poulsen donated the SecureDrop project to the Freedome of the Press Foundation, while James Dolan was “literally the only person in the world who knew all the ins and outs of the system, how to install it, and how to make it better” according to the FPF. 

He had a high-paying computer security job at a large company by then, but I asked him if he’d be willing to come work for us so we could try to get SecureDrop into more newsrooms. We had hardly any money at the time, yet he immediately agreed—even though it meant taking an 80% pay cut. (Later, he would even refuse to accept a raise, insisting that we use any new funding to hire additional people to work on the project instead.)

In a tribute post, the Freedom of the Press Foundation said that Dolan had “long suffered from PTSD from his time serving in the Marines during the Iraq war,” adding “It was an experience that affected him in multiple ways. He often cited the Iraq War as his inspiration for wanting to help journalists and whistleblowers; it made him realize governments needed to be much more transparent and accountable.”

Dolan’s friends and supporters were heartbroken over Twitter:

Timm, FPF’s Executive Director, wrote “It is impossible to overstate how fundamentally important James Dolan was to the development of both Freedom of the Press Foundation and SecureDrop.”

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D.C. Deregulates Birth Control… and Dooms It With Obamacare Add-Ons

The District of Columbia Council gave the green light Tuesday to a bill allowing birth control pills to be purchased with a pharmacist’s prescription.

The measure stops short of allowing over-the-counter contraceptive sales, which would run afoul of Food and Drug Administration policy. But it would allow for women to obtain birth control pills without regular visits to a doctor. The D.C. Board of Pharmacy would figure out how to implement the change.

The change would put D.C. in line with a rapidly increasing number of states allowing pharmacist-prescribed oral contraceptives. Following Oregon and California’s lead, Colorado, Hawaii, Maryland, Missouri, New Mexico and Ohio passed similar legislation last year. Several others (including Iowa, Illinois, Massachusetts, Maine, South Carolina, Texas, and Tennessee) considered it.

The D.C. bill isn’t all deregulatory goodness: it would also enshrine parts of the Affordable Care Act (ACA) into local law, including the requirement that insurance companies cover contraception and other preventative health services at no out-of-pocket cost to the insured. The idea is to ensure their continued “free” coverage even if all or part of the ACA is repealed.

The bill now heads to D.C. Mayor Muriel Browser. If she signs it, the measure will then (like all D.C. legislation) be subject to congressional review—which could be tricky considering the current climate with regard to contraception mandates and Obamacare in general.

“No other state or local jurisdiction in the country has to worry that a random congressman is going to try and meddle with a locally-passed law,” lamented D.C. council member and author of the bill, Charles Allen, in a statement.

True—but decreasing the barriers to accessing contraception might have a better chance if not yoked to a currently pointless policy backing up an already existing (and controversial) federal law.

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Bankruptcy Looms As Sears Warns “Will Consider All Options” If New Financing Process Fails

Sears Holdings, the one-time giant retailer that has been teetering on the edge of bankruptcy for years now, announced this morning that, following yet another disappointing holiday season (shocking), they’ve initiated new discussions with lenders aimed at renegotiating terms on some $1 billion of “non-first lien debt.” 

According to a press release from the company, the debt concessions would be accompanied by another $200 million of cost cuts.

Sears Holdings Corporation announced today it has raised $100 million in new financing and is pursuing an additional $200 million from other counterparties. In addition, Sears Holdings has amended its existing second lien notes, maturing October 15, 2018, to increase their borrowing base advance rate for inventory and defer their collateral coverage test and restart it with the second quarter of 2018, and is in discussions with certain lenders regarding additional transactions to improve the terms on potentially more than $1 billion of its non-first lien debt.

The Company also outlined incremental actions to further streamline its operations to drive profitability, including cost reductions of $200 million on an annualized basis in 2018 unrelated to store closures.

Rob Riecker, Sears Holdings’ Chief Financial Officer, said: “As previously announced, we are actively pursuing transactions to adjust our capital structure in order to generate liquidity and increase our financial flexibility. The new capital we have secured represents meaningful progress towards those objectives and demonstrates that we continue to have options to finance our business.”

Of course, the most important part of this morning’s press release is the following statement which serves as a not so thinly-veiled threat to junior creditors that any failure to grant financial concessions could result in a bankruptcy filing.

However, should the Company’s efforts to complete these transactions not be fully successful, the Board will consider all other options to maximize the value of its assets.

Sears

The company also announced that November and December comp-store sales plunged 16%-17% year-over-year indicating that restructuring efforts implemented to date have done little to slow mounting losses. Sears’ disastrous holiday sales mark a sharp contrast to the solid gains enjoyed by many of its department store peers such as Kohl’s, J.C. Penney and Macy’s.

Meanwhile, Chairman and CEO Eddie Lampert reiterated in a blog post this morning that “many observers,” including “outside lenders and our vendor community” aren’t convinced that Sears can survive the “Retail Apocalypse.” 

While these actions have so far helped our Company survive the so-called “Retail Apocalypse”, many observers are not persuaded that Sears Holdings can be a viable competitor in the long term. It is obvious that to overcome such skepticism and obtain the support of outside lenders and our vendor community – which is crucial to the success of any retailer – we need to undertake further measures.

However, should our efforts to complete the refinancing not be fully successful, the Company’s Board will consider all other options to maximize the value of Sears Holdings’ assets.

Oh well…vendor support isn’t that big a deal for retailers anyway, right?

Of course, as Sears management continues with their futile efforts to effectuate a restructuring via store closings and cost cuts, the far easier and faster solution, as demonstrated by Kodak, is right in front of their eyes…

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Amash, Paul, and Others Trying to Stop Congress from Expanding Domestic Surveillance Powers

Thomas Massie, Justin Amash, Rand PaulRep. Justin Amash (R-Mich.) and a bipartisan group of 42 lawmakers are going to try to stop Congress from expanding the feds’ ability to snoop on American citizens. If they fail, Rand Paul (R-Ky.) is threatening a filibuster in the Senate.

This week the House is considering legislation to renew Section 702 of the Foreign Intelligence Surveillance Act (FISA) Amendments. This law grants intelligence agencies the authority to snoop on foreign targets on foreign soil without warrants, overseen by a secretive FISA court.

This is done in the name of stopping espionage and terrorism. But the surveillance powers have also been secretly used on Americans to track down evidence of other crimes, without a warrant, circumventing both the Fourth Amendment and the FISA Amendments’ stated intent.

“We think that is unconstitutional, hugely problematic, and we’re here to defend the rights of the American people,” Amash said this morning at a press conference attended by members of both parties in both houses of Congress.

Section 702 had been set to expire at the end of 2017 if it was not renewed. But several lawmakers refused to vote for its renewal unless it is reformed to protect Americans against warrantless surveillance. Unable to reach an agreement, lawmakers kicked the can down the road and just renewed Section 702 unchanged until January 19. Tomorrow, the House may take up one proposed renewal bill.

Unfortunately, the bill they’re considering is absolutely awful. The FISA Amendments Reauthorization Act of 2017—pushed by the intelligence committees of both the House and the Senate—explicitly authorizes the exact violations of citizens’ privacy that Amash and company are trying to stop. Rather than demanding that the FBI and NSA get warrants before they access Americans’ private data and communications, it does the opposite: It gives the feds formal permission to snoop on citizens for a list of federal crimes without getting a warrant first.

Amash has introduced a substitute amendment in the House that would replace the text with the contents of the USA RIGHTS Act. This is an alternative bill sponsored by Sens. Rand Paul (R-Ky.) and Ron Wyden (D-Ore.) in the Senate and by Amash, Ted Poe (R-Texas), and Zoe Lofgren (D-Calif.) in the House.

The USA Rights Act would restrain the feds from using information collected in secret unwarranted FISA searches as evidence in court cases. It would also forbid “about” searches, where feds snoop on communications that are “about” a target as opposed to just communications to and from that target. And it would forbid “reverse targeting,” where the feds snoop on foreign targets for the purpose of accessing the communications of the Americans talking to them.

At today’s press conference, Paul said he would filibuster any plan to renew Section 702 without warrant protections for Americans. To judge from the turnout this morning, it looks like he won’t be alone if he does.

I’ve written extensively about the difference between these two bills under consideration and what they do. If you need a refresher, check out this primer. Or read what Paul himself had to say at Reason about FISA reauthorization here.

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On-Duty Police Deaths Were Near A 50-Year Low In 2017

Authored by Ryan McMaken via The Mises Institute,

The number of police officers killed on duty dropped to near a 50-year low in 2017. As of December 28, 2017, 128 officers died in the line of duty. That’s down 10% from 2016, when 143 officers died, according to new data from National Law Enforcement Officers Memorial Fund.

The only other year with fewer deaths in the past five decades was 2013, when 116 officers were killed. 

These deaths should not all be interpreted as the result of attacks from members of the public. Traffic accidents are the leading cause of police-officer deaths, although shootings play a significant role. 

Although we continue to hear complaints about a “war on cops” from police labor unions, government institutions, and their allies, there is no evidence to support the claim. 

 

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As Tate Fegley noted in October, the most recent data continues a decades-long trend:

[T]here has been a downward trend in officer deaths over the last few decades. In 2016, the number of police officers killed by gunfire was less than half of what it was in the early seventies. Contrary to the narrative of there being a war on cops, rather than a series of isolated incidents of violence against police officers, the number of officers being killed is going down while the number of people employed as police officers goes up.

Since we are dealing with such small numbers, of course, it is impossible to claim that this year’s drop to the second-lowest in 50 years represents any sort of new trend. It would only take an additional 10 shooting deaths to significantly change the trend.

Nevertheless policing overall is becoming statistically safer. 

But to what should we attribute this trend?

According to USA Today, it is at least partly attributable to “officer safety”: 

“In my 33 years doing this, I’ve never seen the amount of awareness given to officer safety and wellness,” [Craig Floyd, president and chief executive of the National Law Enforcement Officers Memorial Fund] said. “That’s definitely been paying off and will continue to help make law enforcement a significantly safer profession.”

Meanwhile, “The number of people killed by officers increased slightly from 963 in 2016 to 971 this year, according to data compiled by The Washington Post.” In other words, in recent years, more than seven times as many people are killed by police, than police die on duty from all causes, including accidents. 

“Officer safety,” of course, is not exactly a non-controversial term. Often, in the wake of police shootings of unarmed citizens, we hear that training related to “officer safety” is geared toward a more aggressive stance.

The Atlantic explains:

Police training starts in the academy, where the concept of officer safety is so heavily emphasized that it takes on almost religious significance. Rookie officers are taught what is widely known as the “first rule of law enforcement”: An officer’s overriding goal every day is to go home at the end of their shift. But cops live in a hostile world. They learn that every encounter, every individual is a potential threat. They always have to be on their guard because, as cops often say, “complacency kills.” … So officers are trained to shoot before a threat is fully realized, to not wait until the last minute because the last minute may be too late.

Training like this nowadays is peculiar to the public sector because it is enabled by “sovereign immunity” laws that make it more difficult for private citizens to sue government agents and agencies for damages. Federal Courts have also made it clear that police agencies are not required to protect citizens from threats. “Law enforcement” and not “citizen safety” is the purpose of government police agencies. If police agencies themselves are already shielded from legal sanction for any lack of action, why accept a high level of risk?  

It should also be noted that policing is not among the deadliest professions, and is not in the top ten according to the Bureau of Labor Statistics: 

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Given that there are more than 900,000 sworn officers, and with 128 fatalities (including accidents) reported in 2017, that brings the fatality rate to under 15 per 100,000. In other words, a job in “grounds maintenance” is more risky than being a police officer. 

Comparing to Private Security

The BLS estimates that there are 1.1  million security guards in the United States, and they too face a variety of hazards:

Private Officer International (POI) has started keeping track of private security officer deaths on duty, concentrating mostly on so-called “feloniously killed” officers. That means they’ve been shot, stabbed, run over, run down, beaten to death, pushed off buildings and so on. According to POI, 112 private security officers were killed last year [2012], whereas (according to the FBI’s own statistics), 72 police officers suffered the same fate in the same period. 

If we use these numbers to calculate fatalities based on “feloneously killed” officers, we find this fatality rate among private security officers to be 10.1 per 100,000 while the rate is 8 per 100,000 for government police. Unfortunately, definitions and numbers of private security officers and fatalities vary by source and it is difficult to find well-established data. 

But what is gained by putting both police and private security in these risky situations? Given the police agencies do not face any direct competition in the United States, it is difficult to draw any conclusions as to the “efficiency” of policing. Looking at areas where both private security and government policing have intersected, however, we can draw some conclusions. 

Private security is rarely studied by researches, but some data (including this suburban case) suggests that private security is, at the very least, not harmful, and can effectively reducing property crime. One larger study (this RAND study of Los Angeles) suggested that when businesses hired private security firms for “Business Improvement Districts” (BIDs) in the city, violent crime dropped more in BID areas than in non-BID areas. RAND also concluded that this was not a matter of simply pushing out crime into surrounding areas. 

Change Enforcement Priorities to Lower Risk and Improve Effectiveness

But what is the correct balance between agent safety and confronting criminal behavior? Interactions between police, security officers, and citizens always have the potential for violence. One way to reduce risk to police and security workers is to simple reduce these interactions. But that makes it difficult to investigate and head off criminal behavior. So, it would seem to be prudent to focus police and security agent actions toward the prevention and solving of real, violent crime (or property crime). 

Private security, of course, tends to focus on these sorts of real crimes, precisely because they’re the ones that are most costly to those who are paying for the private security. 

Unfortunately, government police, on the other hand, end up serving the needs of elected officials rather than property owners, and government policing often involves enforcement of laws against “crimes” that have nothing to do with property crime or violent crime:

Dealing with violent crime constitutes only a small minority of what police deal with on a daily basis. For example, in 2014, out of 11,205,833 arrests made nationwide (in the US), 498,666 arrests were for violent crimes and 1,553,980 arrests were for property crime.

That means 82 percent of arrests were made for something other than violent crime or property crime. 

Moreover, many of these non-violent offenses — such as drug use, liquor violations, carrying an illegal knife, or other infractions that should be regarded as small-time offenses can result in serious jail time or prison time, as well as steep fines and lost earnings. 

For instance, the highly publicized death of Eric Garner at the hands of police officers was a conflict precipitated by the sale of untaxed cigarettes by Garner. The police officers who killed Freddie Gray in custody in Baltimore later claimed the arrest was necessary because Gray possessed a knife that violated city ordinances. 

These situations are of course hazardous for the private citizens caught up in them. But they are also dangerous for the police involved as well. Is this really a prudent way to spend taxpayer resources while exposing police to risks? 

If police really wanted to enhance officer safety, they’d push for an end to the War on Drugs, which turns every minor traffic stop into a potentially deadly situation. When police become engaged more in searching private citizens and seizing private property — rather than in recovering stolen property or tracking down violent criminals — then each police interaction becomes a fearful experience for a population of people far beyond the population of violent criminals. small-time drug addicts then fear arrest an imprisonment for any of the countless non-violent “crimes” that can bring stiff fines and jail terms. Officer safety could be enhanced by pursuing laws and policies that create a more clear connection between police work and suppressing real violent crime. This would create a more helpful, less fearful public, and a police force more focused on real crime. Given how the War on Drugs is extremely lucrative for government police agencies, however, this is unlikely to happen. 

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Goldman Explains How “Bitcoin Could Succeed As A Form Of Money”

Yes, we all know the recurring complaints: it’s volatile, it’s new and untested, it can be hacked, and it has no central bank backing it; most established pundits hate it – today’s comments by Warren Buffett are a case in point – and as Goldman writes in a note released today by its economic team, “cryptocurrencies can seem like a solution in search of a problem.”

Specifically, Goldman notes that “money derives its value from its usefulness in facilitating transactions and diversifying portfolios. The US Dollar serves both purposes relatively well—or at least better than the main alternatives—so it is in high demand around the world.

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Then again, the real reason why Goldman is unable to grasp the utility of Bitcoin, is that the bank – like so many of its peers – is unwilling and unable to admit that there is a problem which bitcoin is addressing, a problem which as Deutsche Bank’s Jim Reid and Macquarie’s Viktor Shvets explained back in September, is that “Modern Finance, Not Bitcoin, Is The Real Fraud.

And yet, even without admitting that the entire financial system is a giant fraud, one which the central banks have spent tens of trillions in the past decade to keep alive, Goldman is willing to suggest that there is a “case for crypto” and that even in a world where the dollar is supposedly a much better currency, if one without central bank backing, bitcoin “could succeed as a form of money.”

Here’s why Goldman is not ready to fully close the book on bitcoin and crypto.

A Case for Crypto?

In practice, Bitcoin and other digital currencies face significant practical hurdles to their adoption as outside forms of money, and many of their possible benefits come with significant drawbacks—several of which were highlighted by our colleagues in an earlier report (Top of Mind: All about Bitcoin, March 11, 2014).

First, some features of cryptocurrencies that might make them competitive with alternative stores of value are also features that are likely to attract government scrutiny. In particular, the anonymity of many cryptocurrencies makes them a useful medium of exchange for criminal activities, including tax avoidance and the circumvention of capital controls. As such, it would be surprising if continued growth in their popularity did not eventually attract greater regulation and law enforcement action by government.

Second, the fact that cryptocurrencies function without central banks may make them valuable as inflation hedges or stores of value, but also makes them vulnerable to demand-driven fluctuations in price. Such volatility makes them poorly suited as a substitute for money generally—which is why most nations eventually abandoned the gold standard in favor of fiat currencies that can more easily stabilize the purchasing power of money by making the necessary supply adjustments in response to changes in money demand. The recent fluctuations in Bitcoin and its relatives suggest they are much too volatile to serve as money (Exhibit 5). Volatility would likely need to come down dramatically (either naturally or through the widespread adoption of cryptocurrencies designed to better stabilize purchasing power via supply adjustments) before we see broader adoption.

 

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We should also stress that, as money, cryptocurrencies should have low expectedreturns in the long run, despite their high returns recently. Our working assumption is that long-run cryptocurrency returns should be equal to (or slightly below) growth in global real output—a number in the low single digits. Thus, digital currencies should be thought of as low/zero return or hedge-like assets, akin to gold or certain other metals. This could still mean that prices increase at a faster rate as the technology is adopted—an analogy might be the value of a biotech company that invents a drug, which eventually becomes a generic—but there is an inherent contradiction between cryptocurrencies as high return assets on the one hand, and stores of value relative to goods and services on the other.

So could Bitcoin succeed as a form of money? In theory, yes, if it proves to be more useful than the alternatives—in terms of facilitating transactions at a lower cost and/or providing better risk-adjusted returns for portfolios.

In practice, however, these gains look small, at least in developed market economies. Transaction costs are relatively low, exchange rates and price inflation are broadly stable, precious metals can be used for portfolio diversification, and governments place few restrictions on holding foreign currency or foreign assets.

That said, the widespread use of the Dollar outside the US—and full Dollarization in some countries—suggests there is already demand for an internationally accepted medium of exchange and store of value. In those countries and corners of the financial system where the traditional services of money are inadequately supplied, Bitcoin (and cryptocurrencies more generally) may offer viable alternatives.

Well if Goldman indeed believes that cryptos could succeed as a form of money, we are confident it could price out the probability and vol, and take the other side of the “5 year put on every cryptocurrency” that Buffett would like to buy.

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Democrats’ Latest Plan to Save Net Neutrality Is All Bark, No Bite

Senate Democrats think they’ve found a way to preserve Barack Obama’s net neutrality rules. Like their plans to reimpose the rules at the state level, the new gambit has a roughly zero percent chance of succeeding.

Sen. Ed Markey (D-Mass.) has introduced a resolution to stop the rollback of net neutrality regulations via the Congressional Review Act (CRA), a 1996 law that gave Congress a way to block rules crafted by executive agencies. Little-used for many years, the CRA has recently become a popular way for Republicans to undo regulations they dislike; Markey’s bill suggests that the Democrats are watching and learning.

But that doesn’t mean their effort will work.

Once a new regulation has been entered in the Federal Register, the CRA gives the Senate 60 days to submit a resolution stopping the rule under an expedited process. In order initiate this process, a CRA requires 30 co-sponsors. Democrats have indeed reached this 30 co-sponsor mark: A full 43 senators have signed on. But that is pretty much all they have.

For starters, the net neutrality rollback announced by the FCC last month has yet even to be entered into the Federal Register, so Democrats currently have no actual rule to review. Getting 30 co-sponsors is for the moment meaningless.

But that will soon change. The more important problem: To pass this resolution Democrats will have to get majority votes in both houses of Congress, each of which is currently Republican-controlled.

Passage in the Senate is conceivable, given that two Republican senators, Susan Collins and John Thune, have said they’d be open to a legislative restoration of net neutrality rules. Collins has even said she would support Markey’s bill. But Republicans command a larger majority in the House—and the expedited process allowed in the Senate doesn’t apply there. And even if by some miracle enough House Republicans cross party lines to pass the bill, it will still have to be signed by President Donald Trump. That isn’t exactly likely.

Given those obstacles, this plan looks less like a serious policy proposal and more like a show for the voters. And that’s for the best: The rollback of these rules returns us to the light-touch approach that allowed the internet to grow and thrive. That isn’t something to block; it’s something to celebrate.

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Hong Kong’s Hang Seng Index Posts Longest Rally In History

For 12 straight days (and 14 of the last 15), Hong Kong’s Hang Seng Index has gone up. That is the longest win streak for the index since its inception in 1969.

 

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Interestingly, Hang Seng has risen non-stop since The Fed hiked rates…

 

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As Bloomberg reports, Linus Yip, a Hong Kong-based strategist with First Shanghai Securities Ltd., said flows into Hong Kong stocks accelerated as moderating interbank rates in the city and in China soothed investor concerns, though he warned the rally’s momentum may wane.

 

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“I don’t expect the index to extend its winning streak as the rally has gone too much, too fast and stocks are overbought,” Yip said. “We would see a more healthy run if there are going to be some corrections along the way.”

And perhaps that flow is about to shift as China changes its FX regime once again…

 

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