iftttwall

Syria may be old news as any escalation has been put on hold at least until next summer, but the hilarity resulting from the bungled US foreign policy intervention in the country lingers. The latest chapter in John Kerry’s book of “Diplomacy for Idiots” is the case of General Salim Adris, a so-called moderate the top Western-backed commander of the Free Syrian Army, who was literally run out of the country by the more extremist, Al Qaeda based factions among the Syrian CIA armed and Qatar funded “rebel” forces.

As the WSJ eloquently puts it, “Islamist fighters ran the top Western-backed rebel commander in Syria out of his headquarters, and he fled the country, U.S. officials said Wednesday.” Any references to brave Sir Robin are purely accidental. It got better when the same Al Qaeda fighters “took over key warehouses holding U.S. military gear for moderate fighters in northern Syria over the weekend.” In other words, as we repeatedly forecast over the summer, the US is now once again arming Al Qaeda fighters with weapons that sooner or later will be used against the US, at a time of the CIA’s choosing.

As for the details of “patriotic” Gen. Idris’ humiliating departure from Syria, and the even more humiliating raid of US military gear, we read on from the WSJ:

Gen. Idris flew to the Qatari capital of Doha on Sunday after fleeing to Turkey, U.S. officials said Wednesday. “He fled as a result of the Islamic Front taking over his headquarters,” a senior U.S. official said.

 

An Islamic Front spokesman also said Gen. Idris had fled to Turkey.

 

The Front took over the warehouses and offices controlled by the Supreme Military Council, the moderate opposition umbrella group that includes the FSA and coordinates U.S. aid distribution, officials said. They also seized the Bab al-Hawa border crossing with Turkey, near the warehouses in the town of Atmeh.

Another bang up job by the State Department:

The growing strength of the Islamic Front prompted the U.S. and its allies to recently hold direct talks with Islamic Front representatives. The goal, according to Western officials, was to persuade some Islamists to support a Syria peace conference set for Geneva on Jan. 22 for fear that a lasting accord won’t be possible without their backing. The SMC already agreed to participate in the peace talks.

A quick primer on how brave the US “loyalists” in Syria are to both the cause, and to US equipment:

U.S. officials say there was no battle for control of the facilities between the SMC and the Islamic Front. One senior U.S. official said the takeover amounted to “an internal coup.” But other U.S. officials disputed that characterization.

 

U.S. officials said the Islamic Front offered to help protect the headquarters and two warehouse facilities from harder line groups. Then, when the Islamic Front came in and helped secure the sites, “they asserted themselves and said: ‘All right, we’re taking over,’ ” a senior U.S. official said.

In other words, one rebel faction essentially handed over US weapons to another rebel faction. Just add spin. Not surprisingly, the CIA had no comment:

The Central Intelligence Agency has been providing small amounts of arms to handpicked moderate rebels. A CIA spokesperson declined to comment on whether American weapons were in the warehouses that were seized by the Islamic Front. Gen. Idris also receives weapons from other countries, including Saudi Arabia.

 

The warehouses also housed nonlethal military gear, including American-supplied trucks and communications equipment.

Bottom line: the US, which nearly launched World War III over a few fabricated Youtube clips in order to help Qatar build a natgas pipeline to Europe support the much lauded freedom fighters, has just cut off aid to the very same group:

The U.S. decision to suspend the delivery of nonlethal aid to rebels in northern Syria is another blow to American efforts to strengthen and unify insurgents fighting Bashar al-Assad, analysts say.

 

The State Department said Wednesday it made the decision after Islamist groups within the opposition captured a warehouse and headquarters of the mainstream opposition alliance backed United States.

 

The decision reflects the challenge the United States has in supporting a fractured opposition where extremist groups are gaining an edge over moderates.

 

“There is simply no way to separate the two,” said Michael Rubin, an analyst at the American Enterprise Institute.

Somewhere Putin is laughing his ass off.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/SIB8xnS3GCE/story01.htm Tyler Durden

Haters gonna hate, but the “Bitcoin bubble” meme has become the financial equivalent of a viral online cat video – wildly popular but pretty vacuous. In an effort to separate fact from fiction, ConvergEx’s Nick Colas reviews 11 bitcoin myths (and dispels them). Still, there’s no doubt that the public is entranced: there are now 3x more Google searches for “bitcoin” than “Western Union”, and 33x more than for “Gold coins”.  We started writing about bitcoin back in February because it was – and still is – a fascinating invention (for better or worse). How it plays out, we will just have to wait and see.

Via ConvergEx’s Nick Colas,

In the spirit of the old high school essay question about the Holy Roman Empire, consider the following query: bitcoin is often described as an online crypto-currency, even though it is none of these things – discuss.  The Cliff Notes suggested essay outline might go something like this:

Bitcoin doesn’t have to be just “Online.”  There are meetups in parks around the world where you can bring your cash, hand it over to a guy or gal with a smartphone, and watch your Benjamins get deposited to an online bitcoin wallet.

 

The “crypto” part is also only partially correct.  Yes, at its core the bitcoin system runs as a piece of open-source puzzles which individuals and businesses try to solve.  The winner gets 25 new bitcoins for their trouble, currently worth about $23,000.  Not bad, but the genius of the system is that everyone playing the puzzle must also register all bitcoin transactions that occur in the 10 minutes it typically takes to solve the puzzle.  Those are also all visible to the system, but by forcing everyone to keep track and reconcile at the end of the 10 minute window, the chance of double-spending the same bitcoin is very low. Bottom line: you don’t need to know how to code to use bitcoins.

 

“Currency”… This is actually the hardest part of the question.  Currencies exist primarily as a way for societies to avoid having to barter goods and services.  It is much more efficient to hand over a $10 bill for dinner rather than contract with the restaurant owner to wash dishes for your meal.  There are some places to spend bitcoin – a simple web search will find them.  But the most accurate thing you can say about bitcoin as truly useful currency is ‘Not yet’.

We’ve been writing about bitcoin since February 2013 because we thought it was a remarkable and intellectually elegant solution to one key social problem: it simply costs too much money to move money.  Want to send $100 to a friend in Argentina by Western Union?  That will set you back $12.  How about paying for a $1 bag of chips with a credit card in the US?  Good luck with that – you’ll likely have to buy a 10 pack to meet the card minimum at the store.  We had no idea the value of a bitcoin would skyrocket from our first report at $31 to about $900 today.  We just thought it was cool.

Still, with all that capital appreciation comes a lot of misinformation.  Part of that is understandable – bitcoin is new and very different from traditional notions of “Money”.  Still, in the rush to understand what bitcoin is – and isn’t – the public discussion on the topic has gotten a bit muddy.

Today we offer up 11 bitcoin myths and our interpretation of the reality under the hype and confusion.

Myth #1: Bitcoin is huge

Reality: By any objective measure, bitcoin is tiny at a total value of $10.8 billion.  Since one of the complaints about bitcoin is that it can enable hard-to-trace criminal activity, let’s compare that amount to the real enabler of drug sales, tax evasion, and even more heinous crimes the world over: the U.S. $100 bill.  There are about $400 billion of those floating around the world.  Total stock of cash money in the U.S.:  about $800 billion.  And when you look at total cash around the world, the number is about $3.8 trillion.  Bottom line: bitcoin at current valuation is 0.3% of the world’s cash money.  That is not huge.

Myth #2: Bitcoin is a major problem in dealing with drugs and terrorism

Reality: Bitcoin is way too volatile at the moment for any serious criminal element.  These are not people that take capital risks where they don’t have to.  Seriously – go try to steal 10% of a dealer’s cash and tell him it is frictional losses due to an illiquid market.  I have heard enough Biggie Smalls raps to tell you how that story ends…  Yes, some enterprising dealers clearly use bitcoin.  But a serious problem?  Bitcoin would be $10,000 or higher if it had any real share of the global drug trade.  Consider that the UN Office on Drugs and Crime estimates the heroin trade into Europe is worth $20 billion on its own. 

Now, it is entirely true that bitcoin businesses will have to develop the same anti-money laundering and know-your-customer rules as any other money transfer enterprise.  And, as we will discuss briefly, that is very good for bitcoin.

Myth #3: Bitcoin is a currency.

Reality: Bitcoin really is a cross between a mutually held company or large partnership and a money transfer business.  Its utility is that the bitcoin miners – those trying to solve the puzzles to get the 25 bitcoin reward – manage the transaction stack (blockchain, in bitcoin-speak) essentially for free.  You want to be part of the partnership? Great – buy some bitcoins and hold on.  But if you just want to send that friend in Buenos Aires money cheaply, you and she might both own bitcoins for a fraction of a second.  You drop dollars in, she gets pesos out.  Bitcoin is a system much more than it is a “Currency”.  Maybe one day she will buy a beer with bitcoins, but the entire system has tremendous utility even without that functionality.

Myth #4: Bitcoin has never been more volatile than now, with all the attention it is getting.

Reality: Check out the two charts we’ve included after this note.  They show trailing one month returns for bitcoin back to August 2010 as well as the standard deviation of those returns.  May 2011 was the peak for trailing 28 day returns at 853%.  The last peak was 11/30/2013 at 479%.

Myth #5: Chinese citizens are shut out of buying bitcoins by government regulation of the banking system.

Reality: According to data aggregator bitcoincharts.com, yuan-based bitcoin demand is still greater than dollar based transactions. Over the past 24 hours, 85,588 bitcoins changed hands on BTC China, while only about 56,000 traded on dollar-based exchanges.

Myth #6: Bitcoin is a store of value.

Reality: The phrase “Store of value” should be used very carefully and only with specific historical proof. It implies that when social or political floodwaters come, the asset in question will allow you to buy shelter, clothing and food.  Gold has that history, as does silver.  Perfect one-carat diamonds also make the grade, albeit only in the last 50
-100 years.  Bitcoin may one day prove it deserves to sit alongside those assets.  It isn’t there yet.

Myth #7: Bitcoin is untraceable.

Reality: Bitcoin transactions flow through an open-source piece of software, so everyone sees every trade.  No, there are no name/address identifiers, but Forbes magazine showed how easy it is to trace bitcoins through the system back in September. Methods to “Launder” bitcoins certainly exist, but so do the risks of handing over your coins to an online thief.  Bottom line: after hearing about what the NSA can do with your computer and phone records, if you think anything you do online is secret, I can’t help you.  OK, if you have mad hacking and crypto-skills, maybe.  But chances are pretty good that you’d just screw it up.  And get caught.

Myth #8: Loss of anonymity will make bitcoin worthless.

Reality: Remember, as long as banks and money transfer businesses have to maintain expensive data centers to run their businesses, bitcoin will always be a cheaper way to transfer money.  Now, how many business build attractive and secure consumer and business offerings on the core bitcoin system – that is an interesting question and is certainly the most important issue regarding its long term price.

Myth #9: It’s a Ponzi scheme!

Reality: A Ponzi scheme is one that has no use other than to defraud later victims into giving money to earlier participants.  Again, bitcoin has a potentially significant positive social value.  Two regional Federal Reserve papers, published in the last month, agree with that statement.  But if you still think bitcoin is a Ponzi scheme, you should probably get rid of your Federal Reserve notes as well.  They aren’t “Backed” by anything either.  Please remit them directly to: Nick Colas, ConvergEx, 1633 Broadway, NY NY 10019.  I will forward them to one of my favorite charities – the USO – where they will do a world of good.

Myth #10: Bitcoin is ready for prime time.

Reality: I don’t own any bitcoin (I lost the 0.10 someone gave me in a demo) and I won’t be using them any time soon.  The reason?  I am afraid that there is simply no safe place to hold them.  Hackers attack bitcoin “Wallets” with disturbing regularity.  As the price continues to rise, their incentives to up. Their game goes higher as well. I don’t think I am alone in this sentiment.  I want a company I recognize to start a bitcoin storage site.  It could be a bank, or Paypal, or Apple.  I don’t care which.  There are plenty – they call me regularly – bitcoin millionaires out there.  How about some of you start reinvesting in the system that has made you so wealthy?

Myth #11: Something better will come along and wipe bitcoin off the map.

Reality: Of course something better will come along.  That’s what happens in technology.  I personally think a charity-based bitcoin product would be huge.  Donate bitcoin in New York, and let the charity redeem them at very close to 100 cents on the dollar where they are needed.  Somalia, as one example, is facing almost total isolation as Barclay’s – the last foreign bank in the country – threatens to leave at the end of the year.  The $100 million remitted by Somalis working abroad will then have to pay even higher fees to send their money home.  What if a famine or other calamity occurs?  And how will the economy have a chance with no access to outside capital?

 

 

At the same time, I simply do not see why a competing product will wipe out the utility of bitcoin.  It has a first mover advantage and a large existing network of miners to support it.  There are scores of early adopters with eight and even nine figure net worths to reinvest and build the system.  There are other online money transfer products out there, of course, and more to come.  The challenges will be the same for all of them: security, utility and legal compliance.

Let me sum up with a final thought: I absolutely understand why there are so many bitcoin haters out there.  But don’t hate the player, hate the game.  Technology is a tremendously disruptive force in society, and it knows no boundaries.   It disturbs every status quo.  That’s what is does.  Just don’t make the mistake of thinking that you can reverse it by calling it a bubble.  Sticks and stones, that…

Now, if someone hacks the entire bitcoin system just to crash it (there’d be no actual value in the effort, since bitcoin would be worthless), then of course will go to zero.  But that won’t be the end – something else will come along.  Technology doesn’t stop.  Get used to it.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/9LKglHEfkSc/story01.htm Tyler Durden

With even Bank of England head Mark Carney admitting UK housing prices may be a little bubbley (and affordability plumbing new depths), RT reports that a hostel in east London has come up with the ingenious idea, to try and solve homelessness amid soaring rents in the British capital, of converting a shipping container from China into a tiny low cost home for hard up and desperate Londoners. The boxes, called mYpads, cost GBP75 per week – around one-quarter of the rent of most distant yet commutable borough in London – and are affordable for even those on minimum wage.

 

 

Via RT,

Although it’s only a steel box, they are calling it mYpad, as notwithstanding how small it is, it’s a compact home with a tiny kitchen, bathroom and living quarters complete with a flat screen TV and a single bed.

Lying on your bed, you could almost imagine you were in a bunk on a ship, perhaps the one on which the containers were transported.

But as rents in London continue to soar, putting most flats and houses out of reach of many people on low incomes or benefits, these may be part of the solution.

 

A mYpad costs just £75 a week. While in some parts of the UK this is cheap but not a giveaway, in London it’s unheard of. In the British capital the average rent, even in a distant borough where oligarchs wouldn’t venture, alive or dead, is around £300 a week.

At 30% of the minimum wage, mYpad is affordable to those who need it most. Louise Stephenson used to live in a hostel but will be one of the first mYpad tenants.

“I think it’s difficult for anyone right now to get comfortable accommodation at a good price, without paying extortionate amounts of rent,” she told RT’s Sarah Firth.

MYpad is the brainchild of Timothy Pain and the YMCA Forest hostel in Walthhamstow East London.  The containers get shipped to Tilbury from China and are then sent to a company for fitting out.

 

“Society takes the carpet out from under them, because the moment they get into work, they can’t afford to live in a hostel and they can’t afford to live anywhere else. It doesn’t make any moral or economic sense,” Pain told RT.

Each container costs £20,000 and to start with they will be built at just two sites in 2014, both of which are connected to the Forest Hostel and are only for young people the charity is working with. 

But with some funding from the Greater London Authority, it is hoped that more charitable housing associations will take them on.

While there are plans to build thirty more mYpads next year, this is not even a drop in the ocean. Unless Britain increases the rate at which it is building affordable, new homes, then by 2020 there will be a shortfall of 2 million homes in the UK.

In London this means that some people may never be able to afford a home of their own.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/mTxCG4lR2D8/story01.htm Tyler Durden

There was much concern that heading into the holiday season the US consumer would hunker down, which is why the just released retail sales came as a bit of good news: the headline and core (ex-autos) numbers both beat expectations of 0.6% and 0.2%, printing at 0.7% and 0.4% respectively, and refuting rumors of a big consumer slowdown into the holiday season. On the other hand, core retail sales, ex-autos, showed a declining growth rate, following the 0.5% increase in October, declining to 0.4% in the past month, while the ex-autos and gas number remained flat from October to November, or 0.6%. It is unclear if this number is good enough to send futures sliding on the back of the horrible claims report which has so far managed to push futures into green territory, but with the bulk of the monthly change contained in the seasonal adjustment, any 0.1% increments of change or beats of expectations are very much noise.

Looking at the strong sectors, aside from autos which posted a 1.8% increase in October, there was strength in Building materials and garden supplies dealers, whose sales also rose by 1.8%, while non-store retailers’ increase of 2.2% was the largest jump since July 2012. Also good news for electronics stores: their sales increased by 1.1%, as did furniture and home furnishing stores, rising by 1.2%. The last place where sales posted a notable increase: food and drinking places, whose sales rose 1.3%. The bad news: all the clothing retailers, whose margins are already imploding: they saw November sales decline by -0.2% from the prior month. Hardly good news for an industry that has been battered in the past few months.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PwZ687WrCLE/story01.htm Tyler Durden

While the Labor Department admits “difficulties in seasonally adjusting” the data, this is the biggest spike ex-Sandy in the all-important initial claims data since 2005. At 368k (versus 320k expectations), this is the worst miss sicne Sandy also (absent the government shutdown debacles) and the Labor department says no states were estimated. This is the worst initial claims print since March… just enough bad news to provide the Fed some leeway? Of course, with enough statistical noise to sink an economy, it would appear another government-inspired data series has become next-to-useless ammo for the baffle ’em with bullshit brigade.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/T-sLbTvnxV8/story01.htm Tyler Durden