Month: January 2017

Back on December 15, two weeks ahead of the day the OPEC production cut agreement was set to begin, according to which some 1.2 million barrels per day in oil production from OPEC member states would be removed, a report emerged that contrary to its mandated production cut of 210Kbpd, Iraq was actually preparing to boost its exports by 7%. As the WSJ first reported, instead of cutting its crude production by 4% as it “promised” it would do in the Vienna November 30 meeting, Iraq instead planned to increase crude-oil exports in January, according to government records, immediately raising questions about its commitment to the OPEC’s landmark production agreement. Iraq’s national oil company, the State Organization for Marketing of Oil, or SOMO, had plans as of December 8, nine days after agreeing to cut production, to instead increase deliveries of its Basra oil grades by about 7% compared with October levels, according to a detailed oil-shipment program viewed by The Wall Street Journal. Those oil shipments represent about 85% of Iraq’s exports.

And while that story quietly disappeared, and was promptly replaced with the more optimistic narrative of OPEC production cut compliance by Kuwait, which as noted earlier today reportedly cut output by 130,000 barrels a day to about 2.75 million a day, while Oman was said to cut 45,000 barrels a day from 1.01 million, it appears that the Iraq overproduction “issue” isn’t going away; it does, however, have an interesting narrative to go with it.

As Reuters reports, while Iraq’s Prime Minister Haider al-Abadi refused to indicate if his country had cut production in compliance with the Vienna deal, he did accuse the autonomous Kurdish region of exporting more than its allocated share of oil “as the country seeks to comply with an OPEC output cut.” As a reminder, as part of the deal, Iraq, OPEC’s second largest producer, agreed to reduce output by 200,000 bpd to 4.351 million bpd.

However, a hurdle has emerged: Kurdistan.

“The region is exporting more than its share, more than the 17 percent stated in the budget,” Abadi said.

Oil exports from the Kurdish region have long been a point of contention with Baghdad, which claims sole authority over sales of all the country’s crude, however which is unable to implement caps on Kurdish production, in effect having to deal with a “rogue, non-OPEC” producer within its borders.

Meanwhile, Kurdish regional authorities have yet to publish oil export figures for December, but the Ministry of Natural resources said it had pumped an average of 587,646 bpd to Turkey’s Ceyhan port in November. This is a problem because under the terms of the 2017 budget, which passed despite a boycott from a key Kurdish party, the autonomous region is allocated 250,000 bpd exports from oilfields under its control. That does not include the disputed Kirkuk fields, which Kurdish forces control but are run by Iraq’s North Oil Company (NOC).

The Kurds built their own oil pipeline to Turkey and began exporting oil via Turkey without Baghdad’s approval in 2013; in 2015, when allegations emerged that Turkey was paying the Islamic State for its (very cheap) oil, the country deflected  by saying it was only paying for Kurdish oil.

If Iraq’s allegations are accurate, it would mean that instead of pumping 250Kbps, the Kurds are pumping more than double that amount, and more than offsetting the alleged reduction by Kuwait and Oman. Furthermore, even if Iraq is fabricating the data, it suggests that Iraq will likely not comply with the OPEC production quotas as long as it has the Kurds as a handy scapegoat on which to blame overproduction. Good luck to OPEC to find who the real culprit is that Iraq is unable or unwilling to cut production by 210kbpd.

Ultimately, should Iraq prove to be a bottleneck to the deal, as happened shortly after the Algiers agreement in September, it is very unlikely that other OPEC (and non-OPEC) nations will stick to their reduced production quotas and the much anticipated “deal cheating” will quickly emerge.

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A memo from the Department of Homeland Security, which was recently reviewed by Reuters, suggest that the Trump administration plans to hit the ground running on the construction of that U.S.-Mexico border wall when they move into the White House later this month.  The memo apparently summarized a meeting held between DHS officials and Trump’s transition team on December 5th in which requests were made for an assessment of “all assets available for border wall and barrier construction.”

In a wide-ranging request for documents and analysis, President-elect Donald Trump’s transition team asked the Department of Homeland Security last month to assess all assets available for border wall and barrier construction.

 

The requests were made in a Dec. 5 meeting between Trump’s transition team and Department of Homeland Security officials, according to an internal agency memo reviewed by Reuters. The document offers a glimpse into the president-elect’s strategy for securing the U.S. borders and reversing polices put in place by the Obama administration.

The Trump transition team also allegedly took aim at Obama’s executive actions, requesting “copies of every executive order and directive sent to immigration agents since Obama took office in 2009.”

The transition team also asked for copies of every executive order and directive sent to immigration agents since Obama took office in 2009, according to the memo summarizing the meeting.

 

Trump has said he intends to undo Obama’s executive actions on immigration, including a 2012 order to allow children brought to the U.S. illegally by their parents to remain in the country on temporary authorizations that allow them to attend college and work.

 

The program, known as DACA, collected information including participants’ addresses that could theoretically be used to locate and deport them if the policy is reversed. Another request of the transition team was for information about whether any migrant records have been changed for any reason, including for civil rights or civil liberties concerns, according to the internal memo seen by Reuters.

 

Among other immigration-related questions, the Trump transition team also hinted at expanding an aerial surveillance program and growing detention capacity for captured illegal immigrants.

One program the transition team asked about, according to the email summary, was Operation Phalanx, an aerial surveillance program that authorizes 1,200 Army National Guard airmen to monitor the southern border for drug trafficking and illegal migration.

 

The program once deployed 6,000 airmen under President George W. Bush but was downsized by Barack Obama, a move blasted by some conservatives who argue the surveillance is vital to border security.

 

The team also asked about the department’s capacity for expanding immigrant detention and about an aerial surveillance program that was scaled back by the Obama administration but remains popular with immigration hardliners. And it asked whether federal workers have altered biographic information kept by the department about immigrants out of concern for their civil liberties.

Which sent two of the largest publicly-traded operators of private detention centers soaring even higher.

 

Now, it seems the only question left to answer is if/how Mexico will pay for the “f**king wall”?  Cash or credit, Mr. Fox?

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Submitted by Peter Schmidt via The Mises Institute,

Between 2000 and 2008, two of the largest financial bubbles in history – in technology stocks and housing, respectively – suffered spectacular collapses. Opinions vary, but some market commentators believe at the peak of the tech bubble, total stock market capitalization exceeded 180% of US GDP. To put this in perspective, the tech stock bubble was over twice the size of the 1920s stock bubble! As large as the bubble in tech stocks was, it was child’s play compared to the housing bubble. When the US housing bubble collapsed, the credit losses were so large the entire worldwide banking system was considered to be in mortal danger. 

One of the primary justifications behind the 1913 founding of the Fed was to prevent financial crises. Logic then dictates if a major motivation behind forming a central bank is the prevention of a financial crisis, then a financial crisis that breaks out under the nose of a central bank must be due — at least in part — to mistakes of that bank. The Fed’s mistakes and its subsequent leading role in causing the housing bubble will be seen by reviewing speeches given by Alan Greenspan and Ben Bernanke that praised the housing bubble era Fed. In addition, a review of statements made in the wake of the tech bubble’s collapse will reveal senior Fed officials taking positions diametrically opposed to positions Alan Greenspan claimed formed the basis for the Fed’s policy toward bubbles, namely, allowing bubbles to burst and dealing with the consequences later. 

From its March 2000 peak to its October 2002 bottom the NASDAQ declined 80%. Throughout the 1990s no one cheered on the “new economy” more than the “maestro,” Alan Greenspan. After the bubble collapsed, Greenspan recognized a need to explain his and the Fed’s actions while the tech bubble grew. In August 2002 Greenspan gave a speech at the Fed’s conference in Jackson Hole. In this speech, which Jim Grant called “self-exculpating revisionism,”  Greenspan offered this rationale for the Fed’s actions during the late 1990s:

The struggle to understand developments in the economy and financial markets since the mid-1990s has been particularly challenging for monetary policymakers. … We at the Federal Reserve considered a number of issues related to asset bubbles — that is, surges in prices of assets to unsustainable levels. As events evolved, we recognized that, despite our suspicions, it was very difficult to definitively identify a bubble until after the fact – that is, when it’s bursting confirmed its existence.

Less than two years later, in January 2004, Greenspan would congratulate himself on the apparent success of the Fed’s strategy. In doing so he would expose the Fed’s role in creating the far more ruinous housing bubble. 

There appears to be enough evidence, at least tentatively, to conclude that our strategy of addressing the bubble's consequences rather than the bubble itself has been successful. … As I discuss later, much of the ability of the U.S. economy to absorb these sequences of shocks resulted from notably improved structural flexibility. But highly aggressive monetary ease was doubtless also a significant contributor to stability.

The “monetary ease” — slashing interest rates — Greenspan was taking credit for here was not helping the economy heal. Instead it was fueling an enormous bubble in housing whose negative consequences can best be described as world-altering.

One month later, in February, Greenspan’s partner in criminal economic ignorance, Ben Bernanke, gave a speech titled, “The Great Moderation.” In this speech Bernanke would, unknowingly, provide further evidence of the Fed’s enormous role in fueling the housing bubble. Bernanke claimed the Fed’s monetary policy was a source of stability and helped to reduce variations in economic output. The irony in giving this speech at this time should not be lost. Bernanke’s speech, like Greenspan’s, betrays a total ignorance of the enormous housing bubble that was only a few weeks from peaking. (Homeownership peaked in April 2004!) With just these two speeches, the criminal incompetence of the Greenspan/Bernanke and the leading causal role the Fed played in the housing bubble are demonstrated.

The Fed’s bubble befuddlement was not limited to a few speeches. For years on end Fed officials would take positions in contradiction to those established by Greenspan in his Jackson Hole, Wyoming, speech. For example, in July 2005 and in his capacity as head of the president’s council of economic advisors, Ben Bernanke was asked on CNBC if there was a housing bubble. He does not answer by saying bubbles can’t be seen until after they burst. Instead he says the following:

Well, I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in housing prices on a nationwide basis, so what I think is more likely is house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it will drive the economy from its full employment path.

Later in October 2005, other Fed officials would also contradict Greenspan’s Jackson Hole speech. By then, homeownership had already peaked and the bubble had started to collapse. Amazingly,  two Fed economists investigated if there was a housing bubble. They — erroneously, of course — concluded home prices are “high but not out of line.” Obviously, if Fed officials were investigating to see if a housing bubble existed, then they believed it could be observed without first having to collapse. 

Often, the most damning indictments of the bubble-era Fed come from other Fed officials. The most loquacious of these officials is current St. Louis Fed president James Bullard. Among the truths Bullard accidently exposed was the one concerning the obvious nature of the recent stock and housing bubbles. In a September 2013 interview Bullard said, “The bubbles we had in the past were gigantic and obvious.” Later, in a November 2013 interview, he said the housing and tech bubbles were “blindingly obvious.”

Amazingly, Alan Greenspan would eventually completely contradict Greenspan! Here is “Mr. Chairman,” as CNBC lovingly refers to him, discussing the Lehman Brothers failure in October 2013, “We missed the timing badly on September 15^th, 2008 [the day Lehman Brothers went bankrupt]. All of us knew there was a bubble.”

So which is it Mr. Chairman? Can bubbles be “obvious” or something “everyone knew” to exist before they pop – as you indicate here – or do you have to wait until after they pop to confirm their existence as you said in Jackson Hole?

Our brief review here demonstrates both the leading role the Fed played in creating the housing bubble — the January and February 2004 speeches — and the many mutually exclusive positions the Fed took on bubbles. In spite of being exposed in what is either a self-exculpating lie (the claim that bubbles can only be seen after they burst) or a sign of gross incompetence (the failure to see two of the largest financial bubbles in history), no Fed official has ever been asked to explain or rationalize the Fed’s contradictory positions on bubbles. Whether anyone from the Fed is ever forced to do so or not, it is obvious the Fed has much to answer for concerning all the economic hardships their bubble befuddlement has caused.

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The hits just keep on coming for Donald Trump, who not only scored several high profile wins today just by tweeting, when first Ford cancelled a Mexico expansion plan after Trump scolded GM for a similar transgression, followed by House Republicans undoing their proposal to strip the Ethics Office of its independence, culminating with the Senate announcing it has begun the process of repealing Obamacare, the next big thing on the agenda is who will be present at the Trump inauguration on Jan. 20.

And while we learned earlier today that both George W, Bush and his wife would attend the Trump inauguration, with a Bush spokesman saying that the couple is “pleased to be able to witness the peaceful transfer of power — a hallmark of American democracy — and swearing-in of President Trump and Vice President [Mike] Pence,” it was the far more unexpected news that the Clintons would also partake in the festivities.

As NY Mag first reported, “Bill and Hillary Clinton have decided to attend the inauguration of Donald Trump as the 45th President of the United States, according to two sources with knowledge of their plans. The Clintons will join former Presidents George W. Bush and Jimmy Carter, who have also announced that they will attend. George and Laura Bush said today that they would be present “to witness the peaceful transfer of power.”

New York adds that over the past few weeks Hillary Clinton discussed with trusted advisers and friends whether or not she should attend the inaugural.

“She and President Clinton, the sources said, decided to do so out of a sense of duty and respect for the American democratic process.”

Moments ago ABC confirmed as much in a tweet:

Aides to Bill and Hillary Clinton tell @ABCPolitics that they will attend @realDonaldTrump inauguration on January 20th

— Josh Haskell (@joshbhaskell) January 3, 2017

With the Clintons joining the inauguration, President George H.W. Bush is the only living president who won’t attend, due to health reasons the Hill reports.

So does this mean that the animosity between the political elites is over?

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There is little doubt that easy access to federally subsidized student loans have contributed to the astronomical increase in the cost of attending college in the United States.  After all, what 18 year old would turn down $200,000 in free money to party for 4 years?  As an added bonus, when you figure out upon graduation that your degree in anthropology if fairly worthless, you can always just move back in with mom and force taxpayers to pick up your debt burden.  Anything less would be a substantial “triggering” event and we just can’t have that.

As we noted roughly a year ago, the amount of student debt outstanding is on track to reach nearly $17 trillion by 2030…which is clearly enough artificial demand to send the price of almost any commodity product soaring.

 

Well, apparently New York’s Governor doesn’t think that misinformed government policies are doing nearly enough to drive up college tuition costs.  As a result, he has decided to jump on the Bernie Sanders bandwagon with a new proposal that would provide free tuition at public state and city colleges to any student whose parents earn less than $125,000.

As the New York Times notes, Cuomo’s plan could apply to as many as 1 million New York families though it was not “immediately clear how the program would be paid for”…which is just a minor detail anyway.

Mr. Cuomo hopes for a quick start for his idea, with a three-year rollout beginning in the fall, though it will require legislative approval, a potential snag when the governor and lawmakers on both sides of the aisle have been at odds over a pay raise and other issues.

 

It was not immediately clear how the program would be paid for, though the administration said the state already provided nearly $1 billion in support through its tuition assistance program; those awards are capped at $5,165, and many of the grants are smaller.

 

If the plan is approved, the Cuomo administration estimates the program would allow nearly a million New York families with college-age children, or independent adults, to qualify.

 

Current tuition at four-year State University of New York schools for state residents is $6,470; at two-year community colleges the cost is $4,350. Costs for City University of New York schools are approximately the same.

Of course, “free tuition” isn’t really free and is estimated to cost New York taxpayers roughly $163mm by the time it’s fully implemented in 2019.

Oh well, we guess this is just a simplification in the process…why go through the bother of underwriting student loans just to have taxpayers pick up the bill later anyway?  With the governor’s plan, you just go straight to taxpayers for a handout upon enrollment.  Moreover, taxpayers save on the interest costs associated the defaulted student loans so this is really a win for everyone.

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Submitted by Simon Black via SovereignMan.com,

Last week during a long overdue vacation, a close friend of mine recommended reading the autobiography of Rich DeVos called Simply Rich.

DeVos is a billionaire entrepreneur who started countless ventures during his nine decades on this earth.

Back in the 1946, for example, DeVos started an airline… virtually overnight.

He just bought an airplane and started flying people around. No rules. No regulations.

They didn’t even have an airport. The local airfield north of Grand Rapids, Michigan, where they were based, hadn’t been completed yet.

As DeVos recounts in his book, “We put pontoon floats on our plane and took off and landed on the Grand River, which ran along the airfield.”

His first office at the airfield was an old chicken coop that he found, washed in the river, and re-painted.

The following year he and his partner opened up one of Michigan’s first “Drive Through” restaurants at the airfield, catering to passengers, workers, flight students, and spectators who came by in the evenings just to marvel at the planes.

Again, no rules. No regulations.

They just saw an opportunity and went for it.

DeVos started another business selling ice cream; another offering fishing excursions on Lake Superior; and another delivering trucks cross-country.

The truck delivery business was one of the more interesting ones; it started when he was just a kid– someone asked him to drive two pickups from Grand Rapids to Bozeman, Montana.

There were no hotels or motels… or even interstates back then.

So DeVos and his friend had to zig-zag their way across corn fields to get there, sleeping on haystacks each night along the way.

The book is a hell of an adventure– a reminder of how free and unencumbered things used to be.

Back in America’s heyday, people succeeded based on their hard work, ingenuity, and willingness to take action.

They didn’t have to spend three years filling out paperwork so that some government bureaucracy could justify its existence.

It was an environment that created unparalleled opportunity and prosperity which, candidly, have long since faded.

Today there are rules for everything; in fact, just this morning, the US federal government published an astonishing 709 pages of new regulations.

And that’s just for today. They publish new regulations every single business day. So tomorrow there will be even more.

These rules make it more difficult to produce, to start a business, to sell a product or service to a willing consumer.

And these rules carry costs, whether it’s in paying a fee, filling out paperwork, etc.

So just imagine the effect that literally decades worth of rules and regulations has had on US productivity (which is now noticeably contracting, even according to government data.)

It’s also worth noting that roughly 30% of occupations in the Land of the Free now require some sort of government license.

In its study “License to Work”, the Institute for Justice reports that 45 out of 50 of the largest cities in the United States have put up substantial obstacles to prevent budding entrepreneurs from selling food from street carts.

A manicurist in Alabama requires 163 days of training, while a shampoo specialist at a Tennessee hair salon must undergo 70 days of training, take two exams, and pay $140 in fees to obtain a license.

Hawaii requires fire alarm installers to undergo a whopping four years of training, pass two exams, and pay $380 in fees to obtain a license.

And a tree trimmer in California must also undergo four years of training, pass two exams, and pay $851 in fees to obtain a license.

It’s absurd.

Nothing that Rich DeVos his partner accomplished in their teens and 20s is even legal anymore.

It makes me think about all the people today who will never have the chance to realize their full potential thanks to the mountain of regulations blocking their way.

This is an important point to understand.

Looking at the data– the incredible overregulation, $20 trillion in debt, insolvent pension funds, etc., it’s painfully obvious that the US is past its prime and holding back millions of people from achieving greater prosperity.

Rich DeVos started so many businesses back in the 1940s because the government stayed out of the way and enabled hard-working risk takers to succeed.

Today the government spends $2 billion to build a website and churns out hundreds of pages of regulations each day.

And this trend gets worse each year.

Understanding this simple reality doesn’t mean that you’re pessimistic, unpatriotic, or expecting the end of the world.

It just makes you rational.

Things change. That’s the bottom line.

The US is still a fantastic place. But it’s no longer the same Land of Opportunity it was when Rich DeVos was getting started.

As I’ve summarized before, the US is a great place to consume… but an increasingly difficult place to PRODUCE.

That imbalance has serious long-term consequences, which we are only starting to experience.

Do you have a Plan B?

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Trump just can’t seem to lose today.  The President-elect scored two victories earlier with Ford announcing plans to keep a plant in the United States, a move they described as a “vote of confidence” in Trump, and his nemesis at Fox News, Megyn Kelly, announcing plans to move to NBC.  Now, before he’s even taken office, the Senate has started preparations for a repeal of Obama’s single crowning piece of legislation, the Affordable Care Act.

Moments ago, the Senate Budget Committee Chairman Mike Enzi released a 2017 budget resolution setting up the process to partially repeal Obamacare early in President-elect Donald Trump’s administration. The Senate will consider the bare-bones budget on the floor starting this week with votes expected next week.  Once the House and Senate agree on a resolution a reconciliation bill repealing parts of Obamacare could proceed.  Of course, using the reconciliation process allows Republicans to avoid Democratic filibuster in Senate which is the same process that Democrats used to pass the controversial legislation in the first place.

This news follows a pair of tweet from Trump earlier this morning declaring the “Obamacare just doesn’t work.”

People must remember that ObamaCare just doesn’t work, and it is not affordable – 116% increases (Arizona). Bill Clinton called it “CRAZY”

— Donald J. Trump (@realDonaldTrump) January 3, 2017

The Democrat Governor.of Minnesota said “The Affordable Care Act (ObamaCare) is no longer affordable!” – And, it is lousy healthcare.

— Donald J. Trump (@realDonaldTrump) January 3, 2017

 

Here is the full text of resolution:

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As observed yesterday, one of the main reasons for the post New Year’s Day surge in Bitcoin to above $1,000 both in China and the US, is that over the past week, in order to further curb capital outflows, Beijing implemented a new set of capital controls according to which Chinese banks would be required to report all yuan-denominated cash transactions exceeding 50,000 yuan (around 7,100 US dollars) to the People’s Bank of China (PBOC), down from the current level of 200,000 yuan, according to a PBOC document released on Friday. Cross-border transfers more than 200,000 yuan by individuals will also be subject to the report process. In terms of foreign currencies, the report threshold remains at the equivalent of 10,000 US dollars for both cash transactions and overseas transfers.

Amusingly, as Xinhua reported over the weekend, “the policy stoked worries that the government is trying to impose capital control in a disguised form” to which PBOC economist Ma Jun had the following retort “It is not capital control at all.” Translation – it is.

And that’s not all, because overnight, China’s currency regulators, the State Administration of Foreign Exchange (SAFE) added its own round of capital controls when it said that it wanted to close loopholes exploited for purposes such as money laundering and illegally channeling money into overseas property. While the regulator left unchanged quotas of $50,000 of foreign currency per person a year, citizens faced draconian new disclosure requirements from Jan. 1, first and foremost requiring foreign currency buyers to indicate how they plan to use the money and when they plan to spend it.

Additionally, mainlanders will now have to fill in a more detailed form when applying to use their renewed US$50,000 foreign exchange quota, which restricts foreign exchange from being used to buy overseas property, securities, life insurance or other investment-style insurance products, according to the Standard.

Bloomberg summarizes the key elements of the latest set of FX conversion requirements:

• Customers must pledge money won’t be used for overseas purchases of property, securities, life insurance or investment-type insurance. While such rules aren’t new, citizens previously didn’t have to sign such a pledge
• Customers must give a more detailed account of the planned use of funds, such as business travel, overseas study, family visits, medical treatment, merchandise trade or purchases of non-investment insurance policies, including the timing, by year and month
• Violators of foreign-exchange rules will be be added to the currency regulator’s watch list, denied foreign-exchange quota for three years and subjected to anti-money-laundering investigations
• Customers must confirm compliance with restrictions on money laundering, tax evasion and underground bank dealings
• Customers must now confirm they aren’t lending or borrowing quotas to or from other citizens

Approved uses of funds are restricted to non-investment including tourism, schooling, business travel and medical care. Those who violate rules will be fined 30 percent of the illegal purchase amount and an additional penalty of less than 50,000 yuan (HK$55,795). Violators will also be deprived of their foreign exchange quota for the year when they break the rule and for the following two years, according to the form.

The measures followed said on Saturday that from this month it will step up scrutiny of individual foreign currency purchases and strengthen punishments for illegal money outflows, although the US$50,000 (HK$387,750) annual individual quota will remain unchanged.

Capital outflows have been a growing concern for the government in the past year as it attempts to put the economy back on track and keep the currency stable without exhausting its foreign exchange reserves, which tumbled to US$3.052 trillion in November, the lowest in almost six years.

* * *

Meanwhile, whether due to these brand new measures or for some other reason, Reuters reports that despite concerns of a flood of FX conversions from Yuan to Dollars on the first day following the Yuan reset, there was little evidence at Beijing and Shanghai banks on Tuesday that Chinese individuals were rushing to lock in 2017 quotas to buy foreign exchange.

As we reported in late December, under China’s capital controls, individuals are permitted to buy up to $50,000 in foreign exchange a year, and data shows January is typically a standout month for onshore foreign currency deposits.

Only a trickle of people at banks were seen selling yuan for dollars on the first business day of the new year, when buyers in theory could have made use of their quotas. At major bank branches in two of China’s biggest cities, there were no queues on Tuesday, and the few individuals who changed money reported doing so with relative ease.

People enter a branch of the ICBC bank in Beijing, China, January 3, 2017.

“The whole process of changing money was pretty smooth and quick,” said an office worker surnamed Xu, who withdrew $500 from an ICBC branch in Beijing on Tuesday for a coming vacation in the United States. Several other customers at banks in the two cities reported similar ease when changing amounts of money well below the quota.

Yang Zhao, chief China economist at Nomura in Hong Kong, said there wasn’t any widespread panic about the falling yuan, so he had not expected a surge in demand.

However, as Reuters adds, it is unclear how much foreign currency exchange was being conducted online on Tuesday. Central bank data shows onshore foreign exchange deposits rose by almost 32 percent in the first 11 months of 2016, propelled in part by the yuan’s fall to eight-year lows.

Aside from the rising forex deposits, there has been little indication of growing unease among ordinary Chinese – although the authorities were taking no chances, repeating a mantra that the economy is improving and there is no basis for depreciation of the yuan in the long term. In recent months, analysts have noted that the yuan was not alone in falling against the dollar, with most other emerging market currencies also suffering, which has helped keep sentiment around the yuan from souring too much.

Ultimately, however, it just may be that the unprecedented rollout of capital controls is finally forcing the Chinese to keep their funds at home. As Nomura’s Zhao said, restrictions on use of foreign exchange limited anyone’s options and so acted as a disincentive anyhow.

“You can’t buy real estate. You can’t purchase anything. Basically you can only park that FX in your deposit account onshore with interest rates that are very low,” he said.

Which means even more focus on the unregulated bitcoin, which has emerged as the last uncontrolled means of escaping China’s draconican FX capital controls – as confirmed by its soaring price – but a more relevant question is how long until China finally does as it threatened in early November, when as BBG reported, China’s regulators were studying measures to limit transactions that use bitcoins to take funds out of the country, citing people familiar with the matter.

According to Bloomberg sources, Chinese officials were considering policies including restricting domestic bitcoin exchanges from moving the cryptocurrency to platforms outside the nation and imposing quotas on the amount of bitcoins that can be sent abroad. Further indicating that Chinese regulators were “just a little behind the curve”, they allegedly noticed only recently that some investors bought bitcoins on local exchanges and sold them offshore, evading rules on foreign exchange and cross-border fund flows, the report further reveals.

Curiously, for now, both SAFE and the PBOC has left Bitcoin mostly alone, perhaps because the total market cap of Bitcoin is still tiny in the grand scheme of things (Chinese outflows amount to roughly $1.1 trillion since they began in earnest in 2015), and maybe because members of China’s politburo are themselves using bitcoin as a means of circumventing capital controls; however the higher the price of bitcoin rises, the sooner that particular status quo is likely to change, with adverse consequences for the price of bitcoin.

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