Tag: finance

• Late Surge in Web Buying Blindsides UPS, Retailers, Some Christmas Packages Aren’t Delivered (WSJ)
• Yen Slides as Turkish Stocks Drop, U.S. Futures Rise (BBG)
• Turkish lira drops to record low against dollar, as Turkey’s Erdogan replaces 10 ministers (FT)
• Egypt designates Muslim Brotherhood as terrorist group (Reuters)
• Thai elections in doubt after political violence (AFP)
• Batista Cedes Oil Unit Control in $5.8 Billion Debt Deal (BBG)
• China celebrates Mao’s birthday, but events scaled back (Reuters)
• First-class stamps to cost 49 cents as of Jan. 26 (AP)
• Obamacare Hits Snag in States as U.S. Site Finds Footing (BBG)
• NSA Struggles to Make Sense of Flood of Surveillance Data (WSJ)
• China Estimates 2013 Growth at 7.6% as Challenges Seen Ahead (BBG)
• Colleges Trim Staffing Bloat (WSJ)
• The Impending Bollywood Boom at the U.S. Box Office (BBG)
• Foreign Investors Face Hurdles in China’s Bond Market (WSJ)
• Sony, Panasonic Call Off OLED TV Tie-Up (WSJ)

 

Overnight Media Digest

WSJ

* Turkey Prime Minister Recep Tayyip Erdogan shuffled his cabinet after an old ally pressed him to resign, in the latest fallout from a corruption case.

* Republican leaders and their corporate allies have launched an array of efforts aimed at diminishing the clout of the party’s most conservative activists and promoting legislation instead of confrontation next year.

* A last-minute influx of enrollees prompted the Obama administration and some states to keep the rolls open for Jan. 1 coverage.

* The U.S. National Security Agency is drowning in useless data, which harms its ability to conduct legitimate surveillance, claims a former employee who created some of the computer code used to snoop on Internet traffic.

* The end of the year is the peak trash season across America, a superlative earned by all the eating, parties and gift giving that people do, and by the growing use of package deliveries from online purchases.

* A pick-up in business investment and robust new-home sales point to an economy on stronger footing heading into the new year. Orders for U.S. durable goods — big-ticket items such as cars and aircraft designed to last more than three years — rose 3.5 percent last month, reversing a decline in October, the Commerce Department said on Tuesday.

* Municipal bonds are on track to post their worst annual performance in nearly two decades as 2013 ushered in more financial woes for U.S. cities. Municipal debt is down 2.58 percent so far this year after handing investors a 6.78 percent return in 2012 and a 10.70 percent return in 2011, according to Barclays’s municipal-bond index.

* U.S. colleges and universities are starting to unwind decades of administrative bloat and back-office waste that helped push up costs and tuition.

* Sherritt International Corp is facing pressure from an activist shareholder amid plans to sell its coal business and focus on its nickel and oil operations.

* Sony Corp and Panasonic Corp have decided to end a development venture that would produce technology to make big and ultrathin televisions, underscoring the challenges of bringing next-generation TVs to the mass market.

 

NYT

* While other types of health care costs might be declining, the cost of emergency room care for the mentally ill shows no sign of ebbing.

* Banks that comply with Islamic law are making inroads into the global banking scene and Western businesses are working to meet the expectations of those banks. The banks can not find enough acceptable places to park their money, many industry insiders say, so investment bankers are scurrying to assemble deals.

* Wind power developers are signing deals, ordering equipment and lurching ahead with construction starts to qualify for a tax credit that is worth 2.3 cents a kilowatt-hour for the first 10 years of production. This month, giant turbine-makers like Vestas Wind Systems Ltd and Siemens AG have announced major new orders, including a deal worth more than $1 billion with MidAmerican Energy Holdings, an Iowa-based utility majority-owned by Warren Buffett’s Berkshire Hathaway Inc.

* Some customers were left without Christmas gifts as United Parcel Service Inc failed to meet delivery deadlines in the face of bad weather and an unexpectedly large surge in demand.

* Mike Lazaridis, a founder and former executive at BlackBerry Ltd , took advantage of a rare rise in its share price to cut his stake in the company.

* The American Bankers Association, an industry trade group, filed a motion in federal court on Tuesday in Washington seeking to quickly suspend one part of the Volcker Rule, which was officially completed two weeks ago.

 

Canada

THE GLOBE AND MAIL

* Mike Lazaridis has cashed in shares of BlackBerry Ltd , making $26 million in the process, as he lessens his stake in the smartphone company he helped create.

Reports in the business section:

* Centerra Gold Inc said on Tuesday it reached a non-binding agreement with the government of the Kyrgyz Republic that could pave the way for joint ownership of Kumtor, the country’s flagship gold mine.

* Torq Energy Logistics, an affiliate of privately held Torq Transloading Inc, said on Tuesday that private equity firm KKR & Co has agreed to invest C$250 million ($235.3 million) to fund Torq’s capital program and acquisition strategy.

* Massive protests and court challenges based on native rights are likely after a National Energy Board decision that gave conditional approval to Enbridge Inc’s Northern Gateway pipeline, say First Nations, environmental groups and others opposed to the project.

NATIONAL POST

* In the six months after the Senate determined his primary residence was in Ottawa, Senator Mike Duffy claimed expenses of more than C$23,000 for travel to and from the province he represents in the red chamber.

 

China

CHINA SECURITIES JOURNAL

– China will push forward the development of a modernized seed industry, China’s vice premier Wang Yang said at a conference on Tuesday. Measures will include enhancing levels of scientific research and protecting seed bank resources.

– China may soon be able to export high-speed rail technology. The first order is likely to come from Eastern Europe, sources told the paper, a potential boost for railway maker China CNR Corp Ltd, as it already manufactures to European standards.

– China’s GDP growth is estimated to hit 7.7 percent this year and 7.8 percent in 2014, according to the Chinese Academy of Social Sciences, a government think tank. Bank of China Ltd estimates GDP growth to be 7.6 percent.

NATIONAL BUSINESS DAILY

– China’s new regulations to raise consumer trust in domestic infant milk formula will be the strictest in China for any food type, said Teng Jiacai, deputy head of the China Food and Drug Administration.

CHINA DAILY

– China is making unprecedented efforts to ensure grain security, urging a 95 percent self-sufficient ratio, according to official targets announced this week.

PEOPLE’S DAILY

– New anti-graft guidelines released this week will greatly enhance China’s ability to battle rampant official corruption, according to a commentary in the Party’s mouthpiece paper. President Xi Jinping has vowed to make stamping out official corruption a key focus of his administration.

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Eagle Rock Energy (EROC) upgraded to Market Perform at Raymond James
Amazon.com (AMZN) ChannelAdvisor data implies slight upside, says Piper Jaffray

HOT STOCKS

SuperCom (SPCB) acquired Smart ID division of On Track Innovations (OTIV)
Lender Processing (LPS) announced FTC approval of Fidelity National (FNF) acquisition

NEWSPAPERS/WEBSITES

• A few early studies are labeling the winners in a year where growth of online shopping has continued to outpace regular retail sales. Three retailers delivered within three days: Costco.com (COST), OfficeDepot.com (ODP) and Sears.com (SHLD), the Wall Street Journal reports
• Yahoo (YHOO) may be dressed like a high-growth company but much of its value rests on its 24% stake in Alibaba. When Alibaba completes its IPO, expected next year, investors must ask whether Yahoo still is worth owning, the Wall Street Journal reports
• The hackers who attacked Target (TGT) and compromised up to 40M credit cards and debit cards also managed to steal encrypted personal identification numbers (PINs), sources say, Reuters reports
• BP (BP) failed to persuade a U.S. federal judge to require businesses seeking to recover money over the 2010 Gulf of Mexico oil spill to provide proof that their economic losses were caused by the disaster, Reuters reports
• Volkswagen (VLKAY) is poised to sell more vehicles in China than GM (GM) for the first time in nine years, regaining its place as the biggest foreign carmaker in the world’s largest auto market, Bloomberg reports
• Apollo Global Management (APO) received approval from investors to increase the limit on its next buyout fund to $17.5B from $15B, sources say. The firm expects to finish raising the fund this month, a source added, Bloomberg reports

SYNDICATE

DS Healthcare Group (DSKX) announces $2.42M private placement
Oramed (ORMP) to raise $15.8M in registered direct offering

ACTIVIST/PASSIVE FILINGS

Michael Lazaridis lowers stake in BlackBerry (BBRY) to 4.99%
Starboard Value lowers stake in DSP Group (DSPG) to 8.7% from 10.1%

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/vt6xrGOmqIo/story01.htm Tyler Durden

The latest overnight meltup which has pushed the DJIA and S&P to new implied record opens has been driven by, what else, the falling Yen, which after tumbling to fresh new 5 year lows following the release of the BOJ minutes (which said nothing new), has sent both the Nikkei higher by 1%, to post-2008 highs of 16,174, while the S&P, up about 5 points just shy of 1840, and has only three trading days in which it should close the gap to the central banks’ price target of 1900 as we first showed in April.

In the absence of any actual newsflow (we now live in a world in which both good and bad news are P/E multiple beneficial, just continue keeping an eye on the EURJPY and the USDJPY – these are the only two signals tht matter for the market.

The other, far less relevant, overnight bulletin points are summarized by Bloomberg:

• Treasuries steady, with 10Y yields holding near YTD high seen in Sept.; trading quiet with U.K. closed for Boxing Day and before New Year’s holiday next week.
• The Turkish lira weakened to a record low vs USD after a third government minister resigned amid a corruption probe and urged Prime Minister Erdogan to do the same
• Shinzo Abe visited Yasukuni Shrine on Mao’s birthday, drawing a quick rebuke from China for paying respects at a site that memorializes war-dead including World War II criminals
• China estimates that growth slowed to 7.6% his year, with mounting challenges putting pressure on the nation’s traditional growth model of investment-led spending, according to Xinhua
• Thai police fired tear gas and rubber bullets at protesters trying to break into a Bangkok arena where political parties were registering for a snap election meant to ease months of unrest
• A homemade bomb exploded alongside a public bus near a Cairo campus, coming two days after a deadly attack on a Nile Delta police headquarters that prompted Egypt’s military- backed government to brand the Muslim Brotherhood a terrorist group
• The U.K. government is considering rule changes that would make it easier for new banks and alternative finance providers to provide funding to small and medium-sized companies
• From Maryland to Hawaii, Obamacare’s state-run enrollment operations are running into technical difficulties, creating new headaches for the White House even as the federal insurance website finds its footing
• Former NSA contractor Edward Snowden, in a Christmas message on a London television station, called government surveillance worse than anything envisioned by George Orwell in “1984”
• BofAML Corporate Master Index OAS narrows to new YTD low 129bps; $50b has priced this month. High Yield Master II OAS narrows 4bps to 396bps, new tight since 2007; nearly $21b priced in Dec. CDX High Yield closed at 108.48, third consecutive record, from 108.35; YTD low 101.03 (June 24)
• European sovereign markets closed. Nikkei gains, China stocks decline to four-month lows; U.S. equity-index futures rise. WTI crude little changed, copper and gold higher

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/I2Cp44pS9Vw/story01.htm Tyler Durden

It has been 7 years and 4 months since the last Prime Ministerial visit to Yasukuni Shrine (a symbol of Japan's past militarism – which appears to be resurrecting); but in what China describes as an act that is "absolutely unacceptable to the Chinese people," current Japanese Prime Minister Shinzo Abe paid tribute to the war dead today. The strong reaction was met with a rapid 'apology' of sorts as Abe stated officially, "I am aware that, because of misunderstandings, some people criticise a visit to Yasukuni shrine as an act of worshipping war criminals… [but] I have no intention at all to hurt the feelings of Chinese or South Korean people."

In the past… (via Reuters)

China and South Korea have repeatedly expressed anger in the past over Japanese politicians' visits to Yasukuni Shrine, where Japanese leaders convicted as war criminals by an Allied tribunal are honored along with war dead.

 

The shrine is seen in parts of Asia as a symbol of Japanese past militarism.

Abe's Excuse…

Via AFP,

Prime Minister Shinzo Abe said Thursday his visit to the controversial Yasukuni war shrine was a pledge that Japan would not go to war again and was not intended to hurt Chinese or South Koreans.

 

"I chose this day to report (to enshrined spirits) what we have done in the year since the administration launched and to pledge and determine that never again will people suffer in war," he told reporters at the shrine.

 

"I am aware that, because of misunderstandings, some people criticise a visit to Yasukuni shrine as an act of worshipping war criminals, but I made my visit to pledge to create an era where people will never suffer from catastrophe in war," Abe said.

 

"I have no intention at all to hurt the feelings of Chinese or South Korean people."

 

And The Chinese response…

Chinese foreign ministry Asian affairs dept head: Yasukuni visit "absolutely unacceptable to the Chinese people" pic.twitter.com/c3skU6FnTn

— Austin Ramzy (@austinramzy) December 26, 2013

 

And the consequences…

 

 

Chinese Foreign Ministry on Abe Yasukuni visit: "The Japanese side must bear all consequences." #uhoh

— ian bremmer (@ianbremmer) December 26, 2013

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/6ZSdcn9chYo/story01.htm Tyler Durden

It has been 7 years and 4 months since the last Prime Ministerial visit to Yasukuni Shrine (a symbol of Japan's past militarism – which appears to be resurrecting); but in what China describes as an act that is "absolutely unacceptable to the Chinese people," current Japanese Prime Minister Shinzo Abe paid tribute to the war dead today. The strong reaction was met with a rapid 'apology' of sorts as Abe stated officially, "I am aware that, because of misunderstandings, some people criticise a visit to Yasukuni shrine as an act of worshipping war criminals… [but] I have no intention at all to hurt the feelings of Chinese or South Korean people."

In the past… (via Reuters)

China and South Korea have repeatedly expressed anger in the past over Japanese politicians' visits to Yasukuni Shrine, where Japanese leaders convicted as war criminals by an Allied tribunal are honored along with war dead.

 

The shrine is seen in parts of Asia as a symbol of Japanese past militarism.

Abe's Excuse…

Via AFP,

Prime Minister Shinzo Abe said Thursday his visit to the controversial Yasukuni war shrine was a pledge that Japan would not go to war again and was not intended to hurt Chinese or South Koreans.

 

"I chose this day to report (to enshrined spirits) what we have done in the year since the administration launched and to pledge and determine that never again will people suffer in war," he told reporters at the shrine.

 

"I am aware that, because of misunderstandings, some people criticise a visit to Yasukuni shrine as an act of worshipping war criminals, but I made my visit to pledge to create an era where people will never suffer from catastrophe in war," Abe said.

 

"I have no intention at all to hurt the feelings of Chinese or South Korean people."

 

And The Chinese response…

Chinese foreign ministry Asian affairs dept head: Yasukuni visit "absolutely unacceptable to the Chinese people" pic.twitter.com/c3skU6FnTn

— Austin Ramzy (@austinramzy) December 26, 2013

 

And the consequences…

 

 

Chinese Foreign Ministry on Abe Yasukuni visit: "The Japanese side must bear all consequences." #uhoh

— ian bremmer (@ianbremmer) December 26, 2013

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/6ZSdcn9chYo/story01.htm Tyler Durden

McDonalds’ internal employee resource website McResource Line has been no stranger to surreal, farcical scandals in the past several weeks. First, it was revealed that the site was offering MCD workers tips, telling employees to find second jobs, apply for food stamps and sell their things to weather a financial crisis. The site had also gaven advice on how to tip au pairs, doormen, personal trainers and pool boys. The irony meter went off the charts following a study released in October by UC Berkeley Labor Center and University of Illinois that said 52% of families of fast food workers receive assistance from a public program like Medicaid, food stamps, the Earned Income Tax Credit or Temporary Assistance for Needy Families. Still, none of this compares remotely to the latest debacle at the world’s largest fast food maker, when on one of the resource website pages, McDonalds basically strongly advises its employees to eat… elsewhere.

The advice is given with graphics depicting the ‘unhealthy choice’ and the ‘healthier choice.’ McDonald’s own food is in the former column.

From the Mail:

The fast food giant has advised employees to avoid meals with burgers and fries and to eat healthier options like salad and sandwiches. The advice was dispensed on the now-infamous McResource Line, the employees-only website that has told workers to sell their things and get second jobs to make ends meet.

 

Despite featuring a vast array of deep fried delicacies, the Golden Arches reminds employees that ‘avoiding items that are deep fried are your best bet.’

The sensible advice also tells McWorkers to ‘limit the extras such as cheese, bacon and mayonnaise.’ Tasty add-ons that are staples of many menu items they serve on a daily basis.

 

A hamburger, fries and soda are warned against, because ‘eating a diet high in fat puts people at rick for becoming overweight.’ Many locations offer steep food discounts and short breaks to employees, virtually forcing them to eat the unhealthy food, often forcing the hand of workers without the time or means to eat elsewhere.

 

 

‘It is hard to eat a healthy diet when you eat at fast-food restaurants often,’ the advice continues. ‘Many foods are cooked with a lot of fat, even if they are not trans fats. Many fast-food restaurants do not offer any lower-fat foods.’

But where should workers eat, if not at McDonalds? “Eat at places that offer a variety of salads, soups, and vegetables.” Of course if the food at those places costs a tad over $0.99, and happens to be unattainable to the average McDonalds workers, well then, tough.

Anyway, fast forward to today when in the aftermath of these humiliating revelations we find that the McResource site has been taken down and that MCD workers are no longer strongly advised to eat elsewhere.

From CNN:

Visitors to McResource Line on Wednesday were greeted with this statement: “We are temporarily performing some maintenance in order to provide you with the best experience possible. Please excuse us while these upgrades are being made.”

 

McDonald’s confirmed the site had been taken down in a statement posted on its website. “A combination of factors has led us to re-evaluate and we’ve directed the vendor to take down the website. Between links to irrelevant or outdated information, along with outside groups taking elements out of context, this created unwarranted scrutiny and inappropriate commentary. None of this helps our McDonald’s team members.”

Bottom line, dear McDonalds team members: you are once again allowed and even encouraged to wolf down on all the junk food you can afford (if at your place of work, so much the better). After all, obesity will take at least a few years to develop, and by then, courtesy of Obamacare, it will be some other poor taxpayer sap on the hook footing the bill for all those cardiac bypass surgeries…

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

Christmas: perhaps the most celebrated holiday in the US, regardless of religion, race, ethnicity, gender, or any other background characteristic. At least, according to a recent Pew study which found that nine-in-ten Americans say they celebrate Christmas, and three-quarters say they believe in the virgin birth of Jesus. But only about half see Christmas mostly as a religious holiday, while one-third view it as more of a cultural holiday. Virtually all Christians (96%) celebrate Christmas, and two-thirds see it as a religious holiday. More surprisingly, fully eight-in-ten non-Christians in America also celebrate Christmas, but most view it as a cultural holiday rather than a religious occasion.

 

The findings are less surprising when Pew looked into how Americans celebrate the holiday: 86% of U.S. adults say they intend to gather with family and friends on Christmas this year, and an identical number say they plan to buy gifts for friends and family. Roughly nine-in-ten adults say these activities typically were part of their holiday celebrations when they were growing up.

 

 

Something has changed with the passage of time, however: fewer Americans say they will send Christmas or holiday cards this year than say their families typically did this when they were children. The share of people who plan to go caroling this year also is lower than the share who say they typically did so as children. And while about seven-in-ten Americans say they typically attended Christmas Eve or Christmas Day religious services when they were children, 54% say they plan to attend Christmas services this year.

There are significant generational differences in the way Americans plan to celebrate Christmas this year, with younger adults less likely than older adults to incorporate religious elements into their holiday celebrations. Adults under age 30 are far less likely than older Americans to say they see Christmas as more of a religious than a cultural holiday. They are also less likely to attend Christmas religious services and to believe in the virgin birth. This is consistent with other research showing that younger Americans are helping to drive the growth of the religiously unaffiliated population within the U.S. But the new survey also shows that even among Christians, young people are more likely than older adults to view Christmas as more of a cultural than a religious holiday.

One-in-five adults say they are the parent or guardian of a child in their household who currently believes in Santa Claus. An additional 14% of Americans are parents or guardians of at least one child under the age of 18 but say their children do not believe in Santa Claus. (About two-thirds of Americans are not the parents or guardians of any children in their household.) Nearly six-in-ten Hispanics say they are parenting minor children in their homes, including 38% who have children who believe in Santa Claus. By comparison, fewer blacks and whites say they currently have Santa-believing children (21% and 15%, respectively), in part because blacks and whites are less likely than Hispanics to have minor children in the home.

Among those who have a child who believes in Santa Claus, seven-in-ten (69%) say they plan to pretend that Santa visits their house on Christmas Eve this year. But even among U.S. adults without a child who believes in Santa, sizable numbers plan on receiving a visit from Old St. Nick. Roughly one-in-five parents whose children do not believe in Santa (18%) say they will pretend to get a visit from Santa this year, as do 22% of those who are not the parents or guardians of minor children in their household.

Other highlights from the survey:

• Among the religiously unaffiliated, 87% say they celebrate Christmas, including 68% who view Christmas as more of a cultural holiday.
• Roughly eight-in-ten Americans (79%) say they plan to put up a Christmas tree this year. By comparison, 92% say they typically put up a Christmas tree when they were children.
• Nearly six-in-ten Americans say they plan to give homemade gifts this holiday season, such as baked goods or crafts. There is a big gender gap on this question; two-thirds of women (65%) plan to give homemade gifts, compared with 51% of men.
• Those who celebrate Christmas as more of a religious event are much more apt than those who view it as a cultural occasion to say they will attend religious services this Christmas (73% vs. 30%) and to believe in the virgin birth (91% vs. 50%). But on other measures, the differences in the ways the two groups will mark the holidays are much smaller. Roughly nine-in-ten in both groups will gather with family and friends and buy gifts this Christmas, and identical shares of each group will pretend to get a visit from Santa Claus on Christmas Eve (33% each).

And some of the findings in detail:

What do Americans look forward to the most and lest in Christmas:

 

More religious or cultural:

 

Will there be a Christmas tree?

 

Who is buying gifts:

 

Was Jesus born of a virgin?

 

 

Instead of just purchasing gifts, how many actually prepare them:

 

 

How many are gathering with the family?

Source: Pew Research

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/GGbmCb3Tpog/story01.htm Tyler Durden

 

The biggest problem facing investors today is that “the rules” of the game change almost every year.

 

What I mean is that any basic rule investors took for granted could be thrown out the window. Indeed, in the last five years we’ve seen:

 

1)   Accounting standards at financial institutions suspended.

2)   Capital requirements for banks (Basel III) postponed multiple times.

3)   Fraud go unpunished.

4)   Obvious insider trading amongst political officials and banking insiders.

5)   Central bankers openly admit that they will lie to investors.

 

Why are so many laws and rules being thrown out?

 

The Powers That Be are committed to propping the system up by any means possible.

 

Consider Spain.

 

Spain’s banking system, by any reasonable analysis, is totally bankrupt.

 

The reason for this is that Spanish banks are all packed to the brim with garbage assets (mortgage loans and Spanish Government bonds… which aren’t worth the paper they’re printed on).

 

Consider the story of Bankia.

 

Bankia was formed by merging seven bankrupt regional Spanish banks in 2010.

 

The new bank was funded by Spain’s Government rescue fund… which received “preference shares” in return for over €4 billion (from taxpayers).

 

These preference shares were shares that a) yielded 7.75% and b) would get paid before ordinary investors if Bankia failed again. So right away, the Spanish Government was taking taxpayer money to give itself preferential treatment over ordinary investors.

 

Indeed, those investors who owned shares in the seven banks that merged to form Bankia lost their shirts. They were wiped out and lost everything.

 

Bankia was then taken public in 2011. Spanish investment bankers convinced the Spanish public that the bank was a fantastic investment. Over 98% of the shares were sold to Spanish investors.

 

One year later, Bankia was bankrupt again, and required the single largest bailout in Spain’s history: €19 billion. Spain took over the bank and Bankia shares were frozen on the market (meaning you couldn’t sell them if you wanted to).

 

When the bailout took place, Bankia shareholders were all but wiped out, forced to take huge losses as part of the deal. The vast majority of them were individual investors (the bank currently faces a lawsuit for over 140,000 claims of mis-selling shares).

 

So that’s two wipeouts in as many years.

 

The bank was taken public a year a second time later in May 2013. Once again Bankia shares promptly collapsed, losing 80% of their value in a matter of days. And once again, it was ordinary investors who got destroyed.

 

Indeed, things were so awful that a police officer stabbed a Bankia banker who sold him over €300,000 worth of shares (the banker had convinced him it was a great investment).

 

Which brings us to today.

 

Bankia remains completely bankrupt. But its executives and the Spanish Government continue to claim that things are improving and that the bank is on the up and up. Indeed, just a few weeks ago, the Wall Street Journal wrote an article titled “Investors Show Interest in Bankia.”

 

The story featured a quote from Spain’s Finance Minister that, “… it is logical. The perception of Spain has improved and Banki has improved a lot.”

 

Bear in mind, this is a bank that has wiped out investors THREE times in the last THREE YEARS. So that’s three different rounds of individual investors being told that Bankia was a great investment and losing everything.

 

Every single one of these wipeouts was preceded by both bankers and Spanish Government officials claiming that “everything had been fixed” and that Bankia was a success story.

 

And now the Spanish Government is trying to convince them to line up for a fourth round.

 

This kind of fraud and lawlessness is unbelievable to me. But it is indeed how the world works today. Those who have power will do anything they can to retain it. This includes, lying, cheating, and stealing.

 

And while certain items relating to this story are unique, the morals to Bankia’s tale can be broadly applied across the board to the economy/ financial today.

 

Those morals are:

 

1)   Those in charge of regulating the system will lie, cheat and steal rather than be honest to those who they are meant to protect (individual investors)

2)   Any financial problem that surfaces will be dealt with via fraud or lies rather than taking a hit. This will include short selling bans, stocks being frozen, bail-ins, and worse.

3)   When the inevitable collapse finally does hit, it will be individual investors and the general public who get screwed.

 

For a FREE Special Report outlining how to profit from bear market crashes and bull market runs, swing by: http://phoenixcapitalmarketing.com/special-reports.html

 

Best Regards

Phoenix Capital Research 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/kilQQFdWBZU/story01.htm Phoenix Capital Research

Submitted by Lance Roberts of STA Wealth Management,

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/gWFad6Om1f0/story01.htm Tyler Durden

Once upon a time, money – in the form of precious metals – used to be literally dug out of the earth. Limitations on the amount that could be mined, and on how much growth could be borrowed from the future (all debt is, is future consumption denied), is why eventually the world’s central bankers moved from money backed by precious metals, to “money” backed by “faith and credit”, in the process diluting both. It was the unprecedented explosion in credit money “creation” that resulted once money could be “printed” out of thin air that nearly destroyed the western financial system. Which brings us to Bitcoin, where currency “mining” takes place not in the earth’s crust, or in the basement of the Federal Reserve, but inside supercomputers.

It is these supercomputers, that are the laborers of the virtual mines where Bitcoins are unearthed, that the NYT focuses on in a recent expose:

Bitcoins are invisible money, backed by no government, useful only as a speculative investment or online currency, but creating them commands a surprisingly hefty real-world infrastructure.

 

Instead of swinging pickaxes, these custom-built machines, which are running an open-source Bitcoin program, perform complex algorithms 24 hours a day. If they come up with the right answers before competitors around the world do, they win a block of 25 new Bitcoins from the virtual currency’s decentralized network. The network is programmed to release 21 million coins eventually. A little more than half are already out in the world, but because the system will release Bitcoins at a progressively slower rate, the work of mining could take more than 100 years.

As the following chart shows, in addition to the surge in the price of Bitcoin, another explosion witnessed recently is in the processing power of the Bitcoin network: from non-existent a couple of years ago, the “mining” power dedicated to hashing, or the calculations used to extract new Bitcoins, has risen to nearly 10 quadrillion per second!

So what do these supercomputer-populated mines look like? Below we look at two examples of just that.

* * *

First, we look at Hong Kong, where one of the largest Bitcoin mines in the world is located.

In an industrial backwater near Hong Kong’s massive port, one of Asia’s largest Bitcoin mines is quietly turning raw computing power into digital currency.

Located about eight miles from the city’s finance hub, the entire facility is no larger than a two-bedroom apartment. Aside from a small bathroom, the mine offers no creature comforts.

It is dominated by vertical racks that house hundreds of ASIC chips. Shorthand for application-specific integrated circuits, these chips are custom-built to mine bitcoins.

These racks house hundreds of ASIC chips used to mine bitcoins.

Chinese investors have been enthusiastic early adopters, a trend amplified by a lack of more traditional investment vehicles in the country

The Kwai Chung mining facility is extremely quiet — except for the whirr of computers

Industrial bitcoin mines devote their massive amounts of computing power to working on the algorithm, and are rewarded with an equivalent share of bitcoins. Currently, a winner is rewarded with 25 bitcoins roughly every 10 minutes.

A closer look at the towers. Most of the facility is devoted to mining for an investor group in China.

Miners are lured to Hong Kong because of its proximity to chipmakers in China and the city’s permissive regulatory environment.

A bubbling liquid produced by 3M cools the ASIC chips.

This mine was purpose-built by Allied Control for clients based in China.

Kar-Wing Lau, Allied Control’s vice president of operations, said the mine is cheaper to run and more efficient than many others because it uses a technology called immersion cooling.

Heat sinks and fans are typically used to disperse the heat generated by massed ranks of computer chips, but this Hong Kong mine is liquid-cooled using a product developed by 3M.

The processors used in the mine were build specifically for mining. They have no other function. “These ASIC chips, they can mine bitcoins and do nothing else,” Lau said. “Given the pace of advancement, we need them to be constantly upgraded.”

These radiators, housed on a balcony outside the mine, help disperse heat produced by the chips.

Immersion cooling allows Allied Control to leave less space between the chips, which saves money that would otherwise be spent on rent.

The technology also cuts down on electricity use — one of the other major costs associated with Bitcoin mining. Lau wouldn’t reveal how much it cost to build the mine, but he said that electricity bills for a fully-operational mine of this size would typically exceed $50,000 per month.

“The real question from a business perspective is how efficiently you can run your mining operation,” Lau said.

The inside of the racks used to house the mining chips.

Cooling, however, is only one of the key factors when determining Bitcoin “mine” placement. Another key one: access to cheap electricity, because those massive servers sure soak up a lot of electricity: electricity, whose costs can quickly add up once a parallel processing cluster gets big enough.

* * *

Which brings us to Bitcoin mega-mine #2 in Iceland.

It is here that the NYT goes searching for digital excavators used to procure the digital currency.

On the flat lava plain of Reykjanesbaer, Iceland, near the Arctic Circle, you can find the mines of Bitcoin.

 

To get there, you pass through a fortified gate and enter a featureless yellow building. After checking in with a guard behind bulletproof glass, you face four more security checkpoints, including a so-called man trap that allows passage only after the door behind you has shut. This brings y
ou to the center of the operation, a fluorescent-lit room with more than 100 whirring silver computers, each in a locked cabinet and each cooled by blasts of Arctic air shot up from vents in the floor.

 

“What we have here are money-printing machines,” said Emmanuel
Abiodun, 31, founder of the company that built the Iceland installation,
shouting above the din of the computers. “We cannot risk that anyone
will get to them.”

 

Mr. Abiodun is one of a number of
entrepreneurs who have rushed, gold-fever style, into large-scale
Bitcoin mining operations in just the last few months. All of these
people are making enormous bets that Bitcoin will not collapse, as it
has threatened to do several times.

Iceland’s low electric bill and its effective infrastructure, may be a reason why the one country that rebelled against the banker syndicate and jailed some of its bankers, may become the place where the bulk of Bitcoin mining takes place:

The computers that do the work eat up so much energy that electricity costs can be the deciding factor in profitability. There are Bitcoin mining installations in Hong Kong and Washington State, among other places, but Mr. Abiodun chose Iceland, where geothermal and hydroelectric energy are plentiful and cheap. And the arctic air is free and piped in to cool the machines, which often overheat when they are pushed to the outer limits of their computing capacity.

 

The operation can baffle even those entrusted with its care. Helgi Helgason, a burly, bald Icelandic man who oversees the data center that houses the machines, said that when he first heard that a Bitcoin mining operation was moving in he expected something very different. “I thought we’d bring in machines and put bags behind them and the coins would fall into them,” said Mr. Helgason, with a laugh.

No coins, but the cash miners get in exchange for BTC, especially if each Bitcoin continues to trade close to $1000, the mining can be quite lucrative. The flipside, however, is that the business is just as if not more capital intensive than running a gold mine for the same profit.

Until just a few months ago, most Bitcoin mining was done on the home computers of digital-money fanatics. But as the value of a single Bitcoin skyrocketed over the last few months, the competition for new coins set off a race that quickly turned mining into an industrial enterprise.

 

“Even if you had hardware earlier this year, that is becoming obsolete,” said Greg Schvey, a co-founder of Genesis Block, a virtual-currency research firm. “You are talking about order-of-magnitude jumps.”

 

The work the computers do is akin to guessing at a lottery number. The faster the computers run, the better chance of guessing that right number and winning valuable coins. So mining entrepreneurs are buying chips and computers designed specifically — and only — for this work. The machines in Iceland are worth about $20,000 each on the open market.

…

 

In February, Mr. Abiodun used the investors’ money to buy machines
from a start-up dedicated solely to manufacturing specialized mining
computers. The competition for those computers is so intense that he had
to pay for them and wait for delivery.

 

When the delays became lengthy, however, he went on eBay and paid
$130,000 for two high-powered machines, which he set up in June in a
data center in Kansas City, Kan.

 

This was the beginning of Mr. Abiodun’s company, Cloud Hashing, which
rents out computing power to people who want to mine without buying
computers themselves. The term hashing refers to the repetitive code
guessing that miners do. 

 

Today, all of the machines dedicated to mining Bitcoin have a
computing power about 4,500 times the capacity of the United States
government’s mightiest supercomputer, the IBM Sequoia, according to
calculations done by Michael B. Taylor, a professor at the University of
California, San Diego. The computing capacity of the Bitcoin network
has grown by around 30,000 percent since the beginning of the year.

What is the upside of mining?

At the end of each day, the spoils are divided up and sent to Cloud Hashing’s customers. Last Wednesday, for example, the entire operation unlocked 225 Bitcoins, valued at around $160,000 at recent prices. Cloud Hashing keeps about 20 percent of the capacity for its own mining.

To be sure, like any industry in its infancy, there are numerous glitches, and mining for Bitcoins is no different:

Some Cloud Hashing customers have also complained on Internet forums that it can be hard to get a response from the company when something goes wrong. But this has not stopped new contracts from pouring in. Cloud Hashing now has 4,500 customers, up from 1,000 in September.

 

Mr. Abiodun acknowledges that the company has not been prepared to deal with its rapid growth. He said he had used $4 million raised from two angel investors to add customer service representatives to offices in Austin, Tex., and London. Cloud Hashing is now preparing to open a mining facility in a data center near Dallas, which will hold more than $3 million worth of new machines being produced by CoinTerra, a Texas start-up run by a former Samsung chip designer.

 

The higher energy costs — and required air-conditioning — in Texas are worth it for Mr. Abiodun. He wants his operation to be widely distributed in case of power shortages or regulatory issues in one location. But he is also expanding his Icelandic operation, shipping in about 66 machines that have been running for the last few months near their manufacturer in Ukraine.

 

Mr. Abiodun said that by February, he hopes to have about 15 percent of the entire computing power of the Bitcoin network, significantly more than any other operation.

Hopefully Bitcoin will still be around by then.

* * *

The future of Bitcoin mining is uncertain. There are a fixed number of bitcoins available — and more than half have already been extracted. Kar-Wing Lau of the Hong Kong-based Allied Control, compared the explosion of professional mining operations to an arms race. For now, it appears to be a profitable endeavor. Lau said that Allied Control is currently exploring other mining platforms, including a mine built in a shipping container — something that could prove useful if regulators crack down on the currency.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4MWtLPESfGA/story01.htm Tyler Durden

Since Carl Icahn is offline (one can’t tweet the market or AAPL higher when it’s closed), here is Bill Gross with some twitter Christmas non-cheer.

Gross: HoHoHo! Who cant like a ~25% gain in 2013? Only a Grinch who worries abt record profit margins, corp buybacks &Fed checkwriting. Moi?

— PIMCO (@PIMCO) December 25, 2013

Of course, the 25% return in 2013 was for Bernanke’s favorite asset class: stocks. Bonds… not so much.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_FmIHLX5gvM/story01.htm Tyler Durden