Bitcoin: The Most Impressive Speculative Bubble In Modern History


Do you believe in Bitcoin’s future as the currency of choice?

The same technology that makes bitcoin secure as a means of exchange also makes it hideously inefficient compared to other payment technologies. But the more serious objection to bitcoin is that it enables criminals and terrorist organizations to move value around the world out of sight of national governments and law enforcement. Some nations that have already banned bitcoin include China, India, Sweden and Vietnam. So far none of the Anglo nations have been willing to prohibit this overt act of criminality – at least not yet.

The complete article

Christopher Whalen — The American Conservative

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The evolution of the Federal Reserve’s promises as recorded on their banknotes


Promises made on banknotes have changed over time. Interesting blog looking at these changes.

Most members of the public don’t know how the underlying monetary systems work, but they do see what is printed on its banknotes. To the public, the morphing set of promises on the face of a Federal Reserve note would have been one of the more visible manifestations of a shift from a mish mash of paper currencies issued by two different institutions and pegged to gold… to one single legal tender currency issued by the U.S.’s now-dominant monetary institution, the Fed—the Treasury receding into the background.

The complete article

JP Koning — Moneyness

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Wall Street’s Best-Kept Secret Is a 72-Year-Old Russian Chess Expert


In contrast with chess’s deliberative reputation, Alburt says the game helps traders think on their feet. “Strong chess players are good at making quick, usually correct decisions,” he says. “Traders are basically doing the same things as chess ­grandmasters: You have to make quick decisions in by definition uncertain circumstances.” Other chess attributes that help those high up on the ladder, he says, are its emphasis on logic and “making people responsible for their decisions.” Or as Icahn puts it: “If he’s a good chess player, he has a good math mind. So if he’s a good player, he’s not an idiot.” Hirsch of Seneca Capital agrees. “There’s a great satisfaction in ­envisioning how something is going to play out and be right,” he says. While playing chess, Hirsch adds, he credits Alburt “with any good moves I make.” The blunders, he notes, “are all mine.”

The complete article

James Tarmy — Bloomberg

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From Bitcoin to Ethereum


These crypto currencies have been hot topic of discussion recently with the success of Ethereum. Today’s needull tries to explain what these are and the differences between Bitcoin and Ethereum.

The Ethereum blockchain is much faster than that of Bitcoin. The delay between two blocks in the bitcoin system is around 12 seconds. The propagation time of a block through the network, understandably, poses de facto new challenges. The Ethereum protocol provides solutions in both cases. Moreover, and this is the great innovation of this platform, one can arbitrarily store data on the blockchain—by which I mean smart-contracts—that are, in fact, programs written in a complete Turing language. There is thus no restriction on the complexity of programs that can be deposited on this particular blockchain.

The complete article

Aurélien Alvarez, reply by Jean-Paul Delahaye — Inference

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All in the Family Debt

What do social conservatism and neoliberalism have in common? They both undermine community responsibility and force families to take on cross-generation debt.

Indeed, many of the policy reforms after the Reagan revolution can be understood as an attempt to reinvent the imperative of familial responsibility in the new idiom of household debt. As policymakers imposed cuts to health, education, and welfare budgets, they simultaneously identified the family as a wholesale alternative to the twentieth-century social state. And as the responsibility for deficit spending shifted from the state to the household, the private debt obligations of family were defined as foundational to socioeconomic order. The family, not the state, would bear primary responsibility for investing in the education, health and welfare of children.

Boston Review

Image: Painting by Brianna Keeper

Why regulators should focus on bankers’ incentives


This is an article advocating incentives and disincentives on bankers rather than banks.

Regulators should not levy fines on banks, despite them having the legal status of a person, and instead apply the fines to those responsible at the time of the offense, whether subsequently retired or not.  As earlier noted, the onus of proof should be on the managers of those who committed the misdeed, and so on up the hierarchy, to convince (a jury) that they took all reasonable steps to prevent the misdeeds of their subordinates.  The size of fine could be related positively both to the extent of negligence and to rank.

Of course, the threat of personal liability and loss could make bankers overly cautious, as is often said of US medical practice, with unnecessary and costly tests of patients to reduce the threat of suits.  As usual, there would be an optimum internal degree of liability, but we are currently well below it.

The complete article

Charles Goodhart – Bank Underground

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Ten Years after the Crisis

A decade has passed since 2007, the year sub-prime loans began to default, signalling the start of the financial crisis which shook the world within months of its beginning. Governments have changed, foreign exchange rates are back to pre-2007 era, real estate rates have stabilized, jobs are back but the banking sector is still dealing with the aftershocks and it still remains under intense public and political scrutiny.

The very memory of 2007-08 sends shivers down bankers across the globe

So, the question that remains after 10 years since world’s largest banks began to feel the tremors that would ultimately lead to their end, what exactly is the future of banking?

Today’s Needull, a recent article from The Economist, sums it up all, as it looks at the various changes triggered by this financial apocalyse, over the decade.

So have the banks at last put the crisis behind them? This special report will argue that many of them are in much better shape than they were a decade ago, but the gains are not evenly spread and have further to go. That is particularly true in Europe, where the banks’ recovery has been distinctly patchy. The STOXX Europe 600 index of bank share prices is still down by two-thirds from the peak it reached ten years ago this month. European lenders’ returns on equity average just 5.8%.

America’s banks are significantly stronger. In investment banking, they are beating European rivals hollow. They are no longer having to fork out billions in legal bills for the sins of the past, and they are at last making a better return for their shareholders. Mike Mayo, an independent bank analyst, expects their return on tangible equity soon to exceed their cost of capital (which he, like most banks, puts at 10%) for the first time since the crisis.

Full Article Here

The Economist – Patrick Lane

Original Blog: Brazen Banker

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