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Authored by Sven Henrich via,

I got a freak chart for you that’s stunning, but bear with me here because it requires some background and patience. Most of us are focused on the daily or weekly action and it’s easy to lose sight of big cyclical trends. We don’t think of them as they take a long time to unfold and the daily noise is so much more dominant.

With the advent of permanent central bank intervention sparked by the financial crisis all of us have come accustomed to markets always going up with the occasional correction in between and the timing of corrections have seemingly become shorter and shorter. Big fat bottoms that happen after just a few days of temporary terror. We haven’t seen a true bear market since the financial crisis and even that one lasted barely more than a year as central banks stepped in. The last longer term bear market came after the technology bust in 2000 when markets bottomed in 2002 and 2003 and then proceeded onto the next bull market.

It didn’t always used to be this way. Going back to 1900 there were multiple extended periods of stock markets going nowhere and trading in wide chop ranges:

One could even argue that the period between 2000 and 2012 was such a period before markets finally broke above their 2007 highs.

But looking at this very long term chart we can note consolidation periods that were much longer, most notable the period between the 1960’s and the early 1980’s. No progress whatsoever, but then something happened and the answer should be obvious: The advent of personal computing, the internet and information technology. It changed everything and accelerated the world to never before seen wonders. But it also has come at a cost and we may be seeing the effects of this cost unfold in front of our eyes.

View it from a big macro perspective: Central banks have done their best to lead a global economy back to organic growth coming out of the financial crisis. The promise was full employment and inflation back to 2%. If you look at the official statistics they’ve met their unemployment goal, but they kept missing on the inflation front. Why? Because they are fighting the greatest deflationary force known to man: Technology. Companies like Facebook and Netflix have stamped out massive audience businesses requiring few people to serve them. The scalability of technology is incredible. Hence the economic model has changed and it’s all a bit inefficient for the many, but highly effective for the few. It is no accident that wealth inequality has expanded to the extreme degrees we witness today. It’s no accident that the tech titans are the richest people running around the planet. And given central banks’ desperate actions to ward off these deflationary forces they’ve enabled not only the renewed acceleration of asset bubbles again benefitting the very few, but they’ve also encouraged the taking on of unprecedented government and corporate debt and BBB rated junk debt in the process.

And now it gets interesting. In 2018 we witnessed a global blow-off top following 10 years of central bank intervention and following the US tax cut. Peak artificial liquidity. Global central bank balance sheets peaked in January 2018.

Where did the $DJIA stop? Not at some arbitrary point. No sir, it stopped at a very particular point, a point only a freak chart can suggest.

As many of you know I’m a big fan of trend lines and here it is, the freak chart:

1929 top, 2000 top, 2018 top (if 2018 is a top), but there is little denying the obvious: The $DJIA stopped twice in 2018 at a trend line that dates back to the starting points of 2 major crashes. 1929, and the 2000 technology crash.

The consequences? Immediate doom and gloom? I can’t say, what I can say is that this trend line has been massively relevant and is very much confirmed. Some may dismiss it as a fluke of course, but that would be a hell of a fluke.

Note there is a lower trend line there. This lower trend line has been left in the dustbin of history, untouched since the advent of the technology boom. The world has changed greatly since the 1980s, but the ghosts of historic debt expansion and slowing growth are all around us. If we can’t see massive organic growth with the largest artificial liquidity injection in human history what will it take? I have to ask.

What if it took all this artificial liquidity to barely squeak out 2% growth? That spike in GDP growth in the US last year? Looks very much temporary as the effects of the tax cut barely lasted 9 months.

Here’s the latest global growth forecast by the IMF:

2020 starts in less than 12 months and look at those far right columns.

Nobody wants to predict a recession of course, but these numbers are skirting awfully close to a recession.

1.3% GDP growth for Germany in 2019? 0.5% GDP growth for Japan in 2020? All these places still have negative rates and/or full intervention. US sub 2% in 2020 while the country is running trillion dollar deficits?

That’s the grand result of 10 years of artificial liquidity injections?

What if that’s the best this new economic reality could achieve under the structural circumstances? What if the technology growth boom is petering out? What’s $AAPL’s next big path to growth? Another iPhone version? Hardly.

No, it may just be that slowing growth globally will force the world to come to terms with the largest debt expansion in history and perhaps all of a sudden all that BBB rated junk debt will become very relevant very quickly:

Who is to say? I suggest nobody knows because the world has never before been in these circumstances.

But if things do indeed turn sour than our freak chart has some potential technical destinations to consider:

I’ve added some fibs to this long term chart and adding to the intrigue is the fact that these fibs line up with major previous market pivot points. Perhaps that’s just another fluke, but is it so unreasonable to presume that a 10 year record liquidity injection and record debt expansion has perhaps caused asset prices to overshoot? Just reversing back to the 2015/2016 area would constitute a .382 fib retrace. A 50% retrace would bring $DJIA back to the 2007 highs. A .618 fib retrace would bring $DJIA back to the 2011 lows and perhaps tag the lower trend line, timing dependent.

In context of a 90 year chart is such a technical retrace to the lows of just 8 years ago unreasonable? I have to ask.

Especially if you realize that 61.8% of the gains in that 90 year $DJIA chart have come in just the last 8 years. 

Ponder that.

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Author: Tyler Durden
Posted: January 23, 2019, 12:55 am

How did Tesla accelerate from 0-60 mph in such a short period of time?

Today’s five-minute-long animation is presented in association with Global Energy Metals, and it tells you everything you need to know about the history of Tesla, including Elon Musk’s vision for the future of the iconic electric car company.


The video primarily keys in on Tesla’s successes and the setbacks the company has faced along the way – it also shows that Tesla was able to pass Ford in market value just seven years after the company’s IPO.


As Visual Capitalist's Jeff Desjardins notes, the above video is the culmination of our Rise of Tesla Series, which also includes three full-length infographics that tell a more in-depth story about the history of Tesla, and what the company aspires to:

1. Tesla’s Origin Story (View infographic)

  • What was the vision behind the founding of Tesla?
  • Early hurdles faced by the company, including its near escape from the brink of bankruptcy
  • Elon Musk’s takeover of the company, and the dramatic actions taken to keep it alive
  • A timeline showing the development of the Roadster, and why this first car matters

2. Tesla’s Journey: How it Passed Ford in Value (View Infographic)

  • The company’s plan to parlay the Roadster’s success into a viable long-term company strategy
  • Introducing the Tesla Model S and Model X
  • How the company would use the Gigafactory concept to bring economies of scale to battery production
  • Other milestones: Powerwall, Autopilot, and Tesla’s growing Supercharger network
  • The announcement of the Model 3

3. Elon Musk’s Vision for the Future of Tesla (View Infographic)

  • Detailing Tesla’s ambitions for the future, including how it plans to productize the factory
  • Other vehicles Tesla plans to release, including the Tesla Semi and a future ultra low cost model
  • How Tesla plans to combine fully autonomous cars with the future sharing economy
  • Exploding demand for lithium-ion batteries, and why Tesla is planning on building additional Gigafactories
Author: Tyler Durden
Posted: January 23, 2019, 12:35 am

Authored by Charles Hugh Smith via OfTwoMinds blog,

The social media/search giants have mastered the dark arts of obfuscating how they're reaping billions of dollars in profits from monetizing user data, and lobbying technologically naive politicos to leave their vast skimming operations untouched.

I've been commenting on the cancerous disease that's taken control of the Internet-- what Shoshana Zuboff calls Surveillance Capitalism--for many years. Here is a selection of my commentaries:

800 Million Channels of Me (February 21, 2011)

The New Facebook Buttons: Promote, Despise, Abandon (November 1, 2012)

How Much of our Discord Is the Result of the "Engagement" Advert Revenue Model of Social Media? (October 24, 2017)

Are Facebook and Google the New Colonial Powers? (September 18, 2017)

Hey Advertisers: The Data-Mining Emperor Has No Clothes (September 15, 2017)

The Demise of Dissent: Why the Web Is Becoming Homogenized (November 17, 2017)

Should Facebook, Google and Twitter Be Public Utilities? (March 5, 2018)

Should Facebook and Google Pay Users When They Sell Data Collected from Users?(March 22, 2018)

The Blowback Against Facebook, Google and Amazon Is Just Beginning (April 27, 2018)

How Far Down the Big Data/'Psychographic Microtargeting' Rabbit Hole Do You Want to Go? (April 25, 2018)

If you've followed any of my analyses, it will come as no surprise that I've concluded the only way to restore the health of the Internet is to ban all collection of user data. That's right, a 100% total ban on collecting any user data whatsoever.

We need to distinguish between customer/supplier data and user data. If a social media or other corporation wants to collect data from people who pay it money for services rendered, or from suppliers that it pays for services, then that process of data collection should be 100% transparent.

A customer pays for a service in cash; a user pays nothing. A company might want to collect data from its paying customers in order to upsell them or serve them better, and corporations who produce goods and services might want to collect data from the suppliers they pay.

Banning the collection of any data from users would of course destroy much of the revenues of companies such as Facebook, Google , Twitter, Instagram et al. It would also destroy the perverse incentives these corporations have institutionalized and excused as "garsh, you can't stop the advance of technology," as if their pursuit of Surveillance Capitalism were somehow an inevitable outcome of the Internet rather than a malign disease that's undermining democracy and the free flow of diverse opinions and dissent that is the foundation of functional democracy.

By banning the collection of any and all user data, the social media/search giants would become quasi-public utilities, providing whatever service they offer for free and collecting revenues from other businesses for services such as display advertising--advertising which cannot be targeted at specific groups of users because there is no data on users to exploit.

If you think this is unrealistic, look at craigslist. Craigslist is free to individual users, and it doesn't collect and sell user data to make billions of dollars. It sells adverts to businesses such as auto dealers and companies placing employment ads. These income streams are more than enough to fund the operational expenses and reap the owners a substantial profit.

Surveillance Capitalism is all about creating the illusion of privacy controls. The social media/search giants have mastered the dark arts of obfuscating how they're reaping billions of dollars in profits from monetizing user data, and lobbying technologically naive politicos to leave their vast skimming operations untouched.

Keep it simple: ban all collection of user data--no exceptions. That will be easy to enforce and easy for all participants to understand.

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Author: Tyler Durden
Posted: January 23, 2019, 12:15 am

China's People's Liberation Army (PLA) has announced major changes aimed to transform itself into a modern fighting force taking its focus away from land-based fighting which has defined much of the 20th century since WWII whiling boosting its navy, air force and new strategic units focused on emerging hi-tech threats such as cyberwarfare. 

A new report this week in the official Xinhua News Agency has touted the military's "transformational changes" which has seen its infantry and ground operations branch outpaced by the others as part of what's described as a "strategic shift designed to transform the People’s Liberation Army into a comprehensive modern force." The shift is so significant that it's seen the navy, air force, rocket force and a "strategic support force" (responsible for areas like cyberwarefare) climb to over the 50% of total PLA troops, further leaving the total number of officers in the PLA reduced by 30% (as traditionally large ground forces require more officers for those units). 

Calling the shift "unprecedented," Xinhua described the reorientation in the PLA's priorities a result of President Xi Jinping's 2015 pledge to downsize the number of personnel by 300,000 in order to rapidly bring the armed forces into the modern era, which has largely left massive infantries and "front" warfare behind. 

But regardless of the huge reduction China still has by far the largest military in the world by sheer numbers, with 2 million active servicemen and women, down from 2013, when a defense white paper puts its combined branches at 2.3 million servicemen, with only 235,000 in the Navy and 398,000 in the Air Force. By comparison, the United States claims nearly 1.3 million total active military personnel and another 800,000 in reserves. 

With China's army now taking a backseat, Beijing is expected to continue shifting away from mere homeland-based defense to engaging threats by air and sea, increasingly in disputed waters in places like the East and South China China, and in protection of its interests abroad as its "Belt and Road Initiative" continues to take root. 


In announcing the strategic shift, state media cited a Shanghai-based military analyst, Ni Lexiong, to say that Beijing is responding to the rapidly transforming battlefield: “The Chinese military used to… operate following the model established in the second world war,” he said. “It had to be reformed and optimized to meet the pressing needs of the changing times and this is the purpose of the overhaul,” continued Ni.

This includes, he explained, the necessity of reducing the redundancy which comes with an oversized infantry and ground operations force: “In the old set-up, the PLA had too many officers. In this overhaul, all these officers must find new positions and adapt or they will be made redundant,” said Ni.

The leaner force aims to prioritize advanced defense technology to bring the PLA up to par with global rivals, such as the United States, which by all accounts has established global military superiority though never having the largest forced based on sheer numbers. 

Author: Tyler Durden
Posted: January 22, 2019, 11:55 pm

Update: Newark airport has been given the green light to resume normal operations following the drone incident. 

Normal #EWR operations have resumed after arrivals were briefly held by the FAA due to reports of drone activity north of the airport earlier this evening. We’re coordinating with the FAA & fully supporting all federal law enforcement authorities as they investigate this incident

— Newark Liberty Airport (@EWRairport) January 23, 2019


The Federal Aviation Agency ordered Newark Liberty International Airport to halt flights temporarily after a drone sighting, according to Bloomberg

The civilian drone was spotted just north of the New Jersey hub flying at an altitude of 3,500 feet according to FAA spokesman Greg Martin on Tuesday. 

The grounding comes one week after the Trump administration announced a long-awaited set of proposals allowing drones to fly at night and over populated areas without a waiver, while also tightening security for industries seeking to expand into robotic aerial deliveries. 

Under the proposed rule change, the FAA would require drone operators to have "an anti-collision light illuminated and visible for at least 3 statute miles." Those weighing under 0.55 pounds could fly over populated areas without additional restrictions. Manufacturers of drones weighing more than that would have to prove to the FAA that if their product "crashed into a person, the resulting injury would be below a certain severity threshold." 

In recent weeks, London's Gatwick and Heathrow airports had drone incidents which resulted in major travel disruptions. Last week, 38-year-old George Rusu was charged with flying a drone near Heathrow on Christmas Eve - just days after a scare at Gatwick grounded over 1,000 flights. 

Author: Tyler Durden
Posted: January 22, 2019, 11:37 pm

Via The Zman blog,

Usually, when you seek to take over something, you try not destroy it in the process of acquiring it. For example, if you’re trying to rise up the ranks of an organization, you don’t want to discredit the organization in the process. What’s the point of rising up the ranks, if the post you finally attain has been made worthless? This “conservative” instinct becomes stronger once you have gained control of whatever it was you were after. Now it is yours and you do what you must to protect and increase its value.

For example, when the Left took over the institutions of the American ruling elite, they were careful to not destroy them in the process. They destroyed the people in their way, for sure, but they were careful to avoid damaging the institutions too much. In fact, they worked to increase the power of the government, the schools and the colleges once they gained power over them. Today, logic says the Left should be extremely conservative, not wanting to alter anything, for fear of diminishing the power of what they have.

That’s the curious thing about what we are seeing from the Left. They have a firm grip on all of the institutions of the empire. They control the mass media. They control the administrative state and the education system. Global corporations are now run by people deeply invested in virtue signaling. The days of the Left having to pressure big business to do their bidding are long over. Big business is the vanguard of the Left now. Despite this, the Left is running around trying to scramble all of the rules.

When you’re in charge, the rules are your friend. After all, you get to write the rules, pick the people who enforce the rules and pick the people who interpret the rules. That is one of the best perks of being in control of the institutions. The people in charge of the empire should be the great defenders of law and order, as the rules work in their favor. Instead, everywhere you look, the Left is trying to destroy the authority and legitimacy of the things they control. It’s as if they are trying to burn down their own house to spite us.

A good example is the two big fake news stories this past week.

The first one was an obvious put up job by some hack political operators. There was no way it could hold up under scrutiny. Left-wing media should have attacked it in order to maintain what little credibility they have on these issues. Similarly, they fell for the story about the teenagers and the Indian protester. Official media should have been all over debunking that story, as that would have made them look responsible and humane.

Instead, they helped egg on the feeding frenzy. Even if the facts were as originally presented, normal people will always take the side of a kid over an adult in a situation like this. It’s not as if the kids were a gang of blacks attacking an old man in the subway. They just stood their ground and peacefully protested on behalf of their issue. More people were red pilled by that story than by all the alt-right internet memes combined. The media frenzy was suicidal, self-destructive and avoidable.

Now, it could simply be the case where their fanatics on social media make it impossible to put the brakes on these feeding frenzies. A left-wing idiot posts fake news on Twitter and within hours it is retweeted a million times by other left-wing idiots. The speed of the process makes it impossible for the more sober minded media operations to react in a timely fashion. Before they can react, the fake news has rocketed around the internet and the debunking of it is well under way.

That’s not the case in other areas where you see the Left damaging their own cause. For example, they are undermining the law in an effort to swat at flies. Two years after Charlottesville, left-wing lesbian lawyer Roberta Kaplan is asking the court to manipulate Federal law so she can harass alt-right activists. Her scheme relies on reinterpreting old laws aimed at the KKK to terrorize people who attended the rally. Kaplan is a billionaire and she is suing people who don’t have two nickels to rub together.

This is not strictly an American issue. In Canada, two left-wing professors are suing a student, because the student shared a Jordan Peterson video. This video was so upsetting and triggering to the professors, they went on a crazy rant about Peterson on social media. They now fear he may sue them, so they are suing the student in an effort to shift the blame onto her. That sounds insane, but given the state of the courts in Canada, it is not out of the question that the student loses the case.

The only possible outcome of this sort of lawfare is to convince people that the law is a fraud. The only way a legal system can function is if the people think the law is both rational and predictable. Even if people don’t like the laws, they will obey them as long as the law is predictable. If left-wing lawyers manage to subvert the law by getting left-wing judges to sign off on what amounts to state terrorism, the law becomes the enemy of the people. The value of controlling the law and the courts declines.

Even if you want to put this sort of stuff aside as the actions of rogue individuals and mindless idiots on-line, think about some of the policies the Left is championing. One big item on their list is the normalization of open borders by debasing the value of things like driver’s licenses. States with left-wing government are in a rush to issue driver’s licences to illegals. This will result in so much fraud that the picture ID will lose its value. All levels of government count on those ID’s being mostly accurate.

It’s not just for the benefit of foreigners. New York State is now offering a third option for biological sex. A big part of how the state keeps tabs on the citizenry is having their personal information, usually through the driver’s license process. How long before the body dysmorphics start demanding they can describe themselves as they feel they should be described, rather than their actual description? Cops will be looking for people claiming to be dinosaurs, having licenses with pictures of a T-Rex on them.

When you start to tabulate the radical agenda and the ad hoc activity of the Left, the most obvious conclusion is there is little coordination. The people at the top have lost control of the monster they created. They dream of creating a coalition of non-whiles, over which they will preside, so they can control the empire. The trouble is their coalition is always reminding the other side that such an arrangement will be a catastrophe. Again, the Left is mostly just radicalizing white people now.

The other conclusion is the radicalism of the Left has no limiting principle, so it has to spiral out of control. Like the Khmer Rouge, the logical end of this new radicalism is an orgy of self-destructive violence. That means it will not burn out on its own as happened in the 1970’s with student radicalism. This round of radicalism is for keeps and the Left will not stop until they are stopped. That’s going to put an end to civic nationalism and any thoughts of restoration. Whatever comes next comes after the final conflict.

Author: Tyler Durden
Posted: January 22, 2019, 11:35 pm

Is the government shutdown also Vladimir Putin's fault? Following a report released Tuesday by the FBI, we imagine it's only a matter of time before Rachel Maddow and the rest of the left-leaning cable news commentariat come to that conclusion.

In a 72-page-report and press conference, the FBI on Tuesday attacked President Trump for allowing the shutdown (now in its 32nd day) to continue and listed all the ways that break in funding for the DOJ (where the FBI is housed) has impacted its ongoing investigations (though it's worth noting that, according to media reports, the Mueller probe has continued without much of an interruption). Among the functions that have been interrupted: The US attorneys office can't issue grand jury subpoenas, ongoing investigations have been interrupted, agents are struggling to work without pay, and efforts to thwart sex trafficking and anti-gang operations (including investigations into MS-13) have been delayed.

The FBI shared a summary of these gripes in a twitter thread published by the FBI Agents Association. Though agents are still working cases, some agents are struggling to feed their families. All of this culminated with Agents Association President Tom O'Connor calling on lawmakers to pass legislation funding the FBI.

Today at 11:30 am, members of FBIAA's National Executive Board gather for a press conference to discuss the current and lasting impacts of the #GovernmentShutdown on FBI operations and national security. Updates will be shared on this thread.

— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019

Opening statement from FBIAA President @tfoconnor83: "I want to make one point clear: Agents were working cases yesterday, are working cases today, and will be working cases tomorrow. They are doing so without pay and under increasingly challenging conditions."

— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019

"Last night I delivered food to our office break room for those in the office who are in need. The FBI family always comes together in times of crisis, but it's truly sad that we must resort to this."

— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019

"As we said in our petition to elected leaders warning that the failure to fund the FBI could undermine important work on January 10, this is not about politics for Special Agents. For the FBI, financial security IS national security."

— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019

"The failure to fund the FBI undermines essential FBI operations, such as those designated to combat crimes against children, drug and gang crime, and terrorism."

— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019

The FBIAA has compiled stories from active FBI Special Agents about the #GovernmentShutdown's impacts on their work in a report titled "Voices from the Field." Below are some excerpts on FBI operations. The full document can be downloaded at

— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019

Regarding the future of the FBI, @tfoconnor83 says, "The failure to fund the FBI is creating long-term problems by making it more difficult to recruit and retain skilled and experienced Special Agents." Below are excerpts from Voices from the Field on this topic.

— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019

"Our leaders must listen to the voices of the men and women who are committed to protecting our country. We ask our leaders to listen to the Voices from the Field. There is no time for delay - fund the FBI now."

— FBI Agents Association (@FBIAgentsAssoc) January 22, 2019

Some of the anecdotes included in the report offered more details about how the shutdown has affected investigations.

"I have been working a long-term MS-13 investigation for over three years," one FBI employee wrote in the report. "We have indicted 23 MS-13 gang members for racketeering, murder in aid of racketeering, extortion, money laundering and weapons offenses. ... Since the shutdown, I have not had a Spanish speaker in the division. We have several Spanish speaking informants. We are only able to communicate using a three-way call with a linguist in another division."

Several agents claimed that, because the FBI currently cannot pay confidential informants, efforts to curb narcotics trafficking have fallen by the wayside because the bureau is "unable to do undercover" or confidential human source operations that require purchases of guns or drugs from dealers on the street.

In other words, Trump is using the shutdown to exact his revenge on the FBI...and he doesn't care whether it hampers investigations into gangs and drug traffickers.

Read the full report here.

Author: Tyler Durden
Posted: January 22, 2019, 11:15 pm

Authored by Kurt Nimmo,

An Arizona Republican thinks she can get Trump’s wall built by imposing a tax on folks who look at porn on the web. 

AZCentral reports:

Republican state Rep. Gail Griffin, R-Hereford, wants to charge you $20 to look at pornography on the internet.

House Bill 2444 would require companies that make or sell electronic devices in Arizona to install software that blocks porn.

To remove the block, all you’d have to do is prove you are 18 and plunk down $20, payable to the Arizona Commerce Authority.

The money would go into a newly created account called the John McCain Human Trafficking and Child Exploitation Fund, with the proceeds to be used for one of 10 things.  

Don’t be fooled by the title. The legislation is merely another revenue generation scam by the state. It has nothing to do with human trafficking or child exploitation. 

But wait a minute. Maybe AOC (socialist darling Alexandria Occasion-Cortez) should propose a similar idea to pay for her list of free goodies, including the budget-busting idea everybody should be on Medicare and college should be free (an idea that will certainly rile up the loan sharks feeding off student loans). 

Despite her inability to grasp simple economic concepts - seemingly a common problem among the Millennial Generation - AOC might embrace the concept of heavily taxing folks for what they view in the privacy of their own homes. In fact, it can fit comfortably within the context of the Me Too movement. All aspects of “toxic masculinity” are to be eradicated. 

By why stop at porn?

Billionaire Michael Bloomberg, the former mayor of New York, blazed a path with his sugary drink tax. Last year, he put together a task force to look at expanding revenue generation by taxing all manner of unhealthy “lifestyle choices,” including the use of tobacco and alcohol. 

AOC is apparently oblivious to the fact no number of new taxes, including her proposed 70 percent tax rate on millionaires, will satiate the desire for “free things” which are, of course, not free. Billionaires, however, are smart—they invariably come up with ways to avoid the long reach of the tax man, thus leaving the monetary burden to you and me, the little people. 

Maybe I’m not giving this lady a fair shake. It’s possible she realizes no amount of taxation - short of total confiscation of all wealth by the state - will pay for the list of free things she promises habitually gullible citizens. 

It’s possible she understands the only way to pay for free things is to borrow the money and play a few ledger book tricks at the Federal Reserve.

Far too many Americans are oblivious to a massive debt picking up steam like a runaway train descending a 45 degree trajectory. AOC’s supporters - mostly of the clueless socialist stripe - are milling about on the tracks. They are deaf, blind, and dumb to the impending disaster. 

After the smashup, they’ll be out for blood.

Author: Tyler Durden
Posted: January 22, 2019, 10:55 pm

The only companies who have been hurt more by the astounding flop of Apple's latest crop of smartphones have been Apple's suppliers. And following a beat-down in the shares of companies that produce displays, casing and internal components for the phones as Apple has now twice scaled back production guidance in a two month period, perhaps it was inevitable that some of these companies would need to seek some form of financial relief, due to their heavily reliance on the relationship with Apple.

And while so far the headlines relating to Apple's suppliers have focused mostly on layoffs and retrenchment at the companies' factories, for the first time on Tuesday, the Wall Street Journal reported that Japan Display, which manufactures the liquid-crystal displays used in the iPhone XR, is in advanced talks to secure outside funding from Taiwan’s TPK Holdings and the Chinese state-owned Silk Road Fund for a stake as large as 30% (which could give the companies control of a firm that was once deemed a strategic national asset by Tokyo).


And just like that, the first iPhone bailout is one step closer to becoming a reality.

Japan Display Inc. is in advanced talks with Taiwan’s TPK Holdings Co. and Chinese state-owned Silk Road Fund about an investment that would include a stake of about 30% with the possibility of greater control later, people familiar with the matter said. The size of the investment isn’t decided but could reach around ¥60 billion (around $550 million) or more, the people said.

That Japan Display is the first supplier to struggle in the wake of Apple's guidance cut is hardly surprising: The company relied on Apple for roughly half of its revenue during the fiscal year ending in March 2018.

Also, aside from the liquid crystal display used in the iPhone XR, many of the other display products once manufactured by Japan Display have become commoditized - meaning that phone manufacturers can buy similar products more cheaply from producers in China and South Korea. And what's worse for JD, Apple is expected to drop those displays altogether in its batch of phones set to debut in 2020, which are expected to feature an "organic" light-emitting diode display.

Though it's days of being a cutting edge producer of display technology are far behind it, WSJ says Japan Display might still have some value for an Asian producer looking to leverage its ability to mass-produce low-density polysilicon sheets. The deal reported by WSJ hasn't been finalized, but it's looking increasingly likely that TPK and the Silk Road fund will purchase a slug of convertible JD bonds which they can then convert into stock.

TPK of Taiwan makes the touch-panel portion of displays for many smartphones including the iPhone. The Chinese investors are interested in building display factories in China using Japan Display’s technology, people familiar with the plans said. A TPK spokeswoman declined to comment, and Silk Road Fund didn’t respond to a request for comment.

Under the deal being discussed, the investor group wouldn’t initially take a majority stake and some of its money would go to purchase Japan Display bonds convertible into stock, paving the way for fuller control in the future, said people involved in the deal. INCJ, the Japanese government-backed fund, would hold on to its shares for now but might sell its stake in coming years, they said. INCJ currently owns 25% of Japan Display.

Japan Display plans to use the invested money for day-to-day operations and hopes to announce a deal as soon as mid-February, when it reports quarterly earnings, said people familiar with the deal. The investor group is likely to take up the majority of the company’s board, they said.

Final terms haven’t been set, and the deal could still fall apart. Other Chinese companies including display maker BOE Technology Group Co. and touch-panel maker O-Film Tech Co. at one point considered investing in Japan Display but dropped the idea, said people involved in the talks. Representatives of BOE Technology and O-Film Tech didn’t respond to requests for comment.

With Japan Display on the chopping block, we wonder if Apple's other suppliers will come to their senses and start lobbying the iPhone maker to at least consider cutting prices as sales stall and the relative strength in the US dollar makes its phones increasingly unaffordable abroad.

Author: Tyler Durden
Posted: January 22, 2019, 10:35 pm

Since he stopped issuing promo-tweets about ICOs (after allegedly being threatened by the SEC), one-time PC security pioneer turned crypto true believer has been relatively quiet (emphasis on relatively). To wit, he hasn't issued any more outrageous promises about his willingness to consume a certain appendage in front of a live audience should the price of bitcoin not eclipse a certain level, and he hasn't elaborated on an anecdote detailing his penchant for sexual congress with one of the ocean's mightiest mammals.

Whale fucking. No joke. Each year, on Feb 1st, in the Molokai Channel, a few men compete in the world's only whale fucking contest. Humpback whales are easy to fuck- for a second or less. World record: 31 seconds. I competed once. Almost got my ribs crushed. Stick with Ostriches.

— John McAfee (@officialmcafee) June 24, 2018

In fact, he hasn't said much of anything that would be considered headline-worthy. That is, until today.

In a video published on his twitter account, McAfee, who famously fled from murder charges brought by authorities in Belize, revealed to that he is officially on the lam after a grand jury was allegedly convened in Tennessee to pursue unspecified federal tax charges against McAfee and his family.

But don't worry, McAfee fans. Because he isn't giving up on the battle against tyranny. Which is why he will be waging his 'McAfee 2020' campaign in exile...from his boat.

But why exactly is the federal government coming after McAfee? Well, this might be one explanation: According to McAfee, for the last eight years, he has refused to pay federal income taxes. The government's decision to prosecute himself, his family and - according to McAfee - several of his campaign workers - is just the latest indication that McAfee's prophesy about cryptocurrencies eventually leading to conflict with governments is finally becoming a reality.

"Cryptocurrency will at some point come head to head with government. Why? Because when privacy coins are widely used, governments will no longer be able to collect income taxes. This is a good thing. We will some day be at war."

But the government's reason is flawed, McAfee says, because refusing to pay taxes isn't actually illegal (according to McAfee).

"I have not paid taxes for eight years, I have not filed returns...I've been fine. It's not illegal. Today...Jan. 22...the IRS has convened a grand jury in the State of Tennessee to charge myself, my wife Mrs. McAfee and four of my campaign workers with unspecified IRS crimes of a felonious nature."

After piercing the government's transparent ruse, the true motivation behind McAfee's persecution should be obvious to all. The government is trying to silence McAfee for having the courage to boldly advocate for people to abandon fiat currency and switch to crypto. But rather than simply allowing the government to toss him in prison (where he presumably wouldn't have access to twitter), McAfee is taking his battle to the high seas.

"They want to silence me. I will not allow that. So I am running my campaign in exile on this boat for the duration...I will not allow them to imprison me and shut my voice down, which they will do immediately. Why? I am a flight risk - obviously, I am in flight.

"I will be putting out videos every day to explain what has happened."

We're very much looking forward to hearing more from McAfee, soon to be the first presidential candidate to run for higher office while remaining a fugitive from justice.

Call him the Dread Pirate McAfee.

The McAfee 2020 Campaign is, as of this day, in exile. I am being charged with using Crypto Cuttencies in criminal acts against the U. S. Government. More videos coming shortly. Stay tuned.

— John McAfee (@officialmcafee) January 22, 2019

But where is McAfee going to seek refuge from the tyrannical US government? Why to Venezuela, of course!

The flybridge on our boat makes it the tallest boat in the Atlantis Marina. One of our shephars, Axel, has taken charge of the aft deck docking station. He's waiting, i think, until we disembark for Venezuela in 4 hours at which time he and the other pups are hijacking the boat.

— John McAfee (@officialmcafee) January 22, 2019

And he's bringing a few campaign workers with him.

Videographer @Thefotoking in Nassau on a Crypto friend's yacht on our way to Venezuala. Robert will be documenting my campaign for the next 21 months.

— John McAfee (@officialmcafee) January 22, 2019

We imagine President Maduro will welcome McAfee with open arms, if only for his crypto expertise.

Author: Tyler Durden
Posted: January 22, 2019, 10:25 pm

NFA News Releases

December 19, Chicago—NFA takes emergency enforcement action against Georgetown, Cayman Islands commodity pool operator and commodity trading advisor Beverstone Fund Management and its principal Roland Kaehler
Posted: December 20, 2018, 5:59 am

Elite Forex Blog - Market Research & Analysis

This is a tale of how greed and lack of risk management can blow up in a big way. Brace yourselves.
Allow me to introduce you to one Matt Todorovski, a resident of Australia who wanted to become a trillionaire - - yes, a trillionaire - - by sitting in front of his computer trading the FOREX markets.
Now there is absolutely nothing wrong with being ambitious, setting goals, and trying to beat the markets. Millions of people around the world do it, and the vast majority of them fail. It's a tough business. That's why the handful of winners make so much money. Because almost everyone else loses.
For years, Mr. Todorovski did plenty of losing. From his start in 2009 up through the beginning of 2018, his efforts yielded nothing but financial pain (being a resident of Australia, his reporting was naturally in Australian dollars, each of which is about 0.72 of a U.S. dollar). About a year ago, he was looking at lifetime "winnings" of about negative seven hundred thousand dollars.
Then, for reasons unknown to me, his trading luck started turning around. He finally wiped out his losses in September 2018, and then he started making..........profits! And, million by million, he proudly noted the date of each milestone. He also, strangely, decided that the sky was the limit, and he would put in placeholders for future profit milestones, up to and including $1 trillion. Because God knows the way to get ten times richer than Jeff Bezos is to trading FOREX on your personal computer.
This fellow wasn't shy about sharing the specifics of his account, either. He would regularly update followers on the various automated systems he was using and the gains or losses from each one. As shown below, he had amassed over $13 million in profits as recently as about a month ago.
And then, late in December, things took their first serious turn for the worse:
Perhaps to bolster his spirits - - and keep naysayers at bay - - he started amassing a bunch of bromides, motivational lines, and inspirational quotes.
And then, positive thinking notwithstanding, he losses accelerated.
As illustrated below, there was a big move in the USD/JPY, and this one-day wonder was enough to wreck the guy. (In just a few weeks, however, the damage to the chart vanished).
Which reminds me of a similar wipeout James Cordier went through with and its own centimillion-dollar wipeout. (Here, again, the destruction would have never happened if he had somehow been able to hold on just a few weeks).
But getting back to our hero in Australia..........having lost so much in such a short amount of time, and with public visibility, he started getting pounded with I-told-you-so style hate mail, some of which he shared.
Within the span of hours, he was wiped out. The entire $14 million of his account was gone.
You probably know where this is leading..........
Although he shouldn't hold his breath. Someone (maybe a relative) kicked in $100, and about ten days later some big-hearted soul augmented it with five dollars of his own.
I suppose the lesson learned here, at a minimum, is one that Matt expressed in his own "Methods Of Procedure": 

    Posted: January 22, 2019, 4:05 pm
    The Jamaican stock exchange, unknown to most of the world and which is open for trading only three and a half hours a day, was 2018's best performing stock market.
    The exchange - which started 50 years ago, by Edward Seaga, a Jamaican Harvard graduate who worked as a record producer in the 1950s and 1960s - saw its main index up 29% during 2018, the most among 94 national benchmarks according to Bloomberg . Over the last five years, Jamaica's impressive market returns are even more pronounced: Jamaican stocks are up almost 300%, more than quadrupling the next national benchmark and outperforming the S&P 500 nearly seven times.
    The blistering ascent of the local stock market took place despite real growth in Jamaica averaging less than 1% over the last four years; in 2018, growth in Jamaica was expected to come in at 1.7%. However, the small size of the local market has kept it relatively insulated from the broader economy, and helped Jamaican equities move as quickly as they have. As a result, the total value of the 37 stocks on the main index is less than $11 billion.
    And now, capital is starting to trickle into Kingston as it tries to reinvent itself as a financial hub. Paul Simpson, a 36-year-old banker and investor in Kingston told Bloomberg:  “Clearly, capital goes where it’s comfortable. To see capital coming here means people must be comfortable." That, or they are simply hoping to recreate past returns.
    The floor of the Jamaican stock exchange
    The financial industry in the country is located mostly in the neighborhood of New Kingston. It isn’t a tourist destination like Negril and it isn't impoverished, like Trench Town. Instead, it’s an area where you’ll find Porsche dealerships and Starbucks.
    Similar to China, over the past decade, the country's financial sector assets have tripled and its number of financial institutions have multiplied by a factor of eight.
    It gets better: the World Bank now ranks Jamaica as the sixth best nation for ease of starting a business. Economist Uma Ramakrishnan, the IMF’s Jamaica mission chief said that "If I could hold a megaphone and tell investors now’s the time, I’d do it."
    Still, before US hedge funds start arriving with dreams of massive alpha, the limitations of local stocks are pronounced, especially when one considers the small size of the market. Additionally, the shares available to the public are limited as many of the companies are mostly owned by large institutions and conglomerates. Like with Japanese government bonds, it is commonplace for some stocks not to trade for days and the number of unchanged stocks on a daily basis often outnumbers both gainers and losers.
    In other words, in a world desperate for liquidity, Jamaica may not be your best bet.
    Which is also why the managing director of the exchange, Marlene Street Forrest, is working on improving its logistics. Trades now settle in two days instead of three to comply with international standards and the exchange is looking to introduce market making this year. Margin accounts and short selling are both also on the agenda for the coming year  - yes, there is no way to short stocks right now, and in a throwback to more normal times there are no HFTs or ETFs (there are no Jamaican stocks in U.S. ETFs, even those tracking “frontier” countries such as Kazakhstan, Sri Lanka, and Vietnam, the most emerging of the emerging markets).
    Still, the market is growing: there are 20 new IPOs scheduled for this year, and while the exchange evolving, as things often go in the islands, it's doing it at its own pace. 
    “We ensure that we are going to get it right before we move,” Street Forrest said. 
    Posted: January 21, 2019, 2:22 am
    While there were countless argument offered to explain December's near-record market drubbing, we said on several occasions last month that the simplest reason for last month's plunge was also the simplest one: faced with a mountain of redemption requests, hedge funds were forced to sell their holdings into a market that had never been more illiquid, which meant hitting each and every bid and culminating with the brief, December 24th bear market.
    We now have confirmation, because according to Hedge Fund Research, investors fled hedge funds as markets plunged in the fourth quarter (or is that markets plunged as investors fled hedge funds), pulling a massive $22.5 billion, the most in more than two years. The exodus added to the total withdrawals of $34 billion in 2018, or about 1% of hedge fund industry assets, the largest quarterly outflow since Q4 2016 when investors redeemed about $70 billion.
    Large fund outflows were concentrated in several firms which closed and returned capital to investors, with approximately two dozen firms experiencing net asset outflows of greater than $500 million for the quarter. Despite the overall negative trends on flows and performance, but reflecting the trend of larger hedge fund relative outperformance, approximately one dozen firms received net asset inflows of greater than $500 million for the quarter.
    Flows by firm size also showed net outflows across all firm sizes, with firms managing greater than $5 billion experiencing outflows of $15.6 billion. Mid-sized firms managing between $1 and 5 billion saw outflows of $2.8 billion for the quarter, while firms managing less than $1 billion saw outflows of $4.1 billion.
    "Hedge fund outflows in 4Q were driven by several factors, most notably investor reaction to steep losses in traditional asset investments and the sharp spike in equity market volatility leading to redemptions" stated Kenneth J. Heinz, President of HFR.
    The spike in redemptions came as hedge funds suffered their worst performance since 2011 in a year marked by two corrections, a bear market, and a spike in year-end volatility.
    Additionally, as Bloomberg notes, several big names exited the industry last year, including T. Boone Pickens, Leon Cooperman and Philippe Jabre, while virtually everyone else struggled to generate any alpha (with a few exceptions ). "Outflows also included several large fund closures," said HFR President Kenneth Heinz in the quarterly report, including instances of family office conversions and orderly, manager-initiated returns of investor capital.
    Broken down by strategy, equity hedge funds suffered the biggest outflows, with investors pulling $16.8 billion in the quarter and a total of about $23 billion for the year, according to HFR. Hedge funds in this group fell 5.9% on an asset-weighted basis in 2018, the worst performers of all strategies tracked by HFR. Confirming that the redemptions were liquidity and not performance driven, even the year’s top performing macro managers, up 1.6%, ended 2018 with outflows of $12.3 billion.
    There was a silver lining: event-driven (ED) funds brought in $6.4 billion in the quarter - the only strategy to see inflows - and $6.9 billion for the year, although performance weakness decreased total ED capital to $819 billion from the prior quarter. ED sub-strategy flows were driven by Distressed/Restructuring and Special Situations funds, which experienced inflows of $6.5 billion and $1.4 billion, respectively.
    Fixed income-based Relative Value Arbitrage (RVA) strategies led industry performance in 2018, as the HFRI Relative Value Index (Asset Weighted) added +0.5 percent for the year, while the HFRI Relative Value (Total) Index posted a narrow decline of -0.2 percent for 2018. In 4Q18, RVA strategies experienced outflows of $5.4 billion, decreasing total RVA capital to $835 billion from the prior quarter.
    "Trends in Macro, CTA, and RVA/Credit Multi-Strategies, and stronger relative outperformance of larger funds were all favorable throughout the intense market dislocations of December and 4Q. While the overall investor flows and performance trends were negative, it is likely that discriminating institutional investors which experienced or observed areas of strong performance through the most difficult equity and commodity trading environment in a decade will factor these positive dynamics into portfolio allocations for 2019."
    With volatility set to return with a vengeance once this algo-driven bear market rally ends, 2019 promises to be just as challenging for the 2 and 20 crowd.

    Posted: January 18, 2019, 8:46 pm
    New York, NY ( 1/17/2019 — Pre IPO Swap focuses on Pre IPO companies.  These are not necessarily ‘Unicorns’ but many are.  We get asked what is a private late stage mature company that qualifies for Pre IPO?  There isn’t a specific answer, some companies will be very late stage, others can be closer to the startup phase for example LYFT is not so old but already has filed for IPO.
    We like to compare any business to food as it’s something everyone understands.  Let’s take the example of a Hamburger.  The first step in the cycle is the farm where the cow grows up.  Then at some point the cow is butchered and sent for processing.  Wholesale, the beef is then sold to food companies where it ultimately becomes a Hamburger and sold at McDonalds.  Finally, the end product is sold in thousands of locations across the world.  The last step in the process is garbage – capitalism produces a lot of garbage.  But science is inventing ways that garbage gets fed back into the system (for example, fertilizer).
    So the question is – at what point do you want to invest in the company?  When it’s still a cow?  When the end product is being marketed on TV like McDonalds commercials?  Or in the cleanup phase?
    We have called these steps in the cycle Growth, Processing, Branding, Distribution, Waste.  There are more detailed product cycles – this is simply to explain where Pre IPO is – typically it’s somewhere around Processing.  It’s the wholesale market.
    When a company goes public – that’s the branding phase.  There is a road-show, the underwriter promotes the IPO so that when it hits the market there is interest (such as for Pinterest).
    By the time the product – whatever it is – hits the end user (that’s the IPO) it’s been so watered down and over hyped it has little room for explosive growth.  And frankly, they don’t want stocks moving triple digits in a year it makes other stocks look bad.  They need to be tamed.  Companies that don’t fit the profile stay private.
    With Pre IPO we are looking for just the right amount of risk and reward.  We want companies to already have been proven in the market – but before the marketing blitz.  Before the compliance changes that go on to fit the profile of a public company.  Ultimately, no matter what type of business you are – when you have to comply with rules it takes some of the zest out of your business; that’s usually a good thing.  Public markets allow capitalism to function at its best.  But for Pre IPO investors – they want to find the ‘Goldilocks Zone’ – not too risky, and just enough reward.  See our Pitch to learn more, or follow our blog.
    Posted: January 18, 2019, 3:03 am
    Pre IPO Swap New York, NY 1/12/2019

    Did you know that the CIA has its own Venture Fund?  And did you know that Venture fund was key in starting Facebook and Google?  As explained in the book Splitting Pennies – the world is not as it seems.

    For many readers especially on Zero Hedge this comes as no surprise, as you are well aware of the octopus that wraps its tentacles around the globe.  But it may surprise you how active In-Q-Tel is and how chummy they are with the rest of the VC community.  It’s as if they are just another VC, but with another purpose.  Let’s look at some of the stats, from Crunchbase:

    Here’s a list of recent investments…

    If you dig back you won’t see Google or Facebook on there – which is company policy for retail consumer investments that can impact the public (it’s kept secret behind an NDA).  Here’s how it works – In-Q-Tel may invest in your startup but there’s a big catch.  First, you have to sign an NDA which is enforced strongly – that you are not to disclose your partner.  Second, you must agree to ‘cooperation’ when it comes to information sharing now or down the road, such as location data on people using Facebook, Google, or other systems – perhaps only to feed it into a big data brain at Palantir.  Or perhaps for more street level surveillance.  The surveillance is known by fact, not conspiracy theory – but by fact – due to the disclosure of classified documents by Edward Snowden.  If it were not for Snowden, we could only guess about this.  The name of the main program is PRISM but there are many others.

    For those in the VC community that are deep in the know- the “Deep VCs” like Peter Thiel for example, the Snowden revelations would come as no surprise.  MUST READ – No Place To Hide – the story of the NSA, PRISM, and Snowden (written by Greenwald).

    But for others, it may come as a surprise that not only the CIA has its own VC fund, but that it sits on many corporate boards alongside many Wall St. firms and other VCs.

    And of course, they always do well.

    Let’s consider the doors they opened for Google, or in the case of Google it was more like the doors that were closed.  Google was not the best search engine, it was not superior technology – it wasn’t even really very good.  It just became a monopoly and crushed the competition.  Many wonder how they were able to do it, and that this is part of the Entrepreneur “Magic” that few have.  Well we can say in the case of Google there was no Magic they had a helping hand from a friend in the deep shadows.  Google wanted to become huge – the CIA wants information (they always do, so we don’t use the past tense ‘wanted’).  So it was a cozy and rational partnership – in exchange for making the right handshakes at the right time, allowing Google to become a global behemoth, all they needed to do was share a little information about users.  Actually, a lot of information.  No harm in that, right?

    But in doing so Google violated itself as well as prostituted its model and its users.  Google still does this and is not nearly as flagrant as its brother Facebook, however Google shares more detailed ‘meta data’ which is actually more useful to Echelon systems like Palantir that rely on big data, not necessarily photos of what you ate for breakfast (but that can be helpful too, they say).

    The metaphor is making a deal with the devil; you get what you want but it comes at a price.  And that’s the price users pay to Google – they get service ‘free’ but at a huge cost, their privacy.  Of course – this is all based on the concept of Freedom which really does exist in USA.  You don’t have to use Google – there are many alternatives like the rising star Duck Duck Go:

    But who cares about privacy; only criminals, hackers, programmers, super wealthy (UHNWI) and a few philosophers.

    Google remains the dominant search platform and much more.  Google exploits niche by niche even competing with Amazon’s Alexa service.

    The argument here is that Google wouldn’t be Google without the help of the CIA.  This isn’t our idea it’s a fact, you can read about it here on

    Two decades ago, the US intelligence community worked closely with Silicon Valley in an effort to track citizens in cyberspace. And Google is at the heart of that origin story. Some of the research that led to Google’s ambitious creation was funded and coordinated by a research group established by the intelligence community to find ways to track individuals and groups online.  The intelligence community hoped that the nation’s leading computer scientists could take non-classified information and user data, combine it with what would become known as the internet, and begin to create for-profit, commercial enterprises to suit the needs of both the intelligence community and the public. They hoped to direct the supercomputing revolution from the start in order to make sense of what millions of human beings did inside this digital information network. That collaboration has made a comprehensive public-private mass surveillance state possible today.

    There you have it – Google is the child of the digital revolution of the surveillance state.  Why spy, when you can collect data electronically and analyze with machine learning?

    The new spy is the web bot.

    And the investors in Google did well – so that’s the investing story that matters here.  It pays well to have friends in high places, and in dark places.  Of all the investments In-Q-Tel made, almost all of them have done very well.  That doesn’t mean that Palantir is going to grow to the size of Google, but it does provide natural support should a company backed by In-Q-Tel run into problems.

    By the time Facebook came out, digital surveillance was already in the n-th generation of evolution, and they really stepped up their game.  In the creepiest examples, Facebook doesn’t necessarily (and primarily) collect data on Facebook users – it does this too.  But that’s just a given – you don’t need to perform surveillance on someone who gives all their data to the system willingly – you always know where they are and what they are doing at any given moment.  The trick is to get information about those who may try to hide their activities, whether they are real terrorists or just paranoid geniuses.

    How does Facebook do this?  There are literally hundreds of programs running – but in one creepy example, Facebook collects photos that users take to analyze the environment surrounding.  Incidentally, the location data is MUCH MORE accurate than you see on the retail front end.  So you get the newspaper and see a gift in your mailbox for your birthday – you take a photo because the ribbons are hanging out.  What shows up in the background?  All kinds of information.  What the neighbor is doing.  License plate of the car driving by.   Trash waiting to be picked up by the street.  A child’s toy left by the sidewalk.  You get the picture.  Facebook users have been turned into sneaky little digital spies!  While they are walking around with their ‘smartphones’ (should be called ‘dumbphones’) scrolling their walls and snapping photos away – they are taking photos of you too.  That means, Facebook collects data for the CIA about users who don’t have Facebook accounts.  This is the huge secret that the mainstream media doesn’t want to tell you.  Deleting your Facebook account will do nothing – every time you go out in public you are being photographed, video recorded, and more – all going into big data artificial intelligence for analysis.

    But here’s the best part.  You own it!  The CIA may have a bad reputation but it is part of the US Government, and thus – profits go back to the Treasury (those which are declared) or at least they are supposed to.  Considering this, why is there a stigma about even talking about In-Q-Tel when in fact we should be more involved in any US Government operation when it is technically owned by the people and funded by taxpayers?  Meaning, do taxpayers have rights to know what goes in in taxpayer funded entities, like In-Q-Tel?  The big difference between In-Q-Tel and the CIA is that In-Q-Tel functions just like any other VC – they disclose most of their investments, they attend conferences, they accept business plans.  You can literally submit your idea to In-Q-Tel and get funding.  Of course, like any VC there’s a very small chance of being funded.

    So what’s an investor’s take on this story?  In-Q-Tel is not Freddie Mac there is nor a quasi-government entity; it’s not an NGO and there is no implicit guarantee that In-Q-Tel’s deals will do any better than Andreessen Horowitz.

    However, their deals do very well.  Companies they fund not only have the backing of the CIA explicitly, it’s not only about business – it’s about national security!  Under that guise, it’s no wonder that companies like Google and Facebook rocket to the top.

    We are not suggesting that investors double down on In-Q-Tel bets.  We are only suggesting that at a minimum, we follow what they do.  It’s a data point – a good source of information.  And the best part is that it’s public.

    Their most recent investment is in a virtual reality company in Boca Raton, FL called Immersive Wisdom:

    Immersive Wisdom® is an enterprise software platform that allows users to collaborate in real-time upon diverse data sets and applications within a temporal and geospatially-aware Virtual, Mixed, and Augmented Reality space. Immersive Wisdom is hardware-agnostic and runs on VR, AR, as well as 2D displays.  Regardless of geographic location, multiple users can be together in a shared virtual workspace, standing on maps, with instant access to relevant information from any available source. Users can simultaneously, and in real time, visualize, fuse, and act upon sensor inputs, cyber/network data, IoT feeds, enterprise applications, telemetry, tagged assets, 3D Models, LiDAR, imagery and UAV footage/streaming video, providing an omniscient, collaborative view of complex environments.  Immersive Wisdom also acts as a natural human interface to multi-dimensional data sets generated by AI and machine learning systems. The platform includes a powerful SDK (Software Developer Kit) that enables the creation of customer-specific workflows as well as rapid integration with existing data sources/applications.

    Cool stuff for sure – but it’s in early stages.  Pre IPO Swap suggests real Pre IPO ‘unicorns’ not because of size, but because of the right mix of risk and reward. See why we think so in our pitch.

    In any analysis, it’s worth watching In-Q-Tel, which is a top source of funding and investment data we watch on  Pre IPO Swap.

    To get real-time updates on companies like this, companies that In-Q-Tel invests in -   follow our blog free.
    Posted: January 13, 2019, 5:38 pm
    In what was an abysmal year for most hedge funds, three investing icons successfully pulled their weight and generated outsized returns amid an otherwise dreary landscape.
    Last week we reported that after correctly predicting the "significant risk of a correction", quant giant Renaissancemade an impressive 8.5% return in 2018 despite a 2.1% drop in December, solidly outperforming the broader market.
    It wasn't just the secretive fund founded by chain-smoking codebreaker Jim Simons that blew past its competition last year. On Sunday, Bloomberg reported that Bridgewater's flagship Pure Alpha fund rose a remarkable 14.6%. This was no small feat for Bridgewater which also happens to be the world's biggest hedge fund with $160 billion in unlevered assets, and came at a time when hedge unds on average lost 6.7%  in 2018, according to the HFRX Global Hedge Fund Index, as market trend and momentum both collapsed.
    A just as impressive record is that since its inception in 1991, Pure Alpha Strategy has generated an average annualized return of 12% after fees, a track record which some have wondered if it is too good to be true.
    And yet in a bizarre twist at the start of 2018, Bridgewater's Ray Dalio said on January 23 that "If you're holding cash, you're going to feel pretty stupid." Ironically, cash ended up being the best performing assets, while virtually every other asset class posted negative returns in 2018, making those holding anything but cash feeling pretty stupid. Which means that at some point between January and December, Ray Dalio quietly moved out of most assets although "surprisingly" he never made that shift public.
    In any case it wasn't just Simons and Dalio: according to a Monday note from Bloomberg, the flagship fund of another computer scientist, David Shaw's, D.E. Shaw, also generated double-digit returns, gaining 11.2% last year.
    The New York-based investment firm’s Composite fund invests across multiple strategies and is the company’s largest and longest-running. It returned 3.5 percent last month, the person said, as the S&P 500 Index sunk 9.2 percent.
    And in yet another indication that Madoff was an amateur, DE Shaw's composite fund, which has about $14 billion in assets, amazingly hasn’t had a losing year over the past decade. In 2017, it gained 10.3%, the Bloomberg source said.
    D.E. Shaw was founded by computer scientist David Shaw and has more than $50 billion in assets under management, including $28 billion in hedge funds. Its Composite fund has largely been closed to new investors since mid-2013, but the group continues to build out new strategies and products. Recent areas of development have included private credit opportunities in Europe and renewables investing.
    Some trivia: when DE Shaw was just two years old, a largely unknown 26-year-old took a job at D.E. Shaw and became one of the company's vice presidents in just four years; he was tasked with researching new business opportunities on the rapidly growing Internet, which was held tremendous potential in the early 1990s. That youngest made a list of 20 products he could sell online, and decided that books were the most viable option. When he couldn't get D.E. Shaw on board with the idea, he decided to branch out on his own.
    A little under three decades later, that "relatively unknown" person is now the world's richest person.

    Posted: January 7, 2019, 8:56 pm

    The company founded by Peter Thiel, Elon Musk and Max Levchin has spawned three billionaires, many, many millionaires and generation-defining companies. Here, we break down the key players from the most notorious group in Silicon Valley.

    The picture above features some of the most poorly dressed men of the 2000s. Behold the outsized sportswear, the leather blazers, the silky shirts. But these men can afford to both laugh off our criticism and buy several new wardrobes. For they are the ‘PayPal Mafia’ and between them, these 13 men are worth billions and billions of dollars. And to be fair to them, they were styled as faux gangsters for the 2007 Fortune magazine shoot that birthed their infamous moniker. Mick Brown recently met PayPal co-founder Peter Thiel for an extraordinary Telegraph Magazine feature. The vast success enjoyed by Thiel and his former colleagues got us thinking: how did one company breed such a remarkable crop of entrepreneurs and capitalists? Click on the famous Fortune photograph below and discover exactly who the PayPal Mafia are.
    The 'PalPal Mafia' photographed for a Fortune magazine feature in 2007. PHOTO: Robyn Twomey - Corbis Outline
    1. Jawed Karim
    Role in PayPal: Designed and implemented PayPal’s incendiary real-time anti-fraud system, among other key components of the business.
    After PayPal: Karim, Chad Hurley (designer of PayPal’s first logo) and Steve Chen (another PayPal colleague and early Facebook employee) founded a video sharing site in 2005. They named it YouTube. Soon after developing the fledgling site, Karim enrolled at Stanford University where, despite having already displayed a certain acumen in this area, he chose to study computer science. He continued to act as an advisor to YouTube before cashing in 137,443 shares of stock (worth a cool $64 million) when Google purchased YouTube for $1.65 billion in November 2006. Now 35, Karim launched a business called Youniversity Ventures in 2008 aimed at helping students and graduates develop business ideas with early PayPal investors Kevin Hartz and Keith Rabols.
    Estimated net worth: $140 million
    2. Jeremy Stoppelman (below)
    Role in PayPal: Joined PayPal as an engineer whilst it was known as, eventually becoming the Vice President of Engineering.
    Post-PayPal: Resigned soon after PayPal was picked up by eBay for $1.5 billion in 2003, taking a year to attend Harvard Business School. Inspired whilst poorly with flu and finding it tricky to find decent doctor recommendations, he and a former colleague Russel Simmons dreamed up the idea for online reviews site Yelp in 2004 and convinced former PayPal Chief Technology Officer Max Levchin to put up $1 million in initial funding. Steve Jobs convinced him to reject Google’s acquisition offer in 2010 and in 2012, Yelp became a public limited company. But it’s not been a smooth recent few years: Yelp reviewers leaving negative reviews have faced legal action from affronted businesses and the site’s faced accusations of handing positive reviews to advertisers.
    Estimated net worth: $111-$222 million
    PHOTO: Getty
    3. Andrew McCormack
    Role in PayPal: Joined in 2001, working closely as an assistant to Peter Thiel as the company prepared for its initial public offering (IPO)
    After PayPal: Helped set-up another Thiel venture, hedge fund company Clarium Capital before founding a restaurant group in San Francisco. Currently a partner at venture capital firm Valar Ventures, he found his way back to Thiel in 2008 to join Thiel Capital via corporate development roles at eCount (now part of US banking conglomerate Citigroup) and Yahoo!.
    Estimated net worth: Unknown
    4. Premal Shah
    Role in PayPal: Spent six years at the company as a product manager.
    After PayPal: Became President of non-profit organisation Kiva, which allows people to lend money to struggling entrepreneurs and students in over 70 countries via the internet. Founded by former programmer Matt Flannery and his businesswoman ex-wife Jessica Jackeley, the site was raising around $1 million every three days by November 2013.
    Estimated net worth: Unknown
    5. Luke Nosek
    Role in PayPal: One of the co-founders, alongside Thiel, Elon Musk and Ken Howery and his friend from the University of Illinois, Max Levchin and Vice President of Marketing and Strategy.
    After PayPal: Departed after the eBay takeover and travelled the world, before founding San Francisco venture capital firm Founders Firm (slogan: ‘We wanted flying cars, we got 140 characters’) with Thiel and Howery in 2005. Has spoken extensively about the benefits of brain training through meditation.
    Estimated net worth: Unknown
    6. Ken Howery
    Role in PayPal: A co-founder and Chief Financial Officer between 1998-2002.
    After PayPal: Hung around as eBay’s Director of Corporate Development for just under a year after the takeover, before rejoining Thiel as vice president of private equity at Clarium Capital in 2004. Started Founders Fund less than 12 months later with Thiel and Nosek. In 2012, he co-founded Popexpert, an online learning platform that allows users to connect face-to-face with experts across a broad range of fields. Howery’s available for consulting sessions if you have a spare few $100,000.
    Estimated net worth: Unknown
    55382205_3044414cPHOTO: Getty
    7. David Sacks (above)
    Role in PayPal: Joining from management consultancy firm McKinsey & Company, Sacks became PayPal’s chief operating officer.
    After PayPal: Sacks boasts one of the Mafia’s more diverse post-PayPal CVs. After eBay assumed control, he left for Hollywood and produced and financed the Golden Globe nominated 2005 movie Thank You for Smoking. The next year, he founded genealogy website Frustrations with inter-office communication led him to develop a productivity tool to help employees share information. This was to become the social network Yammer. Mircosoft acquired the company for $1.2 billion in July 2012. Sacks was named corporate vice president in Microsoft’s Office Division. He hit the headlines in 2012 after throwing himself history’s most gauche 40th birthday party. The theme? ‘Let them eat cake’ French revolution. The entertainment? Snoop Dogg. The cost? A reported $1.4 million.
    Estimated net worth: Unknown
    8. Peter Thiel
    Role in Paypal: Co-founder and CEO.
    After PayPal: After earning $55 million from his 3.7 per cent stake in the eBay deal, Thiel immediately founded hedge fund Clarium Capital, a global macro hedge fund and made the ludicrously savvy decision to angel invest $500,000 in fledgling social network Facebook. Thiel was the first outside investor in the company and sold almost has made over $1 billion selling his shares. You can read Mick Brown’s in-depth profile on Thiel right here.
    Estimated net worth: $2.2 billion
    9. Keith Rabois
    Role in PayPal: Held the nicely extravagant title of Executive Vice President, Business Development, Public Affairs and Policy between November 2000 and November 2002.
    After PayPal: Regarded as a very useful person to have around at a start-up, Rabois went onto hold senior positions at LinkedIn (more on that in a minute), Max Levchin’s Slide (a company responsible for slideshows and animations in social networks) and electronic payment firm Square (founded by Twitter’s Jack Dorsey). Controversy accompanied his exit from Square, with a threat of a lawsuit over sexual harassment claims by a male employee who allegedly obtained a job at the company after beginning a relationship with Rabois. Which makes Gawker’s accusations of Rabois’ undergraduate homophobia all the more disturbing. Rabois is now a partner at venture capital outfit Khosla Ventures and serves on the board of directors at Yelp and Xoom.
    Estimated net worth: $1 billion
    PHOTO: Getty
    10. Reid Hoffman
    Role in PayPal: Joined from the world’s first (failed) social network SocialNet to become a member of the board of directors, then went full-time to become PayPal’s COO. By the time of the 2002 eBay takeover, he was executive vice president.
    After PayPal: ‘The most connected man in Silicon Valley’ co-founded inbox bothering business social network LinkedIn in December 2002, owning a stake now worth an estimated $2.39 billion with its IPO in May 2011. The eldest of the Mafia is also lauded for his clever/lucky angel investing. He’s made upwards of 80 angel investments (including Facebook, Zynga, Flickr, Digg and and in 2010 joined Greylock Partners, running their $20 million Discovery Fund; designed to seed fundings of worthy start-ups.
    Estimated net worth: $3.9 billion
    11. Max Levchin
    Role in PayPal: A co-founder and the firm’s chief technology officer, well regarded for his contributions to PayPal’s anti-fraud efforts.
    After PayPal: Took his $34 million from the PayPal sale and founded Slide. Google picked it up for $182 million in August 2010, with Levchin becoming Google’s Vice President of Engineering on 25 August. A year and a day later, Google closed Slide and Levchin departed. Between Slide’s rise and fall, he helped start Yelp in 2004 (and is the company’s largest shareholder), was appointed to the board of directors of Evernote and and co-founded financial services company Affirm. In recent years, he’s started a company called HVF (standing for, enjoyably, ‘Hard, Valuable, and Fun’), a firm designed to fund projects looking to leverage data and joined Yahoo!’s Board of Directors. He’s keeping himself busy.
    Estimated net worth: $300 million
    12. Roelof Botha
    Role in PayPal: A qualified actuary, South African Botha negotiated PayPal’s sale as its Chief Financial Officer. He had joined the company prior to his graduation from the Stanford School of Business, becoming director of corporate development.
    After PayPal: A regular on the Forbes Midas List of top tech investors, Both joined venture capital giant Sequoia Capital in January 2003 as a partner, where’s he’s stayed ever since. His extra curricular business pursuits include sitting on the boards of 13 companies, including Jawbone, Evernote, Tumblr and Xoom. He was also on YouTube’s board before the company was acquired by Google.
    Estimated net worth: Unknown.
    13 Russel Simmons
    Role at PayPal: The firm’s Lead Software Architect.
    After PayPal: Co-founded Yelp with Jeremy Stoppelman and served as its CTO until he ‘transitioned’ into an advisory role in June 2010 to take some ‘much needed time off to travel’. Fresh from his high end gap year, Simmons launched Learnirvana in 2012, a web tutor program that helps users learn languages.
    Estimated net worth: Very difficult to discover. It’s very easy to tell you that near-namesake and hip-hop mogul Russell Simmons is worth around $340 million, however.
    PHOTO: Art Streiber/August Image
    Not in the picture, but absolutely worth profiling:
    Elon Musk (above)
    Role at PayPal: PayPal had merged with Musk’s financial services and email payment firm in 1999 and Musk became the new company’s largest shareholder by the time of its sale to eBay. He earned $165 million from the deal.
    After PayPal: Strap yourselves in. Musk launched Space Exploration Technologies (SpaceX) in June 2002, where he serves as the CEO and CTO. In May 2012, their Dragon spacecraft ensured SpaceX became the first commercial vehicle to launch and dock a vehicle to the International Space Station. He assumed leadership of electric car firm Tesla Motors in 2008 and in 2013 unveiled a proposal for a new form of transportation between the Greater Los Angeles area and the Bay Area in San Francisco. His ‘Hyperloop’ is a subsonic air travel machine completely reliant on solar energy.
    Estimated net worth: $9.7 billion
    Posted: January 6, 2019, 2:56 am
    Atlanta, GA ( – 12/18/2018
    Microsoft (MSFT) is a company that many geeks love to hate.  Windows glitches and patches, embarrassing moments in tech history – yet Windows is the dominant computing platform not only for PCs but for Server environments and many other systems.  Yeah, they missed the internet, they lost out on Blockchain – and Social Media confuses them.  But still, MSFT has a market cap as of today of an astounding 798 Billion with a B.  It’s a huge company and has one of the highest paid CEOs in the world.
    What’s a more compelling story though is the investment history of Microsoft, such as the stock split history.
    Microsoft has been a cash cow from the moment they landed the Windows contract.  Since then, the stock has been on a near 70,000% ride, paying juicy dividends all the while.  An investment at the IPO of $2100 would have returned $1,467,072 far outpacing inflation.
    On 13 March 1986, Microsoft went public at $21 a share. 100 shares would be worth $2100.
    Microsoft has since had 9 splits (Microsoft Stock Split History) for a total of 288x.
    Split adjusted IPO price would be 21/288 = $0.073.  Your 100 shares would have become 28,800 shares.
    MSFT closed at  $50.94 on 27 April 2016, which would make that $2100 investment worth $1,467,072, a 69860% return on investment. $2100 in 1986 would be approximately $4563 in 2016 so a 69860% ROI adjusts to 32154% after inflation.
    This leads to the question – is Pre-IPO investing for real?  Is this really the big secret of the wealthy – how they make their wealth?  Of course, as Bill Gates has retained the title off an on for decades of the worlds richest – we must remember what made him so – it is the stock price.  He is the wealthiest person in the world (depending on market fluctuations, he may be only top 5 or 10, and Forbes list doesn’t include Shadow banking where Rothschilds and others keep their private assets private) because he’s an early IPO stakeholder and investor.  Well done, Bill.
    It is no wonder why Steve Ballmer is so excited – you would be too if you became rich just from your companies stock price.
    So how can I join the club, you ask?  Checkout LYFT, Palantir, SpaceX, AirBNB and more @ – get them BEFORE they IPO.

    Posted: December 19, 2018, 8:03 pm
    Posted: December 7, 2018, 8:42 pm
    Global Intel Hub – (Zero Hedge Exclusive) 11/28/2018 – Atlanta, GA
    The system is crooked.  So why bother, right?  Most Americans don’t vote don’t care.  Up to 30% don’t file don’t pay taxes.  That’s real freedom!  As we explain in our book Splitting Pennies – the world is not as it seems.
    Personally, I watched the fixing of the 2000 election from ground zero in Palm Beach County Florida.  The registration of dead voters, the confusion over the chads, getting prisoners to vote Republican.  Gore should have won by a much larger margin (not that I wanted Gore to win, I’m speaking like an objective observer).  Being a trader, I wasn’t much interested in voting or politics which was unusual, as I went to a school where Dan Quale and George Bush Sr. were visitors at our mock political rallies, friends of mine were some of Bush’s biggest donors (that was in the year he lost, of course).  Barbara Bush came to one of my baseball games, I had the photo where I shook her hand on my bedroom wall for years (I was 8 years old I thought it was significant like meeting the Queen). 
    But knowing these people intimately, hanging out with some Kennedy’s from time to time on the Island (or at least, seeing an altercation between them and police at the piano bar), seeing the weirdo stuff, the manipulations of other people, using money to silence people, illegal side businesses, their mafia friends when they needed to ‘get things done’ – I realized that there are 2 parallel worlds.  There is the world as I called it ‘As seen on TV’ and then there’s the real world.  ZH readers know this well, but as a young child one doesn’t manifest this vision automatically.  It takes experience seeing this evil, or in my case both – it was later confirmed by the extensive research into the financial system.  When I read “Confessions of an Economic Hitman” it wasn’t surprising, it was just a more detailed and well thought out account.  Just like it’s unfair to profile Muslims based on race, it’s unfair to profile the Elite as a bunch of killers and perverts.  Let’s take the recent example of an article recently published on Zero Hedge, where Florida’s richest man said that people like Soros should be in jail:
    Thomas Peterffy is a billionaire in his own right, he founded Interactive Brokers – one of the most cutting-edge electronic brokerages in the world.  IB is in a class of its own.  It’s the go-to broker for hedge funds, RIAs, and many industry insiders.  Soros on the other hand represents the real Jewish Mafia elements that flourish in the United States, who exploit what corruption and bribery elements are still available.  They are so much more successful than the Italian Mafia because they have masked their activities like legitimate businesses (plus, they know how to play as victims or use the ACLU).  The foundations such as “Open Democracy” are real Orwellian Radical Socialist Movements to the core.  Remember that the Bolshevik Revolution in Russia was financed by Wall St.  Capitalism in a way financed Communism, as it was really meant to solidify Monopoly Capitalists and their business interests in Russia (imagine having a pure Monopoly on a country the size of Russia – which is what they had.)
    Going back to the main topic which is the Criminalization of Politics, using these 2 opposing Hungarians as examples; one guy built a great business.  Another has built a business by manipulating political systems at home and abroad (in secret), and all the insider trading that comes along with good political connections.  Soros is not a lucky fool he’s a shrewd dude make no mistake this guy is much more sophisticated than many Italian Mafia bosses who are mostly successful street thugs.  It would be impossible for them to penetrate Wall St.’s AML rules as they have been ‘nicked’ from time to time.
    So how is politics criminalized?  Here’s how it works, and the best example is Bill Clinton.  Obviously, the Governor of Arkansas can only do so much – he can’t start selling drugs out of his office.  What he can do is organize one of his friends to make sure the cops don’t go by a certain airport, or even go so far as to provide protection to airplanes flying in and out of Columbia, South America with tons of cocaine.  Your benefactors will be so happy with your security service they certainly will pay it back, either through a proxy campaign contribution or maybe they will buy a brick you have for sale on ebay for a million bucks.  Everyone knows Clinton bricks are magic so who wouldn’t pay a million for it?  “Pay for Play” politics wasn’t invented by the Clintons or the Bushes in fact this type of bribery has been going on for thousands of generations.  Only the real strong civilizations, excluding Rome which was built on corruption and then deteriorated, have solved this problem.
    Which by the way brings up an interesting irony about the Soviet Union – USSR.  Here was a communist dictatorship with absolutely NO CORRUPTION.  It was impossible.  Party leaders enjoyed benefits such as choice apartments or a color TV, but you couldn’t buy a party member, nor could you do something like Clinton did for example.  Party members that were loyal were rewarded in a top down strictly controlled hierarchy.  If they felt you were trying to start a business or enjoyed listening to Voice of America you could be imprisoned or shot by one of Stalin’s good squads.  If you were even suspicious of violating the rules, like you had a nice car – you were called ‘speculant[1]’ which is like ‘capitalist’ because it was against the communist ethos.  We are not communists nor are we promoting communism obviously it has proven to be a bad system, but it does serve as a good example of a system where there was absolutely no corruption, the CIA sure did try.
    Obviously, this is extreme and ultimately didn’t work, and the quality of life in USSR was mostly poor.  There are however many examples today of successful non-corrupt societies, such as most of northern Europe and Switzerland.  Swiss Banking is built on anti-corrupt principles, if Switzerland was run like Wall St. it would not exist like a country, it would be usurped by neighbors Germany, France, and Italy, in that order.  The Swiss have a unique national identity which is part European part ‘Swiss’ and part of this unique identity is a unique set of banking values and fiduciary rules that make them Swiss.  Swatches, Toblerone, and Swiss Cheese comprise a fraction of Swiss GDP comparing with the banking sector[i].  The important note here is that the Swiss do not depend on ‘banks’ has to do with ‘river banks’ such as the ‘banks on the Thames’ which is the place where rivers deposit their valuables (Gold for example) because the water runs slowly, and they collect there due to weight.
    Politics has been criminalized by the unethical use of money; what used to be a doctrine, or an argument, has been replaced by a lobbyist group.  Lobbying by itself is not the evil, but what has happened is that a mafia like force has taken over politics through lobbying groups, as they have become legitimized bribery.  Mob rule means rule of men not rule of law; meaning that going back to the examples of Clinton, although there are many strange unsolved crimes constantly happening around both Bill and Hillary, none are investigated more than a few phone calls at best.  A documentary film “The Clinton Chronicles” documented many of the strange occurrences of previous staff who have died of mysterious causes or have committed suicide by stabbing themselves in the back 10 times.
    This book The Russia Hoax elaborately explains how the entire plot against Russia a smokescreen is only to cover up the dirty dealings of the Clintons.  And the sad thing, most of it is all legal.  It’s possible for example to buy protestors, as we have seen since the “Black Lives Matter” fiasco, riots in Charlotte, leading to the recent ‘screamers’ in the Capital building and other Kavanagh protestors.
    And, released only recently; hacking group Anonymous released documents showing the real wizard behind the curtain trying to frame and entrap Russia in quicksand is no other than the United Kingdom[2].
    If Russia creates an information campaign, we can too – so the thinking goes.  But why doesn’t Switzerland have an army of online provocateurs?  The answer is simple, there are really a few countries that are the instigators here in ‘The Great Game’ – and the British invented it.  During the Bush years there was a meme that Tony Blair was a lap dog of Bush doing whatever he said, but it was likely the other way around. 
    This trend of the criminalization of politics has been going on for decades, so much so that it now has become endemic.  Trump’s #draintheswamp idea was great rhetoric but we haven’t seen any action towards that end yet, and perhaps never will.  It’s like the mob expression ‘in a crooked environment, crooks are the most honest people’ – at least you know where they stand!  The lies that have been uncovered about the Russia Hoaxare just astounding – if an individual who was not a politician had done any of these things, even 1% they would be in prison. 
    Through the process of the criminalization of politics, the criminals themselves become immunized.  It becomes so toxic that if anyone honest comes into the playfield, like Trump for example, they must be destroyed.  Trump isn’t necessarily a good guy obviously he’s not, but he’s not a criminal, and he’s not a politician – those are the sole qualities that made him President.  Voters have been tricked by the Bush, Clinton, Obama mafia and whether you like or dislike Trump you have to agree that he has done what he said he would do, which makes him unique comparing with the last 50 years of Presidents.  Probably, since he’s been in office, he’s been compromised, which is why we haven’t seen any of the Criminals in jail – and here’s the point.  Is there anything that anyone can do about this system?  Not really.  A complete cleansing of the entire political class would be necessary. 
    But if that were even possible, who would replace them?   Ron Paul is an anomaly.  It would be necessary to create a new type of civil servant, one who acted like he grew up in the 18th century.
    A training program could be created, with works like Plato’s Republic and other texts.
    Rules could be created like for judges, the political class would be forbidden to engage in any outside businesses. 
    You see where this is going.  But it’s highly impractical in our society, it’s the stuff they teach in Universities which is a complete waste of efforts because then you enter the real world, which is much more sordid and darker than anyone can really explain.
    The reality is – Capitalism encourages criminal activity (white collar crime).  For many reasons.  Physical crimes are extremely difficult to execute and are harshly punished (armed robbery for example).  But Ponzi schemes and other types of frauds are subtly encouraged, and are not harshly punished.
    The Federal Trade Commission (FTC) under the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), has recently announced that it seeks law-enforcement action against a residential resort development in Belize, calling it “the largest-ever overseas real-estate investment scam” the agency has ever seen.
    At a recent press conference in Washington, D.C., the agency said the development known by names that include Sanctuary Bay, Sanctuary Belize, Buy Belize, Buy International, and Buy Paradise, fleeced 1,000 American investors, out of more than $100 million.
    According to court documents filed by the FTC in the US District Court of Maryland, 24 individuals and shell companies falsely claimed to be constructing a luxurious resort community that would feature a hospital, hotels, a golf course, a spa, a casino, high-end boutiques, cafes, restaurants, and an “American-style” supermarket.
    Now, being a Boca native, this type of fraud is just part of real estate business, so they tell us in South Florida.  Real-Estate “Developers” will sell a bunch of units that don’t exist, they will ‘sell the dream’ if you will, or a Buffalo Ranch, or whatever sounds good now – and vanish.
    Widows swindled out of their divorce settlements, retirees tricked into liquidating their IRA into the hands of a swindler. 
    There should be more protections in place to protect victims of financial fraud, that’s number one.  Being involved in court cases as an expert witness in multiple FX related Ponzi Schemes, I asked a single question:  Where’s the money?  Answer was always the same, we don’t know, well, we will try to recover it.  So, I asked, what’s the point of sending this perp away for life if we can’t get the money back to the victims?  And the retort always the same, to serve as an example for other would be scammers.  But obviously this model doesn’t work.  And the Feds, meaning the Federal Reserve Bank, and the banks, allow this to happen. 
    They encourage crime by allowing it – that’s number two.  They need to stop it.  Stop allowing financial crimes to happen.  99% of the financial markets are electronic that means any transaction is a keystroke away from being stopped.  Bank of America’s idiotic “AI” will block my debit card when we take a road trip but can’t stop a $50 Million Ponzi Scheme?  Remember, there was a guy, who alerted the SEC about Madoff.  The problem is systemic, it’s not that there’s no solution.  Politicians especially – they want it to be allowed because they are in on it too – and here’s the problem.
    There is a financial incentive that allows such crimes to continue Wall St. and in politics.  Let’s be clear about this – stopping criminals doesn’t make you a socialist, nor does it make you a liberal.  When Ponzis blow up everyone suffers not only the victims.  Our company has had clients in Aramanth, MF Global, PFG, just about all the big financial frauds of the decade.  In many cases, lost funds were a significant percentage of the client portfolio and thus prevented further investment in more fruitful projects.
    An honest man couldn’t make it into the White House, or into Congress; and again, we’ll remind readers that Ron Paul, an OB/GYN – and Dennis Kucinich are anomalies.  We are living in a world where the more stupid the better – the more dangerous, ridiculous, fattening – the better.   Basically, the IQ of humans is declining – rapidly.  As you are reading this, you can hear people getting dumber.
    A defining trend in human intelligence tests that saw people steadily obtaining higher IQ scores through the 20th century has abruptly ended, a new study shows. The Flynn effect – named after the work of Kiwi intelligence researcher James Flynn – observed rapid rises in intelligence quotient at a rate of about 3 IQ points per decade in the 20th century, but new research suggests these heady boom days are long gone.  An analysis of some 730,000 IQ test results by researchers from the Ragnar Frisch Centre for Economic Research in Norway reveals the Flynn effect hit its peak for people born during the mid-1970s, and has significantly declined ever since. "This is the most convincing evidence yet of a reversal of the Flynn effect," psychologist Stuart Ritchie from the University of Edinburgh, who was not involved in the study, told The Times.  "If you assume their model is correct, the results are impressive, and pretty worrying."
    And we should not need to mention, that criminals on average have a lower IQ than non-criminals.  In a society that respects the Mafia, popularized by the CIA via Martin Scorsese films, it should be no surprise that leading figures in business act accordingly.  It is also no surprise that the president is a reality TV star (not really a professional actor, but worse).  Sadly, being the clown by design that Trump is, he has achieved more than any of the previous Presidents combined.
    The dumbing down of America is a well thought out plan concocted in the 70’s which is corroborated by the above hard data.  It is the same year that big business interests created New World Order control mechanisms like the “Trilateral Commission[3]” – it’s not a conspiracy, it’s right out there in the open.  You see, during the 1960s there was a movement of real change in USA and that scared the hell out of the establishment.  Flower Power was more than drugs and hippies, it was a potential of revolution, or the disruption of the status quo.  So they spent billions of dollars and learned how to channel that youthful energy in the wrong way – into crap like Facebook Selfies and violent films.
    They (the people who own us) like criminals because they can easily be controlled.  When you’re facing a life sentence, you’ll do anything they ask to get out of it.  That’s number three – in a normal society laws need to be enforced without prejudice. 
    Such methods like Blackmail to control were not invented by J. Edgar Hoover but they sure were effective.  When you have ‘the goods’ over your employees, whether they be C-Suite execs or your common retail clerks out on Parole, they will do what you want.  The entire criminal justice system is a sham, they even make money on you when you get locked up as the majority of the penitentiary system is privatized.
    So this method of control creates a ‘favors’ system similar to how the mob operates.  They will do you a ‘favor’ and not tell your employer about  your secret gambling problem.  And in exchange, you are to pass a pork belly project guaranteeing a bridge to no where in a lucrative construction contract.  This isn’t really ‘politics’ as it was meant to be, it’s become – the Criminalization of Politics.  (Applause)
    REFERENCE ARTICLES                                                                                                                                                                                                                                                                                                                                           
    To see the world for what it really is, checkout  To order more crap you don’t need and book’s you’ll never read,  For crashing Crypto prices see
      Posted: November 29, 2018, 3:23 am
      Elite E Services (11/19/2018) Delaware, USA As reported originally by Zero Hedge, a fund that did business through the website has actually justified the use of the clause that you can lose more money than you invest.  This is only possible in options trading, and specifically, naked short selling of options.  Due to a 'rogue wave' the options went deep into the red and caused the broker, INTL FC Stone, to request clients deposit the loss beyond the zero on their account.  While the manager is solely to blame for improper risk management, this will have the opposite effect on the alternatives investing community in general.  Now every manager with this clause which is all regulated managers, are going to have clients asking 'can this happen to us?' to which there is no good answer.  This is the spike:

      Options strategies are not all disasters waiting to happen, there are hundreds of examples too many to name, such as Alpha Z Advisors.

      This should serve as a wake up call to all managers and investors to re-asses the risk management plan - as in today's market anything is possible.

      To see an example of an options strategy that has a 5+ year record, see Alpha Z Advisors - Strategies based on Anomalies.

      Read the Entire Zero Hedge article:

      Shorting vol (naked) with "Other People's Money..."? What could possibly go wrong?
      Q: Have I lost all the money in account, then?
      A: Yes
      "Stocks are great, until they aren't," proclaims the now 'dark' website of Tampa-based, explaining to 'high net worth investors' that "options are better but most make the mistake of buying them."
      And so, the thoughtful-looking, wealthy grey-haired gentlemen of today should given their Fed-earned money to the managed accounts of, which touted itself as premier and highly experienced commodities options trading firm. The firm’s president and head trader, James Cordier, explained in a recent interview: “Our goal is to take an aggressive vehicle and manage it conservatively.”
      Unfortunately for the clients' managed accounts, Cordier's actions were anything but 'conservative'.
      On November 15, 2018, notified its investors in an email entitled “Catastrophic Loss Event” that it not only lost all their money, but that they would also owe money to Intl FC Stone for margin calls.
      I am writing to give you an update on the situation here with your account.
      We have spent the week unwinding our short natural gas call position as expediently as possible.
      Today which was to be the final day of liquidation, the market flared as prices appear to have been caught in a "short squeeze."
      The speed at which it took place is truly beyond anything I have seen in my career. It overran our risk control systems and left us at the mercy of the market.
      In short, it was a rogue wave and it overwhelmed us.
      Unfortunately, this has resulted in a catastrophic loss.
      Our clearing firm, FC Stone now requires us to liquidate all positions. We hoped to have this done today. If not, it will be completed tomorrow.
      Your account could potentially be facing a debit balance as of tomorrow. will be processing fee credits over the course of the coming days to help alleviate debit balances. What these will be will be determined after all positions are cleared.
      This has in effect, crippled the firm. At this point, our brokers at FC Stone have been assisting us in liquidation.
      Our offices will remain open and we will all still be here to answer your questions and process account closings. We will do everything in our power to ease what discomfort we can.
      I am truly sorry this has happened.
      I will be updating you again via memo in 24 hours.
      In case you were wondering just that means, Dear Client, here is's Q&A on "Debit Balances"...
      What do I do about this Debit Balance?
      You likely received a debit call notice from FC Stone this morning via email. You may receive it in the mail as well. This is a call to add funds to bring the balance back up to zero. Instructions for paying the balance on the notice. Any questions on debit balances can be directed directly to FX Stone at the number on the notice. Stone requests the funds asap but if it takes a few days, that is OK.
      What happens if I don't pay the balance?
      We recommend balances be paid. If it is not paid, it becomes like any other unpaid bill.
      For some context, not only did the NatGas calls rocket in price due to 'delta' changes in the underlying, 'vega' exploded them exponentially as NatGas vol spiked to a record high over 90... A double-whammy for the short call positions which "crippled the firm."
      For a sense of what the pain felt like - here is Goldman's NatGas Vol Carry strategy index (a more-hedged version of the naked calls was writing)...
      Ring any XIV (short vix ETF) bells?
      We suspect these 'picking up pennies in front of a steamroller'-conmen were not alone in their strategic losses.
      As we noted previously, what is notable is that the move in nat gas was so powerful, it nearly caused a VIXtermination-type event in the VelocityShares Daily 3X Inverse Natural Gas ETN, which seeks to produce three times the opposite daily move of US natural gas prices and is known by its stock market ticker DGAZ.
      Derivatives strategist Pravit Chintawongvanich, who rose to popularity with his hourly hot takes during the February VIXplosion that anihilated several inverse VIX ETNs, pointed out that DGAZ and its “long” leveraged cousin UGAZ could be liquidated if natural gas prices move sharply: "Because these products offer 3x daily leverage, a one day move greater than 33 per cent in either direction would blow up one of them," he wrote.
      In other words, the market was this close to another inverse ETN extinction event, only this time not in volatility but in natural gas. Meanwhile, the DGAZ's days may be limited: starting off the month with $500MM in assets, in just two weeks it has been cut in half, and as of this morning had just $247MM in assets.
      As JohnSChapman notes, unfortunately, it did not trade options conservatively. It traded “naked” rather than “covered” options, leaving investors subject to unlimited exposure. This unlimited exposure is what caused to lose all their money and more in the last few days. Thus, and its principals negligently engaged in a risky trading strategy that was unsuitable for its clients and breached its fiduciary duties to them by putting its interests ahead of its clients.
      The team includes Rosemary Veasey, Matthew Donovan, James Cordier, Michael Gross, and Alicia Zedella. But here is thefirm's president and head trader, James Cordier, in an Oscar-winning performance, apologizing to his 'family' of clients in one of the most surreal videos ever...
      "I promise you every day when I woke up, I was checking for rogue waves..."
      If you can get through the theatrics of thanking several clients for BBQ sauce and not visiting them in the south of France, Cordier explains how it was all an unforeseeable event...

      "I truly invested your funds like you were a family...I'm sorry this rogue wave capsized your boat... I wish you great luck and good health."
      Are all 290 clients convinced?
      'Rogue wave' our collective ass.. Being 'naked' short calls is grossly negligent with even the most risky of speculative capital - and sheer recklessness in a so-called 'conservative' strategy. Yep - who could have seen that coming?
      *  *  *
      Posted: November 20, 2018, 3:34 am
      Sadly, Man has proven throughout history that given the opportunity, he will find the lowest common denominator.  Sociologically speaking we are in a time of “Peak Freedom” man has never been so free.  But this comes at a cost, and as we will see in this article, a cost so great entire civilizations can rise and fall because of it.  If you give a naughty teenager a million dollars and tell him ‘do whatever you want’ probably he will not build a business empire or cure cancer.  Likewise, supported by the European Union, Malta was given a pack of matches and using simple household chemicals made it into an IED but as powerful as a Nuclear Bomb; which is about to explode in their face.
      Malta created a wormhole allowing black criminal elements a ‘shortcut’ to legitimize themselves with an EU Passport; but it was the EU which allowed them to do this, and thus it will be the EU that first faces Malta about this issue.  Before digging deeper let’s go through a little background about Malta this little ‘hole in the sea’ near Italy.  Malta is a culture with ancient roots dating back to Phoenicians.  Throughout history Malta has served as neutral territory for negotiations and even ‘staging grounds’ for the crusades, Knights of Malta (Knights Templar) and other groups.  So, Malta has a history of selling their soul to the highest bidder.  As there are no natural resources on Malta, they rely on tourism and financial services like many islands in similar situations.  But you can only sell so much sun; more than 1 Million Tourists visit Malta each year[1], and their current infrastructure can’t even support that.  The real-estate construction boom (which is fitting for Malta as they have a natural obsession with Cranes) is expanding more than most developed countries, but it still can’t keep up.  There are even internet problems as experienced by companies like Bet Fair who have had to limit the amount of on-shore staff in Malta due to connectivity issues[2].
      Malta joined the European Union (EU) in 2004, and for a period of about 10 years promoted Malta as a place to do financial business and gambling; ending in 2013 with the election of Joseph Muscat (note that, this is a Maltese name and not related to the rodent Muskrat[3]).  During this 10-year period Malta was promoted in the Forex community, among others, and saw a boom in retail and institutional Forex operation moving to the island and had barely a single fraud.  Compared to similar jurisdictions like Cyprus especially, Malta was white.
      Muscat changed all this with an aggressive Passport selling program that netted Malta substantial profits both in actual fees and in capital flowing to the island.  It was the sort of thing that was common in Cyprus, and one reason why many avoided Cyprus in favor of Malta and other white places.  But what rules were in place, to check the participants in this program, their backgrounds, and other important information?  Or did the Maltese simply take the money and look the other way, which is so easy to do when you have the strong EU behind you.  Malta seems to believe that it can have its cake and eat it too; getting quick money from the black market without the risks and liabilities associated with it.  Unfortunately, the world doesn’t work that way, and Malta is in for a big wake up call.
      Prior to his sudden death, Gaddafi began to implement a plan to create and sustain a Gold backed Dinar for black Africa – a real threat to USD and EU global hegemony.  Wikileaks emails have revealed explicitly that this was the reason for the Libya intervention and subsequent toppling and killing of Gaddafi[4].  This story is really an algorithm that has been replayed hundreds of times since World War 2 which is the sole and exclusive reason the US Dollar remains the supreme and only settlement currency for global business.  It is also the reason why countries like the United Kingdom, Germany, Japan, and many others – freely accept US Dollars and do not attempt to start their own competitive versions of the US Dollar.
      This more obvious, practical, economic policy motif is not on the surface, but it is real.  As a matter of policy enforcement, the US takes an aggressive stance on terrorist financing on the financial level (if terrorists cannot be financed, they don’t exist.)  This policy was enforced globally well before the Patriot Act and other post 9/11 measures.  Financial tools were even used in the Cold War – ‘spending them to death’.
      The US Dollar is backed by bombs, vis a vis the US Military[5].  The alliance between Washington, Wall St. has been very close since World War 2, because after World War 2 USA was the only country that wasn’t bombed into oblivion and was tasked to literally ‘rebuild the world’ which included structuring of a new global monetary system agreed upon at Breton Woods[6].  Although the world has changed much in 60 years, the unipolar power system of global management, using the US Dollar as the funding currency, has not.  Despite rhetoric from socialists, libertarians, and anarchist commentators – emerging markets such as BRICS pose a limited or non-existent threat to this system of global management.
      The way that this system survives and has survived for 60 years, is by eliminating any threat to its existence.  There are a few types of threats; the most obvious and pulpable being that of a currency alternative to the US Dollar which is not controlled by the Fed, such as proposed by Gaddafi.  Another threat that is subtler is a means by which unsavory actors like criminals can completely avoid the US Dollar system, such as proposed by some Crypto Currency alt-coins.  Malta has created these means with their no questions asked passport program, and thus has opened the gates of hell into a previously impervious barrier of entry into the EU-US system.  Having an EU passport is nearly just as good as having a US passport not only for travel but for banking reasons.  An example from our Forex business; Russian nationals are subject to several layers of additional checks when opening a new investment account, which can be so complicated they are impossible even for the legitimate Russian investor to complete.  They can ask for notarized documents from previous addresses you lived, which is not possible to collect in Russia.  Or they can ask for multiple forms of ID, which may not be easily accessible.  Russia is considered a ‘red flag’ country and thus additional scrutiny and AML checks are required in most compliance systems.  As they should be – the amount of crime and corruption in Russia is widespread, so much so that it is considered to be endemic (part of the system).  In this example by having the Malta issued EU passport the Russian criminal could completely circumvent AML rules designed stop terrorist financing, money laundering, and other criminal activities.
      These topics are not abstract issues for academic discussion they are serious issues that can have devastating effects.  Bloomberg broke the ice on this topic very politely in Bloomberg style:
      For critics of Muscat, one powerful symbol of cronyism is Ali Sadr Hasheminejad, head of Pilatus Bank, the institution allegedly in the middle of the suspicious transactions involving the Panamanian shell companies linked to government officials. Sadr is an Iranian national, but when establishing and registering the bank in Malta he used a passport he’d purchased from St. Kitts. While Sadr was enmeshed in controversy in Malta, a parallel investigation into him and his bank culminated in his arrest by U.S. authorities, who charged him this spring with setting up a network of shell companies and bank accounts to hide money being funneled from Venezuela to Iran—transactions that allegedly violated economic sanctions against Iran. Prosecutors also alleged that Sadr established Pilatus Bank using illegal funds. Sadr pleaded not guilty and has been released on bail in the U.S.; his lawyer didn’t respond to requests for comment.
      Ali Sadr Hasheminejad is a character which deserves his own article so in order not to get distracted we will just say that he’s been charged in New York with setting up a “Sanctions evasion scheme” to the tune of $115 Million USD – using his bank in Malta as the go between[7] This is unrelated to the passport scheme mentioned earlier, which is why we needed to allow the reader to connect the dots for yourself to see what’s going on here.  A client of Pilatus bank could, in theory (we haven’t seen the client lists yet) could buy an EU passport and as an account holder of Pilatus bank, launder money to any country in the US-EU sphere, which is 90% of the Western world.  What this means is a figure from organized crime for example, could ‘wash’ himself both his money and his identity, through Malta.
      This dual fake ID money laundering scheme is the first of its kind in the modern world.  What’s sad is that Malta was previously mostly a white country (meaning not criminal) 95% catholic, with a strong tradition of ‘trading’ as merchants.  Cyprus has been polluted with criminal elements for a long time, but people know it, and many avoid it.  But even in the twisted world of Cyprus black mafia, something like this never existed.  What the Maltese have done is in one-way criminal genius, and in another way extremely stupid.  We can say that ‘studies show crime doesn’t pay’ but that’s not necessary here.  Just look at the political fallout from Malta’s handling of the Pilatus situation (car bombing reporters who won’t shut up).  The Global Perception of Malta has done a complete 180, but the war against Malta is only beginning.  They violated untold and unagreed rules of the game, by exploiting the fairness of the EU system for their own profit and passing the liability to their EU owners. 
      (Guys, a country is a Currency, you gave up sovereignty in 2004 Brussels is not going to allow this.)
      Furthermore, Malta has a convoluted understanding of law, but it is with reason.  Malta doesn’t have a unique legal system and history of precedent as exists in Great Britain, or Switzerland.  They have a ‘mixed system’ which is a little of this and little of that[8], and when you mix it together it becomes a big pile of crap.  It’s like keeping 3 sets of laws and using which one is convenient to you at the time.  Nice try, but the world doesn’t work like that, especially when you have allowed criminals to violate US sanctions.
      We can assume that, Iranians avoiding sanctions are just part of the VIP client list at Pilatus bank.  Since 2013 the number of wealthy Russians in Malta has exploded, as they are preferring the passport program and ease of banking in Malta’s new program over their previous choice of Cyprus.  Russia is a growing economy and part of early stage capitalism is the growth of quasi illegal robber baron class as was in the United States during the late 19th century.  It’s unfair to call them ‘Mafia’ because they aren’t really ‘criminals’ any more than John Rockefeller was a criminal, but for the purposes of this article we can add “Russian Mafia” to the list.  And certainly many Russians who have bought passports are legitimate businessmen, but consider this.  US imposed sanctions on Russia over the 2014 Ukrainian dispute, and by having an EU passport from Malta, it circumvents those sanctions.
      Those who forked out for Maltese and - by default - EU citizenship last year included Arkady Volozh, the founder of Yandex, a Russian Uber-type firm, and his entire family.  They also included: Alexey Marey, the former CEO of Alfa Bank Russia, the country's largest private lender; Alexey De-Monderik, a co-founder of Russian cyber security firm Kaspersky Lab; and Alexander Mechatin, the CEO of Beluga Group, Russia's largest private spirits company.  The newly-minted Maltese nationals emerged in a list of more than 2,000 names published in the country's legal gazette at the end of last year.  The gazette does not say who bought passports in 2016 and who was naturalised for other reasons.  But the names of wealthy foreign nationals stand out as the most likely to have paid the €1.1 million in fees, Maltese bond, and Maltese real estate investments that it costs to get nationality.  The Russian roll-call for 2016 went on to name: Dmitry Semenikhin (a media millionaire); Alexander Rubanov (energy firm executive); Roman Trushev (oil and gas); Andrey Gomon (transport magnate); Alexey Kirienko (investment broker); Dmitry Lipyavko (petroleum products tycoon); Andrei Melnikov (cobalt and uranium magnate); and Anatoly Loginov (owner of an online payment systems firm).  It also named Russian real estate developers, retailers, and agricultural land owners.  It came out after the previous gazette showed that 40 percent of new passport buyers in 2015 were also Russians.  Owning a Maltese passport gives people the right to visa-free travel to 160 countries, including the US, and to live and move around their money anywhere in the EU.  The surge in Russian applications comes after the EU and US imposed economic sanctions and visa-bans and asset-freezes on Russia over its invasion of Ukraine in 2014.  It also comes amid US plans to create a new blacklist on 29 January 2018 of cronies of Russian president Vladimir Putin over his meddling in the 2016 US election.
      Right now, the Department of Justice (DOJ) is embroiled in a scandal targeted at Trump using Russia as a scapegoat.  Forces inside the US Government, for the first time, are staging what can only be referred to (and has been) as a cold coup on the legitimately elected President.  These powerful deep-state actors are in agencies like FEMA, CIA, FBI, IRS, and others.  These are powerful agencies.  Now is not a good time to be hiding or laundering money for Russians! 
      And we’re only getting started!  Malta recently adopted the world’s first Crypto Currency legislation, right at a time when the public is learning thatbillions of dollars have been laundered through Bitcoin, and that hot money from Asia was a leading cause to the rapid rise of Bitcoin.  The point is that Crypto Currency is now the leading solution for money laundering.
      So why are they being so flagrant?  Are they stupid, bold, or a little of both?
      Non-Maltese foreigners in the island have reported that the regulators do not understand the underlying business.  There are other anecdotal accounts, such as from a tourist:
      We were staying in a hotel that had a kitchen and living room it was like a hybrid half hotel half apartment, there was daily cleaning service, but we cooked our meals on the stove.  So early in the week we bought salt, oil, spices, and other basic kitchen elements.  Near the end of our stay, near the last day, the maid approached me and asked if she could have the salt.  It was almost empty.  It cost about $0.25 cents.  To which I said, “But we might use it we are still here for another day, but I will leave it here for you, ok?”  To which the maid replied, “But the other maid has a shift tomorrow and she will get it.”  Over a pinch of salt! 
      Anyone who has been to Malta can attest to their peculiar behavior.  If you want to close a corporation, you have to appoint a special liquidator (similar to a bankruptcy judge) who must wear a special hat and sit on a special ‘throne’ in the town square, where he must by voice ask if there are any company debts.  These outdated traditions are more than antiquated, they are a problem if you are a serious professional company that wants to do business in Malta.
      Malta is rated 84 out of 100 by the World Bank ‘ease of doing business[9]’ What it takes 1 man to do in New Zealand, it takes 8 men in Malta.  Must be all the heavy lifting from those big stones.
      This can work for you because it protects your empire from new competition, but sadly, they are using this ‘bureaucratic fog’ for aiding and abetting international criminals.
      Let’s take a look at Iran’s currency 10 year chart:

      Here’s why we believe Malta is about to be pummeled into submission. 
      1. Malta is providing a way for those on the OFAC list to avoid / circumvent sanctions
      2. By providing an OFAC loophole, Malta is as a state, aiding and abetting criminals (who are criminals according to the United States)
      3. As a side business, it is easy for these participants to launder money directly (for themselves) or for their criminal network friends.  It is possible, and likely, that copy cats of Pilatus have setup laundry businesses using similar and less obvious loopholes.
      4. On the regulated front, Malta is providing a backdoor to the European Union (EU) with light regulation.  This isn’t necessarily, by itself, a bad thing – but combined with the other more serious problems, it becomes a matter of discussion.
      5. Malta’s financial system can survive Pilatus bank and Ali Sadr trial.  But what’s next?  What next scandal lies in the shadows, another fraud to be unraveled?  Could it involve a high-profile Russian diplomat on DOJ’s black list?  If Pilatus is isolated, Malta can survive.  As soon as the next mole pops up in the garden, it will be impossible for Malta to whack them all.
      Some material facts:
      • Not only is the case about Ali Sadr Hasheminejad disturbing by itself, his bank, which was financed with his own illegal gains, was used to open a bank.  That bank, among other things, was a laundry for Iranian capital.  The bank was approved by MFSA, Malta’s regulator, who recently asked the ECB to rescind its bank license[10].
      • The creator of this passport program, Joseph Muscat, is accused of taking bribes from wealthy criminals from banned/blocked places due to his name appearing in the Panama Papers[11].  We need to note here that we have not seen the contents of these documents, so there is no smoking gun evidence.  But the timing is otherwise too coincidental for a forensic auditor.
      The most significant financial whistleblower in US history, and perhaps in all history, said that it was the CIA behind the Panama Papers.  While this story has been featured on CNBC, the analysis of the implications has died on the vine:
      Bradley Birkenfeld is the most significant financial whistleblower of all time, so you might think he'd be cheering on the disclosures in the new Panama Papers leaks. But today, Birkenfeld is raising questions about the source of the information that is shaking political regimes around the world.
      Birkenfeld, an American citizen, was a banker working at UBS in Switzerland when he approached the U.S. government with information on massive amounts of tax evasion by Americans with secret accounts in Switzerland. By the end of his whistleblowing career, Birkenfeld had served more than two years in a U.S. federal prison, been awarded $104 million by the IRS for his information and shattered the foundations of more than a century of Swiss banking secrecy.
      "The CIA I'm sure is behind this, in my opinion," Birkenfeld said.
      Let’s run with that for the moment, especially since the CIA has such a deep history in Central and South America.  How is Malta connected to NATO, Ukraine, and the periphery of the EU?  Does Malta represent the opposite of what’s happening in Britain, Catalonia, and other potential breakaway states?  Is Malta leading the way to corporate national Fascism? Is this pleasing, or worrisome to their friends in Washington?  These are the types of questions we need to answer to really understand how this small country plays a big role in regional politics, with their bold cash for passports program.
      What are the interests here, in the proxy jurisdictions like Malta?  Libya for one, not only due to Malta’s close presence to Africa, but both Libya and Malta gained independence within 13 years of each other[12].  Certainly, there was a lot of oil business run through Malta, for reasons of convenience if anything. 
      Malta is not, the vortex of criminal activity in the Mediterranean, that is Cyprus.  In Cyprus, you can find drug trafficking, human trafficking, gambling, money laundering, and more – all in a country that can lose power for days on end.  Cyprus is the real black hole in the Sea.  There is no comparison in size, the criminal industry in Cyprus is 100x greater than Malta could ever grow to.  But 2 wrongs don’t make a right and being another criminal island in the sea doesn’t make the case here against Malta any less disturbing.  But there are some big differences we need to understand, such as:
      1. For Malta, this is a recent phenomenon, that started around 2013. 
      2. Cyprus isn’t flagrantly taunting violating US rules.  Russian Mafia has been in Cyprus for decades, but so are many other interests as well.  Malta’s passport program and the Panama Papers leaks made Malta stick out as a world leader in EU passport selling to those on a black list OFAC or other.
      3. There is Mafia in Italy, but Mafia doesn’t run the government (anymore).  What Muscat has done is created his own Maltese Mafia.
      It seems like Malta has really lost their soul.  You know there’s a catch with America as the land of milk and honey.  It is possible to come to America with nothing and become a billionaire.  But there’s a catch – you must give up your soul.  Has Malta tried to Americanize themselves? 
      Finally, Malta is now the number one jurisdiction in terms of Crypto volume (but not OTC, where Russia leads)[13].  This is really the reason for this in-depth analysis of the place.  If Malta is going to blow up, and we’ve outlined reasons well in this article – is this really a place you want to keep your Crypto?  As we’ve learned from past experiences, when dominoes fall – you don’t want to be one in the line (even if your exchange is the best one). 
      Malta as a jurisdiction has become shaky.  If Pilatus can launder money using a bank which was approved by MFSA, how easy will it be to launder Crypto through exchanges when MFSA has a clear lack of understanding for financial markets, and when Crypto is by its nature completely opaque.
      If Malta cannot provide protections from criminals like Ali Sadr Hasheminejad, then what remains for Crypto exchanges which are not only mostly unregulated – they are mostly opaque and anonymous.
      The conclusion is that we expect massive capital outflows from Malta.  Some of that capital will flow to home – but others will look for alternative jurisdictions, like Bahamas. 
      Crediblock is a Bahamas Blockchain and FinTech consultancy that can assist in your Bahamas Blockchain enterprise setup such as Crypto Exchange, Hedge Fund, Insurance Company, Brokerage, or Bank[i].

      Important Reference Articles to read on this topic

      Posted: November 5, 2018, 1:07 am
      Bloc10 @ Atlanta, GA 10/27/2018 — Bloc10 today has launched Total Cryptos University offering multiple courses about Crypto Currency, Blockchain Technology, and Day Trading Crypto.  “We launched this program because there is a huge education factor in Crypto.” says Joseph Gelet, Chief Strategy Officer of Bloc10.  “Like with anything new, there is a lot to learn. Not everyone spent their last 10 years on Wall St. or in Finance School.  So we launched an online university.”
      Courses come complete with actual products that can be used like trading signals, alerts, algorithmic trading systems ‘robots’ – books, software, and more.  The plan is to offer members new strategies each week and each month.  “We want to provide our members with the most value to maximize their trading potential.  So we are going to launch new products every week.” he says.
      The course uses the practical ‘hands on’ learning approach which means that students are provided products to use and trade with, rather than a ‘textbook method’ used in Universities.  Practically, there aren’t Universities offering Blockchain or Crypto classes yet – but that will certainly change in the future.  For now, we have Total Cryptos University.  
      Some snapshots of what you’ll learn inside the course:

      Predator Arbitrage trading dashboard

      Predator arbitrage dashboard

      Traditional Macro Economic Analysis

      Arbitrage vs. Traditional Trading

      Learn more @

      Posted: October 27, 2018, 8:18 pm
      The US legal system has a message for those who not only feel like manipulating the currency market, but have picked a delightfully appropriate name for their FX rigging operation: just do it.
      Moments ago, the three former British currency traders who formed the core of the infamous currency rigging "Cartel", were found not guilty of using an online chatroom to fix prices in the $5.1 trillion-a-day foreign exchange market.
      Chris Ashton, Rohan Ramchandani and Richard Usher
      According to Bloomberg, a New York federal jury rejected the government’s claim that Richard Usher, Rohan Ramchandani and Christopher Ashton, better known as "The Cartel," rigged the market from 2007 to 2013 by coordinating trades and manipulating prices on the spot exchange rate for euros and U.S. dollars.
      They wept in relief as the verdict was handed down in Manhattan federal court Friday after the jury deliberated for less than a day.
      Usher, a former JPMorgan foreign-exchange trader, Ramchandani, former trader at Citigroup, and Ashton, the ex-head of spot FX trading at Barclays, were charged in January 2017. The case followed an investigation into conduct that was exposed by Bloomberg in 2013.
      The three men faced as long as 10 years in prison had they been convicted, but since their conviction would make any future FX rigging that much more problematic, or simply because the government was incompetent and was unable to prove a slam dunk case, they are now free.
      The acquittal is that much more bizarre because previously four banks, JPMorgan, Citigroup, Royal Bank of Scotland and Barclays all pleaded guilty to manipulating currency markets in 2015 and agreed to pay $2.5 billion in fines. At the time, UBS - which ratted everyone else out - received immunity from antitrust charges for being the first institution to report misconduct in the FX market, although it pleaded guilty to a related fraud and paid a $203 million penalty. Overall, more than a dozen financial institutions have paid about $11.8 billion in fines and penalties globally, with another $2.3 billion spent to compensate customers and investors.
      As Bloomberg notes, The three men, who were based in London, waived extradition to New York to fight the single charge of conspiracy to restrain trade. None of the defendants took the stand to testify.
      So how did they walk free when their own employers admitted to currency manipulation?
      Matt Gardiner, a former currency trader at Barclays and UBS Group AG who helped organize the group, testified for the government in exchange for an agreement that he won’t be prosecuted. Gardiner said the group agreed on trading strategies and would congratulate each other when their bets paid off. He also testified that he had no idea the group was doing anything illegal until he began negotiating with U.S. prosecutors. In closing arguments, lawyers for the defendants urged jurors to reject his testimony.
      Jurors heard testimony that the men spent almost all of their work days in the chatroom, where they exchanged market color, inside jokes and personal information.
      Prosecutors showed transcripts of some of the chats, recorded phone calls and trading records which showed coordination among the group. The defense said the chats reflected innocent banter and that the traders sought to profit off one another. We profiled some of these exchanges previously in "Accused "FX Cartel" Members Joined Forces After Trying To "End" Each Other."
      Speaking before the acquittal, Mayra Rodriguez Valladares, a former foreign-exchange analyst for the New York Fed, said that the verdict would "send a general signal to the market that the FX code is not going to be seen as having any teeth,” referring to the FX Global Code, a set of guidelines aimed at raising standards after the rigging scandal. "They’ll go back to same old, same old,” of the acquittal in an interview before the verdict. “It’s business as usual, everybody does it."
      Especially the Fed, her former employer.
      Javier Paz, founder of research and advisory firm Forex Datasource told Bloomberg before the verdict that the investigation has signaled to traders that “illegal actions carry a high risk of betrayal.” Whether the case will have a longer term impact remains to be seen.
      “There’s definitely more awareness by clients of what could go wrong in trades, there is much more employer oversight, and, as we saw on this case, there’s government oversight and appetite to prosecute wrongdoers,” Paz said.
      However, Pax was "under no illusion that banks and bankers will stop misbehaving long term. The kinds of lessons being experienced today have a way of being forgotten in a few years."
      They certainly won't stop misbehaving if after years of documented manipulation, a jury of their peers finds them innocent.
      Game On!
      Posted: October 26, 2018, 7:18 pm
      As regulators' campaign to kill off Libor continues unabated, helping to squeeze the 3 month dollar Libor rate to its highest level since the financial crisis, federal prosecutors in New York have won convictions on charges of wire fraud and conspiracy against two former Deutsche Bank traders for rigging the benchmark rate that underpins the value of nearly $400 trillion in financial instruments denominated in a range of currencies.
      Matthew Connolly, who supervised the bank's money-market derivatives desk in New York, and Gavin Black, who traded derivatives in London, were convicted on the basis of testimony from three junior traders (two of whom pleaded guilty, and a third signed an agreement to avoid prosecution in exchange for his testimony), who said Connolly and Black directed them to aid in the altering of the bank's Libor submissions to benefit the desk's trading positions. The illicit behavior for which the two men were convicted took place between 2004 and 2011, according to Bloomberg.
      The convictions represent a major win for federal prosecutors, but they can't celebrate just yet; last summer, convictions won by the DOJ against two London-based Rabobank traders were reversed on appeal, dealing an embarrassing blow to prosecutors in New York and the DOJ. All told, global regulators have secured $9 billion in fines from a collection of some of the world's largest investment banks, including DB and Barclays.
      But for the duration of the trial, it appeared that Connolly and Black would also beat the rap, as the judge treated the fumbling prosecutors with open hostility, particularly after one of the government's key witnesses was called out by the defense in open court for lying about his bonus in a federal plea agreement.
      The defense had some success in portraying the three witnesses as liars who molded their stories to avoid prosecution.
      The three former traders told jurors that, at the urging of the defendants, they altered the rate or pressured others to submit false data to benefit trading positions held by Connolly and Black. Parietti said Connolly ordered him to disclose positions to the submitters in London because Connolly believed his team was being undermined by others at the bank who were rigging the rate in their favor.
      The defense argued that there were no clear guidelines on how banks should submit their rates for the calculation of Libor until at least 2008, and that they weren’t expressly forbidden from taking derivative trading positions into account when making the submission until 2013.
      During cross-examination, attorneys for Connolly and Black attempted to portray the government’s witnesses as liars who initially defended their practices to investigators and changed their stories only in exchange for a deal with prosecutors.
      All told, at least 10 former Deutsche Bank traders have been charged with rigging interest-rate benchmarks, including Libor and Euribor, in the US and UK. Christian Bittar, a former DB prop trader who was effectively directed by the bank to influence rates (and who was pushed out after DB clawed back some of his bonus and turned him into a convenient scapegoat), was sentenced to five years and four months alongside Barclays trader Philippe Moryoussef, who received 8 years but was sentenced in absentia because he chose to stay in France. 
      The challenge for the prosecution will now shift to ensuring that these convictions stick. But while prosecutors will no doubt hold up the scalps of Simon and Connolly as a warning to others who might dare to impinge upon the sacred integrity of markets, the fact remains that not a single senior executive was charged in the scandal (though it contributed to the downfall of former Barclays CEO Bob Diamond). In fact, regulators even stepped up to protect DB CEO Anshu Jain despite his bank's flagrantly illegal activity, after Bafin, the German securities regulator, declared in 2015 that Jain had no knowledge of the illicit trading despite a preponderance of evidence to the contrary.
      Posted: October 17, 2018, 11:50 pm
      TOKYO (Reuters) - If European Central Bank chief Mario Draghi appears slightly more downbeat at his regular news conference than before, it could foreshadow a possible move by to the bank to trim its monetary policy stimulus.
      FILE PHOTO - European Central Bank (ECB) President Mario Draghi holds a news conference at the ECB headquarters in Frankfurt, Germany, March 7, 2018. REUTERS/Ralph Orlowski/File Photo
      That’s the conclusion of two Japanese researchers who’ve used artificial intelligence software to analyze split-second changes in Draghi’s facial expressions at his post-policy meeting press conferences.
      The findings follow a similar analysis by the same researchers of Draghi’s Japanese counterpart, Haruhiko Kuroda, last year, which claimed to have identified a correlation between patterns in his facial expressions and subsequent policy changes.
      Yoshiyuki Suimon and Daichi Isami, the paper’s authors, think that subtle changes in Draghi’s facial expressions could reflect a sense of frustration Draghi might have been feeling before making policy adjustments.
      Their study covered Draghi’s news conference from June 2016 to December 2017 and found signs of “sadness” preceding two recent major policy changes — when the central bank announced a dovish tapering in December 2016 and another quantitative easing cutback in October last year.
      FILE PHOTO - European Central Bank (ECB) President Mario Draghi attends the 27th European Banking Congress at the Old Opera house in Frankfurt, Germany November 17, 2017. REUTERS/Ralph Orlowski/File Photo
      However, Suimon noted changes in Draghi’s emotion scores were smaller than Bank of Japan Governor Kuroda’s, pointing to the European central banker’s greater degree of inscrutability.
      “This suggests that Draghi is maintaining more control on his expressions, whether he is doing so consciously or not,” said Suimon, who is the lead author of the study.
      In both the Kuroda and Draghi studies, screenshots of the policymakers’ faces were captured every half-second from video footage.
      Suimon and Isami analyzed those images with a program developed by Microsoft called “Emotion API” that uses a visual recognition algorithm to break down human emotions into eight categories: happiness, sadness, surprise, anger, fear, contempt, disgust and neutral.
      (For a graphic on Draghi's facial expressions click
      Reuters Graphic
      They also examined the facial expression of ECB Vice President Vitor Constancio, who sits next to Draghi at his news conferences. Constancio showed more joy even when Draghi’s joy score dropped.
      Slideshow (4 Images)
      Kiyoshi Izumi, professor of the University of Tokyo, who specializes in financial data mining and artificial market simulation, said studying simultaneous facial expressions from a team of policymakers, such as Draghi and Constancio, provided stronger sample sizes.
      “Some people — President Draghi, in this case – are better at poker facing than Governor Kuroda. So it’s interesting and worth analyzing the news conference as a whole,” Izumi said.
      Suimon and Isami presented their latest findings to a meeting of the Japanese Society for Artificial Intelligence (JSAI) on Tuesday. The pair studied together at the University of Tokyo’s Graduate School of Frontier Sciences and did the research in their personal capacity.
      Suimon said they have looked into Kuroda’s recent news conferences, and have not found any facial data to suggest an imminent major policy change. The BOJ kept settings unchanged at its last policy meeting.
      In October, Kuroda laughed at the notion that artificial intelligence could analyze his face to predict changes in monetary policy, noting such studies would only prompt those being scrutinized to manage their facial expressions more carefully.
      Posted: October 16, 2018, 2:33 am
      Oil is still the world’s leading energy source, with growing demand, a fluctuating pricing system, and much of its production in volatile regions. The oil market’s value is larger than the world’s valuable raw metal markets combined, with an annual production valued at US$1.7 trillion. A flourishing black market is no surprise, with about US$133 billion worth of fuels stolen or adulterated every year. These practices fund dangerous non-state actors such as the Islamic State, Mexican drug cartels, Italian Mafia, Eastern European criminal groups, Libyan militias, Nigerian rebels and more – and are a major global security concern.
      The top five countries accused of oil trafficking – Nigeria, Mexico, Iraq, Russia, and Indonesia – are also producersIt is estimated that Nigeria alone loses US$1.5 billion a month due to pipeline tapping, illegal production and other sophisticated schemes. In Southeast Asia, about 3 percent of the fuel consumed is sourced from the black market, estimated to be worth up to US$10 billion a year. In Mexico, drug cartels launder drug revenues through the oil trade
      Other countries are not immune. Turkey is not an oil producer yet serves as a major transit route for hydrocarbons flowing to Europe from OPEC countries like Iraq and Iran. As an energy hub, Turkey is strategically situated for the illegal trade and lost an estimated US$5 billion in tax revenue in 2017. An uptick in smuggling oil and other refined products began 2014, when ISIS took control of major Syrian and Iraqi oil fields.
      As with most commodities, the volume of oil smuggling is primarily linked to fluctuating prices. With climbing oil prices, illicit trade is expected to increase. The European Union is a prime example on how price disparities of fuel within its own member state countries tend to incentivize illegal trade producing counterintuitive routes. Lower oil prices in Eastern Europe have created maritime smuggling routes to the United Kingdom and Ireland. Ireland estimates it loses up to $200 million annually with fuel fraud, while up to 20 percent of fuel sold in regular gas stations in Greece is illegal.
      The legal complexities and ambiguities of the global oil and gas trade often create an opening for illegal activity.
      In some cases, subnational actors openly export oil despite official prohibition by central governments. The Kurdistan Regional Government in Iraq maintains it is their region’s constitutional right to export oil independently, in defiance of the central government. With Baghdad withholding the region’s 17 percent of budget share, the regional government sought economic independence through hydrocarbons and found a degree of international sympathy, given its role in combatting ISIS and hosting 1.9 million refugees and internally displaced people. The unrefined product was sent via pipeline through Turkey’s Ceyhan port, loaded by various Greek shipping companies on tankers, then stored in Malta or Israel until buyers were found. Shifting routes of Kurdish oil tankers can be observed on sites like
      Authorities who benefit from the trade often stymie efforts to combat illegal trafficking, as seen in countries like Iraq or North Korea, with terrible consequences for citizens. Conflict and illicit trading near the Niger River Delta reduced overall foreign direct investment in recent decades.
      With 90 percent of the world’s goods, 30 percent of which are total hydrocarbons, traded by sea, much of the illegal fuel trade is conducted on water. Two thirds of global daily oil exports are transported by sea, reports the UN Conference on Trade and Development, and a staggering 64 percent of international waters are areas beyond any national jurisdiction. Non-state actors offshore West Africa, Bangladesh or Indonesia take advantage of loopholes created by international law and the law of the sea. Transfer of illegal fuel is often done ship to ship on neutral waters – with one ship commercially legal, recognized as carrying legitimate imports at the final port of destination. Thus, illegal crude from countries such as Libya or Syria finds its way to EU markets. Recently Russian ships have been found involved in smuggling oil products to North Korea through ship to ship transfers.
      Armed theft and piracy also occur. Hijackings off the coast of Somalia resumed in 2017, the first since 2012, after the international community reduced enforcement. Beyond jurisdictional issues, many governments are overwhelmed by other maritime security threats and cannot prioritize the illegal trade. In fact, fuel traders have reported that the problem is so pervasive that many companies calculate in advance for losses up to 0.4 percent of any ordered cargo volumes.
      The industry runs on high risk tolerance.
      Transparency International estimates that over the next 20 years, around 90 percent of oil and gas production will come from developing countries. The relatively low average salaries of state employees relative to the private sector in developing countries encourage the temptation to look for other income sources.
      Consider Mozambique, where immense offshore natural gas reserves have been discovered. Emerging from decades of civil war, the country has a diverse wasta system – an Arabic term for bribing and asking for favours – along with strong political allegiances and state structures that struggle to withstand internal and external pressures. Estimates suggest that 54 percent of all cargo movements in the capital city, Maputo, involve bribes, and Mozambique risks following the path of Nigeria, a country in need of socioeconomic development despite vast oil and gas reserves under development since 1958. The country is reported to have already lost around US$400 billion since its independence in 1960 due to theft or mismanagement in its oil sector.
      The Organization of Economic Co-operation and Development suggests that the impacts of the illegal oil trade go underestimated, and the affected countries suffer from the deteriorating rule of law, loss of biodiversity, pollution, degradation of critical farmland, increasing health problems and armed conflicts. Other opportunity costs include increased financial risk premiums for investors with billions of dollars lost annually due to illegal bunkering, pipeline tapping, ship-to-ship transfers, armed theft, adulteration of fuel and bribery. Illicit trade allows authoritarian states to maintain revenue flows for years despite international sanctions designed to weaken their rule. In the 11th year of UN oil sanctions, Iraq’s dictator Saddam Hussein had managed to become one of the world’s richest men, with an estimated US$3 billion in wealth
      Some governments condone the illicit trade. An intertwining of regime structures and corruption – often supported by governments and corporations – is a major stumbling block for the international community’s attempts to contain illegal trading. So far, governmental and industry efforts to halt the practice have been ineffective – and it could be that the illegal oil trade offers enough benefits to consumers, producers and government officials to disincentivize investigation. Some officials suggest that condoning trade in illicit oil and petroleum products helps keep regional and local security intact.
      The first global conference on fuel theft, held in Geneva in April, may be a watershed moment. The conference aimed at encouraging discourse among stakeholders within the hydrocarbons industry on how to tackle the scale of this global crime and was based on the work of Ian Ralby, I.R. Consilium and the Atlantic Council’s Global Energy Center, which produced Downstream Oil Theft: Global Modalities, Trends, and Remedies, the most extensive examination of illicit downstream hydrocarbons activity published to date.
      Courtesy of: Visual Capitalist
      Similar challenges confront the rapidly growing liquefied natural gas market. Strong international cooperation is required, or detrimental effects for global security, the environment and economic prosperity will continue. Unless monitored and addressed by robust policy and regulation, the illegal oil activities will remain a key funding source for terrorism, organized crime, authoritarian states and violent non-state actors.

      Posted: October 14, 2018, 3:54 pm
      Finance professor John Griffin, along with his doctoral student companion, Amin Shams, were the two academics that drew market-moving conclusions about bitcoin last year, while the digital currency was trading around $20,000. After sifting through 2 terabytes of trading data, they alleged that bitcoin was being manipulated by someone using the cryptocurrency Tether to purchase it. Tether remains a relatively little-known crypto, which is pegged to one US dollar. Part of its appeal is that it can "stand in" for dollars when necessary, according to Bloomberg.
      Griffin and Shams authored a paper in June, with the results of their findings ultimately catalyzing many digital assets to move lower, despite the fact that the CEO of Tether publicly denied that its currency was used to prop up bitcoin.
      Griffin works at the University of Texas at Austin, and has become quite an unpopular figure on Wall Street for similar work he has done in the past on ratings companies, the VIX and investment banks. In most of his findings, he claims that these well-known financial instruments and players are, in one way or another, rigged. And the professor seems to enjoy exposing precisely that: rigged, manipulated markets and shady players.
      "I not only want to understand the world, but make it better," he told Bloomberg.
      Griffin's work has become popular reading within the DOJ and the Commodity Futures Trading Commission, according to Bloomberg. These regulators – many of them low on resources, time and staff - welcome any additional help they can get (the SEC’s budget has forced it into a hiring freeze and the CFTC budget was cut by Congress in March of this year).
      John Reed Stark, a former attorney in the SEC’s enforcement division, stated: “It’s incredibly helpful to have an expert of Griffin’s caliber."
      After spending the beginning of his tenure as a professor tackling little-known and inconsequential parts of the market, he started to feel the need to take on bigger tasks. In fact, he claims that part of the Bible spoke to him, when he read a passage that motivated him. It stated “Have nothing to do with the fruitless deeds of darkness, but rather expose them.”
      His targets – like the VIX index, owned by CBOE Global Markets - say that he misreads data. In response to work that he did on the VIX, CBOE stated his “...academic paper’s analysis and conclusions are based upon a fundamental misunderstanding about how VIX derivatives are traded and settled.”
      In 2017, Griffin's work revealed that one or more market participants had been trading S&P 500 options in a way to artificially boost or depress the VIX, which would then have an impact on VIX futures. They argued that the volume of S&P 500 options would spike suspiciously at times, but only in the contracts that were used to help price the VIX. He claimed these trades simply didn’t make sense unless somebody was trying to manipulate the VIX.
      And he’s not buying the explanation given to him by the CBOE: “There is no doubt we understand how the market works,” he said.
      As a result, the CBOE has been sued many times over for this supposed manipulation. Meanwhile, riffin says he’s not going to work with any individual plaintiffs, but he does not rule out the possibility that he may work as a consultant in the future – if he can get paid.
      Every time he publishes a new paper, he gets more attention. His paper on the alleged bitcoin manipulation has been downloaded more than 20,000 times and was cited by the SEC when the regulator rejected a bitcoin ETF that would have made it easier for retail investors to trade the crypto.
      And as he continues to expose one fraud after another, Griffin - unlike Goldman - is truly doing God's work. 
      Posted: October 14, 2018, 12:55 am
      From Bloomberg:

      Good Friday claims a sacred spot on the Maltese calendar, and this year the holiday was casting its reliable spell. In the late afternoon, hundreds of people streamed from Baroque cathedrals outside the capital city of Valletta, forming slow parades through steep and narrow streets. Men in biblical robes lugged crosses, children clutched bright flowers, and small brass bands marched behind with raised trumpets and inflated cheeks. A breeze wrinkled the Mediterranean, and the sun slipped to a flattering angle, encasing all that charm in amber.

      At the same time, the nation’s top-rated prime-time television show was wrapping up a special daytime broadcast: an annual telethon to raise money for children receiving cancer treatments abroad. In the bottom-left corner of the screen, a digital counter tallied the donations. When the number finally hit €1.26 million ($1.46 million), the studio audience began to stir, eager to applaud the fundraising record.

      That’s when Prime Minister Joseph Muscat called into the telethon’s phone bank. He, too, seemed in a celebratory mood. The day before, the country had announced that it had registered a €182 million surplus for 2017, its second straight year in the black after decades of deficits. Patched through to the telethon’s host, Muscat pledged €5 million to the cancer charity on behalf of the government, nearly quadrupling the previous telethon record in an instant. The audience erupted. Some of the operators on the dais behind the stage removed their headsets and laid them on the table, as if to declare victory.

      But these days in Malta, feel-good stories never seem to last. When Muscat hinted that the donated money would come from a fund fed by Malta’s Individual Investor Programme—a government initiative that sells Maltese passports to foreigners for €650,000 (less for additional family members), plus a €150,000 investment in government bonds—Good Friday took a turn.

      Prime Minister Joseph Muscat and his wife, Michelle.PHOTOGRAPHER: DANIEL LEAL-OLIVAS/WPA POOL/GETTY IMAGES
      An opposition Parliament member wrote on Facebook that, as a cancer survivor, he was disgusted by the possibility that the patients’ care was being financed by money from “criminals and the corrupt.” Another suggested Malta was trying to clean its dirty money by funneling it through a good cause. “It’s [like] thinking that prostitution is OK once part of the proceeds are donated by the pimp to charity,” Jason Azzopardi, a Parliament member, complained on Facebook.

      The story of how Malta got to this point—where a holiday donation to a children’s charity can spark outrage and lament—starts brightly enough. A tiny country carves a small but lucrative niche in the global economy. Money flows in, thousands of jobs are created, and the government intensifies the strategy, opening the country to more partners and funding sources. Then comes the twist: Allegations of money laundering, political skulduggery, smuggling, organized crime, and even a murder.

      Multiple investigations—by local magistrates, American prosecutors, and European politicians and banking regulators—have been rattling Malta’s financial and political networks for more than a year. Some of the most powerful countries in the world have suggested that a nation of about 450,000 people might pose a serious threat to global efforts to track money laundering, enforce economic sanctions, and maintain fair transnational standards.

      A 15-month inquiry into one of the most contentious of the allegations—one suggesting that Muscat’s wife was directly involved in setting up a shell company for money laundering—wrapped up in late July without uncovering evidence that would justify criminal charges. “One hundred threads of suspicion don’t stitch together a single strand of proof,” the investigating magistrate concluded.

      The story isn’t over yet, because some of those threads still dangle, and critics of the government both inside and outside Malta remain convinced that they tie into other scandals, other crimes. The government continues to try to nurse its battered reputation back to health, and how it all turns out will likely depend on how the Maltese ultimately answer the question lingering over their country: To supercharge its financial-services sector, did the smallest country in the European Union sell its soul?

      Taking a sunset dip in Sliema Harbor, near Manoel Island.
      Taking a sunset dip in Sliema Harbor, near Manoel Island.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
      South of Sicily, east of Tunisia, and north of Libya, Malta’s three tiny islands have been eyed as well-placed steppingstones by the Phoenicians, Greeks, Romans, Byzantines, Arabs, Normans, French, and British. All coveted Malta as a staging ground, which makes its history a swashbuckling saga of raids, sieges, bombings, and rotating occupations. When the last British military base finally left in 1979, it took with it the country’s main economic engine. Malta turned to tourism, doing its best to sell ancient ruins, fortress walls, sloping medieval streets, and sheer limestone cliffs. The country eventually discovered, as most sunbaked islands do, that while it’s possible to get by on atmospherics, it’s hard to do much more.

      In the early 1990s, Malta’s two major political parties argued over whether to take a shot at EU membership—generally speaking, the Labour Party didn’t like the idea and the Nationalist Party did. By the mid-’90s, with the Nationalists in power, the country began to prepare its application to join the bloc.

      To convince the rest of Europe that it could be a trusted partner, Malta began instituting a series of financial and regulatory reforms. In the process, the country was reinventing itself as a new sort of steppingstone: a transit hub not for ships or soldiers but for money, in an environment of regulatory legitimacy, transparency, and stability. Malta discovered that the residue from centuries of turmoil (an ingrained adaptability, strong links to disparate cultures, the English language) was an asset, as was the country’s size, which allowed it to nimbly sidestep bureaucratic delays and cater to rapidly evolving industries that valued good computer connections more than natural resources. The traditional downsides of island economies—the high costs of transporting supplies in and out, for one—didn’t apply to the financial-services industry.

      By the time the country’s membership in the EU was formally approved in 2004, Malta had staked out its place within Europe’s economy, and the nation’s attractive tax schemes—effective rates as low as 5 percent for foreign-owned companies, vs. an average of 22 percent for other European countries—helped attract investment funds, banks, and financial-services firms from all over the world. The steady influx of new business helped the local economy avoid a significant downturn during the 2008 financial crisis. Shortly after Muscat and his Labour Party took office in 2013, effectively ending 25 years of Nationalist electoral dominance, the country instituted the controversial passport-selling scheme, which was denounced by EU officials who feared it could create a back door for shady individuals or dirty money to gain access to Europe’s financial markets. But Muscat energetically pushed the plan, traveling abroad to sell it to prospective citizens, and it quickly took off. In 2014, Malta began a three-year run as the fastest-growing economy in Europe, and Muscat and his allies described the passport program as a complete success. By the beginning of this year, the government had collected about €600 million through it.

      Muscat’s opponents in the Nationalist Party, as well as some members of the Maltese press, weren’t sold. In 2016 investigative journalist Daphne Caruana Galizia dug into the documents released in the Panama Papers leak and discovered that two of Muscat’s closest aides had established companies in Panama. She accused them of using those businesses to launder money from kickbacks she said they’d received for helping to arrange the sales of passports to Russian nationals. They denied it; a separate magisterial inquiry regarding those allegations is under way.

      Later, Caruana Galizia reported that Muscat’s wife, Michelle, had established her own Panamanian shell company through the same middleman who’d set up those for Muscat’s aides—the accusation that the magistrate this summer said he’d found no proof to support. Caruana Galizia also accused Pilatus Bank, a Maltese institution founded in 2014, of handling much of the money in those alleged transactions, as well as those involving the shell companies set up by the prime minister’s aides.

      Additionally, the journalist alleged that the first lady had received at least $1 million from Azerbaijan’s ruling family. Last year an international consortium of investigative journalists accused members of Azerbaijan’s ruling elite of operating a $3 billion scheme to launder money, pay off European politicians, and buy luxury goods; the reports cited “ample evidence” tying the ruling family to the schemes. Azeri President Ilham Aliyev last year labeled the accusations “totally groundless, biased and provocative.”

      Caruana Galizia’s blog became the most-read news source in Malta. And even though she criticized both parties, it was a clearinghouse for critics of Muscat’s government. On any given day she might have accused a Maltese official of visiting a prostitute; or exposed an alleged local oil smuggling ring that helped Libya evade sanctions; or traced personal connections between government officials and suspected criminals; or slammed Muscat for trying to pitch Malta as a cryptocurrency capital, which she suggested would attract more corruption; or detailed alleged links between the country’s growing online gaming sector and the Italian Mafia. The list of her enemies was large and growing, and by last fall she faced 47 lawsuits—42 civil, 5 criminal—about 70 percent of them from government officials, according to her sister, Corinne Vella.

      Prime Minister Muscat was one of those suing her, and he labeled her accusations as “the biggest lie in Malta’s political history.” Many in Malta seemed to believe him; in June 2017, as the allegations swirled, Muscat called for a snap election, and he was reelected with 55 percent of the popular vote.

      Last October, as she drove away from her house, Caruana Galizia was killed by a car bomb. Police later arrested three men, low-level criminals, for planting and detonating the device. But no one in Malta considers the crime solved. Whoever ordered the killing remains unidentified. Some speculate that criminals involved with the Libyan smuggling ring might have targeted her, or that the Sicilian Mafia put out the hit. Many others blame the government.

      Muscat and his administration loudly condemned the murder, calling it a tragedy and energetically denying any link to it. But the killing marked a turning point for Malta. The notion that corruption might have overtaken Malta’s economy now spread far beyond the confines of an opposition party, and the eyes of the world turned toward the tiny country. It has been struggling to clear its name ever since.

      Protesters call for action following the killing of Caruana Galizia last October.
      A recent protest over the killing of journalist Daphne Caruana Galizia, murdered last October.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
      Everyone knows everyone in Malta. It’s an exaggeration, of course, but among the nation’s financial elite, the people who run the banks and institutions and sit on the governing boards, the notion is all but taken for granted. “There are, unofficially, some 10,000 people who work in Malta’s financial industry, and the guys in charge—there are maybe 50 or 70 of us—we know each other fairly well,” says Joseph Portelli, chairman of the Malta Stock Exchange.

      In describing the financial community as small and closely knit, Portelli is defending it. He grew up in New York with his Maltese parents, and 15 years ago moved to Malta to manage his own fund, which specializes in emerging-market investments. He entered a financial-services industry that was fiercely protective of its reputation and keenly sensitive to insinuations of corruption. Now, as allegations of wrongdoing swirl, that defensive sensitivity is more acute than ever. Portelli has adopted it as naturally as any lifelong resident.

      “We’re getting this blemish that we’re money launderers,” he says, “and that’s the worst irony.” There have been a few small problems, he concedes, with a handful of small banks. “You know what they all have in common?” he asks. “Not one of the principals was Maltese, they were all foreigners.” The locals, he suggests, police one another.

      It’s a variation on an argument that’s been around since Plato and Aristotle. Small states tend to be less susceptible to corruption for two reasons: It’s more difficult to hide indiscretions, and higher levels of social cohesion discourage dishonesty. In the early 2000s several academic studies used data to support this theory, and some analysts suggested that globalization might be of particular benefit to small countries—freer trade and the increased mobility of labor and capital would reduce the costs of being small, they argued, while the advantages associated with less corruption could be retained.

      An alternative theory is that small states will be susceptible to cronyism—all those close connections might enable, rather than discourage, financial subterfuge. More recent studies, including research conducted by the World Bank, have found that the data used in the earlier reports were incomplete, and the suggestion that smaller countries are statistically less corrupt than large ones remains unproven.

      By the beginning of this year, the government had collected about €600 million through the passport program

      For critics of Muscat, one powerful symbol of cronyism is Ali Sadr Hasheminejad, head of Pilatus Bank, the institution allegedly in the middle of the suspicious transactions involving the Panamanian shell companies linked to government officials. Sadr is an Iranian national, but when establishing and registering the bank in Malta he used a passport he’d purchased from St. Kitts. While Sadr was enmeshed in controversy in Malta, a parallel investigation into him and his bank culminated in his arrest by U.S. authorities, who charged him this spring with setting up a network of shell companies and bank accounts to hide money being funneled from Venezuela to Iran—transactions that allegedly violated economic sanctions against Iran. Prosecutors also alleged that Sadr established Pilatus Bank using illegal funds. Sadr pleaded not guilty and has been released on bail in the U.S.; his lawyer didn’t respond to requests for comment.

      Malta’s government attempted to distance itself from Sadr, but the same sort of intimate connections found throughout the financial sector have undermined those efforts. Local news outlets reported that among the 250 guests at Sadr’s 2015 wedding in Italy were Muscat, his wife, and one of the aides accused of moving money from kickbacks related to the passport program through Pilatus Bank.

      The July magistrate’s report stated that some of the evidence used by Caruana Galizia and others to implicate Michelle Muscat—including Pilatus Bank documents suggesting she was the owner of the shell company at the center of the scandal—bore falsified signatures. Muscat and the lawyers for Pilatus Bank immediately presented the findings as a “certification” that the whole story had been a lie cooked up by Caruana Galizia and foreign critics, and they denounced it in terms familiar to anyone conversant with the new vocabulary of political grievance: It was “fake news,” part of a “witch hunt.” They also drove home the point that the magistrate’s report identified serious improprieties on the part of their critics.

      But the family of Caruana Galizia pointed out that the identity of the owner of the Panamanian shell company is still a secret. Furthermore, the European Banking Authority just weeks before had cited “serious and systematic shortcomings” in how Maltese regulators monitored Pilatus Bank before and after Sadr’s ties to Iran were exposed. A confidential 2016 regulatory report that was leaked last year confirmed that the bank’s profitability depended on politically involved clients from Azerbaijan. And the U.S. allegations that Sadr founded Pilatus Bank with criminal proceeds remain unaffected by that magisterial report.

      The result of all this is a contagion of suspicion. Many of the allegations of money laundering and other financial crimes have proved difficult to either verify or dismiss outright, but collectively they make it increasingly hard to swallow the idea that corruption is strictly a foreign import here. The country’s only independent think tank, the Today Public Policy Institute, ceased operations in April. Its stated reason for closure was bluntly condemnatory: “a sense of defeatism over the government running roughshod over standards of professionalism, transparency, and accountability.”

      Muscat and those in his government generally have responded to such criticisms by going on the offensive: Instead of putting the brakes on controversial policies, they’ve stomped on the gas. Muscat this year pushed for an expansion of the passport sales program, arguing that such investments and the economic activity they spur could help Malta become one of the wealthiest countries in Europe within his lifetime. Last year alone, private wealth in Malta jumped by more than 20 percent, thanks in part to its newly minted citizens.

      “Globalization is like a treadmill—you can’t say you are tired, because the second you stop, you will fall off,” Muscat said during a press conference earlier this year. “Once in the race, we must not simply be there to take part, but we are there to win.” Previously he’d outlined the types of policies that would power Malta’s sprint toward success: “some sensible, others risky, yet others which might sound, and be, outright insane.”

      In April, just as several Asian countries were cracking down on cryptocurrencies, Muscat announced that Malta would become the first country in Europe to create a regulatory and legislative framework specifically designed to attract virtual currencies. Shortly thereafter, Binance Holdings, the world’s largest cryptocurrency exchange, announced it was moving its headquarters from Hong Kong to Malta. Within weeks, Morgan Stanley analysts were reporting that a majority of the world’s crypto trading volume was moving through companies based in Malta.

      There are people who insist that the government’s continued success in attracting investment and generating revenue is itself an answer to the disputed allegations of money laundering, kickbacks, and other financial crimes. “Luckily, this comes at a time when it washes off,” says Edward Scicluna, the country’s finance minister. “The false and fake parts are washing off, because Malta is being so successful that it’s very hard to accept them and to correlate them with a successful country. Normally corruption is rife in backward countries where there are no investments. So you find it very difficult to reconcile these two.”

      A yacht moored in Sliema.
      Yachts have largely displaced fishing boats in the harbor in Sliema.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
      In Sliema, one of the most affluent towns in Malta, open-air restaurants line the harbor road. A few decades ago, diners here would look out upon dozens of Maltese fishing boats bobbing in the water, their prows upturned and their wooden hulls painted in rainbow stripes. Now the harbor is crowded with hundreds of fiberglass yachts—large, modern, colorlessly impressive.

      The view helps explain why many Maltese are ambivalent about their country’s progress: They know that economic opportunities are more plentiful than they used to be, but they fear progress might be smoothing away the country’s distinctive edges. The skyline is dotted with cranes rising above the cathedral domes, and those cranes always seem to be hovering over the same sort of building: tall, rectilinear, and cut in clean angles. Malta is the most densely populated country in the EU, and the economic boom of recent years has intensified the pace of construction. Locals often complain of the dust from all of the building sites; when it rains, the drops sometimes hit windshields as small, powdery explosions—tiny puffs of brown smoke.

      Competing real estate agencies line Sliema’s coast road, stretching for several blocks. Constantly changing listings for apartments and houses paper their windows. “There’s big demand, and the prices keep getting higher,” says Carl Peralta, director and founder of 77 Great Estates, one of the agencies.

      Driving that demand is a new genus of Maltese resident that, Peralta insists, can easily be spotted in the cafes and restaurants of Sliema. Many are from northern Europe, and almost all are young—20s, maybe early 30s. They carry backpacks, they don’t drive cars, and they’re rarely spotted anywhere before 10 a.m. They work for the hundreds of internet gaming companies that have flocked to Malta in recent years. The companies offer the range of gambling services, from online poker and games of chance to sports betting.

      In the early 2000s, only two online gaming companies could be found in Malta; now there are up to 300, and the sector accounts for an estimated 12 percent of the economy, according to the Malta Gaming Authority. Both the governing party and the opposition agree that the growth was a result of commendable foresight: In 2004, Malta became the first country in Europe to regulate online gaming, helping to legitimize an industry that previously stood on the fringes of respectability and legality.

      “Laugh all you like, prime minister. But we will insist that you don’t get off scot-free”

      The new arrivals who’ve bought citizenship through the passport program maintain a much lower profile than the gaming-industry workers. You can’t pick them out of a crowd on the street, and it’s difficult to even identify them in government documents. When Malta last released its annual list of new passport holders, it was maddeningly difficult to decipher; purchasers were listed in order of their first names, without a country of origin, and mixed among thousands of others who obtained their citizenship though birth or naturalization.

      The Maltese press has discovered that the list of new citizens includes Russian oligarchs and even a woman who was suspended from the Vietnamese parliament for having dual citizenship, which is illegal in Vietnam. Roberta Metsola, who represents Malta in the European Parliament, suggests that many of the passport purchasers want nothing to do with Malta; they simply want the financial and travel access that an EU passport provides. “We’ve had cases of people arriving on a private jet, meeting a real estate agent, taking out a basement flat somewhere here for a year, never even seeing it, and leaving in the afternoon,” Metsola says.

      Peralta, the real estate agent, says that rings true to him. Those who are buying passports, he says, know the minimum they must spend on housing—either €350,000 for a purchase or rental payments of at least €16,000 a year for five years. Meeting those minimum requirements, Peralta says, is often the only feature they’re specifically looking for in a property. “I know there are checklists they have that say they need to open the water taps once a month, or send a cleaner once a month,” he says. “But no one is living there.”

      The town of Sliema is a popular destination for expats and new citizens.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
      Jonathan Ferris speeds through Valletta’s darkened streets, jumps off his motorcycle, and walks briskly into the lobby of the Phoenicia Malta Hotel, where he finds a table in the noisy lounge. His features are lean, and he moves with a restless energy. His eyes scan the room, and he raises his voice just loud enough to be heard above the lounge singer, who is halfway through a slow and torchy version of Fleetwood Mac’s Songbird.

      “I was the top man,” Ferris says, “the top investigator of financial crimes in the country. Type my name in the internet. All bloody hell comes up.”

      The European Parliament is concerned enough about Malta to have sent an investigative delegation to the country multiple times this year. The committee’s report, issued recently, described an atmosphere of fear had settled over the country—and a sense that criminals could operate with impunity. Ferris believes his life during the past year perfectly represents the intersection of both phenomena.

      He says that in 2017 his bosses at Malta’s Financial Intelligence Analysis Unit, the national agency tasked with policing money laundering, asked him to step aside from the investigation of the allegations involving Muscat’s wife and aides. He had told them he didn’t trust one of the known sources that had fed Caruana Galizia information regarding Michelle Muscat’s alleged ownership of the shell company—a source Ferris had investigated before and who, incidentally, was later discredited by the magisterial inquiry. Ferris’s bosses told him they believed his history with that source compromised his objectivity. That angered him, and he told his bosses that within 72 hours he could determine the true owner of the company that Michelle Muscat was allegedly involved in. He explained to them how he would consult tax returns, political party documents, and bank records. The next day, he says, he was fired and stripped of access to investigative documents and records. His firing further fueled suspicions against Muscat and his wife.

      After Caruana Galizia was killed, Ferris says, he began to fear for his own life. He takes his bloodhound out for walks in the early morning, and several months ago he began to notice cars following him with the headlights off. “I decided, from now on, I’m always going to carry my gun around,” he recalls. Police officers now monitor his house for eight hours each night. “What good does it do? I don’t know, because for the rest of the 16 hours out of 24, I and my family are all alone.”

      After Caruana Galizia’s murder a similar anxiety spread quickly among those seen as unfriendly to the government. Some of Malta’s neighbors pointed to that generalized unease as emblematic of the current state of the country. The European Parliament report described “systemized and serious deficiencies” in the rule of law in Malta, which had eroded the population’s general sense of security. Additionally, a police investigation in Italy has alleged that the Sicilian Mafia infiltrated companies in the online-gaming sector, using them to launder illicit funds.

      When Muscat sat in front of European Parliament members during a plenary hearing to discuss the rule of law in Malta last June, he dismissed the allegations publicized by Caruana Galizia as politically motivated, setting a tone for his denials that he’s used ever since. His relaxed attitude—and particularly his periodic smiles—during the questioning rankled some of the politicians.

      “You can laugh all you like, prime minister,” said Werner Langen, a German member. “But we will insist that you don’t get off scot-free.”

      A vigil held to remember Caruana Galizia at the Great Siege Monument, nine months after she was killed.
      A memorial for Caruana Galizia at the Great Siege Monument.PHOTOGRAPHER: NADIA SHIRA COHEN FOR BLOOMBERG BUSINESSWEEK
      This past year was supposed to be Malta’s chance to showcase its economic gains to the outside world, to take a victory lap after years of growth. It assumed the presidency of the EU in 2017—a first for the country—and this year Valletta was named the EU’s Capital of Culture, another rotating title that was cast as a big deal for such a small country. Earlier this year Muscat went so far as to claim that national pride in Malta had hit an all-time high.

      The country’s tourism authority kicked into high gear to take advantage of the promised attention. All sorts of cultural galas and grand openings were organized, and the National Museum of Archeology, a grand 16th century building in the middle of Valletta, became a nucleus for the celebrations.

      One afternoon in April, tourists filed through the museum’s entrance and wound their way past exhibits that guided them along the country’s circuitous story. On the second floor, dozens of people entered the majestic Gran Salon, which centuries ago served as a banquet hall for the knights of the Order of St. John. Enormous tapestries, ancient and colorful, hung from the walls, and a small crowd gathered in front of a podium for a special event that had been organized just the day before. Scicluna, the minister of finance, stepped to the microphone.

      “I’m very proud, and very pleased, to be the person to launch this national Anti-Money Laundering and Combatting of the Financing of Terrorism strategy and plan,” Scicluna said.

      Despite the introduction, he didn’t appear to be particularly pleased to be delivering a speech denouncing money laundering, drawing more attention to a problem that he clearly sees as a threat to Malta’s reputation and livelihood. The reputational damage resulting from continued scrutiny from various quarters—the European Parliament, the European Banking Authority, Italian police, the U.S. Department of Justice—could trigger a backlash against the tiny country that might pose a real threat to its economic foundations.

      As the investigation into Mafia involvement in Malta’s online-gaming sector continues, European lawmakers have several times proposed restrictions on cross-border betting, a change that would classify the services provided by many Maltese companies as illegal. Ana Gomes, a Portuguese parliamentarian who leads the EU commission investigating rule of law in Malta, has said the country’s low corporate tax rate is “anti-European” and saps billions in revenue from other member states. In March, the European Parliament voted to pursue a “tax harmonization” scheme that would create one common corporate tax rate applied throughout the EU. A U.K.-based nonprofit advocacy group, Tax Justice Network, issued a report estimating that such a policy would cut Malta’s tax base by more than half.

      In the midst of these pressures, Scicluna stood at the podium and delivered a string of statements that should seem so self-evident that they’d never have to be uttered. “I’d like to say that Malta—and this is an important statement to make—is deeply committed to preventing, detecting, and prosecuting money laundering and terrorist financing activities. Financial crime threatens the safety of our society, the integrity of our financial system, and the stability of our economy.”

      That economy, Scicluna hastened to add, was healthy and strong, and this year the International Monetary Fund’s executive board singled out the country’s “sound policies” as the root of its success.

      When he wrapped up his remarks, the crowd in the Gran Salon filed out of the museum, where they joined the current of pedestrians flowing along Republic Street toward the Great Siege Monument, which sits in front of the main courts building in one of the city’s central squares.

      Since last fall, people have been placing candles, flowers, and signs at the base of the monument as a makeshift memorial to Caruana Galizia. At least eight times since then, someone has swept away the items in the dark of night; each time, the flowers and candles and signs are quickly restored. Recently, a local governing council lobbied to ban the temporary memorial for good, arguing that it was time for the country to move on.

      On this day, dozens of tourists stopped in front of the monument and faced the plaques that explained the historical significance of the statues. But none of them pointed their cameras up at the statues. Every one of them focused on the marble base and the makeshift memorial, and on the sign that read, “No Justice.” 

      Get Crypto Currency Information at 
      Posted: September 24, 2018, 3:05 pm
      Global Intel Hub - Zero Hedge Exclusive (9/15/2018) -- Weather modification isn't anything new, in fact we authored a piece last year on the topic when Irma came, but it seems that with Florence we need a reminder to put this in perspective.  As is the theme in our book seriesSplitting Bits, our doctrine is that everything you know is wrong - the world is not as it seems (and not as on TV.) 
      As Hurricane Florence bears down on the southeastern United States, nearly 759,000 homes are in the storm’s path, and a worst-case rebuilding scenario could cost more than $170 billion, according to an estimate from real estate data provider CoreLogic.
      CoreLogic calculated the reconstruction cost value, which is the total expense of completely rebuilding a property in case of 100% destruction, for 12 metro areas in the Carolinas and Virginia. The table below shows those estimates for a Category 4 storm, which is Florence’s current designation. Additional estimates based on other categorizations is available on CoreLogic’s web site.
      That's ok, but where does the $170 Billion really go?  Home builders, re-modelers, laborers, real-estate, computers, rebuilding, insurance.. some people will take their insurance check and go spend it.  Here's the breakdown from Bloomberg, but note the word 'boost' appears only 4 times; car rental companies, transportation companies (truckers), Lowes and Home Depot (supplies), and generators; 
      Equity investors are closely tracking Hurricane Florence as the worst storm to hit North Carolina in decades could also have a menacing effect on the insurance, retail, agriculture and restaurant industries. More than 1 million people are evacuating their homes as the Category 4 storm is expected to make landfall over the weekend. Analysts say the event could also be a boon for companies that specialize in roof repairs or disaster-related services, as well as transportation providers.
      But that's just on the surface.  When we dig deeper, the disaster economy is booming.  Don't forget, after Hurricane Katrina, the state of Louisiana received $115 Billion in Federal funding:
      According to National Hurricane Center, Hurricane Harvey is second only to Hurricane Katrina as the costliest hurricane to hit the United States at $125 billion. Katrina cost about $161 billion.  By the time December 2017 had rolled around, the United States government had sent about $11 billion in federal disaster aid to Texas, and the state was asking for $61 billion more in federal assistance.  After Hurricane Katrina, Louisiana had received almost $115 billion in federal aid.  Multiple organizations and companies have raised money and provided aid for the people of Houston. The companies and aid listed below have provided a combined amount of at least $26.82 billion of the $125 billion that Harvey caused.
      $115 Billion is a lot of money!  So where does it all get spent?  Even if it goes into the pockets of greasy and sleazy politicians, the point is that it is getting distributed.  The case for the Hurricane economy is a proof for the US Military's whacked out economic theory invented by someone like Robert Macnamara "$1 into the Miliary = $2 in economic output"  but if war is such a good business, we have to ask why they don't have a staged demolition of an entire city, like Los Angeles (maybe just Century City, LA is too big).  They will warn everyone to get out, no one will be hurt, unlike 911.. (MUST READ- BLACK 911)
      There is no evidence needed to understand what's going on here - the disaster economy is booming and weather wars are in full swing.  It's a $170 Billion + event that is started by a group inside the military that controls the weather.  They do it all, they can create hurricanes, intensify them, reduce them, they can control storms like one would with a video game.  If you don't know about this or don't believe it, have a small education on the topic by watching the video below:

      They have the technology for a long time.  They have the motive, and well - is it really all that bad?  A good storm clears out nature and resets everything.  It's good for business.  Why not?  That's their thinking, we are not condoning weather modification.  But if you believe that it doesn't exist, you live in fantasy land, where fairy tales come true and everyone lives happily ever after.
      There is a huge political side benefit, that they can blame 'global warming' on Trump for example, when in fact it may be deep state Democrats installed by Obama who are pushing the buttons on these storms.  

      Posted: September 16, 2018, 10:09 pm
       Total News - Atlanta, GA 9/3//2018 - Bitcoin is cool.  You can see people's faces light up when you talk about it.  It's like Gold.  Humans are fascinated by Gold for a number of psychological reasons which are well more powerful than its scarcity.  Other elements, such as Rhodium, Platinum, Iridium, and many others - are far more rare than Gold.  Gold is just something magic, that resembles happiness, wealth, and shines brightly.  There may be an ancient connection here we haven't yet stumbled upon.  
      For 15 years, FX and other alternative asset classes have proven they have what it takes to outperform the stock market.  FX algorithmic strategies for example, are in a class of their own.  But few understand and those who don't aren't willing to spend the few minutes required to get it.  But Bitcoin has changed all that.  Tell someone you are an FX quantitative fund manager and they might look at you like you have a disease.  Tell you are trading Bitcoin and they will get excited.  Go figure!
      Bitcoin made investing cool again, especially with millennials.  Although there are probably hundreds to thousands of better investments - Bitcoin is just cool.  This is the viral effect that shot BTCUSD to 20,000 - not because of its robust design, or anything else.  It's just cool.  And you can quantify cool - that's not the problem.  The problem is identifying the next 'trend' before it becomes a trend.
      And what's interesting is that Bitcoin is a digital 'crypto' currency but so is the US Dollar, the key difference is that Bitcoin is not issued by any centralized authority.  But many have been trading electronic digital dollars for a long time.  So EUR/USD is not so different mechanically than BTC/USD - except the allure.  FX is complicated - Bitcoin is not.  You just buy and HOLD.  They've combined FX with penny stocks!  It's electronic day trading on steroids, with an IV drip Red Bull.  It's unregulated, it's decentralized - and we don't even know the names of the owners of the exchanges!  But it's cool.
      You can get cool points probably in high school by talking about it (this is a theory we didn't ask any high schoolers).  But we remember the 90's when it was that way about stocks.  Got a stock tip?  What's hot?  ATHY?  OSTK?  Bitcoin is that plus more - because of social media and the internet which is worldwide.
      So we're not saying that it's good or bad - maybe it is good because more people will be interested in investing.  Maybe it's bad because it has shown them the wrong example of what an investment should look like.  What is interesting though you can do arbitrage in Crypto.  There's really no minimum so you can invest $1.  So go ahead - have your crack at it!  
      Hopefully, as more sane and reasonable approaches to Crypto markets become more prevalent - such as Total Cryptos BIT FIX - we will see an institutionalization of the Crypto markets.  -jg
      Posted: September 3, 2018, 7:30 pm
      Following a series of attacks on the Federal Reserve's rate hike policy and complaints about the strong dollar, some Wall Street observers are saying the possibility that Trump himself will launch a sustained campaign to weaken the dollar as a way to reduce the U.S. trade deficit can no longer be dismissed.
      While a strong-dollar policy has been a cornerstone for successive U.S. administrations, Trump - like with many other things - has shown a penchant for upending the currency status quo. Since taking office in 2017, he has routinely talked about wanting a weaker dollar to support U.S. manufacturing. Additionally, Trump's administration has been lukewarm toward America’s traditional strong-dollar stance.
      As Bloomberg notes in a Wednesday article, in recent months Trump has further stepped up the rhetoric as the dollar has bounced off its lows. In an interview published by Reuters this week, Trump once again accused China and the European Union of manipulating their currencies. Last Friday, he also complained to wealthy Republican donors that he was “not thrilled” with the Federal Reserve’s interest-rate increases under Chairman Jerome Powell, which have boosted the dollar.
      As a result, after a flurry of tweets in which Trump complained that the dollar is blunting America’s “competitive edge,” Wall Street has started to pay attention: in a report this month, JPM's chief US economist, Michael Feroli, wrote in a report this month that he can’t rule out the possibility the administration will intervene in the currency markets to weaken the greenback. Both Deutsche Bank and OppenheimerFunds echoed the view, saying dollar intervention was no longer far-fetched.
      Zach Pandl, co-head of global FX strategy at Goldman Sachs, recently said that "we haven’t had a deliberate effort to weaken the U.S. dollar perhaps since the Plaza Accord in 1985, so it is very unusual and against established practice over the last several decades. A deliberate policy to pursue a weaker currency could cause foreign investors to shy away from U.S. assets -- including Treasury bonds -- raising interest costs for domestic borrowers."
      In a note from Nomura's Richard Koo, the strategist asks "how President Trump might respond if uncertainty did worsen, raising the likelihood of a slowdown in the US economy" and answers that "one possibility is that the administration would shift from tariffs, which require a separate staff to handle exemption requests for each product category, to the use of exchange rates, which would allow simultaneous adjustments to prices for all imported products."
      Here is why Koo is confident that it is only a matter of time before Trump directly intervenes in the FX market:
      A protectionist policy that must be individually tailored to each product category requires large numbers of administrative staff, and a period must be established during which companies can apply for exemptions. Exchange rate-based adjustments, on the other hand, entail no such costs.
      In that sense, the more problematic administrative delays become and the more industry opposition mounts, the greater the likelihood that President Trump will replace tariffs with exchange rates as his main tool for addressing US trade imbalances.
      The loudest warning to date that Trump could rock the currency world has come from Charles Dallara, the former U.S. Treasury official who was one of the architects of the Plaza Accord, the 1985 agreement between the U.S. and four other countries to jointly depreciate the dollar. "The trade debate will increasingly include the currency issues," he told Bloomberg "It’s inevitable."
      As Bloomberg adds, a shift to a more protectionist and interventionist policy, à la 1985, would not only reverberate across the $5.1 trillion-a-day currency market and undermine the dollar’s status as the world’s reserve currency, but could also weaken demand for U.S. assets.
      But can Trump really intervene unilaterally in the currency market, and what tools does the president have at his disposal if he wanted to go beyond mere talk?
      The most direct choice for Trump would be to order the U.S. Treasury (via the New York Fed) to sell dollars and buy currencies like the yen and euro using its Exchange Stabilization Fund, according to Viraj Patel, an FX strategist at ING. But because the fund only holds $22 billion of dollar assets, the impact would likely be minimal. Any direct intervention that is larger and more ambitious in scope would also require congressional approval, he said quoted by Bloomberg.
      Then there is the nuclear option: according to Patel there is one loophole Trump could exploit to get around the fund’s constraints and bypass Congress altogether: by declaring FX intervention a “national emergency.” He could then force the Fed to use its own account to sell dollars.
      Such a move would be a long shot by any stretch of the imagination, but with Trump invoking national security to impose tariffs, Patel says he can’t “completely rule out” the possibility.
      Such a move would certainly roil the market and potentially lead to a USD crash, not only due to Trump's intervention but due to the sudden collapse in faith in the global reserve currency; the result would be a flood of Treasury sales from global custodians around the globe who currently hold over $6 trillion in US Treasuries. To be sure, Trump’s persistent jawboning of the dollar may already be having an adverse effect on foreign demand for U.S. assets. While overall demand at auction has been up and down this year, foreign holdings of Treasuries have slumped to an almost 15-year low of 40%, forcing domestic investors to become the marginal buyer of US Treasurys. China, the largest overseas creditor, has pulled back this year. Japan, the second biggest, has reduced its share to the lowest level since at least 2000.
      A less extreme, and more plausible, option would be for the Trump administration to include currency clauses in any new trade deals, like it did with the updated U.S.-South Korea trade agreement in March, although enforcement would be complicated and the implementation lengthy.
      There is also the suggestion of a global accord on currencies, broached in the past by White House trade adviser Peter Navarro, however the chances of a multilateral agreement on the dollar are remote. Plus, there’s always the threat of retaliation by other nations if the U.S. goes it alone.
      While it remains unclear what Trump will do, keep a close eye on China, where the yuan has tumbled nearly 10% since April, when the trade war with Beijing started in earnest.  The magnitude of the decline, the fastest since the 1994 devaluation, boosted speculation the People’s Bank of China is deliberately weakening the yuan to offset the tariff impact.
      Even though China has denied it is "weaponizing the Yuan", many are skeptical, and Trump is among them: which is why the president has criticized the country for taking advantage of the U.S. by keeping its exchange rate artificially low. (However, Trump has not gone so far as to officially brand China a currency manipulator in the twice-yearly review of international foreign-exchange policies published by the Treasury).
      Trump's single focus on the Yuan may explain why Beijing has pulled all stops to prevent the currency from sliding below the 'redline' of 7.00 vs the dollar (alternatively it is preparing to devalue further if and when Trump launches the next $250BN in tariffs he has warned he would). Stephen Jen of Eurizon SLJ Capital has warned that Trump may be quick to retaliate in the FX markets if it suspects that China is "playing games with its currency," which may have disastrous effects on demand for U.S. assets.
      "If you’re an international portfolio manager with 30 percent of your exposure to the U.S., and you know the currency will be guided meaningfully lower as a policy tool, why would you be investing here?” he said. "The Trump administration needs to be very, very careful with its dollar policy." This was most vividly on exhibit during the Fed's QE phase when Guido Mantega, then Brazil's finance minister, siad the Fed was throwing "money from a helicopter" and "melting" the dollar.
      Ironically, it is the stronger dollar that is crippling emerging markets now.
      Whether or not Trump intervenes, however, Dallara is bracing for more turbulent times:
      "I’ve lived through a lot of market gyrations in my career,” he said. “And I have an uneasy feeling that I can’t validate by data that tensions are going to, at some point, emerge into volatile market dynamics. This is a risk."
      Posted: August 22, 2018, 5:06 pm
      Total News - 8/19/2018 - Atlanta, GA - Venezuelan President Nicolas Maduras announced Friday a massive devaluation of the existing currency, while making a verbal peg 1 "Petro" (Venezuelas new CryptoCurrency which is not yet in circulation) to $60 US Dollars, effectively wiping out the value of the existing currency and forcing the population to use the Petro.
      Crypto Enthusiasts will be eager to see the Petro trade, as it will be the first sovereign Crypto Currency in the world.  IBM has disclosed that it is contracted with more than 10+ central banks to investigate the possibility of making digital sovereign currencies based on cryptographic technologies like Blockchain, but it hasn't disclosed who they are.  Venezuela is an interesting case to be the guinea pig in this digital money experiment, because Venezuela has been a unique host of an underground mining community in the past years, because electricity there is practically free.  The interesting world of underground Bitcoin mining in Venezuela has been covered in an excellent article published on Hacker Noon "Extortion, Police Raids and Secrecy: Inside The Venezuelan Bitcoin Mining World."
      Maduro told viewers:

      "As of next Monday, Venezuela will have a second accounting unit based on the price, the value of the Petro. It will be a second accounting unit of the Republic and will begin operations as a mandatory accounting unit of our PDVSA oil industry."
      What's interesting about Venezuela is that this is an act of desperation, Maduro really has few other choices.  Venezuela has become a war zone in recent years with rolling blackouts, rampant inflation, food shortages, rise in violent crimes, and social unrest.  The Petro is Venezuela's oil backed (government backed) Sovereign Crypto Currency, based on the NEM Blockchain.  But ultimately, it is backed by whatever Maduro says it is backed by, as any fiat currency is.  In fact the word 'fiat' means 'by decree' or in plain English, because I said so.  
      Fiat: a formal authorization or proposition; a decree.
      Maduro said the new currency, set to enter circulation on Monday, will be called the "sovereign bolivar" and will be based on the petro, which is valued at $60 or 3,600 sovereign bolivars, after the redenomination planned for August 20 slashes five zeroes off the national currency. The minimum wage will be set at half that, 1,800 sovereign bolivars. The government would cover the minimum wage increase at small and medium-size companies for 90 days, Maduro added. It was not clear what happens after.  "They've dollarized our prices. I am petrolizing salaries and petrolizing prices," Maduro explained in a Friday televised address. "We are going to convert the petro into the reference that pegs the entire economy's movements."
      We will see the market reaction shortly, however Venezuela is already living in a world of it's own, even bragging about how the IMF doesn't have any 'fingers in our pies' type of speech.  Meanwhile, the population of Venezuela is forced to turn to things like Bitcoin and Alt coins in order to survive, as the national currency is completely unstable.
      Posted: August 20, 2018, 1:17 am
      Online retailer Overstock reported results which, unlike its much more famous and infinitely bigger online retailing peer Amazon, were nothing special: the company reported Q2 revenues of $483 million, generating a net loss for the quarter of $2.20 on a gross margin of 19% in the quarter.
      But the company's earnings were not the reason why OSTK shares soared as much as 25% after hours: the reason was the surprising announcement by the company that Hong Kong-based private-equity firm GSR Capital had agreed to invest as much as $375 MM in exchange for equity in the retailer and, more importantly, its tZero blockchain subsidiary, which as a reminder capitalized on the cryptocurrency craze in late 2017 and concluded an Initial Coin Offering on December 18, 2017, almost to the day when Bitcoin hit an all time high of just under $20,000.
      As Overstock announced in its press release, GSR agreed to:
      • i) buy $30MM in tZero tokens,
      • ii) buy up to 3.1MM shares of OSTK for $104 million (a 5% discount to the Aug. 1 closing price of $33.72),
      • iii) invest as much as $270MM for up to 18% of tZero’s equity at a whopping post-money valuation of $1.5 Billion.
      And since Overstock's market cap as of Thursday's close was just over $1.1 billion, this means that with one term sheet, the company's tZero sub is suddenly worth more than the entire parent company. More importantly, the GSR transaction will boost the company's cash and equivalent holdings to over half a billion dollars.
      Some more details from Byrne:
      Having concluded its Security Token offering, tZERO has raised aggregate consideration of $134 million. This figured includes $30 million from repayment of intercompany debt between tZERO and Overstock. GSR has signed a repurchase agreement to acquire these tokens. As I will diagram in our earnings call, we have designed quite an ecosystem with a scale that matches the enormous opportunity in front of it. When GSR completes its planned investments, we should have over half-a-billion dollars. We believe this will provide ample capitalization with which to build a company that can upend global capital markets.
      Back in December, when Overstock launched its tZero ICO, it said that it was hoping to raise at least $250 million - and as much as $500 million - "to build out a blockchain system that the firm said would allow it to create an exchange to trade blockchain-based assets, like ICOs." In the end it raised aggregated funds of just approximately $134 million, and today's transactions adds to that and enables CEO Patrick Byrne to pursue his Security Token ambitions.
      As a result of the deal, OSTK stock has jumped and was trading as high as $46/share after hours.
      Even with the surge however, the stock remains well below its highs hit in late 2017 and early 2018, when its share price more than doubled to a high of $86.90 in January, due to its blockchain investments rather than its online retailing activities, which have seen it categorised as a cryptocurrency "play."
      Overstock has been one of the few retailers that has aggressively pursued cryptos as both a method of payment and as a means by which to grew the company with its own unique token. As we reported recently, following a burst of adoption of cryptos by various vendors, as the price of bitcoin has tumbled in 2018, so has the rate of adoption. Which is why Overstock's experiment with cryptos and tokens will be closely watched to determine if the digital currency has any chance of becoming useful in practice instead of just in theory.

      Posted: August 9, 2018, 10:31 pm

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      About this podcast: EP 137: The horse bettor exploiting anomalies in financial markets – Dr. William Ziemba Dr. William Ziemba’s an academic, a practitioner, gambler, trader and an author. He’s worked with and consulted to many well-respected names in the field, such as; Edward Thorp, Blair Hull and the very successful horse bettor, Bill Benter. In the beginning, horse betting was William’s field of expertise (he even published a book titled, Beat The Racetrack!) And in many ways, for William, horse betting worked as a gateway to trading financial markets—which he’s been doing since 1983.

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      Posted: August 8, 2018, 6:51 pm