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The Magnitskiy Myth Exploded

Authored by Craig Murray,

The conscientious judges of the European Court of Human Rights published a judgement a fortnight ago which utterly exploded the version of events promulgated by Western governments and media in the case of the late Mr Magnitskiy.

Yet I can find no truthful report of the judgement in the mainstream media at all.

The myth is that Magnitskiy was an honest rights campaigner and accountant who discovered corruption by Russian officials and threatened to expose it, and was consequently imprisoned on false charges and then tortured and killed. A campaign over his death was led by his former business partner, hedge fund manager Bill Browder, who wanted massive compensation for Russian assets allegedly swindled from their venture. The campaign led to the passing of the Magnitskiy Act in the United States, providing powers for sanctioning individuals responsible for human rights abuses, and also led to matching sanctions being developed by the EU.

However the European Court of Human Rights has found, in judging a case brought against Russia by the Magnitskiy family, that the very essence of this story is untrue.

They find that there was credible evidence that Magnitskiy was indeed engaged in tax fraud, in conspiracy with Browder, and he was rightfully charged. The ECHR also found there was credible evidence that Magnitskiy was indeed a flight risk so he was rightfully detained. And most crucially of all, they find that there was credible evidence of tax fraud by Magnitskiy and action by the authorities “years” before he started to make counter-accusations of corruption against officials investigating his case.

This judgement utterly explodes the accepted narrative, and does it very succinctly:

The applicants argued that Mr Magnitskiy’s arrest had not been based on a reasonable suspicion of a
crime and that the authorities had lacked impartiality as they had actually wanted to force him to
retract his allegations of corruption by State officials. The Government argued that there had been
ample evidence of tax evasion and that Mr Magnitskiy had been a flight risk.

The Court reiterated the general principles on arbitrary detention, which could arise if the
authorities had complied with the letter of the law but had acted with bad faith or deception. It
found no such elements in this case: the enquiry into alleged tax evasion which had led to
Mr Magnitskiy’s arrest had begun long before he had complained of fraud by officials.
The decision
to arrest him had only been made after investigators had learned that he had previously applied for
a UK visa, had booked tickets to Kyiv, and had not been residing at his registered address.

Furthermore, the evidence against him, including witness testimony, had been enough to satisfy an
objective observer that he might have committed the offence in question
. The list of reasons given
by the domestic court to justify his subsequent detention had been specific and sufficiently detailed.

The Court thus rejected the applicants’ complaint about Mr Magnitskiy’s arrest and subsequent
detention as being manifestly ill-founded.

“Manifestly ill founded”.

The mainstream media ran reams of reporting about the Magnitskiy case at the time of the passing of the Magnitskiy Act. I am offering a bottle of Lagavulin to anybody who can find me an honest and fair MSM report of this judgement reflecting that the whole story was built on lies.

Magnitskiy did not uncover corruption then get arrested on false charges of tax evasion. He was arrested on credible charges of tax evasion, and subsequently started alleging corruption. That does not mean his accusations were unfounded. It does however cast his arrest in a very different light.

Where the Court did find in favour of Magnitskiy’s family is that he had been deprived of sufficient medical attention and subject to brutality while in jail. I have no doubt this is true. Conditions in Russian jails are a disgrace, as is the entire Russian criminal justice system. There are few fair trials and conviction rates remain well over 90% – the judges assume that if you are being prosecuted, the state wants you locked up, and they comply. This is one of many areas where the Putin era will be seen in retrospect as lacking in meaningful and needed domestic reform. Sadly what happened to Magnitskiy on remand was not special mistreatment. It is what happens in Russian prisons. The Court also found subsequent Magnitskiy’s conviction for tax evasion was unsafe, but only on the (excellent) grounds that it was wrong to convict him posthumously.

The first use of the Magnitsky Act was to sanction those subject to Browder’s vendetta in his attempts to regain control of vast fortunes in Russian assets. But you may be surprised to hear I do not object to the legislation, which in principle is a good thing – although the chances of Western governments bringing sanctions to bear on the worst human rights abusers are of course minimal. Do not expect it to be used against Saudi Arabia, Bahrain or Israel any time soon.

*  *  *

Unlike his adversaries including the Integrity Initiative, the 77th Brigade, Bellingcat, the Atlantic Council and hundreds of other warmongering propaganda operations, Craig's blog has no source of state, corporate or institutional finance whatsoever. It runs entirely on voluntary subscriptions from its readers – many of whom do not necessarily agree with the every article, but welcome the alternative voice, insider information and debate. Subscriptions to keep Craig's blog going are gratefully received.

Tyler Durden Tue, 09/17/2019 - 23:45
Author: Tyler Durden
Posted: September 18, 2019, 3:45 am
Photos Emerge Of New Supersonic Spy Drone At Chinese Military Parade Rehearsal

New images have surfaced on social media earlier this week revealing China's supersonic spy drone rolling through the streets of Beijing during a rehearsal ahead of a parade to celebrate the 70th anniversary of the founding of the People's Republic of China.

The rehearsal was conducted on Sunday and lasted through Monday morning. Observers across the city were able to take pictures of advanced weaponry and share them on social media platforms, domestically and internationally.

The photos sparked a firestorm of conversation on social media platforms, partly due to an unassembled supersonic DR-8 reconnaissance drone was spotted on the back of a military truck. The drone has never been seen before in public.

The South China Morning Post said the DR-8 would play a vital role if a shooting war breaks out with the US in the South China Sea or Western Pacific.

Rick Joe, a Chinese military analyst and author at The Diplomat, tweeted that the DR-8 has similar characteristics to a Lockheed D-21 supersonic drone that retired in the early 1970s. 

The new high speed UAV seems similar to D-21 in some respects, but differences exist:

- big delta wing with ?winglets vs D-21 wing and fin config
- likely chin intake vs nose intake on D-21
- landing gear ?present, i.e. likely reusable rather than expendable like D-21

— Rick Joe (@RickJoe_PLART) September 15, 2019

The DR-8 reconnaissance drone will allow China to coordinate strikes on US vessels with DF-21D anti-ship ballistic missiles, and the DF-26 ballistic missiles.

Zhou Chenming, a Beijing-based military commentator, was cited by the Post as saying the DR-8 has a maximum speed of Mach 3.35 (2,570 mph).

Shanghai-based military commentator Shi Lao told the Post that the People's Liberation Army (PLA) has been testing the drone extensively, says it can easily reach Guam where a major US military installation resides.

"In fact, this UAV [the DR-8] entered into service a while ago," Shi said.

Another military observer on social media said the drone was "the biggest surprise so far."

The biggest surprise so far, hypersonic UAV.

— dafeng cao (@dafengcao) September 14, 2019

Also spotted in the rehearsal was China's hypersonic DF-17 missile, which can penetrate American missile defense networks through evasive maneuvering while traveling between Mach 5 (3,836 mph) and Mach 10 (7,672 mph).

Zhijun Cai, deputy director of the military parade leading group office, told local media that the weapons in the parade are all active and deployed with the PLA.

A previously undisclosed main battle tank of the PLA that entered service last year was also spotted.

"There will be some exciting new weaponry on show at the parade this year," Zhou said.

Hundreds of thousands of people are expected to attend the celebrations in Tiananmen Square on October 1, which will showcase how China, the rising power of the world, is ready for a fight with the US.

Tyler Durden Tue, 09/17/2019 - 23:25
Author: Tyler Durden
Posted: September 18, 2019, 3:25 am
New Zealanders Face 5 Years In Jail For Not Handing-In Banned Firearms

Authored by Paul Joseph Watson via Summit News,

Following a ban on virtually all semi-automatic firearms, New Zealanders face 5 years in jail if they refuse to hand them in.

A France 24 report on the government’s new buyback scheme showed a line of gun owners wilfully giving up their guns in response to the Christchurch massacre earlier this year.

This despite the fact that the shooter himself said in his own manifesto that provoking mass gunfiscation was one of his intended goals. Mission accomplished.

Since the buyback scheme began, 19,000 firearms have been handed in. Most of the guns seen being handed in looked like ordinary rifles, not AR-15s.

Pay Attention America!

Six months after Christchurch massacre, a farewell to firearms in New Zealand

If New Zealanders fail to turn in their banned weapons by Dec. 20, they could face 5yrs in prison.

This is gun confiscation and confiscation is what Democrats want in America!

— Amy Mek (@AmyMek) September 17, 2019

Inspector Terry Van Dillen said he “accepted” that some people would be emotional giving up their guns due to them having been handed down by families for generations.

I’m sure any potential future mass shooters are gleefully handing in their firearms to police as I write this.

New Zealand’s gang members even publicly announced they would refuse to hand in any of the “banned” firearms.

Disarming responsible people and making them easier targets for actual criminals.

Genius idea.

*  *  *

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Tyler Durden Tue, 09/17/2019 - 23:05
Author: Tyler Durden
Posted: September 18, 2019, 3:05 am
Only 38% Of Americans Believe Humans Mainly Responsible For Climate Change

By now, most people have accepted that climate change is real, and that it is happening. What we can't all agree on though, is what the main cause is. As Statista's Martin Armstrong notes, close to an absolute majority of the world's scientists are adamant that we as humans are the main factor behind the speed and extent to which our climate is changing.

When though, like YouGov, you ask the people what they think, the picture becomes a bit cloudier.

Infographic: Are Humans Mainly Responsible for Climate Change? | Statista

You will find more infographics at Statista

As this infographic shows, of the countries surveyed, India has the largest share of people that think human activity is mainly responsible for climate change (71 percent).

At the other end of the scale however, only 35 percent of respondents in Norway and Saudi Arabia believe we should take the lion's share of the responsibility. In Norway, the most widely held belief is that while human activity is partly responsible, there are other factors which should be taken into account (48 percent).

When it comes to outright climate change deniers, the survey suggests that the USA harbors the largest share. There, 6 percent say the climate is not changing, and 9 percent say it is changing but not at all due to humans.

Tyler Durden Tue, 09/17/2019 - 22:45
Author: Tyler Durden
Posted: September 18, 2019, 2:45 am
Shocking Video Simulation Shows The Devastation Nuclear War Would Cause

Authored by Dagny Taggart via The Organic Prepper blog,

The United States and Russia have quite the bumpy relationship. Talk of war between the two powerful countries isn’t anything new, and anyone who is paying attention knows that such a war would be devastating for much of the world.

Two recent research projects show just how bad things would be if the US and Russia unleashed their nuclear arsenals on each other.

A war between the US and Russia would cause a global nuclear winter.

Several months ago, researchers from Rutgers University, the University of Colorado Boulder, and the National Center for Atmospheric Research ran a simulation to see what a nuclear war between the US and Russia would do, and the findings were not pretty: Such a war would plunge the planet into a nuclear winter, with clouds of soot and smoke covering the planet. The study, published in the Journal of Geophysical Research: Atmospheresfound that the nuclear detonations would inject about 147 million tons of soot into the atmosphere. That soot would then spread around the stratosphere, blanketing the Earth in darkness.

Not only would explosions, fires, and radiation exposure kill millions in targeted cities, but the resulting nuclear winter – which could last many years- would drastically alter the Earth’s climate. The growing season would be slashed by nearly 90 percent in some areas, and death by famine would threaten nearly all of the Earth’s 7.7 billion people.

According to the model, the soot would not visibly clear for around seven years. Temperatures would drop by an average of 9 degrees Celsius (16 degrees Fahrenheit) across the globe, the researchers wrote, and it would take around three years for surface light to return to 40 percent of its pre-attack level.

More than 90 million immediate casualties would result.

Researchers at Princeton University created a simulation to see just how bad a nuclear war between the US and Russia would be for humanity, and the picture they paint is terrifying. The team used the Pentagon’s own plans (which were recently leaked) to “highlight the potentially catastrophic consequences of current US and Russian nuclear war plans,” a press release states.

The risk of nuclear war has increased dramatically in the past two years as the United States and Russia have abandoned long-standing nuclear arms control treaties, started to develop new kinds of nuclear weapons and expanded the circumstances in which they might use nuclear weapons. (source)

Researchers at Princeton’s Science and Global Security Lab created this video, which shows just how widespread the devastation from a nuclear war would be.

Does that simulation remind anyone else of the 1983 movie War Games? In that film, a young hacker accidentally accesses a US military supercomputer system called War Operation Plan Response (WOPR). Believing it is a video game, the hacker gets WOPR to run a nuclear war simulation – and the computer nearly starts World War III.

At the end of the movie, the computer tells Professor Falken, who is attempting to stop the WOPR from launching war, that nuclear war is “a strange game” in which “the only winning move is not to play.”

How many nuclear weapons are there?

Nine countries together possess nearly 14,000 nuclear weapons. The US and Russia have the most (6185 and 6500, respectively).

According to ICAN, “The United States and Russia maintain roughly 1,800 of their nuclear weapons on high-alert status – ready to be launched within minutes of a warning. Most are many times more powerful than the atomic bombs dropped on Japan in 1945.”

If all of the nuclear weapons in the world were detonated at once, what would happen? The YouTube channel Kurzgesagt – In a Nutshell attempts to demonstrate the aftermath in this video.

Is nuclear war between the US and Russia inevitable?

Such a war would be suicide for both countries, so why either would resort to such a thing baffles the mind. Earlier today, CNBC reported that Russia is conducting massive military drills with China, India, and Pakistan, in what experts say could be Moscow “sending a powerful message to the West.” Some sources report that tensions between the US and Russia are escalating to “new Cold War” levels. Others believe that the ousting of war hawk John Bolton might be a sign of the potential for a Russia-China-US alliance.

Tyler Durden Tue, 09/17/2019 - 22:25
Author: Tyler Durden
Posted: September 18, 2019, 2:25 am
Mutual Fund Chaos After Investments In Opioid Companies Plunge

Earlier on Monday morning, we detailed how the embattled US drugmaker Purdue Pharma filed for Chapter 11 bankruptcy protection, a long-anticipated move aimed at shielding the company and its owners, the Sackler family, from financial ruin as they shoulder the brunt of the blame for igniting the opioid crisis with their aggressive marketing tactics of OxyContin.

Now we're starting to hear additional reports, specifically in recent filings, that the bust of Purdue and other big pharmaceuticals, thanks to nearly 2,000 litigants, has resulted in at least five mutual-fund companies reporting their returns have been affected after they made risky bets in pharmaceutical companies with opioid-related businesses.

Nick Mazing, the research director at investment research platform Sentieo Inc., told The Wall Street Journal that the number of times companies had mentioned opioids in their annual shareholder reports is up 300% in last eight years.

Walmart Inc., which operates pharmacies across the country, was forced to start disclosing opioid-related litigation as a risk in early 2018, and insurance company The Travelers Companies, Inc. began to disclose opioid-related litigation earlier this year.

Mazing said 55 companies mentioned opioids in their annual shareholder reports filed with the Securities and Exchange Commission as a significant risk factor. This is up from 41 last year and 37 in 2017.

At a time when some 130 Americans are dying every day from opioid-related overdoses, drugmakers like Purdue Pharma, Mallinckrodt, and Endo International are being sued by thousands of municipalities across the country and even individual states.

Mutal funds are worried that their investments in these drugmakers could be severely impacted, as those companies are now paying hundreds of millions of dollars, if not billions, to settle with litigants. In some cases, like Purdue, these companies are filing for bankruptcy.

Miller Value Partners LLC said its Miller Opportunity Trust fund had lousy performance in the last six months, mainly because it had too much exposure to Endo and Teva, two companies that have been cited as significant contributors in the opioid crisis.

"We considered the prospective opioid liabilities but judged them manageable," Miller Value said in its semiannual report for the period ending June 30. "We didn't anticipate just how myopically focused the market would become on this point, which was our main error."

Ohio National Fund said it cut Teva from a foreign-stock portfolio because the shares have been in a bear market for more than one year after a settlement of an opioid-related lawsuit.

Penn Series Funds Inc., an affiliate of Penn Mutual Life Insurance Co., said the 91% crash in Teva's stock in the last 50 months has absolutely "decimated" the company's midcap value fund.

American Funds Insurance Series, which is affiliated with Capital Research & Management Co., and Franklin Templeton Investments were others who saw depressed returns thanks to their exposure to opioid-related pharmaceutical companies.

Tyler Durden Tue, 09/17/2019 - 22:05
Author: Tyler Durden
Posted: September 18, 2019, 2:05 am
Does Bolton's Firing Open New Potential For A Russia-China-USA Alliance?

Authored by Matthew Ehret via The Strategic Culture Foundation,

With President Trump’s long overdue firing of John Bolton on September 10th, a window into the battle between neocon zombies infesting the White House and Donald Trump was made visible once more. As much as people enjoy oversimplifying American politics- clumping all “right wing politicians” together as ideological war mongers, the reality as showcased again this week, is that things are more nuanced and that President Trump is not just another neocon.

To begin to appreciate this fight, it is useful to conduct a short survey of the 3 weeks of fanatical neocon maneuvers led by Bolton, Defense Secretary Esper, Sen. Marco Rubio, and VP Pence. These maneuvers were instigated by two “unforgivable sins” conducted by Trump when the latter: 1) stated his wish that Russia be re-introduced to the G7 on August 21 stating “I think it would be better to have Russia inside the tent than outside the tent”, and 2) his defense of President Xi Jinping as “a great leader” who must resolve the Hong Kong chaos without American interference. These initiatives had to come undone at all costs.

Rubio, Esper, Pence and Bolton Push For War

First, neocon war hawk Marco Rubio ranted at length in the Washington Post calling for the US government to intervene into the Hong Kong mess which itself has been stirred up by American intelligence outfits like the CIA-affiliated National Endowment for Democracy.

In his September 3 editorial, Rubio stated “the administration should make clear that the United States can respond flexibly and robustly in Hong Kong” and called for the Congress to pass the Hong Kong Human Rights and Democracy Act co-sponsored by Rubio, Ben Cartin (Democrat), James Risch (Republican), and Robert Menendez (Democrat). The act, if passed would force the US government to fully support the Hong Kong color revolutionaries while sanctioning all

Chinese officials who “have undermined the city’s autonomy”.

Just before Rubio’s belligerent words went public, US Defense Secretary Mark Esper had already exclaimed publically that America had to confront China directly in support of US allies in the Asia-Pacific over territorial issues and containment of China’s growth. Esper shocked many Asian and western statesmen alike when he stated that there is a “coming shift” from “low intensity conflict… to high intensity conflicts against competitors such as Russia and China”.

In this surreal relay race to Armageddon, Vice-President Mike Pence next took the baton during his September 2 speech in Warsaw, Poland alongside Polish President Andrzej Duda. It was here that Pence here took the opportunity to demonize Russia when he said “with its efforts to meddle in elections across Europe and around the world, now is the time for us to remain vigilant about the intentions and the actions taken by Russia.” Pence went further to state without any evidence that “Russian forces still illegally occupy large parts of Georgia and Ukraine.”

Pence was joined in Poland by ex-US National Security Advisor John Bolton, who ended his tour of four former Soviet nations begun a week earlier (Ukraine, Moldova, Belarus and Poland). Beginning his tour on August 26 in Kiev, Bolton took the opportunity to attack Ukraine’s growing relationship with China which is on the verge of finalizing a deal to purchase the beleaguered Ukrainian aerospace giant Motor Sich. Ever since the Russian sanctions began, the Ukrainian company has lost over 40% of its markets with the Chinese providing the only chance for its salvation. Exhibiting his usual flare for hypocrisy, Bolton attacked China saying: “The Chinese are not afraid to use corruption – or to put it bluntly, bribes – to get the decisions they want”, calling for Ukraine to reject the deal.

The New Silk Road: A Nightmare for all Neocons

It is important to note that Ukraine signed an action plan to join the Chinese-led Silk Road Economic Belt and 21st century maritime Silk Road already 18 months ago with recent plans to accelerate that cooperation. Ever since the BRI and Russian-led Eurasian Economic Union increasingly began merging into a unified program, western NATO-philes have realized that their years of hard work to de-rail a pro-Eurasian alliance in Ukraine could easily come undone.

Having made a mess of Ukraine, Bolton then headed to Belarus, and Moldova pushing an anti-Russian line, ending his trip in Poland where he solidified the location for the additional American 1000 troops to be added to the 4500 US troops already operating in the nation- many of whom operate America’s anti-Russian ABM system.

The ABM system which has been built up around Russia’s southern perimeter and which Poland plays a key role, is part of a larger agenda identified by the Russian government as “Full Spectrum Dominance” and seeks a unipolar nuclear first strike monopoly. Poland’s only hope to avoid being caught in the middle of a nuclear exchange between NATO and Russia is to break free of this program and accept China’s offers to join the BRI which experts have recently stated would make Poland “The Buckle of the Belt and Road”.

It was not lost on Bolton and Pence that Poland is also a key member of the 17+1 Central and Eastern European nations + China group which has deeply tied itself to the BRI while Belarus is a member of the Eurasian Economic Union- making their allegiance to the western technocracy more fragile than some would like to admit.

Breaking Free of the Self-Destructive Psychology of Empire

When objectively assessing the psychological state of the western oligarchy at this particular moment in history, it must be concluded that certain forces operating on behalf of the City of London and Wall Street would go to any length– not excluding nuclear war- in defense of their failing system. There is thus no solution to this dark chapter of the human experience unless:

The bankruptcy of the financial system now sitting atop a $800 trillion derivatives bubble is fully acknowledged such that a serious discussion centered on bankruptcy re-organization can finally occur.

That the neocons and other deep state operatives be flushed from power- following Bolton into the trash bin of history.

That the need for a new system premised upon cooperation and long term development is adopted post-haste. This new system would have to contain certain non-negotiable features such as nationally-guided capital controls to prevent speculative fluctuations of currencies and other vital resources, the separation of investment banking from normal commercial banking functions as was done under the 1933 Glass-Steagall Act (repealed in 1999 in the USA), and long term credit generation for major infrastructure projects.

The BRI as the Foundation for a New System

Russia, China and India are increasingly becoming the foundation for a new multipolar world order founded upon the respect for sovereign nations and improvement of conditions of life of the people driven by Putin’s Far East/Arctic vision and China’s New Silk Road which are winning over dozens of nations to a new paradigm of political economy.

For all of his problems, Donald Trump has maintained a generally consistent (albeit flawed) intention to re-build American industry and infrastructure after decades of post-industrial decay and combat the Deep State which has worked on overtime to overthrow his presidency. On top of this, he has seriously worked to keep the nation out of foreign entanglements while avoiding any new wars (a first for any president in over 50 years). Most importantly, he has attempted repeatedly to create positive relations with Russia and China.

Whether the neo-cons infesting the US administration successfully subvert this potential for a new paradigm which would be unstoppable under a Russia-China-India-USA alliance, or not remains an open question, but Trump’s firing of Bolton will hopefully represent a new purge of war mongering sociopaths while opening the door to a new foreign policy doctrine.

Tyler Durden Tue, 09/17/2019 - 21:45
Author: Tyler Durden
Posted: September 18, 2019, 1:45 am
S&P Says Global Auto Sales To Fall 2-3% This Year

The global automotive industry has been nothing short of a full fledged wreck over the last 12 to 18 months, with major markets like China, Europe and the U.S. all slipping as overextended consumers struggle to find the means necessary to purchase vehicles - even with interest rates worldwide near all time lows. 

And according to S&P, it's going to get far worse before it gets better. 

S&P predicts that global light vehicle sales will fall by 2%-3% in 2019 and, to add insult to injury, there will be "no growth" throughout 2020 and 2021. 

In a new research note out Tuesday, S&P says that sales in China will decline by 7%-9% this year and that U.S. sales will see a 3% decline. It also predicts a 2% drop for European sales for 2019. 

The note's base case assumptions for 2020 and 2021 are 0% to 1% growth in global light vehicle sales. S&P also expects weakness in "all market regions except China, which may see a modest rebound, not before 2021".

S&P believes that manufacturers will grapple with margin erosion in the mass market segment and will struggle to pass through increased costs of connectivity, electrification and autonomous driving. 

Days ago, we just noted that the world's biggest auto market, China, plunged deeper into recession, with the country's China Passenger Car Association releasing preliminary data for August that in no way indicates that the trend could be slowing. 

The CPCA reported last week that sales of sedans, SUVs, minivans and multipurpose vehicles in August fell 9.9% to 1.59 million units. 

It has been the industry's largest downturn in three decades. China has tried to roll out several stimulus measures to help the industry, including loosening car purchase restrictions, but they have done little to encourage consumption thus far. 

Top Chinese SUV maker Great Wall Motor Co. saw its first half profit lower by an astounding 59% and SAIC Motor Corp., China's biggest automaker, also cut its sales forecast recently and predicted its first annual sales decline in at least 14 years. Geely Automobile Holdings Ltd. saw sales fall 19% in August. 


U.S. auto sales have followed suit and are expected to continue to fall (formerly 2.2%, now 3%) in the back half of 2019. General Motors has found itself dealing with its first UAW strike in 12 years and now, the warning bells are also starting to be audible from Mexico. We noted  this week that Mexico's total export volume for August was crushed 12.7%.

It marks a sharp drop for one of the biggest exporters of vehicles in the world, according to new data from FreightWaves. Companies like Ford, Honda, Fiat-Chrysler, Toyota, BMW, GM, Kia, Mazda, Nissan, Volkswagen, and Audi all have manufacturing plants in Mexico. 

Tyler Durden Tue, 09/17/2019 - 21:25
Author: Tyler Durden
Posted: September 18, 2019, 1:25 am
Organizers Of "Storm Area 51" Event In Legal Battle Over Potential "Humanitarian Disaster"

Authored by John Vibes via The Mind Unleashed blog,

In late June, a college student named Matty Roberts created a Facebook event called “Storm Area 51: They Can’t Stop Us All,” after watching a Netflix documentary about the secret military base.

For some unknown reason, the event went viral and quickly gathered millions of followers, who spent half of the summer making jokes and sharing memes about invading Area 51. Roberts never actually had any intentions of risking his life or freedom to enter the top-secret facility and was forced to clarify that the whole thing was just a joke after multiple warnings from various government agencies.

Still, having the captive audience of millions of people on an event page is an opportunity that would be foolish to pass up, so Roberts decided to plan a festival, called Alienstock, in a nearby town instead.

The event was scheduled to take place on September 20th—just a few days from now.

Roberts partnered with a number of other people and organizations to help make the event a success, including a nearby hotel, the Little A’Le’Inn.

Unfortunately, it seems that some of the organizers have had differing opinions on the details of the event and have now split and gone their separate ways.

Initially, the festival was scheduled to take place in Rachel, the town closest to Area 51, but there were some clear indications that the local community was less than happy about the idea. Most notably, a warning posted on Rachel’s town website said that the scene “could get ugly” if incoming curiosity seekers were to trespass on the property of local residents.

After these issues began to arise, the team had a difference of perspective about how to go about handling it. Roberts wanted to move the event to a safer location in Las Vegas, which has proper facilities for the 8,000 people expected to attend, while the owners of the Little A’Le’Inn wanted to keep the event at their location, insisting that they would be able to handle a large crowd.

statement on the Alienstock website reads:

“Due to the lack of infrastructure, planning, and risk management, along with concerns raised for the safety of the expected 10,000+ attendees, we decided to transition Alienstock away from the Rachel festival towards a safer alternative. We are officially disconnecting from the Little A’LE’INN, Rachel NV, and AlienStock’s affiliation with them.

We will no longer offer our logo, social media, website or Matty Roberts likeness or scheduled appearance. In short, the relationship has ended permanently. AlienStock will be moving to a safe, clean secure area in Downtown Las Vegas as an alternative. We are not interested in, nor will we tolerate any involvement in a FYREFEST 2.0. We foresee a possible humanitarian disaster in the works, and we can’t participate in any capacity at this point.”

Soon after, the notice on the homepage of Rachel’s website clarified that Alienstock had been moved to Las Vegas because it was not properly organized. The notice suggested that curiosity seekers should avoid Rachel entirely, however, other organizers are insisting that an event will still take place at the original location in Rachel. They also claim that local residents are happy to have the visitors.

In a statement sent to the Mind Unleashed, the team representing the Little A’Le’Inn said:

Amidst false accusations and rumors, the residents of Rachel Nevada are excited to announce that Alienstock is, in fact, still happening at the Little A’Le’Inn on September 19 – 22nd. With thousands slated to attend and artists traveling in from all over the country, this is sure to be a once-in-this-universe experience.”

“Alienstock has been thoroughly planned, approved, and locally supported. All permits, permissions, and down-payments have been made and correctly filed,” the statement continued.

Earlier this week, two men were arrested near Area 51 while attempting to capture footage of the facility. The men were reportedly two Dutch YouTubers, who flew all the way from the Netherlands for the “Storm Area 51” gathering.

*  *  *

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Tyler Durden Tue, 09/17/2019 - 21:05
Author: Tyler Durden
Posted: September 18, 2019, 1:05 am
California Lawmaker Trying To Weaken Privacy Law Married To Amazon Ring Exec

A California lawmaker trying to weaken a landmark data privacy law is married to a top executive at Amazon's Ring home surveillance company, according to a review of state ethics documents conducted by Politico

Assemblywoman Jacqui Irwin's husband, Jon Irwin, is chief operating officer for Santa Monica-based Ring, Inc., a home security and video doorbell startup that Amazon acquired last year for about $1 billion, state ethics disclosures show.

Like other companies that collect vast amounts of consumer data, Ring — and its parent company, Amazon — has a financial stake in the details of California's groundbreaking data-privacy law. Industry groups, including those representing Amazon, have been scrambling to change the law before it takes effect Jan. 1. -Politico

The California Consumer Privacy Act (AB 873) will give Californians the right to formally request that companies disclose personal data collected about them, ask them not to sell it, and instruct them to delete it. The legislation - the first of its kind in the country - will likely set the precedent for US data privacy alongside new EU regulations. 

One of the proposals that Irwin (D-Thousand Oaks) carried this year was blasted by consumer-privacy groups as an attempt to gut the law by exempting more kinds of data from the new requirements. In an early version of the bill, the lawmaker also proposed striking from the act a provision requiring companies to disclose or delete data associated with "households" upon request, a change likely to have eased the regulatory burden on smart-device companies like Ring. -Politico

"We can talk about this later," Jacqui Irwin told Politico - deflecting when asked about the potential conflict outside her office last week, adding "It's a little bit offensive there."

It should be noted that the third-term Assemblywoman has disclosed her husband's employment on her publicly available statements of economic interest, while the state's Fair Political Practices Commission told Politico that it had not received or investigated any conflict-of-interest complaints about Irwin. 

Irwin, meanwhile, told Politico that questioning herr role in data-privacy legislation to be offensive in light of her professional background as the co-chair of a national cybersecurity task force. 

In a statement sent to POLITICO, Irwin highlighted her background and stressed that her aim since the law was hastily passed last year has been to find "reasonable compromise."

"My role in the privacy debate in the Legislature is focused on bringing people together and solving the practical issues posed to us as policy makers and is independent of any job or role my husband may have," she said. "My education and professional background as a systems engineer provides me distinct qualifications in the Legislature to weigh in on matters related to technology." -Politico

That said, "Voting records show that Irwin has participated in matters that would appear to affect her spouse's firm or parent company," according to Politico, which notes that she "voted on the Assembly floor in favor of a proposal from Assemblywoman Buffy Wicks (D-Oakland) aimed at regulating Amazon's dealings with California vendors. (Amazon has dropped its opposition to the proposal.)," and was "one of just six lawmakers out of 80 to vote against the so-called Alexa bill by Republican Jordan Cunningham (R-Templeton) that would have prohibited smart speaker devices installed in homes, such as Amazon's Alexa, to retain or sell recorded conversations without a customer's consent, among other restrictions. Cunningham pulled that bill from a Senate committee and plans to move it again next year."

According to the report, Irwin has been a key player in negotiations over the California Consumer Privacy Act - arguing that certain types of data, such as store security-camera footage, is an example of information which would be too burdensome and risky for businesses to be required to include in consumer data-deletion requests. 

The act currently has a broad definition of "personal information," which includes names, addresses, geolocation information, device IDs and biometric data. As Politico notes, "Privacy experts say that would include feeds from Ring's video doorbells, some of which are being shared with law enforcement — with consumer consent — in hundreds of communities nationwide." 

"Unquestionably when you walk up to that Ring device, it’s capturing personal information," said Electronic Frontier Foundation senior staff attorney Lee Tien. "This is why a company like Ring would be concerned about the obligations imposed on them by CCPA."

The act will undoubtedly raise costs and reduce revenues for major companies which collect, analyze and sell customer information for the purposes of targeted advertising. In fact, Amazon noted in a SEC filing earlier this year that "government regulation is evolving," and that certain changes could slow growth and increase costs. 

In order to avoid this, trade groups representing tech companies - including Amazon - have spent hundreds of thousands of dollars lobbying for proposed language, exemptions and tweaks to AB 873.

Besides being represented by TechNet and the Internet Association, Amazon alone spent $186,000 on lobbying the state Capitol in the first half of the year, state records show. The company listed AB 873 and AB 1395 among the bills it influenced.

"Look, if your spouse has a financial interest in a company and you are voting on or are proposing legislation that would affect that company, I think there is an enormously good argument to be made that it could be a conflict of interest under the Political Reform Act," said Loyola Law School ethics and campaign-finance expert, Jessica Levinson. 

"It’s both sides that give me pause," she added, saying of Irwin and her husband: "It’s that she’s so seemingly aggressive on the issue in a way that would benefit his company, and he is so high up in the company."

Tyler Durden Tue, 09/17/2019 - 20:45
Author: Tyler Durden
Posted: September 18, 2019, 12:45 am

NFA News Releases

August 15, Chicago—NFA bars George Town, Cayman Islands commodity pool operator and commodity trading advisor Beverstone Fund Management and its principal Roland Kaehler from membership
Posted: August 16, 2019, 4:59 am

Elite Forex Blog - Market Research & Analysis

From Zero Hedge 9/16/2019:

Who would have thought that JPMorgan's precious metals trading desk is the functional equivalent of the mafia, and that its one-time leader, Blythe Masters, was the mafia's don? 
Well, almost everyone who didn't mind being designated a conspiracy theorist for years. And now comes vindication, because this has just been confirmed by the DOJ, which accused the PM trading desks at JPMorgan of being deeply involved in what prosecutors described as a "massive, multiyear scheme to manipulate the market for precious metals futures contracts and defraud market participants."
In an indictment unsealed on Monday morning, the DoJ charged Michael Nowak, a JPMorgan veteran and former head of its precious metals trading desk and Gregg Smith, another trader on JPM's metals desk, in the probe. (Blythe Masters was somehow omitted).
“Based on the fact that it was conduct that was widespread on the desk, it was engaged in in thousands of episodes over an eight-year period -- that it is precisely the kind of conduct that the RICO statute is meant to punish,” Assistant Attorney General Brian Benczkowski told reporters.
Here's where it gets extra interesting: according to Bloomberg, the unusually aggressive language language embraced by prosecutors reminds legal experts of indictments utilizing the RICO Act - a law allowing prosecutors to take down 'criminal enterprises' like the mafia by charging all members of the organization for any crimes committed by an individual on behalf of the organization.
Prosecutors charged the head of JP Morgan’s global metals trading operation and two other traders with "conspiracy to conduct the affairs of an enterprise involved in interstate or foreign commerce through a pattern of racketeering activity" - language that is typically used to describe a RICO charge.
This hints at the possibility of a deeper prosecution for JP Morgan. Already, 12 people have been charged in the precious metals market-rigging conspiracy.
"We’re going to follow the facts wherever they lead, whether it’s across desks here or at any other bank or upwards into the financial institution,” Benczkowski said.
It's unclear what the DoJ is planning, but they're clearly keeping their options open.
Circling back to the indictment, both Smith and Nowak were put on leave over the summer as the DoJ's investigation neared its conclusion.
A third trader named in the indictment, Christopher Jordan, traded precious metals at JPM until he left in December 2009. He later traded precious metals at two other banks, Credit Suisse and First New York.
In a press release accompanying the indictment, Assistant Attorney General accused all three men of scheming to manipulate the precious metals market while potentially harming their bank's clients.
"The defendants and others allegedly engaged in a massive, multiyear scheme to manipulate the market for precious metals futures contracts and defraud market participants," said Assistant Attorney General Brian A. Benczkowski. "These charges should leave no doubt that the Department is committed to prosecuting those who undermine the investing public’s trust in the integrity of our commodities markets."
William Sweeney, the Assistant Director in Charge of the FBI's New York Field Office, added that this manipulation likely impacted "correlated markets and the clients of the bank they represented." 
"Smith, Nowak, Jordan, and their co-conspirators allegedly engaged in a complex scheme to trade precious metals in a way that negatively affected the natural balance of supply-and-demand," said FBI Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office. "Not only did their alleged behavior affect the markets for precious metals, but also correlated markets and the clients of the bank they represented. For as long as we continue to see this type of illegal activity in the marketplace, we’ll remain dedicated to investigating and bringing to justice those who perpetrate these crimes."
According to Bloomberg, three other banks - Deutsche Bank, HSBC and UBS - agreed to pay $50 million (in total) to settle civil claims by the CFTC. Two former JPM employees who pleaded guilty and contributed evidence against their former colleagues that was used in the indictment.
"While at JPMorgan I was instructed by supervisors and more senior traders to trade in a certain fashion, namely to place orders that I intended to cancel before execution," said one former trader John Edmonds during an October 2018 hearing after pleading guilty to commodities fraud and conspiracy, BBG reports.
The behavior dates back more than 10 years to 2009, according to chat logs that were shown in the indictment. The conversations exposed in the chat logs show just how blatant the manipulation was, and how little the traders did to conceal it.
One of the traders who participated in the chat shown above was Christian Trunz, who traded precious metals at Bearn Stearns before joining JP Morgan after the crisis. He told a federal judge last month that this type of behavior was openly encouraged on JPM's trading desks for roughly a decade, and that other traders taught him how to do it. He pleaded guilty to federal fraud charges on Aug. 20, BBG reports.
Another trader said during a plea hearing that he was instructed to bid up the price of futures contracts by placing, then cancelling, bid orders (the literal definition of spoofing) that he never intended to fill.
"I was instructed that if a client wished to sell futures I should simultaneously place both bids and offers with the intent of canceling the bids prior to execution," Edmonds said during his plea hearing.
Edmonds said the purpose was to falsely transmit liquidity and price information in order to deceive other market participants about the supply and demand so they would trade against the orders that JPMorgan wanted to execute.
"We created market activity which artificially drove the sale price up and induced other market participants to purchase at an inflated price," he said. Edmonds entered into a cooperation agreement with the CFTC in July.
Since the crisis, regulators around the world have cracked down on manipulation in rates, forex and government bond markets, so it's not exactly a surprise that this type of behavior was also happening in precious metals. But the brazenness with which traders engaged in such manipulation suggests that they didn't know what they were doing was illegal or wrong, which, in at least some cases, is probably true.
The aggressiveness of this manipulation probe is notable given that the government has lost the last two manipulation cases in court. The DoJ is trying to show that it is “undeterred and are becoming more, not less, aggressive” in cracking down on market manipulation."
Read the full indictment below:

Posted: September 16, 2019, 8:09 pm
From the Wall Street Journal, 9/15/2019:

Spencer Jakab
Saturday’s attack on a critical Saudi oil facility will almost certainly rock the world energy market in the short term, but it also carries disturbing long-term implications.
Ever since the dual 1970s oil crises, energy security officials have fretted about a deliberate strike on one of the critical choke points of energy production and transport. Sea lanes such as the Strait of Hormuz usually feature in such speculation. The facility in question at Abqaiq is perhaps more critical and vulnerable. The Wall Street Journal reported that 5.7 million barrels a day of output, or some 5% of world supply, had been taken offline as a result.
To illustrate the importance of Abqaiq in the oil market’s consciousness, an unsuccessful terrorist attack in 2006 using explosive-laden vehicles sent oil prices more than $2.00 a barrel higher. Saudi Arabia is known to spend billions of dollars annually protecting ports, pipelines and processing facilities, and it is the only major oil producer to maintain some spare output. Yet the nature of the attack, which Iranian-supported Houthi fighters from Yemen claimed was the result of a drone attack by their forces, shows that protecting such facilities may be far more difficult today. U.S. officials blamed Iran and U.S. and Saudi officials were investigating the possibility that another Iranian-backed group carried out all or part of the attack using cruise missiles launched from Iraq. Iranian officials on Sunday denied responsibility for the attacks.
There are countries that even today see their output ebb and flow as a result of militant activity, most notably Nigeria and Libya. Others, such as Venezuela, are in chronic decline due to political turmoil. Such news affects the oil price at the margin but is hardly shocking.
Deliberate attacks by actual military forces have been far rarer, with the exception of the 1980s “Tanker War” involving Iraq, Iran and the vessels of other regional producers such as Kuwait. When Saddam Hussein’s Iraqi forces invaded Kuwait in 1990, removing its production from the market and putting Saudi Arabia’s massive crude output under threat, prices more than doubled over two months.
Yet Saturday’s attack could be more significant than that. Technology from drones to cyberattacks are available to groups like the Houthis, possibly with support from Saudi Arabia’s regional rival Iran. That major energy producer, facing sanctions but still shipping some oil, has both a political and financial incentive to weaken Saudi Arabia. The fact that the actions ostensibly were taken by a nonstate actor, though, limits the response that the U.S. or Saudi Arabia can take. Attempting to further punish Iran is a double-edged sword, given that pinching its main source of revenue, also oil, would further inflame prices.
While the redundancies in Saudi oil infrastructure mean that output may be restored as soon as Monday, the attack could build in a premium to oil prices that has long been absent due to complacency. Indeed, traders may now need to factor in new risks that threaten to take not hundreds of thousands but millions of barrels off the market at a time. U.S. shale production may have upended the world energy market with nimble output, but the market’s reaction time is several months, not days or weeks, and nowhere near enough to replace several million barrels.
After the smoke clears and markets calm down, the technological sophistication and audacity of Saturday’s attack will linger over the energy market.
Stay ahead of markets, get strategies that work in any market.

Aleph Strategies - Alpha Z Advisors

Posted: September 15, 2019, 4:22 pm
Edward Snowden has finally laid it all out - documenting his memoires in a new 432-page book, Permanent Record, which will be published worldwide on Tuesday, September 17. 
Meeting with both The Guardian and Spiegel Online in Moscow as part of its promotion, the infamous whistleblower spent nearly five hours with the two media outlets - offering a taste of what's in the book, details on his background, and his thoughts on artificial intelligence, facial recognition, and other intelligence gathering tools coming to a dystopia near you. 
While The Guardian interview is 'okay,' scroll down for the far more interesting Spiegel interview, where Snowden goes way deeper into his cloak-and-dagger life, including thoughts on getting suicided. 
First, The Guardian:
Snowden describes in detail for the first time his background, and what led him to leak details of the secret programmes being run by the US National Security Agency (NSA) and the UK’s secret communication headquarters, GCHQ.
He describes the 18 years since the September 11 attacks as “a litany of American destruction by way of American self-destruction, with the promulgation of secret policies, secret laws, secret courts and secret wars”.
Snowden also said: “The greatest danger still lies ahead, with the refinement of artificial intelligence capabilities, such as facial and pattern recognition.
An AI-equipped surveillance camera would be not a mere recording device, but could be made into something closer to an automated police officer.”  -The Guardian

Other notables from the Guardian interview: 
  • Snowden secretly married his partner, Lindsay Mills, two years ago in a Russian courthouse. They met when he was 22 (14 years ago) on the internet site "Hot or Not," where he rated her a 10 out of 10 and she rated him a (generous) eight. 
  • He freely moves around Moscow, riding the metro, visiting art galleries or the ballet, and meeting with friends in cafes and restaurants.
  • The 36-year-old lives in a two-bedroom flat on the outskirts of Moscow, and derives most of his income (until now) from speaking fees - mainly to students, civil rights activists and others abroad via video chat.
  • Snowden is an "indoor cat by choice," who is "happiest sitting at his computer late into the night, communicating with campaigners and supporters."
  • At a training school for spies, Snowden was nicknamed "the Count" after the Sesame Street character. 
The Der Spiegel interview, meanwhile, is way more interesting... For example: 
"If I Happen to Fall out of a Window, You Can Be Sure I Was Pushed."
Meeting Edward Snwoden is pretty much exactly how children imagine the grand game of espionage is played.
But then, on Monday, there he was, standing in our room on the first floor of the Hotel Metropol, as pale and boyish-looking as the was when the world first saw him in June 2013. For the last six years, he has been living in Russian exile. The U.S. has considered him to be an enemy of the state, right up there with Julian Assange, ever since he revealed, with the help of journalists, the full scope of the surveillance system operated by the National Security Agency (NSA). For quite some time, though, he remained silent about how he smuggled the secrets out of the country and what his personal motivations were. -Spiegel Online
Select excerpts via Der Spiegel (emphasis ours): 
DER SPIEGEL: Mr. Snowden, you always said: "I am not the story." But now you've written 432 pages about yourself. Why?
Edward Snowden: Because I think it's more important than ever to explain systems of mass surveillance and mass manipulation to the public. And I can't explain how these systems came to be without explaining my role in helping to build them.
DER SPIEGEL: Wasn't it just as important four or even six years ago?
Snowden: Four years ago, Barack Obama was president. Four years ago, Boris Johnson wasn't around and the AfD (Germany's right-wing populist party Alternative for Germany) was still kind of a joke. But now in 2019, no one is laughing. When you look around the world, when you look at the rising factionalization of society, when you see this new wave of authoritarianism sweeping over many countries: Everywhere political classes and commercial classes are realizing they can use technology to influence the world on a new scale that was not previously available. We are seeing our systems coming under attack.
DER SPIEGEL: What systems?
Snowden: The political system, the legal system, the social system. And we have the proclivity to think that if we get rid of the people we don't like, the problem is solved. We go: "Oh, it's Donald Trump. Oh, it's Boris Johnson. Oh, it's the Russians" But Donald Trump is not the problem. Donald Trump is the product of the problem.
DER SPIEGEL: While writing, did you discover any truths about yourself that you didn't like?
Snowden: The most unflattering thing is to realize just how naïve and credulous I was and how that could make me into a tool of systems that would use my skills for an act of global harm. The class of which I am a part of, the global technological community, was for the longest time apolitical. We have this history of thinking: "We're going to make the world better."
DER SPIEGEL: Was that your motivation when you entered the world of espionage?
Snowden: Entering the world of espionage sounds so grand. I just saw an enormous landscape of opportunities because the government in its post-9/11 spending blitz was desperate to hire anybody who had high-level technical skills and a clearance. And I happened to have both. It was weird to be just a kid and be brought into CIA headquarters, put in charge of the entire Washington metropolitan area's network.
DER SPIEGEL: Was it not also fascinating to be able to invade pretty much everybody's life via state-sponsored hacking?
Snowden: You have to remember, in the beginning I didn't even know mass surveillance was a thing because I worked for the CIA, which is a human intelligence organization. But when I was sent back to NSA headquarters and my very last position to directly work with a tool of mass surveillance, there was a guy who was supposed to be teaching me. And sometimes he would spin around in his chair, showing me nudes of whatever target's wife he's looking at. And he's like: "Bonus!"
DER SPIEGEL: You became seriously ill and fell into depression. Have you ever had suicidal thoughts?
Snowden: No! This is important for the record. I am not now, nor have I ever been suicidal. I have a philosophical objection to the idea of suicide, and if I happen to fall out of a window, you can be sure I was pushed.
DER SPIEGEL: You write that you sometimes smuggled SD memory cards inside a Rubik's cube.
Snowden: The most important part of the Rubik's cube was actually not as a concealment device, but a distraction device. I had to get things out of that building many times. I really gave Rubik's cubes to everyone in my office as gifts and guards saw me coming and going with this Rubik's cube all the time. So I was the Rubik's cube guy. And when I came out of the tunnel with my contraband and saw one of the bored guards, I sometimes tossed the cube to him. He's like, "Oh, man, I had one of these things when I was a kid, but you know, I could never solve it. So I just pulled the stickers off." That was exactly what I had done -- but for different reasons.
DER SPIEGEL: You even put the SD cards into your mouth.
Snowden: When you're doing this for the first time, you're just going down the hallway and trying not to shake. And then, as you do it more times, you realize that it works. You realize that a metal detector won't detect an SD card because it has less metal in it than the brackets on your jeans.
DER SPIEGEL: You describe your arrival in Moscow as a walk in the park. You say you refused to cooperate with the Russian intelligence agency FSB and they let you go. That sounds implausible to us.
Snowden: I think what explains the fact that the Russian government didn't hang me upside down my ankles and beat me with a shock prod until secrets came out was because everyone in the world was paying attention to it. And they didn't know what to do. They just didn't know how to handle it. I think their answer was: "Let's wait and see."
DER SPIEGEL: Do you have Russian friends?
Snowden: I try to keep a distance between myself and Russian society, and this is completely intentional. I live my life with basically the English-speaking community. I'm the president of the Freedom of the Press Foundation. And, you know, I'm an indoor cat. It doesn't matter where I am -- Moscow, Berlin, New York -- as long as I have a screen to look into.
Read the rest of Der Spiegel's interview with Edward Snowden here.
Meanwhile, The Guardian provides an interesting 'Snowden Timeline': 

Snowden's timeline

21 June 1983 Edward Joseph Snowden is born in Elizabeth City, North Carolina, US.
2006-2013 Initially at the CIA, and then as a contractor for first Dell and then Booz Allen Hamilton, Snowden spends years working in cybersecurity on projects for the US National Security Agency (NSA).
20 May 2013 Edward Snowden arrives in Hong Kong, where a few days later he meets with Guardian journalists, and shares with them a cache of top secret documents he has been downloading and storing for some time.
5 June 2013 The Guardian begins reporting the Snowden leaks, with revelations about the NSA storing the phone records of millions of Americans, and the agency’s claim its Prism programme had “direct access” to data held by Google, Facebook, Apple and other US internet giants.
7 June 2013 The US president, Barack Obama, is forced to defend the programmes, insisting that they are adequately overseen by the courts and Congress.
9 June 2013 Snowden goes public as the source of the leaks in a video interview.
16 June 2013 The revelations expand to include the UK, with news that GCHQ intercepted foreign politicians’ communications during the 2009 G20 summit in London, and that the British spy agency has also tapped the fibre-optic cables carrying much of the internet’s traffic.
21 June 2013 The US files espionage charges against Snowden and requests Hong Kong detain him for extradition.
23 June 2013 Snowden leaves Hong Kong for Moscow. Hong Kong claims that the US got Snowden’s middle name wrong in documents submitted requesting his arrest meaning they were powerless to prevent his departure.
1 July 2013 Russia reveals that Snowden has applied for asylum. He also expresses an interest in claiming asylum in several South American nations. Eventually Ecuador, Nicaragua, Bolivia, and Venezuela offer permanent asylum.
3 July 2013 While en route from Moscow, Bolivia’s president, Evo Morales, is forced to land in Vienna after European countries refuse his plane airspace, suspecting that Snowden was on board. It is held and searched for 12 hours.
1 August 2013 After living in an airport for a month, Snowden is granted asylum in Russia.
21 August 2013 The Guardian reveals that the UK government ordered it to destroy the computer equipment used for the Snowden documents.
December 2013 Snowden is a runner-up to Pope Francis as Time’s Person of the Year, and gives Channel 4’s “Alternative Christmas Message”.
May 2015 The NSA stops the bulk collection of US phone calling records that had been revealed by Snowden.
December 2016 Oliver Stone releases the movie Snowden featuring Joseph Gordon-Levitt, Melissa Leo, Tom Wilkinson, Zachary Quinto and a cameo by former Guardian editor Alan Rusbridger.
January 2017 Snowden’s leave to remain in Russia is extended for three more years.
June 2018 Snowden says he has no regrets about his revelations, saying: “The government and corporate sector preyed on our ignorance. But now we know. People are aware now. People are still powerless to stop it but we are trying.”
March 2019 Vanessa Rodel, who sheltered Snowden in Hong Kong, is granted asylum in Canada.
September 2019 Snowden remains living in an undisclosed location in Moscow as he prepares to publish his memoirs.
Posted: September 14, 2019, 9:46 pm

Private Equity and Venture Capital Cybersecurity startups in last 2 years analysis

Pre IPO Swap New York, NY 9/12/2019 -- Pre IPO Swap is launching a Series A for Blackwatch Digital so we are researching the Cybersecurity space in order to see what the trends have been.  Using Crunchbase data, we did an export using filters and found 532 firms were founded since 2017, with a total of $752 Million USD in funding.  Users should note that not all firms disclose funds raised, and this doesn't include established firms.  The total recent figure, according to CB Insights, is much higher.
Cybersecurity deals reached a new peak in 2018, with $7B+ invested across 617 deals. So far in 2019 investors have participated in 316 deals worth $6B+.
Are we at the tail end of a downtrend, or is this a temporary 'blip' on the radar?  2019 will be a decisive year, but our argument is that it depends how you count it.  For example, Blackwatch Digital offers a secured and insured custody service for digital assets.  What type of firm is it, Cryptocurrency, Cryptography, Cybersecurity, or I.T. ?  It's clearly not "Cryptocurrency" as they are not doing a token raise and actually their solution is a security solution.  They are a Cybersecurity firm, but their only customers would be firms that have digital assets.  Pre IPO Swap has listed only one Cryptocurrency firm in our system, Circle.
Cybersecurity is a growing market because of the growing problems.  After the 2016 election 'hack' of the DNC (Which we all know was a 'leak' not a hack) it gave security issues global publicity.  Also, cities like Atlanta and many others have been victims of Ransomware, which in many cases devastated their networks.
(Reuters) - The Atlanta cyber attack has had a more serious impact on the city’s ability to deliver basic services than previously understood, a city official said at a public meeting on Wednesday, as she proposed an additional $9.5 million to help pay for recovery costs.
Of course it's easy for Cities and other local governments to simply write checks to stop the problem (money always make the problems worse) but in the world of Crypto you have to be more safe.  That's because if you get hacked, you can bet the Crypto is gone.  There is no bank to replenish your Bitcoin.  Hackers stole $4.26 Billion worth of Crypto just in the first half of 2019:
According to the company's latest Q2 2019 Cryptocurrency Anti-Money Laundering (AML) report, which provides an overview of the major cryptocurrency thefts, scams, and fraud worldwide, criminals and fraudsters netted approximately $4.26 billion for the first six months of the year.  To put this in perspective, cryptocurrency thefts reached $1.2 billion in the first three months of 2019 and $1.7 billion for the entire 2018.
The hired I.T. experts tasked at protecting these networks never read Kevin Mitnick's "The Art of Deception."  Infiltrating a corporate network, or being the victim of Ransomware is typically a limited one time thing.  Once a hacker is known to be inside a network, safety systems close and emergency policies kick in.  After the threat is scrubbed, new countermeasures are likely put in place to prevent the accident from happening again.  But with Crypto, the loss can be huge.
Here's the list of the top 50 Cybersecurity firms founded since 2017, for the full list including funding amounts, investors, and more - contact us.

Posted: September 13, 2019, 3:12 am
The US China trade war is many things that covers many industries but one thing you don’t think of when you think trade war is Blockchain.  So perhaps Blockchain is a good place to start a fruitful discussion to understand cultural differences and how to solve them.  Companies like BiKi are maintaining a positive dialogue by helping US companies list their tokens on a Chinese crypto exchange (although it’s based in Singapore). 

Let’s get a bit of history here.  First, the US has been a close friend to China for a very long time.  But during World War 2, the US saved China from obliteration by an aggressive Imperial Japan.  China was grateful and so was open to a US President Nixon who would visit 20 years later for a historic economic deal that created the Forex market and the China that we know today.  Before the US-China deal China was primarily an agricultural society.  Although Nixon isn’t credited for opening up China, mostly due to a poor understanding of his internal policies and his deteriorating popularity, Nixon’s meeting with Mao was the first event of its kind that finally led to economic reforms that enabled China to grow into what it is today:

Beginning in the late 1970s, China reversed the Maoist economic development strategy and, by the early 1980s, had committed itself to a policy of being more open to the outside world and widening foreign economic relations and trade. The opening up policy led to the reorganization and decentralization of foreign trade institutions, the adoption of a legal framework to facilitate foreign economic relations and trade, direct foreign investment, the creation of special economic zones, the rapid expansion of foreign trade, the importation of foreign technology and management methods, involvement in international financial markets, and participation in international foreign economic organizations. These changes not only benefited the Chinese economy but also integrated China into the world economy. In 1979 Chinese trade totaled US$27.7 billion - 6 percent of China's GNP but only 0.7 percent of total world trade. In 1985 Chinese foreign trade rose to US$70.8 billion, representing 20 percent of China's GNP and 2 percent of total world trade and putting China sixteenth in world trade rankings.

Today, almost every American company has a business, factory, or other operation in China.  Many of them such as Wal-Mart, Apple computer, and others rely heavily on Chinese manufacturing.  China needed a customer to grow their economy: USA.  USA needed cheap labor, and a place where factory bosses would look the other way.  Growing workers rights in USA were making manufacturing expensive.  Offshoring became the go-to solution and China was the engine.  So they weren’t really ‘stealing’ they were ‘learning’ – so it’s a little unfair when Trump wants to enforce Intellectual Property (IP) law when it was the lack of law that forced US companies to go there in the first place.  This is what’s not being discussed in the larger picture of the trade war.

In 2018, Asia was one of the leading regions in terms of growth of blockchain jobs, cryptocurrency usage, innovation, and general openness. Despite some early woes with China banning ICOs, China still produces nearly 70% of crypto mining activity. Headquartered in Singapore, is a global cryptocurrency exchange ranked Top 20 on CoinMarketCap. provides a digital assets platform for trading more than 150 cryptocurrencies and 220 trading pairs. Since its official opening in August 2018, is considered one of the fastest-growing cryptocurrency exchanges in the world with an accumulated 1.5 million registered users, 130,000 daily active users, over 2000 community partners and 200,000 community members in under a year. BiKi’s competitive advantages include helping projects with marketing, influencers, brand awareness, and community growth in the Chinese markets and abroad. With a global approach, BiKi also helps Chinese companies go global and international companies penetrate Chinese markets.

This type of two way collaboration is a good step to solidify the relationship between China and the world.  Many people see this as a US-China issue but it’s actually a China vs. the world issue.  China has internal domestic problems such as fraud, a bad reputation, demographic problems, and a lack of willingness to conform to global norms.  Chinese still cannot send money freely out of China.  There are 2 million internet police in China:

China has around two million people policing public opinion online, according to a state media report that sheds light on the country's secretive internet surveillance operations.  Dubbed "public opinion analysts," they work for the Chinese Communist Party's propaganda department, major Chinese news websites and commercial corporations, according to The Beijing News.

China is different than the west.  But like the Silk Road, there is always a common economic tie that binds.  China is part of planet Earth as we all are, so we need to look at projects like BiKi that are creating synergies, not tensions, if we are to stop the trade war once and for all.

Posted: September 12, 2019, 1:43 pm
From Zero Hedge 9/10/2019:

One year after announcing his intention to step down as chairman of the Chinese e-commerce giant Alibaba, founder Jack Ma finally stepped down on Tuesday, clearing the way for his anointed successor, CEO Daniel Zhang, to take his place. The FT heralded Ma's retirement - which took place on Alibaba's 20th birthday - as the first transition at the top of a Chinese tech behemoth, making it a major milestone for the Chinese tech industry.
Ma, 55, is China's richest man. He famously built Alibaba up from a company founded in his shared apartment into a behemoth worth $462 billion.
A former schoolteacher, Ma is also recognized for his embrace of Chinese nationalism. Last year, he revealed that he is a member of the Chinese Communist Party, and his regular appearances at Davos have helped to cement his status as one of China's preeminent business leaders.
But not everybody is so rosy about Ma's retirement.
In a tweet sent earlier this morning, hedge fund manager Kyle Bass, a prominent China critic, speculated that Ma isn't actually retiring - rather, his carefully choreographed decision to step down is the result of being "forcibly removed from his position, stripped of his shareholdings (transferred to "five unnamed individuals" with the same address), and will likely be jailed or 'disappeared' within the next year."
Clockwork-Jack Ma was forcibly removed from his position, stripped of his shareholdings (transferred to”five unnamed individuals”with the same address),and will likely be jailed or”disappeared”within the next year.This is how xi and wang treat any chinese that become too powerful 
453 people are talking about this
It's unclear where Bass got this information. But the hedge fund manager insisted that "this is how Xi and wang [Qishan, vice president of the CCP] treat any Chinese that become too powerful."
Jack Ma
If what Bass says is true, it could create serious problems for Chinese markets, as the international investors that Beijing is hoping to court (most recently by raising the limits on foreign investment in its stock and bond markets) would undoubtedly interpret it as a sign of President Xi's hostility to China's business community.
Moreover, it would further bolster the perception that the world's second-largest economy lacks the rule of law.
Thanks to his regular appearances at Davos and myriad other appearances in Western media (Ma recently sparred with Elon Musk about the future of AI), Ma's disappearance would be impossible to ignore. And because of his still-substantial holdings of Alibaba stock, Ma is expected to continue guiding the company from behind the scenes, something that will help bolster investor confidence in a company that, when it went public in New York a few years back, marked one of the largest IPOs of all time as the company raised roughly $25 billion.
Courtesy of Statista
So far, Alibaba investors have been unfazed by Ma's decision to retire. The company's shares have gained 9.4% this year. The succession has been tediously planned, and Alibaba and Ma often talk about the company's deep bench of talent. Ma is leaving his successor some lofty targets: By 2036, Ma hopes the Alibaba "economy" can create 100 million jobs, support 10 million profitable businesses and serve 2 billion customers around the world - up from around 654 million today. The company is also targeting $1 trillion in gross merchandise value (the aggregate value of all goods sold on its platform) this year, up from $853 billion last year.
In his public remarks, Ma has remained committed to the Communist Party line, touting Beijing's resilience and unwillingness to cave to the US, even if the trade war drags on for decades.
But Beijing has a unenviable track record of exiling or jailing billionaires, often over murky charges of corruption or tax evasion.

If Bass's accusations prove correct, Ma would be the most high-profile figure to date to meet this fate. For Alibaba shareholders' sake, let's hope he is wrong. But given Xi's totalitarian bent, it would hardly be a surprise if Ma met a similar fate.
Posted: September 10, 2019, 5:17 pm
When you think of VR you think gaming, you think simulators at family fun parks – certainly you don’t think medicine, military, or addiction.  That’s all changing.  VR started out as a toy and has moved to being a very real technology that has applications as far ranging as Rehabilitation or “Rehab.”  It may sound crazy, but it actually works!  A company has created an application for Virtual Rehab, the hot new application in VR.  It’s real, and they call it Psychological Rehabilitation For Vulnerable Populations.  The company is called aptly Virtual Rehab.

Virtual Rehab allows you to confront and to overcome your fears while maintaining your complete privacy. The solution is in your hands. #MentalHealthMatters

That’s how simple it is.  What’s really the problem this solves?  The answer is fairly long so we’ll just summarize here.  It solves a number of problems including but not limited to mental disease, depression, alcoholism, Autism (ASD), drug addiction, and more.  And this isn’t any laughing matter, many of these unresolved cases end up in death or worse.  What can be worse than death?  There are many examples, one being mass shootings – an untreated psychopath goes into a WalMart and shoots 20 or 30 people before killing himself.  We don’t have a solid and stable mental health care system in America, so we are relying on innovative companies like Virtual Rehab to come up with solutions.

In the whole world, $136 Billion is spent on Prevention & Treatment, all inclusive of all related disorders.  That’s a huge amount.  Just in the US alone, 13% of Americans take some form of anti-depressants, according to

As TIME reported in a recent cover story, clinical depression affects about 16 million people in the U.S. and is estimated to cost the U.S. about $210 billion a year in productivity loss and health care needs. Global revenue for antidepressants is projected to grow to nearly $17 billion by 2020.

The problem is out of control, and few clinical solutions present a real practical solution.  We’re not here to say that VR is the alternative that’s going to wipe out depression.  However, traditional methods clearly do not work.  This is a new type of treatment, and a new type of therapy.  It isn’t going to harm anyone to try it.  If it takes off, we’ve just solved a major health crisis. 
Think about this.  Treatment of any such ailment whether depression or addiction always involves monitoring by a case worker, healthcare professional, or social worker.  Do you really think someone who is addicted wants to be honest about their addiction, to the point that they admit that they can’t shake the addiction?  The reality is that treatment is not easy and involves a bit of hand-holding, there is no ‘magic pill’ to make someone kick a debilitating habit like Alcohol or pain killers.

But how does it work?  Here’s a snapshot from the provided materials:

The program is presenting users with real-life situations (in a virtual world) where they need to make difficult decisions or challenging choices about certain aspects of their lives or their surroundings.  The Virtual Rehab solution is used as a preventative tool from relapsing back into addiction (for example). Using real-life virtual simulation, users are subjected heads-on with their cravings. Leveraging cognitive behavior and exposure therapy, users are presented with stimuli (i.e. cues or triggers), such as an alcohol bottle or a drug syringe or similar stimuli, where a physician, a psychologist, or a therapist, can monitor the patients’ behavior and decision-making accordingly.  Different from one-on-one or group therapy sessions, where a patient may not be comfortable sharing all his/her information since they are afraid of repercussions, the Virtual Rehab solution allows and forces a patient into making certain decisions and confronting their cravings accordingly. Therefore, what may not be realized within a traditional therapy session, can be observed and monitored as part of the virtual simulation.  Using Virtual Rehab’s patented artificial intelligence solution, throughout the virtual simulation, and through the use of certain APIs, the solution gathers data relevant to the decisions being made by the user along with their actions and their reactions to the scenarios they are subjected to. In addition, the solution collects biometrics (heart rate, blood pressure, and biodermal activity) as well as eye-tracking activity, which are leveraged to detect the actual impact that the virtual simulation has on the patient.

So here we can see the real value of the ‘virtual’ approach.  Doctors and being in a hospital environment can be intimidating to begin with.  Patients can react differently in an institutionalized setting vs. the comfort of your own home.  Most patients who suffer from addiction, depression, and related ailments do want to get better, they just don’t know how.  So even if this only helps a marginal number of patients, the impact can be groundbreaking.  And the best part, this is all built on Blockchain technology using artificial intelligence. 

Who knows, perhaps VR treatments can change behavior modification in many unknown ways.  There is something in the US called “Troubled Teen Industry” which at the end of the day is a fraud, perpetrated on desperate parents to help unruly teens.  One NYTimes article notes how the ‘schools’ are run like bad prisons:

Several former students at schools operated by Mr. Robinson, a former amateur boxer, said in interviews — some dating back to the 1990s — that he had physically harmed them while disciplining them, and that they remained psychologically damaged.

No doubt that VR is going to have many applications, but how that impacts the market of “Vulnerable Populations” as they call it, can be profound.  That’s because vulnerable populations are open to be exploited, as in the above case with “Troubled Teens”  - desperate parents will do anything to ‘fix’ their kids even paying $40,000 a year to send them to an abuse camp that only has a few ‘deaths’ on the record, but overall good reviews.

Like any technology, the combination of Virtual Reality (VR) and Artificial Intelligence (AI) combined with Blockchain can be a real game changer, we just don’t know which industry will be disrupted most.

Posted: September 9, 2019, 2:24 pm
Crypto seems to look more and more like the banking sector, as more projects launch and mature that resemble bank activities.  Recently we have written about security service Blackwatch Digital and their secured and insured custody service.  Now we are researching a unique stable coin and lending platform known as MyConstant.

What we like about this is that it truly resembles a platform, the way Crypto was intended to be designed.  In the platform lenders can choose their own terms, no credit check, and no nonsense – and find borrowers.  It’s all backed by a stable coin like the US Dollar so there’s no volatility worries in loan calculation.  This is really a micro-finance product they are just using Crypto as the underlying technology.  Frankly, programming a system like this using the US banking system, would be expensive, cumbersome, time consuming, and who knows what it might look like after all the regulatory approvals.

We should note that Constant began as a stable coin and evolved into the lending platform it is now – a healthy and normal evolution.  Borrowers need money and lenders want return on their money.  The platform charges a reasonable 1% fee on all transactions.

Pre IPO companies like Circle are snapping up startups, according to Crunchbase Unicorn Circle has already purchased SeedInvest, Poloniex, and Trigger Finance.  Are companies like MyConstant next?  As the platform proves itself, it may be an easy acquisition target for some of the Crypto ‘big boys’ to integrate into their existing ecosystem.  That’s what companies like Circle are likely waiting on.  Why invest in R&D when you can let the market do that, and then swoop down with boatloads of cash for a quick sale and acquisition? 

That’s the Microsoft strategy, who bought more than 10,000 companies in their lifetime.  It may be the strategy used by many of the larger firms in Crypto, copying the success of Microsoft.  It has always been a big question, why don’t firms engage in more R&D.  Perhaps this is why.

Stablecoins are a new type of cryptocurrency that often have their value pegged to another asset. These coins can be pegged to fiat currencies such as the United States dollar, other cryptocurrencies, precious metals or a combination of the three. Fiat seems to be the most popular option in the marketplace right now, meaning one unit of a stablecoin equals $1. Stablecoins are designed to tackle the inherent volatility seen in cryptocurrency prices. They are normally collateralized, meaning that the total number of stablecoins in circulation is backed by assets held in reserve. Put simply, if there are 500,000 USD-pegged coins in circulation, there should be at least $500,000 sitting in a bank.  With bitcoin suffering abrupt crashes and sudden gains, advocates believe stablecoins help eliminate doubt about conversion rates — making cryptocurrencies more practical for buying goods and services.  Examples of the best-known stablecoins include tether (USDT), trueUSD (TUSD), gemini dollar (GUSD), and USD coin by Circle and Coinbase (USDC). Demand for such coins has been growing. In December, Cointelegraph reported claims that four major stablecoins had clocked up $5 billion in on-chain transactions within just three months — enjoying a 1,032% surge in November compared with two months earlier.

The reasons to use stable coins are clear – and it’s also a logical obvious fit for a lending platform.  There’s no reason to mention that lending is a growth business; lending is the main service of the banking environment in the world.  Only in the US, personal loans equal $138 Billion with a “B” according to CNBC:

Total outstanding U.S. consumer loans hit a record last year, driven by digital-first lending options. Financial technology, or fintech, companies now make up 38 percent of the personal loan market — up from just 5 percent five years ago, according to new data from TransUnion. “The rapid growth in consumer loans sits squarely on the shoulders of fintechs,” says Jason Laky, senior vice president and leader of TransUnion’s consumer lending line of business.

Fintech makes up 38% of that, and Crypto certainly is Fintech.  So what’s next?  It’s a simple move, to start using Crypto for your borrowing needs.  Bitcoin has already been used to purchase real estate.  There are even services that will facilitate Crypto purchases of real assets.  So Crypto lending isn’t so far-fetched after all.  Perhaps, as explained in Splitting Bits in 2017, we are all just one byte away from a Blockchain based financial system.
Posted: August 30, 2019, 6:17 pm

The Crypto market has seen a dichotomy of change; on the surface, we’ve seen a drop in retail popularity and a general loss of hope in the Bitcoins of the world.  But in the background, in parallel, a number of companies are developing institutional grade products that are going to change Crypto forever.  We’ve outlined some of them in other articles here on Zero Hedge.

Our hope is that these projects will create a solid foundation that will foster institutional investment in Crypto.  That’s the world we come from, the world we know – and when it happens it will legitimize Crypto.

CPI Tech, based in Germany, was founded by Marvin Steinberg & Maximilian Schmidt, two successful entrepreneurs with leading roles within the blockchain industry.  The CPI Tech mission is to build the best possible solution for asset holders and companies by tokenizing the asset and to create a new and more advanced way for investors to invest in assets.   Apart from creating highly scalable and rock-solid blockchain software, CPI Tech also specializes in creating extremely lucrative software for their clients to sell on autopilot - without them having to worry about IT, promotion, or marketing. CPI Tech handles all of the process, providing a full solution from A to Z.

What’s revealing about this is that they are targeting the enterprise, not the consumer.  Let’s face it, Bitcoin was a consumer product, and a poor one at that.  With clients like CEOs, Entrepreneurs, Pre IPO founders, and others – we’re seeing a new audience for Crypto which is no longer the tire kickers with $10 to their name.  Bitcoin was cool and it provided the needed exposure to bring a real paradigm shift, but by itself, Bitcoin is not a store of value or an easy transactional currency.  Try paying your employees in Bitcoin and see their reaction (Action Item).

And of course, we’re assuming that many of these new startup coins will have robust security solutions for their Crypto that are insured, such as we have recently written about in articles.  There’s a simple reason that the Fidelity’s and the Schwab’s are not in the market: They are afraid of being hacked.  So if that is now ‘solved’ as it says in the above article, then what are we waiting for?  It’s not going to happen overnight, but it seems to be the beginning of the end of the Crypto-meltdown.  New coins may be more stable and less exciting than Bitcoin, but also more credible and sustainable.
One can make many statements about the Crypto bubble but there’s one we can all agree with – It just wasn’t sustainable.  There were too many fly by night ICO frauds, too many unscrupulous exchanges, too many projects that invested in marketing instead of R&D.  Overall, we learned lessons but from the ashes we are seeing the rise of companies that may last 100 or 1000 years.   Now, even banks are taking a deep look at Crypto:

Just as recently as March 2019, IBM announced 6 banks to issue stablecoins and use the Stellar XLM platform: Announced Monday, six international banks have signed letters of intent to issue stablecoins, or tokens backed by fiat currency, on World Wire, an IBM payment network that uses the Stellar public blockchain. The network promises to let regulated institutions move value across borders – remittances or foreign exchange – more quickly and cheaply than the legacy correspondent banking system.  So far three of the banks have been identified – Philippines-based RCBC, Brazil’s Banco Bradesco, and Bank Busan of South Korea – the rest, which are soon to be named, will offer digital versions of euros and Indonesian rupiah, “pending regulatory approvals and other reviews,” IBM said.

As explained in Splitting Bits, the US Dollar has been used and traded electronically since the 1990s.  So the idea of electronic currency is nothing new.  What’s new is currencies are no longer created exclusively by central banks.  Now many new currencies are being created almost on a daily basis.  Many of them will fail, but the ones that survive the test of the markets, may be the next G8 currencies traded on the Forex market.

That means as banks are getting into Crypto so are all their clients and friends.   Most people don’t know that IBM actually develops and maintains the hardware and software for a great majority of the banking sector.  Their Cryptocurrency, Stellar, is a major player in the Crypto space.  Although Stellar hasn’t received the media attention that Bitcoin has, it is being chosen as the underlying framework for many projects.

CPI Tech is making a plug-n-play solution for the enterprise.  The ramifications for such use are astounding.  Imagine for a moment if Bitcoin had the same momentum but with institutions behind it, not your small retail investors.  It would really be transformative, just like Bitcoin originally promised.  Perhaps one of the flaws of Bitcoin and it’s lack of success were the fact that it didn’t have the ecosystem attached to it.  They didn’t make a development environment, or something similar to how Ethereum has ‘dapps.’

Companies such as Circle can offer more stable coins and Enterprise grade services.  This will attract more investment capital into the companies like Circle offering these products, which will create a positive upward cycle (not a bubble.)  In that case, and only in that case – we will see a real bull run and not a bubble.  Here’s hoping!

Posted: August 27, 2019, 5:18 pm

Back a few years ago before Bitcoin was all the talk, as if Bitcoin is going to be the new money of the future, or a one world currency.  Obviously that hasn’t happened but the Crypto market is growing by leaps and bounds.  We’re going to take a look at a few exciting projects and let readers decide for themselves.  But at first glance, projects are taking shape they are just taking longer than usual.  We’re not going to get into a discussion about tZero, the first regulated securities token, which is still delayed.  But we are going to look at what some on the fringe have been doing, and their tokens and products are just launching.  We’re going to look at how these solutions solve major problems. 

First, the problem of Crypto not being ‘backed’ by anything.  A token is being launched called Kinesis (KVT) that is backed 1:1 by gold and silver.  By itself that’s not a new idea or so novel – but how they are doing it is looking that this launch can be successful.  The founder has explained more about this in a Forbes article:

Kinesis Money is fully operated by the Allocated Bullion Exchange (ABX), an institutional marketplace set up in 2011 for the trade of physical precious metals, gold and silver, being two of the most stable and definable stores of value, across seven global locations.  For the benefit of Kinesis Money, ABX provides the comprehensive infrastructure with the advent of blockchain technology - and the introduction of cryptocurrencies. This gives it a firm advantage over other cryptos in the gold space which simply do not have this backing.

So this isn’t just a couple of kids in the garage – this is a serious commodity backed exchange.  What other types of players have entertained the idea of Gold backed currency?  Russia’s Central Bank has even considered a gold backed Crypto Currency:

“As for mutual settlements, we will consider, of course, [the] proposal on … a gold-backed cryptocurrency.

As most people know, the fundamental difference between Crypto currency and fiat currency is that fiat currency is backed by banks, which are backed by central banks, so it’s notable to watch what central banks are doing in the crypto market.  And what’s ironic about a Gold backed currency – Gold is used as a reserve by some central banks as a physical commodity that always has value.  This has become unpopular in the last 10 years, but China and Russia are hoarding Gold.  In particular, Russia

There’s even a long list of Cryptocurrencies that are backed by gold in some form.  But also the fact that there are so many novel approaches to the same concept solidifies the idea. 

“There’s no monopoly on Great Ideas” Randall S.

Of course, this is all digital so the big risk is going to be getting hacked.  If your ‘digital’ gold get’s hacked it’s the equivalent of your Gold storage being looted.  That’s where Dark Vault comes into play, a new custodial and security service launched by Crypto startup Blackwatch.  Just like in the example with Gold tokens, there are secure custodial solutions out there, but this one seems to be unique.  If it’s as good as it looks, this can create a situation where once again fiat investment dollars will be flowing into Crypto. 

We interviewed a former employee of tZero who wishes to remain anonymous, and this is what he said:

“There’s an unknown number but in the billions of dollars waiting to invest in Crypto if someone can solve the security issue.  Everyone is afraid of being hacked.”

So as institutional investors feel safer, we believe they will start investing in coins like Kinesis, just like investors hold cash.  When you are holding cash you are actually in a Forex trade, that’s denominated in US Dollars (if you are in the US).  Stablecoins are the future, not wild volatile tokens like Bitcoin.   What Bitcoin did was attract attention of the world and get the Crypto market started, which was great – Bitcoin was the prime mover.  But you can’t pay your salaries in Bitcoin nor is it really a good ‘investment’ as due to the mining feature it requires more and more US Dollars to flood into it in order to support the price.

Actually banks and central banks have been thinking of issuing their own coins for a long time.  Just as recently as March 2019, IBM announced 6 banks to issue stablecoins and use the Stellar XLM platform (just as Kinesis):

Announced Monday, six international banks have signed letters of intent to issue stablecoins, or tokens backed by fiat currency, on World Wire, an IBM payment network that uses the Stellar public blockchain. The network promises to let regulated institutions move value across borders – remittances or foreign exchange – more quickly and cheaply than the legacy correspondent banking system.  So far three of the banks have been identified – Philippines-based RCBC, Brazil’s Banco Bradesco, and Bank Busan of South Korea – the rest, which are soon to be named, will offer digital versions of euros and Indonesian rupiah, “pending regulatory approvals and other reviews,” IBM said.

Clearly, Crypto is not just a fad – it’s changing the underlying architecture of the global financial system.  But this is something that’s been happening over a long time frame.  Crypto is a technology, not a form of money.  But that technology was utilized in the ultimate use case to be a form of money in a Crypto currency. 

As explained in Splitting Bits, the US Dollar has been used and traded electronically since the 1990s.  So the idea of electronic currency is nothing new.  What’s new is currencies are no longer created exclusively by central banks.  Now many new currencies are being created almost on a daily basis.  Many of them will fail, but the ones that survive the test of the markets, may be the next G8 currencies traded on the Forex market.

To learn more about money, checkout Splitting Pennies - Understanding Forex
Posted: August 21, 2019, 6:03 pm

We’re all too familiar with the story.  An exchange builds a respectable reputation in a dark and unregulated space, only to get hacked.  But unlike in the traditional banking system, there is no way to get your funds back.  Billions of institutional money is sitting on the Crypto sidelines for this single reason: they are afraid of getting hacked.  Now you must understand that it’s one thing when your own individual account is hacked and you lose your own money; and it’s quite another if it’s client money.  Let’s take Fidelity as an example, because they like Crypto.  Imagine Fidelity has $50 Million equivalent Bitcoin in client funds and it gets hacked.  Fidelity is liable for all the funds meaning it will have to cover the loss with cash.  But it wasn’t insurable, until now.  Digital security company Blackwatch has developed a product Dark Vault which adheres to AML/KYC controls and is ISO 27001 compliant.  But what’s cool about this solution is that not only is it more secure than the current alternatives, it provides real-time access to your Crypto (Competitive products require multi-day ‘withdrawal’ procedures as the solutions are heavy on physical security, not network design).

The strength of the Blackwatch solution is in the architecture.  The problem with most Crypto security solutions is they rely on a single ‘gateway’ so this can also be a single point of failure.  This is the same flaw in traditional network security, whereby a firewall can block 100% of outside hack threats but can’t stop an insider from copying files or accessing computers once inside the firewall (physically).  Studies have shown that the majority of major security breaches come from employees, not from outsiders.  That’s not to say the employees are the hackers themselves, they may be victim to a phishing attack and unwittingly bring Malware to their workplace on a thumb drive, or in case of the CIA contractor Booz Allen Hamilton, left “Sensitive government passwords exposed online” –

Earlier this month, a Booz Allen Hamilton employee accidentally left “sensitive government passwords exposed online,” according to The Washington Post.The worst part is that he didn’t even realize it. And neither did Booz Allen Hamilton.  It wasn’t until Chris Vickery, a cyber analyst at Upguard, accidentally stumbled upon them and wrote about it.  Booz Allen Hamilton isn’t some fly-by-night operation. They’re a big-time government contractor. And according the Post, it’s just the latest in a long line of recent “high-profile cases” where “top secret data was mishandled.”

Cyber security firms such as Black Watch Digital are addressing this issue with architecture described as ‘multi-secure’ which means multi-signature, multi-technology, and multiple levels of encryption are used throughout the platform.  Note though that this is an Enterprise solution, meaning it would be your exchange or Crypto Custodian that would implement the solution, not the individual user. 

When there are such obvious solutions like Dark Vault, one asks the question why someone didn’t do this before.  The answer is, you have to ask all the others.  But what’s certain is that Dark Vault is going to cause a major paradigm shift in Crypto.

Famous hacks

Mt. Gox is the most famous and technically the largest hack, although Bitcoin was worth much less at the time of the hack.  As early as January 2018, Coincheck was hacked for $530 Million USD.

On January 26, hackers compromised user accounts of Coincheck, a Japan-based cryptocurrency exchange. A whopping 560 million NEM tokens worth around $530 million at that time was stolen, making Coincheck’s hack one of the biggest the industry has ever seen, even surpassing the hack of Mt. Gox!  Upon further investigation, it was found that Coincheck exchange suffered from a security lapse that enabled the hack. Apparently, one of Coincheck’s internal computer systems was infected with malware that led to a data breach. The virus allowed attackers to collect many private keys a couple of weeks prior to the hack. Hackers successfully ran off with the stolen coins easily since the Coincheck kept their assets in hot wallets, which are more vulnerable to hacks than cold ones due to their connection to external networks.

One would think with the large quantity of hacks and large sums of money lost operators of exchanges would learn from their lessons.  But the issue isn’t always mistakes, the issue is that they didn’t have a solid design of their security architecture.  There have been 7 hacks already in 2019 totaling more than $800m in USD value of Crypto stolen, and some of the exchanges are big names like Cryptopia, Binance, and others.

What is it going to take for the operators of these exchanges to wake up?  As is the case with any risk scenario, one needs to weigh the cost of insurance vs. the risk of not taking it.  Here, we are looking at complete loss scenarios, if you’re hacked it’s usually a complete hack.  When banks get hacked, there are ways and means to recover lost funds and if they really get in a pinch the Fed can create fresh USD or CAD.  With Bitcoin that’s not the case.  So security needs to be a priority in the Crypto world.

Hackers have stolen over $40 million worth of bitcoin from Binance, one of the world’s largest cryptocurrency exchanges, the company said on Tuesday.  Binance said the hackers ran off with over 7,000 bitcoin and used a variety of attack methods to carry out the “large scale security breach” which occurred on Tuesday.

If even Binance is getting hacked, clearly the current security systems aren’t working.  Fortunately we now have Blackwatch.  With the widespread adoption of Dark Vault, perhaps we will finally see institutional money flow into the Crypto space.

Posted: August 17, 2019, 2:59 am
Traders Beware: The Crypto Tax Compliance Crackdown Has Arrived

US cryptocurrency traders, investors, and other market participants may think that assets like Bitcoin and Ethereum are so anonymous as to be untaxable, and some are about to get a painful lesson on how the technology really works. There is no identifying information in transaction or token data inscribed onto the ledger, sure, but you’re only truly anonymous if you’ve mined your cryptocurrency, bought it with cash, and transacted through dApps exclusively. This describes only the smallest fraction of crypto enthusiasts.

For the rest of us who have (for good reason) traded on larger and more centralized exchanges which also allow fiat depositing, it’s a sobering reminder that these friendlier platforms only exist because financial watchdogs allow them to. One condition of this tentative approval is that your crypto wallet must be associated with your real identity, due to KYC (Know Your Customer) and AML (Anti-Money Laundering) laws. For many traders, centralized exchanges reside at the root level of their crypto portfolio, and now that this nut has been cracked global tax authorities are completely plugged into the sector.

This is why so many in the US—over 10,000 in fact—are recent recipients of a letter from the IRSwhich says in so many words, “We see you, now pay up.”. Fresh on the heels of the recent G20 summit, where major global markets all agreed to follow the same set of FATF (Financial Action Task Force) rules, the IRS is now beginning a campaign to clamp down on US residents who have transferred or transacted cryptocurrency in virtually any way, shape, or form.

An Early Look at the IRS Letter

Those who already received the letter are familiar with its contents, but for those who will soon find it in their mail as the IRS digs its heels in, it’s good to get a preview of Letter 6174 and Letter 6173—both entitled Reporting Virtual Currency Transactions. The IRS is a bellwether for the tax climate worldwide on cryptocurrency, and to see it act so quickly, out of reporting season and with such a broad scope is a clear warning sign; market participants worldwide need to start considering the tax impact of their trades and transactions. While this standard will help pave the way for further integration with fiat money markets, the IRS’s tax scheme is also fairly comprehensive and requires negligent traders to do a burdensome amount of detective work.

Crypto traders must sort out which exchanges are relevant to the IRS (assume they all are) and the coins they have transacted in or held, classify these transactions and their respective realized gains (or losses) and then report them properly. You’ll have a mere one-month window to get compliant, the result for failure is an external review and fitting punitive action. Recipients of the more serious 6173 letter need to get in touch with an IRS agent within one day. Even for those who didn’t receive the letter and have a relatively short history dabbling in DeFi, the legwork required to prepare for the coming crackdown is daunting.

Prepare for Your Impending Token Taxes

If you have not accounted for cryptocurrency in your taxes, then the time to do so was yesterday. You may not have been in the first round of letters, but regardless if you’re included in the second or third rounds, collecting the requisite data now will save an enormous headache. The IRS is acting retroactively, so this recent event applies to everyone including those who have reported already. These traders should ensure that they’ve covered the full range of years required and have included transactions that might not have been considered taxable at the time. Many had previously only reported when they had bought into or out of fiat, and this is indeed relevant, as are transactions of crypto to purchase goods (real or digital), other crypto assets, and even stablecoins like USDC or Tether.

Basically, if any amount of Bitcoin, for example, is at any point anything other than Bitcoin then the IRS wants to know. These transactions are classified into Schedules and are quite intricate, covering ideas such as contractor payments in crypto, tax losses, assets sold for cryptocurrency, transfers between wallets and a dizzying array of other ideas. Accordingly, getting it right requires immense legwork, either done by yourself or by an accountant who you’ve paid big bucks to decipher countless exported exchange spreadsheets.

Better is to use of a service such as Bittax, which shoulders the full burden of tax compliance and reporting for cryptocurrency traders and investors across all their accounts. Bittax’s software uses blockchain to trace a user’s entire history of currency activity from day one, and it provides alerts on incomplete information for retrieval plus addresses that may have been forgotten. In what is essentially a turnkey tax solution for crypto, Bittax runs the full gamut of IRS-related activities including wallets, arenas, ICOs, and even goes so far as to issue one comprehensive report on the relevant years of activity, charged for each year separately.

A solution like Bittax is currently one of the most purposeful use cases for blockchain, as its utility provides tangible valuable, either in time saved or in the penalty of noncompliance. With ledger-based transparency that’s able to prove each trader has reported and signed the required affidavits, Bittax also gives crypto traders the ability to be confident in their compliance and focus on the market.

Your Stake is at Stake

The widespread and enthusiastic campaign by the IRS leaves little excuse even for traders who believe they’re in good standing to neglect a checkup. Though it begins in the US, to understand how much global volume goes through centralized exchanges in G20 countries is also to realize how many millions of people need to get compliant before their own personal crackdown occurs. This may be an opportune time to lock in some holdings for network staking or a long-term investment, or for at least a year to avoid the higher capital gains tax bracket.

Overall the letter signals to investors that the IRS has finally created a template for crypto to exist in tandem with traditional finance, at least where taxes are concerned. This is typical of government, to first determine how a new idea should be taxed before it should be supported or even defined, but at least it’s a step in the right direction.

This post sponsored by Discount Currency Transfers
Posted: August 8, 2019, 6:24 pm
Pre IPO Swap  8/6/2019 -- New York, NY -- Pre IPO Swap has partnered with disruptive firm Transparent Business to tackle one of the biggest problems in Government and the Enterprise: Fraud and Overbilling.  As the world transforms from bricks and mortar to online and virtual, fraud and overbilling is a growing problem with few solutions, until now.  Transparent Business tackles this problem in a unique way, by installing a cloud based tool that monitors electronic activity in a non-invasive manner (they aren't recording all of your data, don't worry).  It's low cost and can prevent multi-million dollar overbilling situations.
This offer is for institutions only (Qualified Purchasers)if you'd like to learn more visit this page we've created about Transparent Business.
Here's a description of their product: Transparent Business makes every minute of computer-based work automatically verifiable. Save your state tens of millions of dollars by simply requiring state contractors to provide transparent verification of billable hours. The state will know the exact status and cost of every project and task, at any moment. Before Transparent Business, state auditors have had no tools to verify the accuracy of invoices based on billable hours. Many invoices for professional time have been paid based on the “honor system”, with some contractors “robbing the state blind”. Transparent Business gives state managers real-time information about the work performed for the state by programmers, architects, engineers, and other professionals, but does not intrude on their privacy. The tool is controlled by the worker, who can start and pause it whenever they wish, so only billable activity is documented. Transparent Business boosts productivity of billable time 15-40% by eliminating time wasters from the billing. We preclude contractors from billing the state for the time spent engaged in non-project related activity such as online shopping, playing computer games, chatting with friends, updating social profiles, watching funny videos, sending out resumes or even working for another client. The savings would come to the state at no cost to taxpayers, as contractors will bear the modest cost of complying, just like they have always absorbed other accounting costs. There’s also no risk, as Transparent Business is available from ADP, the largest payroll processing company and a component of NASDAQ and S&P. The proposed transparency requirement is not vendor-specific.
Their business plan is to create legislation that will mandate use of this product in Government, and not only in US.  The best part about Transparent Business is the active management and dialogue of CEO Alex Konanykhin, as displayed in his last email update, pasted here:
Last week, two shareholders independently of each other asked me why we are doing so much public relations, which made me realize that I had failed to articulate that as a part of our strategy to increase value of your stock, we are working on developing a recognizable, respected and valuable brand name
Brand power is the main reason most companies chose over competitors with better and less expensive CRM solutions, and Silvina and I like to make TransparentBusiness similarly synonymous with the category of Business Transparency, globally.  The value of some brands goes into tens of billions of dollars.   We are far from getting into those numbers, needless to say, but we have already made important first steps in making TransparentBusiness brand valuable. Anyone who googles us will find many mentions of our company, in publications around the world. Quite a few executives already tell us, “yes, of course I’ve heard of TransparentBusiness”, which is a big difference from the days where we had to start every meeting by explaining who we are and what we do.   As we are just in our second round of financing, we seek the most cost-effective ways to boost value of our brand. Our objective is to assure that every $100K invested into brand development would increase the brand value of TransparentBusiness by at least a million dollars.   Most of this work falls on Silvina’s shoulders. As another step in this direction, Silvina gave an interview to EFE, the world’s forth largest wire service.  The report was distributed by EFE this past Saturday and has already been published in a number of publications internationally, including HoyLa VanguardiaEl Confidencial and El Diario. More placements are expected throughout this week.
If you are an institution or Qualified Purchaser that is interested in Transparent Business see this page Transparent Business.

Posted: August 6, 2019, 4:14 pm
It was almost ten years ago that we first profiled the most important trading desk in the world: not one situated in any of the (increasingly empty) massive trading floors of the world's commercial banks located in either the financial district, midtown or Connecticut, but the one inside the 9th floor of 33 Liberty Street, the home New York Fed, the one which is also known in trader folklore as the "Plunge Protection Team."
This is what we said back then:
Mr. Sack, 39 years old, is an economist who runs the markets group at the Federal Reserve Bank of New York. The group runs the Fed's trading, making it the bridge between the marble corridors of the Federal Reserve in Washington and the bustling trading floors of Wall Street.
The center of life in the markets group is a glass-enclosed conference room situated next to a small cluster of trading desks on the ninth floor of the New York Fed. It overflows with people for a daily 9:20 a.m. meeting run by Mr. Sack. A few stray pictures of Alan Greenspan, the former Fed chairman, still hang on pillars nearby.
The markets group grew enormously during the crisis, from about 225 employees to 400 people who monitor the markets for the Fed, manage its portfolio and run the many new trading programs it has started. The Fed holds more than 20,000 individual securities.
Of course, back then said "most important trading desk" was controlled by one Brian Sack, then only 39-year-old, who has since moved on to the far more lucrative pastures of DE Shaw. Sack was replaced in the summer of 2012, by the levitating market wizard, Simon Potter, who promptly realized that to crush the bears one simply had to crush the VIX specs, and the rest would promptly follow.
Then, in the end of May 2019, something unexpected happened: Simon Potter, arguably the most important trader in the world, manning the world's most important trading desk, unexpectedly announced his "resignation." Not only that, but Potter took with him the second most important person at the NY Fed's "Plunge Protection Team", the head of the Financial Services Group, Richard Dzina.
Simon Potter
What was odd, as we briefly noted two months ago, was the sudden and unexpected nature of this departure: it came from nowhere, and prompted some very delicate and substantial questions about continuity at the desk that has so far managed to keep the US stock market from entering a bear market since the global financial crisis over a decade ago.
Now, thanks to Bloomberg, we have a much more detailed look into what transpired at the trading desk of the "Plunge Protection Team", and what we learn is that the past year said institution which forms the bedrock of support for the US capital market has been gripped by what at times is sheer chaos.
Why? Perhaps it will not come as a surprise to anyone, that the reason for said chaos is another career economist, in this case the "new" president of the New York Fed, John Williams (no relation to the Star Wars guy).
As Bloomberg details in a "must read" report, "an unusual level of internal tension broke out in recent weeks at the fortress-like Federal Reserve Bank of New York in lower Manhattan." This was prompted by the sudden departure of the two longtime officials mentioned above, which "shook staff, sank morale and drew attention to the leadership of the New York Fed under John Williams as he enters his second year at the helm." And yes, this is the same John Williams who two weeks ago prompted a mini market tantrum following one of the most epic communication fuck ups by a central banker.
As Bloomberg writes "the story involves Simon Potter, who ran the all-important markets desk, and Richard Dzina, head of the financial services group. Both were abruptly relieved of their roles in late May by Williams. Little explanation was given, but according to current and former New York Fed employees, as well as those close to the bank, the nature of the exits, by fault or design, seemed to be a warning: fall in line."
It is not clear exactly what the two titans of US capital markets had to "fall in line" for, but two things are certain - i) Potter did not "resign", he was fired by Williams, and ii) now that an economist with zero capital markets experience is in charge, and following his termination of Potter and Dzina, the world is one step closer to collapse as a clueless PhD hack is in charge of the most important market in the world.
The economist in question is John Williams, whom Bloomberg laughably described as "a widely respected and oft-cited monetary economist who ran the San Francisco Fed for seven years" which is amusing for a regional Fed that was at the epicenter of the housing crisis (granted under Yellen, not Williams, but still), and which is best known for incinerating taxpayer funds for such profoundly insightful research reports as "why is water wet" (we jest, but a real example of their cutting edge research was whether it was still worth going to college). In any case, when Williams was appointed for the top job in New York - a Fed which has a far closer link to capital markets than any other - this "raised eyebrows from the outset. A finance-industry background has traditionally been seen as a key qualification, something he lacked."
Bingo. And what's worse, Williams - in what was likely an ego tantrum - inexplicably fired the two most important people in his inner circle who have had their pulse on the capital markets for the past decade.
The consequences were immediate, and visible to all:
Williams, who during his San Francisco Fed days often mentioned his reluctance to pay too much attention to short-term swings in the markets, came under fire on July 18 after saying in a speech that central banks should act quickly “at the first sign of economic distress.”
With the remarks coming just a day before Fed officials entered a quiet period prior to their July 30-31 policy meeting, traders immediately took his comments to mean a more-aggressive rate cut was in store. The New York Fed issued a rare clarification walking back his comments later that day, causing another sharp move in the opposite direction.
As Bloomberg adds, the "kerfuffle prompted Ward McCarthy, chief financial economist at Jefferies, to say in a July 22 note to clients that “until proven otherwise, President Williams will remain a communication liability and a probable source of market volatility." This, again, is the guy who is in charge of the world's most important trading desk!
The Williams fiasco It also caught the attention of President Donald Trump, who has been openly critical of Fed policy. He tweeted, “I like New York Fed President John Williams first statement much better than his second.”
Williams inability to communicate with markets aside, Bloomberg correctly points out that "as Williams reorganizes the leadership ranks and puts his stamp on the New York Fed, the ousters of Potter and Dzina leave the reserve bank without two of its most experienced hands."
For those readers who are unfamiliar with our historical obsession with Potter, Bloomberg gives a broad overview of his background:
Potter, who holds a Ph.D. in economics from University of Wisconsin-Madison, started at the New York Fed in 1998. As head of the markets desk, he oversaw the end of the Fed’s massive bond-buying program known as quantitative easing, as well as the unwind that began in October 2017.
Potter was also responsible for briefing policy makers on the state of financial markets at the Fed’s rate-setting meetings. He met with Powell about three weeks after he was relieved of his duties, according to the chairman’s calendar. A Fed spokesman declined to comment on the reason for the meeting or what was discussed.
Dzina, a former Army officer, began his career at the Fed as a bank examiner in 1991 before working his way up the ranks. In addition to leading the financial services group, he also managed a key network central to the U.S. payments system called Fedwire. He’s been described in conversations with those who know him as a steady hand who projected confidence and a team-first attitude. His oft-repeated credo was, “Mission First, People Always.”
So what caused the rift that led to the termination of Potter and his associate? Curiously, that's one thing that remains unknown. As Bloomberg writes, "it’s still unclear whether any specific disagreements prompted the removals. But those close to the New York Fed say Potter and Dzina, who were known for being strong-minded, did not align with Williams on issues related to managerial strategy."
In any event, there’s little doubt many were surprised by how it all went down, Bloomberg notes. What is curious is that until now at least, the market was not aware that the two stalwart guardians of the S&P500, and the heads of the PPT departed after what appears to have been a clash of egos - and styles - with the current, and supremely clueless, head of the NY Fed. The market may be in for a very rude awakening.
Ironically, Potter's termination is something right out of Trump's pinkslipping of Comey:
Williams told Potter of the decision over the phone while the latter was out of town and was scheduled to travel to Hong Kong for a speech on regulatory reform, according to people with direct knowledge of the situation, who aren’t authorized to speak publicly.
And just like at the FBI, the NY Fed appears to be turning on Williams:
Employees put questions to Williams at a town hall-style meeting in June, two weeks after the departures, expressing their frustration over the message Williams seemed to be sending, according to people familiar with the matter. Williams responded by talking about the need for a cohesive vision among the bank’s top executives, without elaborating on the specifics of the decision.
Typical econobabble - lots of SAT words, little substance, and absolutely no clue what to do when the market crashes, which at this rate may come very soon.
* * *
Fast forward to today when the NY Fed has yet to announce who will succeed Potter and Dzina on a permanent basis. In the meantime, Michael Strine, the institution’s first vice president and Williams’ second-in-command, is managing Fedwire. Traditionally, the network is overseen by the first vice president, but was instead delegated to Dzina by Williams’ predecessor, William Dudley, when Strine was promoted to the role in 2015, according to Bloomberg.
To be sure, whoever replaces Potter and Dzina will have plenty to contend with.
On Wednesday, the Fed reduced its benchmark interest rate for the first time in over a decade and signaled more cuts may be in store later this year. New York Fed staffers have also been charged with looking into a new repurchase-agreement facility to provide liquidity to the banking system as cash becomes increasingly scarce. No less important are efforts to modernize Fedwire, which suffered a rare outage this year.

And then there is the risk of a sharp market drop lingering behind every corner, as the only thing that keeps the market propped up is the traders' explicit faith (and hope) in the Fed's ability to support it. The problem is that with Williams at the helm of the PPT, such an ability does not exist. And the moment the market realizes this is precisely when Potter will be so very desperately needed. Alas, at that very moment, Potter will be half a world away, sitting on a beach somewhere, collecting twenty zero percent...
Posted: August 5, 2019, 2:24 am
A massive pullback in international buyers purchasing US real estate has been seen in the last several years, resulting in the softening of housing markets across South Florida, reported The Palm Beach Post.
Foreign buyers purchased a $153 billion in US homes from April 2016 to March 2017, total sales of homes to international buyers dropped to $121 billion for the year ending in March 2018, then plunged to $77.9 billion for the year ending on March 2019, the National Association of Realtors (NAR) said in its latest report.
Florida transactions involving foreign buyers fell to 36,000 in the year ending in March 2019, down from 50,000 the previous year, and 60,000 in the year ending March 2017.
"The magnitude of the decline is quite striking, implying less confidence in owning a property in the US," NAR Chief Economist Lawrence Yun said in a statement.
South Florida is a top destination for foreign buyers, accounting for 20% of the 183,100 international transactions nationwide over the past year.
Capital flight from Latin America over the past decade has driven at least a quarter of Florida's real estate market, but new trends today suggest foreigners are abandoning US markets with home prices in bubble territory.
"It takes a lot more pounds to buy an American property than it did a few years ago," said John Mike, an agent at RE/MAX Prestige Realty in Royal Palm Beach.
Mike said a stronger dollar that stated to rise in 2014 had deterred many buyers from Britain and Europe who are now increasingly buying vacation homes in Spain and the Bahamas rather than Florida.
Mike said President Trump's crackdown on immigration and a dangerous trade war with China had hampered demand. He added that international buyers "don't feel welcome" in America anymore because of President Trump's policies - so they are going elsewhere.
The exodus of foreign buyers and crashing sales explains why homes in South Florida are experiencing the most significant percentage of price cuts in some time, that has led to properties staying on the market for longer, and has tipped the overall market to buyers. All of this suggests that a top could be near.

Discount Currency Transfers

Posted: July 28, 2019, 10:51 pm
Alternative Assets are growing strong.  Perhaps it is part of the reason why Bitcoin was so popular with investors.  The amount of places you can get good returns on your money are dwindling.  They are there – it’s just that they are changing.  Traditional markets may return enough just to stay ahead of inflation – but they also bear the risk of losing.  So in the long run, traditional investing is a net loss in the opinion of many investors.

There has been hesitation among traditional asset managers to add Crypto to their portfolio.  However,there are a growing number of Crypto only asset managers that offer Crypto friendly features like pseudo-anonymity, like AMFEIX.   Some will argue about the differences between these managers & funds vs. the traditional asset classes, but it’s not about a compare and contrast.  It’s about evolution.  Capitalism at its core is about evolution.

Capitalism knows no boundaries, it knows no countries, no loyalty.  It only knows that it has to evolve in order to survive.  Crypto is an interesting question because of the regulation involved.  Basically, being pseudo-anonymous is not always a good thing.  Because Crypto is unregulated (or to say differently, is not controlled by a government regulator) it provides the possibility for fraud.  Just have a look at what President Trump has to say about Crypto:

This is actually a positive comment for Crypto, because there are a number of new stable coins that use the US Dollar as a management reserve.  Crypto has a bad reputation due to Bitcoin, but Crypto is much more than Bitcoin, as we have seen recently in the markets.

Managing money is not easy.  The Barclay Hedge Index is roughly flat or slightly negative in the past years.  There are many fallacies of alternative investments, as explained on Zero Hedge:

Just because something is ‘different’ doesn’t make it ‘better’ – just because something is not mainstream doesn’t make it ‘honest.’  We all here agree that mainstream investing sucks, but do we use the same rational methodology when evaluating alternatives?  Crypto has proven this is not the case.  Investors lost their minds and did all the things they have been told not to do over the years.

Managers are exploring more markets – and one of those is Crypto.  While Crypto is not an asset class per se, it can be.  Crypto broadens the horizons of the manager, so that there are more markets to trade.  And Crypto sure is volatile!  That’s risky, but it’s also potentially profitable.

Also there’s a growing number of Crypto millionaires that simply feel more comfortable investing in the market where they made their money.

While the traditional fund management industry is dying – another one is being born.  Just like Bitcoin came out of no where, new fund managers and strategies are going to dominate the next decade.  Traditional funds like FX Concepts and others, have been closed. 

Global Intel Hub is going to keep an eye out on emerging managers in the Crypto space.
Posted: July 15, 2019, 2:54 pm
Binance is the world leader in Crypto, founded in Asia by an Asian who goes by the name “CZ” – there is no dispute that Binance is #1.  As they expand they are looking to develop niche markets and partner with others who can help them achieve their goals.  Binance clearly is a leader, but they have spots where there is room for improvement, as we all know.  So here again Binance looks for partners who have already done it, and incorporates it into their system.  Most recently, Binance launched their own margin trading platform:

Top crypto exchange Binance has launched its margin trading platform, an official blog post published today, July 11, reveals.  Binance’s move to expand trading possibilities to meet the full scope of institutional and retail traders’ needs had already been indicated by exchange CEO Changpeng Zhao this May — the same month the exchange had suffered a major hack incurring $41 million in losses.

This is where the market is going, but there’s a lot more to trading than margin trading as we all know.  Trading requires a solid methodology, education and training, good execution; and security. 

Anyone who traded stocks during the 90’s or early 2000’s can attest to the fact that trading is easier when you are part of a group.  This is the idea basically of social trading – not necessarily you are following all the trades of your peers, but it gives you an idea of market direction and sentiment.  Also it can act as a confirmation of your own ideas.  Trading as part of a group or team has many added benefits, mostly psychological.  Trading is not a team sport, but working as a team always helps the individual.

So the question boils down to: what do we all want from trading?  We want a market that’s better, quick, and transparent – that’s what BQT is.  Traders have been waiting patiently for the Crypto ecosystem to evolve to the point where you can trade just like Forex or Stocks.

But BQT is more than an exchange, they also have peer to peer trading, social media for traders, education and more.  Their team has good bench strength, coming from leading firms that are already established. 

But what is perhaps most unique about BQT is their ability to trade the BNB token.  The owner of Binance even gave a shout out to BQT saying thanks.

And they do a lot of other useful things such as escrow and even have their own wallet.

The future is uncertain for Crypto – but one thing is for sure.  Trading Crypto is going to be a lot more interesting with offerings like this coming down the pike.

We read about this two years ago in the book Splitting Bits – that Crypto markets would evolve to eventually look like FX.  Crypto is, after all, Over the Counter (OTC) just like many debt markets, Foreign Exchange (FX) and some stocks.  There isn’t a single exchange for Crypto so that makes each venue even more unique. 

Some traders fear OTC because it’s considered ‘dark markets’ so exchanges need to comfort traders as much as possible, especially considering the recent hack of the Canadian exchange QuadrigaCX.

Some of them, like BQT, are taking this a step further and offering up the kitchen sink to traders looking for more than just an execution venue. 

Crypto remains an interesting asset class, with a growing number of bells and whistles for day traders to capture.  As always, Global Intel Hub is going to be monitoring this trend.  Stay tuned.
Posted: July 15, 2019, 2:53 pm
It’s amazing that the big banks continue to mislead and overcharge customers for a simple business, over and over.  That business is foreign payments, sometimes known as foreign exchange.  But first let us understand the difference between payments and trading.  Payments is when you want to send money to a friend in Germany, or pay an invoice from a company in Australia.  You’re sending money.  Conversely, if you are the recipient of a foreign inbound transfer, your foreign friend may send in their local currency and have your bank do the transfer, thus fleecing you out of as much as 8% of your money per whack. 

Here’s the real shocker:  This happens only in America.  In New Zealand for example, when you open a new bank account they may ask you ‘what currency do you want it denominated in?’  The point is New Zealand is an export driven economy with tasty Lamb meat and succulent Marlborough Wines that their economy depends on.  There isn’t really much else going on in New Zealand in a country with 13 sheep for every 1 human.  So Kiwis are above average foreign exchange traders, and many companies offer ancillary services and overlay services such as hedging, payments, and related services.  But you won’t find such companies in USA.  That’s because the population is so brainwashed they have been led to believe the only currency in the world is the U.S. Dollar.  I’m not here to tell you most Americans are stupid, I’m just stating the fact that in Europe you couldn’t rip off customers so badly.  It’s only possible in America.

Another amazing fact is that the banks have paid out settlement after settlement to customers but continue the same abusive practices!  Of course, if you look from their perspective, if you can make $10 Billion and pay out $500 Million in fines and fees then its good business. 

There are companies out there such as which offer a cheaper alternative to exchange foreign currency compared to the big banks, but generally they are unknown.

Take a look at this chart to fully understand what we are talking about:

This is assuming a default transfer value of $100,000.  Quickly, let’s understand the differences between payments and trading.  If you are margin trading foreign exchange, you’ll get near spot rates, as places like FX Trading Pro.  But that’s margin trading, similar to stock trading.  If you are sending money to another country, this is called ‘deliverables’ or ‘remittances’ – in which case you aren’t going to get spot rates. 

But having said all that, look at the savings of using services like compared to what the banks are charging.

On a $100,000 transaction you’d be spending $7,593 on fees.  What’s really insulting is that they will hide these fees from you.  In fact, they will offer you to waive the $30 wire transfer fee if they do the FX conversion for you!  Yes, please, I want to pay $7,593 and save $30.  What planet do we live on?

Bottom line is that there are alternatives, but the banks continue to pillage and plunder like pirates in a modern world.  You’d think that after all the abuses their abusive pricing practices would stop, but they won’t.  Likely what will happen is a new industry of disruptive tech will grow this sector away from the banks and into more of a FinTech service, as we were promised with the Crypto revolution.

Posted: July 14, 2019, 10:51 pm
As promised, Trump is ‘draining the Swap’ although many votes will claim it’s too little too late, it’s not what was promised, etc. etc.  As we explain in Splitting Pennies – the world is not as it seems.

Acosta was told to lay off Pedostein because he was ‘above his pay grade’ and ‘part of intelligence’ – here’s the passage:

“Is the Epstein case going to cause a problem [for confirmation hearings]?” Acosta had been asked. Acosta had explained, breezily, apparently, that back in the day he’d had just one meeting on the Epstein case. He’d cut the non-prosecution deal with one of Epstein’s attorneys because he had “been told” to back off, that Epstein was above his pay grade. “I was told Epstein ‘belonged to intelligence’ and to leave it alone,” he told his interviewers in the Trump transition, who evidently thought that was a sufficient answer and went ahead and hired Acosta. (The Labor Department had no comment when asked about this.)

Now there is speculation of ‘which’ intelligence was referred to, but we will assure readers that if the DOJ is letting someone off the hook it’s either a foreign double agent OR US, British, or Israeli.  Our point here is that when you really look at the intelligence system, it’s similar to looking at a dark market.  There is little difference between the three.  If you want to enjoin the lesser subjects of the Crown; Canada, Australia, New Zealand, and friends – the list can go on pretty long.  In reality the US, Britain, and Israel have a powerful alliance and the EU, Japan, and others do whatever they say.  The politics you see in the mainstream press is largely showmanship for the masses, it makes it look like there are distinct separate governments between such countries when in fact, not.  Of course there are huge exceptions like in the case of Brexit, where a populist movement is creating unique sovereignty for Britain at a great economic cost bourn on the people (Good on ya!).  The point still remains that global political power rests in the shadows and does not share the same lines of country borders as you would see on Google Maps.  We don’t need to draw a Venn Diagram you get the idea. 

The first good bit of research on the subject has a focus on the Mossad, perhaps the most feared and respectable intelligence operation in the world:

But whose intelligence service? CIA and the Russian FSB services are obvious candidates, but they would have no particular motive to acquire an agent like Epstein. That leaves Israel, which would have been eager to have a stable of high-level agents of influence in Europe and the United States. Epstein’s contact with the Israeli intelligence service may have plausibly come through his associations with Ghislaine Maxwell, who allegedly served as his key procurer of young girls. Ghislaine is the daughter of Robert Maxwell, who died or possibly was assassinated in mysterious circumstances in 1991. Maxwell was an Anglo-Jewish businessman, very cosmopolitan in profile, like Epstein, a multi-millionaire who was very controversial with what were regarded as ongoing ties to Mossad. After his death, he was given a state funeral by Israel in which six serving and former heads of Israeli intelligence listened while Prime Minister Yitzhak Shamir eulogized: “He has done more for Israel than can today be said” Epstein kept a black book identifying many of his social contacts, which is now in the hands of investigators. It included fourteen personal phone numbers belonging to Donald Trump, including ex-wife Ivana, daughter Ivanka and current wife Melania. It also included Prince Bandar of Saudi Arabia, Tony Blair, Jon Huntsman, Senator Ted Kennedy, Henry Kissinger, David Koch, Ehud Barak, Alan Dershowitz, John Kerry, George Mitchell, David Rockefeller, Richard Branson, Michael Bloomfield, Dustin Hoffman, Queen Elizabeth, Saudi King Salman and Edward de Rothschild. Mossad would have exploited Epstein’s contacts, arranging their cooperation by having Epstein wining and dining them while flying them off to exotic locations, providing them with women and entertainment. If they refused to cooperate, it would be time for blackmail, photos and videos of the sex with underage women.

This would be nothing new, the FBI has done this for years, a policy established by Hoover.  In the greater good of the clean cut White America Hoover envisioned, he could justify using such tactics to fight against what he believed were the greatest threat to America: Anarchists. 

Using blackmail and other dirty tricks are common in any intelligence agency.  So Pedostein’s leading role in a global blackmail operation on behalf of an intelligence agency is plausible, logical, and profitable for himself and his family.  Obviously, as one does, due to the high level of his targets, he felt he had immunity. 

Let’s digress and discuss criminal prosecution of a U.S. President.  For the crimes Nixon committed, he could have been convicted and served time.  This will never happen in the U.S. for a simple reason – the U.S. President has access to top secret information that’s so sensitive, it could literally change the world.  All the weird things you’ve heard that go on in the shadow government, many of them are exaggerations – but 99% of them are based on various accounts of reality.  Bill Clinton could end it all.  So could Jimmy Carter, god bless.  So for this reason, someone as high up as Hillary Clinton will never be prosecuted and never sit in prison, unfortunately. 

The movement about ‘lock her up’ was sincere and naïve.  Because commoners don’t fully understand how hijacked the U.S. system really is, they believe that in the U.S. you are innocent until proven guilty, and the justice system works as it says it does.  The reality of how the U.S. system works is vastly different from the common perception, and completely different as seen on TV.

So in our analysis, Trump is working the deep state effectively.  He waited for the hoax Muller report to conclude, as starting any attack on the Deep State before its conclusion would have furthered their case.  This was a calculated chess move on both sides, the Deep State needed to draw out the ‘investigation’ for as long as possible, because they knew some huge prosecutions waited on the other side. 

Hillary haters should take comfort in that there are worse things than in prison.  Note Pelosi’s daughter mentioning ‘some of our faves’ may be implicated:

This Epstein case is horrific and the young women deserve justice. It is quite likely that some of our faves are implicated but we must follow the facts and let the chips fall where they may - whether on Republicans or Democrats. #WeSaidEnough #MeToo

The likely conclusion of this case is the complete destruction of the Democratic Party, and perhaps the GOP as well.  But with the GOP set to sweep both houses and the Presidency in 2020, they have time to get their act together.  Note though that Justin Amash just left the GOP and is an independent.

Ross Perot ran as an independent and lost, Trump did the math and it simply would not have made sense to be an independent.  But if the Democratic Party fractures, that may change.  In Europe there are 5 – 10 and sometimes as many as 20 leading political parties.  Is the time of Coke vs. Pepsi over in America?

So Hillary’s not going to Jail, but how will this impact the Swamp, and who will go to Jail?  Remember that as these ‘victims’ come forth, there will be perps other than Pedostein named, perhaps some with names like “Bill” or “John” – cultural leaders of the Democratic Party.

Folks this is a death blow.  While the cheating, corruption, and illegal activities described in Clinton Cash can be swallowed by the mainstream; acts against minors (children) cannot be forgiven.  This strikes a knife into the heart of every American family.  The Demorats are a party of Child Molesters. 

Conspiracy Theorists for a long time have lampooned Elite figures for participating in occult like games, as depicted in Stanly Kubrick’s Eyes Wide Shut.  But this case is real, there are real victims, and real consequences, and it’s in the mainstream media.  Will Pedostein spill the beans to stay out of genpop?  Or will he have a mysterious death blamed on another inmate, secrets taken with him to the grave?

No one will know how this drama will play out, but what is certain is that this is a death blow to the creeps running DC and to the Democratic Party as well.

What’s clear is that the leakers and the traitors have at least been contained, if not convicted, allowing honest Patriots in the FBI and perhaps other agencies to do what they are supposed to do:  Arrest criminals. 

Trump is a street guy with simple ideas, such as ‘enforce the rule of law.’  Perhaps in a time where political corruption was rampant, this was what was needed.  In any event, with Pedostein on fire you can bet he’s going to sing like a canary when he’s not released to his cozy NYC apartment.  And he’s just the tip of the Pedo iceberg.

For more insightful analysis on world events, see

This article sponsored by Thought2go Fast Food for Thought www.thought2go.comand
Posted: July 13, 2019, 10:17 pm

Two Years In, Binance Shows No Signs of Slowing Down

It seems hard to believe Binance is only just turning two years old. The rise of the world’s biggest cryptocurrency exchange has been nothing short of stratospheric. Barely a day goes by when some new Binance innovation doesn’t make the news. No other exchange can claim to be so prolific in releasing new features.  
Most recently, two pretty significant new developments have emerged. 

Extending Fiat-to-Crypto On-ramping

For much of its history, Binance has made its name as a pure crypto-to-crypto exchange with one of the biggest range of altcoin pairings available. However, perhaps in a bid to compete with Coinbase, it’s now stepping up its game in the fiat-to-crypto on-ramping. 
Most recently, the company announced the public launch of Binance Singapore, which allows users to buy into BTC, ETH, or the platforms native BNB token, using Singapore dollars. This came after the initial soft launch in April. The press release also alluded to Binance’s plan to “grow the Singapore blockchain ecosystem” together with Vertex, it’s local partner in the launch. 
This launch comes hot on the heels of the news that Binance is planning to open a regulated US exchange together with FinCEN-regulated BAM services as a local partner. At the same time, Binance took steps to geo-block US users from its platform, which surely indicates that the exchange is exercising caution towards the US regulators. 

Long-Awaited Margin Trading

Another of this week’s announcements is the public launch of Binance’s Margin Trading platform. Margin trading enables traders to take short positions on assets, as well as realize gains at multiples above market fluctuations. The margin trading feature will be accessible through a newly optimized interface, and users will be able to move funds between their primary Binance wallet and their margin wallet without any transaction fees. 
Margin trading was already in the pipeline after it emerged in beta on an invitation-only basis back in May. Although it only appeared to be available on Binance’s spot markets, a derivatives offering seemed to be the inevitable next step. Binance CEO Changing Zhao (CZ) confirmed this at the recent Asian Blockchain Summit in Taipei, telling the crowds that they would soon have access to long and short positions with 20x leverage. 

Could the Latest Binance News Buck the Markets? 

The launch of margin trading, and soon a futures platform, offers up some interesting scenarios for the crypto markets overall. Given the size of Binance’s user base, it could cause a surge on Bitcoin if traders decide to speculate on the length of the current bull run. However, the opposite could also happen. In May 2018, the Federal Reserve Bank of San Francisco published a letter pointing out that the start of the 2018 Bitcoin bear market coincided with the CME/CboE launch of Bitcoin futures to institutional investors. The letter implied that enabling these investors to take short positions caused the market to crash. Therefore, could Binance’s margin trading launch end up having a similar effect? 
It would be bad news for the crypto markets if so, and not just because of it would put an end to the current bull run. Overall, it seems like bad news for an industry based around decentralization that one exchange could end up having a disproportionate effect on the crypto markets overall. Some corners of the crypto universe are already in discussion about whether or not Binance is too powerful, so bringing about a downturn could cement that view. 
Regardless of the market impact on BTC, it seems that these two latest developments will be only good news for the BNB token, which defied market trends in 2018 and has only increased further in 2019. Market sentiment seems largely positive, even despite a temporary dip caused by the news that Binance was closing its doors to US clients. 

Future Outlook

Even with the rapid pace of development so far in 2019, there is still plenty for Binance’s supporters to look forward to. The launch of the Binance blockchain and decentralized exchange DEX offers plenty of scope for further expansion into more dApps and token listings. The futures platform could potentially add more trading pairs over the coming months. 
Perhaps most intriguingly, Binance’s Strategy Officer Gin Chao confirmed that the company is also in discussions with Facebook about potentially listing the Libra cryptocurrency. He further elaborated that Binance is considering becoming a validator node on the Libra network. 
Assuming the regulators allow Zuckerberg’s plans to come to fruition, this would be a massive coup for Binance, as the current list of blockchain and crypto participants is thin, to say the least. Furthermore, it would put Binance in the position of one of the few firms bridging the gap between blockchain and big tech. 
Overall, the rapid pace of development in 2019 has cemented Binance’s position as the world’s top cryptocurrency exchange. “Top’ in this case doesn’t necessarily have to mean volume. It refers to the company’s ability to continue innovating and expanding, making headlines week after week. At just two years old, it seems that Binance is well and truly into its stride. 
Get further news and analysis on 
Posted: July 11, 2019, 4:19 pm

You have probably seen the news that Bitcoin has made a comeback.  For the Bitcoin Bears, this is a sign that Bitcoin is here to stay.  Some are deep rooted in their opinions and will never change.  Others simply want to wait and watch and their opinion depends on the price.  The higher the price, the higher the credibility of Bitcoin.  The price of Bitcoin certainly has gone up based on demand.

While many of the ICOs have fizzled and the SEC has cracked down on frauds, the Crypto “Majors” have seen a resurgence in recent months, with Bitcoin leading the way.  Also many stablecoins have been launched, once again proving that Crypto may be included in the money of the future. 

While no one knows who created Bitcoin, some have speculated with solid evidence that it was a faction inside the US Government.  The implications of this are far reaching, as it is also the US Government that implicitly backs the US Dollar which is the Global Reserve Currency used in the entire world, even in US enemy states like North Korea and Iran.

We also need to remember that as most Crypto Currencies are denominated in Bitcoin, when Bitcoin rises so does Ripple, Ethereum and other BTC denominated pairs.  The most prominent Bitcoin news agency is Coindesk, who mentions that:

Bitcoin’s break above a key price hurdle looks to have set the tone for a retest of recent highs above $13,800.  The top cryptocurrency bu market cap printed a UTC close above $12,061 on Monday, invalidating a bearish lower highs pattern created on July 4, according to Bitstamp data.  Further, with Monday’s close, BTC cemented the bullish view put forward by the strong dip demand below $10,000 observed a week ago.  More importantly, the latest breakout looks sustainable, as bitcoin’s dominance rate (percentage of the market in relation to other cryptocurrencies) has ticked up to 64 percent, the highest level since April 2017, according to data source CoinMarketCap.

Another point to note about Bitcoin is that because it is traded at a number of venues the price may vary from exchange to exchange, and trading data is provided ‘as is’ on a voluntary basis.  This isn’t necessarily a detriment, but this has been a sticking point on the SEC when denying applications for Bitcoin ETFs, due to the impossibility of market surveillance. 

But is this move up in Bitcoin proof of the credibility of the anonymous Crypto Currency or is it a flight to safety, a perception by a new generation of investors (Millennials) who have lost the trust of Wall St. ?  Or is it simply an indication that actually the US Dollar is just going down? 

Here’s a point that only Forex traders will understand, when one currency goes up another goes down.  The US Dollar has the tendency to go down due to the Federal Reserve constantly creating new electronic money.  Bitcoin goes up only by US Dollar purchases, as other fiat currencies are denominated in US Dollars (including the Euro).  So perhaps this is a flight out of fiats away from Forex and into Crypto?  That’s a likely scenario.

In any event, Global Intel Hub will be monitoring this situation closely, and as always we will continue to report on the latest analysis whenever a significant market change happens.

What we are going to be looking at in the coming months is FIX trading of Crypto which we believe will greatly impact Crypto liquidity.

Get Alpha @ Alpha Z Advisors

Posted: July 10, 2019, 1:44 pm
Whatever your bias or special interest, it’s important to understand what’s going on here which is beyond markets and politics.  The world is changing at a pace so fast few can understand what’s really going on.  Taking into account the fact that the world is not presented in real form (fake news) it becomes even more confusing to the average reader.  We have touched on this in our book Splitting Pennies and want to dive deeper here.

Trump is a good example because he’s the first politician that’s not a politician.  He’s not the first, Ross Perot made a stab in 1992 and there have been others.  It’s not about Trump – it’s about paradigm shift.  This term was popularized in Thomas Kuhn’s must read book “The Structure of Scientific Revolutions” which is the basis of the thinking of Silicon Valley.  The proof of his hypothesis was Apple Computer (AAPL).  Recently, we have disruptive unicorns displacing traditional industries, such as the Uber’s and the Lyft’s.

Uber has changed New York City and changed the taxi business forever, for better or worse.  Perhaps Uber has changed the idea of what is transportation.  And just like Bitcoin, this isn’t about tackling the Establishment it’s about technological change and its impact on society.

Going back to politics, the political establishment failed, just like the Taxi industry failed to innovate.  Their last ditch attempt to appease the masses, Obama, was an intelligent attempt but failed short to capture real ‘change’.  Obama proved to be no better than all of his white brothers, or in fact worse. 

Post Trump, politics will never be the same.  Here’s a simple 2020 prediction for you all.  My insurance agent told me ‘no one has a crystal ball’ which was his pitch saying the Democrats are talking about Socialism and are going to raise taxes so here’s my 2020 prognosis:

Trump is going to win in a landslide, and the Republicans are going to take both houses.  They may lose a few battles but overall in 2020 they are going to win the war, and cause the Democratic Party to permanently fracture from the loss.  Democrats still don’t understand that they have disenfranchised themselves from the majority.  They still think that “Well, we’re half the country” and haven’t adopted to the new times.  They may control the media and much of our society but they’ve proven to be associated with wacky conspiracy theories like the Russia Hoax for example.

Democrats are like Taxi drivers 10 years ago saying that Uber will never work because they aren’t professionals.  Trump isn’t a professional politician.  You know what?  They’re right!  That’s why he’s so popular.  And he’s not for sale to the highest bidder, like a Clinton.  But Democrats still have hope, and in 2020 they are going to lose that.  No one knows what that means but a likely scenario means a significant reduction of the party and an upsurge in new upstart parties.  My guess is that the next President is going to be either Arnold Schwarzenegger or a business magnate to emerge such as an Elon Musk (not Elon Musk, just sayin’ – some business innovator, perhaps the founder of an Uber of the future).  What we can say for sure, for the next few generations we aren’t going to have any more Clintons or Bush-types in the White House. 

They failed to evolve and adapt paradigm shift.  Trump seized the moment.  This may all sound far-fetched.  But if you told me during Obama the next President would be Trump I would have thought you were nuts.  If you would have told me in 10 years there wouldn’t be a single Yellow Cab in New York City I would have said you’d be nuts.  I remember staying on high floors at various hotels like the Plaza looking down on the yellow cabs thinking they looked like little ants.  There were almost no street cars in New York City during the 80’s, it was mostly cabs.

Kuhn challenged the then prevailing view of progress in "normal science". Normal scientific progress was viewed as "development-by-accumulation" of accepted facts and theories. Kuhn argued for an episodic model in which periods of such conceptual continuity in normal science were interrupted by periods of revolutionary science. The discovery of "anomalies" during revolutions in science leads to new paradigms. New paradigms then ask new questions of old data, move beyond the mere "puzzle-solving" of the previous paradigm, change the rules of the game and the "map" directing new research.[1]  For example, Kuhn's analysis of the Copernican Revolution emphasized that, in its beginning, it did not offer more accurate predictions of celestial events, such as planetary positions, than the Ptolemaic system, but instead appealed to some practitioners based on a promise of better, simpler solutions that might be developed at some point in the future. Kuhn called the core concepts of an ascendant revolution its "paradigms" and thereby launched this word into widespread analogical use in the second half of the 20th century.

The modern description is ‘going viral’ where society reaches a critical mass, and changes.  It’s the difference between MySpace and Fakebook.

The world is changing so fast, many entrenched industries are failing to adapt, like the political system.  Some are evolving.  If you look at the trend of Organic Foods, you can see big Ag adapting as much as they can.  FinTech is adapting rapidly.  And about politics, Big Tech gets it, in fact Facebook admits that it was used to manipulate an election:

In keeping with their spectacular reputation of violating privacy and rigging elections, Facebook has said that it removed "hundreds of accounts" from Facebook and Instagram that were used to influence elections in Africa, according to CNN. Only it wasn't Russia who was behind this latest intervention, but Israel.

Disruptive tech is changing the way we live and do business.  We Work is changing the way we think about office space.  Hyperloop is building a transportation system so fast you can get from LA to Silicon Valley in less than an hour (some estimates as low as 30 minutes).

A lot of the tech coming out seems like science fiction, but again if you look at where we are today compared to where we were only 10 years ago, things don’t seem so fantastic.  And the best example is Trump – who is the last person anyone would have guessed to be President of the United States of America.

So next time one of the Trump haters starts crying and twitching or in desperate need of counseling, remind them that it’s not about Trump it’s about Paradigm Shift, and that the Political Class failed to deliver any candidate other than corrupt grafters and killers.  The political system as setup by the founding fathers is actually working – as it allows for evolution; just like Wall St. is working. 

Capitalism is an evolutionary ecosystem by nature, if you have a poor model you fail.  Amazon, Google, Microsoft, and others have created wealth and thousands of jobs, and not to mention enable millions of other businesses to achieve productivity with the simple tools they offer.  What did the government offer to us lately?  More rules, regulating people out of business, raising taxes, sponsoring foreign wars we don’t need, etc. etc.

The political establishment simply failed to adapt.  It’s hard to lie to people now, even with ‘fake news’ and ‘deep fakes’ there’s this little problem called the internet, where facts can be seen as facts.  It’s not a court and that’s the great part about it – people decide on their own. 

Stupidity is the strongest human characteristic.  I believe if the Director of the CIA got on TV and told the public all the truth’s they’ve been hiding 99% of the population wouldn’t buy it.  They would think it’s a prank, or a lie, or a “Russian Spy”.  People tend to see what they believe in and what they want to see, not what’s real.  This has been proven by Quantum Physics, which is individually known as the observer phenomenon:

In physics, the observer effect is the theory that the mere observation of a phenomenon inevitably changes that phenomenon[1]. This is often the result of instruments that, by necessity, alter the state of what they measure in some manner. A common example is checking the pressure in an automobile tire; this is difficult to do without letting out some of the air, thus changing the pressure. Similarly, it is not possible to see any object without light hitting the object, and causing it to reflect that light. While the effects of observation are often negligible, the object still experiences a change. This effect can be found in many domains of physics, but can usually be reduced to insignificance by using different instruments or observation techniques.  An especially unusual version of the observer effect occurs in quantum mechanics, as best demonstrated by the double-slit experiment. Physicists have found that even passive observation of quantum phenomena (by changing the test apparatus and passively 'ruling out' all but one possibility), can actually change the measured result. A particularly famous example is the 1998 Weizmann experiment.[2] Despite the "observer" in this experiment being an electronic detector—possibly due to the assumption that the word "observer" implies a person—its results have led to the popular belief that a conscious mind can directly affect reality.[3] The need for the "observer" to be conscious is not supported by scientific research, and has been pointed out as a misconception rooted in a poor understanding of the quantum wave function ψ and the quantum measurement process,[4][5][6] apparently being the generation of information at its most basic level that produces the effect.

The interesting characteristic about politics is that these phenomenon are palpable and changing society in real time.  To fully understand what’s going on in our society, don’t study current events – study Philosophy, Epistemology, History, and Hard Science.

We will conclude with one of the greatest quotes ever:

Enjoy the ride!

For more articles like this, checkout

Posted: July 7, 2019, 2:11 am
  • From CNBC June 2019:
  • Passive investments control about 60% of the equity assets, while quantitative funds -- those relying on trend-following models instead of fundamental research -- now account for 20% of the market share, according to estimates from J.P. Morgan.
  • Passive funds have attracted $39 billion of inflows so far this year, whereas active funds lost a whopping $90 billion in 2019, the bank said.
RT: Traders NYSE concerned worried 190523
Traders work on the floor at the New York Stock Exchange, May 23, 2019.
Brendan McDermid | Reuters
It’s no secret that machines are taking up a bigger and bigger share of investing, but the extent of their influence is approaching shocking proportions. It is as high as 80%, according to one major investing firm.
Passive investments such as index funds and exchange-traded funds control about 60% of the equity assets, while quantitative funds, those which rely on trend-following models instead of fundamental research from humans, now account for 20% of the market share, according to estimates from J.P. Morgan.
This means so much of stock trading is now in the hands of automated buyers and sellers that the market is increasingly sensitive to headlines and more prone to sharp price swings, many notable investors believe.
Omega Advisors founder Leon Cooperman previously said computer trading is creating a  “Wild West” with the markets, calling for an investigation by the Securities and Exchange Commission.
DoubleLine Capital CEO Jeffrey Gundlach has taken a shot at passive investing, saying it is causing widespread problems in global stock markets. He called it a “herding behavior.”
“I’m not at all a fan of passive investing. In fact, I think passive investing ... has reached mania status as we went into the peak of the global stock market,” Gundlach said in December.
While algorithmic models have gained popularity on Wall Street, low-cost passive vehicles keep raking in assets from Main Street. Passive funds have attracted $39 billion of inflows so far this year, whereas active funds lost a whopping $90 billion in 2019, according to J.P. Morgan.
“The pace of outflows from Active is at a cycle high while the pace of passive equity inflows has bottomed and [is] beginning to reaccelerate,” Dubravko Lakos-Bujas, J.P. Morgan’s chief U.S. equity strategist, said in a note on Friday.

Posted: June 30, 2019, 6:23 pm
Remember when it was pure tinfoil-hat conspiracy theory to accuse one or more banks of aggressively, compulsively and systematically manipulating the precious metals - i.e., gold and silver - market? We do, after all we made the claim over and over, while demonstrating clearly just how said manipulation was taking place, often in real time.
Well, it's always good to be proven correct, even if it is years after the fact.
On Tuesday after the close, the CFTC announced that Merrill Lynch Commodities (MLCI), a global commodities trading business, agreed to pay $25 million to resolve the government’s investigation into a multi-year scheme by MLCI precious metals traders to mislead the market for precious metals futures contracts traded on the COMEX (Commodity Exchange Inc.). The announcement was made by Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office. In other words, if the Merrill Lynch Commodities group was an individual, he would have gotten ye olde perp walk.
As MLCI itself admitted, beginning in 2008 and continuing through 2014, precious metals traders employed by MLCI schemed to deceive other market participants by injecting materially false and misleading information into the precious metals futures market.
They did so in the now traditional market manipulation way - by placing fraudulent orders for precious metals futures contracts that, at the time the traders placed the orders, they intended to cancel before execution.  In doing so, the traders intended to “spoof” or manipulate the market by creating the false impression of increased supply or demand and, in turn, to fraudulently induce other market participants to buy and to sell futures contracts at quantities, prices and times that they otherwise likely would not have done so. Over the relevant period, the traders placed thousands of fraudulent orders.
Of course, since we are talking about a bank, and since banks are in charge of not only the DOJ, and virtually every other branch of government, not to mention the Fed, nobody will go to jail and MLCI entered into a non-prosecution agreement and agreed to pay a combined - and measly - $25 million in criminal fines, restitution and forfeiture of trading profits.
Under the terms of the NPA, MLCI and its parent company, Bank of America, have agreed to cooperate with the government’s ongoing investigation of individuals and to report to the Department evidence or allegations of violations of the wire fraud statute, securities and commodities fraud statute, and anti-spoofing provision of the Commodity Exchange Act in BAC’s Global Markets’ Commodities Business, whose function is to conduct wholesale, principal trading and sales of commodities.  Laughably, MLCI and BAC also agreed to enhance their existing compliance program and internal controls, where necessary and appropriate, to ensure they are designed to detect and deter, among other things, manipulative conduct in BAC’s Global Markets Commodities Business.
Translation: it will be much more difficult to catch them manipulating the market next time.
The Department reached this resolution based on a number of factors, including MLCI’s ongoing cooperation with the United States - which means the DOJ must have had the bank dead to rights with many traders potentially ending up in jail - and MLCI and BAC’s remedial efforts, including conducting training concerning appropriate market conduct and implementing improved transaction monitoring and communication surveillance systems and processes. Translation - no longer boasting about market manipulation on semi-public chatboards.
The Commodity Futures Trading Commission also announced a separate settlement with MLCI today in connection with related, parallel proceedings.  Under the terms of the resolution with the CFTC, MLCI agreed to pay a civil monetary penalty of $11.5 million, along with other remedial and cooperation obligations in connection with any CFTC investigation pertaining to the underlying conduct.
As part of the investigation, the Department obtained an indictment against Edward Bases and John Pacilio, two former MLCI precious metals traders, in July 2018.  Those charges remain pending in the U.S. District Court for the Northern District of Illinois. 
This case was investigated by the FBI’s New York Field Office.  Trial Attorneys Ankush Khardori and Avi Perry of the Criminal Division’s Fraud Section prosecuted the case.  The CFTC also provided assistance in this matter.
Oh, and for anyone asking if they will get some of their money back for having been spoofed and manipulated by Bank of America, and countless other banks, into selling to buying positions that would have eventually made money, the answer is of course not.
The full non-prosecution agreement and attachments is below (pdf link)
Posted: June 26, 2019, 2:13 am
Hypersonic missiles - which travel at more than 15 times the speed of sound - are touching off a new global arms race that threatens to change the nature of warfare.
On March 6, 2018, the grand ballroom at the Sphinx Club in Washington was packed with aerospace-industry executives waiting to hear from Michael D. Griffin. Weeks earlier, Secretary of Defense James Mattis named the 69-year-old Maryland native as the Pentagon’s under secretary for research and engineering, a job that comes with an annual budget of more than $17 billion. So the dark-suited attendees at the McAleese/Credit Suisse Defense Programs Conference were eager to learn what type of work he would favor.

The audience was already familiar with Griffin, an unabashed defender of American military and political supremacy who has bragged about being labeled an “unreconstructed cold warrior.” With five master’s degrees and a doctorate in aerospace engineering, he was the chief technology officer for President Reagan’s Strategic Defense Initiative (popularly known as Star Wars), which was supposed to shield the United States against a potential Russian attack by ballistic missiles looping over the North Pole. Over the course of his career, he also wrote a book on space vehicle design, ran a technology incubator funded by the C.I.A., directed NASA for four years, and was employed as a senior executive at a handful of aerospace firms.
Griffin was known as a scientific optimist who regularly called for “disruptive innovation” and who prized speed above all. He had repeatedly complained about the Pentagon’s sluggish bureaucracy, which he saw as mired in legacy thinking.
“This is a country that produced an atom bomb under the stress of wartime in three years from the day we decided to do it,” he told a congressional panel last year.
“This is a country that can do anything we need to do that physics allows. We just need to get on with it.”
In recent decades, Griffin’s predecessors had prioritized broad research into topics such as human-computer interaction, space communication and undersea warfare. But Griffin signaled an important shift, one that would have financial consequences for the executives in attendance. “I’m sorry for everybody out there who champions some other high priority, some technical thing; it’s not that I disagree with those,” he told the room. “But there has to be a first, and hypersonics is my first.”

Griffin was referring to a revolutionary new type of weapon, one that would have the unprecedented ability to maneuver and then to strike almost any target in the world within a matter of minutes. Capable of traveling at more than 15 times the speed of sound, hypersonic missiles arrive at their targets in a blinding, destructive flash, before any sonic booms or other meaningful warning. So far, there are no surefire defenses. Fast, effective, precise and unstoppable — these are rare but highly desired characteristics on the modern battlefield. And the missiles are being developed not only by the United States but also by China, Russia and other countries.
Michael D. Griffin, the Pentagon’s under secretary for research and engineering and former NASA Administrator, at the Space Symposium on Tuesday, April 9, 2019, at Broadmoor Hall in Colorado Springs, Colorado. (NASA/Aubrey Gemignani)
Griffin is now the chief evangelist in Washington for hypersonics, and so far he has run into few political or financial roadblocks. Lawmakers have supported a significant expansion of federal spending to accelerate the delivery of what they call a “game-changing technology,” a buzz phrase often repeated in discussions on hypersonics. America needs to act quickly, says James Inhofe, the Republican senator from Oklahoma who chairs the Armed Services Committee, or else the nation might fall behind Russia and China. Democratic leaders in the House and Senate are largely in agreement, though recently they’ve pressed the Pentagon for more information about the program. (Senate Armed Services Committee ranking member Jack Reed, a Democrat from Rhode Island, and House committee chairman Adam Smith, the Democratic representative for Washington’s ninth district, told me it might make sense to question the weapons’ global impact or talk with Russia about the risks they create, but the priority in Washington right now is to get the American versions built.)
In 2018, Congress expressed its consensus in a law requiring that an American hypersonic weapon be operational by October 2022. This year, the Trump administration’s proposed defense budget included $2.6 billion for hypersonics, and national security industry experts project that the annual budget will reach $5 billion by the middle of the next decade. The immediate aim is to create two deployable systems within three years. Key funding is likely to be approved this summer. Griffin has spoken about America eventually having an arsenal of “a couple of thousand prompt strike missiles.”
Keen enthusiasm has spread to military contractors, especially after the Pentagon awarded the largest one, Lockheed Martin, more than $1.4 billion in 2018 to build missile prototypes that can be launched by Air Force fighter jets and B-52 bombers. These programs are just the beginning of what the acting defense secretary, Patrick M. Shanahan, described in December as the Trump administration’s goal of “industrializing” hypersonic missile production. This spring, he and Griffin created a new Space Development Agency of some 225 people, tasked with putting a network of sensors in low-earth orbit that would track incoming hypersonic missiles and direct American hypersonic attacks. This isn’t the network’s only purpose, but it will have “a war-fighting capability, should it come to that,” Griffin said in March.
Development of hypersonics is moving so quickly, however, that it threatens to outpace any real discussion about the potential perils of such weapons, including how they may disrupt efforts to avoid accidental conflict, especially during crises. There are currently no international agreements on how or when hypersonic missiles can be used, nor are there any plans between any countries to start those discussions. Instead, the rush to possess weapons of incredible speed and maneuverability has pushed the United States into a new arms race with Russia and China — one that could, some experts worry, upend existing norms of deterrence and renew Cold War-era tensions.


Although hypersonic missiles can in theory carry nuclear warheads, those being developed by the United States will only be equipped with small conventional explosives. With a length between just five and 10 feet, weighing about 500 pounds and encased in materials like ceramic and carbon fiber composites or nickel-chromium superalloys, the missiles function like nearly invisible power drills that smash holes in their targets, to catastrophic effect. After their launch — whether from the ground, from airplanes or from submarines — they are pulled by gravity as they descend from a powered ascent, or propelled by highly advanced engines. The missiles’ kinetic energy at the time of impact, at speeds of at least 1,150 miles per hour, makes them powerful enough to penetrate any building material or armored plating with the force of three to four tons of TNT.
A Mach 14 Waverider glide vehicle, which takes its name from its ability to generate high lift and ride on its own shock waves. This shape is representative of the type of systems the U.S. is developing today (Dan Winters for The New York Times)
They could be aimed, in theory, at Russian nuclear-armed ballistic missiles being carried on trucks or rails. Or the Chinese could use their own versions of these missiles to target American bombers and other aircraft at bases in Japan or Guam. Or the missiles could attack vital land- or sea-based radars anywhere, or military headquarters in Asian ports or near European cities. The weapons could even suddenly pierce the steel decks of one of America’s 11 multibillion-dollar aircraft carriers, instantly stopping flight operations, a vulnerability that might eventually render the floating behemoths obsolete. Hypersonic missiles are also ideal for waging a decapitation strike — assassinating a country’s top military or political officials. “Instant leader-killers,” a former Obama administration White House official, who asked not to be named, said in an interview.
Within the next decade, so many of these new weapons might be around that they would be able to undertake a task long imagined for nuclear arms: a first strike against another nation’s government or arsenals, interrupting key chains of communication and disabling some of its retaliatory forces, all without the radioactive fallout and special condemnation that would accompany the detonation of nuclear warheads. That’s why a National Academies of Sciences, Engineering and Medicine report said in 2016 that hypersonics aren’t “simply evolutionary threats” to the United States but could in the hands of enemies “challenge this nation’s tenets of global vigilance, reach and power.”
The arrival of such fast weaponry will dangerously compress the time during which military officials and their political leaders — in any country — can figure out the nature of an attack and make reasoned decisions about the wisdom and scope of defensive steps or retaliation. And the threat that hypersonics pose to retaliatory weapons creates what scholars call “use it or lose it” pressures on countries to strike first during a crisis. Experts say that the missiles could upend the grim psychology of Mutual Assured Destruction, the bedrock military doctrine of the nuclear age that argued globe-altering wars would be deterred if the potential combatants always felt certain of their opponents’ devastating response.
And yet decision makers seem to be ignoring these risks. Unlike with previous leaps in military technology — such as the creation of chemical and biological weapons and ballistic missiles with multiple nuclear warheads — that ignited international debate and eventually were controlled through superpower treaty negotiations, officials in Washington, Moscow and Beijing haven’t seriously considered any sort of accord limiting the development or deployment of hypersonic technology. In the United States, the State Department’s arms-control bureau has an office devoted to emerging security challenges, but hypersonic missiles aren’t one of its core concerns. Secretary of State Mike Pompeo’s deputies say they primarily support making the military’s arsenal more robust, an unusual stance for a department tasked with finding diplomatic