• You Can’t Hide from New App Buried in Your Web Browser

    20.09.2017 • United KingdomComments Off on You Can’t Hide from New App Buried in Your Web Browser

    Boaz Shoshan – Capital and Conflict (United Kingdom) –

    Individual liberty and privacy are not “in vogue” these days. The state and surveillance capitalists take an increasing interest in our lives, with little resistance from us. In fact, most of us purchase the very tools of our own surveillance: the consumer electronics that sleeplessly gather our data. Where will this lead?

    In yesterday’s Capital & Conflict, I mentioned the W3C (World Wide Web Consortium – the international standards organisation for the internet), who are now actively developing a “currency agnostic” payment application that would run out of your internet browser.

    I believe such an app would serve as a data mining tool for tech giants like Google, who will use your transaction history to find out even more about you, and then sell this information to marketers, and hand it over to intelligence agencies. Although the app would broaden the acceptance of cryptocurrencies, it would ultimately destroy their privacy value.

    There is a parallel here in the evolution of the “the internet of money” – cryptocurrency – and the internet. In its early years, the internet was a haven for radical libertarians who saw cyberspace as means of escaping and subverting authoritarian control.

    The independence of cyberspace

    It was in this environment that the Electronic Frontier Foundation (EFF) was born, which in the name of liberty made controversial statements like declaring the independence of cyberspace and taking part in a lawsuit against the Secret Service for seizing computers and floppy disks from a game developer. More recently, they made the news after flying a blimp bearing the slogan “illegal spying below” over the NSA data center in Utah.

    However, as the internet became more popular (particularly after September 1993, when AOL ran an aggressive marketing campaign, sending out millions of free internet trials in the post) libertarian values of its early adopters were slowly diluted by a user base that increasingly didn’t care for them.

    It was at this point that the W3C came along, to create international standards for the web.

    Shortly after writing yesterday’s article, the news broke that the EFF had resigned from the W3C. The reason they are resigning is because they believe the W3C is building a future where the websites you visit will ultimately have control over your computer, and not you.

    The W3C is working on building “Encrypted Media Extensions” (EMEs – apologies for all these acronyms) into new versions of , the programming language used to build websites. This is in league with content creators like Netflix, who are trying to prevent piracy of their video content.

    Control over you

    However, in practice these extensions would hand over control of your internet browser to third parties, who would try to prevent you from doing anything they didn’t want you to. These measures could be increasingly restrictive; the EFF warned in 2013 where these EMEs might lead:

    ‘A Web where you cannot cut and paste text; where your browser can’t “Save As…” an image; where the “allowed” uses of saved files are monitored beyond the browser; where Java is sealed away in opaque tombs; and maybe even where we can no longer effectively “View Source” on some sites…’

    It probably wouldn’t be all that hard to bypass these digital fences. However, anyone that did could have criminal and civil legal proceedings levelled against them – even if they were adding subtitles to video content or making it more accessible for the blind or deaf.

    The push for EME was not only opposed by the EFF – numerous other members opposed it, including the Royal National Institute for Blind People, and the Ethereum Foundation, who published an extensive list of their issues with the project. However, the W3C leadership has ploughed on regardless – why? The EFF are cynical:

    “Somewhere along the way, the business values of those outside the web got important enough, and the values of technologists who built it got disposable enough, that even the wise elders who make our standards voted for something they know to be a fool’s errand. We believe they will regret that choice.”

    Do you treasure your digital liberty and privacy? If so, how do you go about safeguarding it? Or is it something you feel is impossible in this age surveillance? Let me know: boaz@southbankresearch.com

    Until next time,

    Boaz Shoshan
    Capital & Conflict

    Related Articles:


    -Read more at www.capitalandconflict.com-

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  • Phone-Making Titan Eliminates 15,000 Jobs Worldwide

    20.09.2017 • SwitzerlandComments Off on Phone-Making Titan Eliminates 15,000 Jobs Worldwide

    Olivier Perrin – The Brave Little Economist (Switzerland) –

    Dear reader,


    Nokia plans to remove 597 jobs in France and this does not happen.

    Yet it is as usual you will see … And it is sad to die, including the deluge of imbecilities of the subsidized press.

    I say that the Finnish group has been phoning for a long time. He sold his brand to an investment fund and refocused onnetworks, that is, the entire infrastructure that allows you to do a high-definition teleconference with Australia and Japan simultaneously while jogging.

    It does not look like anything these days but it was necessary to install:

    • near100,000 antennas in France alone;
    • cables running one million kilometers to the bottom of the oceans[1];
    • put hundreds of satellites in orbit …

    While recording the explosion of the volume of data exchanged by telephone: they weremultiplied by 18 in the world over the last 5 years[2].

    You can imagine the tour de force, the incredible genius deployed by armies of engineers and technicians …And today we want to throw them out?

    The Curse of Alcatel

    The story begins in early 2016 when Nokia bought the Franco-American groupAlcatel-Lucent, a network giant in a permanent social plan:2000-2005,2008,2009,2012,2013,2014,2016,2017.

    13 years of social plans in 18 years have reduced the number of employees from 280,000 to 60,000 …-80%

    Alcatel-Lucent is the story of two single-legged companies who have married to finally manage to walk … But have never managed to get in rhythm.

    It’s a phenomenal mess and early 2016,we reproduced the same errors, the same story… This time by marrying Alcatel-Lucent to Nokia … Company also in chronic depression, still sounded by its descent into hell, ejected in less than ten years from a market of which it was the undisputed leader and admired.

    Obviously, all the possible promises were made at the time of the marriage … Notably the maintenance of the French employees and even the hiring of new ones.

    Andwham, we learn today that the evil Nokia does not keep his promises.

    Where is the problem ?

    First, the problem is not only French. The group is eliminating 15,000 jobs worldwide, or 15% of its employees: no company does this cheerfully.

    But the announcement must have a particularly bitter taste for ex-Alcatel who are already survivors of a multitude of social plans and still see no end to their ordeal.

    The title of the group’s annual report in 2016 is evocative: “rebalancing to grow “. In the felted world of corporate communication, translate:there is fire

    How is it that countries that are the best engineers in the world, rich in success and barely believable achievements, performing titanic tasks brilliantly and humbly do not know how to sustain their groups of network infrastructures?

    Especially sinceit is not the work that is lacking: it is about developing the 5th generation of mobile networks the “5G” which promises to be a revolution compared to the 4G to connect cars, objects of any kind and making obsolete the domestic connections.

    It’s in a booming area that Nokia suffers!

    Unfair competition

    Deploying networks on entire continents is not the work of an SME.

    In Europe there are only Nokia and Swedish Ericsson as major players in the market. And they are undergoing fierce competition from two groups:Samsungin South Korea and above allHuaweiChina, the world’s largest network infrastructure group.

    Both groups benefit from total public support in addition to labor costs lower than European standards.

    They have made mobile networks 5G national priorities in both China and Korea and benefit from the largesse of a liberal European Union as well as the protection of their states:

    Huawei makes 30% of its revenue in Europe, Nokia 10% in China and Ericsson 12%.

    Huawei’s revenues in Europe are even twice as high as those of Nokia and Ericsson combined! [3]

    Moreover, Huawei has created a research center of 100 people in Paris: in addition they siphon our know-how with our blessing.

    Find the mistake.

    The Price of Free Trade

    Of course, you will be told:if the Chinese and Koreans are better than us for networks, why spend more to do them ourselves?

    very well, we know the refrain: it is the price to pay to afford “the luxury of having an iPhone”.

    And what a luxury, the latest version of the famous phone allows you to turn into virtual dung and besides prefigure the world’s largest copying system thanks to facial recognition (integrated lie detector?).

    But there is a big problem before even wondering about the legitimacy of this vaguely agonizing revolution:

    • Europe can notimpose fierce and unfair competitionon one side and;
    • the French stateoblige Nokia to keep jobs from the other, while the group is in chronic major difficulty.

    With such strategies, everybody is insane: trade unions, bosses, employees, politicians, the general public …

    It is as if you were given a pistol with corks to defend you against a platoon armed to the teeth before you reproach your failure … It would be fun if it were not so tragic.

    And it has been going on for 20 years!

    One can not say that one discovers the problem. Imagine employees who have spent close to half their working lives on a social level.

    Maybe it’s time to take matters into their own hands.

    Ah but in fact no … France has embarked onthe forced-on installation of the optical fiberto serve the protectedPatrick Drahi and its companyNumericable. A project worth 7 billion euros, key to the plan«Very Very High Speed ​​France»in which the State invests 3.3 billion euros. By then, the 5G will have made this colossal effort obsolete but it does not matter, it is what is called“The strategic state”or how to pass big gifts to buddies as citizen engagement. [4]

    And on the European side, Brussels has committed 700 million euros for the 5G by 2020 (including a part for Huawei) …

    Only Orange and École des Mines-Telecom are part of the consortium in France against 9 German groups and 9 in Northern Europe (out of 28). The headquarters of Nokia in Finland as well as its German and Polish subsidiaries are part of the consortium … But not France. [5]

    Nokia France may well die … At least they say it in front.

    In any case, I do everything I can to get rid of these people.

    To your good fortune

    Olivier Perrin

    -Read more at www.le-vaillant-petit-economiste.com (French)-

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  • Good News for Gold Investors

    20.09.2017 • FranceComments Off on Good News for Gold Investors

    Simone Wapler – La Chronique Agora (France) –

    The reaction of gold to the Fed’s speech should tell us a lot about the dollar’s status as a “safe haven”.

    Today, the Fed has to communicate, ie to give indications to the Market as to its future orientations. The Fed could withdraw some of the counterfeit currency it has injected since the financial crisis. It will be very edifying to watch the reaction of gold.

    The Fed now has more than $ 4,500 billion in its balance sheet, a quarter of the US economy. It repurchased bonds, including $ 2,500 billion of treasury bills, giving the sellers fresh money that it created from scratch. This operation was frozen in October 2014.

    The Fed could now begin to resell some of its securities, which would take money off the market. The expected pace would be $ 10 billion to $ 50 billion per month. This is the plan supported by the “falcons” supposed to be for monetary rigor.


    fauconsPersonally, I think monetary hawks have been eradicated for a long time, either at the Fed or elsewhere … They are useless. The gold is fine enough and does not need any official or central bank governor treatment to do the job.

    But there are also doves, favorable to monetary laxity. Janet Yellen is supposed to belong to this clan, gratefully nourished by the seeds of Keynesianism and creditism.


    colombesThis explains why Janet Yellen announced this operation on June 14, nothing has yet been done.

    Over the past 10 years, these $ 45,000 billion in counterfeit currency have accounted for roughly 2 percent of the US economy’s average annual growth.


    *** A phone call to 27 000 € ***Our informant, a former consultant to the CIA, made us revelationsshattering

    To discover them – and the incredible opportunity that goes with it –click here

    Therefore, we can consider that the US growth of the last 10 years, which fluctuates around 2%, is mainly due to this phantom money.

    Evolution du taux de croissance des Etats-Unis depuis 10 ans

    Evolution du taux de croissance des Etats-Unis depuis 10 ansLet us return to gold. Traditionally, gold and dollar spells are linked. A fall in the dollar translates into a rise in gold and vice versa.

    The doves are allergic to gold, its prices are the subject of proven manipulations by the major banks, but the barbaric relic continues to exist. When the doves multiply, the price of gold in dollars is rising.

    Conversely, all hawks throw a threatening shadow on the shiny gold.

    Here is where we are. The following is the chart of the gold price quoted in dollars quoted in London since 2006. A peak was reached during the summer of 2011, with gold exceeding $ 1,900 per ounce. After a long descent into hell until February 2016, its course rebounded.

    cours de l'orcours de l'or

    Click on the graph to enlarge

    $ 1,050 per ounce, the lower orange line, is what graphic analysis enthusiasts call a support, a floor course at the moment. Gold is unlikely to go below.

    $ 1,370 per ounce, the upper orange line, is a resistance. Gold has already stumbled on this ceiling but it seems that stubborn and stubborn, it jumps to try to bump into the ceiling … or burst it.

    Gold and silver prices rise

    Many observers have blamed the recent rise of gold on the history of Korean missiles. Explanation by too easy with a little distance. If the Market had been afraid of a conflict, equity markets would not record record-setting and we would have seen the stock market indices fall in parallel with the rise in gold.

    Certainly, the Market is drunk with adulterated liquidity and kisses the street lamps at night, but it is not yet dead. Our drunkard has his reflexes.

    The dollar is falling against all other currencies. Monsieur le Marche, drunk as he is, bet on a flight of doves.

    But there is much more to be said about the evolution of gold, things that are not necessarily seen on this graph, independently of the cooing of Janet Yellen.

    Let us not forget that this gold price expressed in dollars is only the exchange rate of futures contracts on gold, not physical gold, the real thing.[Editor’s note: Do you know what physical gold you should buy? This piece has very special characteristics that enable it to escape legally from any taxation.Discover it here.]

    When certain holders of these futures contracts demand delivery, gold is not delivered but strong dollar compensation is given to them. Compensation deemed satisfactory … as long as the dollar is accepted.

    Will it still be so? That’s what we’ll see tomorrow …

    -Read more at la-chronique-agora.com (French)-

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  • Bill Bonner: “Mr. Trump Is a Self-Promoter, Not a Revolutionary”

    20.09.2017 • United StatesComments Off on Bill Bonner: “Mr. Trump Is a Self-Promoter, Not a Revolutionary”

    Bill Bonner – Bill Bonner’s Diary (United States) –

    ÎLE D’YEU, FRANCE – Today, we climb a hill and have a look around.

    Down below is a hidden cove on Île d’Yeu:

    The hidden cove on the French island of Île d’Yeu

    But let’s get serious…

    $700 Billion Boondoggle

    Out to our left, under dark clouds, is the political situation.

    For the first 16 years of our daily commentary (in these pages and in The Daily Reckoning), we hardly bothered to look.

    Through the Clinton, Bush, and Obama administrations, nothing much changed.

    Then Donald J. Trump brought fresh air… or an ill wind… depending on how you looked at it.

    We guessed (but were unsure) that this new breeze would be little different from the prevailing winds of the previous 20 years.

    It took a few months to tell the tale, but now we know: We were right. Instead of draining the swamp, as promised, the Trump team adds more slimy liquidity.

    For example, the junta generals – Mattis, McMaster, and Kelly – and their cronies got a big payday this week. Seven hundred billion dollars went into the swamp. Reports The New York Times:

    The Senate has overwhelmingly approved a sweeping defense policy bill that would pump $700 billion into the military, putting the U.S. armed forces on track for a budget greater than at any time during the decade-plus wars in Iraq and Afghanistan. […]

    The 1,215-page measure defies a number of White House objections, but President Donald Trump hasn’t threatened to veto it. The bill helps him honor a pledge to rebuild an American military that he said had become depleted on former President Barack Obama’s watch.

    That’s right: 1,215 pages of boondoggles, designed and written by industry lobbyists.

    Secretary of Defense Mattis wanted to save a paltry $10 billion by closing unneeded bases.

    No way!

    Every puddle of the swamp will be treated like an endangered wildlife habitat – preserved, protected, and promoted.

    Mythical Aura

    The genius of Mr. Trump was to realize – perhaps instinctively – that political parties, ideologies, and practical policies don’t matter.

    He didn’t know the Donbass from the Hindu Kush… and neither do most voters.

    What matters is the Trump brand… and that he could use the same techniques in his run for the White House that he used to build his business empire.

    A brand is different from a product, as leftist writer Naomi Klein, of No Logo fame, has described.

    Marlboro, for example, sold its cigarettes not by promising a better taste, but by peddling a myth – that the smoker of its cigarettes would become more like the Marlboro Man.

    And Chinese tourists do not line up in front of the Louis Vuitton store in Paris to pay $500 for a handbag because of the quality of the product. They buy because it makes them feel part of the “One Percent.”

    Often, consumers buy the brand-name product simply because they’ve heard of it. But real branding goes further. It establishes a mythical aura that is largely independent of the product.

    The cowboy in the Marlboro ads, for example, had nothing to do with the cigarette. The product – often indistinguishable from its competitors – is almost irrelevant.

    So it was that Mr. Trump positioned himself as a brand, not as a bearer of policies or ideology.

    His brand was reliably crass. Dependably in your face. Inevitably mischievous. And a great number of voters, who were fed up with the more conventional humbugs, found him appealing.

    Since then, the president has demonstrated another phenomenon from modern marketing: brand loyalty.

    Recent polls show that his fans are sticking with him. They like the brand; the product – ideas and policies – scarcely matter.

    Mr. Trump’s supporters even seem to invent reasons to approve of his recent move to make common cause with the Democrats. “It helps him get things done,” they say.

    Thunders Gather

    With this novel political situation on the horizon to our left, we turn to look at the money world on the right.

    There, too, dark thunders gather.

    As we saw yesterday, key indicators of U.S. economic health are flat. Corporate sales and profits… along with wages – after accounting for inflation, they’ve barely budged over the last 17 years.

    The reason?

    We have only to turn our back to the left – to politics – to see why: So many resources get sucked into the swamp.

    Myth and Marketing

    A society only gets richer by saving money and investing it.

    If the investments are successful, output increases. This extra production is what makes us wealthier.

    But it only works if: (a) the savings are real, in the sense that they represent real resources, not just phony-baloney pieces of paper or empty Fed credit, and (b) the investments are win-win. That is, they must be made by real investors with “skin in the game.”

    When the feds say they are “investing” in our future… or “investing” in a fairer society… or “investing” to stimulate the economy – it is all claptrap.

    They have no skin in the game… no real money to invest… and no reason to care if the investments pay off or not.

    Often, as we explained yesterday, they prefer for them to fail, since that only encourages them to do more.

    In the end, what they are doing is shifting real resources out of the productive economy toward the win-lose parasitic economy… where wealth is consumed and wasted, not produced.

    Mr. Trump’s appeal, such as it was, was that he seemed ballsy enough to “Drain the Swamp,” letting resources go back to where they belong: the productive Main Street economy.

    His brand was to defy the Deep State, the insiders, Congress, the Establishment, and the powers that be.

    But it was all myth and marketing. Behind the brand advertising, Mr. Trump is a self-promoter, not a revolutionary.

    He has instincts – some good, some bad – about how an economy works, but no coherent theory.

    And without a compass to guide him, he is like a cruise ship lost in a hurricane… pushed by the winds and waves…

    …right into the swamp.



    -Read more at bonnerandpartners.com-

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  • How to Turn the Threat of Armageddon into Cold, Hard Cash!

    20.09.2017 • United KingdomComments Off on How to Turn the Threat of Armageddon into Cold, Hard Cash!

    Andrew Lockley – Exponential Investor (United Kingdom) –

    Yesterday, we introduced you to the idea of “Investing in the Apocalypse”. Today, we’re going to carry on disrupting your “normalcy bias” – the false belief that things will carry on, as they are.

    At Exponential Investor we like to be a positive lot. Where others see only doom, terror, and the incalculable suffering of millions – we spot a money-making opportunity. Below, we’ll show you how to turn the threat of Armageddon into cold, hard cash!

    Climate change

    Climate change will be a serious problem. However, there’s a significant risk that it could develop into an overwhelming crisis – and this is not fully appreciated, by most people. We’re very likely to exceed 2C over pre-industrial temperatures. Such a rise will lead to very severe disruption to the global climate system.

    We should expect significant negative effects on many agricultural zones – leading to large movements of refugees. You only have to look at the strains from the Syrian crisis, to see how serious this situation might get. Add in major sea-level rise, and we could see a quite unprecedented human migration.

    There is also the possibility of unexpected disruptions to the climate system – which could be sudden. Such “tipping point” scenarios would mean major transformations to the way the planet works. One example is the stalling of ocean currents, which are responsible for keeping Britain and Northern Europe warm – a scenario envisaged in The Day After Tomorrow. Another possibility is the large-scale release of methane from permafrost. This would lead to very dramatic warming, over just a few decades. Such scenarios may be unlikely – but they are an active area of scientific research.

    Accordingly, it may be worth investing in firms which are backing more radical solutions to climate change. Of course, renewables are a great bet – and you don’t need climate change to prove the case for that investment. But investments in geoengineering may win out – particularly if things get really bad.

    Sectors to watch: CO2-sucking firms, like Climworks and Carbon Engineering, may benefit – but civil engineering contractors may be a lower-risk play.

    Rogue AI

    One of my favourite recent sci-fi films was Ex Machina. This envisaged a rogue humanoid AI. While the development of emotionally-convincing artificial humans is implausible in the near term, the idea of AI going rogue is a very real risk. As computers take over more and more decision-making processes, the risks are increasing exponentially.

    Modern AI systems are fundamentally different from old-school computer programs. The precise mechanisms by which they make their decisions are no longer visible to us. Furthermore, the integration of computers across the internet is so deep, and so extensive, that their interoperability is not necessarily fully understood. We can see how complex systems are prone to instability, by looking at the financial crisis. While it’s not certain that such risks exist in the online world, it’s hard to prove that they don’t.

    Sectors to watch: if you’re focussed AI risks, you’re probably far better placed investing in AI on the way up, than on the way down!


    Volcanoes are pretty impressive things, and the global media network means we’re pretty used to seeing them. But supervolcanoes are a whole different matter. They erupt only rarely – but they’re as devastating as a nuclear war. During the time of humans, enormous volcanoes like Toba have threatened the very survival of the human race. Genetic evidence has persuaded some scientists that the global human population was reduced to just a few thousand, at around the time of that eruption – a pattern seemingly repeated in other animals.

    Sectors to watch: a large eruption would be curtains for civilisation – but defence firms could benefit from the chaos following a smaller eruption.

    Gamma Ray Bursts

    Every day or so, we catch “sight” of a Gamma Ray Burst. These enormous outpourings of energy originate in dying stars. In much the same way as a nuclear bomb, GRBs can reliably kill far beyond their immediate vicinity. However, unlike a nuclear bomb, the focussed beam from a GRB could sterilise planets many light years away. On Earth, it has been postulated that the Ordovician–Silurian extinction event was caused by a GRB. Even a more mildly-impacting GRB event would trash the ozone layer – devastating agricultural productivity.

    Of course, GRBs aren’t the only risk from space – and we’ve covered the (substantially more likely) asteroid impact, earlier. Alternative scenarios include near-Earth supernovae, and massive solar flares. Even a modest solar eruption has the capacity to unleash chaos on our electronically-connected world – and satellites are especially vulnerable.

    Sectors to watch: it’s very speculative – but any form of agriculture that protects crops from UV (such as glasshouses, or seaweed farming) would likely benefit.

    It’s probably impossible to finalise a list of apocalyptic scenarios – but we’d love to hear your opinions. Email us: andrew@southbankresearch.com


    Andrew Lockley
    Exponential investor

    -Read more at www.exponentialinvestor.com-

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  • Google and Microsoft Making the Bitcoin-Killer App.

    20.09.2017 • United KingdomComments Off on Google and Microsoft Making the Bitcoin-Killer App.

    Boaz Shoshan – Capital and Conflict (United Kingdom) –

    “The state has grown used to treating its taxpayers as a farmer treats his cows, keeping them in a field to be milked. Soon, the cows will have wings.

    – The Sovereign Individual, James Dale Davidson & Lord William Rees-Mogg

    The Sovereign Individual was written in the mid-90s, and predicted a future where computers and the internet would ultimately kill nation states, ushering in a new era of individualism.

    Many of the late Rees-Mogg’s predictions have come true over the years, from the fall of the USSR to the collapse of the Japanese stock market. His keen eye for the future kept readers of his newsletter, The Fleet Street Letter, ahead of the curve and prepared them for shocks that took everybody else unawares.

    What he was referring to by cows having wings was his idea that cyberspace, the digital stateless realm, would become a tax haven. He believed the internet itself could function as an offshore jurisdiction, where wealth could be stored and grow free of tax – what he called a “Bermuda in the sky with diamonds”.

    A lack of physical wealth to tax (an absence of “cows” to “milk”) would starve governments around the globe. In response they would try to violently attempt to suppress the internet, before ultimately collapsing from a lack of tax revenue.

    How could wealth be taken completely online and out of reach from the state? You would need a purely electronic form of money, completely outside of government control. Some would argue Bitcoin, the “internet of money” holds these properties – it’s certainly hard to tax.

    However government actions, as we’ve seen recently in China have an effect on Bitcoin’s price and network activity; it is certainly still tethered the affairs of the real world.

    Charlie Morris, the current editor of The Fleet Street Letter believes electronic money doesn’t actually exist yet and that cryptocurrencies like Bitcoin are not actually currencies at all, but “digital assets”. Here’s an excerpt from a recent issue:

    “You might think that electronic money already exists, but it doesn’t. Internet access and payment systems have merely allowed us to access our bank balance in real time and make transfers in a more efficient manner. Electronic money is taking it a stage further. It would enable you to use the pound, but without your bank. The Bank of England would issue the pound in a controlled manner, and people would be able to store it in a software wallet without the need for a bank.”

    “If digital assets, which sadly have become known as cryptocurrencies, were actually currencies… they could be issued by a central authority, and they could pay potentially interest (currently they don’t). Yet for digital assets to be currencies, they would have to represent cyberspace in some form or another. Perhaps they will in time, but my analysis suggests that they don’t, and won’t. They are merely independent networks whose value is directly related to their adoption and utility.”

    If you’re interested in reading more of Charlie’s analysis, click here.

    Currency or not, the anonymity provided by crypto makes taxing it difficult. But it’s not just the taxman who wants to peel that away.


    Data is the opiate of the technocrats

    “nothing is covered that shall not be revealed; nor hid, that shall not be known.”

    – Matthew 10:26

    We’ve covered the insatiable hunger of tech companies for data in the past. Companies like Google have made their fortunes monetising the endless deluge of personal information we put online. Your search history, the content of your emails, and your location (provided by your smartphone) are all packaged up and sold to marketers trying to sell you their products. This practice of accumulating and then flogging personal data has become known as “surveillance capitalism”.

    And now the data parasites have found a new host to suckle from: cryptocurrency transactions.

    The World Wide Web consortium (W3C), in collaboration with Google, Microsoft, Facebook, Mozilla and Apple has announced they are developing a “currency-agnostic web payment standard”. Effectively, this would allow you to store bitcoin and other cryptocurrencies on your internet browser, allowing you to pay and send currency without needing a third party like PayPal to facilitate the transfer.

    The idea for this system emerged in 2013, where a man named Manu Sporny described it as:

    “What a financial system would look like if you took what worked on the Web and used the same approach to create a financial protocol.”

    If the development is a success, spending cryptocurrency will become even easier. The news legitimises cryptocurrencies – Bitcoin is hard to dismiss as a fraud when Google is building its use into the most popular internet browser in the world.

    But generally speaking, Google will only make your life easier in return for information about you that it can sell – your financial affairs are no exception. If a user only has one bitcoin wallet, as many do, and then tell Google its address (which would be almost guaranteed with this payment application), Google will be able to link them to every bitcoin transaction they have ever made. Plenty of meat for the marketers there.

    The intelligence community will be after this data too – in the interests of national security, of course. No to mention the taxman – the farmer has no intention of seeing his cows fly away to the Bermuda in the sky.

    The app effectively voids all of the anonymous properties of bitcoin. It will be very interesting to see if Zcash or Monero, cryptocurrencies designed specifically to be untraceable, will be supported by this new application. Something tells me they won’t.

    Until next time,

    Boaz Shoshan
    Capital & Conflict  

    -Read more at www.capitalandconflict.com-

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  • Time to Jump Off This Runaway Money Train.

    20.09.2017 • United StatesComments Off on Time to Jump Off This Runaway Money Train.

    Bill Bonner – Bill Bonner’s Diary (United States) –

    ÎLE D’YEU, FRANCE – We are spending a couple of days with friends out on a tiny and charming island in the Atlantic, Île d’Yeu.

    We took the ferry from the Fromentine harbor, near the city of Nantes, on Sunday.

    Since then, we’ve been enjoying the salt-soaked air.



    The old castle on Île d’Yeu

    The castle you see in the photo was built in the 14th century and attacked many times – by Spaniards, Arabs, and English pirates. But locals claim it was never taken by force.

    The engineers who built it were either geniuses, lucky, or both.

    “In World War II, it was used by the Germans,” explained a friend.

    “The Nazis were convinced that the Allies would try to land near here on the mainland. So they put thousands of troops on the island with long-range artillery.

    “It was probably the best assignment any German soldier ever had. It’s a tiny island. And nothing happened. There was no resistance here. There was nothing much to do. The D-Day landing happened in Normandy, hundreds of miles away.

    “After spending the war here… fishing, drinking, taking in the sun on warm days… the German troops got on boats and went back to Germany.

    “And the fortress kept its reputation as impregnable.”



    Inherently Unstable

    Meanwhile, back in the U.S.…

    Business revenues (sales) are becalmed… growing at less than 1% a year over the past 10 years. And that’s before you account for inflation!

    And business profits are going nowhere. They’re rising at a rate of about 2% a year… or roughly equal to the rate of inflation.

    Household incomes and hourly wages – though subject to a lot of fudging – are dead in the water, too.

    Officially, they are now back to where they were at the end of the last century.

    But for some segments of the population – men with no college education – the situation is catastrophic; they’ve lost real income for the last 50 years.

    A dead man lies immobile for a long time. But a debt-fueled economy cannot even sit down. It is inherently unstable. It must move forward… or collapse.

    Consumers spend money now they hope to earn later on. The feds, too, promise benefits they can afford only if the economy – and tax revenues with it – grows fast enough.

    Over the next 10 years, the U.S. government is on course to spend $10 trillion it doesn’t have. It has also committed to a further $80 trillion in entitlements for which it has no known source.

    Only growth can save it.

    But like a bicycle that has slipped its chain, you can pedal as hard as you like; you still won’t get anywhere. The only thing that may help the economy now is a major tax reform.

    But that is almost impossible…



    Strutting and Squawking

    President Trump, elected by Republicans but now charting his own course, teams up with the Democrats on important issues.

    There is no way Democratic Deep State pols are going to vote to cut one of their major sources of funding.

    “What I admire about Mr. Trump,” we told our friends here on the island, “is that he understood – instinctively, perhaps – that he didn’t need to be tied to any party, policies, or programs.

    “The details are too complex and unknowable. Are we fighting the Sunnis or the Shiites? Who can remember? And who knows what is on page 997 of the Obamacare act?

    “And what difference does it make? The important decisions are made by the entrenched Deep State insiders. The president and the voters don’t have much effect on them.”

    The military junta – Generals Mattis, McMaster, and Kelly – control foreign policy. And a sordid cabal of Democrats and Republicans, cronies and zombies, controls domestic spending.

    All squawk and strut shamelessly about monuments, transgender bathrooms, racism, immigration, and other symbolic issues.

    Fans in the cheap seats take sides. They are red. Or they are blue. They are for Trump. Or they are against him.

    It scarcely matters. The bicycle slows. Soon, it will fall over.



    -Read more at bonnerandpartners.com-

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  • Fermi’s Paradox: “Where Is Everybody?”

    20.09.2017 • United KingdomComments Off on Fermi’s Paradox: “Where Is Everybody?”

    Andrew Lockley – Exponential Investor (United Kingdom) –

    Today, we’re taking a short detour from our usual content. We’re looking ahead to the long-term crises and opportunities that can affect your portfolio.

    This is just the kind of thing you’ll find at Cycles Trends and Forecasts – our publication for the far-sighted financial investor.  You can read their cheat sheet of predictions for coming decades – and, right now, it’s completely free of charge.

    I always think investors need to prepare for doom and gloom. That way, you’ll be ready for any crises that come. Maybe I spent too much time reading post-apocalyptic fiction, as a child (the hopeless, bleak Brother in the Land was one of my favourites). But, despite my seemingly-gloomy outlook, history seems to bear out the worst of my fears. All over the world, you can see evidence of civilisations that did not make it. From the lofty heights of Machu Picchu, to the low-lying Temples of Angkor Wat, the world is littered with ruined monuments, temples, and amphitheatres – all signs of civilizations long-gone.

    Today, we like to think we’re different; we like to think we’re smart. But I bet all the other civilisations thought they were different, too. There’s even a word for that: exceptionalism.

    Civilisation today may be larger, and more interconnected, than ever before in history. But that does not mean it’s immune to existential threats. In fact, many such threats are new – directly resulting from our status as an advanced technological society. Nuclear weapons are one obvious example.

    And, just as history informs us of our vulnerability, so might astronomy.

    It seems paradoxical that we have not seen any evidence of civilisation among the myriad stars that make up our galaxy. This is not just any old puzzle, it’s a well-studied paradox: Fermi’s Paradox. It’s colloquially summed up by Fermi’s quotation: “Where is everybody?”

    One possible explanation is worryingly simple: countless civilizations have emerged —only to collapse back into obscurity, or annihilation.

    These two strands of evidence suggest that our future is far from guaranteed. Our actions in the next few decades may dictate our ability to survive as a technological civilization – and maybe even as a species.

    Today, will be taking a look at some of the most important existential threats that mankind faces. Ever commercially-minded, we’ll be focusing on companies that are helping to reduce these risks.

    Your investment might not only be profitable – it might also save the world!


    Nuclear war

    The risk of nuclear war may be obvious – but it remains very real. Notwithstanding recent tensions over North Korea, we’ve been very lucky. Indeed, we’ve seen a remarkable nuclear abstinence, since the use of atomic bombs over Japan ended World War II.

    It would be nice to think that situation will continue, but there are reasons to believe that it will not. A belligerent and expansive USSR has been replaced by a belligerent and expansionist Russia – now headed by a despot. The White House is currently occupied by an impulsive, irrational, demagogue – with dictatorial tendencies. China is threatened by new American rhetoric, and is investing heavily in its military. Around the world, old enemies are becoming nuclear-armed: Israel/Iran, and India/Pakistan being notable examples of potential nuclear tension, in coming years. A cluster of less belligerent states, such as South Korea and Taiwan, may yet acquire nuclear weapons – due to troublesome neighbours and historic enmities.

    Paradoxically, the best way to profit from nuclear weapons may be by investing in the companies that make, deliver and support them. The threat of nuclear annihilation has seemingly been kept at bay by the principle of “mutually assured destruction”. Any nuclear war will be devastating to both sides in a conflict – so neither side can justify first use of nuclear weapons. Coupled with this, no non-nuclear state dares to pose an existential threat to a nuclear state. This principle of deterrence has lasted— so far. By investing further in nuclear arms, it’s possible that nuclear war may be staved off.

    Companies to watch: Honeywell, BAE Systems, Lockheed Martin, Northrop Grumman

    Global pandemic

    We are used to the risk of major global diseases. In our lifetimes, we’ve seen Ebola, Bird Flu, SARS – and a range of others. Fortunately, none of these have turned into an apocalyptic outbreak. Even in relatively recent history, that’s not been the case. The Spanish flu outbreak of 1918 killed more people than the Great War.

    Further back in history, the Black Death was an example of a truly devastating outbreak. Several waves engulfed Europe – but the most severe (in 1349) killed around a third of the English population. Should that death toll be repeated, it’s touch-and-go whether civilization as we know it would persist.

    When it comes to investment opportunities, the obvious beneficiaries are biotech companies. These will be our first line of defence against a pandemic. Currently, we’ve set aside little vaccine production capacity for such use. This societal oversight is finally now being addressed on a relatively significant scale.

    It’s not just natural disease, which we need to worry about. One possible route to a global apocalypse is a synthetic organism – or one that has been genetically modified. Benign experimentation, or negligent bioengineering, could create a newly-threatening pathogen.

    Furthermore, it’s not only human pandemics you need to watch out for. Crops are every bit as vulnerable. If you’re seeking a poster child for agricultural vulnerability, the banana’s lack of genetic diversity places it at particularly serious risk.

    Companies to watch: Pfizer is just one of many firms involved in the Coalition for Epidemic Preparedness Innovations. Don’t forget to watch out for firms operating in plant disease, too.

    Asteroid impact

    Armageddon may have brought asteroid risk into the popular consciousness – but it’s not just sci-fi. The threat of an asteroid impact is very real. Many of Earth’s mass extinctions have originated from what’s technically known as “bolide impacts”. There have also been many smaller events, a recurrence of which could have a very severe impact on human society. For example, 1908’s Tunguska strike was around half the size of the world’s largest nuclear bomb, and it flattened 2,000 square km of forest.

    Companies to watch: Asteroid-mining firms, such as Planetary Resources, and Deep Space Industries would be obvious technology partners. Space majors, such as SpaceX and Boeing, would also be well-placed to benefit from a crisis.

    We’ll continue this cheery stuff, tomorrow. Meanwhile, email us your nightmares: andrew@southbankresearch.com

    While you’re waiting, don’t forget to read up on the killer predictions from Cycles Trends and Forecasts.


    Andrew Lockley
    Exponential investor

    -Read more at www.exponentialinvestor.com-

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  • Cryptos Put Control Back in Your Hands

    20.09.2017 • FranceComments Off on Cryptos Put Control Back in Your Hands

    Simone Wapler – La Chronique Agora (France) –

    The reflections on the bitcoin and the cryptomonies reveal the stakes of the control by the Parasitocracy of the currency, the inflation and the taxes. In my soil, the harvest is now well advanced. The chimneys smoke, the chase has just opened. Bitcoin is not commonly traded between vines and woods. A deer’s thigh against six bottles of white … Jams against cheese … Nuts against oil … A helping hand with a tractor to redo a path against a hand for a roof … Firewood against the masonry … Everything knows but little is said. Bartering always runs, cash is also available. Back in town and finance. The great merit of bitcoin or other cryptomonies is to have kicked the anthill of fiduciary currencies, teeming with parasitocrats. People are starting to think again. “What is the true value of the bitcoin? “Asks columnist James Mackintosh in The Wall Street Journal today. “The big central banks can no longer ignore the expansion of the bitcoin,” says the Bank for International Settlements, which recommends these major central banks to issue their own cryptomonials. Jamie Dimon, president of JPMorgan Chase & Co talks about “scam”. Why, then, do cryptomata disturb as certain as they arouse the enthusiasm of others? Russia hates it … and Saudi Arabia more Discover the mysterious substance that shakes the world’s oil powers – and could bring you spectacular gains: just put that value in the portfolio. Click here to find out more. After all these are only fiat currencies , which have no market value, unlike gold or silver. These currencies need confidence to have value. Compared to an official fiat currency , cryptomonas are simply: Designed to be non-inflationary (available in limited quantities) Managed in a decentralized way and independent of any state or authority But precisely, these two characteristics – which are qualities for their supporters – are horrible defects for the Parasitocracy which is enriched with the fiat currencies controlled by it. The link between state money and taxes Because inflation is a tax. Thanks to inflation, the state increases its revenues and reduces the real weight of its debt. It feeds savers and favors the debtors and its clerks. The ants weep and the cicadas clink at the new harvest. There is an inextricable link between money and taxes – that is why states and governments want to control money since the dawn of time. The centralization of the currency is essential to the collection of the tax. A state, a government must face expenses. He needs soldiers, police, judges, civil servants, tax collectors, and everyone. He must therefore levy and tax the activities of other people. Of course, few people would spontaneously pay taxes. In fact, if they had a choice, very few people would pay taxes. Catholics have the money of worship, a tax of which the faithful themselves fix the amount in their soul and conscience. That, I think, is a rare case of voluntary taxation. For the majority of political organizations, legal force – money or prison – is required for the tax to return. To facilitate the tax, governments impose the currency in which taxes are due. Let’s assume that the bitcoin gets generalized but you have to continue paying your home tax and your income tax in euros. At one point, you would need euros to pay your taxes and avoid worries. Your neighbor is in the same situation as you, as well as your neighbor’s neighbor. [Editor’s note: You’ve probably already received your property tax. Know that this tax on the complicated tax base is riddled with error. How to check, make opposition, get up to 50% discount, rebates and rebates? Everything is here! ] This creates a demand for euros that otherwise would not exist. “And then, the fine business, maybe you think, the Treasury has only to accept the bitcoins or other cryptobidules! ” But no, unhappy, he can not. Because he can not create them himself, the bitcoins and other cryptomonies. This is the whole question of the inflation with which we have been inflated (literally and figuratively) for decades of Keynesianism. Inflation is not a sign of an overheating economy. Inflation is simply a tax. This tax is obtained through monetary creation. The central banks target of 2% inflation is simply a generalized tax target. The states want to control the currency and want the fiduciary money (which is based on nothing) only for that. A roe of deer against six bottles of white, neither seen nor known, is the nightmare of the collector!

    -Read more at –

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  • This Caribbean Island Is Making Economists Scratch Their Heads

    15.09.2017 • FranceComments Off on This Caribbean Island Is Making Economists Scratch Their Heads

    Simone Wapler – La Chronique Agora (France) –

    Political and legislative systems compete because of borders. The management of Hurricane Irma in Saint-Martin is not flattering to the French state.

    Do we still need borders and countries? After all, the international elite regularly boasts of the virtues of “global governance”.

    But the boundaries delimit the management of the states and thus make it possible to compare the management of various political, legislative, taxing and redistributive organizations. Borders therefore introduce a form of competition in the management of public affairs.

    Hurricanes, on the other hand, do not know borders and walk where Mother Nature decides.

    We recently had an interesting experiencein vitrowith Irma. This hurricane swept the French West Indies – notably Saint-Martin, part of which is under Dutch administration and the other under French administration.

    I already hear the kind, sensitive and charitable reader take offense. “This reptilian monster with cold blood and dry heart, named Simone Wapler, instead of pitying herself on unfortunate innocent and irresponsible victims will dissert on a calamity with a neo-ultra-liberal calculator.”

    Exactly. But, dear reader, you are not obliged to read me, and this chronicle has cost you nothing. I must add that in my childhood I knew, besides houses destroyed in a few minutes and buildings crumbling in the streets, scenes of plunder following earthquakes. These memories make me very well imagine what certain inhabitants have undergone.

    Returning to our subject – Saint Martin. Here, drawnan article which I highly recommend you read, an illustration ofCapitalconcerning the economy of St. Martin which is an island, unlike Guyana (I say this in the highly unlikely event that this article goes back to the Elysee).

    In blue, it is the French management and in orange, the Batavian management. For unemployment and paid holidays we dominate, there is nothing to say.

    En bleu, c’est la gestion française et en orange la gestion batav

    En bleu, c’est la gestion française et en orange la gestion batavFor the rest … France is not renowned for its economic performances – we know – and to console us, we have our art of living and our welfare state that the whole world envies us.

    For Irma, our “public service” had a week to prepare. As early as August 31st, it was known that Irma was going to be violent, very violent.

    But precisely, on the preparation side, missed. And,like always, in this kind of circumstances, after the destruction, the plunder.

    irma - LCI

    irma - LCIA distraught French population drooling on the side of the Batavians, where, under strictly identical circumstances, mess and anarchy were better controlled. The Dutch knew how to handle the situation.


    irma«Dutch sidethere are soldiers, a marechaussee, police on every street corner! They put a curfew at 5pm to clean the streets of looters. Here on the French side, the looters fill entire buses with everything they find. “The Dispatch

    Similar testimonies abound.[Editor’s note: Do you know that this seemingly innocuous object that measures less than 10 cm can save your life under such circumstances? This former CIAexplains herehow to get it.]

    Under the French administration, the “forces of order”, according to the consecrated expression, are absent, the administration swept away.

    What does the State do? From the com ‘.

    Macron flew on September 11 and told the public that he was so bold that it was not only him but equipment: “departure for the West Indies with equipment to manage the emergency and start the work of reconstruction “. It is accompanied by the Ministers of Education and Health.“The investment is complete, and the reconstruction will be, rest assured.”

    I do not see what is reassuring to probably even more of anything that does not work.

    The French state controls 57% of the economy but is incapable of performing its regal functions which are to guarantee the safety and property of each. Here is what the borders and a hurricane show us. Let no one tell us that we need “more means”. The Dutch state controls less than 44% of the country’s economy and does better when it is really needed.

    -Read more at la-chronique-agora.com (French)-

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  • By World Economic Forum in Davos, Switzerland, January 23, 2013. Copyright by World Economic Forum swiss-image.ch/Photo Remy Steinegger

    Here’s Why JP Morgan’s CEO Hates Bitcoin…

    15.09.2017 • United KingdomComments Off on Here’s Why JP Morgan’s CEO Hates Bitcoin…

    Nick Hubble – Capital and Conflict (United Kingdom) –

    I’ve just seen the news of another terror attack in London. I hope this letter finds you and your loved ones safe.

    “A large income is the best recipe for happiness I ever heard of…”

    “You intend to be very rich?”

    “To be sure. Do not you? Do not we all?”

    “I cannot intend anything which must be so completely beyond my power to command… My intentions are only not to be poor. ”

    Mansfield Park, Jane Austen

    If money is the best recipe for happiness, then surely the Bank of England (BoE) is an eternal well of euphoria. The BoE certainly sees itself as a positive force in the world – just take a look at this friendly infographic detailing how the BoE helps you by creating money out of thin air and stuffing it into the economy financial markets.

    In a world where politicians and central bankers command market forces and redistribute wealth, where inflation is high and yet interest rates are abysmal, the desire to be wealthy is replaced by the fear of being made poor.

    Yesterday, the BoE announced no change to interest rates, or its quantitative easing programme. The bank rate will remain slack at 0.25%, and the BoE’s stock of government bonds will remain at £435 billion. The BoE’s stock of debt from companies which “make a material contribution to the UK” will remain at £10 billion. As the bonds mature, the bank will buy more, with money summoned from the ether.

    Meanwhile, consumer price inflation has hit 2.9%, and is expected to pass 3% in October. Overall, this is fantastic news… for debtors. Governments and companies can borrow at ridiculously low interest rates, and then watch the weight of their debt float away, as Mark Carney ties helium balloons to it.

    This is bad news for every else. With inflation easily exceeding the hopeless interest rates banks offer to their customers, the purchasing power of the everyman and woman is slowly being crushed. In such an environment, one turns to gold to protect wealth. But gold was hammered down yesterday, with a troy ounce costing roughly £988 at the time of writing – why?

    Because Carney and co are apparently considering raising rates in the future. The prospect of higher rates… sometime, pushed the pound higher against the dollar and gold.

    Colour me sceptical

    Carney was jawboning about rate hikes in the pipeline in 2014, and we’re still waiting.

    I realised today that the BoE hasn’t raised rates for more than a decade – can you remember what you were doing in July 2007? I sure can’t. I’ll believe a rate hike when I see it – all I see on the horizon right now is the price of a Freddo going up.

    But have no fear every, because alongside its monetary policy statements, the BoE released the new Jane Austen £10 note yesterday. I always thought “Capital & Conflict” sounded like an Austen novel – It wouldn’t look out of place on a bookshelf beside Pride and Prejudice, or Sense and Sensibility. A billion of the polymer notes have been printed – that’s 1,000,000,000 portraits of Jane Austen, all staring blindly in bank vaults, waiting to line our pockets and purses.

    Ironically, the quote on the new tenner is as insincere as the jawboning of central bankers:

    “I declare after all that there is no enjoyment like reading!” is said by an Austen character not because she likes reading, but because she is trying to gain the affection of a man who does.

    Speaking of jawboning…

    “You can’t have a business where people can invent a currency out of thin air and think the people buying it are really smart. It’s worse than tulip bulbs, OK?”

    Jamie Dimon, CEO of JP Morgan on bitcoin

    Arguably, you could say the same about fiat currency. But in fairness, Dimon was speaking about how governments wouldn’t allow a stateless currency to compete with their own. With Chinese whispers of a crackdown on bitcoin exchanges, his statements shouldn’t be dismissed out of hand. One Chinese bitcoin exchange has already announced it will be suspending trading, and the price of bitcoin has now fallen from the $5,000 mark to around $3,100 at the time of writing.

    However, like with Carney’s prophesies of a rate hike, we are seeing a lot of words, but little action. I believe the Chinese situation may actually be a North Korea story. Let me explain.

    Neither the US nor China want North Korea to have nukes. North Korea is facing numerous economic sanctions from both countries that lock it out of the global monetary system, who hope that if enough pain is applied, North Korea will abandon its nuclear ambitions.

    Immunity to sanctions

    Unable to get its hands on foreign fiat currencies, North Korea has turned to cryptocurrencies – stateless, they are immune to economic sanctions. North Korean hackers have been stealing crypto from South Korean exchanges to keep the cash coming, and there’s little the US and China can do to stop it.

    However, shutting down bitcoin exchanges (or spreading rumours that they will) causes the price to fall. If bitcoin is worth less, the North Koreans will have less purchasing power, which effectively works as another economic sanction against North Korea. All the stories of China about to shut down exchanges could just be another effort to stop North Korea getting nukes.

    Or maybe the Chinese government are just fed up of bitcoin. Time will tell.

    North Korea certainly isn’t fed up of launching missiles – it fired another over Japan at 10pm last night.

    Have a great weekend, and stay safe out there.

    Until next time,

    Boaz Shoshan
    Capital & Conflict

    -Read more at www.capitalandconflict.com-

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  • We’re Only A Fraction of a Point from a Crash Alert

    15.09.2017 • United StatesComments Off on We’re Only A Fraction of a Point from a Crash Alert

    Bill Bonner – Bill Bonner’s Diary (United States) –

    PARIS – First, the news.

    Cryptocurrencies took a beating after Jamie Dimon – the CEO of JPMorgan Chase, a bank that makes billions from today’s fake-money system – called bitcoin a “fraud.”

    Bitcoin – the leading cryptocurrency by market value – is down to $3,143 at this writing.

    That’s about 36% lower than its all-time high of $4,911, set on September 1 of this year.

    President Trump put another knife into Republicans. According to press reports, he agreed to not only give the “Dreamers” refuge, but also to forget about building “The Wall.”

    And the U.S. national debt rose over $20 trillion… thanks to last week’s debt ceiling suspension.


    Apparent “Prosperity”

    Our hypothesis is simple: Real money represents real resources.

    Phony money – such as credit created out of nothing by the Fed – is counterfeit; there’s nothing behind it.

    If you could create real prosperity by flooding the economy with fake money, Zimbabwe would be the richest country on Earth.

    It printed gazillions of Zim dollars to stimulate the economy. Then, when there was no one left with any real money… and nothing left to buy with it anyway… the Zimbabwe feds gave up. They brought in U.S. dollars.

    When criticized by foreign economists for his role in this disaster, Gideon Gono, the governor of Zimbabwe’s central bank, had a good answer: “Hey, I didn’t do anything you’re not doing.”

    He was right. But what Gono did quick, Janet Yellen, Mario Draghi, et al. are now doing in slo-mo.

    Any boom – fast or slow, big or little – financed with fake money must eventually turn into a bust. And every dollar of apparent “prosperity” – wrought by the counterfeit money – must go back whence it came.

    Classical economists in the 18th and 19th centuries showed why this was so. The demonstration tends to be longer and more tedious than we can stomach here. Instead, we resort to an intuitive proof.

    You pretend to be rich; a Russian model marries you. Then she discovers you are penniless; how is that likely to work out?

    2008 Redux

    This year, total household debt in the U.S. rose to $12.7 trillion – surpassing its 2008 peak.

    That’s the amount of stuff consumed, credit cards maxed out, and vacations enjoyed – on credit above and beyond savings.

    You may say, “Well, so what? We’re able to carry the debt. We’re all right so far.”

    Our grandfather, who lived through the Great Depression, used to joke about it. He said he was on the 11th floor of the First National Bank building in Baltimore, in 1931, when he saw someone through the window who had just jumped off the roof.

    “I’m all right so far,” yelled the man.

    And yes… we are all right so far. We can carry the debt.

    But look at what happens: Today’s wages and asset prices – which we depend on to shoulder that debt load – themselves depend on increasing debt.

    That is, as we saw yesterday, the typical consumer has to keep borrowing. If he stops, sales will go down… profits will go down… wages will go down…

    …and it will be impossible to pay the interest on the current level of debt.

    In other words, there is no such thing as a stable debt-fueled expansion. Instead, it is boom… and then bust. There’s no standing still. You are either taking on more debt to keep the debt bubble inflated…

    …or the whole shebang is losing air.

    And what makes today’s financial world so exciting is that there is so much air to lose – $13 trillion in America alone.

    So… what’s that hissing noise?

    Doom Index Update

    We turn to the Bonner & Partners research department, led by Joe Withrow, for an update:

    The Doom Index is still at a reading of 7 – our “extreme warning” level – as we enter the final month of the third quarter.

    Credit growth is just above negative… but less than 1%. Corporate bond downgrades continue to outweigh upgrades. Stock valuations press ever higher. Margin debt [money stock market investors borrow from their brokers using shares in their accounts as collateral] continues to grow.

    But the ISM Manufacturing Index – a key gauge of the health of the manufacturing sector – continues to hold strong. And junk bonds refuse to crack.

    But remember, our backtests are based on quarterly data. Any major swings this month could push the Doom Index to a reading of 8 – signaling a return of the old and tattered Crash Alert flag. Until then, we remain extremely cautious…

    We used to run our Crash Alert flag up the pole on instinct alone. After so many years of watching the stock market, we thought we’d developed a sixth sense for when it was getting ready to collapse.

    And sometimes we were right! At the end of the 1990s, for example. And again in 2008.

    But we were wrong sometimes, too.

    Since 2009, we’ve raised the flag several times… and still no crash!

    The poor black-and-blue standard was tattered by the wind… bleached by the sun… and drenched by the rain.

    Finally, we had pity on it… blew taps… and hauled it down, wrapping it with white gloves and putting it away until the day it comes out again.

    And now, our Doom Index is just a fraction of a point away…

    We’re ready, Joe. Tell us when to raise the flag.



    -Read more at bonnerandpartners.com-

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  • Is Bitcoin This Generation’s Tulipmania?

    15.09.2017 • United KingdomComments Off on Is Bitcoin This Generation’s Tulipmania?

    Boaz Shoshan – Exponential Investor (United Kingdom) –

    How do the rich and powerful respond when their supremacy is challenged?

    If you want an answer to that question, direct your enquires to Jamie Dimon, CEO of JP Morgan.

    This week he gave us a lovely insight into just what happens when new ideas and thinking disrupts the privileged position of those in power.

    Short answer: they fight back. They’ll play dirty while they’re at it.

    And they’ll stoop to levels of hypocrisy most humans aren’t capable of.

    Case in point – Dimon’s suggestion that bitcoin is a “fraud”. It’s also “worse than tulip bulbs” (look up “tulip mania” if that reference goes over your ).

    Dimon went on to claim the cryptocurrency “won’t end well”. And here’s the kicker – he’ll fire any JP Morgan employee caught owning bitcoin.  “I’d fire them in a second,” he said. “For two reasons: it’s against our rules, and they’re stupid. And both are dangerous.”

    There you go. If you own, have owned or are thinking about owning bitcoin, you’re stupid. In Dimon’s view. If that ruined your day, I apologise.

    I disagree with that view, by the way. In fact I’m happy to personally employ any “stupid” JP Morgan employees out there right here at Southbank Investment Research. Clear your desk and contact me at nick@southbankresearch.com...

    Full disclosure: I can’t promise to pay you like a banker. But I can guarantee if you value genuine critical thinking and the complete freedom to talk about alternative ideas the establishment consider “stupid”, you won’t find a better place to do it than here at Southbank Investment Research. And we buy everyone beer on Fridays.

    You have to love someone like Dimon taking a stand on cryptocurrencies though. It’s the entire crypto revolution in microcosm. Dimon (and JP Morgan in general) is a great example of who the current monetary system works just perfectly for.

    JP Morgan was key in the development of the derivatives market in the 1990s and early 2000s. It approached American International Group with new collateralised debt obligation (CDO) products, which generated huge fees for investment banks. It was involved in subprime lending. It was a real financial innovator.

    Innovative, but not above sticking its hand out for a bailout when the financial crisis struck. It received $25 billion via the Federal Reserve’s Troubled Asset Relief Program (“TARP”).

    In short, it’s a prime example of just what a mess the current system is in.

    Bailouts, rigged interest rates, money printing – it’s all great if you’re an insider.

    The current system suits governments, central banks, investment banks and other financiers just fine. It protects their privileged status, power and wealth.

    Of course, if you’re a normal person the current system doesn’t do you any favours. That’s because you don’t matter. No one cares if you get screwed by a system that favours the powerful.

    If you have to invest your hard-earned savings or pension pot in a market irradiated by quantitative easing (QE) – tough. If your savings pay a pittance – shut up and stop whinging. If you get “bailed in” when a bank goes under – sorry, that’s just the way things are.

    As my mate Sam Volkering (editor of Revolutionary Tech Investor) and author of  put it:

    What slid under the radar with Dimon’s comments was JP Morgan trading revenue was down 20% year-over-year. Meanwhile, Bitcoin is up around 315% this year alone.

    The irony to Dimon’s comments is he’s part of why bitcoin even exists. JP Morgan is part of the reason bitcoin is so successful. The whole rigged, broken financial system is exactly why the future of money is bitcoin and crypto. And there’s nothing Dimon or any of his cronies can do to stop it.

    Which is all just a long-winded way of saying of course Dimon doesn’t like cryptocurrencies. Cryptos are a response to a financial system that is rigged and distorted almost beyond meaning. That doesn’t make bitcoin or other cryptos perfect. But increasing interest in them is an act of financial rebellion.

    That’s how revolutions start. You have to have something to revolt against first. That might be because an existing industry doesn’t work any longer and is replaced by something better. Or it might be what’s there at the moment is so corrupt people are forced to look for an alternative.

    And that’s what cryptos are. An alternative financial system.

    Does that mean they’re guaranteed to succeed? No. Does it mean the market can’t overheat or bubble up? No!

    But I think the existing financial system IS guaranteed to fail. Something will replace it. Long term that something might be cryptos. Understanding that and positioning yourself a of it could well be a smart move.

    That’s the context you need to see cryptos in. A monetary rebellion.

    I’ve seen people describe bitcoin as purely an asset for speculators. That’s a strange and narrow view. It’s like saying the French Revolution was purely about cake, or the Occupy movement was purely about tents. It completely misses the point that both were movements against something.

    I’m open to people’s objections and criticisms because cryptos aren’t perfect.

    But beyond a certain point, you need to flip that equation over: criticism of crypto implies support of the existing system.

    Unless you’re an insider with your in the trough of QE, TARP, ZIRP, NIRP and whatever daft scheme the authorities come up with next, there’s no good reason to support what we have now. There’s no reason not to consider alternatives. You certainly shouldn’t dismiss them as “stupid”.

    You may not want to own bitcoin – at this price, or any other. But if you’re not looking at it as a fundamental reaction against the system we have at the moment, you’re missing the point.

    I’m not going to end by saying “so buy bitcoin” (though I believe setting an account up and funding it with a small amount of money is worth it). But I will recommend you start taking this seriously and learn more about this. To do that I suggest reading Sam Volkering’s book, which we’ve just published here in the UK.



    Nick O'Connor Signature

    Nick O'Connor SignatureNick O’Connor
    Publisher, Exponential Investor

    PS One criticism I’ve seen of cryptos is that they’re created by “anonymous” groups of people. The argument went on to say that it’s better for a currency to be managed by a strongman, king or cabal because then everyone “knows who is in charge”.

    That’s just an argument for authoritarianism. We need someone in charge to manage things, so we all know who we’re being screwed over by. That’s a strange argument.

    I will agree there’s no need for people behind these coins to be anonymous. I doubt it’ll stay like that. There’s no reason Amazon or Google couldn’t issue a coin. A powerful brand combined with a new monetary system would be quite a combo. I can’t see it happening though. Amazon and Google both do pretty well out of the status quo.

    The key difference with all of these ideas is no one is forced to use any one crypto. With a state-managed currency, you’re forced to use what the authorities tell you. You can’t pay your taxes in bitcoin. Or dollars. Or yen. Only pounds. That’s what gives the state a powerful monopoly on your money and your life.

    Cryptos could conceivably break that monopoly. A natural, free market in money, where you can use the currency you deem best for your needs – that’s the world cryptos could create. But it threatens more than just the financial system. It threatens the state itself. Dimon will have some powerful allies in his war on crypto if that happens.

    -Read more at www.exponentialinvestor.com-

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  • You Can Know Tomorrow’s Big Gainers Today

    14.09.2017 • United KingdomComments Off on You Can Know Tomorrow’s Big Gainers Today

    Andrew Lockley – Exponential Investor (United Kingdom) –

    In the Back to the Future films, the “baddie” (Biff) makes a fortune. He does this by travelling through time, to give his younger self a book of sports results. After a few trips to the bookies, Biff’s a multi-millionaire.

    What if you could also see the future, when you place your bets?

    If you could go back 20 or 30 years, it’s clear that one of the best places to put your money would be marketplaces. The leading firms in this sector have become titans: Amazon, eBay, and Airbnb. These have become household names – all based on a revolution in online marketplaces.

    The betting guide from the future is readily available

    If you want to see the future in an industry, you don’t need a time machine. You just need to look at comparable industries, and see how they’ve been disrupted. That’s why marketplaces are one of the key sectors I’m active in. The disruption that’s happening today, in dozens of sectors, is very like the disruption that ebay and Airbnb have already caused.

    You might think this is old news, and that the opportunities have passed. But even today, many industries are virtually untouched. Today, we’re talking to a young entrepreneur who has found a sector he believes is ripe for disruption. The history of huge profits achieved by established marketplaces suggests that he’s making a very smart move.

    I’ll let Rashide Carvalho, from Whipgo, tell you all about his online car hire marketplace.

    AL: How have marketplaces changed the way we live?

    RC: Online marketplaces have changed the way we consume in the 21st century. You can now access a vast number of products on one platform, without much effort – comparing prices from products around the world. You get a wider variety, and have a better customer experience. In the car rental industry, you previously had to use your yearly Yellow Pages to find a car rental company – but now you can use services like whipgo.com to rent cars from hundreds of independent rental companies near you. The process works in seconds – without having to deal with the boring paperwork.

    AL: Why are people drawn to use marketplace platforms?

    RC: People usually turn towards marketplaces because of the efficiency, convenience and variety of options. I now do 90% of my shopping online, and most of what I buy isn’t available near where I live.

    Trust has also played a big part in growing these platforms. A lot of marketplaces are focused on community. This is very important, as people feel like they are part of the company – and not just another consumer on the platform. This helps the platforms, because the experience becomes so good that customers become “evangelists”. They then naturally spread the word to their friends and family. People don’t remember what you say to them, they remember how you made them feel – and that is one of the most important points in every business.

    AL: How have marketplaces disrupted industries?

    RC: Marketplaces have helped new industries to emerge. These platforms helped businesses and people with skills and talents to get more exposure all around the world. Great examples are platforms like TaskRabbit, where you can find people to do DIY tasks for affordable prices; and Fiverr, where you can get freelance services for as little as $5.

    AL: What made you create your own marketplace?

    RC: Everything started when I was 20 years old and tried to hire an Audi R8 to celebrate an achievement. But it was really hard to find a company who had that car; I looked everywhere with no luck. I then thought “Why not buy an R8 and rent it to people who want to drive these vehicles – that would be cool.” After trying to search for companies doing similar things I noticed how hard it was to find them – and that is where whipgo.com was born. The aim is now to improve users’ experience renting vehicles. Today, it takes an average of one hour from the point of arriving at the branch to driving off with the vehicle; we are aiming to bring this down to five minutes.

    AL: What makes a good marketplace platform?

    RC: The secret behind a great marketplace is to solve a problem affecting millions of people. Take a good look around the products you use and ask “Why does it take so long to do something so simple?” or “I’ve had such a bad experience, how can I make it easier?” This is what the founders of some of the biggest marketplaces in the world, like Amazon, Uber and Airbnb, asked – and they were able to create billion-pound industries and get people connected.

    People didn’t know they needed services like Deliveroo and Just Eat – but now does it even cross your mind to leave your house to get a takeaway?

    AL: Where do you see the future of marketplaces?

    RC: As long as an industry is disconnected, then there will always be space for a new marketplace to emerge. As an increasing number of industries get disrupted, this will change the way we live our lives: in transport, food, and retail. Marketplaces improve our way of living, and that is never a bad thing.

    AL: What’s next for Whipgo?

    RC: We launched our “minimum viable product” (MVP) in November 2016, and we received great feedback and traction. Close to £150,000 worth of leads were sent to rental companies. We are now working on Version 2.0. This is going to be released in a few weeks, and we are looking for angel investors. These should be people who believe in our vision, and want to take this exciting journey with us.

    Are you in the market for marketplaces? Let us know: andrew@southbankresearch.com.


    Andrew Lockley
    Exponential Investor

    -Read more at www.exponentialinvestor.com-

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  • This Scandal Could Topple Facebook Forever

    14.09.2017 • FranceComments Off on This Scandal Could Topple Facebook Forever

    Simone Wapler – La Chronique Agora (France) –

    The online advertising market is shaken by a scandal: traffics are distorted by robots.

    If you surf the Internet, you probably experience the workings of advertising on this media.

    When you do a search, commercial links first appear to you. Traders buy their visibility by paying keywords. If you go to a specific site, advertisements appear to you. If we go simultaneously to the same place, you will not see the same advertisers as me thanks to the magic of theCookiesstored by your browser.

    All this beautiful mechanics soliciting our wallet pays. A myriad of providers, large and small, surfing on this wave. Advertisers on their part have been seduced by assurances of return on investment.

    These advertisers do not really know the number of eyes that dragged on the magazine page or the 4 × 3 poster they had purchased at great expense. On the other hand, a geek guarantees them click rates, traffic, etc. Well, that’s what they thought up to now.

    For a scandal over Internet advertising and its consequences are likely to be very important in the sector of technology stocks swollen after a decade of monetary creation.

    Amazon (AMZN) is trading at a price / earnings ratio of 248;Nvidia (NVDA) is trading at a price / earnings ratio of 49;Facebook (FB) is trading at a price / earnings ratio of 37;Alphabet (GOOGL) is trading at a price / earnings ratio of 34.

    In other words, it will take more than 30 years of profits, as things stand, to make your “investment” Facebook or Alphabet profitable. Buying amounts to speculating on a tripling or a quadrupling of current profits.[Editor’s note: Fortunately, technological values ​​do not involve only high-level actions. A new sector is exploding in thebiotech.Discover it here.]

    My colleague, Graham Summers,already worried about the phenomenon in July

    Many of these companies make a significant share of their turnover with online advertising. For example, customers pay Facebook in exchange for an online advertising space, paid space based on Internet traffic.

    This is a fast growing market.

    Croissance des chiffres d'affaires trimestriel de la publicité en ligne 1996-2017 (Mds$)

    Croissance des chiffres d'affaires trimestriel de la publicité en ligne 1996-2017 (Mds$)

    Bogus traffic made by robots

    However, it now appears that robots, not humans, are at the origin of this internet traffic. Therefore, what Facebook and others charge to their customers in exchange for advertising space is based on deception.

    Unilever’s marketing director, whose budget for online advertising is $ 8.4 billion, said 60 percent of the traffic was robots.


    UnileverBy September 2016, it had been learned that Facebook was overestimating the length of viewing of advertising videos by at least 60% to 80%.

    “According to informed sources, major advertisers and marketers are unhappy with Facebook Inc. because they have learned that for two years this Internet giant has overestimated the average viewing time of video ads on its platform . […] Initial counting methods probably overestimated the viewing time of videos by 60 to 80 percent, according to a letter that Publicis Media sent to its customers at the end of August, andThe Wall Street Journalhas analyzed. “Dow Jones News, Facebook Overestimated Key Video Metric For Two Years

    Obviously, advertisers do not remain inert.

    On July 27, Procter & Gamble Chief Operating Officer David Taylor announcedWall Street Journalcut the budgets of certain online ads and see no difference.

    Then the Zerohedge site indicated that Google would pay advertisers in some proven cases of artificial traffic.

    Finally, on September 7, there was a conference organized by Goldman Sachs on the theme of world retail. The president of Restoration Hardware, Gary Friedman, made this tasty secret:

    “We found that 98% of our turnover came from 22 words. Wait … we buy 3,200 words and 98% of the figure comes from 22 words. What are these 22 words? They said, well, it’s ‘Restoration Hardware’ and the 21 incorrect spellings, okay? “

    Let’s recap, dear reader …

    • Many technological values ​​are currently being traded in hallucinating profit-making ratios.
    • Most of the profits are based on very sustained growth in online advertising revenues.
    • The prices of these advertisements depend on the traffic.
    • This traffic is due to robots who are unable to buy.
    • Advertisers with big budgets reduce the canopy and find that they do not worse.

    Suspense unsustainable: who will have the top, the robots of trading or the bogus traffic robots?


    robotsSubsidiary question: What profit-to-profit ratios will we see this time before the final collapse (knowing that something divided by zero tends to infinity)?

    -Read more at la-chronique-agora.com (French)-

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  • Sad! Republican Party Fractures

    14.09.2017 • United StatesComments Off on Sad! Republican Party Fractures

    Bill Bonner – Bill Bonner’s Diary (United States) –

    Yea, though I walk through the valley of the shadow of death, I will fear no evil: for thou art with me; thy rod and thy staff they comfort me.

    – Psalm 23:4

    NORMANDY, FRANCE – Others are beginning to notice: Republicans have lost the White House.

    The Washington Post reports:

    It could very well be a blip on the screen, as could Trump’s flirtation with going the independent route with his presidency. But for a Republican Party that has long worried about Trump’s impact on it, [recent polls from the Pew Research Center] – along with polls showing GOP voters turning on their leaders – suggest there is some restlessness with the party that nominated him and that the GOP is ripe for Trump slamming a wedge right through the middle of it.

    When their general defects, it becomes almost impossible to keep the troops in line. Look for widespread dissension and defection all up and down the Republican ranks.

    Which brings us to tax reform…

    No Escape

    A well-disciplined and keenly motivated party might be able to pass a major tax reform bill.

    It last happened in the enthusiasm for “Morning in America” under President Reagan, 36 years ago.

    But a fractured majority party and an independent president make Congress irrelevant… and unable to do much of anything.

    So there will be no genuine tax reform. No repeal and replace of O’care.

    And now, with the debt ceiling out of the way, there will be no halt to the Debt Bomb Express… running wide open and bound for Hell.

    And that means the next move by the feds will be to ban physical cash. Once the feds get cash out of the way, they have us all under control.

    They can tax as much as they like. They can impose negative interest rates… penalizing you for saving money. They can prevent us from buying guns or cigarettes, or anything they disapprove of.

    This subject came up with a wise friend yesterday…

    “You know who Marcel Dassault is? He built fighter planes for the French during World War I and later founded an aircraft company.

    “He was Jewish. And during the Nazi occupation of France during World War II, he refused to collaborate with the Germans and got sent to Buchenwald. He says he survived because he was carrying a lot of cash.

    “Without cash, you’re out of luck. You can only buy things by going through the banks. And banks are practically government utilities; they do what the feds say.”

    Gold, Guns, and God

    “If they want to stop us dead in our tracks,” continued our friend, “they can simply freeze our accounts under suspicion of anything – money laundering, tax evasion, supporting terrorism.

    “And then they’ll define ‘terrorism’ as any kind of freedom-oriented cause. They won’t need to pass any laws. They won’t need any court orders. They’ll just do it as part of their financial regulation.

    “As you say, governments are always run by insiders. They always try to keep the rest of us under control. But they’ve never before had a tool like the internet.

    “The only reason Americans were so free for so long was because they were in such a wild country. The distances were huge. They had real cash – gold. And they were well armed.

    “You know… it was probably a combination of God, gold, and guns that made America especially free and prosperous.

    “They were mostly Protestants, so they didn’t think they needed priests or the Pope to put them in touch with God. They could read the Bible themselves. That made them independent.

    “Gold was real cash. They didn’t have to ask anyone’s permission to do business with one another. And you have to give people with guns some respect… or at least some space.

    “But now, all of that is going away. I read the news from the U.S. It looks as though Americans are just as much under the thumb of the authorities as people are everywhere else.

    “The god most of them worship today is the federal government. When they enter into the valley of death today, they look for the rod of the Social Security Administration to pay for their retirement and the staff of Obamacare to provide free opiate pills.

    “They’ve still got guns. But if the feds get control of cash… and the banking system… the guns won’t do any good. Your credit card won’t work. Who are you gonna shoot?

    “And that’s the problem with gold, too. They took it out of the money system in 1971.

    “Americans haven’t had any real currency since then. All that most of them have is debt. They buy houses with debt. They buy cars with debt. Cut off the credit, and they’ve got nothing.”

    Empire of Debt

    For the last 46 years, most Americans have used debt to boost their standards of living while their incomes were stagnant.

    More recently, they use debt not to get a, but just to stay in the same place.

    From the host of the StreetTalkLive podcast, Lance Roberts:

    Beginning in 2009, the gap between the real disposable incomes and the cost of living was no longer able to be filled by credit expansion. In other words, as opposed to prior 1980, the situation is quite different and a harbinger of potentially bigger problems a. The consumer is no longer turning to credit to leverage UP consumption – they are turning to credit to maintain their current living needs.

    Household debt levels are back at record highs. At the lower end, people get student loans – which are easy to get – not to go to school, but to pay for cable and beer. Studies show they are twice as likely to use student loan money for living expenses than they were in 2016.

    And at the upper end, “margin debt” – money people borrow from their brokers using shares they own as collateral – has reached a new record high, too. So has corporate debt.

    And last Friday, government debt went through the roof – $317 billion was added to the national debt in a single 24-hour period. That’s $1,000 for every man, woman, and child in America.

    Earlier this week, we were looking – albeit a bit mischievously – into the future. We saw President Trump starting a new political party.

    He has shown he can draw support from Democrats and Republicans. He has shown, too, that he is ready to play one off against the other to get what he wants.

    We were a little shocked by how readily the president joined forces with Deep State Democrats to open the sluice gates.

    But remember, the U.S. is an empire that runs on debt. No wants to stand between the Deep State and the money it needs.

    And now that the flood has begun, the next stage of the great wingy-dingy hullabaloo can begin, too.

    Desperate to keep the money flowing, the feds will boost spending and debt… further balloon the national debt by trillions of dollars… drop interest rates below zero… and clamp down on the use of cash to seal off escape routes.

    Then it will be time to say a prayer…

    Stay tuned…



    -Read more at bonnerandpartners.com-

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  • Central Bankers Are Running Out of Space

    14.09.2017 • United KingdomComments Off on Central Bankers Are Running Out of Space

    Nick Hubble – Capital and Conflict (United Kingdom) –

    Yesterday we finished Capital & Conflict by describing how badly discredited the anti-immigration justification for Brexit is. The figures and the economic justification are simply wrong.

    But the real reason to favour Brexit is plastered all over the news this morning. The EU’s leadership is on a drive for all the things Brexiteers warned about. The end of vetos, the introduction of a joint military force, and an awesomely powerful set of EU politicians to determine foreign and financial policy without recourse for national governments.

    The vision laid out by your president Jean-Claude Junker in his State of the Union speech is enough to drive many more Europeans to euroscepticism. If he had actually spoken about the state of the union instead of his dream for the union, things would’ve sounded different.

    In anticipation of the backlash, which will be far more interesting than the speech itself, let’s look at something more important to your financial wellbeing for today.

    Deutsche Bank has put together the most comprehensive, useful and insightful summary of central bank quantitative easing to date.

    It offers a truly remarkable conclusion which no else seems to point out. In fact, my conclusion is the precise opposite of everyone else who looks at the table it’s published, as shown on the website Zero Hedge.

    Table showing the relevant market size estimates and the share owned by central banksTable showing the relevant market size estimates and the share owned by central banks

    The table shows how different central banks have kept busy the last few years. The US’s Federal Reserve, the eurozone’s European Central Bank (ECB), Japan’s Bank of Japan (BoJ) and the UK’s Bank of England (BoE) are all profiled. The table shows what they bought, how much of it, and what proportion of the total market that amount is.

    The asset classes they purchased are government bonds; asset-backed securities (ABS), like the mortgage bonds which blew up during the financial crisis; covered bonds, which are loans that have a claim on stable collateral; investment-grade (highly rated) corporate bonds; and equities (including exchange-traded funds, or ETFs). The figures are for mid-August.

    For example, the Federal Reserve has bought two and a half trillion dollars of government bonds, about 23% of the total outstanding. It also holds an enormous amount of mortgage-backed securities. But the Americans haven’t bought corporate bonds or stocks. Although in other news the Swiss National Bank has bought vast amounts of US shares.

    Back to the table. The ECB is much more diversified across all the asset classes except stocks. It’s hitting legislated limits on how many bonds it can buy from certain nations including Germany, Portugal and Belgium.

    Japan is the terrifying outlier. The Japanese central bank owns 44% of its government’s debt, 13.5% of the corporate bond market and 2.7% of shares. But that’s extremely misleading because the actual area of intervention by the BoJ is in the Japanese equity ETF market. It owns 75% of those, and rising! Also, the focus of these ETFs tends to be in the bigger index stocks, so the impact of buying is uneven.

    Here in the UK, the Bank of England has been comparatively moderate, owning 21.7% of our national debt and just 3.1% of corporate bonds.

    The obvious analysis based on the table above is that central bankers are running out of space. Their ammunition in the war on deflation is buying stuff. But there isn’t much stuff left to buy. At least not without reaching the limits of common sense, the law, economic law and credibility.

    At some point, they are monetising government deficits, manipulating the stock and bond market to the point where they own the lot and completely undermine credibility of both markets entirely. The price of assets will not convey any information other than central bank action. The result is a world I will discuss in my speech at our conference on 6 October. If you haven’t signed up to listen to the likes of MEP Daniel Hannan and renowned investors Charlie Morris and Tim Price, you can do so here.

    Analysts are terrified about the moment when monetary policy is exhausted. Either because it has no effect, or because it reaches the limits of what can be bought. The turning point identified by central bank watchers is in 2018, when the monetary manipulators will supposedly begin manipulating money less and less.


    Read between the numbers

    The real message in the chart is precisely the opposite conclusion to what commentators focus on. Central bankers have a huge amount of room to move. For example, given the precedent of Japan, the Federal Reserve could double its holdings of government bonds.

    But focus on the blank spaces instead of the filled ones. The figures are hiding the important information there.

    The Federal Reserve hasn’t event touched its enormous corporate bond market and stockmarket. Investment-grade corporate bonds are issued at a rate of more than a trillion US dollars a year, leaving a vast stock of corporate bonds the Fed could mop up. Buying a tiny per cent of the enormous US equity market could add another trillion or so in the US and eurozone. The UK has the biggest potential of all, barely monetising any of its vast financial markets.

    The idea that central bankers are running up against constraints is simply wrong. But articles about the restrictions are everywhere. Especially on the ECB’s limit on buying government bonds. But that limit is imposed by governments. What are the chances it will be changed when the change benefits governments?

    Not that central bank action isn’t creating absurd outcomes already

    The Financial Times reports that 30 US companies own $800 billion in fixed income investments. They’re trying to diversify their hoard of cash to keep it out of risky banks and earning some return.

    But the amount of cash is so large it’s become a market risk. These are companies who are supposed to use their cash, not hoard it like a fund. If they sell, there’ll be trouble. Not only that, but they own 5% of the corporate bond market – the debt of their competitors.

    Another problem is the financial position of central banks. What if the assets they own plunge in price, leaving the entire institution under water? We don’t even know if it’s an important question to ask, that’s how obscure the issue is.

    Until next time,

    Nick Hubble
    Capital & Conflict

    -Read more at www.capitalandconflict.com-

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  • How to Get In Early in This “Dirty” Sector

    13.09.2017 • United KingdomComments Off on How to Get In Early in This “Dirty” Sector

    Andrew Lockley – Exponential Investor (United Kingdom) –

    Yesterday, we started looking at the companion robot space. We concluded by identifying the controversial topic of sex robots as an interesting investment field to explore – although a potentially troubling one. Today we’ll look at the commercial opportunities, and the risks.

    Sci-fi is rich with portrayals of sexually enabled robots, but they’re hopelessly unrealistic. Most depictions are based on humans pretending to be robots – not the other way round. Forthcoming sex-bots will have far more in common with a giant Barbie, than with Gemma Chan in Humans or Alicia Vikander in Ex Machina.

    If you can overcome your squeamishness over this odd investment category, how could you back companies working in this space?

    From one point of view, you could look to invest in the existing doll manufacturers – in the hope their early lead will persist. This is still a fairly obscure market, but there are several firms you could target. Brands such as Lumi Dolls and Realdoll already make life-size sex dolls.

    Lumi Dolls even has its own “brothel” – demonstrating different ways to invest in the proposition. However, the fact that other companies haven’t rushed to set up such establishments rather suggests that the market for pre-enjoyed dolls is a little flat. (Now, I wonder why that might be…?)

    Alternatively, you could find other ways into this market. You might be keen on backing firms making general-purpose companion robots, such as Pepper (from SoftBank Robotics). Such companies will be able to provide the brains behind life-like companion androids – whether sexual, or otherwise. It may turn out that a natural conversation is more important to buyers than the nuts-and-bolts mechatronics. From media reports, it seems that some customers of sex dolls do seem to form a curious type of projected relationship with their purchases – even without movement or speech. If you’re the kind of person who’s willing to spend thousands on a not very life-like companion, then any amount of interactivity would probably be a step up.

    Finally, cutting-edge robotics firms might be the best way into the market. After all, being able to move like a human is a very important characteristic in a sex robot – perhaps more so than the currently unachievable goals of natural conversation and appearance. To this end, investing in general robotics firms may be a better bet – with companies such as Boston Dynamics or Hyundai Robotics offering a starting point for your research.

    It’s important to understand how controversial this space could be. There’s already an NGO working on the issue – the Campaign Against Sex Robots.

    Then there’s the understandable concern about firms like Trottla – manufacturers of child dolls. While UK courts currently take a dim view of this, various experts are cautiously positive (eg, Michael Seto, quoted in NewScientist).

    Could prescribing child sex robots reduce contact sex offending?

    The percentage of men with paedophile tendencies is believed to be in the low single figures. That’s currently a huge social problem: these men are hard to control or treat; difficult to find; and expensive to lock up. Globally, tens of millions of people worldwide may ultimately be allowed (or even forced) to keep child sex robots, in an attempt to stop them harming real children. If the strategy works, it would have a significant economic impact: freeing up police officers; reducing prison populations; and saving the costs of dealing with very damaged victims – many of whom go on to have intractable problems in adult life.

    Nevertheless, the status of child dolls and robots presently remains legally controversial. While doll manufacture (as well as sexual artwork) is seemingly tolerated in parts of Asia, the Anglophone world typically takes a sterner line. Just like the UK case we discussed yesterday, a man has gone on trial in Canada for ordering a Harumi Designs doll. It’s unclear how this legal framework will evolve; there appears to have been no verdict in this case, at the time of writing. Furthermore, there is currently no UK law designed specifically to address child sex dolls and robots.

    By contrast, adult-type sex robots may still be controversial – but there’s no reason to think they’ll be made illegal. Their future is potentially bright – although it hinges on considerable technological progress, before widespread adoption becomes a realistic possibility. Rapid developments are inevitable, in many of the crucial enabling technologies. Economies of scale means dolls will get better and cheaper; AI advances mean they will get smarter; and robotics advances will mean they will get more realistic in their movements.

    Despite the inevitability of progress, mainstream consumers may not be interested. This is a fascinating area for technology and ethics – but, from an investment point of view, it could well remain a niche opportunity. Nevertheless, I don’t want to end up like the IBM’s Thomas J Watson, who allegedly said “I think there is a world market for about five computers”.

    I can genuinely envisage a future where a significant proportion of the world’s single men might have such a robot squirrelled away in a closet – but I’m not sure I find that a comfortable or pleasant idea. However, in a world where any form of flirting is increasingly regarded as harassment, it’s possible to imagine that many men might view robots as a safer and more convenient alternative – as well as being more affordable and reliable.

    Data shows that young people are increasingly turning away from sexual relationships. Therefore, it’s possible we might soon see a generation emerge where robots are seen simply as one of a range of “normal” ways to express their sexuality.

    Personally, I think that we’re a long way from a time when most people will want to have any kind of meaningful emotional connection with such a machine – particularly as they won’t be at all convincing for many decades. However, most of us can probably recall personal experiences where emotional connection has played a relatively small part in the proceedings. If robots can offer something comparable, then maybe quite a few of us will be tempted to hide one in our bedrooms – just like 20th century teenagers hid copies of Playboy.

    I’d really like to hear your thoughts on this challenging subject: andrew@southbankresearch.com.


    Andrew Lockley
    Exponential Investor

    -Read more at www.exponentialinvestor.com-

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  • These EU Countries Will Soon Follow Britain’s Footsteps

    13.09.2017 • United KingdomComments Off on These EU Countries Will Soon Follow Britain’s Footsteps

    Nick Hubble – Capital and Conflict (United Kingdom) –

    What a pickle. If Brexit is a success, it will bolster anti-EU sentiment across Europe. If Brexit is sabotaged by the EU, it will expose the EU’s nature… and bolster anti-EU sentiment across Europe and elsewhere.

    The EU must feel surrounded by problems. To the west, the UK is leaving. To the south, bizarre government budgets require steady bailouts, support from non-EU institutions, and absurd monetary policy. In the north, the mood for integration is fizzling. And in the east, you have open defiance of EU policy. Behind that, literally and financially, you have Russia.

    You might think Brexit is the big story of the lot. It obviously is for Brits. But I’m not so sure Brexit itself is the key to Brexit. That resides in how the EU reacts to our departure.

    One year ago, I was touring eastern Europe with the Free Market Road Show. A bundle of speakers from all around the world tried to espouse free-market values and explain the benefits to an audience between 50 and 500 people across dozens of cities.

    We talked about the surprising amount of Land Rovers at Moldova’s border with EU nations, why Uber was turning to governments for protection like former Soviet state-owned enterprises, and how so-called free trade agreements are like a thief offering to give you back some of the cash they stole in the first place. Then we’d charge off to the next city.

    The flaw in the plan, as I could see it, was that some in the audience implicitly understood what we said and therefore planned to leave for western Europe at the earliest opportunity to join the others who had figured it out.

    The rest of the audience planned to work for the government because that’s the only secure job around. In other words, the collectivist culture dying around them had turned the locals into individualists of the wrong kind. Runaways and those motivated by fear, not optimism, ambition or wealth.

    That explains why eastern Europe is turning nationalist. People want the security once promised to them. Those willing to pursue a dynamic life have left for western Europe. And the rest turn to a strong government.

    Poland, Hungary, Slovakia and soon Czechia, which changed its name from Czech Republic without anyone bothering to take note, have all fallen to eurosceptic, anti-immigration and populist leaders. Many of Italy’s leading parties increasingly campaign for a new currency too. The movement didn’t die with Marine Le Pen.

    But back to eastern Europe because it’s the key to Europe’s future. These are the nations supposedly benefiting most from being inside the EU.

    The first thing you notice in these poorer nations of the EU is how many bridges the EU has built there. Bright blue footbridges proudly declaring EU funds built them scatter the countryside in all sorts of surprising places. Behind one such bridge on the way to Montenegro I saw a queue for an outhouse in the middle of a bunch of fields. The American sitting next to me in the car asked what it is and why there are people queueing there.

    Of course, it’s not just bridges and EU government funds. Western European companies have used the east’s low cost of labour to build factories. I met a Swiss-German packaging magnate who had filled eastern Europe with his booming factories. Thomas Piketty recently wrote in one of his co-authored economics papers that eastern European countries are “Foreign-owned countries”. Foreign direct investment has been pouring in at an enormous pace. This means profits flow straight back out of the country too.

    The whole deal doesn’t look so good from their point of view. Czechia’s president recently declared the country would be better off rejecting the EU’s refugee quota and forgoing EU subsidies.

    These sorts of problems are inherent in the EU. Throwing a bunch of cats into a bag and beating it with regulations and mass refugee immigration does not work well to promote harmony even if you pour in cream. Eastern European states are familiar with unions that benefit others.

    Signs of the breakdown are spreading right across Europe though. I spent half an hour waiting at the German/Austrian and Austrian/Italian border in the last few days thanks to border controls. Google Maps explains how to bypass them with its traffic warnings if you bother to check in time.

    The cracks in the EU are getting deeper all the time. This results in good and bad changes. With the UK gone, it will increasingly be bad changes. Negotiating with an EU that has its back to the wall will be hard.


    Brexit’s justification turns hollow

    While Brexit progresses well, its justification is being hollowed out.

    In the UK, anti-immigration sentiment now looks totally pathetic. After the new immigration system confirmed that only a tiny fraction of the “vanishing” visitors actually stay in the UK and create, I mean steal jobs, it now turns out that British firms prefer to employ Brits. What a surprise…

    The British Chambers of Commerce surveyed job creators to discover they prefer to spend money on training and upskilling locals. It’s rare for firms to turn overseas for recruitment immediately.

    Not only that, but while 40% of British firms employ foreign EU workers, 23% employ those from outside the EU. Given the proximity of EU nations means they’re a natural fit, that hardly suggests we disproportionately rely on being inside the EU system for immigration. It just means treating EU citizens the same as others.

    Hopefully this will help turn the Brexit movement into something that supports immigration of workers equally from all nations based on merit, not political alliances. But it also further discredits the referendum result as based on incorrect migration figures and incorrect assumptions about employers.

    Meanwhile, the pound is providing plenty of ammunition for Brexit enthusiasts. It’s at a one-year high against the US dollar and rose against G10 counterpart currencies after the Brexit bill passed Parliament. With inflation too high, the odds of a rate increase at the Bank of England are increasing.

    Brexit Britain is well on track, for now

    This cheery edition of Capital & Conflict needs some humour. It comes in the form of a new study on offshore wealth. It confirms that it isn’t the capitalists who like to hide their wealth. Those evil socialists, monarchists and populists are the real tax evaders!

    One-tenth of the world’s total wealth is held in offshore tax havens, but that share jumps to as much of 15 percent for Europe and as much as 60 percent for Gulf and some Latin American countries, new research shows. When it comes to total offshore wealth as a share of GDP, the United Arab Emirates, Venezuela, Saudi Arabia, Russia and Argentina lead the pack, while Germany, the U.K. and France all have above-average holdings. The U.S. is slightly below average.

    It’s a great example of confusing cause and effect. Crackdowns are what force wealth overseas. Capitalism brings it back home and puts it to work.

    Hopefully our government will figure it out in time to prevent this.

    Until next time,

    Nick Hubble
    Capital & Conflict

    -Read more at www.capitalandconflict.com-

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  • Two Competitors Are Vying For the Global Currency Throne

    13.09.2017 • FranceComments Off on Two Competitors Are Vying For the Global Currency Throne

    Simone Wapler – La Chronique Agora (France) –

    The US “ceiling on debt” will no longer exist. The preferred “safe haven” of institutional investors disappears.

    A pact was reached on 7 September 2017 between Trump and the Democrats; the next Senate debate in December should be a mere formality.

    On September 8, the US federal government’s debt reached $ 20,000 trillion.

    Bill Bonner unveils thebelow policiesof this case.

    I suggest you take a look at the financial back kitchen.

    For institutional investors, thecashdoes not exist. When the dollar is said to be “safe haven”, bankers and fund managers do not stack banknotes in trunks.

    They buy US Treasury bills.

    In our world of fiduciary money, without anchoring in reality, private debt is in principle unlimited. With 1 € or 1 $ of equity, a commercial bank can create 20 or 30 of it in the form of credit. If the creditors pay, profits will add to the equity and allow the bank to lend even more.

    However, US public debt was limited by the debt ceiling.

    Those who liked “safe haven” knew, for example, that the ceiling was $ 15,000 trillion.

    dette fédérale

    dette fédéraleOf course, for the comfort ofDeep State, this ceiling was always raised. But our investors read in the newspapers that this was the case and the new limit set. In short, their “safe haven” increased in quantity but in a manner known in advance.

    This will not be the case. The preferred “safe haven” may be issued in unlimited quantities without warning. 20 000 bn $ but why not 40 000 bn $? The struggles against poverty, climate change, terrorism are costly combats … What is the price of universal happiness, dear reader, do you have any idea?

    What is the value of something that can multiply to infinity?

    Nowadays, central bank-controlled fiduciary currencies have two competitors: gold and the family of cryptomonas, with bitcoin in mind. These are two assets that can not be infinitely multiplied. How did they react?[Editor’s note: Do you knowthis strategyto take advantage of the rise of cryptomonies? If you act before September 30th, it could allow you to transform a € 20 ticket into … € 2.18m.As strong as the Lotto!

    On the day that Trump reached its political agreement on the debt ceiling, on September 7, gold experienced a strong surge. In New York, it went from $ 1,338 per ounce to $ 1,349 per ounce. This is 0.8% in a few hours …


    goldAnd as you can see, for the “barbaric relic” according to Keynes, it is a hectic day. When Asia awoke, gold was over $ 1,350 an ounce. In fact, just after this political event, gold climbed 1.3%.

    gold 24h

    gold 24hThereafter, the effervescence has somewhat receded, of course, and the gold has returned to its previous level.

    What happened on the day of the cryptomony? Nothing – or rather, they fell because at the same time China was putting new limits to speculation.

    The capitalization of some 1,100 cryptomonias has grown from $ 165 billion to less than $ 150 billion.

    Aristotle 1 – Plato

    I hear and read a lot of reflections on money from so-called “intellectuals”, “economists” generally.

    The ignorance of the monetary history of these brilliant mediated minds is simply confusing.

    In the past, “intellectuals” had turned their attention to money. To misunderstand the reflections of Aristotle, Plato, Copernicus (to mention only a few illustrious deaths and do not offend anyone) on this subject is quite surprising. Would you dare to present your theories about physics by not knowing anything about Newton, or about electricity ignoring everything from Volta to Edison?

    But as Audiard said:the cons, it dares everything. That’s why we even recognize them “

    After studying the finances of the Greek cities and some bankruptcies, after codifying the principal functions of money, Aristotle had come to a conclusion which contradicted Plato, his master.

    For Aristotle, money had to have a real anchorage to be a reservoir of value, a very important function. Money had to be backed up to a commodity, for in order to an agreement to be fair, something must be exchanged for something else rather than wind.

    For Plato, money could only be a simple “social convention.”

    Six centuries before Christ, about three centuries before Aristotle turned his attention to the monetary question, gold and silver were progressively imposed by custom. These shells, shellfish or glass beads.

    1 500 years later, Aristotle’s conclusion is validated by the facts. Of the 775 fiduciary currencies that existed or still exists, 599 died of hyperinflation, war, collapse of empires …

    1,500 years later, gold is still sleeping in the coffers of central banks while dangerous alchemists rage at the head of the central banks.

    According to the work of Stanford’s professor of genetics, Gerald Crabtree, human intelligence would have culminated in the Greek epoch. What if he was right?

    -Read more at la-chronique-agora.com (French)-

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  • The Adult Genre Could Send This Tech Soaring

    12.09.2017 • United KingdomComments Off on The Adult Genre Could Send This Tech Soaring

    Andrew Lockley – Exponential Investor (United Kingdom) –

    Life comes at you fast.

    A couple of weeks ago, I read Supertoys Last All Summer Long by Brian Aldiss – on which Steven Spielberg’s A.I. was based. It’s all about how humans could develop feelings for machines – and it’s superlatively good. The story seemed far-fetched, however; its ethical issues a problem for subsequent generations.

    Then, just a few days ago, a church warden was jailed for importing a child-sized sex doll. Speaking about a closely comparable case, Hazel Stewart, from the Child Exploitation & Online Protection Centre, was quoted as saying that child sex robots were “just around the corner”.

    The robots are coming, fast – and the future may be a lot darker than we’d like

    These two stories pose very challenging questions: can we love robots? And should such relationships be controlled?

    Both modern and classic sci-fi has spent much of its time focusing on the relationship between humans and robots. Depicted scenarios vary widely: innocent companionship in post-apocalyptic solitude (Silent Running); an accidental relationship with a Siri-like operating system (Her); economically helpful elder care (Robot & Frank); and sinister, sentient lovers (Ex Machina). The genre has a rich seam of material, exploring our potential relationship with machines.

    Sentient machines remain a long way off, but simpler companion robots are already upon us – as our recent interview explained. These make no pretence of passing off as a person – and instead take on a variety of cartoon-like forms. You might regard these objects as being no substitute for a human, but the evidence suggests otherwise. Pepper robots are even being used to deliver funeral services in Japan. This unusual use case uncannily echoes Douglas Adams’ Electric Monk:

    The Electric Monk was a labour-saving device, like a dishwasher or a video recorder. Dishwashers washed tedious dishes for you, thus saving you the bother of washing them yourself, video recorders watched tedious television for you, thus saving you the bother of looking at it yourself; Electric Monks believed things for you, thus saving you what was becoming an increasingly onerous task, that of believing all the things the world expected you to believe.

    When it comes to understanding how companion robots will be used in future, current commercial trends are signalling one possible way – and it’s not one that everyone will be comfortable with. Just like in so many other aspects of technology, the road to adoption of companion robots is being paved by sex. What’s more, there’s potentially big money in it. You might spend a few tenners on an Amazon Echo – but this expenditure pales into insignificance, compared to the car-sized cheques some people are now writing to acquire life-like sex dolls. If this niche trend ultimately goes mainstream, there could be a very large new market forming.

    The industry’s current offerings are not much more realistic than a lingerie-shop mannequin. But add in AI speech, emotional recognition, and decent mechatronics – and it’s conceivable that shoppers could soon buy something far more realistic. For some consumers, the idea of a sex robot may then begin to become much more acceptable. Of course, we’re not talking the technology of The Terminator, here – and it will be many decades before such creations will fool any. But no gets porn confused for a real person; you don’t have to think something is alive to get turned on by it.

    You might think that this vision is hopelessly far-fetched – but technology marches on. The first time I saw a demonstration of internet porn it was just a tiny, grainy clip; it took an age to download, and was over in seconds. I remembered thinking “Is that it?” and I just couldn’t see how anyone would be interested. I doubt I was alone in that view, and I’m sure most early pioneers of the internet did not imagine the rise of porn, either. However, a primary use case (in terms of data exchanged) has indeed turned out to be pornography. Estimates are disputed, but perhaps around 10%-15% of traffic is currently adult material.

    Yup – over one in ten bytes currently flying around the interwebs are on their way to someone enjoying a “private moment”.

    As the Avenue Q song accurately states: “The internet is for porn”

    And it’s not just the internet. Adult content has been the driving force behind a huge range of technologies. Everything from VHS to online payments have been spread rapidly by people’s desire to turn generic technology to sexual ends. Robotics clearly has a start when it comes to sex. As you can see from our entertaining interview with the founders of Lovehoney, society has been making electrical sex objects for a long while, now. This creativity has come well in advance of any ability to impart these devices with synthetic emotions or intelligence. Indeed, the desire to mechanise sex has very deep roots: in Victorian times, doctors had mechanical vibrators to cure all manner of supposed ills, apparently caused by women’s sexual frustration. I know a retired GP, who has such a device in a collection of antique medical instruments and curiosities.

    I’m sure you’ll probably want to know whether you can make any money, from this strange potential future of sex robots. Please do check back tomorrow – when we’ll identify some potential investment strategies.

    Meanwhile, I’d love to hear your thoughts on this controversial subject: andrew@southbankresearch.com.


    Andrew Lockley
    Exponential Investor

    -Read more at www.exponentialinvestor.com-

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  • You Might Be Paying for the State to Fail

    12.09.2017 • SwitzerlandComments Off on You Might Be Paying for the State to Fail

    Henry Bonner – Strategy and Council Letter (Switzerland) –

    A “orangery” of the castle now serves as a meeting room … with windows overlooking an English park … with statues, pines and cedars … and a view overlooking the village near the castle …

    In time, a world of farmers and servants inhabited the buildings around the castle … Forming a community, living thanks to the harvests of grains, and breeding of pigs, cows, or sheep … As in most castles of Normandy , the estate also had an orchard of apple trees to make cider …

    Over time, the descendants have sold, lot by lot, the land of the estate, leaving the castle with some farmstead buildings – more or less in a state of abandonment – plus some fields in the vicinity, farmer of the corner … Grapes grow along the walls of the farmyard …

    Courtomer has in addition a cooler, dating from the 16th or before – a stone dome over a basin descending into the basement … The castle also hosts on its grounds a temple (the equivalent of a church for the Protestants), having survived the wars of religion under cover to serve as dovecote …

    Courtomer could serve as a warning to the “great” and the ambitious … At its origins, the landlords had incomes from the land to support maintenance and labor to keep the place in order …

    With the surge in the price of labor, the exodus of people to cities, and the decline in income from land exploitation, the squires throughout France began abandoning their homes … leaving cracks forming in the walls, paint crumbling, piping deteriorating, and – in the extreme – the roofs collapse and the homes get lost.

    Everywhere in France, the abandonment of houses and castles testify to the changes in the economy over the centuries …

    Degradation and ruin usually waits for constructions, projects, and investments whose interest disappears … whose economy no longer promotes sustainability and value …

    Changes within economies leave abandoned factories or buildings in their wake … All projects require maintenance and investment …

    Nuclear power plants demand tens of billions to maintain in France … but nuclear loses competition with oil and gas in efficiency …

    Like the castles of the lords of the ancien regime, these power stations could be extinguished and abandoned … like the factories after the departure of the industry towards China, Slovakia, or Poland …

    Wind turbines and solar power may be abandoned in the next decade … when subsidies are no longer sufficient to keep them alive … or innovations in the field of “renewable” will come to take their allocations and supports.

    Beware of “Projects” and Fantasies …

    Everyone does his best to use his talents and resources to advantage … A mathematician will try to solve his problems by calculations. An engineer will try to systematize them. An artist will look for images to describe them …

    Progress is usually made by error and trial … but sometimes these tests last more than a generation … and today’s projects can become the problems of children.

    EDF has made sure to force nuclear power on France … but these power stations represent a disaster for the country’s finances …

    The individual goes bankrupt, or stops, when his mistakes cost him money … but states and leaders must not bend to the rules of the economy …

    The authorities in Paris are seeking to attract the 2024 Olympics … despite the mess and inconvenience resulting from the Olympic Games over the years … from Rio to Beijing …

    Sometimes these projects create problems of passage … and sometimes they fit into the life of the country for decades or centuries …

    Right-thinking people today are developing protections for a variety of groups and minorities … protections for workers … rights to trade unions …

    … and these good-thinkers leave in the future to worry about the effects and consequences of these “projects …”

    If the future does not have the resources to pay, then, like a castle without an owner, the roof collapses …

    What to do…?

    In the world of finance, debt represents a demand for capital for the future …

    In the future, investors, taxpayers, and households will have to pay for a variety of projects and ideas …

    Our state debt represents more than 2,000 billion euros … By adding the debts of households and companies, the debt in France comes to 5,000 billion euros …

    This “castle” of debts continues to endure as the present world repairs the roofs, repaints the walls, and plugs the holes in the plumbing …

    … but when the heirs of the debt will begin to realize the cost of this debt … of the load to be carried while trying to keep it afloat … then, perhaps, they will prefer to get rid of it …

    In short, as long as our debt is cheap – thanks to rates at close to 0% nowadays – then the mass should continue to grow, without too much trouble …

    On the other hand, on the day of a rise in rates, the debt could see ceding its foundations …

    Attention in front of …!


    Henri Bonner

    -Read more at www.lettre-strategie-conseil.com (French)-

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  • The Chink in Greece’s Armor Not What You’d Expect.

    12.09.2017 • FranceComments Off on The Chink in Greece’s Armor Not What You’d Expect.

    Simone Wapler – La Chronique Agora (France) –

    Nothing is better in Greece and the bureaucracy, saved from bankruptcy on several occasions, still stifles the economy.

    «Greece: the freezing of a gold mine addresses a bad signal», titleLe Figaro

    What? Greece ! Yet we were told that everything was going so much better …

    The country has been able to get into debt in the financial markets this summer, consecration we are told of this good economic health. Yes, in the era of “creditism” a country that is doing well is a country that can get into debt at lower cost.

    Le Monde

    Le Monde“‘Absolute success’, ‘total success’, ‘solid foundations’. On Tuesday, July 25, the Greek government was not short of qualifiers to welcome its return to the markets. After several days of preparation and a postponement, the country has indeed issued for three billion euros of bonds at five years, at a rate of 4.625%. “

    The whole of the Parasitocracy, therefore, rejoiced. Business was resuming. Still more crony capitalism, more subsidies …

    3 billion euros represent 1.5% of the Greek GDP in the current state, there was enough to make for the government Tsípras.

    For banks, the 4.625% with zero risk since in case of slippage, the European Central Bank will exchange the securities againstcash

    Let’s be honest. A little isolated in this cackle, the IMF persists in claiming that Greece will not be able to repay and that the country remains bankrupt. On July 19, he issued a negative opinion and considered that the Greek debt had to be restructured again. But rest assured, everyone went over and six days later, the loan was eagerly bought.

    Less than two months later, on Monday, September 11, the Canadian mining company Eldorado announces however to suspend any project in Greece. Would there be a hurricane, a landslide, an earthquake, an archaeological site to preserve?

    No. Much worse.

    Excerpt from the Eldorado press release:

    “Despite repeated attempts by Eldorado and its Greek subsidiary Hellas Gold to engage constructively with the Greek government, the Ministry of Energy and Environment and other government agencies, issuance of routine licenses and licenses for the construction and development of Skouries and Olympias projects in Chalkidiki, northern Greece. […]

    We have a responsibility to our shareholders to allocate capital to projects that not only have the best rate of return, but also where local governments support our investments and work with us to build a sustainable future. “

    “It is necessary to cut the Gordian knot of the bureaucracy”, comments the site in.gr.

    Effectively. In-game 2,400 employees, 1,200 recruitments and an investment of 3 billion euros. A figure that you will bring closer – dear reader vigilant – of the 3 billion euros recently borrowed.

    In one case, a company that has the ambition to make money and to do this employs people to work. This is called an investment that is expected to have a “return on investment”. In the other, money that will water an omnipresent bureaucracy. It is not a “Gordian knot”, it is in reality the “barrel of the Danaides” from which no profit is expected.

    The Greek administration (Ministry of the Environment, Ministry of Energy) succeeds in not making a decision in two years where in other civilized countries, in similar cases, they are taken in three months.

    Why did Greece not go bankrupt and persist in trying to save its incompetent bureaucracy that needs to borrow to survive?[Editor’s note: Gold is gone for a brilliant autumn and the minerals are going to show a good profitability. Now is the time to look at it. We have selected one that has a very special feature and should allow you to multiply your bet in several ways.Discover it here.]

    -Read more at la-chronique-agora.com (French)-

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  • Most Aussie Loans Exposed as Foul

    12.09.2017 • United KingdomComments Off on Most Aussie Loans Exposed as Foul

    Nick Hubble – Capital and Conflict (United Kingdom) –

    A few weeks ago, I warned about a black swan for UK investors. Bloomberg is on to the story too now, so it’s no longer a surprise package:

    A survey by [UBS] of 907 Australians who took out a mortgage in the last 12 months found only 67 percent stated their application was “completely factual and accurate,” down from 72 percent the previous year. The most common inaccuracies were overstating income and understating living expenses, the survey found.

    Investment bank UBS calculates that Australian banks are sitting on half a trillion Aussie dollars of liars’ loans, over 300 billion pounds’ worth. That’s more than the market capitalisation of the big four banks which dominate lending in the country.

    But this is only a third of the story

    Based on my PhD research, mortgage brokers and banks manipulate a lot of loan applications after the applicant signs off on them (so unknown to the borrower). They literally stick in a “1” in a different colour pen to turn $50,000 of income into $150,000. Even if the scrutinisers at the bank pick up on the problem, they often don’t speak English well enough to make a fuss. And there’s no reason for them to.

    The most fascinating part is that, if a borrower can prove that their lenders changed the loan application form after it was signed, they can cancel their loan and keep their home. The bank has to write off the debt, booking the entire loss.

    All this is of course impossible, if you ask regulators. They have very tight restrictions on lending (which are irrelevant if they are not applied by banks, or applied on incorrect information). But one newspaper and investigative TV show at a time is exposing the truth.

    Here’s what they all miss: while house prices keep going up, none of this need be a problem. Anyone in default can simply sell their home and walk away with a huge amount of cash after paying off the mortgage.

    Unfortunately, there are pockets of Australia with falling house prices. And that’s what exposed the liars’ loans in the US.

    With Aussie banks importing a big proportion of their funds from Europe, you need to keep an eye on this one. It poses a risk to banking worldwide.

    Not that local banks don’t have their own problems too.


    How the volatility crunch hides risk

    Mark Whitehouse made an excellent point in his Bloomberg column which you need to understand. Especially if you own financial shares or are thinking of buying them.

    Measures of risk in the financial system are not the same sort of risk that we think about day to day.

    In markets, volatility is a key factor in calculating risk. For example, trading desks still use the value at risk (VaR) model mandated by regulators even though the financial crisis exposed it as useless.

    This model uses recent levels of volatility to calculate how much prices on an exchange might move in a day. Given that and the investment positions you hold, you can calculate your VaR and see if you’re in compliance with the regulations.

    The idea is to create a bell curve of how much you might lose if things go against you. Banks must be able to weather, say, a once in a lifetime crash, but not a once in a millennia event. The “once in a lifetime” bit is calculated based on volatility recently – it gives you the bell curve of possible market moves and their probabilities.

    But in a market ruled by central bankers, volatility is hitting extreme lows. Which means the perception of risk is calculated to be low. Traders can make bigger bets within the rules given the bell curve includes smaller moves for a given probability. If they don’t make those bets, their returns will fall. We’ve seen trading revenue slump at the major banks, which complain about the lack of volatility to trade off.

    But the low level of volatility is artificial. If volatility returns to more normal levels, the perception of risk will surge. Suddenly VaR will rise and put existing positions in breach of risk management rules. Traders will have to unwind their bets, increasing volatility. It’s a recipe for chaos and a nice little example of how central bank intervention raises risks and problems – unintended consequences.

    Whitehouse adjusts American banks’ VaRs for the fall in volatility and reaches this conclusion: “The banks’ trading operations are only about 25 percent less risky than they were in 2009,” instead of almost 75% less risky as they claim. Banking is a game of numbers and that enormous gap matters a lot.

    Brexit momentum builds towards… something

    With Britain set to leave, the EU can go about making a mess of the continent at a faster pace.

    Tax harmonisation between states will lead to higher taxes. Financial market transaction taxes will hobble EU exchanges. Regulations will boom. Trade restrictions will bite. Anti-trust laws will tighten. Without Britain, so much nonsense will become possible.

    Meanwhile, Brexit and Britain progress well. London remains the world’s financial centre in the minds of surveyed professionals, losing less ground to Asia than the other major centres. Several EU states are considering keeping euro clearing in the UK. Employment and employment participation rates are extraordinarily high. The Brexit bill which adopts EU law passed another hurdle. The main opposition was on the issue of Henry VIII laws. But opposing these only when it suits you looks rather dodgy.

    The best news is that our new post-EU British passports might be made on the continent. Wouldn’t that be a wonderful way to demonstrate how pro-trade and committed to Europe Britain remains?

    Now all we need is another technological and energy revolution on par with the invention of the steam engine. My friend Eoin Treacy has found one in the very same place the steam engine was first developed and used – Cornwall. It could turn Britain into an eco-friendly energy power, delivering vast gains for investors. Find out more here.

    The only fly in the ointment of Britain’s growing independence are the anti-democratic forces protesting in favour of remaining in the EU. Someone needs to let them know we had a referendum.

    Tomorrow, our President Jean-Claude Juncker will give his state of the union speech. I can’t wait.

    Until next time,

    Nick Hubble
    Capital & Conflict

    -Read more at www.capitalandconflict.com-

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