Sunday, 17 January 2021

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Hey, guess what? Global banks rely on leveraged monies used to speculate on things big and small around the world. These speculations are usually denominated in the banks domiciled currency and express risks through the currencies in which the speculation was made. As an example, business done in the eurozone from a Swiss bank has EUR to CHF exchange risk. This risk is materially and significantly magnified by the leverage necessarily inherent in the banking model. 

You want to know what's worse. The entire FIRE (finance, insurance and real estate) sector is susceptible to the same thing, often to more servere degrees. Insurance companies, particularly longer tail companies such as catastrophic PC and life insurance, place the vast majority of their assets in longer duration bonds, oft denominated in thier home domicile country's currency. So, guess what the Swiss National Bank did? They shot spear right through the heart of Switzerlands biggest financial institutions. Let's take a look, shall we?

Allianz, one of the worlds largest insurers, who was significantly weakend this year by firing likely the most important employee they ever had (Bill Gross) thereby suffering hundreds of billions of dollars of asset outflows from PIMCO now has to contend with a vast amount of what may be left of its investment assets denominated in CHF being worth ~17% less, and that's sans the leverage that they're likely guaranteed to employ to some degree. 

Keep in mind that the SNB is employing NIRP (negative interest rate policy) at the same time as letting exchange rates jump as much as 30%, full knowing that many of its largest instituions are highly leveraged into these markets. These are drastic moves.

From the Reuters' persective:

LONDON (Reuters) - Shares in Switzerland's two big banks UBS and Credit Suisse slumped as much as 15 percent on Thursday after a massive strengthening in the Swiss franc raised the threat that reported earnings will be hit hard.

The Swiss National Bank (SNB) shocked financial markets by scrapping a three-year-old cap on the franc, sending it soaring nearly 30 percent against the euro. The SNB also cut interest rates, which were already negative, to minus 0.75 percent.

..."We estimate that the sharp Swiss franc appreciation will potentially negatively impact forward earnings by about 7-10 percent. With interest rates going into deeper negative territory, there could be further margin pressure," Citi analyst Kinner Lakhani said.

Credit Suisse shares were down 10.6 percent at 20.75 Swiss francs and UBS was down 10.8 percent at 14.88 francs by 1414 GMT. Both had slumped by more than 15 percent at one stage, which dragged Credit Suisse shares to a two-year low. Julius Baer shares were down 12.4 percent.

A 10 percent appreciation in the Swiss franc against the U.S. dollar would have knocked 277 million francs ($271 million) off Credit Suisse's pre-tax income in the first nine months of last year and a 10 percent appreciation against the euro would have hit it by 180 million Swiss francs, the bank said in its third-quarter results.

...About 19 percent of Credit Suisse's revenue and 27 percent of its costs were in Swiss francs last year. About 69 percent of revenue was in U.S. dollars and euros, compared with 52 percent of expenses.

...Adding in the impact of higher costs -- especially in wealth management -- UBS could take a 14 percent earnings hit, Credit Suisse 15 percent and Julius Baer 30 percent, Barclays said.

Can you imagine the margin and collateral calls that are likely occuring right about now. Let's discuss contagtion effect in our next blog post, shall we? This is a price snapshot as of now.

swiss financials after SNB currency debacle

This is how to set up the trade in the UltraCoin client to go long the Swiss Franc in euros and short Allianz equity traded directly on the SWX (Swiss stock exchange)...

Allianz short and long Franc


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The pop media is now circling with '"b"itcoin is dead' commentary, prompting me to state yet again, that the value proposition that the "B"itcoin technology represents is grossly misunderstood, if it is even captured by the pop media at all. Remember, Bitcoin with an uppercase "B" is the blockchain, the transport mechanism, the scripting language and the decentralized, distributed trust consensus ecosystem upon which my startup is focused to build solutions upon. "b"itcoin with a lower case "b" is a digital currency and oft times digital payments app, simply early applications (and the most rudimentary ones) in the early portion of this paradigm shifting ecosystem.  

As a matter of fact, the drastic drop in the price of bitcoin serves to highlight the true value of those utilizing the technology behind bitcoin - the blockchain. The drastic drop (or pop) in prices does nothing to alter the business models of these companies. The value proposition lies in the blockchain and programmability, not in the price of individual currencies within a digital currency app - yes, bitcoin as a payment system or speculative currency is an app within an ecosystem, not the ecosystem itself. Until one is able to grasp this concept one will simply be chasing the erratic prices swings of a single cog within a complicated machine up and down - all the while missing the opportunities within.

To proclaim the death of bitcoin due to a drop in the price of components of one of its apps is akin to proclaimng the death of the Internet due to the drop in the price of AOL stock. Yes, it does sound assinine, but that's what the media is proclaiming.

A tightly related, yet tangential story can be used to prove my point (for those that are not familiar with UltraCoin, it is a blockchain-powered Global Macro trading app that allows anybody, anywhere to trade almost anything with any amount of money on a counterparty/credit risk-free basis). WSJ reports: Macro Horizons: Shock Swiss Policy Turn Alters Equation for Other Central Banks:

WRAPThe Swiss National Bank rocked European markets in early trade by abandoning its euro floor. Unable to resist the pressure of euro devaluation against the dollar, and with more likely to come as the European Central Bank prepares to launch quantitative easing, the SNB faced catastrophic losses on its mounting holdings of the eurozone currency if forced to abandon the one-sided peg sometime further down the line. The immediate significance is for people elsewhere in Europe who hold Swiss franc-denominated mortgages, to Swiss corporations which find themselves suddenly 20% or so less competitive against eurozone rivals and to leveraged investors betting that the SNB would hold fast forever. More generally, it reminds people that central banks aren’t invincible. Ultimately, their efforts and intent can be defeated by even stronger market forces and by having to weigh difficult political judgments. Ironically, one of the outside effects over which they have no control are the actions of their counterparts in other countries – which is what the SNB’s will do to others. Poland’s central bank now has a whole new game plan to think about in a meeting Thursday whose decision is due shortly. And a string of earlier central bank decisions in Asia, including a surprise rate cut by India, now have a different meaning for their currencies because the Swiss central bank has just put the franc back into the mix as one of the globe’s safe havens.  (AM, MC) 

SWITZERLAND: Switzerland’s central bank abruptly ended its policy of maintaining a minimum exchange rate of 1.20 Swiss francs to the euro, while at the same time cutting its key interest rate to a negative 0.75% from 0.5%. The Swiss National Bank also said that it was moving the target range for three month Libor to between -1.25% and -0.25% from the current range of between -0.75% and 0.25%.

In what must be one of the most currency market-shattering announcements made by a central bank in recent memory, the SNB ripped the ground out from anyone with an interest in the Swiss franc-euro exchange rate. At one point the euro collapsed to 0.86 against the Swiss franc, from 1.20 immediately before the announcement – a 28% move. That must stand as one of the most dramatic developed market currency moves ever. The SNB justified the move by saying that the 1.20 ceiling had been put in place at a time of serious Swiss franc overvaluation and that while the franc continues to be expensive, it is no longer quite at such an extreme – in part thanks to the dollar’s recent surge. We await fallout among investors holding Swiss equities and macro hedge funds who had taken the 1.20 level to be sacrosanct. (AM)

On that note, notice the trade on this 100% bitocin blockchain powered application. We are going long the Swiss Franc (betting that its spike against the euro will continue past the news event this morning (NYC time) due to its floor decoupling/unpegging from the lagging euro and short the leverlaged oil ETF which had a deadcat bounce up over 7% for the night, where we're assuming it will continue its drop. This is all done in one trade, and this is the power of the bitcoin blockchain. Forget the price of the widgets of that one blockchain app and open your mind to the future of distributed decision making.

Long Swiss Franc short leveraged oil trade via Veritaseums Blockchain powered Global Macro Trading App

For the more adventurous, here's a long CHF short EUR and GBP trade.

Long CHF short EUR and GBP via UltraCoin

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On the New Years special on Max Keiser, I proclaimed that we'll likely see multiple crashes for 2015. I don't say this lightly. First the clip, then some illustrative evidence that demonstrates where I'm coming from.

And for those who fell I'm being bombastic this time around, simply look at where we are and where we've come from...

Here comes the crash

If there are any more doubts, I invite all to peruse my track record in calling the housing crash, the CRE crunch, the European sovereign debt crisis, the mobile computing wars shakeout, the monoline insurer debacle, the fall of Bear Stearns, WaMu, Lehman among over 30 other banks, and much more. Hopefully, I've earned your audience. For those UHNW types interested in assisting me in building a structure to monetize this upcoming volatility, contact me via the information on the coin above. 

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On January 6, 2011 I penned, "As JP Morgan & Other Banks Legal Costs Spike, Many Should Ask If It Was Not Obvious Years Ago That This Industry May Become The "New" Tobacco Companies". Was I right? Fastforward to January 14th, 2015 and you find "JPM Misses Revenues And EPS Due To Another $1 Billion In Legal Costs", as reported by ZeroHedge, as excerpted:

... a miss on both the top and bottom line, reporting $1.19 in EPS, well below the $1.32 consensus, and just barely above the lower estimate of $1.16. This was a decline from both the previous quarter (by 17 cents) and from a year ago (by 11 cents). Revenues missed as well, with JPM reporting $23.552 billion in top line, a decline of $560 million from a year ago ($1.6 billion lower than Q3), and below the $24.0 billion consensus. And while JPM's latest recurring, non-one time "one-time, non-recurring" charge came as a surprise to most (although how over $30 billion in legal charges can be considered one-time is beyond us), at the same time JPM once again resorted to the oldest trick in the book, taking the benefit of some $704 million in loan loss reserve releases, nearly offsetting the entire negative impact of the legal charge.

Of course, the reported revenue should not be confused with the GAAP revenue, which actually was $1 billion less at $22.5 billion, the lowest quarterly real revenue in over a year!

The miss happened despite JPM repurchasing another $1.5 billion in common stock, leaving $2 billion in buyback capacity for Q1 2015.

The weakness in earnings was widespread, and now that JPM's prop desk is dead and buried, and the bank has to make money the old fashioned way using NIM, the fact that Mortgage Banking Income dropped from both the prior quarter and Q4 2013 will hardly inspire much confidence in the firm. Still the result was better than some had expected - the reason: Total headcount down over 7,500 for the year.

Speaking of net interest margin, that's going to be a challenge. AFter all, we have a market crash to deal with.

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As many already know, I've created a startup called Veritaseum that specializes in using the programmable aspects of digital currencies to create "Smart Contracts" to disintermediate legacy businesses that extract economic rent.

Many of my clients, followers and business partners thought me insane to pursue such a path. I considered this a good thing. Why? Because the crowd is very rarely, if ever, successful. The true solutions to real problems are seldom perceived by the masses until after the fact. The masses include the management of big industry, and big finance in this particular situation. 

Let's reference the first sentence that describes my startup to make my assertion evident.

" I've created a startup called Veritaseum that specializes in using the programmable aspects of digital currencies..."

As per Wikipedia:

Digital currency or digital money is an internet based medium of exchange (i.e., distinct from physical, such as banknotes and coins) that exhibits properties similar to physical currencies, however, allows for instantaneous transactions and borderless transfer-of-ownership. Both virtual currencies and cryptocurrencies are types of digital currencies, but the converse is incorrect. Like traditional money these currencies may be used to buy physical goods and services but could also be restricted to certain communities such as for example for use inside an on-line game or social network.[1] Digital currencies such as bitcoin are known as "decentralized digital currencies," meaning that there is no central point of control over the money supply.

Let me make this clear. Nearly all currency, currency transactions, and money are in digitial form in the developed world. This is not a "bitcoin" thing! It is not an "UltraCoin" thing. It's a MONEY thing! Click here to listen to the Fed itself explain how they act as a data company, to the tune of $1.7 trillion.

Now, on to the rest of the company description... create "Smart Contracts"...

As per Wikipedia:

Smart contracts are computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or that obviate the need for a contractual clause. Smart contracts usually also have a user interface and often emulate the logic of contractual clauses. Proponents of smart contracts claim that many kinds of contractual clauses may thus be made partially or fully self-executing, self-enforcing, or both. Smart contracts aim to provide security superior to traditional contract law and to reduce other transaction costs associated with contracting.

Digital rights management schemes are smart contracts for copyright licenses, as are financial cryptography schemes for financial contracts. Admission control schemes, token bucketalgorithms, and other quality of service mechanisms help facilitate network service level agreements. Some P2P networks need mechanisms to ensure that remote strangers contribute as well as consume resources, without requiring the overhead of actual legal contracts. Two examples of such protocols are the storage trading protocol in flŭd backup[1] and the Mojo Nation filesharing auction. Cryptographic authentication of one product part by another has been used, in lieu of a contract between manufacturer and consumer, to enforce tying strategies.[2]

The major difference between the digital currency whose blockchain UltraCoin is set against (the Bitcoin blockchain) and the more prominent digital currencies (ex. USD, EUR) is that there is a Blockchain and programmable capabilities. We can program the money and create safeguards that don't exist in today's legacy banking system.

If banks truly are data companies, as opposed to those big marble buildings whose employees offered toasters in exchange for grandmothers opening up savings accounts, then they really need to change their modus operandi, not to mention dramatically alter their business models.

banks hacked

Bloomberg reports:

While banks globally have almost reached their long-term average of 10 percent return on equity, most have valuations showing investors aren’t optimistic about their prospects for growth, according to the report. Customers will increasingly use mobile services as more than 12,000 startups are focused on banking businesses, McKinsey said.

Pressure is coming from “FinTech” startups, whose focus has moved beyond processing transactions to areas such as personal investments and lending, the authors wrote. The six largest of these non-bank “attackers” have more combined revenue than the 20th-largest global retail bank, according to the report.

“While the number of FinTechs is large, most provide more of an opportunity than a threat to global banks, which can build on their ideas, set up joint ventures, and sometimes acquire these firms to deepen or broaden their offerings and capabilities,” McKinsey wrote in the report.

Well, I don't know about that. Until banks realize that they are essentially massive data companies, currently prone to hacking and manipulation without utilizing the advanced aspects of the very technology that they are forced to depend on, I believe the last portion of my company description will be the most pertinent. Think back to the early '90s when the big newpaper companies thought they were tech savvy by taking a picture of the front page of their rag and posting it on their websites to be read. Big difference between that and YouTube, Google, Facebook and today's digital media, no? Well, the banking industry is just as archaic, but charging more than ever for their products and services...

banking prices normalized and adjusted for inflation

 As you can see from the chart above, banking products and services pricing has outstripped every consumer staple in price appreciation since the 1997 base year sans the two year period where the US put over $1 trillion in bailout aid into the industry (which essentially makes the services even more expensive, during said period, to the tax paying, savings orientated consumer)!

banking prices compared to inflation adjusted income

Again, I believe the last portion of my company description will be the most pertinent: disintermediate legacy businesses that extract rents without adding the requisite value to justify said rents.


 As per Wikipedia:

In economicseconomic rent is any payment to a factor of production in excess of the cost needed to bring that factor into production. In classical economics, economic rent is any payment made (including imputed value) or benefit received for non-produced inputs such as location (land) and for assets formed by creating official privilege over natural opportunities (e.g., patents). In neoclassical economics, economic rent also includes income gained by beneficiaries of other contrived exclusivity, such as labor guilds and unofficial corruption.

Economic rent should not be confused with producer surplus, or normal profit, both of which involve productive human action. Economic rent is also independent of opportunity cost, unlike economic profit, where opportunity cost is an essential component. Economic rent should be viewed as unearned revenue, whereas economic profit is a narrower term describing surplus income greater than the next best risk-adjusted alternative. Unlike economic profit, economic rent cannot be eliminated by competition, since all value from natural resources and locations yield economic rent.

Visit and download the most advanced implementation of smart contracts and digital currencies available to the public.

Wednesday, 03 December 2014 00:00

Occupy... the Fed? Featured

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In 2011, these dudes from Canada flew down to do a documentary on the Occupy Wall Street movement. They asked to interview me and obliged. The indy movie has launched, and it is actually pretty good. Actually, its better than pretty good. Here's a clip of the chapter on the Fed. I urge all to rent or purchase the movie to support the director and producers. This is something that should be on Netflix!

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Those who follow me know that I don't agree with many of Goldman Sachs recommendations, primarily because I know that Goldman considers their clients to be "muppets" and use said muppets as profit springboards for trade setups. Of course, I can be wrong, but remember that we have ex-Goldman partners who support this thesis with personal experience, reference "Goldman Sachs Executive Director Corroborates Reggie Middleton's Stance: Business Model Designed To Walk Over Clients":

An executive director at Goldman Sachs has explicitly corroborated what I and many in the blogosphere have been crowing for some time now, and that is... 


The whole video can be seen here on the Max Keiser show, starting from about 19:00 minutes in where I discuss risk vs reward in GS and how they outperform eventhough risk outweighs reward. Those who like numbers and charts can see where I actually demonstrated in For Those Who Chose Not To Heed My Warning About Buying Products From Name Brand Wall Street Banks:

As in “When the Patina Fades… The Rise and Fall of Goldman Sachs???“, we can reminisce over the fact that Goldman BARELY earns its cost of capital on an economic basis, and that’s before considering the potential horrors which may (and probably do) lay on the balance sheet (for more on BS horror, reference Reggie Middleton vs Goldman Sachs, Round 2.

gs roe

And now we have supporting evidence from the inside... From the NYT:

"TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. I can honestly say that the environment now is as toxic and destructive as I have ever seen it."

"To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money."

"I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work."

" I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave."

 "How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence. What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym."

"I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all."

"It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen."

Well, anyway.... This piece was not intended to reveal the inner workings of Goldman Sach's business model. It was intended to illustrate how our UltraCoin system can be used to monetize global macro trade ideas, even if they are from the vampire squid! According to Forbes:

Goldman’s first non-U.S. trade recommendation revolves around an expectation European stock markets rise in 2015 as the impact of ECB money-printing makes its way into the real economy. Goldman recommends investors go long a December 2015 Eurostoxx 50 call spread, buying a Dec. 2015 strike call at 3,150, and selling a Dec. 2015 strike call at 3,450. “The (nearly) at-the-money 3150 call costs 170.6, while selling the 3450 call costs 69.10 (both priced as of the close on November 19), giving this position a maximum potential 2-to-1 payout,” notes Goldman. The firm sees two reasons European stocks will move higher: regional growth simply accelerates, or disappointing inflation readings force the ECB into added action. Both scenarios, Goldman believes, augur well for European asset prices.

First, let's put this in a form that can be traded via UltraCoin. To go long the Eurostoxx 50, we'll receive exposure to the SPDR Eurostoxx 50 long ETF (speculating that the top 50 EZ equities will rise from currency wars & QE)  and we will pay exposure to the ProShares Ultra Euro ETF (ULE) seeking to provide twice the exposure to the performance of euro versus the U.S. dollar on a daily basis (speculating the euro will fall relative to the US dollar as a result of currency wars & QE by going short). It should also be noted that leveraged ETF products usually seek to match the return of the euro against the dollar over a single day. Due to this and the compounding of daily returns, the returns of the product may deviate from long term return rates, suggesting that investors need to monitor their holdings closely if they are going to be in for a long time period. It should also be noted that this is a materially more advanced trade setup than that recommended by Goldman, for it captures potential euro downside movement relative to the dollar AND potential european equity market upside -which, according to the Goldman hypothesis, are tightly linked. One would think that Goldman should start recommending trading with UltraCoin, no? 

My take on this? Well, it's obvious that the euro will see some pressure from central bank machinations, but its not so obvious... or maybe its too obvious that that is an automatic plus for the eurozone economies in general. Remember, what's good for stocks short term is not necessarily what's good for the economy medium term. The eurozone is a confederate of 27 (or so) countries with widely disparate economies, equity markets, macro situations, fundamentals and financial situations. This is far from a one size fits all situation. This should be obvious to all (and is how I called the Pan-European Sovereign Debt Crisis 5 years ago). In Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse! I illustrated how inaccurate the many calls for European growth actually were, to wit:

Let's take a visual perusal of what I am talking about, focusing on those sovereign nations that I have covered thus far.


Notice how dramatically off the market the IMF has been, skewered HEAVILY to the optimistic side. Now, notice how aggressively the IMF has downwardly revsied their forecasts to still end up widlly optimistic.


Ever since the beginning of this crisis, IMF estimates of government balance have been just as bad...


The EU/EC has proven to be no better, and if anything is arguably worse!




and the EU on goverment balance??? Way, way, way off.

It's not just Greece either...

And what about Italy???

This is Italy's presumption of economic growth used in their fiscal projections:





If the IMF was wrong, what in the world does that make the EC/EU?

Now, for sure, there are some eurozone nations that will benefit mightily from the debasement boost, but those countries are not representative of the entire eurozone. The reason why debasement and QE are almost a forgone conclusion is that Japan has thrown the gauntlet down and the ECB feels it has little choice. You see, there is a stark difference between how the Japanese economy (despite 34 years of a lost decade) and the EZ economies are put together, and a currency war will bring those differences starkly to the forefront. I posted series of tweets on this topic a few days ago...

Of course, if one wanted to take the opposite side of Goldman's views, simply click the switch button in the trade setup screen of UltraCoin to reverse the exposures. Download the UltraCoin client for free, and start trading for free without banks, brokers or exchanges.

Correction: the improper ticker was initially used in the trade setup. We intended to communicate going short the euro, which is what the words said, but the original ticker and desciption was for the Proshares ultra short euro ETF, which would have had a net long effect (shorting the short). The ticker has been corrected to reflect the Proshares long euro ETF, which one would be shorting through the UltraCoin client.

Management apologizes for the editing error. 

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Why is Bitcoin dangerous and of little intrinsic value? Because my local Central Banker Told Me So!

In my last post titled "Come, Journey With Me On An Adventure of Fundraising, Massive Disintermediation and the Confrontation of the Worlds Most Powerful Vested Interests" I told the tale of my trip to the UK to strum up interest in Veritaseum's UltraCoin (see excerpt at end of this post). During the dinner that was arranged for the prospective investors, of which I was the keynote speaker, several of the diners questioned the value of bitcoin as a "virtual' currency. In particular, they asked why should they believe that a bitcoin is really worth $375 or 280 pound sterling. I replied, "Let's look at this way, what is the pound worth?". I got back, it is worth 1.26 euro. Then I fired back, but if you accept that the pound is worth 1.26 euro, how do you have a problem accepting that bitcoin is woth 304 euro, or 371 US dollars? It is that circular logic that is somehow permitted in the evaluation of fiat currencies that is prejudiciously lacking on the valuation of cryptocurrencies. 

The crowd then went on to say, well the pound and other fiat currencies are backed by the government. I said, "Very much like the bank insurance scheme of Cypriot bank account holders, or Zimbabwe currency or Argentinian pesos? Many people oft put too much faith in the 'full faith of the government'!" As you can guess, this really sparked this room of brainy people as I dared them to start thinking outside of the fiat box! Bitcoin is backe by math! The reserve currency is backed by the biggest guns on the globe (yes, it is and it always has been, looked it up if you don't believe me). Other fiat currencies are backed by faith! Faith can be quite fleeting and ephemeral, trust me. As a matter of fact, you don't have to trust me... I'm about to show you.

Friday, the Wall Street Journal ran a piece called Bring On the Currency Wars, of which I would like to quote a few choice lines, to wit:

Central bankers struggling against weak growth and falling inflation have come up with a cunning plan: shift the problems onto someone else. Finding it hard to stimulate domestic demand through cheap credit in a world of rock bottom interest rates, the next best solution central bankers have settled on is to generate growth by boosting net exports. And the way to do that is to devalue their currencies.

Now, the US has performed this stunt like a champion, but over the last few weeks I must admit, we've been outdone!

The Bank of Japan has been the most aggressive at pursuing this policy, driving the yen down 15% against the dollar over the past year. The currency effects have been relatively slow at registering in Japanese trade numbers, but they’ve finally started to show up in the data. Japanese exports jumped 9.6% on the year in October, more than double market expectations.

Other central banks have noticed.

The European Central Bank has announced a number of policies over the past six months designed to boost its balance sheet. The more assets a central bank holds the more liquidity is available to the wider economy and thus cheaper credit–or so goes the theory. But even when interest rates are at rock bottom levels, massive central bank asset purchases by the Federal Reserve and BOJ have “led to a significant depreciation of their respective exchange rates,” noted ECB President Mario Draghi in a speech on Thursday. Implicitly, he was saying: if they can do it, so can we.

Then, on Friday morning, the People’s Bank of China launched its own measures, cutting its one year lending rate by 0.4 percentage points to 5.6% and its deposit rate by 0.25 percentage points to 2.75%. Ostensibly, the cuts were a response to domestic factors, namely falling inflation, a weakening economy and sliding house prices. But it seems clear that the underlying reason was the renminbi’s appreciation relative to the yen.

As one economy devalues, the impact is to force deflation onto its neighbors. With Japan putting downward pressure on the yen, the question now is how long can other Asian economies hold out from their own devaluations.

The currency devaluation game is relative, and its zero sum. If you devalue to increase your imports to another country, you do so at the expense of some other country. Contrary to popular Keynesian math, you really don't get something for nothing. 2 minus 1 does not equal 2, my dear friends. With this concept in mind, let's take a look at the headlines from around the world:

China ready to cut rates again on fears of deflation 11/23/13: This would be the second time in as many weeks.

(Reuters) - China's leadership and central bank are ready to cut interest rates again and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making. Friday's surprise cut in rates, the first in more than two years, reflects a change of course by Beijing and the central bank, which had persisted with modest stimulus measures before finally deciding last week that a bold monetary policy step was required to stabilize the world's second-largest economy.

Draghi Urgency for ECB Action Gets Final Reality Check: Economy

Mario Draghi is about to find out just how urgent his call for action has become. One week after the European Central Bank president vowed to revive inflation “as fast as possible,” policy makers will receive a glimpse on just how feeble cost pressures are now. Economists forecast euro area data on Nov. 28 will show price growth matching the weakest since 2009, which would add to the drumroll for a stimulus debate at the Dec. 4 meeting. Bond yields from Spain and Italy fell to record lows and stocks gained today on speculation the ECB will buy sovereign debt. Draghi has stoked pressure toward purchases as panels of officials study possible new measures and prepare to cut their economic outlook. 

What is the result of all of this devaluing? Well, the next time someone asks you how much is bitcoin worth, you should just say, "In a Currency War, more than the yen, yuan, pound sterling, and euro!"

Bitcoin vs Fiat

The lasting message from the highly Centralized, Centrally Planned, Central Banks of the World? "We think, so you don't have to!"

As exceprted from "Come, Journey With Me On An Adventure of Fundraising, Massive Disintermediation and the Confrontation of the Worlds Most Powerful Vested Interests""

After a couple of more meetings I headed over to the Cavalry & Guards Club on Piccadilly for the dinner. An interesting, old money club that is steeped in English military history. 


The dinner began with quick tutorial on the history of the club and its importance re: the battle of Waterloo, etc. The dinner included over 40 extremely interesting people. Here's the place setting before we got started - each and everyone of the invtees placed at the table appeared. Standing room only - and all to hear what yours truly had to say about Bitcoin's investment potential.

20141117 185449

The room was packed with brainpower - packed! Since they are big on privacy, I will not reveal names, but I can reveal statistics. Over $35 Billion dollars of assets under management directly controlled by the people sitting in those seats. Over $1.2 Trillion controlled by the corporate entities that they represented. Industries included banking, asset management, insurance, real estate, telecomm, energy, commodities trading and medical. Nearly half were successful serial entrepeneurs in their own right, with several having had their own multiple liquidity events. Even a member from the Bitcoin foundation was present. The vast majority were bitcoin skeptical. As for my presentation??? Let's say there's some big money, some olde money, and some money that many thought would never flow into this space any time soon that is quite anxious to investigate crashing the party.


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I'd like to share a little about my fundraising efforts for Veritaseum, one of the most exciting, disruptive and likely controversial start-ups in the FinTech space... ever.

Veritaseum is the company behind my brainchild, "UltraCoin". For those who don't know, UltraCoin utilizes the technology behind the Bitcoin blockchain to create unbreachable contracts and unbreakable promises which can then be programmed to mimic the functions of practically any business that entails the transfer of value... Essentially any business. it does so with more trust, more safety, more flexibility and less cost than any legacy situation that makes heavy use of middlemen that extract rents in exchange for questionable value add. 

I believe that this "invention" is likely the economic and paradigm shredding equivalent of the advent of the Internet, simply on larger scale. First, there's the sheet potential of scale for Bitcoin, and the precedent of its predecessor and compatriot in protocol-based disintermediation, the Internet...


bitcoin adoptioon metriccs

bitcoin vs Interent growth

Second is our patent pending value transfer technology embedded into the blockchain itself. It, in a nutshell, totally and absolutely disintermediates banks, brokerages and exchanges through the use of these programmable "unbreakable promises"...

AAPL short tradeaapl trade

Most with just slight modicum of imagination and insight would be hard pressed not to be exicted, or at the very least, extremely curious about these new technologies, products and services. This is particularly true since the financial services sector is so ripe for disintermediation - reference BitLicense Part 4: Fact- Bank Product Prices Rise Faster Than Income & ALL Other Expenses, Fact- UltraCoin Can Drop Bank Product Prices Dramatically.

Banking Risk Reward and Demise - The Age of Programmable Currencies Page 10Banking Risk Reward and Demise - The Age of Programmable Currencies Page 11Alas, I have received practically no attention from the traditional VC community and even less from the Bitcoin community, and this is despite a sterling track record of calling paradigm shifts such as this one, patents pending and the first functional product in the industry.

So, what is a middle-aged nascent entrepenuer to do? There actually is a meaningful pool of potential investors who do see value in what I described above. My ex-client and subscriber base. Many of my followers have taken it upon themselves to autonomously approach me for investment, including prominent UHNW families (globally known), technology entrepreneurs with recent liquidity events ($600M+), and long time readers who have connections. I'll share the story of one such long time (since 2009) reader below.

Of the early seed investors, this British chap was actually the first to send in money. He called and said he heard me say i was starting a bitcoin-based company and said he wanted to invest. I told him I have another seed investment coming and I was closing the valuation in this round. He wired the money from overseas in less than 48 hours. I was impressed. He used to run a fund-of-funds marketing company and told me that he had many powerful contacts in the UK. I was reluctant at first, and uber-busy. I had just secured verbal commitments for $12 million (on a $4M round) when this chap finally convinced me to swin across the pond. I'll be honest, I was reluctant. So, there I was, arriving at Picadilly Circus going down to the Royal Automotive Club where he arranged for me to stay and have my first introductory meeting with him and his associate.


This is olde English money, and quite a lovely place to boot. So, jet-lagged, and with much work to do in a place that doesn't allow computer or cell phone use in any of the public areas (yes, quite old school) I meet in the dining area...

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We go over the string of meeting that have been set up and the "Thought Leader's dinner" that has been setup up on my behalf as the keynote speaker. The first two meetings were one's that I set up myself from the states through my contacts from India and Wall Street banks. They third stop was to drop off some coins in the Thames River, just under London Bridge. Guess who caught them???

20141117 124105 1

Expect one helluva show when this airs. That's all I've got to say on that topic for now. After a couple of more meetings I headed over to the Cavalry & Guards Club on Piccadilly for the dinner. An interesting, old money club that is steeped in English military history. 


The dinner began with quick tutorial on the history of the club and its importance re: the battle of Waterloo, etc. The dinner included over 40 extremely interesting people. Here's the place setting before we got started - each and everyone of the invtees placed at the table appeared. Standing room only - and all to hear what yours truly had to say about Bitcoin's investment potential.

20141117 185449

The room was packed with brainpower - packed! Since they are big on privacy, I will not reveal names, but I can reveal statistics. Over $35 Billion dollars of assets under management directly controlled by the people sitting in those seats. Over $1.2 Trillion controlled by the corporate entities that they represented. Industries included banking, asset management, insurance, real estate, telecomm, energy, commodities trading and medical. Nearly half were successful serial entrepeneurs in their own right, with several having had their own multiple liquidity events. Even a member from the Bitcoin foundation was present. The vast majority were bitcoin skeptical. As for my presentation??? Let's say there's some big money, some olde money, and some money that many thought would never flow into this space any time soon that is quite anxious to investigate crashing the party.


Between Europe and the US, I plan on raising the largest investment to ever go into a distributed trust (the core tech behind bitcoin) ever!

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On October 17th I penned Reggie Middleton's Open Letter of Commoditization and Disintermediation to Wall Street: Pay Attention Jamie Dimon! Here's an excerpt from the intro of a letter written to the CEO iof a bulge bracket bank included in said missive:

...this is my more fleshed out missive detailing what I see as the inevitable commoditization of your industry. Wall Street in general (and XXXXXXXXXXX in particular) is about to become “MP3’d” (disintermediated), just as the music industry did along its 75% slide in revenues over a 10 year period. Our goal is, in no uncertain terms, to expedite this disintermediation. In essence, our job is to cleave at least 75% of the revenues off of Wall Street banks!

Hopefully, I’ve gotten your attention. Let’s discuss the opportunity - and the threat - to XXXXXXXXXXX in more detail as I present a clearly laid out roadmap to either your firm’s relative failure, or resounding success.


The Challenge to Wall Street and XXXXXXXXXXX

“In the next 10-20 years, 58% of financial advisors will be replaced by software robots and AI.”Frey and Osborne, Oxford University

This is not grandiloquence. We can show our venture alone cutting over 3-4% off of XXXXXXXXXXX’s non-interest revenues and up to 30% of net income attributable to common within 8 to 12 quarters of gaining traction. This is accomplished by removing your pricing power in your most lucrative businesses – transactions, fees and commissions.

In Banking Risk, Reward and Demise - The Age of Programmable Currencies, I posted a most telling graphic...

This drop in revenues and profitability is extreme when viewed today. The effect of "robots" (cloud based streaming services powered by algorithms [robots]) as reported by Wired Magazine today, and as excerpted [emphasis added]:

Consider the fact that it takes roughly one million spins on Pandora for a songwriter to earn just $90. Avicii’s release “Wake Me Up!” that I co-wrote and sing, for example, was the most streamed song in Spotify history and the 13th most played song on Pandora since its release in 2013, with more than 168 million streams in the US. And yet, that yielded only $12,359 in Pandora domestic royalties— which were then split among three songwriters and our publishers. In return for co-writing a major hit song, I’ve earned less than $4,000 domestically from the largest digital music service.

The streaming services and their cloud based "robots" are hurting more than just songrwriters. Record companies are forced to see that graphic above, which was exacerbated by streaming services as they usurped control from MP3 download services that started the decline, which was exacerbated by the iTunes business model. Now, even iTunes is facing the heat from streaming services as its margins and revenues are pressured, forcing them to by the Beats music streaming service (along with the headphone/hardware operation for a gross $3.2B).

Veritaseum's UltraCoin is a potent brew consisting of a combination of:

  2. the ULTIMATE ROBOTS - Scripted money and "SMART CONTRACTS"
  3. and the same peer to peer technology that precipitated the fall of the record industry - ALL WRAPPED UP IN ONE PRODUCT AIMED AT WALL STREET!!! 

The letter to that bulge bracket bank CEO referenced at the beginning of this post ended like this:

One simply cannot stuff the technology genie back into the bottle. Even before critical mass in adoption is achieved, the bulge bracket banks (XXXXXXXXXXX included) will witness a structural decline in margins. Despite this margin compression, there will be a small contingent of banks who will emerge as winners because they will cannibalize the revenues of their competitors adopting and embracing the forces behind this paradigm shift. Doing this will require not only sufficient vision, dexterity and entrepreneurial expertise (the type seldom found in multi-billion dollar global institutions), but exceptional execution to be among the first movers. Money center banks can try to figure this out on their own (good luck being entrepreneurial and first movers), or they can team up with us.

We are a startup, and we’re the first movers! To maintain our advantage, and to gain traction quickly, we’re soliciting established distribution partners. Teaming with us can essentially be boiled down to whether you are the disintermediators - or the disintermediated!

Our Advantage

UltraCoin provides, with full transparency, universal access to any publicly traded financial instrument, on any exchange, at a fraction of the cost of bulge bracket and even many deep discount brokers.

Our patent-pending (we are confident that we’re the first to file, meaning the rest of the Street must come in behind us) products provide access to over 75,000 tickers in all major asset classes from exchanges and bourses from around the world in an innumerable combination of pairs and combinations – not merely just the traditional, binary, long and short. This is not an idea, or mere concept, or whitepaper. This is a tangible product that is available right now and already making significant waves in money center bank circles (download here). Below is a screenshot of my active wallet on my tablet as I type this. 


How do we get started? 


I offer you in gift wrapped packaging - the “first mover advantage”!

My Twitter Updates

ReggieMiddleton "@jpmorgan should absolutely be ‘scared s---less’ about fintech threat" Dimon reportedly said to mgmt team of $3.4T…
Friday, 15 January 2021 21:27
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ReggieMiddleton @Dave20Crypto My biz must leave to fairer lands, with its IP,, tech, creativity & private keys in tow. Intellectua…
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ReggieMiddleton @peter_karavas The topic of the VERI tokens is complex and complicated. Long story short, regulators forced the ass…
Friday, 15 January 2021 18:37
ReggieMiddleton Our patented DeFi invention was illustrated live in 2014 video of fully functioning DeFi wallet developed 8 yrs ag…
Friday, 15 January 2021 18:08
ReggieMiddleton Some have forgotten that I preached the power of DeFi as far back as 2013, right about the time that I invented it…
Friday, 15 January 2021 17:46

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