The Market Ticker
Commentary on The Capital Markets
2017-12-18 12:14 by Karl Denninger
in Market Musings , 183 references
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What's going on at this point is utterly outrageous.

Everyone says "oh yeah, it's all going good and it's based on fundamentals."

No it's not.

Look at "Longfin" (LFIN) which is up some 500% today (who knows how long that will hold up) on a deal announced the other day in which it claimed to have acquired a "blockchain-based solutions provider."

May I quote?

Ziddu Coin is a smart contract that enables SME’s, processors, manufacturers, importers and exporters using cryptocurrencies across continents. Ziddu Coins are loosely pegged to Ethereum and Bitcoin. The importers/exporters convert offered Ziddu coins into Ethereum or Bitcoin and use the proceeds for their working capital needs. At the end of the contract, importers/exporters will realize their proceeds and pay back their funds through cryptocurrencies only. Depending upon the risk profile of the counterparty, the interest will vary from 12% to 48%.

Oh really?  Only 12-48%?  What happens when the so-called "currency" doubles during the time the loan is out?

Then the "interest rate" is really 124-196%, isn't it?

What happens if the "currency" goes up in price by a factor of five?

Now tell me exactly how many such "incidents" the borrower will survive?

The answer is zero.

This sort of **** is outrageous at a level that vastly outstrips the crazy claims of the 1990's tech explosion.  There people were "only" claiming double combined global GDP between all the IPOs on their "reasonable" forward projections.

This crap makes that look like a Girl Scout cookie sale and yet you have a microcap Nasdaq OTC company that literally showed up on Thursday at about $5/share hit over $140 this morning.

All of it on the back of a "fancy-pants embedded coin" scheme pegged to a parabolic rocket-shot which they claim will be the basis for settlement of trade across national boundaries.

Yeah, the market's rise is "organic" and "based on fundamentals."

Bull****.

It is all infused with this crap, from the largest company to the smallest.

But this time it's different....

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2017-12-18 11:36 by Karl Denninger
in Musings , 84 references
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You really ought to come and check it out folks, being that it's the 18th.

Clear the board and have something just after Christmas.  If you're fast you might be able to get it before the 25th, especially if you live somewhere in the general vicinity of NW Florida.

These are all hanging in my house, and they're beautiful..... one went within literal minutes of going up on Instagram, so first come, first serve and don't be slow!

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2017-12-18 10:30 by Karl Denninger
in Technology , 220 references
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This company and it's CEO both deserve to be hit by an asteroid and destroyed:

 by tickerguy

Never mind the company funding those who are alleged to be sexual abusers.

During the "original" debate on this issue there's a pretty clean argument to be made that Netflix intentionally shifted transfers of its content onto a transport provider who it also barred from negotiating bilateral traffic payments.  It then blamed ISPs for "slowdowns" that it caused, intentionally.  There was never one single subpoena served on the firm to back this up, but the objective outside measurements available at the time made an extremely persuasive case for that being exactly what happened.

As I have pointed out in other articles the consequence of so-called "Net Neutrality" has been to essentially reinforce a monopoly by Netflix!  What monopolists do in the general sense is force other people to pay their costs, which they pocket.  It is usually done through nefarious and back door ways, since simply stealing billions tends to be noticed and might run into some pushback.

Amazon does this, for example, by subsidizing product sales with AWS.  They'd never be in business for 10+ years as a product sales company that is incapable of delivering a profit as fulfillment costs continue to ramp faster than top-line sales growth, especially when that happens over the space of many years (and it has.)  But if you can grab some cash from some other customer and make up the difference, especially if you can get the government to be part of the funding source, well.....

Hastings has effectively done the same thing.  

At the same time real issues of neutrality have gotten exactly zero attention.  ISPs during the entire "neutrality" period still blocked SMTP servers, for example, making it impossible for you to run your own mail.  Why?  They claim abuse potential but let's be serious -- forcing all your email through them allows them to mine that email for marketing purposes.  Google clearly does this through Gmail and it must be assumed every other large ISP is doing it now too.  That's your allegedly-private email but as soon as you start tossing it through someone else's server, unencrypted, there is no longer anything preventing said company from using what's in there and selling it.  The number of enforcement actions to force ISPs to stop this crap during so-called "neutrality"?  Zero.

We have a serious problem with last-mile monopolies in the ISP market today.  But you cannot solve that through regulation -- you can only solve it through competition.  There are natural monopolies that exist in certain areas (e.g. last mile easements) and the answer is for municipal, county and state governments to use their eminent domain power they have already exercised for power and water services to provide a "dark fiber" tap to each home or business, all terminated in a convenient and neutral point.  You then pay (if you wish to use it) for the use of that piece of glass and you then select an ISP who has located at the interconnect and that's where the plug goes.  The "central points" are open to all ISPs who wish to enter a market at the same price for the space, power and cooling with a small enough minimum purchase that modest-sized local and regional ISPs can participate.  This is simple, elegant, and can trivially provide gigabit-level transport to each house.  MCSNet would have been a participant in this instantly were it to be made available, and had any of the municipalities in our service area had  the tiniest shred of interest in doing it back in the 1990s I probably would not have sold the company to Winstar.

Let's note that such a model of breaking the back of the monopolists has also been mightily opposed by every single cable and DSL provider in the space today, including by getting laws passed prohibiting localities from doing this sort of thing.  Yeah.

But that someone is a jackass (e.g. Comcast, Cox, etc) and has done things that if anyone bothered to enforce 100+ year old law would send them all to prison doesn't make someone else doing the same thing and enforcing it through law right, just or appropriate.  All that does is make them willing co-conspirators which adds a Racketeering charge to what they should all be staring down.

Hastings and Netflix are slimeballs, and their renewed "public campaign" of misinformation and outright lies must be both exposed and destroyed.

That is, unless you like getting your pocket picked.

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Click here....

You're welcome.

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2017-12-17 12:53 by Karl Denninger
in Editorial , 303 references
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There's a modern version of a "conspiracy theory" going around in regard to the so-called "Deep State."  The chestnut commonly told is that there are a bunch of embedded actors in the country (and internationally) that pull the puppet strings, prevent investigation of criminal acts by certain people in the government and otherwise "direct" how the "visible" government operates.

The truth is that this is all a convenient, self-serving and cowardly lie.

All activity by humans requires energy input.  That is, the world without same tends toward disorder; it is only through the input of energy that order comes from chaos and remains that way.  You can look around you and see it everywhere; the piece of metal left outside rusts, the car turns to dust, the house falls down, the food left out rots, etc.

Everything in the universe operates on the laws of thermodynamics.

Thus the so-called "Deep State" in fact has no resources of its own at all.  It must obtain them like everyone else.  Where it obtains them is from you.

It does so by your voluntary actions.

Let's be clear: Every single individual and group in that so-called "Deep State" can be killed -- either politically or physically.  Of course initiating physical violence is both difficult and expensive, in that 1, 10, 100 or 1,000 (or more) people might need to spend their lives for each one of them but when it comes to causing their political death nobody has to do a single illegal thing.

The so-called "Deep State" exists because we as a people are unwilling to get our noses out of Netflix and Facebook, in short.

Consider the 50 year old heroin addict living with his retired Mom.  Mom gets Social Security.  She has a modest house, paid off.  She lets him live there and cooks, so he has the basic needs of life at zero effort or cost and he in turn gets stoned all day on her money.  Maybe he's on disability, but if so that's hardly enough to live on your own in any reasonable amount of comfort (it's about $1,000 a month), never mind paying for the drugs.

As long as Mom either gives him money for drugs (or lets him steal it without tossing his sorry ass in prison) this can continue indefinitely until the addict overdoses and dies or he begs, "borrows" and steals enough that Mom loses her house.  Then they're both screwed.

Just like you will be if you fund the "Deep State" for long enough.

But let's not kid ourselves; the active complicity of Mom is necessary for the addiction to continue.  It didn't start that way but it sure is that way now.

The day she says "No" and refuses to give in to the whining the addict is forced to either quit using heroin or turn to visible, external crime such as robbery, mugging and burglary.  The latter self-corrects relatively quickly in that he will either be caught and tossed in prison (at which point he'll have trouble getting his fix) or someone will shoot him while he's in the act of robbing them.

No matter what happens the moment Mom says "No" and refuses to cave it is a certainty he will cease using and cease being an addict -- either voluntarily or involuntarily.

The addict is at "fault" for choosing to continue to use drugs but Mom is responsible because she is voluntarily funding it.

The "Deep State" may be at fault for a whole host of sins, some of them really ugly, but don't kid yourself -- it's only because you provide the government with "full faith and credit" that said "Deep State" exists.

You're responsible because you voluntarily fund it.

If any material percentage of the people of a nation decide that's not going to happen any more then said "full faith and credit" goes poof like a fart in a Church and very quickly said "Deep State" has no money to operate. 

Not one single illegal act has to be committed by one single citizen for this to occur.

The people just need to grow a set of balls.

The US Federal, State and Local governments are all highly-dependent on daily cash flows.  Anything that disrupts them is an instant disaster -- for them.  Yes, it's also tough on you, but then again that's the point, right?  It'll be intolerable for them long before it is for you for one simple reason: You can trade effort for a chicken or a loaf of bread.  The Deep State can't trade anything for their acts of coercion, extortion and blackmail because you're collectively the source of what they operate on and they have no other means to acquire the amount of money necessary.  There are simply too few of them in comparison to the amount of cash necessary and as such they can't generate it themselves, nor can they force you to work for their benefit.

Mom doesn't cut off the heroin addict because Mom feels sorry for him and wants him to stay in the house and keep her company.

As a result she tolerates the fact that he robs her blind and unless someone intervenes she'll ultimately let him rob her out of her house!

Well folks?

You're all Mom.

The "Deep State" narrative is a fraud; it's simply a heroin addict that you refuse to cut off and expel.

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