Thursday 7 December 2017

From Bubble to Mania.

Baltic Dry Index. 1670 +04 Brent Crude 61.36
It is a far, far better thing to have a firm anchor in nonsense than to put out on the troubled seas of thought.
John Kenneth Galbraith

Today, as Bitcoin goes from bubble to mania, some thoughts.

Each day now, greed is overcoming fear, and driving money into the mania, as speculators, and money managers fear to lose out. A classic greed bubble.  I worry about what happens if/when this fraud breaks.  How bad will the bust be and how far will the contamination spread? Real assets will get sold to raise the missing cash.  The longer the bubble runs and the higher, the greater the devastation when it ends.

Worse, no one can control that ending.  China or the EU could suddenly outlaw it. A Madoff like ending is all too likely.  But if the financial havoc requires another bailout, I fear for the political stability in America, the UK and EU.  China and Russia have been stockpiling gold, and can probably muddle through with some domestic currency changes. But both are still more command economies than the western democracies.

I suspect that bitcoin and the others are already sucking cash out of other markets. If that becomes a manic mania in 2018, the wealth loss into the underground economy risks a major crisis in the real economy. But will/can the authorities act without a crisis?  And what happens when interest rates normalise?

In short, I think we are living in an early mania. Nothing good comes of it unlike graphene, solar power, AI, and robotics.

Asia Stocks Trading Mixed, Aussie Dollar Weakens: Markets Wrap

By Adam Haigh
6 December 2017, 22:03 GMT Updated on 7 December 2017, 04:05 GMT
Asian equities were mixed, with stocks rising in Japan and Australia, falling in China and South Korea and fluctuating in Hong Kong. The Australian dollar declined after another disappointing set of economic data.

In Japan, the Nikkei 225 Stock Average recovered some of its worst slide in nine months after U.S. stocks steadied. The MSCI Asia Pacific Index was up after falling for eight consecutive days to Wednesday.

The Australian dollar dropped to the lowest in about three weeks after October trade data missed estimates. Weaker-than-expected third-quarter GDP earlier this week reinforced views that the central bank won’t adjust monetary policy any time soon, sending the Aussie lower.

“Japanese stocks will probably regain their calm as the currency market hasn’t fallen into a typical risk-off vicious circle after the selloff in Asian stocks yesterday,” said Juichi Wako, a senior strategist at Nomura Securities Co. in Tokyo. “Shares are looking cheaper.”

Global markets have succumbed to a bout of profit taking this week with eight days of losses for Asian equities culminating Wednesday in the biggest slide since last December for the region’s stocks index. Technology stocks, this year’s biggest winners, have posted the largest declines along with emerging-market shares, also standout winners in 2017.
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Bitcoin Soars Through $14,000, Up More Than 40% This Month

By Adam Haigh
7 December 2017, 03:16 GMT Updated on 7 December 2017, 04:38 GMT
Bitcoin climbed as much as 7.9 percent on Thursday as it surged above $14,000, extending this month’s advance to more than 40 percent. The price of the cryptocurrency touched $14,399.99, a record, according to Bloomberg pricing.

ASX Ltd., the main exchange operator for equities and derivatives in Australia, on Thursday said it will start using blockchain to process equity transactions. Blockchain is the ledger software that makes bitcoin and other cryptocurrencies possible, and Digital Asset Holdings LLC, the startup run by former JPMorgan Chase & Co. banker Blythe Masters, will supply the technology.


Bitcoin also got a boost from a successful test of the Lightning Network, which promises to provide a new way to pay with bitcoin. The technology would move some transactions away from the blockchain by allowing buyers and sellers to transact privately and later broadcast their activity to the public network. Supporters say it will ease the on-going congestion plaguing bitcoin.

On Wednesday, the three companies behind the technology -- Lightning Labs, Blockstream Corp. and ACINQ -- successfully made multiple payments. This is the first time their system has been used on bitcoin’s actual blockchain, according to Elizabeth Stark, head of Lightning Labs. She said this paves the way toward testing with outside businesses.

“We had done some tests before on the main net, but this was the first payment on the bitcoin blockchain across implementations,” Stark said in an email. “The stakes are quite a bit higher when it comes to releasing for the main bitcoin network.”

The price of bitcoin cash fell after the news, slumping 7.4 percent to $1,321, according to prices on Bitfinex. The rival offers a separate solution to bitcoin’s congestion issue.


Bitcoin’s latest price move will add to a chorus coming from naysayers who assert the speculative frenzy is an asset bubble waiting to pop. The largest cryptocurrency by market value has soared from less than $1,000 at the start of the year, up more than 1,300 percent.
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A Bitcoin Frenzy Like No Other Is Gripping South Korea

By Kyungji Cho , Yuji Nakamura , and Narae Kim
6 December 2017, 16:19 GMT Updated on 7 December 2017, 02:36 GMT
Like thousands of South Koreans, Moonsung Bae is infatuated by bitcoin.

The 35-year-old financial analyst got his first taste a year ago, before the cryptocurrency exploded into one of the wildest investment stories of our time, and by the end of last month his personal holdings had swelled to half his liquid assets.

“I had this fear when I first bought,” Bae said. “But then I realized, oh, it actually works.”

It’s certainly worked, at least so far, for those who got in early and rode the speculative wave that pushed the cryptocurrency above $14,000 on Thursday. But where bitcoin and its ilk go from here is the subject of fierce debate, nowhere more so than in Korea, which has emerged as a sort of ground zero for the global crypto-mania.

So many Koreans have embraced bitcoin that the prime minister recently warned that cryptocurrencies might corrupt the nation’s youth. The craze has spread so far that, in Korea, bitcoin is trading at a premium of about 23 percent over prevailing international rates.

While neighboring Japan hosts more transactions by some measures, Korea punches far above its weight: In the 24-hour period through Wednesday evening in Seoul, about 21 percent of the world’s bitcoin trades on fee-charging venues involved the Korean won, according to Coinmarketcap.com. The country accounts for about 1.9 percent of the global economy.
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The Great Credit Party Is Almost Over, Societe Generale Says

By Chris Anstey and Narae Kim
7 December 2017, 04:28 GMT
The great credit party that’s taken yield premiums in major markets down around lowest in a decade is probably months away from an end, as central banks normalize monetary policy and the economic outlook softens, Societe Generale SA predicts.

"We expect next year to be a transition year, when the ultra-low yield environment finally starts to lose its grip," Societe Generale credit strategists Juan Esteban Valencia and Guy Stear wrote in a note. "The U.S. and the eurozone are heading for an economic slowdown in 2019, and given the rising levels of corporate leverage, this should have an impact on credit."

U.S. investment-grade bond premiums will widen by mid-2018, with European counterparts following suit, as credit markets price in the economic slowdown, they wrote. "The sword falls in 2H," they predicted in a report that recognized last year’s annual outlook proved too bearish. Societe Generale had anticipated political risk to hurt credit in 2017, but changed tack by March as that didn’t pan out.

Now, with global premiums having fallen further, "credit looks very pricey indeed," they wrote. "Emerging market and high-yield markets are the most alarming."
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If all else fails, immortality can always be assured by spectacular error.
John Kenneth Galbraith

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Bitcoin again. Who benefits? Is mining bitcoins even cost effective. Below more on the Bitcoin global mania. Any bets on whether this Bitcoin scam ends well?
"Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
Mr Micawber. Charles Dickens.

One Bitcoin Transaction Now Uses as Much Energy as Your House in a Week

Bitcoin’s surge in price has sent its electricity consumption soaring.

Christopher Malmo Nov 1 2017, 7:20pm
Bitcoin's incredible price run to break over $7,000 this year has sent its overall electricity consumption soaring, as people worldwide bring more energy-hungry computers online to mine the digital currency.
An index from cryptocurrency analyst Alex de Vries, aka Digiconomist, estimates that with prices the way they are now, it would be profitable for Bitcoin miners to burn through over 24 terawatt-hours of electricity annually as they compete to solve increasingly difficult cryptographic puzzles to "mine" more Bitcoins. That's about as much as Nigeria, a country of 186 million people, uses in a year.
This averages out to a shocking 215 kilowatt-hours (KWh) of juice used by miners for each Bitcoin transaction (there are currently about 300,000 transactions per day). Since the average American household consumes 901 KWh per month, each Bitcoin transfer represents enough energy to run a comfortable house, and everything in it, for nearly a week. On a larger scale, De Vries' index shows that bitcoin miners worldwide could be using enough electricity to at any given time to power about 2.26 million American homes.
Expressing Bitcoin's energy use on a per-transaction basis is a useful abstraction. Bitcoin uses x energy in total, and this energy verifies/secures roughly 300k transactions per day. So this measure shows the value we get for all that electricity, since the verified transaction (and our confidence in it) is ultimately the end product.
Since 2015, Bitcoin's electricity consumption has been very high compared to conventional digital payment methods. This is because the dollar price of Bitcoin is directly proportional to the amount of electricity that can profitably be used to mine it. As the price rises, miners add more computing power to chase new Bitcoins and transaction fees.
It's impossible to know exactly how much electricity the Bitcoin network uses. But we can run a quick calculation of the minimum energy Bitcoin could be using, assuming that all miners are running the most efficient hardware with no efficiency losses due to waste heat. To do this, we'll use a simple methodology laid out in previous coverage on Motherboard. This would give us a constant total mining draw of just over one gigawatt.
That means that, at a minimum, worldwide Bitcoin mining could power the daily needs of 821,940 average American homes.
Put another way, global Bitcoin mining represents a minimum of 77KWh of energy consumed per Bitcoin transaction. Even as an unrealistic lower boundary, this figure is high: As senior economist Teunis Brosens from Dutch bank ING wrote, it's enough to power his own home in the Netherlands for nearly two weeks.

Digiconomist's less optimistic estimate for per-transaction energy costs now sits at around 215 KWh of electricity. That's more than enough to fill two Tesla batteries, run an efficient fridge/freezer for a full year, or boil 1872 litres of water in a kettle.

It's important to remember that de Vries' model isn't exact. It makes assumptions about the economic incentives available to miners at a given price level, and presents a forward-looking prediction for where mining electricity consumption could go. Despite this, it's quite clear that even at the minimum level of 77 KWh per transaction, we have a problem. At 215 KWh, we have an even bigger problem.


That problem is carbon emissions. De Vries has come up with some estimates by diving into data made available on a coal-powered Bitcoin mine in Mongolia. He concluded that this single mine is responsible for 8,000 to 13,000 kg CO2 emissions per Bitcoin it mines, and 24,000 - 40,000 kg of CO2 per hour.
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Bitcoin Futures Plan Criticized by Brokers for Overlooking Risks

By Sam Mamudi
7 December 2017, 05:15 GMT
Some of the world’s biggest derivatives brokerages criticized plans to offer bitcoin futures and options on U.S. exchanges, telling regulators that the contracts have been rushed to market without proper consideration of the risks.

The Futures Industry Association, whose members include Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc., detailed its concerns in a letter to the Commodity Futures Trading Commission on Wednesday. The association said there should have been more discussion about margin levels, trading limits, stress tests and clearing before the contracts were given a green light.

CME Group Inc. and Cboe Global Markets Inc. were the first bourses to approve bitcoin derivatives, paving the way for mainstream investors to participate in a volatile and largely unregulated market that some have called a bubble. Cboe will start trading futures on Dec. 10, while CME’s contracts are set to debut on Dec. 18. The exchanges were allowed to offer the products after pledging to regulators that they comply with the law, and the contracts will be subject to CFTC oversight.

“A more thorough and considered process would have allowed for a robust public discussion among clearing member firms, exchanges and clearinghouses,” the FIA said in its letter, signed by the organization’s Chief Executive Officer Walt Lukken. “The recent volatility in these markets has underscored the importance of setting these levels and processes appropriately and conservatively.”
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Technology Update.

With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

Hybrid electrolyte enhances supercapacitance in vertical graphene nanosheets

Combining the characteristics of aqueous and organic electrolytes into a hybrid version increases VGN performance in supercapacitors, while KOH activation improves nanostructure and charge storage capacity.

Date: December 5, 2017
 
Source: American Institute of Physics
 
Summary: Supercapacitors can store more energy than and are preferable to batteries because they are able to charge faster, mainly due to the vertical graphene nanosheets that are larger and positioned closer together. Using VGNs as the material for supercapacitor electrodes offers advantages that can be enhanced depending on how the material is grown, treated and prepared to work with electrolytes.
Supercapacitors can store more energy than and are preferable to batteries because they are able to charge faster, mainly due to the vertical graphene nanosheets (VGNs) that are larger and positioned closer together. VGNs are 3-D networks of carbon nanomaterial that grow in rows of vertical sheets, providing a large surface area for greater charge storage capacity. Also called carbon nanowalls or graphene nanoflakes, VGNs offer promise in high-power energy storage systems, fuel cells, bio sensors and magnetic devices, amongst others.
Using VGNs as the material for supercapacitor electrodes offers advantages due to their intriguing properties such as an interconnected porous nanoarchitecture, excellent conductivity, high electrochemical stability, and its array of nanoelectrodes. Advantages of VGNs can be enhanced depending on how the material is grown, treated and prepared to work with electrolytes.

"Performance of a supercapacitor not only depends on the geometry of electrode material, but also depends on the type of electrolyte and its interaction with the electrode," said Subrata Ghosh of the Indira Gandhi Centre for Atomic Research at Homi Bhabha National Institute. "To improve the energy density of a device, [electric] potential window enhancement will be one key factor."

In a paper published this week in the Journal of Applied Physics, from AIP Publishing, Ghosh and a team of researchers discovered ways to improve the material's supercapacitance properties.

According to modeling, VGNs should be able to provide high charge storage capabilities, and the scientific community is trying to unlock the keys to reaching the levels of efficiency that are theoretically available. Needed improvements to be viable include, for instance, greater capacitance per unit of material, greater retention, less internal resistance, and greater electrochemical voltage ranges (operating potential windows).
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The monthly Coppock Indicators finished November

DJIA: 24,272 +243 Up. NASDAQ: 6,874 +289 Up. SP500: 2,648 +189 Up.


1 comment:

  1. Hi,
    The Australian dollar dropped to the lowest in about three weeks after October trade data missed estimates. It's important to remember that de Vries' model isn't exact. It makes assumptions about the economic incentives available to miners at a given price level.I agree with your post. Thanks for sharing your post.
    ...

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