European Central Bank says bitcoin is on the ‘road to irrelevance’

The European Central Bank gave a strong critique of bitcoin on Wednesday, saying the cryptocurrency is on a “road to irrelevance.”

In a blogpost titled “Bitcoin’s last stand,” ECB Director General Ulrich Bindseil and Analyst Jürgen Schaff said that, for bitcoin’s proponents, the apparent stabilization in its price this week “signals a breather on the way to new heights.”

“More likely, however, it is an artificially induced last gasp before the road to irrelevance — and this was already foreseeable before FTX went bust and sent the bitcoin price to well below USD16,000,” they wrote.

Bitcoin topped $17,000 Wednesday, marking a two-week high for the world’s largest digital coin. However, it struggled to maintain that level, falling slightly to $16,875. Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, warned that the bounce is likely just a bear market rally and would not be sustained. “This is just a bearish retest,” he told CNBC.

The remarks from the ECB officials are timely, with the crypto industry reeling from one of its most catastrophic failures in recent history — the downfall of FTX, an exchange once valued at $32 billion. And the market has been largely down in the dumps this year amid higher interest rates from the Federal Reserve.

Bindseil and Schaff said that bitcoin didn’t fit the mold of an investment and wasn’t suitable as a means of payment, either.

“Bitcoin’s conceptual design and technological shortcomings make it questionable as a means of payment: real Bitcoin transactions are cumbersome, slow and expensive,” they wrote. “Bitcoin has never been used to any significant extent for legal real-world transactions.”

“Bitcoin is also not suitable as an investment. It does not generate cash flow (like real estate) or dividends (like equities), cannot be used productively (like commodities) or provide social benefits (like gold). The market valuation of Bitcoin is therefore based purely on speculation,” they added.

Read the rest here.

UK: Labour leader vows to abolish House of Lords

Keir Starmer will abolish the House of Lords and replace it with a new elected chamber as part of plans to “restore trust in politics”, the Observer understands.

In a sweeping constitutional overhaul, the Labour leader has told the party’s peers that he wants to strip politicians of the power to make appointments to the Lords as part of the first-term programme of a Labour government. Starmer said that the public’s faith in the political system had been undermined by successive Tory leaders handing peerages to “lackeys and donors”.

It is understood that Labour will hold a consultation on the composition and size of a new chamber as well as immediate reforms to the current appointments process. Final proposals will be included in the party’s next election manifesto.

Read the rest here.

Interesting that there was none of this bleating when Tony Blair was packing the Lords with Labour peers during his long tenure. 

No.

To paraphrase Voltaire after he attended an orgy, once was an experiment, twice would be perverse.

A bruised Donald Trump announced a new presidential bid on Tuesday night, an invitation to double down on the outrages and failures of the last several years that Republicans should reject without hesitation or doubt.

To his credit, Trump killed off the Clinton dynasty in 2016, nominated and got confirmed three constitutionalist justices, reformed taxes, pushed deregulation, got control of the border, significantly degraded ISIS in Syria and Iraq, and cinched normalization deals between Israel and the Gulf states, among other things. These are achievements that even his conservative doubters and critics — including NR — can acknowledge and applaud.

That said, the Trump administration was chaotic even on its best days because of his erratic nature and lack of seriousness. He often acted as if he were a commentator on his own presidency, and issued orders on Twitter and in other off-the-cuff statements that were ignored. He repeatedly had to be talked out of disastrous ideas by his advisers and Republican elected officials. He turned on cabinet officials and aides on a dime. Trump had a limited understanding of our constitutional system, and at the end of the day, little respect for it. His inability to approximate the conduct that the public expects of a president undermined him from beginning to end.

The latter factor played an outsized role in his narrow defeat to a feeble Joe Biden in 2020 in what was a winnable race. Of course, unable to cope with the humiliation of the loss, he pursued a shameful attempt to overturn the result of the election. He didn’t come close to succeeding, but it wasn’t for lack of trying. The episode ended with Trump, in a grotesque abuse of his powers, trying to bully Vice President Pence into unilaterally delaying or changing the count of electoral votes on January 6 and with an inflamed pro-Trump mob storming the Capitol while the president gave no indication that he particularly minded.

In the midst of this, he threw away two Georgia Senate seats in a fit of pique over Governor Brian Kemp and Secretary of State Brad Raffensperger refusing to bend to his will. The resulting loss of Senate control allowed Biden to get trillions of dollars in spending that he wouldn’t have gotten otherwise and confirm large numbers of progressive judges.

Read the rest here.

The NY Times Discovers the Latin Mass

Old Latin Mass Finds New American Audience, Despite Pope's Diasapproval 

Well, the photos were nice.

Peggy Noonan on the recent election's implication for the GOP

...On the outcome as we know it: The MAGA movement and Donald Trump took it right in the face. Normal conservatives and Republicans fared well. Trump-endorsed candidates went down. Everyone knows the famous examples—Doug Mastriano in Pennsylvania, Don Bolduc in New Hampshire, Tudor Dixon, who lost by 10 points in Michigan. All embraced Mr. Trump, some sincerely, many opportunistically, all consistently. A Hollywood director once said of pragmatic choices, and we paraphrase, that it’s one thing to temporarily reside up someone’s organ of elimination but it’s wrong to build a condo up there, people will notice and get a poor impression. That’s sort of what happened.

Less noticed so far: In Michigan, Democrats flipped both chambers of the Legislature. Republicans lost the state Senate for the first time in almost 40 years. Trump-backed candidates lost big races. The nonpartisan Bridge Michigan said the election should be “a wake-up call for the GOP to move on from Donald Trump’s obsessive quest to re-litigate his 2020 loss.” Jason Roe, a former head of the state party, said the GOP can continue to tilt at windmills or win elections, and if it does the former, “it’s gonna be a rough decade ahead of us.”

Ronna McDaniel, head of the Republican National Committee, lives in Michigan. Think she noticed?

On the other hand Team Normie pretty much flourished east to west. Gov. Chris Sununu in New Hampshire won by 15 points, Gov. Brian Kemp of Georgia by more than 7, and of course Gov. Ron DeSantis of Florida by nearly 20.

The weirdness of the Trump candidates—their inexperience and fixations, their air of constant yet meaningless conflict, their sheer abnormality—asked too much of voters, who said no.

On Mr. Trump himself, everything has been said, including in this space for a long time. An esteemed Tory political figure summed it up succinctly in London in August: “Donald Trump ruined the Republican Party’s brand.”

It will now stick with him or not. It will live free or die.

If, in 2024, Republicans aren’t serious about policy—about what they claim to stand for—they will pick him as their nominee. And warm themselves in the glow of the fire as he goes down in flames. If they’re serious about the things they claim to care about—crime, wokeness, etc.—they’ll choose someone else and likely win.

Read the rest here.

A few issues I see going forward. Trump is going to run. Period. His ego won't allow him not to. And with Trump, it's always about him. If he is denied the nomination, he will almost certainly reject the results and divide the party. He would rather burn the GOP to the ground than concede defeat. And yes, he can do that. He still retains a very sizeable number of supporters whose loyalty can only be described as quasi-religious. 

If he wins the nomination, he is all but certain to go down in flames. Again.

Beyond all of this, the Democrats now have a boogey man that may help them win elections for who knows how long. Trump has become their new Herbert Hoover. After his defeat in 1932, the Democrats ran against Hoover for the next 30 years, with a great deal of success. Every GOP candidate going forward is likely to be tarred as a Trumpist, irrespective of how true it is. And if they try to deny it, then they will risk the wrath of the MAGA wing of the party. 

Lastly, there is the "what if" question surrounding Trump's legal problems. By my count there are at least four criminal investigations and countless civil suits where he is either a target or a person of interest. Of the four criminal cases, one, the Manhattan DA's fraud case appears to have stalled with the DA signaling that he is not ready to pull the trigger on an indictment. The DOJ's January 6 investigation is cloaked in secrecy, and nobody seems to really know where that is going. The Fulton County DA in Georgia has indicated that she is hoping to wrap up the special grand jury by the year's end. So, if indictments are coming, that could be fairly soon. 

But Trump's greatest peril appears to lie in what is being dubbed document-gate. Even some of the most solidly trumpian commentators and legal experts are acknowledging that if the DOJ really wants to nail him, the evidence that Trump effectively stole large numbers of US government documents, including state secrets of the highest level, and repeatedly lied about it to the Feds, is overwhelming. 

And his response has not helped. The usual barrage of lies, accusations of witch-hunts (his favorite term), and official misconduct without evidence are not having much effect beyond seeming to put a chip on his shoulder and daring the DOJ to indict him. 

I think the next six months are going to be very interesting times, in the sense of the Chinese proverb. 

A short reflection on bad bishops

One Year Ago, the Crypto-Con Peaked: Since then, $2 trillion has been wiped out.

A year ago this week, investors were describing bitcoin as the future of money and ethereum as the world’s most important developer tool. Non-fungible tokens were exploding, Coinbase

 was trading at a record and the NBA’s Miami Heat was just into its first full season in the newly renamed FTX Arena.

As it turns out, that was peak crypto.

In the 12 months since bitcoin topped out at over $68,000, the two largest digital currencies have lost three-quarters of their value, collapsing alongside the riskiest tech stocks. The industry, once valued at roughly $3 trillion, now sits at around $900 billion.

Rather than acting as a hedge against inflation, which is near a 40-year high, bitcoin has proven to be another speculative asset that bubbles up when the evangelists are behind it and plunges when enthusiasm melts and investors get scared.

And the $135 million that FTX spent last year for a 19-year deal with the Heat? The crypto exchange with the naming rights is poised to land in the history books alongside another brand that once had its logo on a sports facility: Enron.

Read the rest here.

Quote of the day...

“I don’t watch Game of Thrones. I certainly don’t want to play it at work.”

-Marianne Fogarty former Chief Compliance Officer at Twitter who resigned today

The Big One is Coming and the US Military Isn't Ready

Russia’s invasion of Ukraine revealed the fading power of America’s military deterrent, a fact that too few of our leaders seem willing to admit in public. So it is encouraging to hear a senior flag officer acknowledge the danger in a way that we hope is the start of a campaign to educate the American public.

“This Ukraine crisis that we’re in right now, this is just the warmup,” Navy Admiral Charles Richard, commander of U.S. Strategic Command, said this week at a conference. “The big one is coming. And it isn’t going to be very long before we’re going to get tested in ways that we haven’t been tested” for “a long time.”

How bad is it? Well, the admiral said, “As I assess our level of deterrence against China, the ship is slowly sinking. It is sinking slowly, but it is sinking, as fundamentally they are putting capability in the field faster than we are.” Sinking slowly is hardly a consolation. As “those curves keep going,” it won’t matter “how good our commanders are, or how good our horses are—we’re not going to have enough of them. And that is a very near-term problem.”

Note that modifier “near-term.” This is a more urgent vulnerability than most of the political class cares to recognize.

Adm. Richard noted that America retains an advantage in submarines—“maybe the only true asymmetric advantage we still have”—but even that may erode unless America picks up the pace “getting our maintenance problems fixed, getting new construction going.” Building three Virginia-class fast-attack submarines a year would be a good place to start.

The news last year that China tested a hypersonic missile that flew around the world and landed at home should have raised more alarms than it did. It means China can put any U.S. city or facility at risk and perhaps without being detected. The fact that the test took the U.S. by surprise and that it surpassed America’s hypersonic capabilities makes it worse. How we lost the hypersonic race to China and Russia deserves hearings in Congress.

Read the rest here. 

Man of God

Well worth watching and highly recommended. Unfortunately, I can't embed the video. But you can watch it here.

A Royal Zinger

‘With its raw, unflinching honesty, Spare is a landmark publication full of insight, revelation, self-examination and hard-won wisdom about the eternal power of love over grief.’ This prepublication blurb for Prince Harry’s forthcoming memoir – a friend thinks that Entitled would have been a better title than Spare – could hardly promise more.

Yet while it’s likely to be better than many celebrity memoirs – Penguin have employed JR Moehringer, who ghosted Andre Agassi’s excellent Open, to do the writing – it’s hard to know why the rest of the royal family are reportedly so nervous about its contents. Unless he’s going to spill the beans on their various sexual preferences. Because everything else Harry is likely to say we already know. That his father was a bit emotionally remote, he was deeply affected by the death of his mother, he lost his way in his 20s, he deeply regrets dressing up in Nazi uniform, Meghan taught him how to love again, various members of the royal family are a bit racist, Prince William has turned against him, he loves his rescue battery hens and he was very hurt not to be allowed to wear military uniform at the Queen’s funeral comes as no surprise.

Unless I’m missing something, what really would be a revelation would be for Harry to admit that, all things considered, he’s led a rather cushy, privileged life and if one of the worst things that happened to him was that he was born only second in line to the throne, then he might have done better not to have taken a reported £20m for a four-book deal – does anyone want to read Harry on leadership and wellness? – and to have sucked it up and not made such a fuss.

Source.

FWIW: My views on the royal brat can be found here.

You Can Thank the Fed for Boosting the Powerball Jackpot

The Federal Reserve is boosting the Powerball jackpot without even buying a ticket.

Since there was no winner in Wednesday night’s drawing, the Powerball prize rose to $1.5 billion, the third-largest lottery jackpot in U.S. history. It is a substantially bigger prize than a year ago, before the Fed began raising interest rates this year to tame inflation. That is because the advertised jackpot is the future value of the prize after being invested in government bonds over 30 years.

Higher interest rates mean bigger lottery jackpots. Larger prizes tend to entice more people to buy tickets, said J. Bret Toyne, executive director of the Multi-State Lottery Association, which runs Powerball.

“While some businesses might suffer from rising interest rates, for lottery games that have annuity for the prizes, it is more of a tailwind,” he said.

Here is how it works: 34% of Powerball ticket sales fund the big jackpot, said Mr. Toyne, with another 16% going to the lower-tier prizes. (The other 50% goes to various state programs, operating costs, and retailer commissions.) If a winner chooses a lump sum payout, the person gets that 34%. If instead the person takes the jackpot in annual payments over 30 years, the prize money is invested in a portfolio of bonds.

The Federal Reserve on Wednesday lifted interest rates by another 0.75 percentage point in Chairman Jerome Powell’s quest to tamp down inflation. The central bank’s benchmark federal-funds rate now sits in a range between 3.75% and 4%.

For the next drawing Saturday, the cash set to be available in the jackpot is more than $745 million, according to Powerball. That would be the lump-sum prize. But lottery officials advertised the total jackpot as $1.5 billion, the estimated value of the bond investments.

No winner has chosen the annuity since 2014, according to lottery records.

Economists say it is better for winners to take the lump sum so they can invest it with the intention of earning a better return on the cash. The potential downside of choosing the lump sum over annual payments is the greater risk of losing the money.

“The advertised jackpot is kind of a deception,” said Victor Matheson, an economics professor at College of the Holy Cross.

Still, the allure of a 10-figure jackpot has drawn in more bettors.

Economists who have researched lotteries say that once jackpots reach around $500 million, non-regular lottery players are more likely to jump into the game. That figure is also the value that tends to draw increased media attention.

Read the rest here.

The lottery is of course, a racket. But it can be amusing. For a couple bucks you can daydream about what you would do with an unimaginable amount of money. That said, the annuity is an advertising gimmick. The true value of the lottery is always the current cash value (before taxes).