TBR News December 8, 2017
The Voice of the White House
Washington, D.C., December 8, 2017: “In 1929, my late grandfather held a good deal of rapidly escalating stock in various American companies. 1929 was the year of the Bursting Bubble and my grandfather, very nervous about the upward-rocketing stock market, liquidated his holdings and put the proceeds into cash. His friends all laughed at him for being a loser but on Black Friday, they lost almost everything. Grandfather would be having entertainment watching the bleating sheep buying BitCoins because, like the bloated bubble stock market in 1929, this bubble too will burst. One would think the dotcom scam would have taught a lesson to the sheep but apparently the only way to dissuade them from mass fiscal extinction would be to exile all of them to Poland. It would be a terrible thing to do to the Poles but they could eventually have them for Sunday dinner….on the platter.”
Table of Contents
- Bitcoin blows past $16,000, alarm bells ring louder
- After dramatic gains, bitcoin tumbles 20 percent in 10 hours
- Beware of bitcoin, India’s central bank warns investors
- And speaking of classic fiscal bubbles…..
Extraordinary Popular Delusions and the Madness of Crowds
- Video Game “Loot Boxes” Are Like Gambling for Kids — and Lawmakers Are Circling
- Japan to purchase offensive missiles capable of striking North Korea
- Trump’s Decision on Israel Will Torpedo US Influence in Muslim World
- Private War: Erik Prince Has His Eye On Afghanistan’s Rare Metals
- After Trump speech, Fatah official says Pence ‘unwanted in Palestine’
Bitcoin blows past $16,000, alarm bells ring louder
December 7, 2017
by Jemima Kelly and Gertrude Chavez-Dreyfuss
Reuters
LONDON/NEW YORK (Reuters) – Bitcoin rocketed to a lifetime high well above $16,000 on Thursday after climbing some 67 percent over one week, intensifying the debate about whether the cryptocurrency is in a bubble about to burst.
The largest U.S. cryptocurrency exchange struggled to keep up with record traffic as the price surged, with an upcoming launch of the first bitcoin futures contract further fueling investor interest.
Proponents say bitcoin is a good medium of exchange and a way to store value, much like a precious metal. They also argue it is preferable to traditional currencies because it is not subject to central bank manipulation.
The supply of bitcoin will eventually be capped at 21 million, and some 16.7 million have already been released.
But critics say that the price run-up is a bubble that has been driven mostly by speculation, leaving bitcoin vulnerable to a sharp reversal. JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon famously called bitcoin a fraud in September.
“Bitcoin remains a major gamble as it is very much an asset that remains in uncharted waters, we’ve simply not experienced this before,” said Nigel Green, founder and chief executive of deVere Group.
“Also, an asset that goes almost vertically up should typically raise alarm bells for investors,” he added.
The world’s biggest cryptocurrency has surged seventeen-fold in value so far this year.
The latest move brought its so-called market cap, its price multiplied by the number of bitcoins in circulation, to nearly $305 billion, according to Coinmarketcap, a trade website. By comparison, the market value of Wal-Mart Stores Inc (WMT.N) is around $288 billion.
Analysts said the launch slated for this weekend of bitcoin futures by Cboe Global Markets Inc’s (CBOE.O) Cboe Futures Exchange, one of the world’s biggest derivatives exchanges, was helping drive up the price on expectations it would draw more investors to the market.
The CME Group will launch bitcoin futures one week later, while Nasdaq Inc (NDAQ.O) plans to get into the mix next year.
It is not clear to what extent big U.S. banks will participate in the new bitcoin-related activity.
Goldman Sachs Group Inc (GS.N) will clear bitcoin futures for certain clients when they go live, a spokeswoman said on Thursday.
The bank is “evaluating the specifications and risk attributes for the bitcoin futures contracts as part of our standard due diligence process,” spokeswoman Tiffany Galvin said.
Bitcoin climbed as high as $16,615.62 on the Luxembourg-based Bitstamp exchange BTC=BTSP, up nearly 22 percent on the day. It was last at $16,607.14.
Coinbase, the largest U.S. platform for buying and selling cryptocurrencies, said on Thursday on Twitter that it had experienced an outage due to record traffic. The venue was last up and running.
Some investors said they still see scope for bitcoin to soar even higher.
“It will hit potentially $20,000 because so much capital is coming in and it’s the most liquid secure coin out there,” said David Drake, founder and chairman of DLJ Capital, a family office in New York.
Other trading venues showed different prices for bitcoin, which trades in more than 100 cryptocurrency exchanges that are not accountable to any central authority. For instance, at institutional trading platform GDAX, bitcoin topped $19,000, while it hit above $16,000 at itBit.
Those price discrepancies could add another level of speculation by introducing the prospect of arbitrage trades between the markets.
STOKING VOLATILITY
Some warned that the launch of bitcoin futures, which will allow investors to take speculative short positions to bet against the cryptocurrency, as well as long positions, could spark further volatility.
And while Cboe, CME and Nasdaq offer strictly policed trading environments, the underlying bitcoin market is riddled with exchanges lacking even basic oversight.
The Futures Industry Association, representing some of the world’s largest brokers, sent a letter on Thursday to the U.S. Commodity Futures Trading Commission saying that more safeguards are needed to protect against bitcoin’s high volatility and the risk of manipulation in the spot market.
“Aggressive traders, such as hedge funds and algorithm-driven funds, (will be able) to use this futures market to enter bitcoin trading with high levels of liquidity for aggressive short-selling and knock the prices really low,” said Think Markets analyst Naeem Aslam.
“Players now have an incentive to be on the short side and make profits hedging against the upside.”
Concerns about cybersecurity could also take the shine off of bitcoin.
Slovenian cryptocurrency mining marketplace NiceHash, which matches people looking to sell processing time on computers in exchange for bitcoin, said on Thursday it had lost about $64 million worth of bitcoin in a hack of its payment system.
Bitcoin slumped in 2014 when MtGox, then the world’s biggest bitcoin exchange, collapsed after saying it had been hacked and had 650,000 bitcoins stolen.
The value of all cryptocurrencies now stands at nearly $430 billion, according to Coinmarketcap.
Bitcoin has more than tripled in price since the start of October, putting it on track for its best quarter since the end of 2013, when it surged above $1,000 for the first time.
Reporting by Gertrude Chavez-Dreyfuss in New York and Jemima Kelly in London; Additional reporting by Daniel Bases; Editing by Abhinav Ramnarayan and Meredith Mazzilli
After dramatic gains, bitcoin tumbles 20 percent in 10 hours
December 8, 2017
by Jemima Kelly and Lisa Twaronite
Reuters
LONDON/TOKYO (Reuters) – Bitcoin lost almost a fifth of its value in 10 hours on Friday, having surged more than 40 percent in the preceding 48 hours, sparking fears the market may be heading for a price collapse.
In a hectic day on Thursday, bitcoin leapt from below $16,000 to $19,500 in less than an hour on the U.S.-based GDAX, one of the biggest exchanges globally, while it was still changing hands at about $15,900 on the Luxembourg-based Bitstamp.
Having then climbed to $16,666 on Bitstamp at around 0200 GMT on Friday, it tumbled to $13,482 by around 1200 GMT – a slide of more than 19 percent.
As of 1320 GMT it had recovered to around $14,400, still down 13 percent on the day.
“This correction is an appropriate one after such frenzied trading,” said Nigel Green, founder and chief executive of financial consultancy deVere Group, in a note to clients. “We should expect to see bitcoin see-sawing in coming weeks.”
“Today’s digital world needs cryptocurrencies. One or two of the existing ones will succeed. Whether it’s bitcoin or not remains to be seen,” he added.
As bitcoin slumped, other cryptocurrencies climbed. Ethereum the second-biggest, was up almost 6 percent by 1320 GMT, according to trade website Coinmarketcap.
For the week, bitcoin was still up almost a third. Since the start of October, bitcoin has more than tripled in price – its strongest quarterly performance since 2013.
And since the start of the year, it has increased by about 15 times in value – a rise that led to growing concerns the bubble would burst in dramatic fashion.
The rise has drawn in millions of new investors. So far this week, more than half a million new users have opened wallets with retail-focused bitcoin wallet provider Blockchain, the firm said, doubling the total number of users to 20 million since last year.
Some market-watchers say the most recent lurch higher in bitcoin can be explained by the coming launch of bitcoin futures on major derivatives exchanges. The Chicago-based Cboe Global Markets exchange will launch a futures contract on Sunday, to be followed by CME Group and Nasdaq.
“The fact that Cboe, CME and Nasdaq are preparing to launch Bitcoin trading instruments in the near future could be perceived by investors as a further step towards an international acceptance of Bitcoin,” said Peter Iosif, analyst at currency broker IronFX.
Reporting by Tokyo markets team; Editing by Kim Coghill and Hugh Lawson
Beware of bitcoin, India’s central bank warns investors
December 8, 2017
RT
As the world’s most valuable digital currency bitcoin continues its meteoric rise, financial regulators such as India’s central bank are issuing red alerts to remind investors of related risks.
“In the wake of a significant spurt in the valuation of many virtual currencies (VCs) and rapid growth in Initial Coin Offerings (ICOs), the Reserve Bank of India (RBI) reiterates the concerns conveyed in the earlier press releases,” said the regulator in its latest warning this week.
It’s the bank’s third warning since 2013, which cautioned “users, holders, and traders of virtual currencies including bitcoin” over “economic, financial, operational, legal, consumer protection and security-related risks.”
The warning comes at a time when Indian retail investors are rapidly adopting bitcoin. According to experts, demand for the cryptocurrency outweighs supply in India, pushing its price in the country up to 20 percent higher than international prices.
There are at least 11 bitcoin trading platforms in India which claim about 30,000 customers are actively trading at any given point of time.
Indian authorities launched the so-called ‘Virtual Currency Committee’ in April to research and propose a regulatory framework for cryptocurrencies in the country. It is an interdisciplinary working group of representatives from multiple Indian governmental ministries and banks.
Finance Minister Arun Jaitley said last week that India still does not recognize cryptocurrency. “Recommendations are being worked on,” Jaitley said, adding “The government’s position is clear; we don’t recognize this as legal currency as of now.”
In December 2013, RBI said the legal status of cryptocurrencies as well as exchanges was “unclear.” It has warned that VCs were risky as “they are stored in digital/electronic media that are called electronic wallets” and investors are “prone to losses arising out of hacking, loss of password, compromise of access credentials, malware attack, etc.”
And speaking of classic fiscal bubbles…..
Extraordinary Popular Delusions and the Madness of Crowds
by Charles Mackay
(1814-1889)
London, 1841
Chapter 2
The South-Sea Bubble
At length corruption, like a general flood,
Did deluge all, and avarice creeping on,
Spread, like a low-born mist, and hid the sun.
Statesmen and patriots plied alike the stocks,
Peeress and butler shared alike the box;
And judges jobbed, and bishops bit the town,
And mighty dukes packed cards for half-a-crown:
Britain was sunk in lucre’s sordid charms.
—Pope.
THE SOUTH-SEA COMPANY was originated by the celebrated Harley, Earl of Oxford, in the year 1711, with the view of restoring public credit, which had suffered by the dismissal of the Whig ministry, and of providing for the discharge of the army and navy debentures, and other parts of the floating debt, amounting to nearly ten millions sterling. A company of merchants, at that time without a name, took this debt upon themselves, and the government agreed to secure them, for a certain period, the interest of six per cent. To provide for this interest, amounting to 600,000l. per annum, the duties upon wines, vinegar, India goods, wrought silks, tobacco, whale-fins, and some other articles, were rendered permanent. The monopoly of the trade to the South Seas was granted, and the company, being incorporated by Act of Parliament, assumed the title by which it has ever since been known. The minister took great credit to himself for his share in this transaction, and the scheme was always called by his flatterers “the Earl of Oxford’s masterpiece.”
Even at this early period of its history, the most visionary ideas were formed by the company and the public of the immense riches of the western coast of South America. Everybody had heard of the gold and silver mines of Peru and Mexico; every one believed them to be inexhaustible, and that it was only necessary to send the manufactures of England to the coast, to be repaid a hundredfold in gold and silver ingots by the natives. A report, industriously spread, that Spain was willing to concede four ports, on the coasts of Chili and Peru for the purposes of traffic, increased the general confidence, and for many years the South-Sea Company’s stock was in high favour.
Philip V of Spain, however, never had any intention of admitting the English to a free trade in the ports of Spanish America. Negotiations were set on foot, but their only result was the assiento contract, or the privilege of supplying the colonies with negroes for thirty years, and of sending once a year a vessel, limited both as to tonnage and value of cargo, to trade with Mexico, Peru, or Chili. The latter permission was only granted upon the hard condition, that the King of Spain should enjoy one-fourth of the profits, and a tax of five per cent on the remainder. This was a great disappointment to the Earl of Oxford and his party, who were reminded much oftener than they found agreeable of the
“Parturiunt montes, nascitur ridiculus mus.”
But the public confidence in the South-Sea Company was not shaken. The Earl of Oxford declared that Spain would permit two ships, in addition to the annual ship, to carry out merchandise during the first year; and a list was published, in which all the ports and harbours of these coasts were pompously set forth as open to the trade of Great Britain. The first voyage of the annual ship was not made till the year 1717, and in the following year the trade was suppressed by the rupture with Spain.
The king’s speech, at the opening of the session of 1717, made pointed allusion to the state of public credit, and recommended that proper measures should be taken to reduce the national debt. The two great monetary corporations, the South-Sea Company and the Bank of England, made proposals to parliament on the 20th of May ensuing. The South-Sea Company prayed that their capital stock of ten millions might be increased to twelve, by subscription or otherwise, and offered to accept five per cent instead of six upon the whole amount. The bank made proposals equally advantageous. The house debated for some time, and finally three acts were passed, called the South-Sea Act, the bank Act, and the General Fund Act. By the first, the proposals of the South-Sea Company were accepted, and that body held itself ready to advance the sum of two millions towards discharging the principal and interest of the debt due by the state for the four lottery funds of the ninth and tenth years of Queen Anne. By the second act, the bank received a lower rate of interest for the sum of 1,775,027l. 15s. due to it by the state, and agreed to deliver up to be cancelled as many exchequer bills as amounted to two millions sterling, and to accept of an annuity of one hundred thousand pounds, being after the rate of five per cent, the whole redeemable at one year’s notice. They were further required to be ready to advance, in case of need, a sum not exceeding 2,500,000l. upon the same terms of five per cent interest, redeemable by parliament. The General Fund Act recited the various deficiencies, which were to be made good by the aids derived from the foregoing sources.
The name of the South-Sea Company was thus continually before the public. Though their trade with the South American States produced little or no augmentation of their revenues, they continued to flourish as a monetary corporation. Their stock was in high request, and the directors, buoyed up with success, began to think of new means for extending their influence. The Mississippi scheme of John Law, which so dazzled and captivated the French people, inspired them with an idea that they could carry on the same game in England. The anticipated failure of his plans did not divert them from their intention. Wise in their own conceit, they imagined they could avoid his faults, carry on their schemes for ever, and stretch the cord of credit to its extremest tension, without causing it to snap asunder.
It was while Law’s plan was at its greatest height of popularity, while people were crowding in thousands to the Rue Quincampoix, and ruining themselves with frantic eagerness, that the South-Sea directors laid before parliament their famous plan for paying off the national debt. Visions of boundless wealth floated before the fascinated eyes of the people in the two most celebrated countries of Europe. The English commenced their career of extravagance somewhat later than the French; but as soon as the delirium seized them, they were determined not to be outdone. Upon the 22nd of January, 1720, the House of Commons resolved itself into a committee of the whole house, to take into consideration that part of the king’s speech at the opening of the session which related to the public debts, and the proposal of the South-Sea Company towards the redemption and sinking of the same. The proposal set forth at great length, and under several heads, the debts of the state, amounting to 30,981,712l., which the company were anxious to take upon themselves, upon consideration of five per cent per annum, secured to them until Midsummer 1727; after which time, the whole was to become redeemable at the pleasure of the legislature, and the interest to be reduced to four per cent. The proposal was received with great favour; but the Bank of England had many friends in the House of Commons, who were desirous that that body should share in the advantages that were likely to accrue. On behalf of this corporation it was represented, that they had performed great and eminent services to the state in the most difficult times, and deserved, at least, that if any advantage was to be made by public bargains of this nature, they should be preferred before a company that had never done anything for the nation. The further consideration of the matter was accordingly postponed for five days. In the meantime, a plan was drawn up by the governors of the bank. The South-Sea Company, afraid that the bank might offer still more advantageous terms to the government than themselves, reconsidered their former proposal, and made some alterations in it, which they hoped would render it more acceptable. The principal change was a stipulation that the government might redeem these debts at the expiration of four years, instead of seven, as at first suggested. The bank resolved not to be outbidden in this singular auction, and the governors also reconsidered their first proposal, and sent in a new one.
Thus, each corporation having made two proposals, the house began to deliberate. Mr. Robert Walpole was the chief speaker in favour of the bank, and Mr. Aislabie, the Chancellor of the Exchequer, the principal advocate on behalf of the South-Sea Company. It was resolved, on the 2nd of February, that the proposals of the latter were most advantageous to the country. They were accordingly received, and leave was given to bring in a bill to that effect.
Exchange Alley was in a fever of excitement. The company’s stock, which had been at a hundred and thirty the previous day, gradually rose to three hundred, and continued to rise with the most astonishing rapidity during the whole time that the bill in its several stages was under discussion. Mr. Walpole was almost the only statesman in the house who spoke out boldly against it. He warned them, in eloquent and solemn language, of the evils that would ensue. It countenanced, he said, “the dangerous practice of stock-jobbing, and would divert the genius of the nation from trade and industry. It would hold out a dangerous lure to decoy the unwary to their ruin, by making them part with the earnings of their labour for a prospect of imaginary wealth. The great principle of the project was an evil of first-rate magnitude; it was to raise artificially the value of the stock, by exciting and keeping up a general infatuation, and by promising dividends out of funds which could never be adequate to the purpose.” In a prophetic spirit he added, that if the plan succeeded, the directors would become masters of the government, form a new and absolute aristocracy in the kingdom, and control the resolutions of the legislature. If it failed, which he was convinced it would, the result would bring general discontent and ruin upon the country. Such would be the delusion, that when the evil day came, as come it would, the people would start up, as from a dream, and ask themselves if these things could have been true. All his eloquence was in vain. He was looked upon as a false prophet, or compared to the hoarse raven, croaking omens of evil. His friends, however, compared him to Cassandra, predicting evils which would only be believed when they came home to men’s hearths, and stared them in the face at their own boards. Although, in former times, the house had listened with the utmost attention to every word that fell from his lips, the benches became deserted when it was known that he would speak on the South-Sea question.
The bill was two months in its progress through the House of Commons. During this time every exertion was made by the directors and their friends, and more especially by the chairman, the noted Sir John Blunt, to raise the price of the stock. The most extravagant rumours were in circulation. Treaties between England and Spain were spoken of, whereby the latter was to grant a free trade to all her colonies; and the rich produce of the mines of Potosi-la-Paz was to be brought to England until silver should become almost as plentiful as iron. For cotton and woollen goods, with which we could supply them in abundance, the dwellers in Mexico were to empty their golden mines. The company of merchants trading to the South Seas would be the richest the world ever saw, and every hundred pounds invested in it would produce hundreds per annum to the stockholder. At last the stock was raised by these means to near four hundred; but, after fluctuating a good deal, settled at three hundred and thirty, at which price it remained when the bill passed the Commons by a majority of 172 against 55.
In the House of Lords the bill was hurried through all its stages with unexampled rapidity. On the 4th of April it was read a first time; on the 5th, it was read a second time; on the 6th, it was committed; and on the 7th, was read a third time and passed.
Several peers spoke warmly against the scheme; but their warnings fell upon dull, cold ears. A speculating frenzy had seized them as well as the plebeians. Lord North and Grey said the bill was unjust in its nature, and might prove fatal in its consequences, being calculated to enrich the few and impoverish the many. The Duke of Wharton followed; but, as he only retailed at second-hand the arguments so eloquently stated by Walpole in the Lower House, he was not listened to with even the same attention that had been bestowed upon Lord North and Grey. Earl Cowper followed on the same side, and compared the bill to the famous horse of the siege of Troy. Like that, it was ushered in and received with great pomp and acclamations of joy, but bore within it treachery and destruction. The Earl of Sunderland endeavoured to answer all objections; and on the question being put, there appeared only seventeen peers against, and eighty-three in favour of the project. The very same day on which it passed the Lords, it received the Royal assent, and became the law of the land.
It seemed at that time as if the whole nation had turned stock-jobbers. Exchange Alley was every day blocked up by crowds, and Cornhill was impassable for the number of carriages. Everybody came to purchase stock. “Every fool aspired to be a knave.” In the words of a ballad, published at the time, and sung about the streets,12*
“Then stars and garters did appear
Among the meaner rabble;
To buy and sell, to see and hear
The Jews and Gentiles squabble.
The greatest ladies thither came,
And plied in chariots daily,
Or pawned their jewels for a sum
To venture in the Alley.”
The inordinate thirst of gain that had afflicted all ranks of society was not to be slaked even in the South Sea. Other schemes, of the most extravagant kind, were started. The share-lists were speedily filled up, and an enormous traffic carried on in shares, while, of course, every means were resorted to to raise them to an artificial value in the market.
Contrary to all expectation, South-Sea stock fell when the bill received the royal assent. On the 7th of April the shares were quoted at three hundred and ten, and on the following day at two hundred and ninety. Already the directors had tasted the profits of their scheme, and it was not likely that they should quietly allow the stock to find its natural level, without an effort to raise it. Immediately their busy emissaries were set to work. Every person interested in the success of the project endeavoured to draw a knot of listeners around him, to whom he expatiated on the treasures of the South American seas. Exchange Alley was crowded with attentive groups. One rumour alone, asserted with the utmost confidence, had an immediate effect upon the stock. It was said that Earl Stanhope had received overtures in France from the Spanish Government to exchange Gibraltar and Port Mahon for some places on the coast of Peru, for the security and enlargement of the trade in the South Seas. Instead of one annual ship trading to those ports, and allowing the king of Spain twenty-five per cent out of the profits, the company might build and charter as many ships as they pleased, and pay no per centage whatever to any foreign potentate.
“Visions of ingots danced before their eyes,”
and stock rose rapidly. On the 12th of April, five days after the bill had become law, the directors opened their books for a subscription of a million, at the rate of 300l. for every 100l. capital. Such was the concourse of persons of all ranks, that this first subscription was found to amount to above two millions of original stock. It was to be paid at five payments, of 60l. each for every 100l. In a few days the stock advanced to three hundred and forty, and the subscriptions were sold for double the price of the first payment. To raise the stock still higher, it was declared, in a general court of directors, on the 21st of April, that the midsummer dividend should be ten per cent, and that all subscriptions should be entitled to the same. These resolutions answering the end designed, the directors, to improve the infatuation of the monied men, opened their books for a second subscription of a million, at four hundred per cent. Such was the frantic eagerness of people of every class to speculate in these funds, that in the course of a few hours no less than a million and a half was subscribed at that rate.
In the meantime, innumerable joint-stock companies started up everywhere. They soon received the name of Bubbles, the most appropriate that imagination could devise. The populace are often most happy in the nicknames they employ. None could be more apt than that of Bubbles. Some of them lasted for a week, or a fortnight, and were no more heard of, while others could not even live out that short span of existence. Every evening produced new schemes, and every morning new projects. The highest of the aristocracy were as eager in this hot pursuit of gain as the most plodding jobber in Cornhill. The Prince of Wales became governor of one company, and is said to have cleared 40,000l. by his speculations.13* The Duke of Bridgewater started a scheme for the improvement of London and Westminster, and the Duke of Chandos another. There were nearly a hundred different projects, each more extravagant and deceptive than the other. To use the words of the Political State, they were “set on foot and promoted by crafty knaves, then pursued by multitudes of covetous fools, and at last appeared to be, in effect, what their vulgar appellation denoted them to be—bubbles and mere cheats.” It was computed that near one million and a half sterling was won and lost by these unwarrantable practices, to the impoverishment of many a fool, and the enriching of many a rogue.
Some of these schemes were plausible enough, and, had they been undertaken at a time when the public mind was unexcited, might have been pursued with advantage to all concerned. But they were established merely with the view of raising the shares in the market. The projectors took the first opportunity of a rise to sell out, and next morning the scheme was at an end. Maitland, in his History of London, gravely informs us, that one of the projects which received great encouragement, was for the establishment of a company “to make deal boards out of saw-dust.” This is no doubt intended as a joke; but there is abundance of evidence to shew that dozens of schemes, hardly a whit more reasonable, lived their little day, ruining hundreds ere they fell. One of them was for a wheel for perpetual motion—capital, one million; another was “for encouraging the breed of horses in England, and improving of glebe and church lands, and repairing and rebuilding parsonage and vicarage houses.” Why the clergy, who were so mainly interested in the latter clause, should have taken so much interest in the first, is only to be explained on the supposition that the scheme was projected by a knot of the foxhunting parsons, once so common in England. The shares of this company were rapidly subscribed for. But the most absurd and preposterous of all, and which shewed, more completely than any other, the utter madness of the people, was one started by an unknown adventurer, entitled “A company for carrying on an undertaking of great advantage, but nobody to know what it is.” Were not the fact stated by scores of credible witnesses, it would be impossible to believe that any person could have been duped by such a project. The man of genius who essayed this bold and successful inroad upon public credulity, merely stated in his prospectus that the required capital was half a million, in five thousand shares of 100l. each, deposit 2l. per share. Each subscriber, paying his deposit, would be entitled to 100l. per annum per share. How this immense profit was to be obtained, he did not condescend to inform them at that time, but promised that in a month full particulars should be duly announced, and a call made for the remaining 98l. of the subscription. Next morning, at nine o’clock, this great man opened an office in Cornhill. Crowds of people beset his door, and when he shut up at three o’clock, he found that no less than one thousand shares had been subscribed for, and the deposits paid. He was thus, in five hours, the winner of 2,000l. He was philosopher enough to be contented with his venture, and set off the same evening for the Continent. He was never heard of again.
Well might Swift exclaim, comparing Change Alley to a gulf in the South Sea:
“Subscribers here by thousands float,
And jostle one another down,
Each paddling in his leaky boat,
And here they fish for gold, and drown.
Now buried in the depths below,
Now mounted up to heaven again,
They reel and stagger to and fro,
At their wit’s end, like drunken men.
Meantime, secure on Garraway cliffs,
A savage race, by shipwrecks fed,
Lie waiting for the foundered skiffs,
And strip the bodies of the dead.”
Video Game “Loot Boxes” Are Like Gambling for Kids — and Lawmakers Are Circling
December 8 2017
by Zaid Jilani
The Intercept
In mid-November, video game publisher Electronic Arts released “Star Wars: Battlefront II,” a multiplayer shooter for consoles and PCs. The title is likely to be a top item on many holiday shoppers’ lists; the original “Battlefront” sold an estimated 12 million copies.
But “Battlefront II,” rated for ages 13 and up, has ignited a firestorm of controversy for the particularly cynical way it pushes players to buy “loot boxes,” random collections of in-game abilities that remain a mystery until purchased. Experts say loot boxes prey on addictive impulses that can be particularly difficult for children and other young people to control. Lawmakers, meanwhile, are considering regulating loot boxes as a form of gambling.
“There’s an entire new industry larger than even the film industry which is able to put its products right in the pockets of the average person, including kids,” said Hawaii State Rep. Chris Lee, a Democrat and self-described longtime gamer who has nevertheless described “Battlefront II” as an “online casino designed to lure kids into spending money.”
Lee told The Intercept he is in discussions with lawmakers in other states, including California and Minnesota, about how to respond to loot boxes broadly. Belgium’s gaming commission is reportedly considering regulation of the virtual packages after the country’s Justice Minister said they were dangerous to children’s mental health. There’s precedent for such regulation: Japan’s Consumer Affairs Agency declared a particularly pernicious form of loot box called kompu gacha illegal in 2012.
“The fact that some of the games on there mimic slot machine mechanics is incredibly worrisome for a lot of the folks we’re talking to,” Lee said, “once they realize just how accessible and absolutely unregulated some of these potentially dangerous mechanics are.”
In “Battlefront II,” a loot box costs between 83 cents and $1.80, and it’s not uncommon for a player to buy dozens and dozens of boxes in an attempt to unlock a particular character or capability. One popular YouTuber, for example, bought 85 boxes for around $90 and amassed, along with various in-game upgrades, 18,700 credits — just under half as many needed to unlock marquee character Darth Vader. Remember that the game itself retails at a suggested price of $59.99.
Thus far, “Battlefront II” only sold loot boxes in trial versions of the game. Customer outrage over those testing editions was so intense that when EA tried to answer questions on Reddit, the company’s response became the most down-voted post to ever appear on the site. After that incident, on the eve of the game’s launch, EA removed loot boxes and indeed all digital sales from “Battlefront 2,” a move that helped send EA’s stock price tumbling. The company has said in-game purchases will eventually come back, once it has recalibrated pricing.
EA also maintains that you can earn everything in the game without paying; one player had estimated it would originally take 40 hours to unlock Vader without the help of loot boxes, but after the consumer backlash EA now says the bar has been lowered.
“Battlefront II” didn’t invent the loot box so much as take the concept to maddening extremes. It was popularized by the 2012 game “Mass Effect 3″ and has been spreading ever since. Publishers like the additional revenue stream, while players are drawn to the possibility of saving time or money when they get lucky and purchase the right box. The rapid proliferation of the mystery bundles has come amid the expansion of gaming on mobile devices, where many apps are given away and rely on small transactions within the product as the predominant form of revenue.
Here’s an example of a loot box, from the popular console first-person shooter game “Overwatch.” In the game, you can purchase loot boxes that will give you some random combination of cosmetic items. In the video below, the player purchases $20 worth of loot boxes, then awaits the prizes contained within. The important thing to note is that the player has no idea what’s in the boxes before purchasing them and only finds out after paying:
If loot boxes remind you of a slot machine or lottery ticket, you’re not alone. Just like traditional gamblers, players who acquire loot boxes pay money for an uncertain outcome. Unlike traditional gamblers, there is no strict government regulation to protect them.
David G. Schwartz is the director of the University of Nevada Las Vegas’s Center for Gaming Research and the author of numerous books on the history of gambling. He offered his thoughts as an individual researcher and stressed that he did not speak for his organization.
“For something to be considered gambling, the classic definition [is] risking something of value on an unknown outcome in hope of getting a payoff,” he said. “With a loot box, it’s pretty much that.”
Les Bernal, national director of Stop Predatory Gambling, which researches the gambling industry and advocates for regulations to prevent gambling addiction, agreed. “These game publishers are blatantly exploiting minors, viewing them as an easy way to boost profits,” he said.
Bernal worries that the big video game publishers are targeting a population that is highly vulnerable to gambling addiction. “In the commercial gambling business in general, the way you make your money is on a small amount of players — those players who are financially desperate, and those players who are addicted,” he said. “Young people are more susceptible to gambling problems. They’re at a point in their development where being exposed to commercial gambling has a devastating impact.”
Emil Hodzic is a psychologist who runs the Sydney-based Video Game Addiction Clinic, which each year takes roughly 1,000 clients facing psychological and physical impairments — largely adolescents, but also adults.
He has noticed that some of his clients have developed an addiction to loot boxes and among them are underage addicts who have even stolen their parents’ credit cards in order to make loot box purchases. He likens the boxes to poker machines. “They have an algorithm, a formula for the release of a drop for certain items equivalent to winning a jackpot or lower grade winnings,” he told The Intercept. “The one with the most random results creates the strongest addiction.”
“Essentially people are playing to hope to win something. As far as I’m concerned, that’s the same” as gambling, Hodzic added. Hodzic suggested it would be “ideal” if games were to allow parental controls on the loot box functions.
There is no academic consensus about whether loot boxes constitute gambling. Chanel J. Larche, a Ph.D. candidate at the University of Waterloo’s Gambling Research Lab, said that because the boxes are so new, the psychological effects of using them has not yet been rigorously studied.
“The lines between gambling and regular gaming structures are certainly blurred here, because we are looking at a situation where a random component is being introduced into a game structure that is widely skill-based,” she told us, adding that whether loot boxes constitute actual gambling is a “gray area.” Larche pointed out that the value of what players receive from loot boxes is totally subjective, whereas in traditional gambling the objective value of money can be more easily quantified.
EA, for its part, has argued that its loot box system is not a form of gambling because players will always receive something from opening every box, even if it’s an item they already have or don’t want. Well, sure, and when you play the slots, you’re always guaranteed to get something — maybe a cherry, a seven, and a banana. Just not in the combination you may have wanted.
The Entertainment Software Rating Board, the industry’s group for self-regulation, told the gaming website Kotaku essentially the same thing as EA, adding, “We think of it as a similar principle to collectible card games: Sometimes you’ll open a pack and get a brand-new holographic card you’ve had your eye on for a while. But other times, you’ll end up with a pack of cards you already have.”
Lee, the Hawaii legislator, is looking at regulating three key issues around loot boxes: whether companies are transparent about the costs of such boxes in advertising, whether it’s appropriate for minors to have access to games with loot boxes, and whether gambling mechanics belong in video games, period.
Regardless of whether we see government action, the consumer revolt against “Battlefront II” may be a sign of things to come. As of this writing, the game sits at a user rating of 0.8/10 on the popular rating site Metacritic. Meanwhile, sales of “Battlefront II” are reportedly down 60 percent from the original “Battlefront,” at least in the United Kingdom.
Japan to purchase offensive missiles capable of striking North Korea
The move comes after North Korea recently tested missiles over the pacifist country. The new missiles will be capable of reaching North Korea.
December 8m 2017
DW
Japan’s Defense Minister Itsunori Onodera on Friday announced plans to buy offensive air-to-surface missiles, in a move likely to cause controversy considering the country’s decades-long pacifist history.
Although Onodera did not refer to North Korea in the announcement, the decision comes after North Korea recently tested ballistic missiles over Japan and last week tested a new type of intercontinental ballistic missile that reached an altitude of 4,000 kilometers before landing in the sea within Japan’s economic zone.
Onodera said the ministry intends to request a special budget for the fiscal year starting April 2018 to purchase the missiles, which are designed to be launched from military aircraft to targets on land or at sea.
He said the new missiles would be for defense, with Japan still relying on the United States to strike any enemy bases.
“We are planning to introduce the JSM (Joint Strike Missile) that will be mounted on the F-35A (stealth fighter) as ‘stand-off’ missiles that can be fired beyond the range of enemy threats,” Onodera said.
Japan is also looking to mount Lockheed Martin Corp’s extended range Joint Air-to-Surface Standoff Missile (JASSM-ER) on its F-15 fighters.
The JSM, designed by Norway’s Kongsberg Defence and Aerospace, has a range of 500 kilometers (310 miles) and the JASSM-ER can hit targets from 1,000 kilometers away.
Japan’s missile force had until now been limited to anti-aircraft and anti-ship munitions with ranges of less than 300 kilometers.
Japan’s post-World War II pacifist constitution bans the use of force as a means of settling international disputes, but the growing threat from North Korea has seen politicians, including Onodera, call for a more robust military that could deter a North Korean attack.
Earlier this week Japanese Prime Minister Shinzo Abe told parliament that North Korea’s missile tests were an “imminent threat” to Japan and that talking to North Korea was meaningless.
During his White House campaign US President Donald Trump suggested allies such as Japan need to do more to defend themselves. Since taking office, Trump and his diplomats have offered reassurances of support.
Japan’s missile purchase anouncement comes on the final day of week-long military drills between the US and South Korea, which North Korea vehemently criticized.
The North Korean military released a statement that said: “Through the drill, the South Korean and US air forces displayed the allies’ strong intent and ability to punish North Korea when threatened by nuclear weapons and missiles.”
Trump’s Decision on Israel Will Torpedo US Influence in Muslim World
December 6, 2017
by Patrick Cockburn
The Unz Review
The expected announcement by President Trump that the US recognises Jerusalem as the capital of Israel and will move the US embassy there could mark a critical stage in the reduction of US influence in the world. Seldom, if ever, has such an important US policy initiative been so universally criticised or condemned by almost every country in the world.
President Trump has previously provoked anger in important countries allied to the US since the Second World War such as the UK, Japan, Australia and Germany, but they have tried to continue their past relationship and ignore or play down Mr Trump’s explosive tweets and departure from international treaties. But this time round expressions of extreme disagreement are more than usually mixed with scorn and bemusement at a move which may help Mr Trump in US domestic politics but will seriously damage US political primacy in the region. Even steadfast US allies do not want to become collateral damage.
The fury is greatest in Muslim states: the Turkish government’s spokesman said on Wednesday said that the US decision to recognise Jerusalem as the capital of Israel will plunge the region and the world into endless conflict.Deputy Prime Minister Bekir Bozdag said on Twitter that “declaring Jerusalem a capital is disregarding history and the truths in the region, it is a big injustice/cruelty, short-sightedness, foolishness/madness, it is plunging the region and the world into a fire with no end in sight.”
Turkish President Recep Tayyip Erdogan said President Trump’s action would be a “red line for Turkey” and could lead to Ankara cutting diplomatic ties with Israel.
Turkey’s relations with the US have been in decline for several years, but even Saudi Arabia, which Mr Trump visited and has gone out of his way to praise and support, was very negative about his reversal of traditional US policy on Jerusalem. A Saudi official in Riyadh was quoted as saying that “the recognition will have very serious implications and will be provocative to all Muslims”. It went on to say that the US move would damage its ability of the US to reach “a just solution for the Palestinian question” and the status of Jerusalem should only be decided in a final settlement between Israel and the Palestinians.
Saudi Arabia has cultivated the US as an ally against Iran, but the expected US action will make it impossible to even pretend that “the peace process” is going anywhere. This has been true for years, but the pretence that it was and that the US was a fair-minded arbitrator on Israel-Palestinian issues enabled Muslim states like Saudi Arabia to say that they were keeping close to the US in order to help the Palestinians.
The US recognition of Jerusalem as Israel’s capital and the long term move of US embassy to Jerusalem affects little on the ground, But it may have a profound symbolic impact because many Muslims will see the US action as posing an increased threat to the Islamic holy sites in Jerusalem, the Haram esh-Sharif, on which stands the Dome of the Rock, and al-Aqsa mosque. Their fate will concern and possibly mobilise many of the 1.5 billion Muslims who make up 22 per cent of the world’s population.
Outside the Muslim world, the response to President Trump’s proposed action has been less harsh, but relentlessly negative from Pope Francis in the Vatican to Bolivia and Beijing. Israel captured East Jerusalem in the 1967 and later annexed it, but its sovereignty over the whole of Jerusalem has not been recognised by other states.
The Trump administration says that recognition of Jerusalem as Israel’s capital simply accepts the reality that its seat of government is there in the shape of the prime minister’s office, the Knesset and Israeli Supreme Court. But in practice Mr Trump is endorsing Israeli settlement policy in East Jerusalem and the West Bank. These have made the so-called “two state solution” for the Israel-Palestinian a fiction as the Palestinians are pushed into smaller and smaller enclaves separated from each other.
Mr Trump’s actions will be a serious blow to US influence in the Muslim world and particularly in the Middle East. They will persuade other states around the world that US foreign policy has imploded and will in future be determined by Mr Trump’s policy of self-isolation and political priorities at home. The US ability to shape events internationally is becoming increasingly limited.
Private War: Erik Prince Has His Eye On Afghanistan’s Rare Metals
December 7, 2017
by Aram Roston
BuzzFeed News
Controversial private security tycoon Erik Prince has famously pitched an audacious plan to the Trump administration: Hire him to privatize the war in Afghanistan using squads of “security contractors.” Now, for the first time, Buzzfeed News is publishing that pitch, a presentation that lays out how Prince wanted to take over the war from the US military — and how he envisioned mining some of the most war-torn provinces in Afghanistan to help fund security operations and obtain strategic mineral resources for the US.
Prince, who founded the Blackwater security firm and testified last week to the House Intelligence Committee for its Russia investigation, has deep connections into the current White House: He’s friends with former presidential adviser Stephen Bannon, and he’s the brother of Betsy DeVos, the education secretary.
Prince briefed top Trump administration officials directly, talked up his plan publicly on the DC circuit, and published op-eds about it. He patterned the strategy he’s pitching on the historical model of the old British East India Company, which had its own army and colonized much of Britain’s empire in India. “An East India Company approach,” he wrote in the Wall Street Journal, “would use cheaper private solutions to fill the gaps that plague the Afghan security forces, including reliable logistics and aviation support.”
But the details have never been made public. Here is the never-before-published slide presentation for his pitch, which a source familiar with the matter said was prepared for the Trump administration.
One surprising element is the commercial promise Prince envisions: that the US will get access to Afghanistan’s rich deposits of minerals such as lithium, used in batteries; uranium; magnesite; and “rare earth elements,” critical metals used in high technology from defense to electronics. One slide estimates the value of mineral deposits in Helmand province alone at $1 trillion.
The presentation makes it plain that Prince intends to fund the effort through these rich deposits. His plan, one slide says, is “a strategic mineral resource extraction funded effort that breaks the negative security economic cycle.” The slides also say that mining could provide jobs to Afghans.
“What is laid out in the slides is a model of an affordable way for the US to stabilize a failed state where we are presently wasting American youth and tens of billions of dollars annually,” a Prince spokesperson emailed BuzzFeed News Thursday.
Defense Secretary James Mattis “did meet with Mr. Prince earlier this year,” a Defense Department spokesperson said. “He meets with people all the time to listen and hear new ideas.” The CIA declined to comment. It’s been widely reported that the Pentagon pushed back against Prince’s concept, and that national security adviser H.R. McMaster was opposed to it as well.Prince currently runs a Chinese security and logistics company, as BuzzFeed News has previously reported. Still, in his pitch to America’s policymakers, he plays the US against China. One slide, devoted to “market manipulation in rare earth elements,” presents China as dominating the market for the valuable minerals.
Ironically, the statement from Prince’s spokesman that said Prince’s Chinese company, Frontier Services Group, would participate in the Afghanistan plan, and “would provide logistics support to the extractive firms with secure transportation and camp support.”
Many experts on Afghanistan mock Prince’s concept of privatizing the war there. His supporters say that since the military has so far failed in Afghanistan, his approach deserves a try. One source who was briefed by Prince says, “His heart’s in the right place. The problem is that his head is up his ass.”
On Tuesday, BuzzFeed News caught up with Prince in Leesburg, Virginia. He declined to talk, saying, “You’re a fucking hack.”
After Trump speech, Fatah official says Pence ‘unwanted in Palestine’
With US vice president set to visit later this month, Jibril Rajoub says meeting with Abbas ‘won’t happen’; White House: ‘It would be counterproductive’ to cancel
December 7, 2017
by Alexander Fulbright and Dov Lieber
The Times of Israel
A senior official in the Palestinian Authority’s ruling Fatah party said Thursday US Vice President Mike Pence was “unwanted in Palestine,” following his boss Donald Trump’s recognition of Jerusalem as Israel’s capital, a move met with widespread anger from the Palestinians.
Pence is set to visit Egypt, Israel and the West Bank later this month. When announcing the trip in October, the White House said Pence would hold meetings with Prime Minister Benjamin Netanyahu and PA President Mahmoud Abbas amid US efforts to relaunch peace talks. Trump spoke about the Pence visit in his speech Wednesday, with his vice president at his side, noting, “Vice President Pence will travel to the region in the coming days to reaffirm our commitment to work with partners throughout the Middle East to defeat radicalism that threatens the hopes and dreams of future generations.”
“In the name of Fatah, I say we will not welcome Trump’s deputy in Palestinian territory,” Rajoub said. “[Pence] requested to meet with [Abbas] on December 19 in Bethlehem. A meeting like this won’t happen.”
Responding to rumors the meeting could be called off, a White House aide said Pence “still plans to meet with Abbas as scheduled” and “believes it would be counterproductive for him to pull out of the meeting.”
Abbas has not made similar comments and his office could not immediately be reached.
Following Trump’s speech, in which the US president recognized Jerusalem as Israel’s capital and ordered the State Department to begin preparations for moving the US embassy to the city from Tel Aviv, Abbas slammed the move and said the United States has ended its historic role as the key sponsor for Israel-Palestinian peace talks.
On Thursday, Abbas traveled to Amman to meet with Jordan’s King Abdullah II in order to coordinate a response to Trump’s decision. Fatah has called for protests against the move, while the Hamas terror group has called for a violent uprising, or intifada. Multiple Palestinians were injured in riots throughout the West Bank and at the Gaza border Thursday.
Mohammad Shtayeh, a senior Fatah official, said Trump’s recognition of Jerusalem as Israel’s capital did not leave any room for the boundaries of the city to be negotiated in the future.
“If the president kept the door open for negotiations on the borders of Jerusalem, he could have said the Palestinians have the right to a capital in East Jerusalem,” he said Thursday at a press conference in Beit Jala, a town near Bethlehem in the West Bank.
“The Jerusalem defined by the Americans is the Jerusalem defined by Netanyahu,” he added, meaning the entire municipal boundary as currently defined by Israel, which includes both West and East Jerusalem.
Shtayeh, who has been a senior member of the Palestinian negotiating team since the early 1990s, explained, “When we refer to Jerusalem, we refer to Jerusalem that was there before 1967.”
Jerusalem’s status is one of thorniest issues in the Israeli-Palestinian conflict. The Palestinians envision East Jerusalem, which Israel captured from Jordan in the 1967 Six Day War, as the capital of their future state, while Israel has long declared all of Jerusalem its undivided capital.
As part of their response to Trump’s announcement, the Palestinians on Thursday asked the UN Security Council to take urgent action and demand that the US president’s decision be rescinded.
Palestinian Charge d’Affaires Feda Abdelhady-Nasser said in a letter to the council president that Trump’s declaration violates numerous council resolutions and could lead to “a never-ending religious war.”
The letter cited several council resolutions that prohibit changes to the status of Jerusalem.
Abdelhady-Nasser urged the Security Council to send “a clear message” reaffirming relevant laws and resolutions and “opposing this unilateral and provocative decision.”
She warned that disregarding “these fundamental legal, political and religious dimensions of the question of Jerusalem can only aggravate already heightened tensions.”
Trump’s decision could lead to the “exacerbation of religious sensitivities that risk transforming this solvable political-territorial conflict into a never-ending religious war, which will only be exploited by religious extremists, fueling radicalism and strife in the region and beyond,” Abdelhady-Nasser cautioned.
The Security Council has scheduled an emergency meeting on Trump’s announcement for Friday