11-28-2018, 12:13 AM
*** 28-Nov-18 World View -- Bitcoin bubble and China's Belt and Road bubble both appear to be crashing
This morning's key headlines from GenerationalDynamics.com
****
**** Bitcoin super-bubble implodes and crashes below $4,000
****
![[Image: g181127b.gif]](http://Media.GenerationalDynamics.com/ww2010/g181127b.gif)
Bitcoin price at $3,750 on 27-Nov-2018 (CoinMarketCap.com)
The price of a Bitcoin fell to $3,700 on Tuesday, down from
a peak close to $20,000 in December of last year.
A little over a year ago, in response to people asking my advice about
investing in Bitcoin, I wrote about Bitcoin
just after its price surged past $5,000. In the article I
wrote, "Investing in Bitcoin is the road to disaster. I literally
cannot think of a worse investment today than Bitcoin, or the various
copycat newcomers, such as Ethereum. Bitcoin is almost literally a
Ponzi scheme backed by nothing but air."
So Dear Reader, I hope you took my advice, because if you didn't then
you've lost money. Many people lost a great deal of money investing
as the price increased parabolically all the way up to $20,000, and
those people have lost a LOT of money.
What are analysts saying today? Some are saying that Bitcoin
has bottomed, and now will go up. One says that Bitcoin will
fall further to about $3,000, and then will go up. Another says
that it will remain about where it is now for several months,
and then will go up. These are the same people who have always
said it would go up, even while it was crashing.
This reminds me of the housing bubble in the mid-2000s decade. I was
writing as early as 2004 that there was a housing bubble, as did a few
others. It was perfectly obvious. But the "experts" on CNBC and in
the Wall Street Journal kept saying that "Housing prices can't go down
-- people have to live somewhere," and "Banks won't foreclose -- it's
not in their interest to do so" and "These housing construction firms
know what they're doing, and they wouldn't be building houses if it
were just a bubble."
It wasn't until around 2009 or 2010 that these "experts" even admitted
that there had been a housing bubble, and then they pretended that
they had known it all along. It was the same with the Iraq war,
which everyone was in favor of in 2003, but then years later
pretended that they had been against it all along.
So now we have experts making predictions about the future price
of Bitcoin. How is any prediction of any kind even possible?
If you want to predict the future price of stock shares, you can look
at a company's earnings history. If you want to predict future
corporate bond prices, you can look at a company's assets. If you
want to predict the future price of corn, you can look at yield
estimates that you get from the Department of Agriculture.
But for Bitcoin, there's nothing, absolutely nothing on which to base
any prediction. These analysts on CNBC and in the Wall Street Journal
who predict that Bitcoin will go up should be prosecuted for criminal
fraud, because they don't have a clue. Betting on Bitcoin is worse
than betting on the Las Vegas roulette wheel. Maybe you'll win, maybe
you'll lose but the analysts who make predictions are nothing but
criminals. If you invest in Bitcoin, you should be prepared to lose
100% of your investment. Bloomberg and CNBC and NewsBTC and MarketWatch and Coin Market Cap
Related Articles
****
**** China's 'Belt and Road Initiative (BRI) Bubble' may be in trouble
****
![[Image: g181127c.gif]](http://Media.GenerationalDynamics.com/ww2010/g181127c.gif)
China - prices for iron and steel has crashed in the last month (FT)
The above graph shows that the prices of iron and steel in China have
crashed in the last month, with the right part of the graph looking
very similar to the Bitcoin graph above. Maybe the two are linked in
some way, or maybe it's just a coincidence that they're both crashing
at the same time, but either way the fall in iron and steel prices in
China is the latest sign that the economy has been weakening for about
six months.
It's my personal opinion that China's Belt and Road Initiative (BRI)
is in a massive bubble of its own.
The BRI is a breathtaking project as much as $1.3 trillion on
railways, roads, seaports, and power grids, now extending into a least
76 countries, mostly developing nations in Asia, Africa, and Latin
America, together with a handful of countries on the eastern edge of
Europe.
My feeling, based on many, many things that I've read in the last
year, is that China's BRI is a humongous financial disaster in the
making. The other side of "debt trap diplomacy" is that all these
debt traps will be sprung at roughly the same time, as each debt trap
default creates a level of panic that triggers defaults in other debt
traps.
What most people don't understand is any bank or company can "create"
money by issuing debt. People think that only the federal government
can create money, but the money created by issuing debt is 100%
identical to the money created money created by the federal
government. And in a debt bubble, money created by issuing debt
vanishes when the bubble bursts.
There are a few things about the BRI that I find troubling
and indicative of a financial crisis.
First, the utter secrecy of the terms of the BRI deals, in
particular the amount of debt being created, and the terms of
repayment. I don't see any reason why that information can't
be made public for each country, even if other deals still
have to be kept secret. By keeping the debt secret, China
evokes a great deal of suspicion of bribery, corruption,
and debt-trap diplomacy.
Second, as we recently reported, the terms of China's loan to the
Maldives is becoming public, thanks to a surprise election victory and
change of administrations. The new president, Ibrahim Mohamed Solih,
asked China's ambassador Zhang Lizhong how much the Maldives owed to
China, and he was handed an invoice for the shocking amount of $3.2
billion, many times more than Maldives could afford. This figure was
so embarrassing to China that later denied that Zhang ever gave that
figure. The whole situation raises suspiicion of a great deal of
corruption. ( "24-Nov-18 World View -- Maldives can't determine how much money it owes to China"
)
So you have the huge amounts of money sloshing around 76 countries,
with no public information about the terms. In this top secret
environment, there must be many situations involving bribery
and kickbacks, as well as country leaders lining the pockets of
their family and cronies.
The third issue is what's happening in Pakistan. Pakistan is about to
go into bankruptcy, but it's "all-weather friend" China very
surprising has refused to come to Pakistan's aid. Is this because
China's slowing economy requires keeping expenses in check? China has
asked Pakistan to go to the IMF, but the IMF is going to demand full
details of all the Pakistan-China contracts, and also require Pakistan
to stop funding terrorists.
So this is what I call the "BRI Bubble." China is funding projects in
76 countries, and most of those countries are ever going to be able to
pay that money back. A crisis could occur at any time.
This is a bubble that's going to burst, with catastrophic results,
especially in Asia.
We keep speculating about what will trigger the next world war --
South China Sea, North Korea, Mideast, Kashmir, etc. But another
possibility has always been a global financial crisis triggering the
world war. The Bitcoin crash may have cascading effects leading to a
broader crisis but, if not, it might be the BRI bubble. Bloomberg and Sputnik News (Moscow) and Financial Times and Global Times (Beijing)
Related Articles
KEYS: Generational Dynamics, Bitcoin,
China, Belt and Road Initiative, BRI,
Maldives, Pakistan, International Monetary Fund, IMF,
BRI Bubble
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
This morning's key headlines from GenerationalDynamics.com
- Bitcoin super-bubble implodes and crashes below $4,000
- China's 'Belt and Road Initiative (BRI) Bubble' may be in trouble
****
**** Bitcoin super-bubble implodes and crashes below $4,000
****
Bitcoin price at $3,750 on 27-Nov-2018 (CoinMarketCap.com)
The price of a Bitcoin fell to $3,700 on Tuesday, down from
a peak close to $20,000 in December of last year.
A little over a year ago, in response to people asking my advice about
investing in Bitcoin, I wrote about Bitcoin
just after its price surged past $5,000. In the article I
wrote, "Investing in Bitcoin is the road to disaster. I literally
cannot think of a worse investment today than Bitcoin, or the various
copycat newcomers, such as Ethereum. Bitcoin is almost literally a
Ponzi scheme backed by nothing but air."
So Dear Reader, I hope you took my advice, because if you didn't then
you've lost money. Many people lost a great deal of money investing
as the price increased parabolically all the way up to $20,000, and
those people have lost a LOT of money.
What are analysts saying today? Some are saying that Bitcoin
has bottomed, and now will go up. One says that Bitcoin will
fall further to about $3,000, and then will go up. Another says
that it will remain about where it is now for several months,
and then will go up. These are the same people who have always
said it would go up, even while it was crashing.
This reminds me of the housing bubble in the mid-2000s decade. I was
writing as early as 2004 that there was a housing bubble, as did a few
others. It was perfectly obvious. But the "experts" on CNBC and in
the Wall Street Journal kept saying that "Housing prices can't go down
-- people have to live somewhere," and "Banks won't foreclose -- it's
not in their interest to do so" and "These housing construction firms
know what they're doing, and they wouldn't be building houses if it
were just a bubble."
It wasn't until around 2009 or 2010 that these "experts" even admitted
that there had been a housing bubble, and then they pretended that
they had known it all along. It was the same with the Iraq war,
which everyone was in favor of in 2003, but then years later
pretended that they had been against it all along.
So now we have experts making predictions about the future price
of Bitcoin. How is any prediction of any kind even possible?
If you want to predict the future price of stock shares, you can look
at a company's earnings history. If you want to predict future
corporate bond prices, you can look at a company's assets. If you
want to predict the future price of corn, you can look at yield
estimates that you get from the Department of Agriculture.
But for Bitcoin, there's nothing, absolutely nothing on which to base
any prediction. These analysts on CNBC and in the Wall Street Journal
who predict that Bitcoin will go up should be prosecuted for criminal
fraud, because they don't have a clue. Betting on Bitcoin is worse
than betting on the Las Vegas roulette wheel. Maybe you'll win, maybe
you'll lose but the analysts who make predictions are nothing but
criminals. If you invest in Bitcoin, you should be prepared to lose
100% of your investment. Bloomberg and CNBC and NewsBTC and MarketWatch and Coin Market Cap
Related Articles
- Bitcoin super-bubble surges through $5,000 and blasts even higher (16-Oct-2017)
- Fed Reserve Chairman Janet Yellen says 'no financial crisis in our lifetimes' (02-Jul-2017)
- Updating the 'real value' of the stock market (03-Aug-2010)
- A primer on financial engineering and structured finance (23-Jan-2008)
****
**** China's 'Belt and Road Initiative (BRI) Bubble' may be in trouble
****
China - prices for iron and steel has crashed in the last month (FT)
The above graph shows that the prices of iron and steel in China have
crashed in the last month, with the right part of the graph looking
very similar to the Bitcoin graph above. Maybe the two are linked in
some way, or maybe it's just a coincidence that they're both crashing
at the same time, but either way the fall in iron and steel prices in
China is the latest sign that the economy has been weakening for about
six months.
It's my personal opinion that China's Belt and Road Initiative (BRI)
is in a massive bubble of its own.
The BRI is a breathtaking project as much as $1.3 trillion on
railways, roads, seaports, and power grids, now extending into a least
76 countries, mostly developing nations in Asia, Africa, and Latin
America, together with a handful of countries on the eastern edge of
Europe.
My feeling, based on many, many things that I've read in the last
year, is that China's BRI is a humongous financial disaster in the
making. The other side of "debt trap diplomacy" is that all these
debt traps will be sprung at roughly the same time, as each debt trap
default creates a level of panic that triggers defaults in other debt
traps.
What most people don't understand is any bank or company can "create"
money by issuing debt. People think that only the federal government
can create money, but the money created by issuing debt is 100%
identical to the money created money created by the federal
government. And in a debt bubble, money created by issuing debt
vanishes when the bubble bursts.
There are a few things about the BRI that I find troubling
and indicative of a financial crisis.
First, the utter secrecy of the terms of the BRI deals, in
particular the amount of debt being created, and the terms of
repayment. I don't see any reason why that information can't
be made public for each country, even if other deals still
have to be kept secret. By keeping the debt secret, China
evokes a great deal of suspicion of bribery, corruption,
and debt-trap diplomacy.
Second, as we recently reported, the terms of China's loan to the
Maldives is becoming public, thanks to a surprise election victory and
change of administrations. The new president, Ibrahim Mohamed Solih,
asked China's ambassador Zhang Lizhong how much the Maldives owed to
China, and he was handed an invoice for the shocking amount of $3.2
billion, many times more than Maldives could afford. This figure was
so embarrassing to China that later denied that Zhang ever gave that
figure. The whole situation raises suspiicion of a great deal of
corruption. ( "24-Nov-18 World View -- Maldives can't determine how much money it owes to China"
)
So you have the huge amounts of money sloshing around 76 countries,
with no public information about the terms. In this top secret
environment, there must be many situations involving bribery
and kickbacks, as well as country leaders lining the pockets of
their family and cronies.
The third issue is what's happening in Pakistan. Pakistan is about to
go into bankruptcy, but it's "all-weather friend" China very
surprising has refused to come to Pakistan's aid. Is this because
China's slowing economy requires keeping expenses in check? China has
asked Pakistan to go to the IMF, but the IMF is going to demand full
details of all the Pakistan-China contracts, and also require Pakistan
to stop funding terrorists.
So this is what I call the "BRI Bubble." China is funding projects in
76 countries, and most of those countries are ever going to be able to
pay that money back. A crisis could occur at any time.
This is a bubble that's going to burst, with catastrophic results,
especially in Asia.
We keep speculating about what will trigger the next world war --
South China Sea, North Korea, Mideast, Kashmir, etc. But another
possibility has always been a global financial crisis triggering the
world war. The Bitcoin crash may have cascading effects leading to a
broader crisis but, if not, it might be the BRI bubble. Bloomberg and Sputnik News (Moscow) and Financial Times and Global Times (Beijing)
Related Articles
- Pakistan fails to get agreement from IMF for a bailout (27-Nov-2018)
- Maldives can't determine how much money it owes to China (24-Nov-2018)
- Myanmar signs 'debt trap' agreement with China in response to Rohingya genocide censure (21-Sep-2018)
- Pakistan celebrates its 70th birthday, wondering what Pakistan is (15-Aug-2017)
KEYS: Generational Dynamics, Bitcoin,
China, Belt and Road Initiative, BRI,
Maldives, Pakistan, International Monetary Fund, IMF,
BRI Bubble
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
