The Greatest Bubble of All Time: Cryptocurrencies Give Banks a Run for their Money
A banker that has lost faith in banks is as persuasive as a fat man that lost faith in food.
TASS: "The CEO of Sberbank German Gref says he doesn't believe in banks and thinks that banking services can be provided by any technology company. The statement was a part of his speech at the Investor Day in London. "I do not believe in banks. If you tell me that a bank should be built — it is not about me or our team. The banks are crying because Silicon Valley eats their breakfast every day and we don't want to join the crying ones we want to eat the breakfast of those who eat the breakfast of other banks".
A technological revolution that will turn our lives upside down has been foretold by a horde of ravenous petrels. Very soon, paper money will be forced out by crypto-currency and we'll be paying our bills using Facebook.
Businessinsider.com: "Google, Apple, Facebook, Amazon, and Microsoft, commonly referred to as GAFAM, are increasing their presence in the banking sphere forcing the traditional players out. They're offering mobile wallets commission-free transactions and even business loans. Social networks possess colossal coverage and resources. Their audience is composed of billions of people. In 2016, Apple, Google, and Microsoft together had $400 billion at their disposal".
If we add the recent revolutionary growth of the crypto-currency capitalization then bankers can definitely start crawling to the graveyard. Even this year's crazy 18% growth of Wall Street quotes is puny compared to bitcoin's 1800%.
Fortune.com: "One bitcoin was worth $8,000 on November 20. On December 12, it was worth $17,000. Strangely enough, bitcoin isn't the record-holder at the crypto-currency market. One litecoin costed $4,3 in the beginning of 2017. This week, it's price skyrocketed to $255.5, which shows a 5500% growth."
The capitalization of another cryptocurrency, ethereum, has reached $60 billion. It's worth more than General Motors. It's not surprising that some people are looking for a way to put a stop to this.
Ubs.com: "The bubble to end all bubbles continues. Cryptocurrencies only have value if accepted as currencies. However, they cannot fulfill this role in an economy"
Joseph Borg, Securities Commissioner of Alabama: "It's almost like a mania like the Tulip Mania of 1643, with no tulips this time. People take mortgage loans, empty their credit cards, and draw credit under pledge of property. All that in order to buy bitcoin. That's not something a guy with a mortgage loan and two kids in college should invest into."
The Tulip Mania of XVII is a notorious historic scenario. It always comes to mind when speaking of a financial bubble. In several years, the price of the bulbs brought from the East reached a thousand guilder per piece. Tulips drove many Dutchmen mad and cost others their lives. Instead of the plants, their standard weight units, asen, were the subject of the exchange. The affair ended in collapse, war, and plague, and gave birth to many parables of human greed. However, not only the Dutch are familiar with the story.
Animation frame: "More! Give me more!"
The fairytale Indian rajah has always had many followers. And they always use scientific arguments. For example, before the mortgage crisis broke out in 2007 head of the Federal Reserve Alan Greenspan talked about the irrational (inexplicable) but steady abundance and referred to the mathematical models of Nobel laureates in economics. And then bankers began to jump from the skyscrapers in Manhattan.
Theguardian.com: "The mathematical model of Black-Scholes invented by Fisher Black and Myron Scholes allowed them to calculate the risks of exchange transactions. So there was a universe of derivatives — complex financial instruments. By 2007, its size reached a quadrillion dollars. That is 10 times higher than the cost of all goods produced by mankind in a hundred years".
Gold coins turned into shards. But it was long ago and far away. The greedy rajah did not grow wiser. And somewhere else including Russia, he's just become bolder.
Now, instead of mathematical models we have mining algorithms. But if you look closer it becomes clear that the Internet of things blockchain, cryptocurrencies and the AI open no new reality for us. The laws of capitalism do not cease to work. From the fact that information becomes the goods; communication channels, networks, and data centers — the means of production, the essence does not change by a bit. "Whoever dines with a girl will dance with her".
A video clip: "Hi, here's just a few things you'll still be able to do on the Internet. You can still grab your food. You can still post photos of cute animals like puppies You can still shop for all your Christmas presents online".
This, to put it mildly, strange video appeared at the end of the week and has already collected 150,000 dislikes. By dressing up as Santa Claus, the head of the American FCC, something like our Roskomnadzor, tired to calm the users down.
This week, the commission has allowed Internet providers to manage traffic at will. Roughly speaking, to control the speed, promoting the desired sites and impeding or even eliminating the unwanted. Many are convinced this is a death sentence for the Internet which ceases to be free and breaks up into small kingdoms of the corporations. Today the US, tomorrow the world. Mr. Pai is receiving threats and dissatisfied users are preparing to protest.
Ed Markey, senator: "Tell me, why did you terminate net neutrality? What are you trying to achieve?
Ajit Pai, FCC: "One of the concerns is that we're afraid it restrains the investments".
Now, every provider, and the market is extremely monopolized with AT&T, Verizon and Comcast reigning over it, will be able to form a reality for the user. And this applies not only to financial services or the goods market.
Wsws.org: "They ignore the fact that 50 million Americans have only one provider to choose from and most of the rest having only two. A campaign against freedom of speech on the Internet is already being spearheaded under the pretense of fighting “fake news” and foreign meddling.
Facebook, YouTube and Twitter have hired tens of thousands of censors to ban and block the unwanted content. Google is blocking left-wing websites. The new era of censorship is based on the economic interests of major corporations and the political aims of social reaction Its leading advocates have been the major newspapers and TV broadcasters which have seen a massive decline in readers and viewers".
How long will net neutrality last? Will the Internet repeat the fate of the telegraph before the WWI? All this does not mean that new technologies are harmful. Or that progress will never turn your savings bank into a smartphone app. It means that technologies serve those to whom they belong. At the expense of those who don't own them.
Qz.com: "Three years ago, the study of the French economist Thomas Picketti 'Capital in the 21st Century' caused a commotion and sparked a dispute about the causes of growing inequality. Recently, he published a new 300-page study according to which the gap between rich and poor has increased in all countries".
According to new data by Picketti 10% of the richest people account for 37% of all income in Europe, 41% in China, 46% in Russia, and 47% in the US and Canada. In this sense, it does not matter what bank it would be a cloud-based or a cloudless one. As long as people have their heads in the clouds, no one will prevent bankers from promising their breakfast jam tomorrow.
Film frame: "We've invited you to meal. Your last one. You must be hungry, huh?"
Agitation and Propaganda. See you soon. Peace to your home.