Perspective

AEIdeas – Price changes 1997 to 2017 – Mark Perry 2/2

Howmuch.net – How Much Debt Americans Have in Every State – Raul 12/26/17

Top 10 States Where People Have the Most Debt

1. Hawaii: $869,250
2. Maryland: $284,851
3. Texas: $185,584
4. Oklahoma: $174,839
5. Indiana: $166,844
6. Nevada: $165,740
7. Minnesota: $113,455
8. Illinois: $98,309
9. Maine: $91,183
10. Virginia: $81,194

• “All of this suggests that average debt depends more on an individual’s choices than where he or she lives. People can achieve extremely low debt levels if they are in expensive urban areas or rural towns. If both the bureaucrats in Washington, DC and frontiersmen in Alaska can do it, then we bet you can too.”
• Unless of course you live in Hawaii where the incomes are low and the cost of housing is high…

WSJ – How Fast Are Prices Skyrocketing in Venezuela? See Exhibit A: the Egg – Kejal Vyas 2/5

• “With hyperinflation at 13,000%, eggs become essential to bartering.”

Markets / Economy

Reuters – A decade after recession, a jump in U.S. states with wage gains – Ann Saphir, Jonathan Spicer, and Howard Schneider 2/4

statista – Shrinking sweets – Martin Armstrong 2/5

Cryptocurrency

NYT – As Bitcoin Bubble Loses Air, Frauds and Flaws Rise to Surface – Nathaniel Popper 2/5

• “You did not have to be a technophobe to worry that the virtual-currency boom of the past year papered over plenty of problems.”
• “The scale of those problems is starting to become clear as digital tokens have slid more than 50% in value from their peaks in early January, with steep drops on Monday pushing the value of Bitcoin specifically below $7,000.”
• “Hackers draining funds from online exchanges. Ponzi schemes. Government regulators unable to keep up with the rise of so-called cryptocurrencies. Signs of trouble have appeared at nearly every level of the industry, from the biggest exchanges to the news sites and chat rooms where the investment frenzy has been discussed.”
• “’Cryptocurrencies are almost a perfect vehicle for scams,’ said Kevin Werbach, a professor at University of Pennsylvania’s Wharton School. ‘The combination of credulous buyers and low barriers for scammers were bound to lead to a high level of fraud, if and when the money involved got large. The fact that the money got huge almost overnight, before there were good regulatory or even self-regulatory models in place, made the problem acute.’”
• “The fall from the peaks of early January has been dizzying. The value of all outstanding virtual currencies has been cut by more than half, down over $400 billion as of Monday, according to the website Coinmarketcap.com.”
• “Government agencies in the United States have shut down a few notable frauds. Early last month, securities regulators in Texas and North Carolina issued cease-and-desist orders to BitConnect, an operation that had grown to be worth $3 billion.”
• “But those moves only came after BitConnect had operated openly for months, collecting hundreds of millions of dollars from people around the world despite being labeled a Ponzi scheme by many prominent people in the virtual currency industry. BitConnect offered tokens on a decentralized network, similar to Bitcoin, but promised regular payouts to coin holders.”
• “But regulators have not gotten near most of the brazen schemes that have popped up in the past year, many of which had been attacked by hackers first, or simply shut down by their operators after money had been raised.”
• “A new virtual currency, Proof of Weak Hands Coin, whose creators referred to it as a Ponzi scheme on Twitter and use a pyramid as a website logo, raised $800,000 before hackers got into its systems last week and drained its funds.”
• “One challenge facing regulators is that it is unclear how much of the deceptive activity they can legally control.”
• “Some online groups openly try to manipulate the prices of digital tokens in what are known as pump-and-dump schemes. Similar schemes involving stocks are illegal, but people operating the groups recently told BuzzFeed that they did not think the same rules applied to virtual currencies.”
• “Many schemes have been able to expand quickly because they do not use bank accounts and therefore do not have to win approval from established institutions. Instead, they are able to use virtual currency ‘wallets’ without any approvals. And virtual currency transactions cannot be reversed like normal bank or even PayPal transfers.”
• “Traders have been particularly worried about the largest Bitcoin exchange in the world, Bitfinex, an unregulated operation that has provided few details about its operations, raising concerns about whether it is insolvent or involved in price manipulation.”
• “But the biggest number of incidents have cropped up around so-called initial coin offerings, in which entrepreneurs sell custom virtual currencies to investors to raise money for software they are building. About 890 projects raised over $6 billion last year, a 6,000% increase over the year before, according to Icodata.io, which tracks the offerings.”
• “The $240 million raised through one of the most successful initial coin offerings last year, Tezos, is already frozen in a dispute between the founders of the project and the board they created in Switzerland.”
• “’It is a perfect storm for the kind of scammy activity we are seeing, and it’s not obvious to me how that is easily removed,’ said Fred Wilson, a partner at the venture capital firm Union Square Venture and one of the earliest advocates of Bitcoin in Silicon Valley. ‘Regulation, ideally prudent and informed regulation, can help. But we may also need to have a big correction to really clean things up’.”

WSJ – Daily Shot: Bitcoin 2/5