Tulips and Bitcoin

At Least They're Real

This Tuesday self-described “no nonsense take no prisoners” Jamie Dimon lambasted Bitcoin at a New York investor conference as per press reports. 

The cryptocurrency “won’t end well,” he told an investor conference in New York on Tuesday, predicting it will eventually blow up. “It’s a fraud” and “worse than tulip bulbs.”

Indeed, at least if you buy a tulip bulb, you have something tangible.  A Bitcoin is the monetization of a wish.

Many self-described “sober investors” who buy Bitcoin offer as their “sound” rationale that governments create national currencies out of thin air without “backing” the issuance with any tangible asset and that as a result these currencies are inherently dangerous.  To avoid this “clear” danger they instead “invest” in a currency issued by a private sector entity out of thin air without “backing” by any tangible asset.  

But there are key differences that make this investment a “wise” one so they say. 

• First, aggregate issuance is limited.  
• Second, unlike a government, the private sector entity issuing Bitcoin has no legal powers or ability to support its currency’s value, instead relying on the proven performance of the “free market” for magical solutions.  A dogma that almost certainly Jamie sadly won't have time to address.

To those wise investors AA wants to offer an even more compelling opportunity: AA’s new “virtual” company that will manufacture digital electronic vehicles.  The upside is clearly unlimited as costs of manufacture and selling are low. No raw material except an odd electron here and there is used in the manufacturing process.  There are no associated shipping costs for the product.  Nor do our dealers need to hold physical inventory.

AA’s digital cars also are environmentally friendly.  There are no emissions associated with the manufacturing process or the finished product when in operation.       

Patriotic investors will be happy to note that AA is a proud participant in the current Administration’s Make America Great Again Manufacturing Program.  Our factory is based in the United States where we project that we will employ a virtual workforce of over 150,000 when full capacity is reached.  Strict sourcing standards ensure that only US electrons are used in our product.    

Disclosure: AA and a member of his direct household (Madame Arqala) hold investments in tulips between 15 and 30 bulbs planted in the elegant gardens of Chez Arqala. 

Societal Worth of US Big Banks Part II Beyond Advertising

Actions Speak Louder Than Words, At Least That's What Some Folks Say

In a previous post, I noted the advertising campaign that major US banks had launched to rebut no doubt unfair characterization of them as “reckless” and “too big”.

Ads are fine but sometimes the most compelling argument is how you live your life or conduct your everyday business.

Turning back to the Grey Lady’s coverage of this story, a quote from Jamie Dimon of JP Morgan Chase pictured above, doing his best for humanity, sets the stage.

“When Mr. Dimon was asked in February how he would explain to an analyst’s mother-in-law the benefit of being a large bank, he conceded, “We have a hard time explaining those things to the public.”

Mr. Dimon went on to say: “We make loans. We help companies. We help communities. We are the Rock of Gibraltar in the tough times.”    

In just a few powerful words, he’s made the case for the big banks. 

The central justifying theme is “helping”.  Or "doing one's best for humanity" as in an interview with Fox News 13 January 2015 which you can watch here. 

Of course, banks also have a duty to make an honest profit for their shareholders. 

As Krimes v. JPMorgan Chase Bank NA, 2:15-cv-05087, U.S. District Court, Eastern District of Pennsylvania (Philadelphia) no doubt shows there doesn’t have to be a conflict between an "honest" profit and "doing one's best for humanity" or "helping communities".

In 2008 JP Morgan won a no-bid contract to provide ex- convicts from all Federal prisons in the US prepaid debit cards which they could use to withdraw money they had earned in prison or money that had been sent to them while they were incarcerated.

According to Fortune magazine,

“But when the convicts were freed and tried to access their money, they found that they had to pay huge fees for what seemed like ordinary services.

The former prisoners had to pay $24.50 if they wanted to get a lost card replaced quickly; $10 to withdraw money at a teller window; and $1.50 if they didn’t use the account for a month, according to the Financial Times. They even had to pay $0.45—or the equivalent of two hours of work in prison, the FT notes—if they wanted to check their account balances.”

AA side comment: $0.45 doesn't sound like much until you scale the fees to the convicts' wages per hour to get an idea of the relative cost of the service.

Bloomberg quoting an unnamed ex prisoner:

“I left prison with $120,” an unidentified former inmate said in the complaint. “Because of the fees, I was only able to use about $70 of it.” 

More here.    And here.

Success in achieving goals is a function of attitude and aptitude so they tell AA. 

Perhaps, encouragement to "try harder" would be in order as AA is confident in the presence of aptitude at JPMC.

Department of Manifest Absurdity: Big US Banks Launch Ad Campaign to Demonstrate Their Worth to Society

If You Can't See the Obvious Link to Big Banks, Take as Many Looks as You Need Until You Can.

The New York Times reports (and when the NYT reports AA pays more than his useful careful attention even when the  reporting doesn’t cover metals) that big US banks are engaged in a major advertising campaign to demonstrate their societal worth and why they should be more loved

Not one to usually share the spotlight AA will uncharacteristically let the NYT speak for itself.  The Grey Lady’s comments are in quotation marks.  AA’s thoughts are indented and in italics.

“At both the Democratic and Republican conventions, the nation’s biggest banks were again cast as the bad guys, criticized as being too big and too risky.”

AA:  Note the charge “too big” and” too risky”.   How will the banks prove that they’re not reckless and a danger to national economies?   Glad you asked.

“This week, as the Olympic Games begin in Brazil, one of the big banks, Citigroup, is offering a rebuttal with a series of prime-time television and digital ads featuring images of sweaty athletes, the Space Shuttle and an early A.T.M.

[AA: Heartwarming video here, but be warned if you're a sensitive sort, you might break down crying.]

“Our business is helping Americans make progress,” the ad’s narrator says, as a runner with a prosthetic leg sprints down a track.

AA:  Impeccable logic. .Show hard working folks at their tasks which no doubt have something to do with banking.  What precisely isn’t clear.  Used an ATM? Have a credit card?  In any case a powerful rebuttal against "recklessness" and "riskiness". And one which shows big banks’ virtue.  Smart move as I believe there were some no doubt unfounded allegations about big banks’ ethics and morality.

AA understands from thoroughly unreliable sources that JPMorgan is preparing its own commercials.  Jamie Dimon, known for his no nonsense suffer no fools approach, is reportedly going to appear in a series of ads featuring animals.  Among the ads planned, one features Jamie with whales off the coast of London or Washington state (location yet to be finalized).   Another with cuddly puppies, ice cream, and adorable children.   Tag line:  “Banking making a kinder gentler future for all of us”.

As a banker, AA knows the value of getting a fee for advice, but in a spirit of reckless (I am a banker after all) generosity (here the analogy breaks down), some ways this “geometric logic” could be applied to other cases. 

Goldman is reportedly assisting the US authorities with inquiries into its conduct and fees (a cool half a billion) for the US$6.5 billion in notes (bonds to the layman) it arranged for 1MDB in 2012 and 2013.   Two of the note issues were to fund-–well at least partially—1MDB’s acquisition of power generation assets.  AA sees a compelling ad featuring Malaysian farmers toiling alongside their water buffaloes.  Sweaty and tired after a hard day’s work, they settle back to listen to one of the fireside chats given by Malaysia’s prime minister.  One old chap speaks up.  “I remember when we didn’t have power”.  Tears in his eyes, he turns to the camera, “Thank you, Lloyd”.

Several Malaysian businessmen—LOW, TAN, AZIZ--have been charged with misappropriating 1MDB funds (to use the US Department of Justice’s happy turn of phrase).  Some of the funds are alleged to have been used to acquire works of art as well as fund a Hollywood blockbuster.  Key the camera.  The Parthenon, the Coliseum (Rome), Hagia Sophia, the Pyramids.  Voice over by an actor with an appropriately sonorous voice (Morgan Freeman?)  “Culture is what defines a civilization.”  Pictures of The Rjiks Museum, Museuminsel, The Louvre, The Tate, The Metropolitan Museum of Art.  “Reflected in great art that is still accessible to us today.”   Pictures of the three gentlemen named earlier.  “Art patrons before they are businessmen.  Supporting culture in all its forms”.

And then there is the Islamic Republic of Iran.  Perhaps a harder case with some audiences.  I see a testimonial by Candy Charms who recently visited for some cosmetic surgery.  Nose, if you're interested. According to the Mirror, she said.  "Loved Tehran. The people are so kind and generous.  "Really overwhelmed by the whole trip. The people are so amazing.  Tag Line: “Amazing Iran.  Friendly people.  The most advanced medical care at a reasonable cost”.    Let’s go local with the link on this story from Gulf News as the Mirror article is accompanied by some unsuitable pictures.