Financial Underwriting

Cryptocurrencies – Extra Credit Reading Assignment (Updated 12.01.22)

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Cryptocurrencies are a social movement based on the belief that markings in a ledger on the internet have intrinsic value. The organizers of these ledgers call these markings Bitcoin, or Dogecoin, or offer other names based on the specific ledger. That’s really all a cryptocurrency is. There’s no magic. It’s not money, though it has money-like properties. It’s not anything except a set of markings. Sure, the technology behind the ledgers and how to create more of these markings is kind of neat. But crypto is a movement based on energetic storytellers who spin fables about the utopian future to come. In a lot of ways, cryptocurrencies are like Florida land that no one ever intends to use. It has value in the moment it is traded, but only because there’s a collective belief that it has some intrinsic worth.

Matt Stoller BIG newsletter 12.07.21 — https://mattstoller.substack.com/

FTX seems to be a textbook example of how many investors are easily hoodwinked by media narratives about the latest investment genius who has magically discovered some new way of delivering unprecedented returns. 

How Easy Money Fueled the FTX Crypto Collapse – https://mises.org/wire/how-easy-money-fueled-ftx-crypto-collapse

Good book. It should be required reading for everyone before they invest a single penny.

Update 12.01.22

One more extra credit reading assignment. FTX’s Collapse Was a Crime, Not an Accident

What Middle Class?

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Hat tip to Mike Shedlock, a registered investment advisor at SitkaPacific Capital Management for highlighting the following video for his blog readers.

This is the portion of the blog post where I typically add a snarky comment.

Nope. Not going to joke about this.

Cryptocurrencies 101

/ SupremeCmdr / 2 Comments

Cryptocurrencies are a social movement based on the belief that markings in a ledger on the internet have intrinsic value. The organizers of these ledgers call these markings Bitcoin, or Dogecoin, or offer other names based on the specific ledger. That’s really all a cryptocurrency is. There’s no magic. It’s not money, though it has money-like properties. It’s not anything except a set of markings. Sure, the technology behind the ledgers and how to create more of these markings is kind of neat. But crypto is a movement based on energetic storytellers who spin fables about the utopian future to come. In a lot of ways, cryptocurrencies are like Florida land that no one ever intends to use. It has value in the moment it is traded, but only because there’s a collective belief that it has some intrinsic worth.

Matt Stoller BIG newsletter 12.07.21 — https://mattstoller.substack.com/

TBH I never really understood crypto until I read Stoller’s descriptive paragraph.

Now I understand this is something I will never “invest” my money in. Not that I ever intended to do that before today.

Wait Till 70 for Social Security? Nope

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Schroders surveyed pre- and post-retirees 45 and older and found that only 10% planned to wait until 70 to claim benefits.

Wait Till 70 for Social Security? No Way, Say Most Americans: Survey — https://www.thinkadvisor.com/2021/06/24/wait-till-70-for-social-security-no-way-say-most-americans-survey/

It is painfully obvious to me that the majority of Americans are claiming benefits at both early and full retirement ages because they need the money and can’t afford to wait until age 70. Only healthy elders on financially sound footings will be deferring social security payments until their later years.

Yikes!

A Surge in Small Business Bankruptcies is Underway

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Re-posted article from Straight Line Logic

More than 500 companies filed for bankruptcy under the small-business bankruptcy rules since February, according to the American Bankruptcy Institute. June was the top month for filings with 131 cases; many were filed in states hit hard by the pandemic like Florida, Texas, California, New York and Illinois.

  A Surge in Small Business Bankruptcies is Underway

Unfortunately this is the tip of the proverbial iceberg.

A lot of people are going to need a lot of help over the upcoming years.  Do what you can, in whatever capacity you have to help.  We have increased our donations to a local charity called The Hope Center and have started sending small sums to the Food Bank of Oklahoma.  Every little bit helps.

Comparing Drivers of Pandemic Economic Decline 2020 – NBER

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The collapse of economic activity in 2020 from COVID-19 has been immense. An important question is how much of that resulted from government restrictions on activity versus people voluntarily choosing to stay home to avoid infection. This paper examines the drivers of the collapse using cellular phone records data on customer visits to more than 2.25 million individual businesses across 110 different industries. Comparing consumer behavior within the same commuting zones but across boundaries with different policy regimes suggests that legal shutdown orders account for only a modest share of the decline of economic activity (and that having county-level policy data is significantly more accurate than state-level data). While overall consumer traffic fell by 60 percentage points, legal restrictions explain only 7 of that. Individual choices were far more important and seem tied to fears of infection. Traffic started dropping before the legal orders were in place; was highly tied to the number of COVID deaths in the county; and showed a clear shift by consumers away from larger/busier stores toward smaller/less busy ones in the same industry. States repealing their shutdown orders saw identically modest recoveries–symmetric going down and coming back. The shutdown orders did, however, have significantly reallocate consumer activity away from “nonessential” to “essential” businesses and from restaurants and bars toward groceries and other food sellers.

Fear, Lockdown, and Diversion: Comparing Drivers of Pandemic Economic Decline 2020

I admit to having a short attention span.  My mind tends to wander a bit, sometimes a lot.  The reason for my cognitive wandering is usually a question which sends me down yet another path of discovery.  So here’s another post in my intermittent series on Post Pandemic Changes in Consumer Behavior

My July 4th weekend will be a quiet weekend.  I’ve downloaded the pdf of this working paper to read.  I’m hoping for some insights that I might have missed.

What Retirement?

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Coronavirus Shock Is Destroying Americans’ Retirement Dreams

For older people, the coronavirus crisis has been an appalling shock. Many can’t travel or see grandchildren. Even buying groceries is a risk. Their life savings are melting as the global economy shuts down and financial markets plummet. The pain may be particularly acute in the U.S., where Americans rely on a retirement system that was broken well before a pandemic dashed it to pieces.