So the spy swap reveals that a good chunk of our financial system might be highly manipulated by espionage-based front running (see my previous thread). And that it is not just common practice for spy agencies to monetize their information advantage in markets, but also to cultivate transaction mule-type assets who front these operations on the understanding they engage in secret revenue sharing deals with the states they source their info from. In other words, a bunch of the wealthiest people in finance might only be wealthy because they are intel assets who are happy to monetize data sourced by 👀👀 activities and are allowed to maintain that wealth as part of “the deal”. A sort of “license to manipulate” for king and country.
And weirdly that subtle reveal coincides with a big correction in the Nasdaq.
Obviously might just be a coincidence. But then again if you map out the logical market reaction to such practice becoming more popularly known (the game might be up?) is it really that surprising?
Of course if you think of markets as nothing more than glorified Casinos - the clue was there all along! (Why else was James Bond’s perpetual gambling and tuxedo lifestyle tolerated by M?) 🧐
None of this is really that surprising. As the former Russian spy in the CNBC mini doc says - the only reason nobody cottoned on to it is because most of the world doesn’t think the way “bad guys” do.
Thus, as he also says, markets are just another battleground for nation state hybrid wars. And if that’s the case (as per the plot of Casino Royale) it obviously stands to reason that our state is bankrolling or feeding counter-espionage trading too. And that suggests honest actors don’t really have a chance in that context.
🧵Aside from the headline news, today’s Russian prisoner swap seems to me to include a potentially involuntary limited hangout by the US. It pertains to the release of Vladislav Klyushin and what that suggests about how spies and spy agencies really fund themselves.
The official line is that Klyushin was involved in “hack-to-trade” insider schemes. But why would that be of interest to the Kremlin?
To understand, first watch this suspiciously well produced (given the turnaround time) CNBC mini doc about “Putin’s trader.”
Not only is the doc extremely well produced for something that in theory only became public knowledge today - hinting of tactical embargo terms or pre-positioning of information by the Feds themselves - the access they were given to prosecutors suggests it serves a broader agenda.
There are other tactical if you know you know leaks throughout. For example, the last minute tip off from an anonymous source linking the reporter to a former Russian spy living under an assumed identity after defecting from Russia with US help. That isn’t the sort of source that you just uncover via investigative work.
These diagrams from “How they make money” are absolutely brilliant at pointing out the zero sum nature of some of the world’s most disruptive companies. (And by disruptive I mean unsustainable - just try getting a cab in central London these days? ) As costs bite and investors start to demand some sort of return beyond mere zero sum growth, these things will topple, because they just burn cash.
The absolute opposite of this is Nvidia:
Except you have to consider how much of Nvidia is exposed to the former toppling over?
Yes, I'm overjoyed it's going viral because it means the message is resonating.
No, I don't think I've ever been forwarded or advised to read a single piece as many times as this one.
Yes, it echoes what I've been saying for a long time.
No, I'm not bitter he's getting recognition. I'm a huge fan of his writing and obviously don't even come close in terms of historical expertise. Also, as all traders know ... being too early on something is just as bad as not getting it right. And what matters is that it's belatedly being picked up.
But if you're interested in the expanded Kaminska on the topic dating back over 8 years follow the links I link to this tweet. It's not just a political story. It's an economic story. It's also a story about Gosbanking and digtalisation (and somewhere in there about bitcoin and CBDCs).
And if you want to know my current analysis, sign up to my weekly newsletter at the-blindspot.com
Finally had time to add the links:
The price of unfounded news hints at the true cost of the web
THREAD explaining why seizing Russia's assets is a crossing the Rubicon moment for the West.
1/ Property Rights.
The principle that forfeiture of property before conviction is illegal is one of the longest and most cherished in the Western capitalist tradition. It underpins the basic dimensions of our democratic society. As Wiki notes, the US Constitution's Fifth Amendment guarantees that "no person shall be deprived of life, liberty, or property, without due process of law", a phrase that was derived from Magna Carta.
It was instituted in large part to protect citizens from the overreach of the state.
Due process includes the observation of habeas corpus, the idea that everyone is innocent until proven guilty.
2/ State and central bank immunity.
Ah, you may think. These are not the assets of individuals. These are mainly state assets of either the Russian central bank, the Russian Finance ministry or the Russian Sovereign Wealth fund (though, actually, there are also Russian bank assets and individuals in the mix). Seizing their assets is entirely different.
Well no. The principles of sovereign and central bank immunity are, arguably, even more entrenched in the system.
Take as an example the case of the Afghanistan Central Bank (DAB). On February 21, 2023, the United States District Court for the
Southern District of New York held that DAB is a central bank entitled to jurisdictional
immunity under the Foreign Sovereign Immunity Act and that the court is constitutionally constrained from permitting creditors to seize DAB funds.
Why is it such a big deal? Because sovereign continuity is considered fundamental in the rule-based global order, with the only permitted exception for outright confiscation being for sovereigns that are officially at war with each other.
3/ Reputational issues
It's worth noting that while the assets are widely reported to be situated at Euroclear, in reality, this obscures the fact that Euroclear is merely their custodian. The assets are, according to sources familiar with the situation, mostly sovereign bonds that have been pledged as collateral to the Bundesbank. The corresponding euro liquidity remains frozen on account. If that is true, this explains why the ECB is among the staunchest of opponents to the seizing, and why the Germans in particular are so against the move.
The optics of the Bundesbank, of all the central banks in the world, doing the seizing provides Russia with a highly exploitable propaganda narrative. Not just that the West can't be trusted to preserve sovereign immunity and property rights, but that the Germans are up to their old WW2 tricks in terms of unfairly seizing assets.
But more pertinently, the seizing would skewer any hopes the euro has of surpassing the dollar as the world's top international reserve currency.
On the flipside, defying US/UK pressure to seize the assets could be the making of the euro.
🧵The curious case of the visa outsourcing firms undermining Schengen 🧵1/ The top line on the Polish German border dispute is that Poland has been engaged in a bribes-for-visa corruption scandal, which has seen 1000s of illegal migrants flow into the EU despite the ruling party’s tough official stance on border control and migrants.
2/ This is all true enough and you can read about it👇. But Poland is facing a high stakes election in October which means much of the signal in the story may be being lost. This I think pertains to a much more significant story about Visa processing firms.
3/ Time to familiarise yourself with Dubai-based VFS Global, the world’s leading visa facilitation company that’s now owned by Blackstone and which provides visa facilitation services not just to Poland but about 61 different governments. en.m.wikipedia.org/wiki/VFS_Global
🧵Today is Nikola Tesla's birthday🐦⬛, July 10. It's also my birthday ... woo hoo. So I've decided to commemorate the day with a longish Twitter thread about the Tesla brand you've never heard of, plus a whole bunch of related curios. Full story is here: the-blindspot.com/its-july-10-so…
1/ Until Elon Musk pumped up the brand value of Tesla, it's fair to say Nikola Tesla's discoveries in the field of electromagnetic engineering and physics had for most of the 20th century been overshadowed by those of his contemporary Thomas Edison.
2/ Despite his many accomplishments, Tesla passed away in 1943 at the age of 86, alone and reportedly penniless, in a room he had rented at the Hotel New Yorker in Manhattan. teslasociety.com/hotelnewyorker…