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.

🧵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.

🧵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.

🧵Bloomberg's Matt Levine writes today about the bank deposit franchise, and how the traditional bank model assumes deposits can be treated as long duration liabilities because customers are loyal and deposits sticky... 2/ But if that's true then all efforts to encourage open banking (so as to make it easier to switch bank accounts) and to bring about "frictionless" finance were inevitably going to pose a risk to financial stability.

🧵In the latest Leaked Lunch podcast I sit down with former UBS Libor trader @robilypj to hear his side of the famous interest rate rigging story. We discuss the circumstances leading up to his arrest, the impact the affair had on his well-being and family, what time in prison… twitter.com/i/web/status/1… 2/ For those who don’t know the background, Tom Hayes was charged with conspiracy to defraud in 2012, eventually being convicted in 2015 for 11 years. He served five and a half years in prison, at times in some of the UK’s highest security facilities.

If there’s one thing you read today it must be @andyverity’s sensational account of what really happened with Libor rigging. New evidence reveals coordinated manipulation by international central banks. thetimes.co.uk/article/1d409a… Here are a few of the most shocking extracts from the leaked phone calls (now being serialised in The Times) that show traders - some of whom ended up going to jail - were being coerced into misrepresenting rates by the highest authorities.

**Big** multipolar drop from ECB's Christine Lagarde this afternoon signalling the potential suspension of independent-minded cbanks in favour of aligned interdependence focused on national security objectives (i.e. potential transition to a war economy) ecb.europa.eu/press/key/date… Here are some key quotes: 1/ "We are witnessing a fragmentation of the global economy into competing blocs, with each bloc trying to pull as much of the rest of the world closer to its respective strategic interests and shared values"

🧵TETRIS REVIEW🧵 (Small spoiler warning) Just watched it & absolutely loved it. Huge recommend from me and not just because (as an anglo/pole child of the 80s) it taps into every nostalgic pavolvian Cold War/pro West bit of conditioning in me a la Top Gun And not just because Gameboy and Tetris were my first addictive gaming experience, meaning the falling bricks and music got totally imprinted in my brain…

The reason we are facing this financial crisis is fundamentally because there is no intraday market for funding the massive daily settlement imbalances that emerge organically in the system. Crypto markets actually handle this much better. bloomberg.com/opinion/articl…? As I wrote for Bloomberg in back in August the financial system needs a real time Uber surge pricing mechanism for intraday liquidity :

🧵Investors are slowly waking up to the fact that Credit Suisse may have Kobayashi Maru-Ed the market with some of the most ingenious financial engineering seen yet. We’re talking Wall Street Bets level of creativity to save a business they are too attached to let go of. 1) They’ve managed to wangle a joint SNB and FINMA “whatever it takes” commitment. That’s like an endorsement underwritten in actual Swiss gold. 2) they’ve got access to CHF50 bn on fully covered terms, revealing they are no ordinary distressed borrower.

If you've been overwhelmed by SVB news, here's a wrap of all the other important stuff that got buried in the news flow. I also explain why despite the best efforts of the tech sector to create a media doom loop, this is not GFC 2.0. the-blindspot.com/in-the-blind-s… That's not to understate the importance of what's happening with SVB, but the real story is in the fact that non-farm payrolls are still going up, and that the tech sector's loss will become main street's gain.

Hypothetical: if u had a struggling social media platform that you ultimately wanted to turn into a “distributed social credit system” w/ payments functionality (as a counter to CBDCs) but couldn’t afford a banking license… could u shitpost your way to a very cheap acquisition? 2/ if we resign ourselves to the McLuhan view that a modern fast paced interconnected economy inevitably has to adopt village levels of intrusion for private lives if it’s to avoid a Ted Kaczynski breakdown - then maybe a different perspective on social credit systems is needed?

In which @jemimajoanna calls for the return of two-sided journalism, specifically in connection to the @IsabelOakeshott story. 👏(Tho disagree about the memoirs. Suspect it was more of a Columbo move.) on.ft.com/3YAB4R5 For those not familiar with the Columbo canon, in the detective series everyone knows who the culprit is. Plot centres on Peter Falk using a confidence trick to befriend murderer and then getting him to inadvertently incriminate himself. Often using entrapment strategies.

Should government ministers really be using WhatsApp and WhatsApp groups for policy discussions at all? Surely we all know that these tools come with major disadvantages. Misunderstanding, tone factors, spam risk, no guarantee of comprehension/digestion of message. Hacking risk. I mean we all use them of course. So I’m speaking as a total hypocrite here. They’ve become an indispensable comms method. But I worry they do not replace the need for human-touch convo. I’ve also always worried about the unwitting collusion effect group chats might have.

Just re-listening to Jon Cunliffe on the digital pound. One quote I missed earlier that's worth highlighting. "I think DLT suffers with some real challenges on scalability. I can go into the trilemma with security scalability and speed, but it is it is it is difficult." Cunliffe added: "We put in 30,000 transactions per second, as a base case going to 100,000. I don't think you can find any distributed ledger technology that gets remotely close to that. "

Sir John Cunliffe, deputy gov for financial stability at the BoE, is currently being grilled by MPs about the need for a digital pound/CBDC. He's just suggested there's a more than five out of ten probability we will need one. parliamentlive.tv/Event/Index/5c… Asked if CBDCs could be used to pass on base rate, since commercial banks are currently reluctant to do so, Cunliffe says: "if we were to use it for monetary policy, then we cut across some of the other objectives, impact on transmission mechanism is not clearcut."

This is the BoE trying to limit public anxiety about money becoming programmable on a “if this then that” basis by saying you, not the Bank, will retain control. Except, this has never stopped massive monopolies from being able to coerce users via T&Cs. m.youtube.com/shorts/_szYVNZ… Whether it’s the BoE restricting your access to chocolate unless you lose 10kg and/or banks and vendors doing it on the back of govt “incentives” doesn’t make a difference. The point is that both pathways create data serfdom and situations where you can’t afford to not opt in.

Short ETF 🧵- The authors of a new academic paper about ETFs and bond liquidity have found that ETFs exacerbate illiquidity issues during times of financial panic or crisis. At the heart of the issue are protocols surrounding optimized baskets. papers.ssrn.com/sol3/papers.cf… The FT write-up predictably gives a voice (rightly, but sadly without context!) to the usual ETF industry cheerleaders who deny the liquidity issue. And yet, they also unwittingly (I suspect) reveal something quite significant about how they operate. ft.com/content/d13d2c…

With all the UAP/UFO talk I’m reposting a couple of chats I did with @PaulDabrowa and @rosscoulthart last year. (Terrible optics from me as I was ill and they’re Australian so middle of the night for me as well.) #ufo #uap

https://twitter.com/pauldabrowa/status/1534414077183037440

And this was Part one:

https://twitter.com/pauldabrowa/status/1529723946249388032

Glad you’re on board my honour thesis @jemimajoanna. on.ft.com/3Xece8N Here’s the full link: the-blindspot.com/journalists-wi…

In the latest Leaked Lunch podcast I sit down with finance expert @huwsteenis, now at Oliver Wyman, and previously an advisor to the BoE's Mark Carney on the future of finance and all matters CBDC. We chatted "Britcoin", fintech and ESG. Highlights below: You can listen to the full 1hr+ podcast on Spotifty, Apple, and RSS: open.spotify.com/episode/63uxyZ…