🧵Here's a special Black Friday FATF Thread to complement @pmarca 's explainer on the Joe Rogan show about how the USG's "control mechanism" was applied to Big Tech by emulating the way it already controlled the banking system. 2/ FATF stands for the Financial Action Task Force (FATF). It originated in 1989 as a one-year fact-finding mission, championed by the United States during the “war on drugs,” but has since evolved into one of the most influential, yet opaque, financial regulators in the world.

Reading Alexei Yurchak's "Everything was forever, until it was no more" and have just realised that viral memes — or what they called anekdoty — were a critical feature of late-stage socialism, and arguably a key dissent mechanism. Anekdoty were basically the oral equivalent of today's digital meme. Among the structural similarilties is that they always centered on one prevailing scenario. In Poland 'Idzie Baba do lekarza" etc. — which was then adapted accordingly to depict current news events/developments.

The Blind Spot returns from summer holidays with a deep dive into the two-sided markets that have infiltrated the value system and how they are now systemically repressing productivity.

Why is it that we still can’t spot them despite all our regulatory efforts?

- We start with how such models applied to Autonomy’s business; who they really benefited and why they encouraged so much aggressive accounting.

- We then consider how they apply to more traditional business models like hospitality, and why the years of turning a blind eye to the questionable nature of such incomes might be drawing to an end - especially if recent litigation facing the Marriott group in Poland is anything to go by.

The latter is particularly pertinent in light of the crackdown on Telegram’s Pavel Durov and digital social media spaces more widely.

If these virtual spaces can no longer assume immunity for the potentially illicit content created on their systems by third-party users, why should the same not apply to the world of bricks and mortar agents such as well respected hospitality franchises? For now, they’ve mostly been immune.

And finally, we consider the implications for global growth if the economics of many well established businesses just don’t work without extensive use of “corporate beard” accounting.

Bottom line: honest actors have no chance in an economy where loss-leading strategies dominate cashflows (unless they too get a lift of their own from becoming informants to the state).

Either way, it’s not just a market for lemons problem. It may be a systemic Spencian crisis.

the-blindspot.com/in-the-blind-s… Separately, as the global grift becomes obvious to the average normie it will become ever harder to differentiate the “bad guys” from the “good guys” by actions alone. That’s because once trust is vanquished everyone thinks they have a moral justification as to why the law applies to everyone else but not to them.

🧵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.

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:

***Note for my followers***

Yes, I've read @nfergus's "We are Soviets".

Yes, I think it's bloody marvelous.

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:

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. "