First Bitcoin fund launches from Malta

Ever since the bitcoin cryptocurrency first launched and achieved initial success, institutional investors and hedge fund managers have secretly sought a regulated investment vehicle for bitcoin placements. Malta-based Exante Ltd. has the solution with their new Bitcoin Fund.

“I hope our fund will be the first hedge fund to take advantage of using bitcoins,” explains Managing Partner Anatoliy Knyazev. Exante actually announced the fund in October last year, but they did not make a serious effort to market it. Now, with more institutional interest emerging, they agreed to provide this update to Forbes.

Although any person or entity can acquire and store bitcoins on their own, institutional investors are typically restricted in the types of assets available within their investment charter. Similar to a mutual fund or hedge fund for alternative assets, Exante’s Bitcoin Fund permits institutions and high-net worth individuals to access the vibrant bitcoin market with a licensed product and this alone is an innovative development.

http://www.forbes.com/sites/jonmatonis/2013/03/08/first-bitcoin-hedge-fund-launches-from-malta/

The bizarre banking loophole that has opened up in Malta

Malta throws a spotlight on how secure our bank accounts really are – or aren't

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  • The Guardian, Friday 5 April 2013
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The chair of Malta-based AgriBank is furious at suggestions Malta is next after Cyprus.

Sharon Connor's story, featured on our front page today, is one of the most heart-rending we have ever covered. Not only did she lose her husband tragically early, she has now also lost much of her life savings amid the Cypriot banking collapse.

Once again it throws the spotlight on how secure our bank accounts really are. Last week I wrote that AgriBank, a new player in the British savings market, is offering temptingly high interest rates, but is authorised in Malta, and therefore dependent on the Maltese €100,000 deposit protection scheme.

With memories still fresh of the Iceland debacle, when Icesave's failure overwhelmed the country's deposit protection scheme, I felt it worth a warning, especially given the fact that Malta, like Cyprus, has a super-sized financial sector.

I was wrong. The truth is that deposits in AgriBank are not protected whatsoever. What has emerged is that there is an alarming loophole in EU compensation arrangements, and reason to be seriously concerned about the EU's so-called "single passport" for banking.

AgriBank, although it has no historic connections with Malta, has been granted a licence to operate as a bank by the Malta Financial Services Authority (MFSA) and, because Malta is in the EU, the bank is allowed to take deposits in any of the 26 other countries in the union.

This is one of the drawbacks to the EU's neo-liberal drive for single markets, but profound inability to produce single regulators. We have the farcical set-up of a single banking market, but 27 different regulators all able to offer authorisation for a bank to operate across the entire union. Given the dog's dinner that is RBS, maybe you think our regulators in London are no better than those in Bucharest or Bratislava, but I don't quite buy it. The catastrophic collapses in Reykavik (though outside the EU) and Nicosia tell you otherwise.

But even more bizarre is the loophole that has opened up in Malta. It turns out I was right to assume that banks registered in an EU state have to become members of that state's €100,000 protection scheme, as set out in the European Deposit Guarantee Scheme Directive.

But see if you can make head or tail of this. The MFSA emailed me to say: "We can confirm AgriBank is a member of the Malta Deposit Compensation Scheme (DCS)." Yet on AgriBank's website it says "AgriBank's deposit products are not covered by a depositor compensation scheme."

So is it or isn't it? The MFSA explains it, sort of, in this way. "Please note that on 16 May 2012, the MFSA had issued a policy under which it prohibited (or limited) any newly licensed credit institutions from creating undue liabilities on the local deposit compensation scheme … The position of AgriBank is therefore that while it is a member of the DCS, its funding shall be in the form which are [sic] not considered as eligible deposits under the DCS … There are currently ongoing discussions with AgriBank regarding amendments required to the text on their website."

As far as I can work out, this confirms that you can obtain a cross-EU banking licence from Malta, operate in the UK, be a member of a compensation scheme, but not really be a member of a compensation scheme. Yet one more tiny example of the mountain of idiocies that make so many people loathe the EU.

I don't want to suggest, of course, that Malta is anything other than a paragon of financial virtue, rather than a tax haven favoured by hedge funds. Indeed, when I asked the MFSA questions about AgriBank, its chairman, Professor Joe Bannister, replied in person. "All banks applying for a licence in Malta have to go through a rigorous procedure before being granted the licence," he said. Bannister is furious at any suggestion that Malta is next after Cyprus. "Such statements are ill-founded and have created unnecessary unease about Malta," he adds.

Yet the country's finance minister, Edward Scicluna, is chastened by what he witnessed at EU talks over Cyprus. Writing in the Malta Times he said God help his country if it encounters similar problems in the eurozone.

http://www.guardian.co.uk/money/blog/2013/apr/06/banking-loophole-malta

Obama targets wealthy IRAs

President Obama’s budget, to be released next week, will limit how much wealthy individuals – like Mitt Romney – can keep in IRAs and other retirement accounts.

The proposal would save around $9 billion over a decade, a senior administration official said, while also bringing more fairness to the tax code.

Read more: http://thehill.com/blogs/on-the-money/domestic-taxes/292071-obama-budget-to-target-wealthy-iras#ixzz2PtE6Ekl4 
Follow us: @thehill on Twitter | TheHill on Facebook

Beyond the Post-Cold War World

By George Friedman
Founder and Chairman

An era ended when the Soviet Union collapsed on Dec. 31, 1991. The confrontation between the United States and the Soviet Union defined the Cold War period. The collapse of Europe framed that confrontation. After World War II, the Soviet and American armies occupied Europe. Both towered over the remnants of Europe's forces. The collapse of the European imperial system, the emergence of new states and a struggle between the Soviets and Americans for domination and influence also defined the confrontation. There were, of course, many other aspects and phases of the confrontation, but in the end, the Cold War was a struggle built on Europe's decline.

Many shifts in the international system accompanied the end of the Cold War. In fact, 1991 was an extraordinary and defining year. The Japanese economic miracle ended. China after Tiananmen Square inherited Japan's place as a rapidly growing, export-based economy, one defined by the continued pre-eminence of the Chinese Communist Party. The Maastricht Treaty was formulated, creating the structure of the subsequent European Union. A vast coalition dominated by the United States reversed the Iraqi invasion of Kuwait.

Three things defined the post-Cold War world. The first was U.S. power. The second was the rise of China as the center of global industrial growth based on low wages. The third was the re-emergence of Europe as a massive, integrated economic power. Meanwhile, Russia, the main remnant of the Soviet Union, reeled while Japan shifted to a dramatically different economic mode.

The post-Cold War world had two phases. The first lasted from Dec. 31, 1991, until Sept. 11, 2001. The second lasted from 9/11 until now.

The initial phase of the post-Cold War world was built on two assumptions. The first assumption was that the United States was the dominant political and military power but that such power was less significant than before, since economics was the new focus. The second phase still revolved around the three Great Powers -- the United States, China and Europe -- but involved a major shift in the worldview of the United States, which then assumed that pre-eminence included the power to reshape the Islamic world through military action while China and Europe single-mindedly focused on economic matters. 

Read more: Beyond the Post-Cold War World | Stratfor 

Bill Gross "Man in the Mirror" - What if rates go up, prices go down?

Investors should be judged on their ability to adapt to different epochs, not cycles. An epoch may be 40-50 years in time, perhaps longer.

Bill Miller may in fact be a great investor, but he’ll need 5 or 6 more straight “heads” in a future epoch to confirm it. Peter Lynch is a “party pooper.” Warren is the Oracle, but if an epoch changes will he and others like him be around to adapt to it?

No matter how self-indulgent you think this IO is, I just looked in the mirror and saw at least a 7. You must be blind!

What if an epoch changes? What if perpetual credit expansion and its fertilization of asset prices and returns are substantially altered? What if zero-bound interest rates define the end of a total return epoch that began in the 1970s, accelerated in 1981 and has come to a mathematical dead-end for bonds in 2012/2013 and commonsensically for other conjoined asset classes as well?

http://www.pimco.com/EN/Insights/Pages/A-Man-In-The-Mirror.aspx 

BOJ to pump $1.4 trillion into economy in unprecedented stimulus

(Reuters) - The Bank of Japan unleashed the world's most intense burst of monetary stimulus on Thursday, promising to inject about $1.4 trillion into the economy in less than two years, a radical gamble that sent the yen reeling and bond yields to record lows.

New Governor Haruhiko Kuroda committed the BOJ to open-ended asset buying and said the monetary base would nearly double to 270 trillion yen ($2.9 trillion) by the end of 2014 in a shock therapy to end two decades of stagnation.

The U.S. Federal Reserve may buy more debt under its quantitative easing, but with the Japanese economy about one-third of the size of the United States, the scope of Kuroda's "Quantitative and Qualitative Monetary Easing" is unmatched.

 

"This is an unprecedented degree of monetary easing," a smiling Kuroda told a news conference after his first policy meeting at the helm of the central bank.

http://www.reuters.com/article/2013/04/04/us-japan-economy-boj-idUSBRE93216U20130404

The Four Traits Of Monetary Union Collapse

There are four traits that UBS identified as common trends around the breakup of a monetary union. So has Cyprus (as is tirelessly pointed out, only 0.2% of the Euro area measured by GDP) set a course for the Euro’s destruction? Indeed, with Cyprus having checked the first three items on that list, while it has not left the Euro (yet), UBS concludes, "it may well be occupying a seat very close to the exit."

Via UBS: Is Cyprus Still In The Euro?

The four traits are:

• Monetary union break up is preceded by capital flight from perceived weak from perceived strong parts of the union
• Monetary union break up has tended to be regarded by governments as an opportunity for seizing cash or other assets held by citizens
• Capital controls tend to be imposed early in the break up, and foreigners’ asset holdings are often discriminated against
• Break up of a monetary union is normally associated with civil unrest and authoritarian government in at least some part of the former monetary union.

http://www.zerohedge.com/print/472326

Cyprus Financial Crisis: Deposit Confiscation

http://demonocracy.info/infographics/eu/cyprus_crisis/cyprus_crisis.html

Monte Paschi says lost billions in deposits after February scandal

(Reuters) - Customers' deposits at Italian bank Monte dei Paschi fell by "a few billion euros" after a scandal erupted in February over loss-making derivatives trades at the lender, the bank said in a document posted on its web site on Saturday.

Monte dei Paschi last week reported a higher-than-expected net loss for the whole of 2012 on the back of a rise in provisions for bad loans and 730 million euros in losses on the derivatives trades, which are at the center of a fraud.

http://www.reuters.com/article/2013/03/30/us-monte-dei-paschi-deposits-idUSBRE92T08520130330

Bank of Cyprus big depositors could lose up to 60%

Bank of Cyprus depositors with more than 100,000 euros (£84,300; $128,200) could lose up to 60% of their savings as part of an EU-IMF bailout restructuring move, officials say.

The central bank says 37.5% of holdings over 100,000 euros will become shares.

Up to 22.5% will go into a fund attracting no interest and may be subject to further write-offs.

The other 40% will attract interest - but this will not be paid unless the bank performs well.

It was known that the wealthiest savers at the Bank of Cyprus would take a large hit from the bailout deal - but not to this extent, the BBC's Mark Lowen reports.

http://www.bbc.co.uk/news/business-21982652

Cyprus Bailout Infographic

Bitcoin prices surge post-Cyprus bailout

NEW YORK (CNNMoney)

Shares of the cyber-currency bitcoin have surged in the past week as investors seek safe havens following the unprecedented bailout of Cyprus' banks.

http://money.cnn.com/2013/03/28/investing/bitcoin-cyprus/index.html?iid=Lead

Capital controls in Cyprus remain unclear

http://www.bbc.co.uk/news/business-21936554

In other Cyprus-related developments:

• The Department for Work and Pensions has said British pensions will not be paid into Cypriot bank accounts for the foreseeable future and has advised expats to open UK accounts
• Piraeus, Greece's third-biggest lender, said it has signed an agreement to acquire all of the deposits, loans and branches owned by the Greek subsidiaries of three Cypriot banks - Bank of Cyprus, Laiki, and the Hellenic Bank - for 524m euros (£445m)
• The head of the eurozone group of finance ministers, Jeroen Dijsselbloem, said there were no apparent signs of increased withdrawals of savings from peripheral to core countries in the region as a result of the Cyprus crisis.
• Chancellor George Osborne has said the Treasury is working on a "British solution" for the 13,000 UK customers of Cyprus Popular Bank, part of Laiki Bank, who could lose a proportion of their savings above the 100,000 euros (£85,000) cut-off limit.

Cyprus: The worst is yet to come

FORTUNE -- The banking crisis in Cyprus is far from resolved and will almost certainly morph into a far more serious sovereign debt crisis in the near future, threatening investors around the globe. The revised bailout agreement hatched over the weekend will still leave the island nation's banking-centric economy in ruin, thus limiting the government's ability to meet its future debt payments.

In order to avoid another Greek-style economic meltdown, Eurozone officials would be wise to construct a more practical bailout—one that at the very least avoids nuking the Cypriot economy. Failure to do so will not only condemn Cyprus to years of misery, but it would also put the Eurozone one step closer to a painful breakup.

The markets breathed a sigh of relief on the news that a deal had been struck regarding the Cypriot bailout. European and US markets initially popped in Monday trading, but quickly gave up their gains as investors started to get their heads around the agreement. That is not surprising given how atrocious this deal is for Cyprus.

The hastily put together bailout still forces the nation to come up with 5.8 billion euros to qualify for a badly needed 10 billion euro loan, which will come courtesy of the European Union and the International Monetary Fund. But instead of raising the money by "taxing" bank accounts of all sizes (as what was terribly proposed last week), the plan now calls for taxing only those accounts that exceed the nation's deposit insurance limit of 100,000 euros. It also calls for the wind down of Popular Bank (Laiki, in Greek), one of the nation's largest banks, shoving all the big depositors' cash into a so-called "bad bank" where depositors could possibly lose everything.

Cyprus: The worst is yet to come - The Term Sheet: Fortune's deals blogTerm Sheet

Cyprus a Template For EU

Perhaps the best example of a "word out of place" comes from the new Eurogroup head, Dijsselbloem, also phonetically known as Diesel-BOOM, who just may have ushered in the next, next wave of the Eurozone crisis:

• "Cyprus a Template For EU"

Er... wasn't it a special case, inside a unique case, wrapped in a one-time case? We will ignore the rather hilarious Freudian slip, and focus on what he was explicitly talking about with Reuters [5], which is the resolution model which was just put in place in Cyprus [5]: