We’ve come a long way since the Global Financial Crisis of 2008. “Across Wall Street and in the City of London there was a growing assumption that financial wizards had been able to eradicate risk,” said the BBC documentary “The Fall of Lehman Brothers” in 2009.
Yet, last Monday a guest on CNBC Asia Squwak Box introduced as “well knowledgeable in this space” exhorted the buy of CBOE Bitcoin January ’18 Futures following their launch. Almost parroting the BBC he said Institutions saw it, “As a natural extension of their existing trading products”. It gave them, “All the upside without the worry”.
So those futures soared $1,000 USD in their first five minutes; they shot up another $2k past $18,000 USD next day where they hovered at week’s end. A week later they’re $19,000. Happy days indeed if you got in early: 2000% happier had you offloaded a January 2017 buy.
In 2008, just prior to filing the world’s largest corporate bankruptcy, Lehman Brothers recorded a record profit of $4bn USD. All “Big Four” Australian banks posted record profits this year above $5bn AUD.
All, as with Lehman’s, came on the back of neutered monetary policy buoyed by endless real estate demand. But in Lehmans case, also fraud. On Thursday, the Commonwealth Bank of Australia admitted to 53,000 cases of money laundering. It posted a 2017 profit of $9bn AUD.
CNBC’s expert went on to forecast a Bitcoin price above $100,000 USD in 2018. He barely flinched at the question of a $1m valuation though that he held was “eccentric”.
When asked about Bitcoin’s utility he launched into the well-rehearsed offence, “Gold … doesn’t have any other purpose than to create shiny things that society says we place value on”. Ergo Bitcoin held intrinsic utility. Shortly after that, the CBOE website crashed.
Still, isn’t it interesting that when they put an image to Bitcoin, it’s a stamped gold coin? Isn’t it curious the word “coin” is part of its name at all? You see, he’d forgotten to admit that Bitcoin was only worth the fiat money people were willing to throw at it. And now it’s the turn of the Chicago Mercantile Exchange and NASDAQ to sit at that alchemic pot. “Legitimisation”, CNBC called it. They repeated that word today. A bubble had imprimatur.
Sure we can say with certainty that finance has indeed come a long way this past decade. Why just package the sub-prime and their hedges when today we can market the metaphysical?
At least we have a more robust media with their experts in spaces. Wrote the New York Times in 2007, “Bolstered by continued growth in mergers and acquisitions, especially in the red-hot private equity sector, Lehman reported investment banking revenue of $1.2 billion, a 55 percent jump”.
“Watch Out For a Correction in Bitcoin After a Parabolic Rise,” CNBC posted two hours ago. “Analyst Who Predicted Bitcoin’s Rise Says It Will Hit $300,000,” ran their headline 14 hours earlier.
Well, at least we now have China.
© 2017 Adam Parker. You’ve just read a Parkerpinion.
Main Picture: The Street, author’s photo.