Blain’s Morning Porridge 16^th April 2024: Truss, Trump and BitCoin – what did we do wrong?

How beauteous mankind is! O brave new world, that has such people in it!

Liz Trump – now there is a scary thought! Liz Truss is the news again – still in denial. Trump is in court and angry. Crypto shills are talking BitCoin higher on the halving and presenting detailed charts on why it’s definitely going to $300k. Madness stalks the Earth.  

There are mornings when all you can do is look at the world, and wonder…. How did we ever get to here….

If anyone was still struggling with their voting intentions ahead of the coming UK election, perhaps y’days Liz Truss interview on the BBC will help clarify matters. Nothing surprising about her endorsement of Donald Trump for a second term in the US Presidency – they are both class 1 narcissists after all.

Her solution for the UK is simple: sack everyone who opposed or dared call out her dismal record as prime minister – mercifully the shortest in the UK political history at 49 days, shorter than the shelf-life of a Tesco Lettuce. Her identified enemies of the state include the Governor of The Bank of England, the Office for Budget Responsibility, and anyone else who understands economics better than herself – which is definitionally about everyone in the country.

In a sweet, and I suspect deliberately timed to coincide with Truss’ book launch, compare and contrast the last but one choice of the Conservative Party to lead the nation with Gordon Brown, the last Labour Prime minister, who is profiled in the FT this morning: “Gordon Brown: I really didn’t think we could go as far backwards as we’ve gone.”

Brown was also deeply unpopular – losing to David Cameron in 2010. But it was his manner and gruffness, not his competence that was disliked. Personally, I reckon Brown a great statesman and servant of his country – he saved the Union when his intervention in the Scottish Referendum in 2014 deflected the likely SNP victory. He is the type of citizen we should have in the Lords – not the oligarch chums of Boris Johnson.

Back in the USA – Liz’s choice for the next leader of the Western World, Donald Trump, was put into context y’day. He looked frankly awful as he shambled into court, bleary eyed, barely coherent, angry, and sullen. He apparently then fell asleep in the courtroom… Stormy Daniell’s account of her liaison with Trump featured in a number of weekend papers. It is both pathetic and hilarious – I look forward to how the media present Trump’s adulterous philandering after she gives evidence of her deeply disappointing coupling.

The one certain way to destroy a would-be dictator would be for the populace to laugh out-loud at him.

Outside the courthouse it got a wee bit scary – one of his MAGA cap-branded supporters declared she would support him to her death, and that the country will go to Civil War if he is found guilty.

Scary indeed…

Last night I went to see the film of the moment; Civil War. Skip the following paragraph if you want to avoid the spoiler.

It’s a clever film. We only see the US President twice and very briefly. We learn in snippets only that he’s an authoritarian fascist, has a penchant for executing journalists, and faces an improbable alliance of California and Texas. Right at the start he is rehearsing a TV address to the nation, confidently declaring a tremendous victory for the USA. It soon becomes clear he’s trapped in the bunker – commanding armies that no longer exist yet continuing to lie, threaten, bully, deceive, and deny the truth. It’s a brutal film from the opening Stars’n’Stripes suicide bomber, the horror of intense firefights and executions, right up to the team we follow storming the White House to administer justice. The final frame is a shocker.

In the America of the film US$300 won’t buy a sandwich, but $300 Canadian gets a full tank of fuel. “OK, what kind of Americans are you?”, sums it up. Real Americans who would murder and kill in support of a president clinging to office? Americans seeking truth and justice? Or, American’s who simply pretend its not happening?

All it takes is a few good men to say nothing.

As a film it says nothing about politics, but it’s essentially a politicised film about the polarisation of US politics – and a warning of where the lady declaring her willingness to die in a Civil War on behalf of Donald Trump will take us…

Meanwhile….. back in another imaginary world..

It’s silly season in crypto-currencies again. The fan-boys are screaming Bitcoin is now the most valuable real investible asset. This time it’s the “halving” driving prices higher – because only half-as-much Buttcon will now be mined, obviously they are worth twice as much… Nope. BitCoin is only worth what the next fool is prepared to pay.

The On-Message on Bitcoin is a claim of critical mass adoption; how family offices, private banks, and financial advisors are all recommending and buying Bitcoin for their rich and terribly clever clients. We will never know if that is true – these are private, non-transparent and closed institutions. But if the bitcoin fanboys say it loudly and often enough – then the greater fools who could propel the market will be persuaded its now a mass real-money market, and that it’s not just speculative tosh and nonsense.

I listen when folk tell me about Bitcoin – it keeps my bullsh*t antenae in tune. Last week I was told by a shill trying to persuade me on B/C that I should be at a 20% Buttcon portfolio allocation and how the charts all show, conclusively, that it’s definitely going to $100,000 in the short-term post-halving, and $200-300k in 2025. I was cited portfolio diversification, institutional participation, digital gold, a hedge against dollar default (?), plus all the usual bollchocks about B/C being better than money because no central bank can debase it as critical elements of the investment thesis… Apparently its also directly correlated to AI and Tech stocks – don’t buy overpriced Nvidia which faces competition – but buy B/C instead, because its upside is unlimited.

There is a marvellous scene in the 1983 film Local Hero: “Would you pay me a pound for every grain of sand in my hand?” The scene, where veteran actor Fulton McKay avoids selling his beach to a US oil-magnate to develop into an oil terminal, sums up the absurdity of an asset you have no idea of how to value or even scope.

It’s much the same thing with crypto currencies; we have absolutely no clue what they are really worth, no matter how loudly crypto-shills scream at us about them being worth quintillions.

The reality is Bitcoins are only worth what other people are prepared to pay for whatever they might be. With a barrel of oil – you know it has value processed into fuel or plastics. An ounce of gold is a tangible asset you know is scarce and a liquid and predictable store of value anywhere on the planet. A dollar is a dollar is a dollar in New York, Nairobi or Tehran. But although you can buy crypto anywhere in the world – its volatility means you have absolutely no idea what it might really be worth except what the next fool might pay.

The driving myth behind crypto is that it has value because others accept it as a thing of value. But there is nothing, absolutely nothing, backing it – no promise to pay or how a nation’s financial credibility is at stake on the strength of its currency, its not the critical resource for the global economy contained in barrel of oil, or a bright lustrous metal to wear as a bangle of ring. Instead, there is lots of complex mumbo-jumbo about proof of work, halvings, blockchain, and some dubious chap who might have invented it and holds about 20% of the B/C in existence. Really??

Bitcoin is the ultimate Emperor’s New Clothes Asset – fabricated around the tale only very clever people can understand the worth of an invisible, intangible asset you can’t actually do anything much with.

• The brutal reality is it has no unique Real-World use – still the only unique thing you can do with BitCon is pay ransoms, blackmail or for illegal goods and services.
• The only use of Bitcoin as a means of payment is as a cash equivalent. Its effectively barter – you accept or pay bitcoin based on it being exchangeable for dollars to pay for the end goods. The problem is the extreme volatility of that exchange rate.
• BitCoin is a first iteration cryptocurrency. All things evolve. Ask the dinosaurs what happens when quantum computing hits the planet.
• BitCoin is simply gambling on the ongoing credibility of the Greater Fools
• BitCoin requires gazillions of KWHs of energy to mine, consuming enormous amounts of energy and resources that would otherwise reduce carbon emissions. Don’t pretend its ok to use green renewable power – that’s just power that could have been used elsewhere for a greater purpose than making crypto shills richer.

I am willing to publish any well written, coherent article from a proper financial institution explaining why Bitcoin should be part of a portfolio – the only thing I will insist upon is your name and company name accompanies the piece.

Out of time, and back to the day job…

Bill Blain

Author of the Morning Porridge

Wind Shift Capital

www.windshift.capital