He just can’t help himself: disgraced sociopath, record-breaking fraudster and prolific Democratic donor – not necessarily in that order – Sam Bankman-Fried, has issued another apology to his staff in a letter that outlined a crash in “collateral” to less than $9 billion from $60 billion.

“I didn’t mean for any of this to happen, and I would give anything to be able to go back and do things over again,” the corpulent 30-year-old who may or may not be in the Bahamas apologized yet again in the message sent to employees Tuesday, although he really should be apologizing to the millions of clients whom he wiped out. Alas, like the recurrent ramblings of a psychopath, Sam’s takeaway was that the implosion at FTX was the side-effect of an unfortunate bank run, and had nothing to do with SBF’s actions; that’s because SBF still refuses to take any responsibility for what happened and makes zero admission that the factors that led to this historic bankruptcy were in his control all along. Sam claims that he didn’t “realize the magnitude of risk.” His main remorse – like that of any pathological individual – is that he got caught.

Still don’t believe us he was a sociopath? Read this:

I didn’t mean for any of this to happen, and I would give anything to be able to go back and do things over again. You were my family. I’ve lost that, and our old home is an empty warehouse of monitors. When I turn around, there’s no one left to talk to. I disappointed all of you, and when things broke down I failed to communicate. I froze up in the face of pressure and leaks and the Binance LOI and said nothing. I lost track of the most important things in the commotion of company growth. I care deeply about you all, and you were my family, and I’m sorry.

No he isn’t, and if it wasn’t his fault, whose fault was it? Well, as he “describes” the sequence of events, you see it was all the market’s fault as a slide in digital-asset markets in spring roughly halved collateral from $60 billion to $30 billion, while liabilities were $2 billion. A combination of a credit squeeze, a further selloff in virtual coins and a “run on the bank” left collateral at $9 billion ahead of FTX’s Nov. 11 bankruptcy, he wrote. The estimate for liabilities had reached $8 billion by then. Here is how, in his words, what was initially a $58 billion overcollateralized balance sheet ended up having more liabilities than assets.

“I did not realize the full extent of the margin position, nor did I realize the magnitude of the risk posed by a hyper-correlated crash,” Bankman-Fried said. He didn’t give exact details on the makeup of the collateral or the liabilities. If he did, it would look something like this chart from Morgan Stanley:

What happens next is what any sniveling sociopath posing as a CEO would say: I had no idea any of this could happen:

I did not realize the full extent of the margin position, nor did I realize the magnitude of the risk posed by a hyper-correlated crash.

And it is here, that we get the first admission that something nefarious happened: i.e., loans  – to related parties, such as the $4 billion “given” from FTX to SBF – and the “secondary sales” which we now knows SBF pocketed some $300 million for personal use.

The loans and secondary sales were generally used to reinvest in the business—including buying out Binance—and not for large amounts of personal consumption.

And so, ladies and gents of the jury, would you consider a $40 million penthouse to be a “large amount of personal consumption.” And what about a private jet: in this day and age everyone needs one, how can one possibly define that as “large amount of personal consumption.” As for the meaning of “generally”, we are confident SBF’s close buddy Bill Clinton will give him the proper definition of that word.

Prudently, there was zero mention in Sam’s meandering word salad that FTX had illegally commingled and sent billions in customer funds to SBF’s personal hedge fund, Alameda, which despite frontrunning virtually every crypto transaction still lost $3.7 billion before 2022. That’s ok, Sam can discuss that in court.

There was, however, the usual lies, including SBF’s increasingly warped representation of reality, which is to be expected: as noted above, he is after all, a sociopath.

We likely could have raised significant funding; potential interest in billions of dollars of funding came in roughly eight minutes after I signed the Chapter 11 docs. Between those funds, the billions of dollars of collateral the company still held, and the interest we’d received from other parties, I think that we probably could have returned large value to customers and saved the business.

Narrator: none of this happened, and none of this will happen either:

Maybe there still is a chance to save the company. I believe that there are billions of dollars of genuine interest from new investors that could go to making customers whole. But I can’t promise you that anything will happen, because it’s not my choice.

That’s right: it is now all in the hands of the person who presided over the Enron bankruptcy and who thinks your fraud is way worse.

And speaking of fraud, there was one sentence in the whole letter where this pathological liar may have told the truth, if inadvertently:

… None of this changes the fact that this all sucks for you guys, and it’s not your fault, and I’m really sorry about that. I’m going to do what I can to make it up to you guys—and to the customers—even if that takes the rest of my life. But I’m worried that even then I won’t be able to.

No, you won’t be able to, but when it comes to “the rest of your life”, both the “guys” and the customers who you left with nothing because of your infinite greed, fraud and incompetence, they all have an idea where you can spend it.

Whether or not that happens will depend on just how broken the US legal system is, where a few million in donations to prominent democrats may be all it takes to get a lifetime “get out of jail” card.

SBF’s full letter to his now former employees is below

Authored by Katabella Roberts via The Epoch Times (emphasis ours),

Sperm counts worldwide have halved over the past 45 years, according to a study published on Nov. 15 in the journal Human Reproduction Update.

The study was conducted by an international team of researchers led by professor Hagai Levine of Hebrew University of Jerusalem’s Hadassah Braun School of Public Health.

They aimed to examine trends in sperm count among men from all continents and analyzed 223 studies based on sperm samples taken from over 57,000 men across 53 countries including the United States, Europe, and Australia between 1973 to 2018.

Previously, a 2017 study conducted by the same team of researchers reviewed sperm count data in North America, Europe, Australia, and New Zealand. The new analysis updates that review to include data from Central and South America, Asia, and Africa for the first time.

Researchers in the latest study found an “appreciable decline” in sperm count during that time period.

Specifically, researchers found that men in South America, Asia, and Africa shared a similar decline in total sperm counts and concentration as was previously observed in their study concentrated across Europe, North America, and Australia.

Sperm Counts Fall Over 62 Percent

Overall, results showed the mean sperm count fell by 51.6 percent between 1973 and 2018 across men from all continents, dropping on average by 1.2 percent per year from an estimated 101.2 million per milliliter to 49 million per milliliter from 1973 through 2018.

Total sperm counts fell by 62.3 percent during the same period.

Men are considered to have a low sperm count if they have less than 15 million sperm per milliliter or less than 39 million sperm total per ejaculate, according to the Mayo Clinic.

Additionally, they found that data from the year 2000 showed a decline in sperm concentrations of more than 2.6 percent per year, doubling compared to the previous decline of 1.16 percent annually from 1972.

Researchers said the “substantial and persistent decline is now recognized as a significant public health concern” and that further research on the causes of the decline is urgently needed to prevent further disruption of male reproductive health.

“We hope that the new evidence provided here will receive attention not only from clinicians and scientists but also from decision-makers and the general public,” the researchers wrote.

Men who suffered from infertility were excluded from the study.

Researchers did note limitations to their study, however, including how the data was collected and reported as standards and methods for counting sperm have changed markedly over time. That makes it harder to compare the latest sperm counts to historical data. Additionally, researchers noted that complete elimination of all selection/recruitment bias was impossible because they were not able to collect semen samples at random.

‘Not a Cause for Panic’

“I think this is another signal that something is wrong with the globe and that we need to do something about it. So yes, I think it’s a crisis, that we [had] better tackle now, before it may reach a tipping point which may not be reversible,” Levine, the leading author of the research, told The Guardian.

Read more here…

Russia’s energy giant Gazprom on Tuesday accused Ukraine of stealing natural gas supplies intended for Moldova by siphoning it off during transit. Gazprom is now threatening to halt deliveries via the key the Sudzha route. 

“The volume of gas supplied by Gazprom to the ‘Sudzha’ gas measuring station (GMS) for transit to Moldova via Ukraine exceeds the physical volume transmitted at the border of Ukraine with Moldova,” Gazprom’s statement said.

The allegation further specified that the Ukrainian government stole 52.52 million cubic meters of gas which was intended for Moldova. Gazprom said that amount of gas never left Ukraine’s territory while in transit.

According to the fresh statement as presented in state media: 

The Russian energy company further warned that if the transit imbalance persists then it would begin slashing gas supply to the Sudzha GMS for transit via Ukraine from 10 am (7am GMT) on November 28, “in the amount of the daily underderlivery.”

Ukraine has a sprawling network of natgas transmission pipelines from Russia that feed into Europe, which now ironically enough remain the only key supply route to western and central European countries following the Nord Stream sabotage blasts. 

Despite the raging war which has been on for nine months, some 42 million cubic metres (mcm) per day still transits through Ukraine via the Sudzha route.

Gas inflow for transit from Russia to Europe in Ukraine from February 1 to November 14, 2022, by entry point(in million cubic meters):

You will find more infographics at Statista

Moldova is very heavily dependent on Russia for its energy supplies, and has been suffering rolling blackouts of late. On Monday donor countries gathered in Paris where they pledged hundreds of millions of dollars in aid to help salvage Moldova’s energy infrastructure, and to prevent political destabilization at such a sensitive time. Moldova has recently applied for EU membership.

Western officials have long accused Russia of seeking to takeover Moldova amid its “special operation” in Ukraine. International media has tended to blame tiny Moldova’s energy woes on Moscow and its ‘weaponizing’ energy.

Authored by Daisy Luther via The Organic Prepper blog,

More people than ever are facing dire circumstances, and we’re just getting started with this economic disaster. And what is our government doing?

Why, they’re giving our money away.

To other countries, no less.

The U.S. government agreed to pay “climate reparations.”

But the plight of our own countrymen seems to be less important than those in other countries affected by climate change. The United States has just agreed to pay up to a billion dollars to poor countries for “climate reparations.” As per an opinion piece in the Wall Street Journal:

The use of climate policy to soak Americans keeps getting worse, and the United Nation’s climate conference in Egypt ended this weekend with agreement on a new fund to pay reparations to poor countries. Welcome to the latest climate shakedown.

The 2015 Paris accord suggested rich countries compensate poor countries for climate damage—the rationale being that industrialization has increased temperatures and led to natural disasters. Poor countries finally forced discussion of a formal mechanism to pay climate reparations onto this year’s U.N. conference agenda.

…on Thursday Europe abandoned the U.S. by proposing a deal, and Mr. Kerry rolled over.

Wealthy countries will now set up a fund to cover climate damage for the least developed countries—i.e., not China or middle-income nations. This will be financed from “a broad donor base” and “mosaic of solutions,” such as international development banks and taxes on aviation, shipping and fossil fuels.

Some reports suggest that the US will be on the hook for up to a billion dollars. In October, it was reported that the total amount due would be $4.3 trillion.

That’s the sum the US and other major carbon polluters will face at the COP27 climate summit in Egypt next month.

Well, other polluters except for China.

China is not contributing jack sh*t. It’s essential to note that out of all the polluters in the world, China is the worst offender, creating 30% of the world’s carbon emissions.

Yet, they’re exempt from this outrageous bill. Not one thin dime shall they pay. I’m not a fan of China’s dystopian policies and government, but at least they aren’t causing shortages and suffering in their own country in order to virtue signal how green they are.

In the end, it’s just the rich getting richer and the poor getting poorer. Says the WSJ:

Countries might also shake down U.S. fossil-fuel producers in their own courts. Climate reparations will merely serve as another form of global income redistribution. The Biden Administration’s surrender shows again that the religion of climate change is progressive penance for the sin of being prosperous.

In doing this, they ignore the plight of everyday Americans who can’t afford to run their heat or keep their homes.

Meanwhile, Americans are truly suffering.

We’ve repeatedly discussed the effects our current economic crisis is having on Americans. We talked about how they’re skipping meals and how they can’t afford medical care. We’ve been warning for years that they are struggling to meet their most basic needs. We live in a nation that destroyed itself during the Covid pandemic and has left its people hanging out to dry, with no jobs, no money, and no hope.

This isn’t some abstract concept about the planet.

This is real. And it’s happening to folks in our own communities.

Read these personal statements about how the economy is crushing Americans.

Here’s how the economy is affecting housing.

Sheba Everett is a single mother living in Durham, North Carolina, an area that is facing massive increases in the cost of living due to new companies coming to the region. Lower-income people are rapidly being displaced. She works full-time as a teacher with multiple side gigs to keep a roof over the heads of herself and her daughters. They were making ends meet until she got an eviction notice. A local newspaper shared her story:

The September eviction letter caught them by surprise, she said, even though all the annual leases were converted in the last two years to month-to-month leases. Everett asked about it in March when her lease changed and said she was told it was to help tenants struggling in the post-pandemic economy. Now, everyone is in dire straits, trying to find affordable housing when the only units available are condemned or too small, she said.

“It will be three years in March (since they moved into their current home), so the prices were still somewhat reasonable (before), and so I tried to find something similar, and it’s just like double the price, so there’s just no way I can survive or stay in Durham or any of that.

I don’t know what I’m going to do, and I tried to get a loan to buy a house. Actually, in my neighborhood that I grew up in, I found a house — a five-bedroom house; it was (roughly) 1,400 square feet — in my old neighborhood that I grew up in; I was ecstatic. It was $300,000 (but) I didn’t get approved for enough to buy that house. We’re basically stuck right now. … I just couldn’t believe I’m a teacher, and I can’t afford to even live in the neighborhood that I grew up in.

I’ve reached out to the housing agencies, but since we’re in a crisis right now — one of the worst that we’ve seen in our lifetime — they’re backed up. I am one of many numbers. I’ve gotten on a couple of waiting lists, and even those things, they definitely will keep a roof over our head, but it’s not anything that actually fits my family’s needs. It’ll keep us from being homeless.

I’ll work five jobs and pay for a super-expensive place where I literally can barely breathe, but I can’t uproot my children from their home without giving it my all, because like I said, it’s way more than just a house.

As a single mom myself, I know exactly how difficult it is to have to uproot your children in the midst of financial problems. It’s heartbreaking to see them suffer because of money. When you don’t have much money, a home is the one thing that you strive to provide, no matter what.  Losing that security is almost unbearable.

(Disaster comes in many forms. Check out our free QUICKSTART Guide to better understand the four levels it can reach.)

Here’s how the economy is affecting utilities.

The high cost of energy is causing exorbitant heat bills as we move into winter.

As the first frigid weather of autumn chills the Northeast, many people are faced with a tough decision: deal with the surging costs of heating their homes or live without it.

Home heating prices are skyrocketing yet again this winter, up 18% nationwide on top of last year’s 17% spike, according to the National Energy Assistance Directors Association (NEADA).

Charmaine Johnson works in the call center at Philadelphia’s Heater Hotline, part of a non-profit that assists low-income families with their heating systems and bills. Johnson, 63, can relate to the concerns she’s hearing all day. She, too, is struggling to afford her heating bills…

…Johnson says she doesn’t qualify for government assistance with her heating bills. As inflation also pushes up her food budget and other expenses, she is bundling up and keeping the heat turned down, hoping to stretch that oil for as long as possible.

“It’s miserable,” she said. “It’s like living in an igloo.”

The elderly and children are the most likely to suffer when folks can’t afford to turn their heat to a reasonable level. Some senior citizens living on fixed incomes are talking about keeping their thermostats at a nippy 50-55 degrees.

It doesn’t matter how you heat, this year, you are going to pay more. The Energy Information Administration (EIA) predicts that:

…heating a home with natural gas will cost an extra 25% this winter, and heating with electric will run 11% higher. The steepest hike will be on heating oil, which is expected to be 45% more expensive than last winter, squeezing roughly 5 million households, mostly in the Northeast.

Many of our most vulnerable citizens are facing a long cold winter.

But by all means, let’s stash a billion dollars or so in a fund for other countries.

Imagine what we could do with a billion dollars here at home. Imagine the people who could be fed, housed, and sheltered. Sure, it wouldn’t solve all of our problems. It wouldn’t undo the damage done to our economy by disastrous lockdown policies.

But wouldn’t it be better to help the folks at home before pledging tons of money to others?

I don’t hate other countries. I don’t hate poor countries. I’ve spent a lot of time traveling the world, and I want to see other countries be prosperous too. But it cannot come at the expense of our own people, who have paid tax after tax after tax but still can’t turn their heat above 5o degrees in the winter.

Is it just me? Do you feel that this is a terrible use of American money, or do you think it’s a good call? If you could decide where to distribute a billion dollars as a government official, where would you direct it? And how the heck does China get off scot-free?

*  *  *

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Goldman’s Ben Snider has published his latest quarterly Hedge Fund Trend Monitor report, which is one of Goldman’s most widely followed research reports (and mercifully, it doesn’t include any forecasts, so there is no way Goldman can be catastrophically wrong unlike its year-ahead forecasts). This year, Goldman analyzed the holdings of 786 hedge funds with $2.3 trillion of gross
equity positions at the start of 4Q 2022 ($1.5 trillion long and $730 billion short). It’s available in the usual place for pro subscribers.

What the report found is that as the Fed attempts to navigate the US economy toward a soft landing, hedge fund portfolios were in a “holding pattern” with quarterly position turnover dropping to a new low during 3Q as PMs had literally no idea what to do or how to trade so they just stood there like deer in headlights (see more below).

The total magnitude of changes to sector tilts was the smallest since 2019, and most tilts sit near their 10-year averages. Hedge fund exposure to Growth vs. Value returned to its 20-year average. Net leverage remained at low levels, with funds using ETFs and futures to manage their exposures to a macro-driven market characterized by elevated correlations. Single stock short interest remains close to the record lows reached in 2000 and last year.

In contrast with light market exposures, hedge fund long portfolios carried an unusually large tilt away from Momentum. Momentum has recently been very negatively correlated with the direction of the equity market, as reflected by the sharp Momentum reversal alongside the market rebound in early November. While the Hedge Fund VIP basket of the most popular long positions has declined by 29% YTD…

… funds appear convicted in their favorite stocks, while aggressively shorting the year’s best S&P performer: the energy sector in general and Exxon in particular. Eventually they will figure out what the right trade is.

The average hedge fund holds 71% of its long portfolio in its top 10 positions, the highest concentration on record outside of 4Q 2018. Tech and Comm Services account for nearly half of the VIP list and 8 of the top 10 stocks. While funds paused their shift away from China ADRs during 3Q, BABA is still the only representative in the VIP list

although in contrast with light market exposures, hedge fund long portfolios carry an unusually large tilt away from Momentum.

Below, we summarize some of the key findings:

MSFT supplanted AMZN as the most popular hedge fund long position, while UBER and NFLX entered the top five. META fell out of the top five for the first time since 2014.

The VIP list contains the 50 stocks that appear most often among the top 10 holdings of fundamental hedge funds. While the basket has outperformed the S&P 500 in 58% of quarters since 2001 with an average quarterly excess return of 34 bp, the past two years have been a complete disaster.

There were 15 new constituents to the HF VIP list: APG, CEG, ET, FLEX, LBRDK, LLY, LSXMK, NVDA, PGR, SPGI, TDG, TMO, UTHR, VMW, WDAY.

But what we found more remarkable is that in the VIP mirror list, the Very Important Short Positions (VISP) for hedge funds, the top name was none other Exxon – our favorite long since the summer of 2020 when it dropped to the $30s – which has doubled this year (and quadrupled since it was kicked out of the Dow Jones). And judging by how much short covering XOM still faces, not to mention how much more buying lies in stock as hedge funds rotate from being short to going long energy, Exxon may very well double again from here.

Going back to hedge fund flows in Q3, Goldman notes that a rotation from Consumer Discretionary to Consumer Staples was the largest shift among sectors (for the reason why, just as Target which saw an exodus of clients who ended up going to “cheaper” WalMart for their purchases).

Industrials remains the largest net overweight relative to the Russell 3000, though only one stock (TRU) ranked among Goldman’s Rising Stars list of the stocks with the largest increase in hedge fund popularity during 3Q (which of course is negative for reasons we have explained every single year since 2013). Four Industrials (GXO, RHI, JCI, IAA) appeared on the list of Falling Stars

Here are some of the most notable charts from the report (which is available to pro subs in the usual place)

Hedge fund equity market exposure is exceptionally low…

And yet, short interest for the typical stock remains extremely low…

But not so at the index level: hedge funds are extremely short equity futures…

… which they are doing by shorting ETFs: there is more short activity in ETFs than usual

As a result the average stock correlation is very elevated…

Funds entered 4Q 2022 with long portfolios tilted away from Momentum…

The tilt away from Momentum has been a headwind to fund returns for most of this year, but was rewarded during the sharp Momentum reversal this month. As we noted after the CPI miss, Goldman’s long/short S&P 500 Momentum factor (GSMEFMOM) returned 20% in 2022 through November 3rd but this month experienced a sharp reversal ranking in the 1st percentile since 1980

The hedge fund tilt away from Momentum is particularly notable in light of the negative recent correlation between Momentum and the broad equity market. Momentum has also outperformed in other major periods of market stress in recent years, including 2009, 2012, 2016, and 2020. In light of this relationship, it is unlikely that Momentum will fully unwind its recent outperformance unless the market and economic outlooks improve substantially. While light hedge fund net leverage suggests funds are not optimistic about the near-term path of the market, their tilt away from Momentum appears to conflict with this view.

In a time of record uncertainty, hedge fund are doing the only thing they know: doubling down on their existing positions and praying for the best: as shown below, HF portfolio density has recently risen to near record highs.

A logical extension: portfolio turnover decreased to new record lows in 3Q as traders froze, terrified to buy or sell anything.

Funds remain tilted toward “real economy” sectors and away from tech…

More in the full Hedge Fund Tracker note available to pro subs.

Egg supplies are tightening nationwide as more than 37 million egg-laying hens have died this year due to the severe bird flu outbreak, accounting for a whopping 10% of production. The result has been soaring egg prices at the supermarket ahead of the holiday season. 

“Prices for eggs climbed more than 10% from September to October, according to the latest Consumer Price Index data. Prices in October were 43% higher than the same month a year ago. Eggs had the biggest jump by far on a monthly and yearly basis in any category in the US Department of Agriculture’s food price outlook,” Bloomberg reported. 

Consumers paid an average of $3.42 for a dozen Grade A, large eggs last month — up from $1.82 a year earlier. 

Readers have been well-informed this year about the devastating bird flu outbreak ravaging commercial poultry farms nationwide. 

“The recent spike is extraordinary in the shell-egg as well as egg-product markets,” Bill Lapp, president of Advanced Economic Solutions, a consulting firm specializing in food economics, told CNBC. 

Besides eggs, food inflation remained at the highest levels since the late 1970s, crushing the pocketbooks of Americans as they drain their savings and rack up credit card debt to buy essentials. Breakfast was the cheapest meal of the day but has since become expensive, thanks to soaring egg, bread, meat, and orange juice prices. 

The last bird flu outbreak was in 2015. This current outbreak appears much worse in terms of just egg prices. 

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Arizona Republican governor’s candidate Kari Lake issued a Monday update, saying her attorneys are working to obtain more information and “whistleblowers are coming forward” after reports of poll issues on Election Day in Maricopa County.

“Attorneys are working diligently to gather information,” said Lake, a former local news anchor who was backed by former President Donald Trump. “Whistleblowers are coming forward and the curtain is being lifted. Whether done accidentally or intentionally. It is clear that this election was a debacle that destroyed any trust in our elections.”

Authorities Maricopa County are, according to Lake, “still counting ballots” after “printer problems, tabulation errors, three-hour-long lines and even longer and confusing instructions given by election officials made this election day the most chaotic in Arizona’s history.”

For the past several days, Lake has been posting videos of voters complaining about their experiences during Election Day to her Twitter page.  She’s said that Republican voters were disenfranchised when they tried to cast ballots in Maricopa County, the state’s most populous county.

Officials in Maricopa County said on Nov. 8 there were problems with vote-tabulation machines and asked voters to drop their ballots inside dropboxes. Later that day, Maricopa County Board of Supervisors Chairman Bill Gates and county Recorder Stephen Richer blamed an issue with printers for the problem and later said that the glitch would not stop anyone from voting.

Letter

Over the weekend, Arizona Attorney General Mark Brnovich’s office sent a letter asking Maricopa County for answers about the apparent voting problems. The memo said that it has fielded hundreds of complaints about how authorities conducted the election during the in-person voting phase.

“These complaints go beyond pure speculation, but include first-hand witness accounts that raise concerns regarding Maricopa’s lawful compliance with Arizona election law,” the letter said, asking for a response before Nov. 28. Gates, in an interview with local media, said his office would comply.

“We’re reviewing this with our attorneys right now and I don’t have anything further to say at this point, but we will certainly before we hold the canvass,” he told KTAR on Monday.

Gates stated that around 70 of the county’s 223 vote centers suffered problems on Nov. 8. Technicians were able to solve the problem by the same afternoon, he remarked.

The letter said that Maricopa needs to provide a “full report” for the “myriad problems that occurred in relation to Maricopa County’s administration of the 2022 General Election.”

Hobbs Declares Victory

Last week, Democrat gubernatorial candidate Katie Hobbs, the Arizona secretary of state and chief election official, declared victory. Lake has not conceded yet and it appears that she will not do so anytime soon, according to her video.

“Arizonans who choose to make their voice heard on election day should not be disenfranchised or punished for choosing to vote in person,” Lake said Monday. “Yet they were I want you to know Arizona. I will continue fighting until we restore confidence and faith in our elections.”

And Lake, in reacting to the attorney general’s recent letter to Maricopa County, told the Daily Mail on Sunday she still believes “I will become governor, and we are going to restore honesty to our elections.”

Read more here…

Like almost every other equity related to crypto this month, Silvergate Capital has been punished badly. 

As we noted last week, the stock has had a triumphant fall from grace, plunging from highs of $160 per share in early 2022 to lows near $24 over the last few trading sessions, as each day new ugly crypto-related headlines cross the wires.

But for Silvergate, which is known as the largest and most well known regulated crypto bank in the United States that also can allow customers to send cash in real time, it looks as though business may be returning to normal…somewhat.

This morning it was announced that institutional cryptocurrency platform FalconX would be resuming its use of the Silvergate payment network. It had suspended use of the network last week. 

“Concerns have abated,” the platform told its clients in a memo. The halting of use of Silvergate was consistent “with our standard process to pause and reassess operations in these scenarios,” the company wrote, according to a Tuesday morning Bloomberg note. 

Meanwhile, Silvergate Chief Executive Officer Alan Lane said earlier this year that the bank “remains committed to supporting customers during a challenging period for the digital-asset industry,” Bloomberg reported. 

On his LinkedIn page Monday, Lane wrote: “I’ve said before that our business was built to support our customers during growth and market transformation. And we remain steadfast in that commitment to you, our customers.”

In the interim, as Silvergate continues to weather the storm, its stock has amassed a massive 12% of its float short, even despite the plunge in shares, according to S3.

Recall, about a week ago Silvergate confirmed it had little exposure to the FTX blowup. 

Lane, Chief Executive Officer of Silvergate, said:

“In light of recent developments, I want to provide an update on Silvergate’s exposure to FTX. As of September 30, 2022, Silvergate’s total deposits from all digital asset customers totaled $11.9 billion, of which FTX represented less than 10%. Silvergate has no outstanding loans to nor investments in FTX, and FTX is not a custodian for Silvergate’s bitcoin-collateralized SEN Leverage loans. To be clear, our relationship with FTX is limited to deposits.“

Authored by William Anderson via The Mises Institute,

Much is made of the failure of Republicans to make predicted gains in the recent midterm elections, but, as Ryan McMaken has pointed out, Congress plays a much-diminished role in national governance to the point that even had the so-called red wave actually occurred, it is doubtful that much would have changed regarding Joe Biden’s presidency. In fact, most of what Biden has done in his two years in office has been outside of congressional legislative matters.

McMaken points out:

This all combines to mean we should expect very little change on policies at the federal level. For example, we can expect to keep hearing plenty about the evil of fossil fuels. The administration will continue to press for less drilling for oil and gas, and the war on coal will continue. The administration will continue to issue new edicts for “fighting global warming.” 

As McMaken notes, Biden has used executive orders liberally, sometimes using a twisted interpretation of federal law, and then unleashing his regulatory and law enforcement agencies to get his desired results. For example, federal banking regulators and the Securities and Exchange Commission have pressured banks and other lenders not to led to the oil and gas industry, citing the fealty to fighting climate change as the reason.

Note that the administration is doing this not via congressional authorization, but rather through its own self-serving “interpretation” of existing federal law. Likewise, Biden’s infamous student loan forgiveness order was not through such relief passed by Congress, but rather using a 2003 federal law that permits the US secretary of education to employ “expansive authority to alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies.” What constitutes a “national emergency” must be in the eyes of the beholder, as any reason will do—and, so far, the courts have signed off on this vast expansion of executive power. This is reminiscent of Franklin Roosevelt’s perverse interpretation of the 1917 Trading with the Enemy Act to undergird his gold seizure from Americans and devaluate the dollar.

(Biden has not been the only recent president to liberally employ executive orders for questionable reasons. Donald Trump used existing law to raise tariffs against Chinese products, claiming that his actions meant that the Chinese were now helping to pay for their exports to the USA. Once upon a time—before turning over some of its authority to the executive branch—Congress had sole authority to set tax rates.)

Biden’s reckless actions have come in part because progressives in the 1930s convinced Congress to give away much of its authority to the executive branch, the action well described by Paul Craig Roberts and Lawrence Stratton in their book, The Tyranny of Good Intentions. The authors described a scene in which Congress was passing bills not even yet written and acceding their authority to the president as a response to the economic calamity of the early 1930s.

The New Deal, which was Franklin Roosevelt’s set of policies ostensibly to combat the Great Depression (although one easily can argue that the New Deal was the main reason the depression lasted for a decade), made FDR a “transformational” president, a title that Biden actively is seeking for himself. Encouraged by historical writers such as Jon Meacham and Doris Kearns Goodwin, Biden wants to become an icon like Roosevelt, although the “hook” today is not economic depression (yet) but rather the so-called climate emergency.

Unfortunately, becoming a presidential icon requires that the executive branch impose severe economic damage to the country. Roosevelt’s New Deal, far from pulling the USA out of the Great Depression, left it mired it in what economist Robert Higgs called “regime uncertainty,” which resulted in high unemployment and a dearth of capital investment. Biden’s version of the so-called Green New Deal points the economy in the same direction. Writes Thomas Woods:

In the old days, progressives claimed to be trying to improve the standard of living of the ordinary person. Everything they advocated would have had the opposite effect, but at least they claimed to be making his life better.

Now they’re not even claiming that.

You will be poorer, they’re telling you. Your electricity bills will be higher. The price of your car will be higher. And according to them, higher prices are in fact a good thing, because they’re supposedly a sign of a strong economy.

His claims notwithstanding, Biden’s objective to have a “transformational” presidency is to make Americans worse off now in exchange for the remote possibility that the Green New Deal will allow for future generations to have better weather. Biden’s grandiose view of himself and his policies are egged on in part by Meacham’s flattery:

He has been described as Joe Biden’s “historical muse”, an occasional informal adviser to the US president and contributor to some of his major speeches including the inaugural address.

In March, Jon Meacham put together a meeting between Biden and a group of fellow historians at the White House that lasted more than two hours. What did he learn about the 46th president?

“He’s like an upside down iceberg,” the Pulitzer prize-winning historian says by phone. “You see most of it and that’s not spin: there’s just not a lot of mystery to Joe Biden. The last four or five minutes of his press conference in the East Room [on 25 March] when he talked about democracy and autocracy, that was pretty much it.”

As the average American family struggles to keep up with inflation and the Biden administration deliberately makes it more difficult for them to live a semblance of normal lives, historians such as Meacham are telling Biden to expand his reach and his authority in fundamentally changing how Americans live. Indeed, in Biden’s first two years, he has brought about fundamental change to American life, but that change has been harmful.

Robert Higgs in his article “No More Great Presidents” lays out the modern historians’ standard for “greatness”:

The lesson seems obvious. Any president who craves a high place in the annals of history should hasten to thrust the American people into an orgy of death and destruction. It does not matter how ill-conceived the war may be. 

So far, Biden has not launched the USA into a foreign war, although he has almost single-handedly financed (with US tax dollars, of course) the proxy war between Ukraine and Russia, using the Russian invasion as his justification for doing everything he can to prolong the fighting. However, by shackling the energy industries, blaming businesses for the inflation his government created, and doing whatever he can to make daily life difficult for ordinary people, one can say that Biden is at war with people who have no means by which to fight back.

Even had the red wave passed over the electorate earlier this month, it would have changed the Biden presidency very little, if at all. That is how powerful the executive branch under Biden has become. And Biden will continue to listen to the “historians” who fawn over his every word and tell him that he, too, can be a “great” president.

While we wait for the US and EU to unveil details of the Russian oil price caps which will be implemented in two weeks (we may have a lot to to wait after John Kirby said that “It’s not just about the dollar figure. It’s about the implementation, of course, making sure as many countries as possible can sign on to that,” he tells reporters, clearly stalling as nobody in the west knows just how badly such a price cap could backfire and send prices soaring), China is not taking any risks as its crude buyers – who have emerged as the biggest buyers of Russian oil in 2022 taking advantage of western sanctions and buying up Russian oil with discounts as large as $30 below spot – have paused purchases of some Russian oil as they too wait for details of a US-led cap to see if it presents a better price.

As Bloomberg reports citing “traders with knowledge of the matter”, several cargoes of Russian ESPO crude for December-loading remain unsold and there’s hesitation among sellers and Chinese buyers to close deals before more clarity on the exact price cap level is known, according to traders with knowledge of the matter.

The Russian oil price cap is set to be implemented alongside European Union sanctions on Russian crude on Dec. 5, with those adhering to the measure gaining access to insurance, banking and shipping services from the bloc. The cap is designed to keep crude flowing from the OPEC+ producer to prevent a global supply shock but crimp the Kremlin’s revenues as it wages war in Ukraine.

However, Russia has reiterated that it won’t sell to nations that implement the cap, potentially sending oil sharply higher (back in July JPMorgan said that “Oil Price Could Hit “Stratospheric” $380 If Russia Retaliates To G7 Oil Price Cap“). Instead, Moscow will redirect supply to “market-oriented partners” or reduce production, according to Deputy Prime Minister Alexander Novak. In other words, the status quo will continue, since to this day Russian oil makes its way to European markets, only instead of being bought directly from Russia, it comes by way of China or India instead, with Europe paying a substantial premium to where oil would trade if all these artificial trade barriers did not exist.

ESPO, or Eastern Siberia-Pacific Ocean oil is popular with China’s independent refiners due to the high diesel yield and short shipping distance. Traders said many market participants appear open to referencing the price cap — even if they don’t officially support it — provided the level isn’t too dislocated from current prices.

Should the level be set too low, however, the party responsible for shipping and insurance coverage — which can be the seller or buyer, depending on contract terms — may need to seek services from non-EU providers, thereby complicating the process and drastically changing the economics of the deal.

At the same time, and as Zoltan Pozsar explained back in March, adding to buyers’ concerns is that banks that finance crude purchases are wary of the looming sanctions and soaring freight rates. Service providers are weighing their possible exposure to the EU penalties and how best to navigate restrictions when they take effect in less than two weeks.

Ahead of the price cap, Russian seaborne fuel exports soared to the highest since at least 2017 as the nation’s refiners rushed to do deals before EU restrictions on imports and shipping come into force. The nation’s average daily exports of oil products from Nov. 1 to 10 jumped 22% from the prior month to around 3.17 million barrels, according to estimates from data and analytics firm Kpler.

Ironically, Bloomberg also reported previously that the largest oil companies in China – whose dependence on cheap Russian oil has soared this year – are seeking help from Beijing to keep Russian imports flowing after new sanctions on Moscow that are set to kick in next month. State-owned oil refiners are worried about their ability to work out the payment channels, logistics and insurance needed to keep buying from the OPEC+ producer after Dec. 5.

China and India have become key outlets for Russian crude after most other buyers shunned the OPEC+ producer following its invasion of Ukraine. Both China and India have, in turn, become major sources of Russian oil to Europe, only instead of calling it Russian oil they sell it as – drumroll – China and Indian oil. And that allows Europe’s virtue signalers to sleep at night.