Vinyl

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Selling

A significant dip in price over the last week, with Bitcoin dropping as low as $53k at one point. As we have discussed before, the Mount Gox distributions would spook the market as people who have waited a very long time for their money finally got their hands on it.

Billions in bitcoin was on the move on Friday as a result, with a fairly predictable price response. 

Adding to that was the German government, who have started to sell off bitcoin they have seized over the years. Their behaviour has been a bit more erratic though, with $200m worth moved to exchanges and OTC desks on Friday.

People seem alarmed, but they shouldn’t be. Governments can buy and sell bitcoin whenever they wish, and liquidators can do the same. The thing they cannot do is create any more of it. Friday also saw the largest day of inflows to the US ETFs in a month. The demand was not sufficient to mop up all of Germany’s coins, but it will be eventually.

I expect this whole operation will put this effort from former UK Prime Minister Gordon Brown’s in the shade. At the time, the British Government's selling depressed the price of gold too.

HIs “attempt to diversify and strengthen Britain's reserves” did not go so well. At the time you could buy gold for £160 per ounce; today it costs £1,850. A 90% decline in the value of sterling.

Vinyl

Vinyl might also appeal because you have to listen to the whole album rather than just jump to your favourite songs. Or the sound quality might be better (or at least you might believe that) or many other reasons that it is “obviously better”. Except, nobody cares. We aren’t going back to vinyl.

I know people who love it, who swear by it and spend fortunes on it but we simply are not going back. So when I saw this cartoon, I also considered the generation that loves vinyl also happens to hold about 70% of the wealth, the balance belonging to Generation X and Millennials.

It doesn’t matter that all the money is concentrated in the older group though. They can sell their vinyl to other people in that group but not forever; that technology class is not going to survive another 20 years. Its value will tend to museum piece levels for the best looked after collections, but otherwise, zero.

So the question is, does the generation behind me want what I have? Can I sell it? It doesn’t matter if your assets are “better” or the new assets as far (as you are concerned) are terrible. Can you sell them to the generation behind you? Will they want your bonds? Will they want your 40 storey commercial real estate building that you don’t even know your super fund owns?

What are the under 30s thinking? What are they doing? Do you even know?

… and you know, young people are idiots so copying them as a strategy is likely wrong. Except that they are almost never wrong. They predict every trend. Indeed, almost by default they cause every trend.

Ignore them if you want to but they won't be buying your vinyl any time soon.

Euro-Trash

A wild week in Europe. Britain’s governing party was predictably thrown to the wolves with a record number of government ministers losing their seats entirely (including former PM Liz Truss).

In France, a rather more interesting dynamic emerged; in the second round of voting a tactical withdrawal of over 200 candidates in the final week meant the French right wing did much worse than predicted. As it turned out, the left wing and centrist alliance (including the Greens) will form the largest party and likely hold the Prime Minister's position.

France then ends up with a President nobody likes and a Prime Minister the majority of people do not want.

What to know is that the new government is going to want to spend a lot of money. Lower (you read that correctly), the retirement age and increase benefits across the board. The spending predictions lead to deficits on French GDP of about 6% annually, way in excess of the EU limit of 3%.

The Euro, somehow, reacted positively to the news. Probably because the more divisive candidate did not win. 

In any event, no party now has a majority. Almost certainly then, extra spending will be allowed through the parliament and almost nothing else will be. Not quite chaos yet, but it will be a big mess.

Further information

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