The New Success Track: Happiness

In The Happiness Track: How to Apply the Science of Happiness to Accelerate Your Success, Emma Seppälä, science director of Stanford’s Center for Compassionate Altruism Research in Education, challenges the idea that success requires stress.

In a conversation with Knowledge@Wharton, Seppälä identifies some success myths and talks about ways that calmness can improve productivity and performance.

An edited transcript of the conversation follows.

Knowledge@Wharton: You start The Happiness Track with a story about an internship that gave you a view into two very different ways of working and of viewing success. Please tell us about that experience and what you learned.

Emma Seppälä: I worked for a major international newspaper out of Paris, France. My role was to communicate between the editors, who were on the second floor, and mostly American, and then the press people, who were in the basement and were mostly French, blue-collar workers. It was so interesting to notice the difference. Both groups were working toward the same goal of getting a newspaper out by the following morning. Yet, there were two very different approaches toward that goal. On the second floor, people sat hunched over their computers, eating over their keyboards, not talking to each other. It was a very tense atmosphere. It felt a little unhealthy, even, in terms of just the lack of communication and just the general mood you could feel.

Then, whenever I would go down to the press section, people were outright festive. There was food laid out. People were just welcoming me loudly into the room. Now, of course, you’re looking at two different cultures. Upstairs were more Americans, downstairs, more French people. You’re looking at white collar versus blue collar. But overall, what this experience shows is that people can be working toward the same goal and yet have two very different approaches.

The book is not about how French people do better than Americans in any way. No, not at all.

But we have the misconception that, in order to be successful, we have to postpone our happiness. But if you really look at the data, which is what I’ve been doing for the last 10 years, you see that if we prioritize our well-being, we actually end up being more productive, performing better, having better relationships with others, which translates into far better outcomes.

Knowledge@Wharton: Can you tell us how you would define happiness and a little more about the benefits of it?

There’s another form of happiness which is much, much longer lasting. I would even call it a sense of fulfillment. That is a sense of happiness derived out of a sense of purpose, social connection in positive relationships with other people and even a sense of doing something for a greater good, something beyond our own self. Twitter  The way that this applies to the workplace is that we see, for example, that leaders and employees who are more supportive of others around them, in direct contrast to this theory that we have that we have to look out for number one, they end up performing better, they end up having better relationships, they end up being more charismatic, more liked. Also, their health improves, and even their longevity. There’s a lot to be said for this second type of happiness that we often don’t hear about.

Knowledge@Wharton: One of the success myths you talk about is the tendency for so many of us to be in overdrive and to equate stress with success. You argue that stress management doesn’t work, and recommend tapping into our natural resilience. How have you seen this be effective in your work with veterans? And how can it help and work for others?

Seppälä: We believe that we can’t have success without stress. Many of us even count on that adrenaline that comes from over-caffeinating ourselves, over-scheduling ourselves, waiting until the last minute to get things done, because we believe that will make us more productive. But if you really look at the data, what long-term stress does, and we’ve probably all heard this so much, is that it really impairs not only our physical health but even our cognitive faculties, like our attention and memory, not to mention our emotional intelligence, our ability to communicate with other people in effective ways.

Yet, we don’t know what to do, because all of these responsibilities are coming at us, workplace demands, personal demands. It’s very easy to feel stressed. Again, short term stress is great; it does help you get through a deadline. But that chronic, long-term stress, research overwhelmingly shows, is negative for us. So what can we do? We can’t change the demands coming our way. But what we can do is change our own internal resilience and our ability to cope with those demands. So we’ve learned how to kick-start our drive system, our stress response, our fight or flight response. We’re very good at that.

In fact, we’re so good at it that we often have a hard time shutting it off, which is why we come home at night and sometimes people will choose to have a drink just to settle down. Or they’ll need sleeping medications, which many people need, just to sleep. We’ve forgotten how to tap into the other side of our nervous system, which is the parasympathetic nervous system, the rest-and-digest nervous system, the restorative nervous system. And I worked with some of the arguably most stressed individuals in our society, which were veterans coming back from war in Iraq and Afghanistan. They live in a quasi-permanent state of stress from the anxiety that is a direct result of their experiences.

We did a breathing-based intervention. What’s so interesting about breathing, as simplistic as it can sound, is that it’s a direct route to that calming part of your nervous system, the parasympathetic nervous system. We found that, in a very sort period of time, the veterans were able to sleep again. They were able to live their lives again, rather than being in a constant state of anxiety. If they can do it, so can we. Breathing is such a simple way to calm ourselves down, yet it gives us a way to tap back into a very natural way to restore ourselves, to recoup our energy, and to really perform at our best.

Knowledge@Wharton: Emma, would you be willing to lead us in a breathing exercise?

Seppälä: Sure. We know that our breath changes with our emotions. If you’re feeling stressed, anxious, angry, your breath will be shorter, it will be faster. Similarly, when you’re more relaxed, when you’re happier, you’ll breathe more deeply. What we know is, on the inhale, our heart rate accelerates. When we exhale, it decelerates. So what we want to do is lengthen our exhales. So you want to take long, deep breaths, and you want to lengthen that exhale.
I can lead you in one right now. If you want to just take a long, deep breath in, for a count of one, two, three, four, and just hold the breath for a couple of seconds. Then let’s exhale for a count of eight: one, two, three, four, five, six, seven, eight. You can breathe in this way.

The nice thing is you can do this in a board meeting, you can do this at your desk, you can do this on your commute. Just lengthening and deepening your exhales will really help to start to calm your nervous system down. There’s so much more to learn about the breath, but this is a very good introductory exercise.

Knowledge@Wharton: You talk a lot about managing energy, as well, to increase well-being. What depletes our energy? And what can help to restore it?

Seppälä: A number of things deplete our energy. One of them is our adrenaline-fueled life. So as we’re constantly depending on adrenaline to get through the day, we’re also exhausting ourselves very quickly because that stress response taxes so many systems in our body, from our immune system to our cognitive skills and many other parts of our body. So what we should start to think about is introducing more calmness into our life. This is not a very popular word, to be calm, especially in the United States. If you ask Americans how they define happiness, they will define it in terms of very high-intensity emotions like excitement and enthusiasm, elation, thrills.

We have this idea of work hard, play hard. This idea that there’s always intensity. When you’re working, you’re highly stressed, and when you’re playing, you’re highly excited and thrilled.

That’s all well and good. But in terms of our energy, these are very depleting. High-intensity is very depleting. It actually activates the stress response. Whether you’re highly excited or highly stressed, you’re activating that stress response in the body.

One thing we can start to make more time for is calming activities. If you ask individuals in East Asian countries how to define happiness, they define it with words like “serenity,” “peacefulness,” very low-intensity words….

If we learn to introduce more calmness into our day or into our schedule, we’ll find that we manage our energy better and that we’ll have more energy in the tank when we need it most.

One exercise that researchers have found is very helpful is to alternate throughout the day high-intensity activities with lower-intensity activities. So maybe your very intellectually demanding activity, you have to write an article or present a Power Point presentation, or something of that sort, and then balance that with more low-intensity activities, whether that’s entering data, cleaning out your desk, going through mail, et cetera. That helps give you a little bit of that boost of energy when you need it.

At the same time, it also helps you be more creative. Because when we’re constantly focused, we don’t tap into our natural creative ability. That’s another mistake that we make. We believe that in order to be creative we have to constantly be focusing on our field. Yet, creativity emerges — ah-ha moments, eureka moments emerge — when our mind is more in a relaxed state, perhaps doing a more low-intensity activity that requires less focus.

Refugee Crisis Disunity

A De Facto Solution Takes Shape in the Balkans

Photo Gallery: Closing Borders in the Balkans            
Angela Merkel is still hoping for a European solution to the refugee crisis. But with patience running out, Austria has joined countries on the Balkan Route to impose Plan B. But with the closure of borders, the situation in Greece is becoming dangerous.

It is a recent Wednesday morning and on the glass-walled 20th floor of the Ringturm highrise in the heart of Vienna, generals in their moss-green uniforms have gathered along with other decorated military officers and top-level government officials. The view is expansive, stretching to the Vienna Woods in the east and to the forests on the banks of the Danube River to the west.

One can see as far as the Slovakian border and to the lowlands at the border to Hungary -- two of the frontiers the country intends to immediately begin protecting in an attempt to block the inflow of more refugees, absent a functioning European plan.

Defense Minister Hans Peter Doskozil, a Social Democrat who has only been in office for four weeks, is speaking to a small group. He is not one to shy away from conflict. Instead of criticizing Austria for introducing a ceiling on the number of refugees it is willing to allow into the country each day, the minister says, the European Commission should finally fulfill its obligation to come up with a European solution to the refugee crisis. Otherwise, the current trends will only be magnified, he says. "Every EU member state is currently withdrawing to its own position and is taking its own national measures."

It has been a week of solo measures and heightened tensions within a deeply fractured Europe.

On March 7, the EU will once again attempt to find a solution to the refugee crisis at a special summit meeting in Brussels. German Chancellor Angela Merkel continues to place her hopes on Turkey, with her plan calling for the country to stop the flow of refugees and even take some of them back. But at the same time, countries along the Balkan Route have begun taking measures of their own, with Austria leading the way.

Now that Vienna is only accepting 80 asylum applications per day at the Spielfeld border crossing with Slovenia -- and now that other Balkan countries have constricted the refugee flow in response -- migrants have begun backing up in Greece. In his interview, Defense Minister Doskozil makes no attempt to contradict the impression that exactly that outcome was intended. Currently, he says, his ministry is examining whether and how many soldiers should be sent to Macedonia to help the country secure its border with Greece. That border has been closed to Afghans since Monday, with only Syrians and Iraqis allowed to pass. On Tuesday and Wednesday of this week, a total of only 150 refugees entered Macedonian territory. On Thursday morning, another 100 were allowed to pass, before Macedonia completely sealed off its border. When and whether it will be reopened is unclear.

Giving Austria the Middle Finger

One day earlier, the Austrian government had held a conference on the refugee question in Vienna, with only select countries on the Balkan Route invited to attend. Greece and most other EU member states were not among the invitees. Greece was furious at being excluded and reacted on Thursday by recalling its ambassador from Vienna, a gesture that in the diplomatic world is akin to giving Austria the middle finger. Athens followed up on Friday by cancelling a planned visit to the Greek capital by Austrian Interior Minister Johanna Mikl-Leitner.

Concern in Brussels has been rising rapidly in recent days that the uncoordinated border closures could result in chaos and perhaps even instability in the Balkans. The European Commission has sought to put a stop to the domino effect on the Balkan Route with strong words: Vienna's cap on refugees is "incompatible with Austria's obligations under European and international law," wrote European Migration Commissioner Dimitris Avramopoulos in a harshly worded letter to the Austrian interior minister. Luxembourg Foreign Minister Jean Asselborn said on Thursday that Europe no longer has a plan. "We are heading into anarchy," he said.

Greece has now de facto become the collecting point for the vast majority of refugees heading north. The country, says one EU diplomat candidly, "is turning into a single enormous hotspot," referring to the plan to establish central refugee registration points on Europe's periphery. Greece has been in the throes of a deep economic crisis for years and is now completely overwhelmed by the task of providing food and shelter to tens of thousands of refugees. Some 12,000 migrants are currently stranded in the country and the four official camps are hopelessly overcrowded. A spokeswoman from Doctors without Borders says that if Afghans continue to be blocked from continuing northward, the system will collapse "in just eight days." Because there is "no realistic emergency plan," she says, her organization is preparing for the worst. The European Commission is likewise developing emergency aid so as to prevent the collapse of the state on the Turkish border.

Dozens of buses with around 5,000 refugees on board were stopped on the highway by police earlier this week in Greece because the camps in Idomeni, on the Greek-Macedonian border, were already filled beyond capacity. Some 500 people continued on foot, walking along the highway and spending the night alongside angry farmers who have been blocking traffic with their tractors in recent weeks to protest against Tsipras' austerity policies. They are shameful scenes that played out across the country -- all symbolic of European failure.

'A Miracle'

The situation in the Greek capital is particularly dramatic. The most recent focal points of crisis can be found among the ferry terminals at the port of Piraeus and on Victoria Square in the heart of Athens. Hundreds of people are camped out on the square, sleeping on the ground and loitering in the streets. The burgeoning chaos is reminiscent of the situation in Hungary last summer when Prime Minister Viktor Orbán allowed the situation to become so intolerable that Chancellor Merkel responded by opening the borders.

Hassan Mohamadi, a lanky 26-year-old from Afghanistan, knew nothing of the disarray when he disembarked from the ferry Blue Star 1 at 6:30 a.m. on Thursday morning. Holding his wife's hand with one hand and his five-month-old daughter with the other, he said that morning that he was happy again for the first time in a long while. Some 1,300 migrants from the islands of Lesbos and Chios arrived in Athens that morning on board the Blue Star 1.

"It is a miracle that we have arrived," Mohamadi said, adding that he and his family had been underway for 12 days, having fled their village of Qur due to poverty, suicide bombings and Islamic State, which has begun expanding in Afghanistan. Mohamadi wants to continue on to Germany, but for now he and his family are stuck in Athens. He looked uncomprehending when he learned that he would be unable to continue his journey northwards. At the port, a migrant smuggler approached him and said: "If you have money, I can bring you there." The trip to Germany via the new route through Albania goes for around €3,000.

In parliament this week, Prime Minister Alexis Tsipras said: "We will not accept turning the country into a permanent warehouse of souls," threatening that Athens would block EU decisions until the distribution of refugees among member states is implemented. "We will not tolerate that a number of countries will be building fences and walls at the borders without accepting even a single refugee," he said. But what might the consequences be? Is the threat from Athens merely an empty one?

Deputy Foreign Minister Nikos Xydakis spoke with SPIEGEL by phone to address such questions. "Since Sept. 23, when the first refugee summit took place, there have been many subsequent meetings. In October, Turkey took part and we agreed on a joint plan, with Turkey agreeing to take back a generous number. But neither Turkey nor EU member states have adhered to the agreement. Germany promised to maintain the status quo at its border until the next summit on March 7, but that failed as well."

Greece, Xydakis says, is all alone. "So why should we adhere to any new agreements?" He says that Greece could begin exercising its veto beyond just the refugee summit and use it on all EU issues where unanimity is required.

'Greece's Closest Ally'

SPIEGEL has learned that Athens is considering declaring a state of emergency and applying for EU aid to cope with the refugee situation. Thus far, the government in Athens has declined taking such a step out of political considerations. But doing so now, Athens believes, could push EU member states to show solidarity with Greece in the refugee crisis.

The man who is primarily responsible for preventing refugees from continuing on their northward journey out of Greece is Gjorge Ivanov, the president of Macedonia. At his residence in Villa Vodno, in southern Skopje, Ivanov makes the claim that "Macedonia is Greece's closest ally." But things look different in reality. Relations between the two countries have been tense ever since Macedonia became an independent state, primarily because Greece is unwilling to accept that its neighbor to the north has the same name as one of its own provinces. Europe is a complicated continent.

The closing of the border to Greece, Ivanov says, was merely a reaction. "Whenever a country to our north restricts its borders, we do the same," he says. Macedonia, Ivanov continues, made it clear that it would only be able to tolerate 2,000 migrants at a time making their way through the country.

Macedonia may not be in the EU, but it is still behaving more responsibly than some EU member states, the country's president insists. He says he could no longer wait for a decision to be made in Brussels, otherwise Macedonia would have been overrun by refugees. "In times of crisis, each country must find its own solutions."

Ivanov's words are a requiem to the vision of a Europe that can find joint answers to problems that individual countries cannot confront on their own.

Solidarity is a word that has failed to gain traction in Eastern Europe. Members of the Visegrád Group, made up of Poland, Hungary, the Czech Republic and Slovakia, share a common past as communist countries and often see themselves on Europe's periphery, both geographically and psychologically. Governments of those countries have the backing of a population that is broadly skeptical of welcoming refugees into their midst.

Among political leaders in the Videgrád Group, Hungarian Prime Minister Viktor Orbán is the most influential opponent of Merkel's refugee policies. This week, he announced that he intended to hold a referendum on the distribution of refugees among EU states as was agreed to last September. Voters will be asked: "Do you want the EU to prescribe the mandatory relocation of non-Hungarian citizens to Hungary without the approval of the Hungarian parliament?"

Doing Germany's Dirty Work

People in Brussels and Berlin are furious with Orbán because of the move. European Parliament President Martin Schulz told SPIEGEL: "According to the distribution plan, Hungary is supposed to take a mere 1,294 refugees. I don't understand how you can hold a referendum against that, unless one sees it as an additional step away from a Europe of solidarity and common accountability."

The likelihood that the EU refugee summit on March 7 will find success is diminishing by the day.

And Chancellor Merkel is increasingly isolated with her plan to solve the crisis with the help of Turkey. Many Eastern European politicians and EU diplomats don't believe that Merkel's Turkey solution will yield rapid results. Skepticism is widespread in Vienna as well, with hardly anyone believing that the problem can be solved by sending a few billion euros to Ankara.

"And if it can," says a member of Austrian Foreign Minister Sebastian Kurz's staff, "then we have to make it much clearer to Turkey what we expect -- that they prevent refugees from traveling onward but also that they stop bombing the Kurds."

Displeasure with the Germans is growing for another reason as well: Even as Berlin is criticizing the measures that countries on the Balkan Route have taken, Germany has profited from them as well in the form of plunging numbers of refugees entering the country. "We are doing the dirty work for the Germans," says one Eastern European EU diplomat.

Austrian Defense Minister Doskozil agrees. "Germany should be more grateful to us." Austria, he says, is merely ensuring that countries along the Balkan Route are coordinating with one another. The criticism from Germany "is completely incomprehensible," he says, adding that the refugees are being sent north in an orderly fashion. "There is an alternative," he says. "We could just allow them all to haphazardly continue to Germany."

By Giorgos Christidis, Katrin Kuntz, Walter Mayr, Peter Müller, Jan Puhl and Mathieu von Rohr

Whose QE Was it, Anyway?

Carmen Reinhart

American dollar cut into shape of the United States

CAMBRIDGE – Between 1913 (when the United States Federal Reserve was founded) and the latter part of the 1980s, it would be fair to say that the Fed was the only game in town when it came to purchases of US Treasury securities by central banks. During that era, the Fed owned anywhere between 12% and 30% of US marketable Treasury securities outstanding (see figure), with the post-World War II peak coming as the Fed tried to prop up the sagging US economy following the first spike in oil prices in 1973.
We no longer live in that US-centric world, where the Fed was the only game in town and changes in its monetary policy powerfully influenced liquidity conditions at home and to a large extent globally. Years before the global financial crisis – and before the term “QE” (quantitative easing) became an established fixture of the financial lexicon – foreign central banks’ ownership of US Treasuries began to catch up with, and then overtake, the Fed’s share.
The purchase of US Treasuries by foreign central banks really took off in 2003, years before the first round of quantitative easing, or “QE1,” was launched in late 2008. The charge of the foreign central banks – let’s call it “QE0” – was led by the People’s Bank of China. By 2006 (the peak of the US housing bubble), foreign official institutions held about one-third of the stock of US Treasuries outstanding, approximately twice the amount held by the Fed. On the eve of the Fed’s QE1, that share stood at around 40%.
Spanning a decade (2003-2013), QE0 was the most sustained and uninterrupted surge in central banks’ purchases of Treasuries on record. It is difficult to determine the extent to which the Fed’s QE1 during the crisis owed its success in bringing interest rates down to the fact that it was being reinforced by what foreign central banks worldwide – notably in Asia – were doing simultaneously. It is instructive, however, that the Fed’s next two policy installments, QE2 and QE3, were not matched by large foreign purchases and appeared to have only modest effects in financial markets.

US Treasuries holding

After the turmoil of the 2008 crisis subsided, a variety of indices of financial conditions displayed comparatively low levels of volatility (by historic standards) through the spring of 2013. But that spring bloom of stability soon faded. A combination of falling oil and primary commodity prices, an over-ripe business cycle, and the Fed’s announcement of its intent to start “tapering” its asset purchases brought the decade-long boom in many emerging markets to an end. Since then, growth in these economies has slowed markedly, their stock markets have slumped, capital outflows have escalated, and many of their currencies have crashed.
In tandem with this grim turn of events, numerous emerging-market central banks reversed course and began selling US Treasuries. We would not know about these sales, however, from the Fed’s quarterly report of the Financial Accounts of the US: Around the time official sales commenced, the Fed stopped reporting US Treasuries held by foreign official institutions (a series of data that had been available since 1945). The report now shows only the aggregate figure, which combines central bank holdings with those of the private sector.
Fortunately, the US Treasury still publishes the information. As of the end of 2015, the share of Treasuries held by foreign central banks is more than 1.5 times what the Fed holds. But this figure is significantly down from its peak and, with capital outflows from China and elsewhere showing little signs of abating, is now trending lower.
The fitful and disorderly unwinding of QE0 is most likely overwhelming the effects of reassurances by Fed officials that they will maintain a large balance sheet. Indeed, tighter liquidity conditions and increased volatility in financial markets are the byproduct of the reversal in the long cycle of foreign purchases.
The unwinding of QE0 does not necessarily imply a decline in the rest of the world’s appetite for US Treasuries. In times of financial turbulence, US Treasuries have historically been a safe haven for private flight capital. But the change in ownership taking place now does carry implications for financial stability. The change from the steady (and often predictable) purchases of the foreign central banks of the 2003-2013 era to the less predictable hands of private investors, who are more sensitive to changes in rates of return, is likely to be the signature of this stage of the global cycle.


Obsoleting Banks, Brokers, Clearinghouses and Exchanges

By: Gordon Long & Reggie Middleton

FRA Co-Founder Gordon T. Long has an in-depth discussion on the future of Bitcoins and Block Chain technology with serial entrepreneur, Reggie Middleton. Middleton's experience has given him the ability to recognize value, or the lack thereof, well before much of the professional populace. His ability to identify opportunity and his "out-the-box" mind-set are due to years of entrepreneurial pursuits in insurance, financial valuation/modeling, technology, media, and real estate. He is the founder of Veritaseum and the finance and technology blog, Boom Bust Blog. Until 2011, he wrote about financial evaluation and the global financial crisis at the Huffington Post.

After graduation with a degree in business management from Howard University, he worked for Prudential Insurance and trained in the sale of financial products. Since then, he worked in the fields of financial securities and risk management. He was also a significant investor in residential real estate.

Middleton is known for making predictions about the crash of markets and large financial institutions long before they occur. Aaron Elstein of Crain's New York Business said "Mr. Middleton has been startlingly accurate in the past. He forecast the collapse of the housing market in 2007, and in early 2008 warned of the demise of Bear Stearns weeks before it happened. Earlier this year, he said that Ireland's finances were in terrible shape long before Standard & Poor's got around to downgrading that nation's credit rating."

In 2007, he founded Boom Bust Blog, a commercial financial advisory reported to have over 3000 subscribers. In February 2013, he won CNBC's first-ever stock draft competition, beating out six other professional traders. He then went on to win the second CNBC stock draft in 2014 by an even larger margin, beating out all other professional participants.In 2014, he founded his current venture, Veritaseum, the progenitor of UltraCoin technology. According to Mr. Middleton, UltraCoin exploits modern cryptography in the fields of finance, economics and value transfer to disintermediate legacy financial institutions such as Wall Street Banks.

The European Banking System
"The problems from 2006-2009 are the same problems we have now."
I call it the great global macro experiment. Authorities attempted to do things they have never done before. Things such as negative interest rates and particularly QE which was a practise adopted from the Japanese. It is important to note that Japan began QE within their economy 30 years ago and still to this day the desired results from it have not been achieved; Japan is still fighting inflation.
"Central bankers believe that if they prolong the problem long enough they can export their economic problems to other countries, not realizing that it is a global economy."
The way it works is, we have a bubble; and a bubble is defined as an instance when prices shoot above the fundamental value of the good or service. Once this bubble pops and instead of allowing a natural reset of prices and value, instead people try to further push prices up.

Blockchain Technology
"It is essentially bitcoin revamped with a different name."
Bitcoins underlying foundation is essentially a new way of dealing with databases. It is a database that is distributed amongst many individuals. In essence it is a database run by 3 million machines which each shares a full copy of the database and each having full functionality of the database.

With this much territory, you get a system which cannot be taken down by a single or even multiple authorities. In addition it solves something called the "double spending problem" which is the risk that a digital currency can be spent twice.

Double-spending is a problem unique to digital currencies because digital information can be reproduced relatively easily. Physical currencies do not have this issue because they cannot be easily replicated, and the parties involved in a transaction can immediately verify the bona fides of the physical currency. With digital currency, there is a risk that the holder could make a copy of the digital token and send it to a merchant or another party while retaining the original.

This was a concern initially with Bitcoin, since it is a decentralized currency with no central agency to verify that it is spent only once. However, Bitcoin has a mechanism based on transaction logs to verify the authenticity of each transaction and prevent double-counting.

Bitcoin requires that all transactions, without exception, be included in a shared public transaction log known as a "block chain." This mechanism ensures that the party spending the bitcoins really owns them, and also prevents double-counting and other fraud. The block chain of verified transactions is built up over time as more and more transactions are added to it.
"The bitcoin and block chain technology now parallels what the internet was in 1993. Most people didn't get it and if they did get it they strictly thought of the internet as email; fast forward and look where we are now with the internet. Bitcoins and digital currencies are a way of transferring value."

Independent Global Banking

Certain strong regimes such as the US, Germany and Britain have attempted to impose their limitations. An example would be the US with peer-to-peer file sharing halting the activities of The PirateBay. This was possible because it was a centralized server which was easy to target.

But now we are in an environment that has similar things with millions of hubs and files are transferred in a huge web. This is near impossible to take down therefore the law was broken and governments and authorities resorted to illegal means to halt these new developments, it is unclear still as to how successful they were.
"It is about adapting to paradigm shifts. History shows that entities that fight or prevent these shifts will not be successful and eventually be forgotten. Microsoft is a good example of a top tier company which sustained two paradigm shifts and this was because of all their patents and so much of the world using their services."
The banks are taking bitcoin technology and trying to incorporate it into their business models.

It will make many processes faster but at the same time, you do not need banks to make transactions anymore. Therefore no matter how much more efficient banks become, if they become obsolete than the increased efficiency is of no good.
"The banks are following the same route with banking as AOL did with the internet. Ultimately the end result will be no different as well."
If you charge a correct risk payment for capital, a bank could never get big enough to take down the world because it wouldn't be able to afford to take that risk. If I can get money at 75 basis points then I would take all the risk in the world and if I mess up I only have to pay 75 basis points; there is no reason not to take risk. But if I paid 18-25% for that money I would become far less risk averse.
"Bring back true fundamental market analysis, natural market economics and the system solves itself."
Future of Bitcoin Blockchain

At the end of the quarter we are launching an HTML client which allows you to hold assets in your device on a webpage. It is like having a bank account on a webpage that sits on your device and it cannot be stolen unless it is stolen from you directly.

Additionally we will be launching applications of block chain technology to capital markets. We plan to have applications for credit, peer-to-peer swaps and for real estate transactions in beta of md-year but definitely by year end.

There are legal issues but we can get passed these issues by putting actual cash within the block chains. It will increase the efficiency to facilitate cash flows from various kinds of investments. It is a way of eliminating banks from the equation.

Job Quality Offers Weak Wages

 brick animated GIF

Headlines for the Employment Report allowed the president to take a victory lap but that was like Bush’s "Mission Accomplished" nonsense.

Within the data was the buried kernel of truth—80% of new jobs were at minimum wage level.

Wages declined which isn’t good of course but the take away for me is the U.S. now has what amounts to a permanent under-class of workers. This plays into the hand of candidate Trump naturally as outsourcing of skilled labor with several trade deals has hit home for workers…just sayin’.

Crude oil prices continued to rise, 90% correlated to the S&P 500, as rumors of an oil price freeze have falsely become fact. It’s amusing to me that Venezuela, Russia and others have bought into this farce given the platers lack of credibility—again, just sayin’. Epic short-squeeze is the conventional wisdom. And, the rally extended to beaten down Brazil believing arresting leaders will lead to better fundamentals.

China was “hoped” to launch more stimulus given lowered economic data. Do they have this kind of credibility? I don’t think so, but it’s good for a rally—just sayin’.

Gold rose early but fell back late as popular ETF IAU has stopped issuance of new shares given high in-flows and less gold available to back it up. This makes it like a closed-end fund with premiums possible.

Market sectors moving higher included: Most sectors.

Market sectors moving lower included: Volatility (VIX), Energy MLPs (AMLP), Treasury Bonds (TLT), Dollar (UUP) and Gold Stocks (GDX).

Below is the heat map from Finviz reflecting those ETF market sectors moving higher (green) and falling (red). Dependent on the day (green) may mean leveraged inverse or leveraged short (red).

3-4-2016 3-29-00 PM
Volume picked up a little bit but we’re still running light. Breadth per the WSJ was positive once again. Markets are much overbought, (see NYMO below).

3-4-2016 3-29-50 PM

12-17-2015 9-04-44 PM Chart of the Day
12-31-1969 4-00-00 PM EEM

Charts of the Day


    SPY  5  MINUTE














    The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.


    The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.


    The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation has changed due to a variety of new factors including HFTs, new VIX linked ETPs and a multitude of new products to leverage trading and change or obscure prior VIX relevance.


There’s a lot to discuss, but I’ve said all I want to say this day, except for one thing: No matter how much you don’t like the markets, or even angry with it, you have to follow the tape and your system.

That’s the most important lesson I can convey this day and every day. 

Let’s see what happens. 

Mutual Fund Fees: A Bad Incentive Fades Away

Revenue sharing payments from asset managers to brokerages are likely to become a thing of the past

By Jason Zweig

Photo: Christophe Vorlet

One of Wall Street’s most opaque practices may be on the verge of fading away.

In what’s called revenue sharing, asset managers pay brokerages to subsidize the costs of distributing their mutual funds. The industry describes these payments as a potential conflict of interest, since they could create incentives for a brokerage to promote the funds that pay the most instead of those that are best for their clients.

These fees may be, but often aren’t, disclosed in a fund’s disclosure documents. To learn more about them, you will have to look up your broker or adviser’s policy on the practice. It’s usually on the firm’s website, although you might need a magnifying glass to find it and a quart of coffee to read it. No investor should shed a tear if these fees become a thing of the past.

This spring, the Department of Labor is widely expected to issue a rule requiring anyone offering investment advice on retirement accounts to put clients’ interests first and foremost.

Despite heavy lobbying and various bills in Congress seeking to derail it, the rule is likely to go into effect by early 2017. It is also likely to put revenue sharing into retreat.

The fees can pay for data analysis, meetings and conferences, educational and marketing materials, seminars for clients and so on. Similar payments defray the costs of brokers’ and advisers’ hotel bills, meals, entertainment and travel expenses at sales and training events.

The financial industry calls these fees “payment for shelf space,” and they can add up. At Edward Jones, revenue-sharing fees from fund companies topped $153 million in 2014, or just under 20% of the the St. Louis-based brokerage and advisory firm’s total net income that year.

At Merrill Lynch, fund companies pay up to 0.25% of sales and 0.10% of assets annually for “marketing services and support,” according to a 2015 disclosure. Morgan Stanley collects $750,000 per year from each of 28 fund companies it has designated “global partners” and $350,000 annually from each of another 11 “emerging partners,” according to the firm’s latest available disclosure.

The disclosure statements warn that revenue sharing can be an ethical minefield. Edward Jones says the payments create “an additional financial incentive and financial benefit” to the firm and its advisers. Merrill Lynch points out that funds that don’t enter into such arrangements “are generally not offered to clients.” Morgan Stanley says the firm may “promote and recommend” funds that pay higher revenue sharing.

“We strive to always act in our clients’ best interests,” an Edward Jones spokesman says when asked about the practice, adding that the firm supports regulation that doesn’t limit how investors choose to pay for financial advice. Merrill Lynch and Morgan Stanley declined to comment.

Privately, brokers say the influence of such fees is complex — but doesn’t determine which funds investors are offered.

“Revenue sharing helps fund companies cement their relationships with us and be more integrated into the organization,” says a senior executive at a major brokerage and investment-advisory firm. “But I can tell you with absolute certainty that it doesn’t give them an advantage in terms of what gets approved or what people buy or sell within our firm.”

“It just doesn’t,” he adds.

Firms emphasize in their disclosures that while the parent company may benefit from the fees, individual brokers, financial advisers and their managers don’t earn extra money for selling funds that happen to pay revenue-sharing fees. They also tend to exclude retirement assets from having to make these payments.

The debate could soon be moot. The proposed Department of Labor rule would require anyone offering retirement-investing advice to avoid incentives or quotas that could create the potential to act against an investor’s best interest. Under that regime, revenue sharing will be hard to sustain.

The impending rule is “forcing a lot of investment managers and distribution platforms to account for why they might not have offered a cheaper fund to retirement plans,” says Andrew Foster, chief investment officer at Seafarer Capital Partners in Larkspur, Calif. “That pressure is changing the industry at a very rapid pace.”

Brokerage and advisory firms, he says, are suddenly willing to consider forgoing those extra fees.

“It is all going to change,” says the senior executive at a major brokerage and advisory firm.

The restrictions on IRA funds will “affect all revenue sharing,” he says.

Financial advisers, like anyone providing a service, deserve to be paid. But the people buying the service are the ones who should pay for it. Until advisers are paid solely by their clients, no one will be able to tell whether the advice is tainted.