Archives for November 2015

Bitcoin’s reclusive inventor Satoshi Nakamoto was chosen by finance professor from UCLA and University of Chicago Professor Bhagwan Chowdhry. He was asked by the Nobel Prize committee to nominate someone for the prize, and explained his choice to the Huffington Post.

“I can barely think of another innovation in economics and finance in the last several decades whose influence surpasses the welfare increases that will be engendered by Satoshi Nakamoto’s brilliant, path-breaking invention. That is why I am nominating him for the Nobel Prize in Economics.”

The Nobel Prize in Economic Sciences was established by the Swedish central bank, Sveriges Riksbank, in memory of Nobel Prize founder Alfred Nobel. It has been awarded by the Royal Swedish Academy of Sciences since 1969.

The invention of the bitcoin is nothing short of revolutionary, according to Chowdhry. The digital currency offers many advantages over both physical and paper money, he said, adding that bitcoin had spawned innovations in the financial technology sector since financial contracts could be digitized, stored, verified and transferred instantaneously.

“It is secure, relying on almost unbreakable cryptographic code, can be divided into millions of smaller sub-units, and can be transferred securely and nearly instantaneously from one person to any other person in the world with access to the internet bypassing governments, central banks and financial intermediaries such as Visa, MasterCard, PayPal or commercial banks, eliminating time delays and transactions costs.”

Chowdhry noted that bitcoin’s inventor has never published in any of the scholarly economics or finance journals, except for a 9-page white paper “Bitcoin: A Peer-to-Peer Electronic Cash System” which was posted by Satoshi Nakamoto on the web in 2009.

Since all the Nobel Prize awardees are traditionally contacted by phone, there could be a problem with contacting the Bitcoin founder, Chowdhry said. No one really knows who Satoshi Nakamoto is, where he lives or what his phone number is, he claimed. The professor suggested that Nakamoto could be informed online, and even proposed to accept the award on Nakamoto’s behalf during the ceremony in Stockholm in December.

Bitcoin is the first decentralized digital currency, and was launched in 2009. The crypto-currency is held in a digital wallet, a kind of virtual bank account. Transfers are made without banks and transaction fees. All Bitcoin users’ transactions are private which lets them buy or sell anything without it easily being traced back to them. This led to a number of allegations that bitcoin has become the currency of choice for drug trading and other illicit activities. Bitcoin defenders say any currency can be used for illegal means.

READ MORE: Australia pushes to recognize bitcoin as regular currency

Recently, a number countries and banks have suggested treating bitcoin and other digital currencies similarly to standard money.

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Article source: https://www.rt.com/business/321274-nobel-prize-economics-bitcoin/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Follow RT’s LIVE UPDATES on Russian passenger plane crash aftermath

The forecast comes from the Adviser to the Minister of Tourism, Mohamed Yousef, who said that losing those tourists would be “a severe blow” to the industry.

“Russian tourists are ranked first with 3 million tourists per year. British – 1 million,” Yousef said according to Al Ahram newspaper. “Their leaving is a severe blow for the industry. The loss will be 70 percent of the tourist influx.”

Such a scenario could see Egypt’s GDP plummet, as tourism makes up 11.3 percent of GDP, while also providing for about 14 percent in the country’s revenue in foreign currencies, according to the Ministry of Tourism.

Yousef’s statement comes during a rush of foreign countries suspending flights to and from Egypt in wake of the Russian plane crash in Sinai that killed all 224 people onboard.

Russia suspends flights to Egypt due to security concerns after Sinai crash

Russia followed suit on Friday, following the UK, the Netherlands, Ukraine, and some other states in canceling flights to and from Sharm el-Sheikh until the cause of the Sinai crash is established. One proffered scenario has been a terrorist bomb attack, although this is yet to be verified by the investigators studying the plane’s remains.

Most recently, the Dutch tour operator Corendon canceled all flights to Egypt until at least December 18. Two other Dutch operators, TUI and Neckermann, only cancelled flights to Sharm el-Sheikh.

Egypt’s tourist business has dropped significantly since 2011, when the country was engulfed in anti-government protests.  Up until then, Egyptian resorts had hosted up to 15 million tourists per year, as opposed to 2014, when only 9.9 million tourists visited Egypt, Reuters reported.

However, before the deadly tragedy of October 31, Egypt had hoped to welcome about 10 million visitors and see revenue from tourism reach $8 million by the end of this year. Statistics had been showing stable growth recently with 6.6 million people visiting Egypt in August, an increase of 5 percent from last year, RIA Novosti reports.

Article source: https://www.rt.com/business/321127-egypt-flights-tourism-loss/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The Shanghai Composite Index climbed 1.9 percent to 3,590.03 at Friday’s close, up 20 percent from its August sell-off bottom. The Shenzhen Composite Index gained 2.82 percent to close at 2,152.43. It jumped five percent on Wednesday, which was its largest daily gain in almost two months. The index has rallied more than 30 percent from its September low.

The stocks rallied on Wednesday, following Chinese President Xi Jinping comments on the country’s 13th five-year economic development plan.  Beijing set a goal of no less than 6.5 percent growth by 2020, and targeted doubling its 2010 gross domestic product and per capita income.

“The rally in financial stocks is signaling to some investors that the bull market is coming back,” a Shenzhen-based trader at Guosen Securities Co, Zhao Bingtong told Bloomberg. “Details on the nation’s five-year plan set the positive tone for the market with the Shanghai Composite breaking through the 3,500 level and luring more investors to join.”

He added that the market could see some profit takers emerging in the next few days and “whether it will settle above the key mark is crucial in determining the course of the market.”

Analysts say that the Asian market has been also encouraged by the rise of US and Europe stocks, that reflected signals of the world‘s industrial activity stabilizing.

The recovery of Chinese shares occurs as Chinese President Xi Jinping’s prepares to meet Taiwanese President Ma Ying-jeou on Saturday. This is the first meeting between the leaders of the two countries since 1949, after China’s civil war.

“The meeting is read by investors as an indication that there will be even more economic collaboration,” Gerry Alfonso, director of trading at Shenwan Hongyuan Securities was cited as saying by MarketWatch. “This together with the business friendly five-year plan…[is] making the investment environment rather bullish.”

Chinese shares started falling dramatically in mid-June with the market value shrinking over 30 percent and losing up to $4 trillion in capitalization in about a month. To support share prices the Chinese authorities cut interest rates, suspended initial public offerings, relaxed margin-lending and banned large shareholders from selling stakes. The government injected about $14 billion into the markets in July to slow the collapse.

In mid-August, China devalued the yuan to boost the country’s faltering exports. The measure, however, only added to worries about the country’s economic growth despite continued government measures.

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Article source: https://www.rt.com/business/321033-china-stocks-growth-investors/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The ruling against Deutsche Bank also stipulated that the people responsible for the “lucrative” violations must be sacked.

“The firm did not have sufficient policies and procedures to ensure that activities conducted at its offices outside of the United States complied with US sanctions laws,” the Federal Reserve said when announcing the penalties.

Since the bank was also found guilty of violating various New York state laws, it has to pay the two institutions separately.

READ MORE: Deutsche Bank faces record €6bn quarterly loss 

The Department of Financial Services said the bank’s employees embraced “nontransparent methods and practices” and processed over $10.8 billion for financial institutions under US sanctions in Iran, Libya, Syria, Myanmar and Sudan. These transactions took place over a time period from 1999 to 2006, according to the New York regulator.

Deutsche Bank revealed in a statement that it has ceased all such operations and agreed to pay the fine. “We are pleased to have reached a resolution with the New York Department of Financial Services and the Federal Reserve,” a Deutsche Bank spokeswoman said. “The conduct ceased several years ago, and since then we have terminated all business with parties from the countries involved.”

The Federal Reserve described Deutsche Bank’s transactions with Iran and Syria as “unsafe and unsound” and demanded that Deutsche Bank develop an “enhanced” program to “ensure global compliance” with all US sanctions.

Meanwhile, two French banks, BNP Paribas and Credit Agricole, were slapped with even bigger fines for dealings with US-sanctioned countries. BNP Paribas must pay $8.9 billion and Credit Agricole $800 million.

READ MORE: Deutsche Bank scales back in Russia after US criminal probe 

Deutsche Bank still faces investigations by the US Justice Department and New York State’s Department of Financial Services looking into possible sanctions violations in its activities in Russia. 

The main focus is so-called “mirror trades,” in which Russian clients bought securities in rubles through Deutsche Bank’s Moscow office and then sold identical ones for foreign currency (including US dollars) through the bank’s London office. The transactions are reportedly worth over $6 billion.

Back in June, Deutsche Bank began its own internal investigation into securities trades carried out from 2011 to early 2015.

Article source: https://www.rt.com/business/320791-deutsche-bank-fined-us-sanctions/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The claims were made by UK-based Magister Advisors, which helps to advise the technology industry on mergers and acquisitions. They came to the conclusions after interviewing a number of Bitcoin companies from around the world and there was a general view it would become a key reserve currency in the space of just 15 years. 

“Blockchain is without question the most significant advancement in enterprise IT in a decade, on a par with big data and machine learning. What JAVA is to the Internet, blockchain is to financial services. We have now reached a fork in the road with Bitcoin and blockchain. Bitcoin has proven itself as an established currency. Blockchain, more fundamentally, will become the default global standard distributed ledger for financial transactions,” said Jeremy Millar, a partner at Magister Advisors, in a statement released by the organization. 

A blockchain is a network of computers, all of which must approve a transaction has taken place before it is recorded, in a chain of computer code. As with Bitcoins, the first application of the technology, applied to money, cryptography is used to keep transactions secure and costs are shared among those in the network.

Given the importance of developing blockchain technology, the survey by the group found that banks and financial institutions are willing to spend around $1 billion on projects over the next two years.  

The blockchain technology will not replace key infrastructure in place, such as wire transfers, but instead it will complement it by helping to store metadata. 

“Banks will initially be unwilling to remove the core infrastructure that handles the process of clearance and settlement but they will increasingly run parallel blockchain processes, evidence by the spike in investment that our poll has identified,” Millar added in the statement cited by the IB Times.

He also added that he expects the technology to become increasingly popular.

“Blockchain technology will underpin a growing number of routine transactions globally as trust grows. Our interviews with 30 of the leading Bitcoin companies worldwide cement our view that the currency is gaining traction. Growing vendor acceptance and the adoption of Bitcoin in developing markets are creating a pincer movement that will lead to widespread business and consumer acceptance and adoption over time,” he said. 

Bitcoins are also experiencing a boom in value. On Wednesday November 4, the price increased by a massive 12.5 percent. It opened trading at $400.71, but in the space of just a few hours, had risen to $450.60, the Coindesk website reports. 

In September, nine of the world’s largest investment banks, including JP Morgan and Goldman Sachs, partnered with New York-based tech startup R3CEV. The firms are looking to develop common standards using the same technology behind Bitcoin.

The blockchain technology R3CEV is working on underpins the internet-based bitcoin currency. The controversial cryptocurrency doesn’t have a central authority – its security comes from the network of all Bitcoin users who share the same protocols, which together act as a distributed ledger to keep track of every transaction. Not having a central authority means that an internet-wide catastrophe would have to occur in order to compromise the integrity of the ledger.

The banks collaborating to make use of the blockchain technology in mainstream finance are JP Morgan, Commonwealth Bank of Australia, BBVA, Barclays, Goldman Sachs, UBS, Royal Bank of Scotland, Credit Suisse and State Street. They see it as a way of instantly updating payment ledgers and transferring money without relying on the trust of a central authority.

“If you’re looking to introduce applications with distributed ledger technologies to improve the financial markets, you can’t have each participant working to a different pattern,” Christopher Murphy, global co-head of FX, rates and credit at UBS told The Financial Times. “What R3 … [is] doing is bringing a consensus which could establish common standards.”

Article source: https://www.rt.com/business/320774-bitcoin-reserve-currency-2030/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

US investigators allege Russian mobile operators MTS and VimpelCom paid hundreds of millions of dollars in bribes to an Uzbek official, who is related to the President of Uzbekistan Islam Karimov, presumably his daughter Gulnara Karimova.

The money was allegedly used so the Russian companies could secure wireless licenses in the country.

“We have publicly disclosed the information on the investigation and the decision to set this money aside, which will be reflected in the financial statement,” VimpelCom spokesman Artyom Minaev told Russian business media RBC on Tuesday. The company continues to cooperate with the authorities, thus it cannot give further comments, he added.

READ MORE: US seeks seizure of $1bn in assets of telcos operating in Russia

“Provisions of this kind normally mark the maximum damage the company may suffer. Still, $900 million is a lot, and it’s not quite clear what the basis for this figure was, ” Alexander Vengranovich, analyst at Otkritie Capital told Bloomberg.

Another company under investigation is Nordic network TeliaSonera. The carrier said it hasn’t heard from authorities investigating whether it will be fined.

“We have not as of yet received any indications from US authorities on a number of a fine or sanction or other consequence of this yet,” TeliaSonera General Counsel Jonas Bengtsson told Bloomberg Tuesday.

In recent years, investigations by US authorities have expanded outside the country’s borders. Suspected illegal use of US dollars anywhere in the world is enough justification for regulators to begin inquiries. Deutsche Bank is currently facing an investigation over possible money laundering in Russia after US currency was used in suspicious transactions.

Article source: https://www.rt.com/business/320622-vimpelcom-uzbekistan-karimova-investigation/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

In a trial which started on Monday in Manhattan federal court, the lawyer for the businessman claimed that Morgan Stanley used insider information about Deripaska’s $1.5 billion investment in auto-parts maker Magna to illegally profit from short selling.

The lawsuit claims that during the height of the financial crisis in 2008, Morgan Stanley and the bank on the deal, BNP Paribas, thwarted Deripaska’s 20 percent stake in Magna which cost the businessman at least $900 million. BNP Paribas was dismissed as a defendant in the trial.

READ MORE: Russia’s metal giant Rusal to ‘freeze’ unprofitable plants, lay off thousands of workers

In September 2008, BNP Paribas loaned Deripaska most of the money for the investment. While Morgan Stanley was not directly involved in the loan, it entered into a swap agreement with BNP Paribas under which it assumed some of the risk for the loan in exchange for fixed payments. Right after BNP’s $93 million margin call, Morgan Stanley immediately started short-selling Magna which drove down the price of its stock.

Deripaska’s lawyer claims that Morgan Stanley obtained insider information, none of which was public.

“Morgan Stanley was completely within its contractual rights, completely within industry standards,” the bank’s lawyer Jonathan Polkes told the jury.

The lawyer claimed it was Deripaska to blame for the dispute because he “walked away” from his investment and refused to pay what he owed when the banks sent him a bill.

READ MORE: Aluminium battle: Russian oligarchs in $1 billion UK lawsuit

The lawsuit seeks up to $25 million in damages. Deripaska himself is not expected to testify at the trial, which is scheduled to take several weeks.

Oleg Deripaska is the owner of Rusal, one of the world’s biggest aluminum producers.

Article source: https://www.rt.com/business/320611-deripaska-rusal-bank-court/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The US aircraft designer named Jeff Babione the new executive vice president and general manager of the F-35 Program, succeeding Lorraine Martin.

“Jeff is a seasoned leader who is uniquely qualified to lead the F-35 team through this critical phase of the program,” said Orlando Carvalho, Lockheed Martin Aeronautics executive VP in a statement. “He brings a deep understanding of the F-35 program, strong customer relationships and a collaborative leadership style that will ensure we continue the positive momentum of the program.”

Despite vast spending that has made the F-35 jet the most expensive piece of military hardware ever created, the program seems to have had several setbacks.

“The stealth fighter lacks the sensors, weapons and speed that allow a warplane to reliably detect and shoot down other planes in combat. Especially when those planes are shooting back,” said a review from military website War is Boring.

“The F-35 can see great. It just can’t see all that great in the air. At least not compared to modern Chinese- and Russian-made jets — the planes the F-35 is most likely to face in battle in some future war,” it added.

According to the US Department of Defense, the program’s office wasn’t accurately recording the jet’s problems.

“Not all failures are counted in the calculation of mean flight hours between reliability events, but all flight hours are counted, and hence component and aircraft reliability are reported higher than if all of the failures were counted,” the Fiscal Times quoted the report.

The F-35 is a US fifth generation multirole combat aircraft designed to perform ground attack, aerial reconnaissance, and air defense missions. The program was launched in 2006 but has experienced a number of cost overruns and developmental delays due to concerns over performance and safety.

Article source: https://www.rt.com/business/320487-f35-lockheed-martin-pentagon-us/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Tour operators reported a sales drop of 30 to 50 percent on Saturday, with sales on Monday at a near standstill, according to a spokesperson for the Russian tourism union Irina Tyurina.

“This is called shock reduction, after a while people realize that this is an exceptional situation,” Tyurina told Kommersant daily.

According to Maya Lomidze from the Russian Tour Operators Association, a few dozen passengers canceled flights to Egypt. And only 16 passengers canceled Metrojet (Kogalymavia) flights after the tragedy, she added.

Egypt is the most popular destination for Russian tourists, according to Russian statistics bureau Rosstat. In the first half of this year over one million Russians visited the country, almost a fifth of all Russians going on holiday abroad.

The only precedent for a long-term decline in demand for a single tourist destination has been Tunisia in the aftermath of a terrorist attack in June.

According to Irina Tyurina, Russian tourist interest in visiting Tunisia has still has not recovered. “It’s a combination of two factors: firstly, the aggression was aimed directly at tourists, and secondly, Tunisia has traditionally not been in demand during the winter; it’s cold in the country at this time,” she said.

The air crash is another blow to Egypt’s struggling tourism industry. Several years of instability and sporadic terrorist attacks targeting tourists have made the country a much less attractive holiday destination. In September, Egyptian police mistakenly killed 12 Mexican tourists, taking them for terrorists. According to the World Travel and Tourism Council, one in nine Egyptians depends on tourism for their living.

Two of the largest airlines in Europe, Lufthansa and Air France, have decided to temporarily suspend flights over the Sinai Peninsula, where the Russian plane carrying 224 passengers crashed on October 31.

“We took the decision to avoid the area because the situation and the reasons for the crash were not clear,” a Lufthansa spokeswoman said. “We will continue to avoid the area until it is clear what caused the crash.”

“Air France confirms it has set up, as a precaution, measures to avoid flights over the Sinai,” a spokeswoman for the carrier told the media.

Kogalymavia Flight 7K9268, an Airbus A321, went off radar 23 minutes after taking off from Sharm El-Sheikh International Airport. The plane was carrying 217 passengers and 7 crew. The official cause of the crash is under investigation.

Article source: https://www.rt.com/business/320473-russia-egypt-tourism-sinai-crash/?utm_source=rss&utm_medium=rss&utm_campaign=RSS