Tuesday, February 20, 2018

Venezuela's 'Petro' Token Launches in Pre-Sale - CoinDesk

Venezuela's 'Petro' Token Launches in Pre-Sale - CoinDesk:

Is it an ICO or an IKO. There has been a new trend that is catching fire, to do an initial public offering (IPO) in cyber/cryptocurrency coins, or ICO. Venezuela, with a failed currency in a failed state, is doing a very novel approach their new ICO offering is to be backed by a small portion of their vast oil reserves. And the coin will be called a Petro, which is equivalent to a barrel of Venezuelan (sour) crude in the ground. It is generally better that the collateralization of the Petro is oil in the ground because kleptocracy government can't steal it, privatize it or transfer it to friends and family. (See Wikipedia's article on the Petro, great because it is dynamically updated.)

Given the kleptomania of the country, it probably should be called a IKO, for klepto currency. There is some genius involved here. Government employees have not been paid for months. And there is only government employees, since the private sector has been taxed, squeezed, arrested and otherwise squeezed out. No one wants to lend money or invest in capital investments because the government has a way of lying, stealing, cheating and privatizing.

The Bolivar currency is a klepto nightmare. The preferred exchange rate is about 10 to the US$ so friends and family get a spectacular subsidy. But hyper inflation has about 25,000 Bolivar to the US$. Of course, it is hard to get US dollars, and bolivars are useless.

When it was announced that Russia was going to "help" Venezuela with this Petro IKO, it was an obvious in for Russia to meddle in Latin America. The Petro, will obviously supersede all other (worthless) Venezuela Debt and liabilities. It is very clever. Venezuela can move to a new currency for some things, and leave the worthless currency for other things (like paying off debt).

Other countries and other dictators will be watching this closely.

On the other hand, a collateralize ICO has lots of potential. Troubled, or failed states can offer an ICO to keep mining their diamonds, oil, gold and lithium. Hmmm...???

While you are thinking about Oil-collateralized-ICOs, check out our scenario discussion on the death of big oil at our sister site here at ScenarioPlans.com: http://delphiplan.com/2018/02/20/scenarios-of-stranded-oil-assets/ 

Notes. The Petro "white paper" discusses opaquely the intermix of the Vz Goverment, the oil-collateralize instrument, and more. (Check bitcoin news on Petro.) Here's a summary and link to the white paper at Medium. There are soooo many issues with this ICO. The gov makes out here, there and everywhere: about 17% of the allocation, a discount to entice usage, a ICO price of $60 per barrel. Venezuela has  (dirty) heavy crude, so it should be discounted something like $7 per barrel... Oh, and the oil is still in the ground!

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Saturday, January 27, 2018

Unexpected Consequence of US Tax Reform: International Patent Pinball

IP intensive US corporations have gained a tangible, potentially very profitable benefit from the tax reform signed into law in December 2017.  A new provision reduces taxes on “foreign derived intangible income,” i.e., Intellectual Property (IP) -- primarily patents.  However, in yet another “all that glitters…,” this new benefit doesn’t arrive without its requirements for a
new level of analysis and decision-making.


In  a comprehensive January 24, 2018 Wall Street Journal article by Sam Scheckner, Tax Change Aims to Lure Intellectual Property Back to the U.S. - WSJ, the tax rates was dropped to 13.125% until 2025 which corporations view as a major improvement over the prior rate of up to 35%. As the author states, this is a serious attempt to bring back assets from countries such as Ireland that had a much lower tax than the US for years.  Corporations, such as Google and Facebook, while not commenting for the article, have in place elaborate asset transfer schemes- see “Double Irish” across multiple countries to gain the optimum tax rate.  

The US action to reduce the asset rate has not gone unnoticed by these other countries.  Several are revising their tax rate in response to and to outflank the US change.  This has driven US corporations with overseas operations to reengage in asset number crunching -- aka patent pinball -- to
land on the country with the optimum package. The patent number crunching could involve licensing versus barrier patent protected product revenues versus sales versus tech transfer partnerships depending on the terms and conditions in a given country.  And as countries change their tax laws in
what amounts to revenue one-up-manship, patent pinball is certain to become an ongoing game.
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