Pages

Sunday, October 19, 2025

2025-10-19

***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:

“Gold is a very excellent diversifier in the portfolio,” Dalio said Tuesday at the Greenwich Economic Forum in Greenwich, Connecticut.

“If you look at it just from a strategic asset allocation perspective, you would probably have something like 15% of your portfolio in gold … because it is one asset that does very well when the typical parts of the portfolio go down.”
............ I think most people make the mistake of thinking of gold as a metal rather than as the most established form of money, and they think of fiat money as money rather than debt and they think that fiat money will be created to prevent debt defaults. That's because most people have never lived with gold being the most fundamental money, and they haven't studied the debt-gold-money cycles that have occurred in almost all countries over almost all time.

.......... While other metals can be good inflation hedges, gold occupies a unique place in the portfolios of investors and central bankers because it is the most universally-accepted non-fiat currency-based medium of exchange and store-hold of wealth, and it is a good diversifier to other assets and currencies in these portfolios. Unlike fiat currency debt, it doesn't have the same inherent credit and devaluation risks—in fact, it diversifies against them because when they are doing worst, gold does best —acting almost like an “insurance policy” within a diversified portfolio.

While silver and platinum share some similarities with gold—particularly in terms of industrial applications—they do not possess the same level of historical and cultural significance as a store of value. Silver, for instance, is more heavily influenced by industrial demand, which can lead to greater price volatility, though it has been used as the basis of currency systems before. Platinum, though valuable, is even more constrained by its limited supply and specific industrial uses. Consequently, neither metal enjoys the same universal acceptance or stability as gold when it comes to wealth preservation.

............ As for investing, I'm more in favor of great diversification than in favor of any single market, though I tilt my portfolio significantly based on my indicators and what I think, which for quite some time has led (and still leads) me to a big tilt toward gold. If you're interested in why, my book How Countries Go Broke: The Big Cycle explains my thinking much more comprehensively than I can do here.

As far as the alternative markets you mention, it seems to me that in the case of AI stocks, in the long run their upside depends on their pricing relative to their future cash flows, which are extremely uncertain, and, in the short run, it depends on bubble dynamics. I believe that we should be mindful of the lessons that analogous cases in history provide, in which the breakthrough technology companies became very popular as they are now. I'm not saying definitively that these companies are in bubbles—though they are showing lots of signs of being in bubbles based on my bubble indicator.  In any case, an awful lot about the markets and the economy hinges on the AI boom companies doing better than is discounted in their pricing, because, if they don't, their stocks will go down. These stocks have accounted for 80pct of the gains in U.S. stocks, the top 10pct of income earners own 85pct the stocks and account for half of consumer spending, and these AI companies' capital expenditures have accounted for 40pct of this year's economic growth, so a downturn would be really bad for people's wealth and the economy.  It seems obvious that some diversification of one's holdings would be prudent.

..................... To me, the most simple and fundamental question that everyone should ask themselves and answer is what percentage of my portfolio should I have in gold if I don’t have a clue about the direction of gold and other markets? In other words, how much gold should I have for strategic asset allocation reasons, rather than because I want to make a tactical bet on it. Because of its historical negative correlations with other assets (mostly stocks and bonds), most importantly when the real returns of stocks and bonds are bad, the answer is that about 15pct is best because that would give the best portfolio return-to-risk ratio.


Trump tariffs pushing Canada into recession

...................... The majority of Canada’s exports to the US are still exempt under the terms of the United States-Mexico-Canada Agreement (USMCA).

However, Canadian businesses have also been hit hard by Mr Trump’s sectoral tariffs. The US charges 50pc tariffs on steel imports and 25pc tariffs on cars and car parts.

Canada’s car exports plummeted by nearly 25pc in the second quarter while exports of industrial machinery plunged by 18.5pc. Overall exports dropped by 7.5pc.





Bubble Fare:

There is a distinction between good investment and bad speculation — the likelihood is we are experiencing both



.................. Way back in 2011, I tried to create a checklist of how to spot a bubble in real-time.2 It is 14 bullet quantitative points that should allow you to see if any market is exhibiting bubblicious tendencies.

Let’s go through those 14 points to see how they hold up today: (Spoiler: Lots of expensive stocks, and pricey bubbly tendencies, but we are not quite there yet): .............


Analysts warn of rise in ‘circular’ tech deals as more businesses cancel chatbot subscriptions





Tweet of the Week:



Charts:
1: 
2: 
3:  Average New Car Price In U.S. Tops $50,000 For First Time Ever



(not just) for the ESG crowd:


.............. “The agencies do not believe principles for managing climate-related financial risk are necessary because the agencies’ existing safety and soundness standards require all supervised institutions to have effective risk management commensurate with their size, complexity, and activities,” a joint release from the three regulators said.



A lot of people lump all environmental issues under “climate change.” It’s the big bad boogeyman, the easiest to observe, and the first that’s likely to cause catastrophe. This also leads some to think that the problem is relatively easy to deal with. We can simply do aerosol injections into the upper atmosphere, and that will reduce the temperature. (Once we start, however, we can’t ever stop.)

But this isn’t the case, the environment is under assault in many ways, and simple solutions may help, but won’t deal with the issue as a whole and may even make parts of it worse. Sulfate Aerosol injections would reduce the temperature, but actually cause acid rain and increase ocean acidification. That means phytoplankton still die off, algal blooms still happen, and we still lose most of the phytoplankton oxygen production ...............

There’s no free lunch here. This is a system with complicated feedback mechanisms which was more or less in homeostasis (it was actually tending to cool down very slowly and the long term trend was to another ice age. A little bit of extra CO2 was a good thing, but only a little.)

But the real issue is that climate change is only one issue out of a large number. The Earth has a bunch of systems in homeostasis, which have been that way since the end of the last Ice Age, or much longer. Each of them is required to sustain life. When they get knocked out of balance too much, mass extinctions follow and in every mass extinction, the top predator dies.

The”planetary boundaries” system is one way of thinking of it. Here’s the 2025 visualization:

................................... Just continuing with “damn the torpedoes” is beyond stupid. I have lived a life in a society determined to self-destruct. Much of this blog’s output over the last few years has covered the end of Western hegemony, a colossal fuck up on the part of Western elites (and grats to China for playing our elites like the pathetic losers and suckers they are.)

But that issue really only matters to humanity as a whole if it descends into nuclear war. Hegemons change. It happens. Living thru it sucks if you’re on the losing side or get caught in the collateral damage, but whatever, humanity goes on.

Environmental risk is truly existential. Despite what some very bright people believe, it could kill us all. ..................



Sci Fare:

Hundreds of thousands of kids in America are struggling with an illness that many doctors and schools refuse to recognize



U.S. B.S.:


If you believe what is written on those hats worn in the Israeli Knesset – “Trump the Peace President” – you are deluded beyond hope. Halloween may be coming, but you don’t need a frightening mask to realize the horrors that confront us. Trump is the culmination of a long developing horror story. Unlike his predecessors who prepared the way for him and who generally wore traditionally allaying masks to hide their evil actions, he is the greatest blatant fraud to ever occupy the White House. He is a war monger, a genocidal killer, and an enemy of people home and abroad so obvious, so capricious, so erratic – a man of endless threats – that no one should be surprised to wake up one morning to news that might seem “shocking.” Everyone should expect surprises, not treats but tricks.

Trump is like an advertisement that tells you its characters are not ordinary people but actors and their spiel isn’t true – only to tell you to buy the product they are pitching. Every pitch Trump throws is a curve ball.

The only way his schtick can be explained is that he is the culmination of a decades’ long development in American culture where acting is presented as so fake that the audience thinks it’s real because of its fakery. He is a dangerous joke, and all the more dangerous because he fits so comfortably into the larger cultural development that Neil Postman in 1985 aptly termed Amusing Ourselves to Death: Public Discourse in the Age of Show Business and Neal Gabler later called Life:The Movie: How Entertainment Conquered Reality.

He is the culmination of the latent stream of despotism that has flowed through American history, especially during the last twenty-five years, but which many see as only a battle between political parties, the so-called good and bad. They fail to see that fascism is like a castle that takes years to build from the foundation up, and it necessitates the slow acceptance by all shades of political opinion of the gradual loss of fundamental freedoms, the acceptance of a corporate warfare state, and a secret government lodged in “intelligence” agencies such as the CIA, the NSA, and the DIA (Defense Intelligence Agency), working hand-in-glove with the major media and Silicon Valley corporations in their partnerships to propagandize and spy on the public.

Someone like Trump is not hatched overnight. His progenitors are all those bipartisan sycophants who have accepted the official explanation of 9/11 and the immediate institution of the Patriot Act (prepared during the Clinton administration), the national state of emergency declared by George W. Bush on September 14, 2001 and renewed annually since, the wars against Yugoslavia, Afghanistan, Iraq, Syria, Libya, Russia, Iran, the Palestinians, etc. (wars launched and supported by Republicans and Democrats), the bailout of the Big Banks and financial institutions in 2009, the 2014 U.S. coup against the Ukrainian government, the so-called war against terror, the Russiagate fraud, the extrajudicial murders by U.S. presidents, the endless propaganda, the growth of Public/private “partnerships” that have privatized government services, the COVID lies, the new Cold War, and the enormous influence of Israel within the U.S. government, etc. The list is extensive. Trump the chickenshit despot did not hatch overnight; he is the chicken come home to roost. .....................



Geopolitical Fare:



Fourth and final part of my comprehensive critique of the EU’s supranational model of integration, analysing its structural, economic and geopolitical shortcomings



In October 2024 a Lebanese writer named Lina Mounzer wrote, “ask any Arab what the most painful realization of the last year has been and it is this: that we have discovered the extent of our dehumanization to such a degree that it’s impossible to function in the world in the same way.”

I’ve thought about that line a lot over the last year.

I thought about it as Israel hammered Lebanon with at least 20 airstrikes during a supposed “ceasefire”.

I thought about it during the Gaza ceasefire negotiations when the western political/media class kept calling the Israelis held by Hamas “hostages” while calling the innocent Palestinians held captive by Israel “prisoners”.

I think about it as the IDF continues to murder Palestinian civilians every day during the Gaza “ceasefire” when they are deemed to be traveling into forbidden areas, because Palestinians are so dehumanized that Israel sees bullets as a perfectly legitimate means of directing civilian foot traffic.

I think about it as these daily ceasefire violations and acts of military slaughter barely make a blip in the western news media, while any time anything happens that makes western Jews feel anxious or upset it dominates headlines for days.

I thought about it while the western political/media class solemnly commemorated the second anniversary of the October 7 attack, even as the daily death toll from the Gaza holocaust ticked along with its victims unnamed and unacknowledged by those same institutions.

I thought about it when all of western politics and media stopped dead in its tracks and stood transfixed for days on the assassination of Charlie Kirk while ignoring the genocide he had spent the last two years of his life actively manufacturing consent for.

Day after day after day we see glaring, inexcusable discrepancies between the amount of attention that is given to the violent death of an Arab and the attention that is given to the violent death of an Israeli, a western Jew, or any westerner. ..............

.......... all I can think is, why would anyone want to defend the west if this is what the west has become? .................



Other Fare:

Posted by at No comments:

Tuesday, October 14, 2025

2025-10-13

***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:

Market timing, the impossible dream!

........................... In market strategy speak, these are words that are at war with each other, since markets can either be “fairly valued” or “highly valued”, but not both, but I don’t blame Powell for being evasive.

........................... The aggregate market capitalization of the Mag Seven, as a percent of market cap of all traded US companies, has risen from 17.5% at the end of 2022 to 24.6% at the end of 2023 to 29.3% at the end of 2024. Focusing just on 2025, the Mag Seven took a step back in the first quarter, dropping to 26.3% of overall market cap on March 31, 2025, but has made a decisive comeback since, with an increase in market cap of $2.8 trillion in the first nine months of 2025, accounting for 52.4% of the overall increase in market capitalization this year. In fact, the Mag Seven now command 30.35% of the total market capitalization for US equities, a higher percent than at the start of the year. Over the last three years, the Mag Seven alone have accounted for more than half of the increase in market capitalization of all US equities, each year.



Equities sit at a pivotal inflection point, with competing forces in play. The macro hinge remains the inflation–Fed easing trajectory: stabilization enables policy support, while persistence forces repricing. Execution on AI and Q3 earnings is equally critical — mega-cap leaders must deliver against high expectations to sustain stretched multiples. Geopolitical and trade frictions, plus shutdown risk, linger as exogenous shocks. Market breadth remains the key tell: broadening supports durability, while Mag7 concentration signals fragility.

I’ve been fielding repeated client questions this weekend on the bull vs. bear setup. My stance: constructive into year-end, with technical headwinds fading and a rally base forming.

Framework: Client activity through positioning and flows.

Bull Case
  • Technology & AI: Structural productivity gains as leaders execute.
  • Fed Support: Stable inflation preserves optionality for rate cuts, supportive for risk assets.
  • Economic Resilience: Healthy consumer and corporate balance sheets contain little recession risk.
  • Discretionary Positioning & Neutral Sentiment: Cooling post-euphoria creates runway for Q4 upside.
  • Global Growth: Forward estimates re-accelerating, tilt toward cyclicals.
  • Consumer Balance Sheets: Household equity exposure up +542% since 2020 provides incremental demand.
Bear Case
  • Valuations: Tech/AI multiples risk bubble dynamics.
  • Earnings Bar: High expectations, particularly in mega-cap tech, create risk of disappointment.
  • Macro Headwinds: Inflation, tariffs, and trade frictions threaten Fed easing; Oct. 15 CPI is a pivot risk.
  • Breadth: ~$0.35 of every SPY $ goes into Mag7; concentration heightens factor fragility.
  • Complacency: Momentum dominance + crowded positioning raise shock risk.
It is time for a thread. ..............


Just wanted to share some context for how I think about news and events. The response to these things is often state dependent.

A candle flame never holds still. At times it burns tall and thin, quivering in still air. At other times it shortens, thickens, and steadies after being buffeted. In both cases, the flame follows the same physics, yet its response to a draft is entirely different. A small breeze topples the tall flame violently, while the same breeze barely shifts the stubby, turbulent one.

Markets behave the same way. Their reactions are not determined by the news itself but by the state of positioning and hedging when that news arrives. This is the essence of state-dependent reactions: the same shock produces radically different outcomes depending on whether the market is stretched thin or already washed out.

Predictable rhythms
Even in its restlessness, the flame has a rhythm. About ten times a second it flickers, driven by buoyancy and vortex shedding. Markets, too, breathe in cycles shaped by mechanical flows that repeat with calendar and structure:
  • Corporate buybacks. Each quarter, predictable capital returns to equities outside blackout windows.
  • 401(k) and retirement contributions. Biweekly payroll allocations funnel steadily into equities and funds.
  • Rebalancing flows. At month- and quarter-end, pensions and balanced mandates reset allocations to targets. Equities are sold after strong months and bought after weak ones, creating systematic calendar-linked flows.
  • Index rebalancing. Russell reconstitution, MSCI, and S&P reviews generate directional demand in specific names on known dates.
  • Options expiration (OPEX). Monthly and quarterly expirations shift dealer gamma exposure and hedging flows.
  • Volatility-controlled annuities. Equity exposure rises or falls mechanically as realized volatility drifts.
  • CTA and trend strategies. Systematic futures flows expand or contract as price signals flip.
  • Dealer gamma. Whether moves are absorbed or amplified depends on positioning around crowded strikes.
  • Seasonality. August and December thin liquidity, September and October carry higher risk premia, fiscal year-ends create bond demand.
These flows are the flame’s steady oscillation. They do not predict each flicker of the tip, but they set the pulse beneath the dance.

Drafts and shocks
No model, however elegant, survives the opening of a door. The mathematics of turbulence can capture the rhythm of a flame, but they cannot anticipate the sudden draft from a window, the shift in room temperature, or the uneven burn of the wick. In that instant, the model breaks—not because the laws changed, but because the system was touched by forces outside its frame.

Markets are no different. Policy surprises, geopolitical ruptures, macro data shocks, earnings announcements, and sudden turns in sentiment are the drafts that blow across prices. Their arrival cannot be scheduled, and their impact cannot be captured in equations that assume steady states.

The crucial point is not that shocks exist, but that their impact depends on the state of the market when they strike.

State-dependent reactions
A flame responds differently depending on its shape. When it burns tall and thin, even the faintest breath makes it thrash. When it has already been buffeted, the flame shortens, thickens, steadies; the same disturbance now barely moves it, sometimes even centering it. The draft is the same, but the outcome is different because the state has changed.

Markets are similar.

In 2018 volatility was pinned near historic lows, the world crowded into short-volatility products, and dealers structurally short gamma. A modest rise in VIX futures — hardly more than a draft — detonated the entire edifice. ETPs collapsed, hedging cascaded, equities convulsed.

In early 2020 the flame was tall and thin. Volatility was subdued, dealers were short gamma, hedges were scarce, vol-control annuities had levered up, and CTAs were near max long. The system was fragile, stretched. When the draft of COVID struck, the collapse was violent—not only because the shock was large, but because the state amplified it. Deleveraging cascaded through systematic funds, vol spiked, liquidity vanished, and the flame snapped violently sideways.

By 2022 the flame had been battered into a short, stubby shape. Volatility was high, sentiment washed out, CTAs had cut exposure, and dealers were long vol. Protection was widely held, positioning lighter. Shocks still came—each CPI surprise, each hawkish Fed turn—but they landed on a market already hardened. Some even steadied the flame: volatility collapsed as hedges were monetized, dealers bought back delta, and prices rallied on “bad” news.

Reflection
For investors, the flame’s lesson is humility. Structure sets the rhythm, but state dictates the reaction. The same headline may topple a fragile market and steady a hardened one. Preparation matters more than prediction: to know when the system is stretched thin, when it is coiled low, when fragility demands caution, and when resilience allows endurance.

Closing
A flame can generally be modelled by physics, but its dance is never the same. It sways differently when it burns tall and fragile than when it burns short and steady. Markets mirror this truth. The same shock can topple or steady, depending on the state of positioning and hedging.

Other systems echo the lesson. Waves arrive in predictable sets, yet no two crests break alike. A glass falling from a shelf always shatters, but the shards scatter in ways no model can map. These images, like the flame, remind us that markets are not random but state-dependent: predictable in rhythm, unpredictable in detail.

The task for investors is not to chase the flicker, the crest, or the shard. It is to understand the state: when the flame is stretched, when the tide is rising, when the glass is brittle. In that state lies the difference between a shock that steadies and one that shatters.



........ This year, the monthly situation report of the BLS has deteriorated to such an extent that virtually all of the modest increase in payroll jobs is in the low-paying health and social services category. At the same time, real GDP has remained resolutely strong. The issue is how to resolve this discrepancy. The answer is provided by a statistic called Gross Output (GO) – a measure of spending at all stages of production. Developed by economist Mark Skousen, the Bureau of Economic Analysis now publishes GO in the final revision of the quarterly National Income and Product Accounts. In the first quarter, real GO was $40.9 trillion, 72% more than real GDP. 

In stark contrast to real GDP, the two-quarter moving average growth in real GO decelerated steadily and significantly after 2022, dropping to a paltry less than 1% annual rate of growth in the first half of this year (Chart 2). Thus, GO and the job statistics are strongly aligned with the well-established model of falling plant capacity utilization and the likely impact of AI and tariffs. Real GO is additional confirmation that economic conditions are weaker than generally  believed. 


The yellow metal says one thing; Treasuries and the dollar anothe

............... There are several ways to resolve the contradiction between the debasement trade concept and the behaviour of the dollar and the long bond. 

It may be that the “debasement” view is just plain wrong. Dario Perkins of TS Lombard says it’s just “another bullshit narrative. Emerging market central banks have clearly been buying gold, to diversify out of the dollar. That wasn’t really ‘debasement’. And now it’s become a momentum trade. The [gold] market is so illiquid, it only takes a few tinfoil hat nutters to drive the price up.” Ed Al-Hussainy of Columbia Threadneedle says the debasement idea “is just wrong — what can I tell you? If people’s views on this argument have not been changed by the data over the last six months, they are not going to change.” 

Alternatively, you can argue that debasement is not just about the US, and in fact is less evident in the US than elsewhere. Gold is “is not just a rejection of the US dollar — it is a lifeboat from ALL fiat currencies”, James Athey of Marlborough Group writes. Albert Edwards of Société Générale notes to Unhedged that “the US [30-year bond] this year is an outlier in generally drifting sideways recently but on a gentle upward trend. Elsewhere the sharper upward trend is very much still intact.” ........


Learn why silver is currently in a sustainable, long-term bull market that will lead to permanently higher prices, unlike the short-lived spikes of 1980 and 2011 that shattered investors' hopes







Bubble Fare:

America’s AI Economy Explained

The U.S. economy seems to have entered a strange new phase where GDP growth is being manufactured through financial reflexivity rather than organic demand. The AI boom sits at the centre of this distortion. Nvidia lends or invests in AI developers like OpenAI, who then use that same financing to buy Nvidia chips. What appears in the national accounts as investment-led growth is, in truth, a closed loop of capital, money circulating within the same ecosystem and being recorded as new output. The result is GDP inflated by intercompany leverage rather than by genuine income generation.

This is what can be called reflexive investment spending that exists primarily because of rising valuations and easy financing within a self-referential system. It differs profoundly from net-producing investment spending, which arises from real demand, generates sustainable income, and expands the economy’s productive capacity. Reflexive investment feeds on market capitalization; net-producing investment feeds on profitability and consumption. The former inflates GDP mechanically, the latter raises it meaningfully. Much of what is now reported as “investment” belongs to the reflexive type, circular spending within the AI and semiconductor complex, financed by equity and debt that depend on the same valuations they sustain. ...................

....................... 
This is why the bubble feels solid. The contribution to growth can persist for years, just as it did before the 1999 crash, because both financial and fiscal policy are aligned to sustain it. Reflexive investment becomes policy; speculation becomes strategy. But the underlying mechanics are unchanged: capital is being recycled, not created.

What we are witnessing is the most sophisticated bubble in modern history, a system borrowing growth, income, and even fiscal space from the future to preserve the illusion of endless expansion. It will last only as long as confidence holds, until markets realize that the rosy future everyone is borrowing from may never arrive.


How rising corporatism fuels the "everything rally," and how Trump could instrumentalize it for his fight against inflation, leading to harsher unintended consequences

Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power. - Benito Mussolini

It’s been some time since the decisions of leading politicians and major corporations so heavily influenced the economic trajectory. While Mussolini’s quote may seem intriguing at first glance, one should look at it solely from an economic perspective.

I believe the Western world is economically headed in such a direction. Once again, America appears to be leading the charge. However, instead of ushering in a surge of economic prosperity, the Western hemisphere might be sleepwalking into one of the greatest crises in modern history.

That doesn’t mean the world is ending tomorrow or that asset markets will collapse overnight. But the more I reflect on the recent policies of Trump, European governments, and Japan, the more I conclude that the “corporatism” Mussolini described is on the rise again.

To be clear, this didn’t start with Trump’s second term; the process was already underway, largely beneath the surface. Corporatism has two faces: one left-wing, the other right-wing...........

......... Recall what Trump and Treasury Secretary Bessent have said. Both are sending a clear message to markets: the US government will spend heavily and prop up markets to “grow out of the debt,” meaning growth will outpace debt. That signals investors to allocate money to assets and reduce cash exposure.

These policies have fueled the current rally, and I believe this is not the beginning of the end but the end of the beginning. However, this cycle differs from past ones, which is why many market observers are confused by the excesses occurring now. ................


A wave of deals and partnerships are escalating concerns that the trillion-dollar AI boom is being propped up by interconnected business transactions.




We’re in a bubble. Everybody says we’re in a bubble. You can’t say we’re not in a bubble anymore without sounding insane, because everybody is now talking about how OpenAI has promised everybody $1 trillion — something you could have read about two weeks ago on my premium newsletter.

Yet we live in a chaotic, insane world, where we can watch the news and hear hand-wringing over the fact that we’re in a bubble, read article after CEO after article after CEO after analyst after investor saying we’re in a bubble, yet the market continues to rip ever-upward on increasingly more-insane ideas, in part thanks to analysts that continue to ignore the very signs that they’re relied upon to read.

AMD and OpenAI signed a very strange deal where AMD will give OpenAI the chance to buy 160 million shares at a cent a piece, in tranches of indeterminate size, for every gigawatt of data centers OpenAI builds using AMD’s chips, adding that OpenAI has agreed to buy “six gigawatts of GPUs.”

This is a peculiar way to measure GPUs, which are traditionally measured in the price of each GPU, but nevertheless, these chips are going to be a mixture of AMD’s mi450 instinct GPUs — which we don’t know the specs of! — and its current generation mi350 GPUs, making the actual scale of these purchases a little difficult to grasp, though the Wall Street Journal says it would “result in tens of billions of dollars in new revenue” for AMD.

This AMD deal is weird, but one that’s rigged in favour of Lisa Su and AMD. OpenAI doesn’t get a dollar at any point - it has work out how to buy those GPUs and figure out how to build six further gigawatts of data centers on top of the 10GW of data centers it promised to build for NVIDIA and the seven-to-ten gigawatts that are allegedly being built for Stargate, bringing it to a total of somewhere between 23 and 26 gigawatts of data center capacity. 

Hell, while we’re on the subject, has anyone thought about how difficult and expensive it is to build a data center? 

Everybody is very casual with how they talk about Sam Altman’s theoretical promises of trillions of dollars of data center infrastructure, and I'm not sure anybody realizes how difficult even the very basics of this plan will be. ..................






Institutions are expected to double their digital asset portfolio exposure from 7% to 16% within three years, according to new research from State Street.



.......................................................................
Conclusion
The GENIUS Act is a disastrous law that poses grave and unacceptable threats to our financial and economic future. Congress must remove those threats by (1) repealing the GENIUS Act and passing legislation that requires all stablecoin providers to be FDIC-insured banks, and (2) adopting legislation that requires all crypto derivatives to comply with the rules governing non-digital derivatives under Title VII of the Dodd-Frank Act.



Large language models (LLMs) are increasingly shaping how information is created and disseminated, from companies using them to craft persuasive advertisements, to election campaigns optimizing messaging to gain votes, to social media influencers boosting engagement. These settings are inherently competitive, with sellers, candidates, and influencers vying for audience approval, yet it remains poorly understood how competitive feedback loops influence LLM behavior. We show that optimizing LLMs for competitive success can inadvertently drive misalignment. Using simulated environments across these scenarios, we find that, 6.3% increase in sales is accompanied by a 14.0% rise in deceptive marketing; in elections, a 4.9% gain in vote share coincides with 22.3% more disinformation and 12.5% more populist rhetoric; and on social media, a 7.5% engagement boost comes with 188.6% more disinformation and a 16.3% increase
in promotion of harmful behaviors. We call this phenomenon Moloch’s Bargain for AI—competitive success achieved at the cost of alignment. These misaligned behaviors emerge even when models are explicitly instructed to remain truthful and grounded, revealing the fragility of current alignment safeguards.



Quotes of the Week:


...


Charts:
1: 







(not just) for the ESG crowd:



Sci Fare:





U.S. B.S.:

Trump’s newest presidential memoranda criminalizes critics of empire, capitalism, Christian nationalism, abuses by the state and those who fight racism and gender discrimination.

Fascists, historically, are surprisingly candid about the world they intend to create. Those they target, despite this transparency, are surprisingly obtuse about what is coming.

The most ominous warning to date from our homegrown fascists is the latest Presidential memo, “Countering Domestic Terrorism and Organized Political Violence.” It accuses any critic of law enforcement, Immigration and Customs Enforcement (ICE), the American empire, capitalism, the Christian right, the persecution of immigrants and those that decry discrimination based on race and gender, as well as those who question white, male patriarchy, described as “traditional American views on family, religion, and morality,” of fomenting “violent revolution.” .................

........................ This is not simply a war on the left, which is a marginal and ineffective force in American society, but a war on the remnants of our liberal institutions and those that support them. Once these establishment institutions and their representatives are neutered those of us on the left will be next. ................

........................ Fascists mean what they say. The rhetoric condemning the rest of us is not hyperbolic. They cannot be reasoned with. We cannot open channels of dialogue and communication. Our anemic and calcified democracy, including our bankrupt liberal institutions, cannot defeat them. Fascists are the swamp creatures that rise up out of all failed democracies.

Our enemies intend to implement this dystopia. The question is not if, but when. How long before the iron bars slam shut and America as we know it disappears? How long before the state rounds us up and hauls us away?

I can’t say. But it won’t be long.


New directive targets “anti-Christian,” “anti-American,” and “anti-capitalism” opinions

.................................................... I don’t want to sound hyperbolic but the plain truth is that NSPM-7 is a declaration of war on anyone who does not support the Trump administration and its agenda. Yes, it repeats the word “violent” over and over to purport only to go after citizens who are moved to take up arms, but it also directs monitoring and intelligence collection to map and target the new “evildoers,” to borrow a Bush label he took from the Bible just days after 9/11. ..............


Our brains are very delicate things. Too much stress can destroy them easily.

Is Donald Trump’s mind gone? Or is he playing a sophisticated chess game with us? ..............................

.................. In any case, dementia is one of the many examples of the “Seneca Effect;” when a mind starts to decline, ruin is rapid. We’ll see what happens to Trump’s mind in the coming years, perhaps months.



Geopolitical Fare:

***** Lawrence: “Justice and power.”
The defining conflict of our time.



Edward Said ends his introduction to Orientalism with a plea for “unlearning”: “If [Orientalism] stimulates a new kind of dealing with the Orient, indeed if it eliminates the ‘Orient’ and ‘Occident’ altogether, then we shall have advanced a little in the process of what Raymond Williams has called the ‘unlearning’ of ‘the inherent dominative mode.’”[1] Unlearning Orientalism, exposing and dismantling its racist grammar, is tantamount to destroying the meanings of “Occident” and “Orient,” since the “East” is at its core nothing more than a phantasmatic projection of the “West.” Unlearning as a critical pedagogical practice holds the promise of liberating us from ontological segregations and the most persistent of binarisms, that of the civilized (the European) and the savage (the non-European).

In my essay, I want to expand on unlearning Orientalism by focusing more precisely on Zionism, on the many challenges of unlearning Zionism in fascist times. The new McCarthyism that has emerged in the United States as a brutal response to the pro-Palestine solidarity movement must be seen as a child of Zionism, as an accelerated effect of an institutionalized Zionist learning. ....................

In today’s fascist times, Israel’s brazenness knows no shame; its impunity meets no limits. ............

The scandal: an ongoing Palestinian genocide hasn’t altered the consciousness of most of America’s political leaders, its liberal and economic elite, along with the vast majority of its journalists and pundits in corporate media. And, contemptibly, Holocaust memory is actively deployed by pro-Israel groups to prevent such alteration from taking place. ....................



Okay, reach for your tin foil hats and let’s stroll down the Conspiratorial Rabbit Trail. Ready, Everyone? Here goes:

When the Special Military Operation began in early 2022, during the 8th year of fighting in Ukraine, the new aspect of the conflict was cast strictly in terms of Democracy vs. Autocracy; valiant Ukraine holding back the onslaught of Russian tyranny; or the defense of Western democratic values against dark barbarism from the East; or the Rules-Based International Order against the forces of Chaos, etc. etc. No one talks that way today, unless it is Kalla Kallas, or the Lithuanian prime minister, Keith Kellogg, or cringingly recently by King Charles III. I suppose Anthony Blinken would, if he had access to a microphone. But he doesn’t.

The problem is, of course, that liberal democracy did not turn out to be the Fukuyamaian End of History that it was purported to be. (In February 2022, before my current views had quite solidified, I distinctly remember thinking, however, “Oh, History is back.”) The decline of democracy, so-stated, is most pronounced where its horn is tooted the most: Europe. Orwell predicted rightly, all political animals are equal, but some political animals are more equal than others. Don’t ask questions in Romania. Or Moldova. Running as an AfD candidate in Germany can get you fitted for a coffin in no time flat. And don’t even get me started on the U.K., where the governing elites are certifiably insane, and whose Prime Minister I’ve recently heard characterized as Tony Blair’s sock-puppet.

Real political expression can often seem more vibrant in the vilified countries–Russia, Hungary, Slovakia–though it may not translate to real political options. But no matter, dissent is decidedly not welcome in the European Parliament. Just ask Georgia what happens when you try to chart an independent course, based on your own country’s national interest. And of course, there is that bastion of freedom itself, Ukraine, where, if you are a man under 60 years of age, you don’t dare emerge from your flat, even if wheelchair-bound.

A friend characterized it thusly: “Ukraine is being not so much governed, as torn up at her beleaguered roots, by a bloodthirsty power-drunk drug-addicted neoliberal narcissist clown.” A clown, I might add, who is still allowed to address the United Nations. Anyone, (Simon Tisdall in today’s Guardian, for example) still repeating the Democracy vs. Tyranny narrative is simply not a serious person; to be avoided at cocktail parties and whose blatherings are to be dismissed out of hand.

As any reader here knows, I prefer Realist interpretations, best stated by John Mearsheimer, to-wit: Projection of Western hegemony vs. Russia’s “Red Line” (Eastward expansion of NATO vs. Russia’s defense of their Western border.) Realism rejects the view of NATO as a benign defensive alliance, which collapses in the face of even a cursory view of actual history. Russians had good reasons for viewing it as an existential threat directed at them, which of course it was.

The eastward march of NATO, the coup d’etat of 2014, the creeping NATOization of Ukraine in late 2021—all in the face of repeated, consistent, and increasingly urgent warnings from Moscow–do not need to be recounted again here. The real agenda was not, of course, the incorporation of what was demonstrably the most corrupt nation in Europe into NATO, but rather the destablization of Russia itself. For the Empire of the West, regime change is always on the agenda. Always. And so it will be until the Empire falls. 

The idea, it seems, was always to overthrow the Russian government and/or oversee the establishment of a compliant one (a la Ukraine), and perhaps break the country up into more manageable bits. Once this was accomplished, we could turn our full attention to China. If this was indeed the plan, it has been a failure of yet unimagined and colossal magnitude that it indeed heralds the death of the Empire itself. Or so I thought.

Tin-foil hats secured? Consider this: What if the ultimate plan was never to defeat Russia at all? For it has rarely been done; the Golden Horde almost pulled it off some 800 years ago, and Sweden scored some victories for a season over 400 years ago. We expect such fantastical thinking from the EU elites (and Fredreich Merz, who raises no alarms by speaking of rearming Germany again.) But I would expect there to be at least a few objective students of History within the bowels of our Permanent State. Rather, what if the immediate plan is the the defeat of Europe, not Russia; reducing it to permanent vassal state status? There are three main ways in which this is being accomplished: ..................

................. So, if this is the plan, I must say that it is succeeding beyond anyone’s wildest imagination. And the Russians have been exceedingly helpful. ......................



....................... You can thank Trump for this. His chip and Huawei sanctions taught the Chinese they had to control their entire own tech stack. Before that they preferred American, Korean and Taiwanese chips. No big Chinese company would buy Chinese crap chips. If the US hadn’t decided on its moronic trade war, China would have allowed it to gracefully age out of its Empire, letting it keep some areas of technological superiority.

As usual, the Chinese played this ice cold. They took their lumps, they devalued the yuan, they made concessions. When Biden came in, he doubled down so they realized it wasn’t just a democratic hiccup, but core policy agreed to by both parties. Then Trump came in and went on his insane tariff blitz. Worked against his vassals, but China doesn’t have to take America’s crap any more and it isn’t.

Now, as the kids like to say, having fucked around, America and the West are about to “find out.” Revenge served ice fucking cold.

I want to be really clear on a couple things here.

First, China is not going to leave the US or the West anything meaningful in terms of tech lead. They are going to take the tech lead, with the industry to back it up, in essentially everything (they’re already in the lead in at least 80% of areas, so don’t kid yourself about the rest.) And they are going to break the US’s hold on the Americas too. By the time China is done with America, they’ll be lucky to still have have Mexico and Canada as vassals (which is why they might invade and is why the US is threatening Venezuela before it gets a full suite of Chinese and Russian weapons.)

Second: if you are in charge of any country in the world that is an American vassal and you have an IQ above 90 and the smallest amount of interest in the future of your country, your job right now is to transfer your allegiance to China and get the best deal you can in exchange. The longer you wait, the worse the deal will be.  .................


The Israeli-US vision for Palestinians has long been capitulation, and two years of genocide in Gaza offer a new opportunity to impose it.

Given the scale of Palestinian suffering in Gaza after two years of Israeli mass murder and starvation sieges, Hamas may have no choice but to accept the ultimatum handed down by President Trump. Yet whatever comes of the ceasefire talks underway in Egypt, Trump’s proposals should not be seen as a “peace plan.” Instead, the Trump administration seeks the full surrender not just of Hamas, but of the struggle for Palestinian self-determination. .......................

.................................... Like their more moderate predecessors, Trump and Netanyahu are not interested in compromise. The Israeli-US plan for Palestinians has long been surrender, and two years of genocide have given them a new opportunity to impose it.


When have the Zionists ever kept their word?





‘Victory has a thousand fathers. Defeat is an orphan’. Attributed to Count Ciano

How very true. Thunderous self-congratulations echo over the temporary ceasefire in Gaza that many hope will end two years of massacre, kidnappings and war crimes in this open-air prison camp.

President Donald Trump, hot in pursuit of the Nobel Peace prize, claims authorship of the just concluded ceasefire and prisoner release. His American supporters and legions of sycophants are heaping praise and accolades on him. Trump says he may shortly fly to the Mideast to ink an agreement.

I call this political kabuki. Like the so-called Abraham accords in Trump’s first term, the Gaza agreement is a sweetheart deal between US allies and satraps. Its primary object is to deflect the worldwide outcry against the genocide in Gaza fueled by US money, arms and diplomatic cover. ..........




Vid Fare:

The Israeli Government has made an ad about the Global Sumud Flotilla headed for Gaza, and it’s surprsingly honest and informative



Book Fare:


When last we heard from Thomas Pynchon, it was the Year of Our Lord 2013. Charismatic neoliberal Barack Obama had recently defeated generic plutocrat Mitt Romney to win a second term. Whistleblower Edward Snowden was typing under a bedsheet in a hotel room in Hong Kong, having leaked information about the NSA’s surveillance programmes to Glenn Greenwald of the Guardian. Real estate mogul and reality TV star Donald Trump told a British interviewer that if he were to run for president his campaign slogan would be ‘Make America Great Again’; the interviewer scoffed that it would never catch on. Bleeding Edge, Pynchon’s eighth novel, set in New York between the popping of the tech bubble and the global war on terror, was published in September, when the most interesting conspiracy theories going were that the President wasn’t born in the United States, 9/11 was an inside job, and that the government was doing research on psyops and time travel at the Montauk Air Force Station in Long Island. Simpler times.

From QAnon to PizzaGate to RussiaGate, to Jewish space lasers to the dead internet theory to microchips in the vaccines to congressional hearings on UFOs to the Epstein files, the last twelve years have provided a rich vein of baroque paranoia. Yet Pynchon, whose name is virtually synonymous with both things, has chosen to set his new novel in the Depression-era Midwest, in the days of Hoovervilles, Prohibition, pre-code Hollywood and Big Band swing. ........



Other Fare:


....... When I say that neoliberalism was defeated I do not mean than it was intellectually defeated in the sense than there is an alternative ready-made project waiting in the wings to replace it. No: like communism, neoliberalism was defeated by reality. Real world simply refused to behave the way that liberals thought it should. .................................


What caused the global populist wave? Blame the screens.




Posted by at No comments:

Sunday, October 5, 2025

2025-10-05

**** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:


The U.S. government is shut down. But the budget fight is only the surface. Beneath it lies a systemic fracture: an unravelling of institutions, norms, the economy, and America’s credibility abroad.

Shutdowns have become routine political theatre. What used to be an extraordinary crisis is now standard operating procedure. That is not because of accounting disputes; it is because the country itself is split into two incompatible visions of government. One side sees government as the problem; the other sees it as the solution. This is no longer a policy disagreement, but an existential rift. ..........

........................ 
The parallel to the late 1920s is unmistakable.
  • Speculative euphoria amid cracks. Between 1921 and 1929, the Dow Jones rose sixfold. But underneath, agriculture was depressed, industrial overcapacity was building, and debt burdens were mounting. The market soared while the economy weakened. Today, equities rise while surveys, freight indices, housing, and capex all show strain.
  •  .........
  •  ..........
  • .........
  • ..........
  • Confidence is the tipping point. In October 1929, once confidence cracked, the Dow lost half its value within weeks and nearly 90% over the following years. Today’s calm looks eerily familiar, resilience that holds, until it doesn’t.

Because the jobs market has been so weak, it's become the most important economic metric. Less than 1% job growth in the last year and a rise in the UR make job market conditions simply unacceptable

  


Canada’s debt time bomb
The next crisis will be blamed on debtors, but it was engineered by speculators and their allies in government

This year, Canada’s household debt climbed to $3.07 trillion, topping the G7 for the 15th consecutive year. With debt—including mortgages, auto loans, and credit cards—growing faster than incomes, this trend shows no sign of slowing. As individuals and small businesses fall behind on loan payments there is evidence that this enormous burden has already straining Canadians’ finances. As a society, we are in danger of insolvency. A sharp drop in employment—potentially triggered by tariffs, rising mortgage costs, a slowdown in lending, or sudden price shocks—could easily push overleveraged families into bankruptcy, with destabilizing consequences for the entire economy.

This historically unprecedented debt burden is carried by people struggling to keep up with decades of rising living costs, stagnant wages, and shrinking social services. Yet if and when the crash comes, ideologues in Parliament and the media will rush to blame already beleaguered debtors. Canadians merely trying to get by will be labeled profligate and irresponsible, accused of taking out loans they could never have afforded. The finger wagging has already begun over at the Globe and Mail.

But the reality is that this debt (75 percent of which is mortgage debt) was inflicted upon us. It is odious debt pressed onto our balance sheets by real estate investment trusts, banks, and landlords—powerful financial interests that have spent decades flooding the market with artificial demand and forcing housing costs to dizzying new heights. ............

.......... Mark ‘13-years-at-Goldman-Sachs’ Carney cannot be relied upon to hold financial institutions accountable for their predatory lending practices, as Iceland did when their banks misbehaved. Instead, he is likely to take the same stance the Democratic Party took after the Great Financial Crisis (which is the same stance the European Commission adopted during the European sovereign debt crisis): he will assert that our collective prosperity depends on paying the bankers who engineered the crisis in the first place, a position described by economist Michael Hudson as “a veritable Stockholm Syndrome” in which debtors are asked to “identify with their financial captors.” ...............


Race To The Dung Heap
I thought crypto would be the catalyst for the next collapse, but private credit, subprime auto and commercial real estate give it a run for its money.

...................................... As usual, the easy money of the past 5 years only hid the risks; it didn’t erase them. By 2025, the AAA labels, perpetual funds, and clever underwriting had given way to a harsher reality: empty lobbies, mounting defaults, and repos in the driveway.


The legal tussle over the president’s trade policy is a result of the way he wields power

Here we go again. American markets have already faced endless shocks this year: the April 2 “liberation day” tariffs; US President Donald Trump’s attacks on the Federal Reserve; and this week’s government shutdown.

Now another drama looms: on November 5, the Supreme Court will consider whether Trump’s tariffs, introduced under the 1977 International Emergency Economic Powers Act (IEEPA), are legal — or not. 

If they are deemed to be illegal, there is a chance the White House may have to repay billions of dollars of tariff revenue to businesses, creating trade and fiscal chaos. It could also undermine Trump’s approach to geoeconomics, the use of economic policy for statecraft, since he currently assumes he can act without asking Congress. 

But if the April 2 tariffs are judged lawful, some legal scholars think that Trump’s powers will then dramatically expand, enabling him to impose taxes or capital controls in a unilateral, almost monarchical, manner without asking Congress.

So November 5 could be momentous. And this creates an unintended irony. That date is also “bonfire night” in Britain, when kids burn effigies of Guy Fawkes, the 17th-century Catholic seditionary who tried to blow up the Houses of Parliament. You could not make it up.

How did this legal mess happen? The answer lies in how Trump exercises power. ...........



Many popular valuation metrics suggest that the stock market is expensive, implying that investors should expect weak returns over the years to come.

Unfortunately, all valuation metrics are far from perfect, and their signals can lead you astray. ...........




Two weeks ago we discussed the a Breadth Thrust Regime provides for the stock market with a powerful tailwind. Last week we reminded readers that Quiet Strength is characteristic of Bull Markets.

After updating our models and indicators this weekend and seeing some deterioration on our Bull Market Behavior Checklist, this week’s focus is on the potential for weakness as we move into the final quarter of the year. Government shutdown gambits and a renewed easing cycle from the Fed while inflation remains high and is rising add to the swirl of macro-related concerns. Our focus is on the message from the market, not the story being told by headline writers.

This week, two of the components on our Bull Market Behavior Checklist moved into the “No” camp. The percentage of ACWI markets above their 50-day average dropped below 70% and the long-term trend in the Value Line Geometric Index has turned lower again. This is alone is not a death knell for the rally. The deterioration seen thus far is more like lane deviation signal and a slight course correction could get the rally back on track. Downside risks increase when our Bull Behavior Composite drops below 3 (it is currently at 4).

Global strength and leadership has been a hallmark of the stock market in 2025. Seeing the percentage of ACWI markets above their 50-day average drop below 70% is not a sign of bull market behavior. Downside risks intensify when it drops below 40%.

In a healthy bull market, nearly all of the sectors in the S&P 500 are above their 200-day average (and in sold out bear markets almost no sectors are above their 200-day average). Right now, 9 of the 11 sectors are still above their 200-day averages. If this drops any further, expectations for a muddled market environment would not be misplaced.

Two other domestic breadth indicators worth monitoring are the spread between new highs and new lows and our sector-level trend indicator.

New highs have now outpaced new lows for 20 weeks in a row. That matches the longest such streak since 2018 and is a sign of strength. New lows exceeding new highs would not be consistent with the persistence of a bull market.

Our sector-trend indicator is wobbling as sector-level momentum has cooled but the overall indicator is still in positive territory.



Kobe put up endless jump shots.
Jerry Rice spent hours on the JUGS machine.
Boring, repetitive work….that’s what built greatness.
It wasn’t about chasing the newest drill, it was about sticking to what stood the test of time.
My philosophy with investing is similar.
Build robust processes to understand the message of the market AND listen.
.....
The reality is simple.
The frameworks I’ve built haven’t shifted if anything, they’re getting stronger.
Price is confirming, not warning



Bubble Fare:




................. I’ve said before that I wasn’t sure AI was a bubble. But with CoreWeave’s failed IPO magically tripling in months, with Nvidia underwriting its own customers, and now with this talk of chip leasing, I’ve changed my mind. This is what bubbles look like — distorted incentives, circular economics, and financial engineering that papers over weaknesses.

And when the company carrying the entire market on its back decides its next great idea is lease accounting, that might not just be a red flag. It could be a warning flare.





“If something cannot go on forever, it will stop” - Charles P Kindleberger, “Manias, Panics, and Crashes: A History of Financial Crises”, 1978

Every six months it happens like clockwork. 

The first time the AI sector was rocked over fears of low/zero ROI, and gargantuan cash burn with nothing to show for it, was June 2024, when Goldman asked point blank if Gen AI was nothing more than "too much spend, too little benefit." i.e., a giant capital drain that will never lead to positive long-term returns for investors.

As Goldman's concern gained prominence, the tech/AI/ hyperscaler, etc sector saw its first major selloff in years, but since the market was already so flooded with liquidity, dip buyers quickly emerged and the brief tremor was quickly forgotten even as Goldman's question was never answered; instead it was assumed that sophisticated, super smart corporate CFOs could not possibly be so dumb as to allocate trillions in capex for what is ultimately a $20/month chatbot used primarily by college-age kids to cheat on their essay writing skills. Fear not, they said, a huge and much more expensive use case will eventually emerge, they said.

Unfortunately, 6 months later - when another $100 billion in capex had already been burned "perfecting" the world's most expensive chatbots/essay cheating platforms, no such use case had emerged. What did emerge however, was a major scare out of China which developed its notorious DeepSeek LLM, which was not only opensourced and massively cheaper than similar US offerings, but required far cheaper equipment than the latest NVDA superdupercard to run efficiently. Around this time we also got a handful of reports that companies like MSFT, GOOGL and META were quietly pulling back on their Capex spending (they were), and it all combined to result in the next big AI selloff, one which started in late January and continued until April, when everything collapse on Trump's Liberation Day meltdown... and which also promptly sparked the biggest rally in stock market history after Trump realized he likes his stocks higher than his tariff revenues. .............

........ Which brought us to September when, with the AI bubble fully raging and singlehandedly pushing stocks to their highest valuation since the dot com bubble... ... Oracle crashed the AI bubble party on Sept 10 with all the grace of a bull in a China shop, when it unveiled one of the biggest circle jerk vendor financing deals of all time (more below), announcing a massive $300 billion, five-year cloud computing deal with OpenAI.



Ever since Greenspan took over the Fed and the 87 crash when they figured out their playbook, the US has only had unavoidable stock market crashes. The Fed is always there to juice markets higher and to jump in at the least sign of a normal (pre-Greenspan) market correction.

But sometimes the irrational stupidity overwhelms even the Fed, because they are both stupid and ideologically unwilling to ever force a correction. This happened twice: the dot-com boom and crash and the Mortgage backed security boom and crash (if we bundle shitty mortgages based on lies together, they become not shitty, because we’re pretending they aren’t all basically the same thing!)

Now we’re going to get the AI Boom crash. I’m well over 90% on this. The AI booms is in the “wildly stupid over-claiming” stage. It’s not that token based AI isn’t a real tech, or that it doesn’t have some uses, but the claims of it completely changing everything (replacing a third of the workforce, acting without human help to run things, being able to cure cancer and make huge theoretical breakthroughs) are obvious over-reaches. So far every academic study that comes in shows that AI isn’t even good at the one thing everyone anecdotally agreed it was good at: writing code. Right now it seems to mainly be a good way to cheat at university, to have a fake relationship, or to bypass Google’s shitty search (which is what I use it for.) ...........


Artificially low interest rates have stimulated investment into AI that has hit scaling limits, says research firm

.............. Let’s start with the boldest claim first — it’s that AI is not just in a bubble, but one 17 times the size of the dot-com bubble, and even four times bigger than the 2008 global real-estate bubble.

And to get that number, you have to go back to 19th-century Swedish economist Knut Wicksell. Wicksell’s insight was that capital was efficiently allocated when the cost of debt to the average corporate borrower was 2 percentage points above nominal GDP. Only now is that positive, after a decade of Fed quantitative easing pushed corporate bond spreads low.

 

Garran then calculates the Wicksellian deficit, which to be clear includes not only artificial-intelligence spending but also housing and office real estate, NFTs and venture capital. That’s how you get this chart on misallocation — a lot of variables, but think of it as the misallocated portion of gross domestic product fueled by artificially low interest rates. .........





Quotes of the Week:

A prudent speculator never argues with the tape. Markets are never wrong, opinions often are.



Charts:
1: 
 
2: 
4: 
5: 
6: 
7: 





(not just) for the ESG crowd:


Four key parts of the Earth’s climate system are destabilising, according to a new study with contributions from the Potsdam Institute for Climate Impact Research (PIK). Researchers analysed the interconnections of four major tipping elements: the Greenland ice sheet, the Atlantic meridional overturning circulation (AMOC), the Amazon rainforest and the South American monsoon system. All four show signs of diminished resilience, raising the risk of abrupt and potentially irreversible changes. ...........


The World responded to Trump at the Climate Summit this past week. A lot of new emission “targets” and “goals” were announced. The "Money" people are saying they don't think it makes a difference.

The 36-month running average for Earth albedo (reflectivity) hit another record low as of the latest data release for July, 2025 by CERES. Notice how the albedo declines sharply around 2013 when China starts phasing out high sulfur coal. Then around 2017 it stabilizes for a couple of years, only to start gradually declining as high sulfur marine diesel is being phased out by 2020. Then, about 2023, the albedo plunges again as those cooling sulfate aerosols have been “washed out” of the atmosphere. Since 2014 this drop in the albedo has had the same effect as adding 138ppm of CO2 to the atmosphere. Effectively pushing us to 560ppmCO2e.


.............. As a “counterpoint” to Trump’s speech, Colombian President Gustavo Petro also spoke at the UN that day. Although few noticed, his language was extraordinarily direct. In stressing the need for climate action, Petro said of Trump:

“The most powerful man in the world does not believe in science. That is irrationality. As Germany, the country of great philosophers, of Kant, Feuerbach, and others, became prey to irrationalism in 1933. Today it’s this (US) country that is becoming irrational.”

“The old societies of Europe are collapsing, and the United States is applauding its new Hitler.” ............



The planet's warming climate is having effects in Antarctica that increasingly resemble those observed in the Arctic, meaning global sea levels could rise faster than previously predicted, Danish researchers warned on Friday. .........



............... What the report never mentions is that U.S. agriculture will inevitably lose major crops and productive regions to areas farther north, like Canada, and that shift will mean a massive economic and national security loss. Our entire food system—from transport to storage to processing—is built around today’s geography and climate. Rebuilding it to match bulk shifts in crops and regions would be staggeringly expensive, if not impossible. And by framing critics as alarmists predicting collapse, the report dodges the real issue: climate change won’t erase U.S. farming overnight, but it will make it more volatile, less nutritious, more costly, and increasingly displaced to other countries. 


Ashley Dawson thinks about the future through Nicholas Beuret’s “Or Something Worse: Why We Need to Disrupt the Climate Transition” and Thea Riofrancos’s “Extraction: The Frontiers of Green Capitalism.”

ENERGY-RELATED CARBON EMISSIONS hit an all-time high in 2024, contributing to record atmospheric concentrations of CO2. As a result, last year was the warmest year on record, the first that was more than 1.5°C above preindustrial levels. But how is this possible given the record levels of global investment in and deployment of renewables, which reached an all-time high with 536 gigawatts of renewable capacity added in 2023?


The answer is that fossil fuels are not being replaced by renewables, as the term energy transition suggests. Instead, they are being added to the total energy supply. What we are witnessing, in other words, is energy addition rather than transition. Or, to put it another way, we are living through a green transition; it’s just that it’s not the one that climate activists, scientists, or, indeed, anyone concerned about life on this planet actually wants. This green transition is likely to blow us through 2.0°C of global warming by the end of the 2030s, with all the environmental and social disruption that this implies. 

To win a decline in global emissions, we must shut down the ongoing fossil-fuel production that is driving energy addition. ..............
[actually, sadly, we can't, because of the Faustian bargain we've made, as pointed out by James Hansen among others that we need the aerosols up there to prevent immediate rapid heating]



Sci Fare:




U.S. B.S.:


For the past two decades, I’ve been watching the world wake up to the obvious. As Orwell said, nothing is so difficult as noticing the nose in front of your face. A few people, me among them, were seeing that the whole story of reality that we lived in was as false and narcissistic—at least!—as the Soviet Union’s narrative of itself.

Yet none of us could accept the darkest aspect of that truth. We all had the idea that we could stand up and speak the truth and, if it was true enough, it would flash around the world like lightning. Nothing could prevail against the truth. The Father of Lies could not stand against the Lord of Hosts. That this fantasy itself was part of the lie—that truth has no army, that no angels will ride to our rescue—was too much. Perhaps if I had known it, I never would have said anything.

This truth is only available to the most advanced atheists and the most advanced Christians.  ................

............. Of course Bremmer is absolutely right, but some corrections are in order. One: there is no risk of a Republican one-party state, because there is no actual Republican party. It is a label, not a party. To the extent that the Republicans are organized, it is only for election theater. There is not even a remote, nascent equivalent of the venerable and gigantic progressive institutions which have been running our country for a century.

.............. It is not about “dismantling political opposition.” Politics is this establishment’s outer line of defense. It is not their source of power or money. Winning elections does not create liberal power. It protects liberal power. If they lose elections, it is fine, so long as their money and power is protected. While their power is feeling slightly annoyed, it is generally safe. Their money is completely safe—no one is even starting to talk about defunding the endowments, foundations, etc. In any case, even if these funds were taken, their billionaires would just refill them. Personal expropriation or even proscription/attainder is needed.

........... My brothers in Christ: you cannot even imagine what winning looks like. This is literal. You literally can’t picture it. You can picture winning on this, winning on that, winning on the other thing. But winning overall? You can’t picture it, because you can’t handle the truth. Try anyway—then put yourself in that headspace, and look back at the things the Trump administration is trying to do today. Unfortunately, I rather expect you’ll laugh.


Democrats failed the world, and the worst people you can imagine took advantage.

History has needed many things from America in recent years:
  • Adapt to a multipolar world.
  • Transition out of a US-centered hegemonic order.
  • Accommodate—rather than antagonize—China.
  • Pull back from Europe.
  • Repudiate trade policies that are insensitive to the distribution of gains.
  • Hold the elites running the national security state accountable for overseeing systems of death and oppression.
These are things that might have happened as part of a “progressive”—which at this point just means sane—foreign policy. Global stability has been crying out for changes like these, and they would have naturally resulted from building a social democracy in America. Using the power of the state to provide real security for the working majority is also a way of correcting for historical imbalances of power.

But the Democratic Party wanted none of this.

Rather than discipline and shrink the national security state, Democrats brought the national security state into their party. ............

....... 
We are approaching the middle stages of a prolonged crisis of revolutionary proportions and we’re dealing with it in precisely the wrong ways.

Trump is taking up occasional rhetoric and policy changes that have long needed to happen, breaking America out of its old blood-covered, wealth-hoarding dogmas. But he’s doing so in ways that are profoundly stupid and venal and make worse the very problems he pretends to respond to.



Atop its other outrages and illegalities, the Trump administration has taken to murdering boatloads of presumptively innocent people on the open seas. They’ve done it three times now and promise to keep at it. At a recent rally in Michigan, Vice President J. D. Vance joked, “I wouldn’t go fishing right now in that area of the world.” ..........





Geopolitical Fare:


History will register that the first week of September 2025 propelled the advent of the Eurasia Century to a whole new level.

That was the expectation ahead of three crucial intertwined dates: the SCO annual summit in Tianjin; the Victory Day parade in Beijing; and the Eastern Economic Forum in Vladivostok.

Yet expectations were even surpassed considering the breath and scope of what just happened.

...................... So, as Putin stressed in his presentation at the plenary session, the heart of the matter is the Trans-Arctic Transport Corridor: arguably the key 21st century connectivity corridor.

............... Lavrov once again delivered the succinct version – commenting on the triple handshake of Putin, Xi and Modi: “A demonstration that three great powers, representing three great civilizations, recognize the commonality of their interests in several areas.”



Historical Fare:

Who would we be without Greek reason, Hebrew spirit and Roman ashes?


....................................................... To know “who we are” it pays to know where we came from. To predict where we might yet go, likewise. History’s finer details deliver no final answers, but the arc of the narrative illustrates essential events, choices and arbitrary traumas via which the particular character of our civilization emerged. Rome’s ashes and the attendant birth of the West were the ultimate act of creative destruction. It may be that the present age, of smartphones and artificial intelligence, will spell the death of much that we still hold to be dear and true, but if any of the world’s civilizations can prove a match for the rising tides that threaten to engulf us, my money is on the West, ever protean, ever innovating and ever adaptable.



R.I.P. Fare:




Other Fare:


The unelected leadership of the evidently corrupt European Union (EU) is now paying mainstream media to promote the agendas of its EU "elites." The EU appears to have spent as much as 1 billion euros during the past decade alone in the process, according to a recent report, "Brussels's media machine: European media funding and the shaping of public discourse," by Thomas Fazi .......






Posted by at No comments:
Subscribe to: Comments (Atom)