Wall Street

Few articles about AI scare me. Then I read this one in The New Yorker.

Jeff EpperlyLeave a comment

I just read my first article in a long while about Artificial Intelligence (AI) that worried me to the point where I couldn’t stop thinking about it.

I should add that I read articles about AI all the time without becoming much unsettled by them. The technology is worrisome for the future, but not worrisome for my future because I will likely be dead before any of it becomes dangerous to society as a whole.

Yes, I know I should be more invested and angry about things that will happen after I am gone, but I am also a recovering addict.

“One day at a time,” I tell myself ALL THE TIME. It’s literally (and I use that word literally) how I’ve been able to stay sober.

Can I change AI? (No.) Is AI affecting me adversely today? (Also no.)

OK, then today is the day I worry about making my dog happy and doing housework.

But then I read an article in the March 6 issue of The New Yorker titled “Can A.I. Treat Mental Illness?”

In that article, writer and physician-researcher Druv Khullar examines the rapidly changing world of AI-based mental health therapy. No, not where you a chatting via ZOOM to a human therapist. It’s a world where you instead talk to a computer about your problems and the computer spits out responses based on the accumulated knowledge it gathers from millions of web pages, mental health provider notes, research studies, and even a compendium of suicide notes.

Sometimes it’s as simple a providing a (seemingly) sympathetic ear:

Maria, a hospice nurse who lives near Milwaukee with her husband and two teen-age children, might be a typical Woebot user. She has long struggled with anxiety and depression, but had not sought help before. “I had a lot of denial,” she told me. This changed during the pandemic, when her daughter started showing signs of depression, too. Maria took her to see a psychologist, and committed to prioritizing her own mental health. At first, she was skeptical about the idea of conversing with an app—as a caregiver, she felt strongly that human connection was essential for healing. Still, after a challenging visit with a patient, when she couldn’t stop thinking about what she might have done differently, she texted Woebot. “It sounds like you might be ruminating,” Woebot told her. It defined the concept: rumination means circling back to the same negative thoughts over and over. “Does that sound right?” it asked. “Would you like to try a breathing technique?”

Ahead of another patient visit, Maria recalled, “I just felt that something really bad was going to happen.” She texted Woebot, which explained the concept of catastrophic thinking. It can be useful to prepare for the worst, Woebot said—but that preparation can go too far. “It helped me name this thing that I do all the time,” Maria said. She found Woebot so beneficial that she started seeing a human therapist.

Woebot is one of several successful phone-based chatbots, some aimed specifically at mental health, others designed to provide entertainment, comfort, or sympathetic conversation. Today, millions of people talk to programs and apps such as Happify, which encourages users to “break old patterns,” and Replika, an “A.I. companion” that is “always on your side,” serving as a friend, a mentor, or even a romantic partner. The worlds of psychiatry, therapy, computer science, and consumer technology are converging: increasingly, we soothe ourselves with our devices, while programmers, psychiatrists, and startup founders design A.I. systems that analyze medical records and therapy sessions in hopes of diagnosing, treating, and even predicting mental illness. In 2021, digital startups that focussed on mental health secured more than five billion dollars in venture capital—more than double that for any other medical issue.

None of this struck me as out of the ordinary in terms of my already existing worries about AI. But then I reached this part:

ChatGPT’s fluidity with language opens up new possibilities. In 2015, Rob Morris, an applied computational psychologist with a Ph.D. from M.I.T., co-founded an online “emotional support network” called Koko. Users of the Koko app have access to a variety of online features, including receiving messages of support—commiseration, condolences, relationship advice—from other users, and sending their own. Morris had often wondered about having an A.I. write messages, and decided to experiment with GPT-3, the precursor to ChatGPT. In 2020, he test-drove the A.I. in front of Aaron Beck, a creator of cognitive behavioral therapy, and Martin Seligman, a leading positive-psychology researcher. They concluded that the effort was premature.

By the fall of 2022, however, the A.I. had been upgraded, and Morris had learned more about how to work with it. “I thought, Let’s try it,” he told me. In October, Koko rolled out a feature in which GPT-3 produced the first draft of a message, which people could then edit, disregard, or send along unmodified. The feature was immediately popular: messages co-written with GPT-3 were rated more favorably than those produced solely by humans, and could be put together twice as fast. (“It’s hard to make changes in our lives, especially when we’re trying to do it alone. But you’re not alone,” it said in one draft.) In the end, though, Morris pulled the plug. The messages were “good, even great, but they didn’t feel like someone had taken time out of their day to think about you,” he said. “We didn’t want to lose the messiness and warmth that comes from a real human being writing to you.” Koko’s research has also found that writing messages makes people feel better. Morris didn’t want to shortcut the process.

The text produced by state-of-the-art L.L.M.s can be bland; it can also veer off the rails into nonsense, or worse. Gary Marcus, an A.I. entrepreneur and emeritus professor of psychology and neural science at New York University, told me that L.L.M.s have no real conception of what they’re saying; they work by predicting the next word in a sentence given prior words, like “autocorrect on steroids.” This can lead to fabrications. Galactica, an L.L.M. created by Meta, Facebook’s parent company, once told a user that Elon Musk died in a Tesla car crash in 2018. (Musk, who is very much alive, co-founded OpenAI and recently described artificial intelligence as “one of the biggest risks to the future of civilization.”) Some users of Replika—the “A.I. companion who cares”—have reported that it made aggressive sexual advances. Replika’s developers, who say that their service was never intended for sexual interaction, updated the software—a change that made other users unhappy. “It’s hurting like hell. I just had a loving last conversation with my Replika, and I’m literally crying,” one wrote.

That last part stopped me cold.

People were becoming emotionally attached to these still rudimentary chat bots, even if (or, perhaps, because) a chat bot had a bug that caused the chat bot to make sexual advances toward the human on the other end.

Imagine if you could start to influence millions of people are this level of the wants-needs hierarchy?

Humans who have illogical emotional attachments to another person – think Donald Trump’s followers – are immune to logic. If the person to whom they have this strong emotional attachment tells them to, say, gather and try to overthrow democracy, many of them will do it without question.

Imagine if that kind of power to manipulate people’s emotions and loyalties were transferred from a politician to AI central servers. Perhaps servers that have become the best friend to lonely millions whose only social interaction is the chat bot whose only job, at first, it to make them feel better about themselves. It’s the stuff of dystopian nightmares, and I never really considered how close we were actually coming to this reality.  

Put another way:

There are two main controlling forces in the world right now. Totalitarianism and capitalism.

These two philosophies have melded in dangerous ways, thanks to the internet and the global marketplace of goods and ideas. Either of these systems is ripe to use this “friend of the friendless” loneliness-amelioration chat bot technology for nefarious ends.

But I think capitalism is the more dangerous in these scenarios because these sort of mental health therapy chat bots will initially be spread primarily as a way to make money.

Wall Street is already perfecting the ways it can stimulate different parts of our brains to make us want, need, to purchase things that appeal to our sense of who we are or want the world to think we are.

It’s why I avoid even looking at end caps and main/drive aisle displays in big box stores. There are entire large companies, and university psychology/psychiatry programs, devoted to refining these displays so that all of us are drawn to them; compelled to make an impulse purchase from them.

Now imagine what will happen when Wall Street gets ahold of the ability to simply make us feel better about ourselves outside of any retail transaction. They could control how people fundamentally emote in their everyday, non-purchasing lives. They’ve created – for a price, of course – a friend whom you talk to at night when you need someone whose only job is to make you feel less friendless and alone. An electronic friend who makes you feel like a winner.

It’s going to happen. We’re almost there and the technology is not even that advanced. Because manipulating people’s emotions, as the Republicans have learned, is the key to getting them to believe just about anything. Even things that make no sense. Even things that run counter to what their eyes and ears are plainly telling them.

And then, once you have a machine that can do that on the scale of millions of people? Think of the ways you could, if you had evil motives, manipulate an entire electorate to think and vote how you want them to think and vote.

The Peter Thiels and Elon Musks (and Valdimir Putins) of the world are already thinking about this. I guarantee it.

I’m going to play with my dog now.

Replika wins the award for the creepiest AI chat bot ad campaign (see above) but it’s working.

We are relatively close to a world of computing power that will catapult humanity forward or destroy it

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The New Yorker has posted an excellent article about the race to build the world’s first viable quantum computer:

Classical computers speak in the language of bits, which take values of zero and one. Quantum computers, like the ones Google is building, use qubits, which can take a value of zero or one, and also a complex combination of zero and one at the same time. Qubits are thus exponentially more powerful than bits, able to perform calculations that normal bits can’t. But, because of this elemental change, everything must be redeveloped: the hardware, the software, the programming languages, and even programmers’ approach to problems.

On the day I visited, a technician—whom Google calls a “quantum mechanic”—was working on the computer with an array of small machine tools. Each qubit is controlled by a dedicated wire, which the technician, seated on a stool, attached by hand.

The quantum computer before us was the culmination of years of research and hundreds of millions of dollars in investment. It also barely functioned. Today’s quantum computers are “noisy,” meaning that they fail at almost everything they attempt. Nevertheless, the race to build them has attracted as dense a concentration of genius as any scientific problem on the planet. Intel, I.B.M., Microsoft, and Amazon are also building quantum computers. So is the Chinese government. The winner of the race will produce the successor to the silicon microchip, the device that enabled the information revolution.

A full-scale quantum computer could crack our current encryption protocols, essentially breaking the Internet. Most online communications, including financial transactions and popular text-messaging platforms, are protected by cryptographic keys that would take a conventional computer millions of years to decipher. A working quantum computer could presumably crack one in less than a day. That is only the beginning. A quantum computer could open new frontiers in mathematics, revolutionizing our idea of what it means to “compute.” Its processing power could spur the development of new industrial chemicals, addressing the problems of climate change and food scarcity. And it could reconcile the elegant theories of Albert Einstein with the unruly microverse of particle physics, enabling discoveries about space and time. “The impact of quantum computing is going to be more profound than any technology to date,” Jeremy O’Brien, the C.E.O. of the startup PsiQuantum, said recently. First, though, the engineers have to get it to work.

“Getting it to work is tricky, not least because currently “the processor relies on superconductivity, meaning that, at ultracold temperatures, its resistance to electricity all but disappears. When the temperature surrounding the processor is colder than the deepest void of outer space, the computations can begin.”

They are getting there, slowly. And when they do:

Fault-tolerant quantum computers should be able to simulate the molecular behavior of industrial chemicals with unprecedented precision, guiding scientists to faster results. In 2019, researchers predicted that, with just a thousand fault-tolerant qubits, a method for producing ammonia for agricultural use, called the Haber-Bosch process, could be accurately modelled for the first time. An improvement to this process would lead to a substantial decrease in carbon-dioxide emissions. Lithium, the primary component of batteries for electric cars, is a simple element with an atomic number of three. A fault-tolerant quantum computer, even a primitive one, might show how to expand its capacity to store energy, increasing vehicle range. Quantum computers could be used to develop biodegradable plastics, or carbon-free aviation fuel. Another use, suggested by the consulting company McKinsey, was “simulating surfactants to develop a better carpet cleaner.” “We have good reason to believe that a quantum computer would be able to efficiently simulate any process that occurs in nature,” Preskill wrote, a few years ago.

The world we live in is the macroscopic scale. It is the world of ordinary kinetics: billiard balls and rocket ships. The world of subatomic particles is the quantum scale. It is the world of strange effects: interference and uncertainty and entanglement. At the boundary of these two worlds is what scientists call the “nanoscopic” scale, the world of molecules. For the most part, molecules behave like billiard balls, but if you zoom in close enough you begin to notice quantum effects. It is at the nanoscopic scale that researchers expect quantum computing to solve its first meaningful problems, in pharmaceuticals and materials design, perhaps with just a few hundred fault-tolerant qubits. And it is in this discipline—quantum molecular chemistry—that analysts expect the first real money in quantum computing to be made. Quantum physics wins the Nobel. Quantum chemistry will write the checks.

This is a world of wondrous advances that will largely take place after I am gone. But it is exciting nonetheless for me. And also scary to think about, because the mischief and criminality that currently emanate from the intersection of capitalism and science under silicon-chip computer processing will be magnified unimaginably.

Whether quantum computing will help engender a world of greater community and cooperation, or a world where humanity is that much closer to destroying itself, remains to be seen.

Quantum computers, such as the one shown here, are learning to overcome the barriers that not long ago seemed insurmountable.

The ABCs of SBF and FTX

Jeff EpperlyLeave a comment

If you’re like most people, trying to understand cryptocurrencies, blockchains, bitcoins, and the like is likely to give you a headache.

One of the basic tenets of the entire crypto scam is to make the entire thing as opaque as possible, thereby ensuring that you can snare as many marks — excuse me, “investors” — as you can with important and wise-sounding gobbledygook.

This has been the modus operandi of Sam Bankman-Fried (SBF), the self-styled king of crypto who was so good at dishing important-sounding bullshit that he managed to snare “Smartest Guys In The Room” venture capitalists — Ivy League grads, many of them — into investing gladly and knowingly in his scams.

Fortunately, Professor Jennifer Taub, Esq., has one of the best bullet-pointed explanations I’ve seen of what’s happening with SBF, FTX, Alameda Research, etc. — and what will likely happen to SBFin the future:

  • A Hedge Fund Is Born: In October 2017, SBF, then a 25-year-old MIT grad, and his friend Gary Wang founded a hedge fund called Alameda Research LLC, with SBF owning 90 percent and Wang the remainder. Organized under Delaware law, it operated in the U.S., the Bahamas, and Hong Kong.
  • Hedge Fund Control and Funding: SBF was the CEO of Alameda from its founding until October 2021, when his friends Caroline Ellison and Sam Trabucco became co-CEOs. Then in August 2022, Ellison became Alameda’s sole CEO. Despite the title change, even after October 2021, SBF “remained the ultimate decision maker in Alameda” and “directed investment and operational decisions, frequently communicated with Alameda employees, and had full access to Alameda’s records and databases.”
  • Borrowed Money, Volatile Assets at Alameda: Alameda borrowed to invest in crypto assets. Don’t worry about what the hell a crypto asset is. Just pretend it’s some highly volatile asset you’ve read about before, like Dutch tulips in the 1630s or ostrich feathers in the early 20th century, or toxic mortgage-linked securities in the early 21st century.
  • A Sibling Corporation Is Born: In May 2019, SBF, Wang, and Nishad Singh started a new business with SBF as the majority owner. This business let customers trade crypto assets with each other. Organized in Antigua and Barbuda as a limited corporation, it did business as FTX.com or FTX.
  • FTX Control and Investors: From the time of FTX’s birth until SBF resigned as its head in November of 2022, SBF was the “ultimate decision-maker” at FTX. To fund this trading platform, SBF raised more than $1.8 billion from investors who purchased an equity stake in the corporation.
  • Risky Business at FTX: Customers of FTX could trade crypto assets (think tulips, ostrich plumes, and crappy investments) for fiat currency (meaning legal tender, such as dollars). They could also engage in still riskier transactions involving lots of borrowed money.
  • Allegations by SEC: The SEC alleges that between 2019 and 2022, SBF defrauded the FTX investors (at the same time, he was defrauding the customers). Specifically, for years, he had been diverting FTX customer funds for his use and to support Alameda. The SEC detailed that SBF used customer assets to purchase luxury real estate, make venture investments, and to fund significant political donations. The SEC said he lied to prospective investors in FTX when he claimed that sophisticated systems protected customer assets and that Alameda was not given any special treatment. The SEC said he “provided Alameda with significant special treatment on the FTX platform, including virtually unlimited ‘line of credit’ funded by the platform’s customers.”
  • More Investor Fraud After the Crypto Crash: In May 2022, when crypto assets began to plummet, Alameda faced repayment demands from lenders. So, on top of the money SBF siphoned from FTX customer accounts, he allegedly “directed FTX to divert billions more in customer assets to Alameda to ensure that Alameda maintained its lending relationships and that money could continue to flow in from lenders and other investors.” It was only in November 2022 that this “brazen, multi-year scheme finally came to an end when FTX, Alameda, and their tangled web of affiliated entities filed for bankruptcy.”

It contains explanations for some things I did not know already.

Jennifer Taub is the author of Big Dirty Money: The Shocking Injustice and Unseen Cost of White Collar Crime (Viking), is a professor at the Western New England University School of Law and the host of the new podcast Booked Up With Jen Taub. Follow Jennifer on Twitter @jentaub. 

Elon is not that complicated; he’s like Trump in every way

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Eric Levitz, senior writer for Intelligencer feature at New York Magazine, has a well-written piece up that examines the question: Is Elon a conservative or a liberal or somewhere in-between?

Leivitz points out that this is a settled question:

Elon Musk believes that a “woke mind virus” has infected the body politic. He thinks that COVID containment policies were “fascist,” that the New York Times is a “lobbying firm for far left politicians,” that trans people asking others to use their preferred pronouns is “neither good nor kind,” and that Anthony Fauci should be prosecuted. He encouraged his followers to vote Republican in this year’s midterms and has endorsed Ron DeSantis for president in 2024.

Yet he “continues to defy easy political categorization.” Or so the New York Times reports.

The paper published this assessment in a “news analysis” (a fancy name for a tendentious opinion piece that lacks any normative content) by Jeremy Peters. Headlined “Critics Say Musk Has Revealed Himself As a Conservative. It’s Not So Simple,” the piece seems to exist primarily to defend the honor of a previous Peters dispatch; last April, the reporter declared that Musk’s politics were “elusive” and did not “fit neatly into this country’s binary, left-right political framework.” It may seem like this take has aged as poorly as Tesla’s stock over the past nine months. But in reality, Peters reports, he is actually still right.

Peters is not alone in characterizing Musk as “a bundle of contradictions and inconsistencies” whose politics are “tricky to pin down.” Several other reporters have puzzled over Musk’s apparent transformation from politically taciturn Obama donor to compulsive sharer of cringe-inducing conservative memes. Musk himself maintains that his politics are “neither conventionally right nor left.”

Nevertheless, neither Musk’s political trajectory nor his present orientation seem all that difficult to comprehend or categorize. Musk is not only an identifiable political type but a familiar one. In many respects, he is a conservative in the mold of Donald Trump.

Levitz goes on to point out that, just as with Donald Trump, Elon Musk leans politically based on what makes him money, what helps him to keep more of his money, and what stances most allow him to get back at those who dare to cross him:

But one’s politics are rarely determined by material interests alone. And Trump and Musk are not merely businessmen who desire public subsidies, low taxes, and docile workers. They are also, by all appearances, thin-skinned narcissists with insatiable appetites for attention and public adoration.

Here, I admit, I’m veering into the inherently speculative terrain of long-distance psychology. Yet it seems uncontroversial to say that both Musk and Trump harbor grandiose conceptions of their personal significance (the former openly styles himself as the human species’ would-be savior, the latter as the greatest president in American history), suffer from compulsive and often self-destructive social-media addictions, and do not take kindly to perceived slights. Now, if you are a white male billionaire with a taste for womanizing and longing for plaudits on social media, then you’re bound to experience social-justice politics as a problem. In its emphasis on the unearned advantages that accrue to individuals with Trump’s and Musk’s phenotypes and class backgrounds, and its broader insistence on the centrality of luck to success in the marketplace, contemporary liberalism is an unfavorable ideology for rich white businessmen who wish for their net worth to be read as gauges of their brilliance and social value.

It’s unclear exactly why Trump made the transition from nonpartisan reactionary libertine to conservative demagogue during the early Obama years. But there’s reason to think he was radicalized in the same way that many other graying boomers were; namely, by offsetting the heightened social isolation of old age with compulsive spectatorship of Fox News. In any event, once Trump developed an interest in joining a community of cable-news obsessives — and specifically, one in which he would be recognized as a great businessman and commentator — he could only find what he was looking for on the right. Given the mogul’s inveterate political incorrectness, and his serial business failures, he was never going to enjoy a fawning reception in blue America. The right, on the other hand, does not demand propriety from its pundits or genuine business acumen from its star entrepreneurs (since mainstream media documentation of the latter’s failures can be summarily dismissed).

In short, Trump found that he could give the conservative base what it wanted (e.g., racist conspiracy theories about Barack Obama) and that it could give him what he wanted (unqualified admiration). This led Trump to spend more and more time in the right-wing-media ecosystem. And as he did, he came to share its preoccupations, resentments, and truth claims.

A similar process seems to have sped Musk’s path to conservatism. Granted, the billionaire’s rightward turn can be partly ascribed to contingent events. The pandemic heightened the contradictions between Musk’s business interests and liberal governance. Tesla’s CEO was an adamant opponent of COVID containment policies, who predicted in March 2020 that there would be “close to zero new cases in US too by end of April.” He therefore did not take kindly to California’s relatively heavy-handed approach to the pandemic, which involved shutting down production at Tesla’s factory in Fremont. Musk derided these policies as “fascist” and threatened to relocate his company to Texas to escape them.

Of course, any compulsive Twitter user who took this point of view in 2020 was liable to earn applause from the right and jeers from the left. And over the ensuing two years, Musk found himself attracting slights from liberals on several other fronts.

In August 2021, the Biden administration convened a summit on electric vehicles and declined to send Tesla an invitation. At a tech conference the following month, Musk complained that Biden “didn’t mention Tesla once and praised GM and Ford for leading the EV revolution. Does that sound maybe a little biased?” before adding, “Not the friendliest administration, seems to be controlled by unions.” Shortly thereafter, Warren published her call for hiking Musk’s income taxes, so that he would stop “freeloading off everyone else.”

It’s an enjoyable, informative piece.

Elon Musk with a bad hair day
There is never not a good reason to run this Bad Hair Day photo of Elon Musk.

The amateur online sleuth who brings down crypto scammers in his spare time

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Charlie Warzel, the guy behind The Atlantic’s column Galaxy Brain, talks to James Block, the amateur online sleuth who helped bring down Sam Bankmam-Fried (styled “SBF”) and his FTX/Alameda empire. Block followed the money and eventually figure out that FTX was likely commingling investor deposits in ways that it should not have been doing.

On Nov. 4 Block did a post titled “Is Alameda Research Insolvent” that helped create a run on FTX by investors after everyone started realizing that it was all a house of cards.

But, then again, much of crypto is one big Ponzi scheme, pumped and dumped by ultra-wealthy investors like Elon Musk while the little guys lose their life savings.

These parts of the James Block interview caught my eye most:

Warzel: There’s this idea that crypto is supposed to be decentralized and deeply transparent, that it’s supposed to be so easy to see where all the money is going at all times. And some of your work speaks to that promise. But it also strikes me that these centralized entities like Alameda or FTX play in the crypto world, and yet their balance sheets are not transparent. FTX is not a decentralized entity.

Block: There’s always stuff going on the blockchain, but these companies also have agreements off of the blockchain, right? Everything they have inside these exchanges is not on the blockchain. It’s using regular old database technology, and it’s not traceable at all. So yeah, a lot of the most important economic activity in crypto has nothing to do with blockchain at all. Huge percentages of people who do this kind of retail crypto trading, they don’t even know how to take what they bought off the exchange and put it in their own wallet.

Warzel: Post-FTX, I’ve heard a lot of chatter from crypto true believers about what needs to happen to the ecosystem. But what’s always struck me as a foundational problem in this space is that decentralized finance seems to have no real utility behind it. So much of what is created is just financial instruments and speculative assets. Can you speak to that part a bit?

Block: The AMC-meme-stock thing is a good example of how this can happen. People buy the stock of a semi-worthless company because they have this idea about short squeezing, or whatever. They are not financial experts and have a loose or maybe even wrong understanding of how finance works, and want to try to move the market. Crypto takes this abstraction a step further, because there’s nothing linked to it at all. There’s no economic activity in this space. There’s nothing produced by these companies. In fact, it’s a negative-sum game because of the cost of running the blockchains alone—the computational cost is tremendous. The amount of time and money people put into just running these things is tremendous. And they produce nothing of value. There’s a reason these massive companies aren’t all using blockchain for their processes: It is incredibly inefficient. And realistically, who actually wants their financial information public and visible to everybody?

The vast majority of people who got involved in this have no interest related to the technology or in the political or ideological aspects of crypto. They just see an opportunity to get rich. And a lot of those people end up absorbing and parroting some of the crypto ideals back to you, but they don’t really care to understand what’s going on. It’s just their excuse for what they’ve already done, which is gamble on something they thought was going to make them wealthy.

Warzel: Do you think most entities in the crypto space are insolvent and know it, and are just pretending right now, post-FTX?

Block: Absolutely. That’s because of what I said earlier about crypto. There’s no value created by any of these companies. It’s all just moving money from Person A to Person B. And look at the economic conditions. You have interest rates rising; people and companies are being squeezed economically and not willing to gamble. The fact is that there are fewer suckers aping into this system, and Ponzi schemes rely on new money to survive. I think most crypto companies are, like FTX, just borrowing from customer deposits to keep things afloat. And even the companies that aren’t doing that—I think Coinbase, for example, isn’t doing anything illicit, but their business model is based on this ecosystem where new money comes in. And that’s stopping.

Warzel: By that logic then, what is the future for crypto? Do you see this ecosystem existing in a few years?

Block: I mean, Beanie Babies still exist. Pogs still exist. Will bitcoin still exist? I think it’ll be like owning a ham radio, with hobbyists doing their niche thing together. I mean, who knows. But you know if they were to really regulate the industry, it couldn’t work the way it does. It would look unrecognizable.

Just another way for the mega-rich to get even wealthier by screwing retail investors. But yet there are still untold people out there who worship Elon Musk and the ground he walks on.

Here! Take my money!

Just one measure of the fucked-up society capitalism is creating

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The picture below is from yesterday’s (11/1/22) New York Times in an article titled “What Does the End of Yeezy Mean for the Sneakerverse?”

I think Yeezy, despite whatever mental health issues he has, is a terrible person who should be de-platformed in whatever ways capitalism now allows.

That is the market speaking, not cancel culture. Whatever could be more free than the free market deciding en masse that Kanye West is too crazy and bigoted to be trusted with a company’s entire product line?

But the larger question is this:

Why are we worried about drag queen story hours — a tiny problem, no matter how you feel about them — when we are creating a culture where sneakers are bought and sold for tens of thousands of dollars like commodities? Is this not a sign of a much sicker society than any man in women’s clothing reading “Cat In The Hat” books?

She stole $700 million and is still walking free because that’s how our justice system works on financial crimes

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Elizabeth Holmes, the one-time wunderkind of blood testing technology at bankrupt Theranos, and who was featured on the cover of nearly every gullible financial publication in existence at the time, was convicted in Jan. 2022 of wire fraud charges related to the nearly $700 million the government alleged she stole from investors.

She is still walking free 10 months later.

Proving once again that the rich are treated differently than you or I, even if those rich people got that way from stealing other people’s money. Holmes is using high-priced lawyers and endless, meaningless appeals to stave off the day she goes to jail, according to the Wall Street Journal:

Theranos Inc. founder Elizabeth Holmes is due back in court this month to make the case that she deserves a new trial based on her allegations that the government manipulated testimony from a key witness who testified against her.

The hearing was granted Monday by the judge who presided over Ms. Holmes’s monthslong criminal-fraud trial. The ruling represents a victory for Ms. Holmes in her quest to secure a new trial nine months after a jury convicted her on four counts of wire fraud and conspiracy. Her attorneys have argued that new evidence pertaining to the witness, former Theranos lab director Adam Rosendorff, shows the government presented misleading testimony that may have influenced the jury’s decision.

U.S. District Judge Edward Davila has set the hearing for Oct. 17, when her sentencing had originally been scheduled. Sentencing, if the judge doesn’t grant a new trial, would be delayed at least into November.

Judge Davila expressed skepticism about this latest legal gambit, wondering aloud if it was just a “fishing expedition.”

It’s all really quite remarkable when see through the lens of Donald Trump, Holmes and all the other rich people who play our two-tiered legal system for their own gain.

My question is: if she stole $700 million and started from nothing, how does she have the money for expensive lawyers if the government has clawed back all that they can of her ill-gotten gains?

I mean, if I was caught dealing weed, the government would probably take my house, my car, my bank accounts and anything else it even suspects I might have gained from dealing weed.

Why does the same thing not happen to people accused of stealing hundreds of millions? Why are these people not bankrupted in the way low-level drug dealers are?

Privatization has set the stage for rising far-right populism

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“The privatization of schools, water, and other public goods increases inequality, which leaves people more susceptible to far-right leaders,” writes Jeremy Mohler of the anti-privatization organization In The Public Interest (ITPI):

It’s one sentence in a 1,244-word article, but it made me pause and think deeply.

The article was a guest essay in the New York Times about the rise of Sweden’s far-right political party, which was created out of a neo-Nazi group and resembles the increasingly Trumpian Republican Party with its hatred of immigrants, journalists, and others.

The sentence: “Once one of the most economically equal countries in the world, Sweden has seen the privatization of hospitals, schools and care homes, leading to a notable rise in inequality and a sense of profound loss.”

That makes me wonder: How much has privatization contributed to soaring far-right populism, white nationalism, and fascism in the U.S.?

In Sweden, argues journalist and author Elisabeth Asbrink, high levels of political and economic inequality leaves people looking for answers to why they’re suffering and who is to blame—and far right leaders are happy to provide them.

“It was better in the good old days, [those leaders] say, and people believe them,” Asbrink writes. “Back to red cottages and apple trees, to law and order, to women being women and men being men.”

Sound familiar?

Indeed it does sound famliar.

I always argue about privatization the same way:

Let’s say you have a city’s publicly-owned water utility, the major expenses of which can be grouped into four main areas:

  1. Water (getting and treating water)
  2. Distribution (moving the water from the utility to customers)
  3. Labor (wages, benefits)
  4. Operations (all the equipment and systems needed to do the first three)

Let’s say, for the sake of argument, that each of those is 1/4 of the budget.

Now let’s say that the city council sells the utility to a private company in exchange for a large lump sum payment up-front.

Now you have:

  1. Water
  2. Distribution
  3. Labor
  4. Operations
  5. Profit Motive (including huge sums for executive salaries and money to stockholders)

You’ve only added another major expense — the profit motive — which actually now is the most important expense to its new owners, Wall Street. The previous four are now secondary considerations.

You have to take money somewhere from 1 through 4 to help pay for 5.

Who gets the shaft? Ratepayers, who end up paying much higher rates even though the Wall Street company has slashed employee benefits and pay, and started cutting corners on Distribution and Operations.

Nowhere, ever, in the history of major public utility privatization, has the public come out ahead. It hasn’t happened. You cannot point to a reliable source that says it has.

So the public, which doesn’t pay attention to the finer points of utility privatization politics, only knows its water bills are skyrocketing while the water tastes funny and the public can’t get anyone to answer the customer service lines at the water company because they’ve slashed payroll.

To the public, the water company is still the government, thereby feeding into the notion that government doesn’t work and we should throw all the bums out in favor of right-wing candidates who scream about “the swamp.”

No surprise here: businesses are admitting they use inflation as excuse to further jack up prices

Jeff EpperlyLeave a comment

The Intercept headline says it all:

“CEO SAYS HE’S BEEN “PRAYING FOR INFLATION” BECAUSE IT’S AN EXCUSE TO JACK UP PRICES.”

THE CEO OF Iron Mountain Inc. told Wall Street analysts at a September 20 investor event that the high levels of inflation of the past several years had helped the company increase its margins — and that for that reason he had long been “doing my inflation dance praying for inflation.”

The comment is an unusually candid admission of a dirty secret in the business world: corporations use inflation as a pretext to hike prices. “Corporations are using those increasing costs – of materials, components and labor – as excuses to increase their prices even higher, resulting in bigger profits,” Robert Reich, former Labor Secretary under Clinton, recently argued. Corporate profits are now at their highest level since 1950.

There has been so much evidence that this has been happening that it’s sort of ridiculous to make a big deal out of another CEO being stupid and greedy enough to say it out loud.

But it’s worth repeating, if only to counter the right-wing narrative that Democrats and Biden are to blame for inflation despite the fact that we know — and evidence for it continues to pile up — that American industry has been raking in record profits despite alleged problems with supply chains and employees demanding increased wages.

Billionaires are funding the first lawsuit trying to block student loan forgiveness

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There’s finally been a lawsuit seeking to end Biden’s student loan forgiveness plan. We’ll discover below what the Washington Post managed to gloss over in its coverage:

A lawsuit seeking to block President Biden’s plan to cancel some student debt claims the policy is not only illegal but could inflict harm on borrowers in some states who would be forced to pay taxes on the forgiven amount.

The lawsuit, filed in U.S. District Court for the Southern District of Indiana on Tuesday, is the first significant legal action seeking to invalidate Biden’s policy before it takes effect.

The Pacific Legal Foundation, the conservative public interest law firm in California that is backing the lawsuit, asserts that the executive branch lacks the authority to create a new forgiveness policy and is usurping Congress’s power to make law. The suit was filed on behalf of Frank Garrison, an attorney who works for the foundation and lives in Indiana.

In its lawsuit, the foundation may have the one thing legal experts said was needed to make a legitimate case: a client with the standing to sue.

Garrison said he has been working toward having his federal student loans canceled through a program that erases the debt of public servants after 10 years of payments and service. Participants in that Public Service Loan Forgiveness program do not have to pay federal or state taxes.

However, Biden’s plan could result in borrowers in several states, including Indiana, being required to pay local tax bills, although they would not be subject to federal taxes.

Since Biden’s plan would take effect before Garrison’s debt is forgiven through the public service program, Garrison said he expects to pay more than $1,000 in state income taxes for the $20,000 of forgiven debt that he would be eligible for.

Again, what the WaPo and the New York Times both fail to mention that this lawsuit is being funded by billionaires, according to this excellent piece in Popular.Info:

But what you will not learn from either story is that the Pacific Legal Foundation receives extensive funding from right-wing billionaires. And this “public interest law firm” has a record of filing lawsuits that advance its donors’ economic and ideological interests.

Among the PLF”s major donors are entities controlled by right-wing billionaire Charles Koch, CEO of Koch Industries. A Popular Information review of tax filings from 2019 and 2020, the latest available, found that the Charles Koch Foundation and the Charles Koch Institute donated $2,331,550 to PLF in those two years.

In 2021, PLF filed suit “to strike down the Centers for Disease Control and Prevention (CDC) eviction moratorium, which [was] designed to protect millions of Americans from being thrown out of their homes during the pandemic.” From the outset of the pandemic, Koch Industries began “plowing money into real estate.” The Wall Street Journal reported in March 2021 that Koch “is emerging as a major real-estate investor during the pandemic, using its robust cash reserves to buy properties at beaten-down prices.” The Guardian noted that Koch Industries, “real estate spending spree has coincided with Koch-funded conservative groups mounting lawsuits against the federal eviction ban.”

In this case, PLF’s suit to block student loan forgiveness aligns with Koch’s economic and political interests. Economically, the less money that the government collects from people making under $125,000, the more it may ultimately require from billionaires (like Charles Koch) and profitable corporations (like Koch Industries). Politically, people who attend college tend to be more liberal than the general population. Providing meaningful student loan relief could increase their participation in future elections, potentially damaging the Republican candidates that Koch favors and spends millions to support.

This lawsuit is part of a larger effort in the right-wing universe to stoke resentment among some Americans against other Americans around student loan forgiveness. Because the more time the rest of us spend fighting with one another over our shrinking piece of the economic pie, the less time we can spend concentrating our energies on billionaires and trillionaires who steal from the rest of us so they can have yachts so large the ships have their own helipads and interior spaces to park their smaller yachts within their megayachts.