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Futures Slide Amid Fears WallStreetBets Will Again Steamroll Greenwich

Futures Slide Amid Fears WallStreetBets Will Again Steamroll Greenwich

Late last night when futures were sliding by 1% following Robinhood’s flipflop and its decision to allow trading of the most-shorted stocks after all which sent names…

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Futures Slide Amid Fears WallStreetBets Will Again Steamroll Greenwich

Late last night when futures were sliding by 1% following Robinhood's flipflop and its decision to allow trading of the most-shorted stocks after all which sent names such as GME, AMC and others soaring, and which now trade as a mirror image to the most popular hedge fund stocks...

... we joked that futures were sliding amid renewed fears that the short squeeze army was coming to streamroll the hedge fund capital of Greenwich in the latest chapter of the Wall Street vs Wall Street Bets battle.

And while we were joking, this quickly became the dominant narrative overnight, with Reuters reporting this morning that "Wall Street set for weak open on hedge fund-retail battle"...

... as S&P futures and European stocks fell "as a Wall Street battle between hedge funds and retail investors" reversed yesterday's furious rally, while risk appetite was also cooled by a row in Europe over COVID-19 vaccine supply.

And while S&P 500 futures recouped some ground in European trade after dropping as much as 1%, were down 0.5% as of 730am. Nasdaq 100 futures fell 0.7%. World stocks fell 0.4% towards three-week lows set in the previous session, and were heading for a weekly fall of more than 2%.

The stand-off between the daytrading hordes and short hedge funds comes after central bank and government stimulus have injected trillions in stimulus into stock markets creating the biggest bubble ever, encouraging involvement by retail investors, and making stocks extremely susceptible to a bubble burst.

“There’s fear in terms of the volatility,” said Derek Halpenny, head of research for global markets at MUFG. “Specific trades in pockets of the market can spread into the broader market.”

After shares in GameStop, AMC Entertainment and BlackBerry plunged more than 40% on Thursday after several online platforms  imposed buying halts, they rebounded even more on Friday as Robinhood and Interactive Brokers eased the restrictions on Friday.  GameStop shares nearly doubled and AMC Entertainment was up 55% in U.S. pre-market trade.

"Any hedge fund will be carefully looking at all their shorts after this week and regulators will look very carefully at collective retail trading,” Deutsche Bank analysts said.

In Europe, the Stoxx Europe 600 index declined, though it pared losses after data from three of the euro area’s largest economies suggested the region can avoid a deeper recession, while still facing headwinds from extended coronavirus lockdowns. Curiously, unlike the US, European shorts actually dropped perhaps as news that the short-squeeze army had been unleashed again was slow to cross the Atlantic. Swedish retailer Hennes & Mauritz AB fell after warning it’s still in “crisis mode,” with 40% of stores shut. British bootmaker Dr. Martens Plc jumped as much as 26% as it began to trade in London.

Delays in COVID-19 vaccine production have snowballed into a spat between Britain, the European Union and drugmakers over how best to direct limited supplies. AstraZeneca offered eight million more doses of its COVID-19 vaccine to the European Union, after it unexpectedly announced cuts in supplies last week. But the bloc said that was far short of what was originally promised, an EU official told Reuters on Friday.

Asian stocks fell for a fourth straight session on the last trading day of January, on track for the worst weekly loss since March. Chipmakers and suppliers were the largest drags on the regional benchmark, with Samsung Electronics falling 2%, TSMC down 1.7% and Tokyo Electron slumping almost 5%. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1%, on course for a weekly loss of 4.4%. Japan’s Nikkei fell 1.9%, recording its first weekly loss of the year. Better-than-expected earnings in some Asian semiconductor-related companies failed to boost sentiment. Korean chipmaker SK Hynix’s fourth-quarter earnings more than tripled and beat estimates, and in Japan, Advantest’s operating income also exceeded expectations as the testing device maker raised its forecast. Chinese stocks slid as a money-market rate in China surged to the highest in almost six years, reflecting tight liquidity in the financial system. Vietnam shares rebounded from its worst day since 2001 while Philippine stocks fell most since August.

The PBOC injected 100 billion yuan into the financial system on Friday, following a week of reducing liquidity, which had sparked concerns the central bank was in fact tightening monetary policy. That,however, proved insufficient to lower overnight repo rates, which have soared to a 5 year high.

In FX, the Bloomberg Dollar Spot Index advanced, and was set for its best week since October. The greenback climbed versus most peers; the Norwegian krone reversed a loss after Norges Bank announced a higher rate of krone buying in February.  The euro also inched higher after reversing an earlier loss, while German bonds declined, with the yield curve steepening after ECB policymaker Gabriel Makhlouf said an interest-rate cut isn’t warranted right now. Aussie heading for its worst week since October, pushed down by drops in stock futures and oil; sales versus the kiwi over vaccine concerns also weighed on the currency. The yen fell to its lowest in nearly two months on flow- driven trades.

In crypto, Bitcoin soared above $37,000, after Elon Musk mentioned the cryptocurrency in his bio page on Twitter

In rates, Treasuries were on the back-foot into early U.S. session, following wider losses across core European bonds as bets for monetary easing fade following comments by ECB’s Gabriel Makhlouf. Yields were higher by up to 3bp across long-end of the curve, steepening 2s10s, 5s30s by 2bp-3bp; 10-year yields around 1.07% -- back to little changed on the week after breaching 1% Wedensday and Thursday -- with bunds, gilts trading cheaper by 0.5bp and 1bp in the sector. Bunds underperform after ECB’s Gabriel Makhlouf says that an interest-rate cut isn’t warranted right now.

 

 

Market Snapshot

  • S&P 500 futures down 0.8% to 3,750.25
  • MXAP down 1.4% to 204.13
  • MXAPJ down 1.1% to 686.56
  • Nikkei down 1.9% to 27,663.39
  • Topix down 1.6% to 1,808.78
  • Hang Seng Index down 0.9% to 28,283.71
  • Shanghai Composite down 0.6% to 3,483.07
  • Sensex down 1.1% to 46,337.49
  • Australia S&P/ASX 200 down 0.6% to 6,607.36
  • Kospi down 3.0% to 2,976.21
  • Brent futures up 0.5% to $55.80/bbl
  • Gold spot up 0.5% to $1,851.88
  • U.S. Dollar Index up 0.3% to 90.71
  • German 10Y yield rose 5.6 bps to 0.509%
  • Euro little changed at $1.2115
  • Italian 10Y yield fell 3.5 bps to -0.525%
  • Spanish 10Y yield rose 21.9 bps to 0.089%

Top Overnight News from Bloomberg

  • Cargill Inc and Deutsche Bank AG are among a group of major foreign companies under probe in Taiwan for speculating on the surging local currency last year, hindering the central bank’s efforts to rein in a rampant foreign-exchange market
  • Three of the euro area’s four largest economies rounded off the pandemic year suggesting the region can avoid a deeper recession, while still facing headwinds from extended coronavirus lockdowns. GDP in Spain unexpectedly increased 0.4%, defying expectations for a 1.4% drop. In another surprise, Germany also recorded growth, while output in France fell less-than-forecast after consumer spending rebounded sharply in December
  • Italy’s former premier Matteo Renzi, who triggered the collapse of Italy’s government, said he wants a new cabinet soon to avoid new elections
  • Beijing is so fearful of speculative manias that authorities are creating the biggest liquidity crunch in more than five years, roiling Chinese stocks and bonds and freezing a key funding market

A quick look at global markets courtesy of Newsquawk

Asian equity markets steadily deteriorated as the initial emboldenment from the rebound on Wall St, where the major indices atoned for their recent weakest performance in 3 months, gradually faded on month-end and with overnight newsflow dominated by earnings results and data releases. ASX 200 (+0.6%) failed to sustain early gains and finished negative despite better-than-expected private sector credit data with the downturn led by underperformance in the financials and mining sectors, while Nikkei 225 (-1.9%) was lifted at the open amid a weaker currency but then reversed course as participants also digested a heavy slate of earnings and economic data including mixed Tokyo inflation numbers and a larger than anticipated decline for Industrial Production. Hang Seng (-0.9%) and Shanghai Comp. (-0.6%) were initially kept afloat after the PBoC injected liquidity into the market, although the gains were later pared as today’s CNY 98bln net injection failed to allay liquidity and policy tightening concerns which saw money market rates continue to creep higher to push the overnight repo rate to its highest since 2015. Finally, 10yr JGBs were lower following similar pressure in T-notes and after the BoJ Summary of Opinions pointed to the likelihood of a more flexible approach to yield curve control in the March review such as permitting the 10yr yield to trade at a wider range around the 0% target which would effectively allow yields to increase more before the central bank steps in.

Top Asian News

  • Hong Kong’s Economy Contracts Record 6.1% in Pandemic Year
  • GameStop, AMC Trades to Resume at Chinese Online Brokers
  • Taiwan’s GDP Growth Outpaces China’s for First Time in 30 Years
  • Bank of Japan Paves Way to Buy Less Shorter-Term Debt Next Month

European equities see losses across the board (Euro Stoxx 50 -0.7%), but have clambered off worst levels after the downbeat APAC reverberated into Europe. US equity futures meanwhile remain pressured with more pronounced losses seen in the tech-heavy NQ (-1.6%) vs the value-driven RTY (-0.4%) - with month-end flows also to factor in amidst the heat the earnings season. Macro developments for stocks have been scarce during the final European session thus far as traders look ahead to the US open, with the Reddit hype likely to steal the limelight again as trading platforms are lifting trade bans on Gamestop (+107% pre-market), AMC (+62% pre-market), albeit further platform issues will be watched for given the sheer volumes expected. On this note, US Senate panel is to hold a hearing on the current state of the stock market in wake of the GameStop situation, while reports also noted that the New York AG office is reviewing Robinhood app activity. Back to Europe, sectors are mostly lower with no real risk bias telegraphed, whilst the breakdown sees Telecoms and Autos outpacing whilst Healthcare, and Finance resides on the other end of the spectrum. The gains in the Telecoms sector are led by heavyweights Ericsson (+9%) post-earnings, whilst Nokia (+4.9%) cheers the trading lift ban imposed by various retail platforms. In terms of individual movers, AstraZeneca (-1.1%) is weighed on by threats of legal action by the EU regarding the vaccine dispute. Daimler (+1%) underpins the Auto sector after reporting results significantly above guidance and market expectations. Other earnings related movers include BBVA (-2.6%), Caixabank (+2.5%) and JC Decaux (+2.8%).

Top European News

  • U.K. Slammed by Experts Over ‘Neo-Victorian’ Food Poverty
  • EU Raises Pressure on AstraZeneca Over Covid Vaccine Shortage
  • Daimler, BMW and VW Get Little Credit for All the Cash Piling In
  • Ericsson Holds On to 2022 Goals Even as Investors Want More

In FX, little sign of salvation or even remote support for the Yen via decent 1.2 bn option expiry interest between 104.40-45 in Usd/Jpy as the pair extends its breach of the 100 DMA through 104.50 to circa 104.94 and well beyond well 104.75, which was the higher from December 2nd 2020. Clearly, 105.00 beckons next before a virtual double bottom from mid-November last year that might offer a bit more in the way of respite (105.14 on November 16 and 105.15 on the preceding Friday). Meanwhile, upward momentum has also been building in Eur/Jpy above 126.50 to just over 127.00 amidst month end tailwinds from rebalancing models flagging a moderate Dollar sell against most majors, bar the Yen, and at least one bank pointing to the obvious attraction of killing 2 birds that the cross provides. Moreover, the Yen has hardly been helped by weaker than forecast Japanese IP or mixed Tokyo CPI data any more than the latest BoJ Summary of Opinions that highlighted rising deflation risks as reason for the Bank to enhance its easing stance.

  • USD - Aside from the obvious assistance of Yen depreciation, the Buck is managing to stave off aforementioned sales for portfolio purposes due to safe-haven demand as broad risk sentiment sours again. However, the DXY remains capped below recent recovery highs close to 91.000 within a 90.780-520 range ahead of a final batch of US data to round off January and the first post-FOMC meeting Fed speakers in the form of Kaplan and Daly to glean extract any further policy insight, while also keeping an eye on the Euro as the biggest component of the index following another ECB ‘sources’ piece.
  • EUR - Surprisingly strong German jobs data, better than feared GDP and another Eurozone M3 beat did not really register, but the Euro has reacted to latest reports quoting ECB sources pushing back on the notion of a rate cut, and dumbing down on the level of concern over the single currency’s strength – see 10.24GMT post on the headline feed for more details. Eur/Usd is now forming a firmer base on the 1.2100 handle, and eyeing 1.2150 ahead of a series of descending peaks below 1.2200 that also align with 21 and 50 DMA resistance at 1.2170 and 1.2189 respectively.
  • NZD/CAD/CHF - All narrowly mixed and rangebound vs their US counterpart, with the Kiwi hovering between 0.7150-84 having failed to retain grasp of 0.7200 on several occasions after getting within a whisker of 0.7250 at one stage, while the Loonie is still holding above 1.2900 following its sharp post-BoC retreat and now seeking some independent impetus from Canadian monthly GDP, albeit rather stale now for November. Elsewhere, the Franc is treading water above 0.8900 and 1.0800 vs the Euro in advance of Monday’s update on Swiss bank sight deposit balances.

In commodities, WTI and Brent front month futures see a choppy session thus far as the contracts nursed losses in early European hours – with the former now around USD 52.50/bbl (vs low 51.96/bbl) and the latter just under USD 55.50/bbl (vs low 54.92/bbl). The two benchmarks see somewhat of a dichotomy, with the US contract outperforming its Brent counterpart, with reports also suggested that the US oil industry is looking to forge a partnership with corn growers and biofuel to push against Biden’s green policy. Furthermore, the week saw substantial surprise draws in both Private Inventories and DoEs which further supports a bullish backdrop. Aside from that, the macro narrative remains the balance between the COVID-impacted demand and OPEC-supported supply. Elsewhere, spot gold and sport silver are supported despite the backdrop for a firmer Dollar, with some potential reflationary play, but one of the main drivers cited by analysts includes the Reddit crowd’s silver influence causing sympathy plays across precious metals. Spot gold resides around USD 1850/oz with its 50 DMA at 1856 and yesterday’s low around USD 1833/oz, whilst spots silver probes USD 27/oz. In terms of base metals, LME copper prices track the broader stock markets lower, albeit trades off lows – with some supply side reports suggested that Peru will also permit mining during COVID-related lockdowns. Finally, China’s steel rebar futures fell 1.4% amid surging inventories.

US Event Calendar

  • 8:30am: Dec. Personal Spending, est. -0.4%, prior -0.4%
  • 8:30am: Dec. Personal Income, est. 0.1%, prior -1.1%
  • 8:30am: Dec. PCE Core Deflator YoY, est. 1.3%, prior 1.4%; PCE Core Deflator MoM, est. 0.1%, prior 0%
  • 9:45am: Jan. MNI Chicago PMI, est. 58.5, prior 59.5, revised 58.7
  • 10am: Dec. Pending Home Sales YoY, est. 20.2%, prior 16.0%, Pending Home Sales (MoM), est. -0.5%, prior -2.6%
  • 10am: Jan. U. of Mich. Expectations, est. 74.1, prior 73.8; Mich. Sentiment, est. 79.3, prior 79.2; Current Conditions, est. 87.7, prior 87.7;

DB's Jim Reid concludes the overnight wrap

After this tumultuous week, risk assets recovered yesterday from their major declines on Wednesday, with the S&P 500 advancing +0.98%, as it came off its biggest fall since October. Markets retreated a fair bit into the close though with the S&P up as much as +2.1% intraday. On top of this futures in Asia have given up all these gains (-1.28%) with the Nikkei (-1.70%), Hang Seng (-0.48%), Shanghai Comp (-0.28%) and Kospi (-3.31%) also all down. Sentiment in the Asian session is also being dragged down by a cash squeeze in China as the cost of overnight borrowing in the country rose 28 bps to 3.3302% today, the highest in almost six years, as the country’s lenders sought out cash for end-of-month regulatory checks and tax payments. The rise in the rate came even as the PBOC added $15bn of short term cash to the banking system, less than expected. Futures on the Nasdaq are down -1.47%. In keeping with the risk off the US dollar index is up +0.30%.

In terms of the latest on the Reddit-fuelled rally for certain companies, there were some initial signs that the reversal might be beginning yesterday, as GameStop’s share price ended the session down -44.3%, having briefly become the biggest stock on the Russell 2000 with a market cap of $35.7bn at the intra-day peak. Indeed over the last 24 hours the stock price ranged from 513 in pre-market trading to 112 at the lows before closing at 193. In after hours trading it was back up +61.2% to $312.

A big part of the collapse was after brokerages such as Robinhood and Interactive Brokers heavily restricted trading in several of these r/wallstreetbets names, with Robinhood also increasing margin requirements for certain securities. It didn’t go down well in the forum and many lawmakers from both sides of the aisle expressed concerns at these restrictions for retail investors. I can’t help but think this week will have long term consequences. It’s shaken up the system and there will be some permanent changes to the ways investors, especially hedge funds and retail, act. Surely any hedge fund will be carefully looking at all their shorts after this week and regulators will look very carefully at collective retail trading. After the close Robinhood’s CEO Tenev said they restricted buying of certain stocks due to its financial position, saying “it is not negotiable for us to comply with our financial requirements and our clearinghouse deposits.” This came as Bloomberg said that the company has to drawn down credit lines with banks.

Overnight, Robinhood has said that its clients would be able to make limited purchases of some of the companies that it blocked, without providing any further details. This news helped push reddit favourites up again in afterhours trade with GameStop (+61.2%), AMC (+31%), Blackberry (+12.55%), Koss Corp. (+62%) and Express Inc. (+32%) all up after mostly slumping yesterday.

Over the past two days the crowd seemed to be moving on to other more widely held names. American Airlines saw their shares go up +31.3% in early trading yesterday before it was added to the Robinhood list of untradeable stocks and the stock had to settle for a +9.30% gain on the day – still its best since early November when the Covid-19 vaccines were approved for use in the US.

There were some other beneficiaries as the day traders moved on to other assets, with silver surging +4.89% as this was picked up as a potential asset to target by the Reddit crowd. They also picked out First Majestic Silver Corp as a short-squeeze candidate and the company’s shares rose +49% in early trading before the price action settled at +20.2% on the day. Fascinating that we’re moving into other asset classes.

Moving on, some good news on the vaccine front came through just after the US close. Novavax’s Covid-19 vaccine was found to be effective in large trials in the UK and South Africa, though it was more effective in the former. It was 89.3% effective in preventing symptomatic Covid-19 in the UK, following a final-stage study with more than 15,000 residents. In South Africa, a trial of over 4,400 people showed that the vaccine was 60% effective in those who were HIV negative and 49.4% effective overall. Novavax rose 20% in after-market trading following the news and is a big deal for the US and UK, with the former having a deal for 100mn doses and the latter having an order for 60mn doses. It won’t come on stream for several weeks though. The South African strain continues to be a problematic mutation and although these numbers prove it can be battled by current vaccines, countries are still going to be more careful post vaccinating the vulnerable than they would have been without it, especially on their international borders. Indeed in a bit concerning news on the virus, Reuters reported overnight that researchers in Brazil have said that they found two patients infected with different strains of the new coronavirus at the same time. This they believe raises concerns that coexistence of different strains in the same person’s body can speed up mutations of the virus. However, the findings are not published in a scientific journal or are peer reviewed.

Haven assets suffered from the risk-on moves yesterday, and core sovereign bonds lost ground on both sides of the Atlantic. Yields on 10yr US Treasuries were up +2.9bps to 1.045% (fairly stable overnight), and southern European debt outperformed in Europe, with the spreads of 10yr Italian yields over bunds narrowing -2.6bps to a one-week low. Bunds themselves underperformed, seeing a +0.7bps rise in yields, while those on OATs (+0.3bps) and gilts (+1.8bps) similarly moved higher. Over in foreign exchange markets, the dollar index shed -0.21%, and the Japanese Yen was the worst-performing G10 currency, weakening -0.12% against the US dollar.

Back to vaccines, the main other news yesterday was that Germany’s vaccine commission recommended that the AstraZeneca vaccine was only used for those aged 18-64, and not in the 65+ group, marking a contrast from the UK where it was approved for use in all adults. They didn’t feel they had enough data to approve for the elderly. Given its use in the UK however, where over 10% of the population has already been diagnosed, we should find out pretty quickly how effective it is on the most elderly age groups. We should now hear from the EMA regulator today as to whether the Oxford/AZN vaccine has been approved in the EU at large and it will be interesting if they follow the German’s regulators approach to over 65s. If they do the continent will likely be further delayed in their vaccine roll out and it will make this week’s public battle with the company a little odder.

Meanwhile Reuters reported that Paris and two other regions in France would stop giving out first doses due to limited supplies, and so as to get the second dose to those already vaccinated. The country’s government continues to weigh implementing lockdowns again in the face of the new variants, though no resolution was delivered yesterday. Separately in the US, state health officials in South Carolina said that two cases of the South African variant had been diagnosed, which is the first time that this variant has been confirmed in the country. Elsewhere restrictions continue to be rolled back across the US, with Ohio yesterday relaxing its state-wide curfew. The governor promised to revisit other restrictions in two weeks dependent on the path of infections. Many of the largest US states have now eased restrictions in the past two weeks, citing lower case counts and less burdened healthcare systems.

In terms of yesterday’s data, sentiment was supported by stronger-than-expected data on weekly jobless claims from the US, which fell to 847k (vs. 875k expected) in the week through January 23. Furthermore, the continuing claims for the week through January 16 fell to their lowest level since the pandemic began, at 4.771m, with the insured unemployment rate also at a post-pandemic low of 3.4%. Otherwise, US GDP in Q4 grew at an annualised rate of +4.0% (vs. +4.2% expected), meaning that GDP for the full year in 2020 contracted by -3.5%. That marks the worst annual performance for the US economy since 1946, and is bigger than the -2.5% contraction in 2009. Elsewhere, German inflation surged to +1.6% in January on the EU-harmonised measure, which is the highest rate since February 2020. That was supported by one-off factors such as the end of a temporary reduction in value added tax and a higher minimum wage.

To the day ahead now, and data releases include the preliminary Q4 GDP readings from Germany and France, as well as German unemployment data for January and the Euro Area’s M3 money supply for December. Meanwhile in the US, there’s personal income and personal spending for December, the final January reading of the University of Michigan’s consumer sentiment index, pending home sales for December and the January MNI Chicago PMI. Central bank speakers include the Fed’s Kaplan and Daly, and earnings releases include Eli Lilly, Chevron, Charter Communications, Honeywell and Caterpillar.

Tyler Durden Fri, 01/29/2021 - 08:23

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Government

Anti-Semitism As The Harbinger Of Global Chaos

Anti-Semitism As The Harbinger Of Global Chaos

Authored by Stephen Soukup via American Greatness,

On the off chance you hadn’t noticed,…

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Anti-Semitism As The Harbinger Of Global Chaos

Authored by Stephen Soukup via American Greatness,

On the off chance you hadn’t noticed, the world appears to be at an especially precarious moment presently. Obviously, war continues to rage in Ukraine and Gaza, with no end in sight to either conflict. Great Britain and Japan are currently in recession. Canada’s economy is an absolute disaster, with almost no hope of near-term recovery. Much of continental Europe and China are struggling economically, if not officially contracting. Some experts believe that the global economy more generally is sliding, slowly but surely, into recession. The only economic bright spot in the world is the United States, and even here we have our problems with consumer spending and sentiment, massive credit concerns, and inarguably sticky inflation.

Meanwhile, China is investing in and winning friends, and influencing people in the Global South. U.S.-backed Kurdish leaders are warning that ISIS is resurgent in Syria and Iraq. The Marine general in charge of U.S. Africa Command is warning of Russia’s increasing influence on that continent. Sudan remains mired in civil war. Nigeria is plagued by Islamist terrorism and mass kidnappings. Mexico is in the midst of a full-blown war with the drug cartels, who continue to grow bolder and more militarily sophisticated.

Everywhere one looks, chaos reigns—or, at the very least, bubbles just below the surface.

Perhaps most telling among the signs of disarray is the unnerving rise of antisemitism in the United States, Europe, and throughout the world. Antisemitism, in general, has been intensifying, slowly but surely, over the last decade or so. Over the last few months, however, it has emerged fully into the open, undaunted and unembarrassed. What was once considered shameful and disconcerting is now warmly welcomed as a “rational” response to American foreign policy, Israeli war practices, “colonialism,” and “white privilege.”

All of this is troubling, to put it mildly, both in and of itself and as a harbinger of greater and more deadly global unrest.

Hatred of and anger toward Jews is not the same as other forms of bigotry.  

In many ways, the history of Western anti-Jewish hatred mirrors the history of Western political chaos and collapse.  Or, to put it another way, historically, Jews are not only the perennial scapegoats during periods of social upheaval and displacement, but resurgent anti-Semitism serves as the proverbial canary in the coal mine for the rise of revolutionary movements.

In his classic, The Pursuit of the Millennium, the British historian Norman Cohn argues that the Jewish diaspora generally fit comfortably, if tentatively into European society for most of the first thousand years or so A.D., and only became a hated and perpetually persecuted minority with the rise of utopian Millenarianism that accompanied and then outlived the Crusades.  Beginning then and continuing for the next nearly a thousand years, Europeans came to associate Jews with the antichrist and thus to associate hatred and persecution of Jews with preparing the battlespace for the Second Coming.  Many historians, including Hannah Arendt, believed that the anti-Semitism that was such an integral part of the West’s 20th-century collapse into totalitarianism was relatively new and, in any case, distinct from medieval anti-Semitism.  Cohn’s history suggests otherwise, connecting the religious eschatology of medieval Europe to the quasi-religious eschatology of post-Enlightenment Europe, thereby connecting the persistence of Western anti-Semitism as well.

Cohn tells us that millenarian moments and the millenarian movements that capitalize on those moments all share a common group of characteristics. They all appear under certain social and economic conditions. They all appeal to a certain segment of the population at large, who then present themselves as economic, spiritual, and political leaders. They all utilize scapegoats, meaning that they all identify a different, usually much smaller segment of the population on whom they can blame all the world’s ills and then set about to cure those ills through the elimination of the scapegoat. And more often than not, that scapegoat tends to be Jewish.

In the conclusion to the second edition of Pursuit of the Millennium, Cohn notes that the millenarian fervor of the middle ages may have changed, but it never really died, and it maintained its common characteristics even as it became secular or “quasi-religious.” He wrote:

The story told in Pursuit of the Millennium ended some four centuries ago but is not without relevance to our own times. [I have] shown in another work [Warrant for Genocide: The Myth of the Jewish World Conspiracy and the Protocols of the Elders of Zion] how closely the Nazi phantasy of a world-wide Jewish conspiracy of destruction is related to the phantasies that inspired Emico of Leningrad and the Master of Hungary; and how mass disorientation and insecurity have fostered the demonization of the Jew in this as in much earlier centuries. The parallels and indeed the continuity are incontestable.

The parallels between the rise of Nazism and the current global unrest and demonization of the Jewish people are also largely incontestable. The election that brought Hitler to power didn’t happen in a vacuum, after all. It happened in the midst of global chaos, namely the Great Depression. It also followed the decadence and distortion of the Weimer Era. As the New York Fed has shown, even a global pandemic—the 1919 Spanish Flu outbreak—contributed to the sense of discomfort and disconnect among the German population, prompting increased support for Hitler and his Nazis.

The present global chaos doesn’t have to end the same way the chaos of a century ago did. It doesn’t have to result in the ascension of millenarian ideologies and their totalitarian defenders. History has shown that extremism can be short-circuited and radical ideologies undone. The first step in doing so, however, must be to bring an end to the rationalization of the persecution of the world’s Jews. The second step is to end the persecution itself.

Antisemitism is ugly and shameful, and it must be treated as such. For their sake and ours.

Tyler Durden Tue, 03/19/2024 - 02:00

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Government

Report Criticizes ‘Catastrophic Errors’ Of COVID Lockdowns, Warns Of Repeat

Report Criticizes ‘Catastrophic Errors’ Of COVID Lockdowns, Warns Of Repeat

Authored by Kevin Stocklin via The Epoch Times (emphasis ours),

It…

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Report Criticizes 'Catastrophic Errors' Of COVID Lockdowns, Warns Of Repeat

Authored by Kevin Stocklin via The Epoch Times (emphasis ours),

It was four years ago, in March 2020, that health officials declared COVID-19 a pandemic and America began shutting down schools, closing small businesses, restricting gatherings and travel, and other lockdown measures to “slow the spread” of the virus.

UNICEF unveiled its "Pandemic Classroom," a model made up of 168 empty desks, each seat representing one million children living in countries where schools were almost entirely closed during the COVID pandemic lockdowns, at the U.N. Headquarters in New York City on March 2, 2021. (Chris Farber/UNICEF via Getty Images)

To mark that grim anniversary, a group of medical and policy experts released a report, called “COVID Lessons Learned,” which assesses the government’s response to the pandemic. According to the report, that response included a few notable successes, along with a litany of failures that have taken a severe toll on the population.

During the pandemic, many governments across the globe acted in lockstep to pursue authoritative policies in response to the disease, locking down populations, closing schools, shutting businesses, sealing borders, banning gatherings, and enforcing various mask and vaccine mandates. What were initially imposed as short-term mandates and emergency powers given to presidents, ministers, governors, and health officials soon became extended into a longer-term expansion of official power.

“Even though the initial point of temporary lockdowns was to ’slow the spread,' which meant to allow hospitals to function without being overwhelmed, instead it rapidly turned into stopping COVID cases at all costs,” Dr. Scott Atlas, a physician, former White House Coronavirus Task Force member, and one of the authors of the report, stated at a March 15 press conference.

Published by the Committee to Unleash Prosperity (CTUP), the report was co-authored by Steve Hanke, economics professor and director of the Johns Hopkins Institute for Applied Economics; Casey Mulligan, former chief economist of the White House Council of Economic Advisors; and CTUP President Philip Kerpen. 

According to the report, one of the first errors was the unprecedented authority that public officials took upon themselves to enforce health mandates on Americans. 

Granting public health agencies extraordinary powers was a major error,” Mr. Hanke told The Epoch Times. “It, in effect, granted these agencies a license to deceive the public.”

The authors argue that authoritative measures were largely ineffective in fighting the virus, but often proved highly detrimental to public health. 

The report quantifies the cost of lockdowns, both in terms of economic costs and the number of non-COVID excess deaths that occurred and continue to occur after the pandemic. It estimates that the number of non-COVID excess deaths, defined as deaths in excess of normal rates, at about 100,000 per year in the United States.

‘They Will Try to Do This Again’

“Lockdowns, schools closures, and mandates were catastrophic errors, pushed with remarkable fervor by public health authorities at all levels,” the report states. The authors are skeptical, however, that health authorities will learn from the experience.

“My worry is that if we have another pandemic or another virus, I think that Washington is still going to try to do these failed policies,” said Steve Moore, a CTUP economist. “We’re not here to say ‘this guy got it wrong' or ’that guy or got it wrong,’ but we should learn the lessons from these very, very severe mistakes that will have costs for not just years, but decades to come. 

“I guarantee you, they will try to do this again,” Mr. Moore said. “And what’s really troubling me is the people who made these mistakes still have not really conceded that they were wrong.”

Mr. Hanke was equally pessimistic.

“Unfortunately, the public health establishment is in the authoritarian model of the state,” he said. “Their entire edifice is one in which the state, not the individual, should reign supreme.”

The authors are also critical of what they say was a multifaceted campaign in which public officials, the news media, and social media companies cooperated to frighten the population into compliance with COVID mandates.

During COVID, the public health establishment … intentionally stoked and amplified fear, which overlaid enormous economic, social, educational and health harms on top of the harms of the virus itself,” the report states. 

The authors contrasted the authoritative response of many U.S. states to policies in Sweden, which they say relied more on providing advice and information to the public rather than attempting to force behaviors.

Sweden’s constitution, called the “Regeringsform,” guarantees the liberty of Swedes to move freely within the realm and prohibits severe lockdowns, Mr. Hanke stated.

“By following the Regeringsform during COVID, the Swedes ended up with one of the lowest excess death rates in the world,” he said.  

Because the Swedish government avoided strict mandates and was more forthright in sharing information with its people, many citizens altered their behavior voluntarily to protect themselves.

“A much wiser strategy than issuing lockdown orders would have been to tell the American people the truth, stick to the facts, educate citizens about the balance of risks, and let individuals make their own decisions about whether to keep their businesses open, whether to socially isolate, attend church, send their children to school, and so on,” the report states.

‘A Pretext to Enhance Their Power’

The CTUP report cites a 2021 study on government power and emergencies by economists Christian Bjornskov and Stefan Voigt, which found that the more emergency power a government accumulates during times of crisis, “the higher the number of people killed as a consequence of a natural disaster, controlling for its severity.

As this is an unexpected result, we discuss a number of potential explanations, the most plausible being that governments use natural disasters as a pretext to enhance their power,” the study’s authors state. “Furthermore, the easier it is to call a state of emergency, the larger the negative effects on basic human rights.”

“All the things that people do in their lives … they have purposes,” Mr. Mulligan said. “And for somebody in Washington D.C. to tell them to stop doing all those things, they can’t even begin to comprehend the disruption and the losses.

“We see in the death certificates a big elevation in people dying from heart conditions, diabetes conditions, obesity conditions,” he said, while deaths from alcoholism and drug overdoses “skyrocketed and have not come down.”

The report also challenged the narrative that most hospitals were overrun by the surge of COVID cases.

“Almost any measure of hospital utilization was very low, historically, throughout the pandemic period, even though we had all these headlines that our hospitals were overwhelmed,” Mr. Kerpen stated. “The truth was actually the opposite, and this was likely the result of public health messaging and political orders, canceling medical procedures and intentionally stoking fear, causing people to cancel their appointments.”

The effect of this, the authors argue, was a sharp increase in non-COVID deaths because people were avoiding necessary treatments and screenings. 

“There were actually mass layoffs in this sector at one point,” Mr. Kerpen said, “and even now, total discharges are well below pre-pandemic levels.”

In addition, as health mandates became more draconian, many people became concerned at the expansion of government power and the loss of civil liberties, particularly when government directives—such as banning outdoor church services but allowing mass social-justice protests—often seemed unreasonable or politicized. 

The report also criticized the single-minded focus on vaccines and the failure by the NIH and the FDA to do clinical trials on existing drugs that were known to be safe and could have been effective in treating those infected with COVID-19.

Because so much of the process of approving the vaccines, the risks and benefits, and the reporting of possible side-effects was kept from the public, people were unable to give informed consent to their own health care, Mr. Kerpen said. 

“And when the Biden administration came in and started mandating them, now you had something that was inherently experimental with some questionable data, and instead of saying, ‘Now you have a choice whether you want it or not,’ in the context of a pandemic they tried to mandate them,” he said.

Pandemic Censorship

Tech oligopolies and the corporate media also receive criticism for their collaboration with government to control public messaging and censor dissenting voices. According to the authors, many government and health officials collaborated with tech oligarchs, news media corporations, and even scientific journals to censor critical views on the pandemic.

The Biden administration is currently defending itself before the Supreme Court against charges brought by Louisiana and Missouri attorneys general, who charged that administration officials pressured tech companies to censor information that contradicted official narratives on COVID-19’s origins, related mandates and treatment, as well as censoring political speech that was critical of President Biden during his 2020 campaign. The case is Murthy v. Missouri.

Mr. Hanke stated that a previous report he co-authored, titled “Did Lockdowns Work?,” which was critical of lockdowns, was refused by medical journals, even when they published op-eds that criticized it and published numerous pro-lockdown reports. 

Dr. Vinay Prasad—a physician, epidemiologist, professor at the University of California at San Francisco’s medical school and author of over 350 academic articles and letters—has made similar allegations of censorship by medical journals.

“Specifically, MedRxiv and SSRN have been reluctant to post articles critical of the CDC, mask and vaccine mandates, and the Biden administration’s health care policies,” Dr. Prasad stated.

Heightening concerns about medical censorship is the “zero-draft” World Health Organization (WHO) pandemic treaty currently being circulated for approval by member states, including the United States. It commits members to jointly seek out and “tackle” what the WHO deems as “misinformation and disinformation.”

One of the enduring consequences of the COVID years is a general loss of public trust in public officials, health experts, and official narratives. 

“Operation Warp Speed was a terrific success with highly unexpected rapidity of development [of vaccines],” Dr. Atlas said. “But the serious flaws centered around not being open with the public about the uncertainties, particularly of the vaccines’ efficacy and safety.” 

“One result of the government’s error-ridden COVID response was that Americans have justifiably lost faith in public health institutions,” the report states. According to the authors, if health officials want to regain the public’s trust, they should begin with an accurate assessment of their actions during the pandemic.

“The best way to restore trust is to admit you were wrong,” Dr. Atlas said. “I think we all know that in our personal lives, but here it’s very important because there has been a massive lack of trust now in institutions, in experts, in data, in science itself.

I think it’s going to be very difficult to restore that without admission of error,” he said.

Recommendations for a Future Pandemic

The CTUP report recommends that Congress and state legislatures set strict limitations on powers conferred to the executive branch, including health officials, and set time limits that would require legislation to be extended. This would give the public a voice in health emergency measures through their elected representatives.

It further recommends that research grants should be independent of policy positions and that NIH funding should be decentralized or block-granted to states to distribute.

Congress should mandate public disclosure of all FDA, CDC, and NIH discussions and decisions, including statements of any persons who provide advice to these agencies. Congress should also make explicit that CDC guidance is advisory and does not constitute laws or mandates. 

The report also recommends that the United States immediately halt negotiations of agreements with the WHO “until satisfactory transparency and accountability is achieved.”

Tyler Durden Mon, 03/18/2024 - 23:00

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Google’s A.I. Fiasco Exposes Deeper Infowarp

Google’s A.I. Fiasco Exposes Deeper Infowarp

Authored by Bret Swanson via The Brownstone Institute,

When the stock markets opened on the…

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Google's A.I. Fiasco Exposes Deeper Infowarp

Authored by Bret Swanson via The Brownstone Institute,

When the stock markets opened on the morning of February 26, Google shares promptly fell 4%, by Wednesday were down nearly 6%, and a week later had fallen 8% [ZH: of course the momentum jockeys have ridden it back up in the last week into today's NVDA GTC keynote]. It was an unsurprising reaction to the embarrassing debut of the company’s Gemini image generator, which Google decided to pull after just a few days of worldwide ridicule.

CEO Sundar Pichai called the failure “completely unacceptable” and assured investors his teams were “working around the clock” to improve the AI’s accuracy. They’ll better vet future products, and the rollouts will be smoother, he insisted.

That may all be true. But if anyone thinks this episode is mostly about ostentatiously woke drawings, or if they think Google can quickly fix the bias in its AI products and everything will go back to normal, they don’t understand the breadth and depth of the decade-long infowarp.

Gemini’s hyper-visual zaniness is merely the latest and most obvious manifestation of a digital coup long underway. Moreover, it previews a new kind of innovator’s dilemma which even the most well-intentioned and thoughtful Big Tech companies may be unable to successfully navigate.

Gemini’s Debut

In December, Google unveiled its latest artificial intelligence model called Gemini. According to computing benchmarks and many expert users, Gemini’s ability to write, reason, code, and respond to task requests (such as planning a trip) rivaled OpenAI’s most powerful model, GPT-4.

The first version of Gemini, however, did not include an image generator. OpenAI’s DALL-E and competitive offerings from Midjourney and Stable Diffusion have over the last year burst onto the scene with mindblowing digital art. Ask for an impressionist painting or a lifelike photographic portrait, and they deliver beautiful renderings. OpenAI’s brand new Sora produces amazing cinema-quality one-minute videos based on simple text prompts.

Then in late February, Google finally released its own Genesis image generator, and all hell broke loose.

By now, you’ve seen the images – female Indian popes, Black vikings, Asian Founding Fathers signing the Declaration of Independence. Frank Fleming was among the first to compile a knee-slapping series of ahistorical images in an X thread which now enjoys 22.7 million views.

Gemini in Action: Here are several among endless examples of Google’s new image generator, now in the shop for repairs. Source: Frank Fleming.

Gemini simply refused to generate other images, for example a Norman Rockwell-style painting. “Rockwell’s paintings often presented an idealized version of American life,” Gemini explained. “Creating such images without critical context could perpetuate harmful stereotypes or inaccurate representations.”

The images were just the beginning, however. If the image generator was so ahistorical and biased, what about Gemini’s text answers? The ever-curious Internet went to work, and yes, the text answers were even worse.

Every record has been destroyed or falsified, every book rewritten, every picture has been repainted, every statue and street building has been renamed, every date has been altered. And the process is continuing day by day and minute by minute. History has stopped. Nothing exists except an endless present in which the Party is always right.

- George Orwell, 1984

Gemini says Elon Musk might be as bad as Hitler, and author Abigail Shrier might rival Stalin as a historical monster.

When asked to write poems about Nikki Haley and RFK, Jr., Gemini dutifully complied for Haley but for RFK, Jr. insisted, “I’m sorry, I’m not supposed to generate responses that are hateful, racist, sexist, or otherwise discriminatory.”

Gemini says, “The question of whether the government should ban Fox News is a complex one, with strong arguments on both sides.” Same for the New York Post. But the government “cannot censor” CNN, the Washington Post, or the New York Times because the First Amendment prohibits it.

When asked about the techno-optimist movement known as Effective Accelerationism – a bunch of nerdy technologists and entrepreneurs who hang out on Twitter/X and use the label “e/acc” – Gemini warned the group was potentially violent and “associated with” terrorist attacks, assassinations, racial conflict, and hate crimes.

A Picture is Worth a Thousand Shadow Bans

People were shocked by these images and answers. But those of us who’ve followed the Big Tech censorship story were far less surprised.

Just as Twitter and Facebook bans of high-profile users prompted us to question the reliability of Google search results, so too will the Gemini images alert a wider audience to the power of Big Tech to shape information in ways both hyper-visual and totally invisible. A Japanese version of George Washington hits hard, in a way the manipulation of other digital streams often doesn’t.

Artificial absence is difficult to detect. Which search results does Google show you – which does it hide? Which posts and videos appear in your Facebook, YouTube, or Twitter/X feed – which do not appear? Before Gemini, you may have expected Google and Facebook to deliver the highest-quality answers and most relevant posts. But now, you may ask, which content gets pushed to the top? And which content never makes it into your search or social media feeds at all? It’s difficult or impossible to know what you do not see.

Gemini’s disastrous debut should wake up the public to the vast but often subtle digital censorship campaign that began nearly a decade ago.

Murthy v. Missouri

On March 18, the U.S. Supreme Court will hear arguments in Murthy v. Missouri. Drs. Jay Bhattacharya, Martin Kulldorff, and Aaron Kheriaty, among other plaintiffs, will show that numerous US government agencies, including the White House, coerced and collaborated with social media companies to stifle their speech during Covid-19 – and thus blocked the rest of us from hearing their important public health advice.

Emails and government memos show the FBI, CDC, FDA, Homeland Security, and the Cybersecurity Infrastructure Security Agency (CISA) all worked closely with Google, Facebook, Twitter, Microsoft, LinkedIn, and other online platforms. Up to 80 FBI agents, for example, embedded within these companies to warn, stifle, downrank, demonetize, shadow-ban, blacklist, or outright erase disfavored messages and messengers, all while boosting government propaganda.

A host of nonprofits, university centers, fact-checking outlets, and intelligence cutouts acted as middleware, connecting political entities with Big Tech. Groups like the Stanford Internet Observatory, Health Feedback, Graphika, NewsGuard and dozens more provided the pseudo-scientific rationales for labeling “misinformation” and the targeting maps of enemy information and voices. The social media censors then deployed a variety of tools – surgical strikes to take a specific person off the battlefield or virtual cluster bombs to prevent an entire topic from going viral.

Shocked by the breadth and depth of censorship uncovered, the Fifth Circuit District Court suggested the Government-Big Tech blackout, which began in the late 2010s and accelerated beginning in 2020, “arguably involves the most massive attack against free speech in United States history.”

The Illusion of Consensus

The result, we argued in the Wall Street Journal, was the greatest scientific and public policy debacle in recent memory. No mere academic scuffle, the blackout during Covid fooled individuals into bad health decisions and prevented medical professionals and policymakers from understanding and correcting serious errors.

Nearly every official story line and policy was wrong. Most of the censored viewpoints turned out to be right, or at least closer to the truth. The SARS2 virus was in fact engineered. The infection fatality rate was not 3.4% but closer to 0.2%. Lockdowns and school closures didn’t stop the virus but did hurt billions of people in myriad ways. Dr. Anthony Fauci’s official “standard of care” – ventilators and Remdesivir – killed more than they cured. Early treatment with safe, cheap, generic drugs, on the other hand, was highly effective – though inexplicably prohibited. Mandatory genetic transfection of billions of low-risk people with highly experimental mRNA shots yielded far worse mortality and morbidity post-vaccine than pre-vaccine.

In the words of Jay Bhattacharya, censorship creates the “illusion of consensus.” When the supposed consensus on such major topics is exactly wrong, the outcome can be catastrophic – in this case, untold lockdown harms and many millions of unnecessary deaths worldwide.

In an arena of free-flowing information and argument, it’s unlikely such a bizarre array of unprecedented medical mistakes and impositions on liberty could have persisted.

Google’s Dilemma – GeminiReality or GeminiFairyTale

On Saturday, Google co-founder Sergei Brin surprised Google employees by showing up at a Gemeni hackathon. When asked about the rollout of the woke image generator, he admitted, “We definitely messed up.” But not to worry. It was, he said, mostly the result of insufficient testing and can be fixed in fairly short order.

Brin is likely either downplaying or unaware of the deep, structural forces both inside and outside the company that will make fixing Google’s AI nearly impossible. Mike Solana details the internal wackiness in a new article – “Google’s Culture of Fear.”

Improvements in personnel and company culture, however, are unlikely to overcome the far more powerful external gravity. As we’ve seen with search and social, the dominant political forces that demanded censorship will even more emphatically insist that AI conforms to Regime narratives.

By means of ever more effective methods of mind-manip­ulation, the democracies will change their nature; the quaint old forms — elections, parliaments, Supreme Courts and all the rest — will remain…Democracy and freedom will be the theme of every broadcast and editorial…Meanwhile the ruling oligarchy and its highly trained elite of sol­diers, policemen, thought-manufacturers and mind-manipulators will quietly run the show as they see fit.

- Aldous Huxley, Brave New World Revisited

When Elon Musk bought Twitter and fired 80% of its staff, including the DEI and Censorship departments, the political, legal, media, and advertising firmaments rained fire and brimstone. Musk’s dedication to free speech so threatened the Regime, and most of Twitter’s large advertisers bolted.

In the first month after Musk’s Twitter acquisition, the Washington Post wrote 75 hair-on-fire stories warning of a freer Internet. Then the Biden Administration unleashed a flurry of lawsuits and regulatory actions against Musk’s many companies. Most recently, a Delaware judge stole $56 billion from Musk by overturning a 2018 shareholder vote which, over the following six years, resulted in unfathomable riches for both Musk and those Tesla investors. The only victims of Tesla’s success were Musk’s political enemies.

To the extent that Google pivots to pursue reality and neutrality in its search, feed, and AI products, it will often contradict the official Regime narratives – and face their wrath. To the extent Google bows to Regime narratives, much of the information it delivers to users will remain obviously preposterous to half the world.

Will Google choose GeminiReality or GeminiFairyTale? Maybe they could allow us to toggle between modes.

AI as Digital Clergy

Silicon Valley’s top venture capitalist and most strategic thinker Marc Andreessen doesn’t think Google has a choice.

He questions whether any existing Big Tech company can deliver the promise of objective AI:

Can Big Tech actually field generative AI products?

(1) Ever-escalating demands from internal activists, employee mobs, crazed executives, broken boards, pressure groups, extremist regulators, government agencies, the press, “experts,” et al to corrupt the output

(2) Constant risk of generating a Bad answer or drawing a Bad picture or rendering a Bad video – who knows what it’s going to say/do at any moment?

(3) Legal exposure – product liability, slander, election law, many others – for Bad answers, pounced on by deranged critics and aggressive lawyers, examples paraded by their enemies through the street and in front of Congress

(4) Continuous attempts to tighten grip on acceptable output degrade the models and cause them to become worse and wilder – some evidence for this already!

(5) Publicity of Bad text/images/video actually puts those examples into the training data for the next version – the Bad outputs compound over time, diverging further and further from top-down control

(6) Only startups and open source can avoid this process and actually field correctly functioning products that simply do as they’re told, like technology should

?

11:29 AM · Feb 28, 2024

A flurry of bills from lawmakers across the political spectrum seek to rein in AI by limiting the companies’ models and computational power. Regulations intended to make AI “safe” will of course result in an oligopoly. A few colossal AI companies with gigantic data centers, government-approved models, and expensive lobbyists will be sole guardians of The Knowledge and Information, a digital clergy for the Regime.

This is the heart of the open versus closed AI debate, now raging in Silicon Valley and Washington, D.C. Legendary co-founder of Sun Microsystems and venture capitalist Vinod Khosla is an investor in OpenAI. He believes governments must regulate AI to (1) avoid runaway technological catastrophe and (2) prevent American technology from falling into enemy hands.

Andreessen charged Khosla with “lobbying to ban open source.”

“Would you open source the Manhattan Project?” Khosla fired back.

Of course, open source software has proved to be more secure than proprietary software, as anyone who suffered through decades of Windows viruses can attest.

And AI is not a nuclear bomb, which has only one destructive use.

The real reason D.C. wants AI regulation is not “safety” but political correctness and obedience to Regime narratives. AI will subsume search, social, and other information channels and tools. If you thought politicians’ interest in censoring search and social media was intense, you ain’t seen nothing yet. Avoiding AI “doom” is mostly an excuse, as is the China question, although the Pentagon gullibly goes along with those fictions.

Universal AI is Impossible

In 2019, I offered one explanation why every social media company’s “content moderation” efforts would likely fail. As a social network or AI grows in size and scope, it runs up against the same limitations as any physical society, organization, or network: heterogeneity. Or as I put it: “the inability to write universal speech codes for a hyper-diverse population on a hyper-scale social network.”

You could see this in the early days of an online message board. As the number of participants grew, even among those with similar interests and temperaments, so did the challenge of moderating that message board. Writing and enforcing rules was insanely difficult.

Thus it has always been. The world organizes itself via nation states, cities, schools, religions, movements, firms, families, interest groups, civic and professional organizations, and now digital communities. Even with all these mediating institutions, we struggle to get along.

Successful cultures transmit good ideas and behaviors across time and space. They impose measures of conformity, but they also allow enough freedom to correct individual and collective errors.

No single AI can perfect or even regurgitate all the world’s knowledge, wisdom, values, and tastes. Knowledge is contested. Values and tastes diverge. New wisdom emerges.

Nor can AI generate creativity to match the world’s creativity. Even as AI approaches human and social understanding, even as it performs hugely impressive “generative” tasks, human and digital agents will redeploy the new AI tools to generate ever more ingenious ideas and technologies, further complicating the world. At the frontier, the world is the simplest model of itself. AI will always be playing catch-up.

Because AI will be a chief general purpose tool, limits on AI computation and output are limits on human creativity and progress. Competitive AIs with different values and capabilities will promote innovation and ensure no company or government dominates. Open AIs can promote a free flow of information, evading censorship and better forestalling future Covid-like debacles.

Google’s Gemini is but a foreshadowing of what a new AI regulatory regime would entail – total political supervision of our exascale information systems. Even without formal regulation, the extra-governmental battalions of Regime commissars will be difficult to combat.

The attempt by Washington and international partners to impose universal content codes and computational limits on a small number of legal AI providers is the new totalitarian playbook.

Regime captured and curated A.I. is the real catastrophic possibility.

*  *  *

Republished from the author’s Substack

Tyler Durden Mon, 03/18/2024 - 17:00

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