Dear Subscribers,
Since the Blind Spot doesn’t have any advertisers (funded as we are by subscribers), we, alas, can’t indulge in an impulse to tell them to “go fuck themselves” if they disagree with our editorial slant or want to impose their slant on us.
But what we can and have pre-emptively committed to is sooner ruining ourselves than taking money from those who may seek to influence our independence. Which is why we don’t reply to emails like this:
Alas, the ‘earth’, due to our small size, is unaware of our principled position. So our good (or, perhaps, commercially questionable) deed, may forever go unnoticed.
Not the case for Elon Musk. The earth notices everything he does.
And thanks to the global megaphone that is his ownership of X, as well as his billions, he’s now on the verge of turning the burning of $44 billion not just into performance art but an act of supposed effective altruism. All in a bid to magnify the perceived righteousness of his principles, with the hope (we suspect) of them being emulated far and wide by the majority of the human race. Or ‘earth’.
If you don’t know what we’re talking about you must somehow have missed last week’s Elon Musk/Andrew Ross Sorkin DealBook summit interview, in which he told Disney’s Bob Iger to “go f*** yourself” for daring to blackmail him with an advertising boycott. Not sure how you might have missed it, since it mostly broke the internet. You can watch the whole thing (as opposed to the singular “go f*** yourselves” clip) here.
If there was a single takeaway, it was that we can now appreciate that $44 billion wasn’t really the price Elon Musk paid for a social media platform. It was the price he paid for the world’s most powerful promotional tool for ‘brand Elon’.
Even if X the company collapses to zero, it will still have been worth the original price tag. Just ask the KLF what destroying £1 million for the sake of art can do for your global brand and notoriety.
The numbers themselves tell the story. Global advertising spend in 2023 is projected to total approximately $874 billion. Disney alone spent $7.2 billion in advertising in 2022. Now, bear in mind, Elon’s portfolio of companies (as he reminded Sorkin) spends next to nothing on official advertising.
Yet, with $44 billion (much of it ponied up by other people), Elon can now promote his companies, trounce his competitors from the comfort of his toilet and, most important of all, sell his competing philosophy and vision of tomorrow to an international and potentially limitless audience. Even if Elon crashes and burns, the very act of destroying X on a point of principle stands to inspire many more people to shape the world the way Elon wants them to than the effective altruism of a dozen competing billionaires.
Might the outrageousness put off as many people as it inspires? Absolutely.
But, herein lies the second facet of Elon’s masterful troll.
Persuasion is a subtle art form. If it’s too obvious it doesn’t work. Counter-propaganda, as Elon (we suspect) would see it, works similarly. As the Vatican’s chief social media cardinal once explained to me during an interview, conversion in the missionary sense requires finding common ground with those you seek to convert first. It is only from a position of mutual trust, that you can then seek to influence.
Those who have no sympathy for the Israeli/Jewish position were never going to be persuaded to think otherwise by Elon posting a “I stand with Israel flag” on his bio. Nor would Elon’s trip to Israel (arranged before the antisemitic Tweet was posted) been half as impactful.
The uncomfortable truth is that sometimes the world needs reverse psychology for persuasion to work. In this case, Elon’s post (not really all that anti-semitic in the grand scheme) ended up providing Israel with a much broader platform for presenting its perspective on the conflict than had he not posted it. Was the affair contrived from the start? Who knows. Stranger things have happened.
But there was more said than just “go f*** yourselves”. Elon also pondered where are the aliens? Are there even aliens? Do we need new physics? He explained why the Fermi Paradox needs to be challenged by us becoming a multi-planetary civilisation. He noted we need to give people hope for the future. He said he wants Jeff Bezos’ Blue Origin to succeed. He also expressed contempt for OpenAi, which he helped found, noting the AI venture should be renamed “Super closed source for maximum profit AI”. And he had thoughts on Sam Altman’s little ring of corrupting power.
As usual, this newsletter was brought to you by Izabella Kaminska and Dario Garcia Giner.
| BUSINESS, ECONOMICS AND FINANCE ETC |
DWS LAUNCHED SOME FIXED MATURITY BOND ETFs, aimed at four different maturities to compete with its rival BlackRock who launched a similar series of products earlier this year.
What the hell is a fixed maturity bond ETF? Why it’s a bond ETF that doesn’t have the low-yield drag of its legacy portfolio of course. — IK
CHINA’S DECISION TO ISSUE 1TRILLION YUAN of additional sovereign bonds in October indicates the country has accepted that larger annual budget deficits as a percentage of GDP will be needed in the future.
BREXIT DIDN’T DESTROY BRITISH MANUFACTURING after all. Free market economist Julian Jessop outlined how British manufacturing output has increased since the Brexit vote due to the UK having a higher weight of pharma and food manufacturing, relative to autos, capital and luxury goods. This meant it was relatively well-positioned during Covid.
AMERICAN COMPANIES DEI EFFORTS lost crucial momentum this year after the Supreme Court struck down affirmative action in colleges — ruling that schools can’t explicitly consider race in the admissions process. This means DEI policies are now posing legal liabilities for companies, reports Axios, because lawsuits and lawmakers are pushing back.
AUSTRALIA APPOINTED ANDREW HAUSER as the new Reserve Bank of Australia’s deputy head. Formerly the executive director of markets at the Bank of England, Hauser is expected to start his five-year term before the first RBA board meeting next year.
THE TREASURY COMMITTEE’S DIGITAL POUND REPORT concluded (rather sensibly) that the Government and Bank of England must resist the temptation to believe that a digital pound can fix problems it can’t. They also urged for privacy to be mandated into any CBDC design and that it goes through a parliamentary vote.
“This report has set out some of the benefits and risks from a digital pound. While there are some potential benefits, their extent is unclear and there are significant risks and challenges to be worked through, particularly in relation to privacy and financial stability. It is not clear to us at this stage whether the benefits are likely to outweigh these risks,” — the report said.
ERRATIC PRICE SHIFTS IN OIL prices this week were supposedly driven by an opaque group of algorithmic money managers, as oil prices fell for the sixth week straight.
Not that this Zoomer knows anything about finance, but the rise of automated or algorithm-caused rapid price changes, and our growing inability to understand their complexity, should raise severe concerns about a near-future when AI-led algorithms will dominate money managers strategies. [Zerohedge made a career and an online empire by making this point, and the early tweens were full of stories expressing market algo anxiety. — IK]
The topic of unexpected risk exposure to a form of automated stock picking was raised this week on Spot Markets Live as we discussed a Goethe University study which blamed ETF ownership as responsible for a warping in the stock market.
The academic researchers claimed an increase in passive ETF ownership has rendered a firm’s earnings or product launches less important than bullish trends or “market-wide sentiment shocks”, leading to larger than usual stock market volatility.
This week also saw the rise, and rapid fall, of Gamestop shares.
Though meme watchers were excited the stock had jumped almost 20 percent this Tuesday, concern was rapidly expressed at the impossibly high volumes (for retail traders, at least).
Redditors expressed surprise that mainstream outlets claimed this rise and fall in Gamestop shares was caused by retail traders, when a very high number of GME shares — almost 61 million shares of a total free float of 81 million — were rapidly traded in call options between Tuesday and Thursday this week.
Especially absurd for a meme stock whose online following has turned to direct registering of shares, precisely to avoid money-managers’ use of loaned shares for ostensible price manipulation (or so they claim).
But what’s even more important than rapid oil, ETF, and meme stonk price fluctuations is what lies ahead for algorithms.
As previously shared, Wharton undertook a study that proved AI-powered collusion in stock trading algorithms could hurt price formation.
If one of the difficulties in the development of powerful Artificial Intelligence leads to a certain ‘black-box’ approach in the AI’s methodologies and executions, how could we hope to ever regulate these systems? Particularly if our modern day dumb-algorithms continue to prove that unexpected outcomes are often too complex to foresee — DGG
| ELECTRIC DREAMS |
CAR DEALERS IN THE US CLAIMED THEY CAN’T SELL EVs with cars continuing to pile up at dealerships. Numerous car dealerships wrote a letter to President Biden asking the White House to delay plans for an aggressive transition to Electric Vehicles for 2032, as they claimed the deadline was far too ambitious.
THE BRITISH GOVERNMENT ANNOUNCED A £2bn investment in its automotive industry as part of a £4.5bn investment plan in key manufacturing sectors. This automotive push will be specifically pointed towards the development of hydrogen fuel cells, lightweight electric vehicle powertrains, and motorsport technology.
ELON MUSK’S CYBERTRUCK PRESS LAUNCH GIMMICKS included shooting at the Cybertruck with a variety of ammunition, and demonstrating the Cybertruck can beat a Porsche 9/11 in 0-60, while towing a Porsche 9/11.
| THE MEDIUM IS THE MASSAGE |
AMERICAN AND BRITISH PLANS FOR GLOBAL CENSORSHIP were handed to Michael Shellenberger’s Public by whistleblowers. The documents showed that a leader of the Cyber Threat Intelligence League, a “former” British intelligence analyst, was “in the room” at the Obama White House in 2017 when she received the instructions to create a counter-disinformation project to stop a “repeat of 2016.”
IRELAND’S HATE SPEECH LEGISLATION WAS DUBBED ‘THE MOST DRACONIAN’ by Shellenberger who highlighted the bill outlined individuals may get “up to 12 months in prison for refusing to give the password to your devices if suspected of committing hate speech.”
‘PERSHING SQUARE BACKS FREE SPEECH’, legendary hedge fund investor Bill Ackman claimed on X as he defended Musk against claims that the eccentric billionaire had made antisemitic comments, noting the perils of non-profit governance are often comparable to conventional for-profit ventures.
IN A SURPRISE MOVE, THE CO-FOUNDER OF BLM FOR RHODE ISLAND announced he would endorse Donald Trump in the next American elections, arguing that Democrats had taken African-American votes for granted.
| CRYPTO EVANGELISM |
BITCOIN SURGED: The OG of crypto hit $38,800 for the first time in over a year.
| GEOPOLITICAL HOTSPOTS |
HAMAS INVITED ELON MUSK to visit Gaza following his visit to Israel. Though Elon declined the offer, he claimed his belief that “a long-term prosperous Gaza is good for all sides.”
THE BRAZILIAN ARMY WAS PUT ON HIGH ALERT after the country’s military published intelligence that the Venezuelan military was building up on the Guyanese border.
The context is that Venezuela is holding a referendum on whether it should annex about 160,000 square kilometres of land in neighbouring Guyana on December 1. It has claimed rights over the territory for at least 200 years.
The intensification of the dispute comes after Guyana, which has recently experienced an oil rush, declared an intention to build numerous military bases along its Venezuelan border. The Venezuelan military in response declared similar plans for fortification while Maduro opened the door to a referendum-backed invasion.
The noteworthy context is that the recent Guyana oil boom has made the country the second fastest growing nation in the world.
Over 20 oil majors and minors, including Saudi Aramco, BP, and Shell are now competing for Guyanese oil contracts. ExxonMobil Guyana, the country’s first and largest oil producer, announced its third offshore Guyanese project, the Prosperity FPSO, had become operational.
But one wonders whether a military invasion, which has been clearly placed on the cards due to the Venezuelan referendum on annexation, is really the desired outcome for the Bolivarian state government?
Venezuela had previously, under the presidency of Hugo Chavez, sidelined its dispute with Guyana and the Essequibo region via PetroCaribe, an association which provided preferential payments to Caribbean countries (including Guyana) for discounted Venezuelan oil. This gave Venezuela an oil import monopoly in the region and soothed Venezuelan nationalist nerves on Essequibo, which has been under dispute for centuries, even before Venezuela was independent from Spain.
Considering the recent unthawing of Venezuelan President Nicolas Maduro’s relationship with the United States as well as the country’s assurance of upcoming free and fair elections with a re-energised opposition in November, this leaves — at least to our minds — a few more probable options for Maduro.
As we speculated in this week’s Spot Markets Live, the referendum will likely give Maduro a clear popular mandate for taking an aggressive stance.
We suspect Maduro could leverage this to attempt to extract American concessions for either existing American oil company extraction in Venezuela, or via drilling rights for PDVSA in the Essequibo region. Beyond these long and medium-term objectives, Maduro will naturally benefit electorally in the short-term by posing as the defender of Venezuela’s historic sovereign interests.
Assuming the quick loosening of sanctions on Venezuelan products is a priority for Maduro, the above options will (hopefully) be far more likely than all-out war on the abnormally peaceful continent (as far as state-on-state violence goes). — DGG
UKRAINE IS SET TO JOIN NATO after the war, NATO Secretary General Jens Stoltenberg said, but only on the condition the Ukrainian government follows recommended reforms to its systems of governance.
| DAISY DAISY… |
AMERICA HAS BEEN WORKING TO SEVER a Middle Eastern AI tech giant’s close relationship with China, the New York Times reported. G42, with its name inspired by The Hitchhiker’s Guide To The Galaxy, is an artificial intelligence firm currently controlled by UAE Sheikh Tahnoon bin Zayed and, according to the NYT, American officials believe it is hiding the extent of its work with China. The story echoes The Blind Spot’s previous analysis drawn from the commentary of security expert Matthew Pines and former White House economist Pippa Malmgren; that technology transfer woes related to G42 were at the heart of OpenAI’s boardroom intrigue. Though the NYT was unable to explicitly nail the connection, it hints of it throughout the article.
Some more clarity, albeit still submerged in murky intrigue, is coming to the OpenAI boardroom disaster.
This week saw the above article somewhat confirming speculative theories formerly outlined on Spot Markets Live and on our Blind Spot newsletter; that American security services were highly concerned with AI tech transfers to China through an OpenAI alliance with a double-dealing Middle Eastern tech giant.
Sam Altman’s return has come at the cost of effective altruist Helen Toner, who was booted out of the OpenAI board, and with the entry of Larry Summers and former Salesforce exec Bret Taylor.
The entry of the last two individuals is certainly interesting and gives some credit to this line of inquiry. Larry Summers is a reportedly well-connected figure in the American elite establishment, and Bret Taylor was CTO of Meta and, later, the Chairman of Twitter’s board while both organisations were exposed to have been in league with shady American government initiatives to restrict online speech. I believe (with little proof) that Helen Toner’s exit, and Sam Altman’s abortive firing, could be explained with a little speculation.
Let’s say the OpenAI board received a formal warning that Altman’s expansionist ambitions with G42 were dangerously furthering China’s AI in the superpower tech race.
I can see how Ilya Sutskever and Helen Toner, both strong advocates of reining in development of Artificial Intelligence, felt forced to use this warning to defend their own concerns — and by extent, humanity’s (from their POV) — by reluctantly firing Sam Altman. But the aggressive plans for expansion were never the problem, at least not where American strategic imperatives were concerned. It’s akin to a scene from Silicon Valley.
Picture the following: A shady CIA operative shows up in a black SUV to a secret meeting before a reluctant and nervously shuffling Ilya and Helen, on a cloudy Californian evening.
“Either the expansion with G42 is over, or you’re over” the agent utters. Feeling the weight of humanity on their shoulders, the two Board members feel compelled to further their rightful agenda while complying with this secretive dictat.
Presenting an ultimatum to Altman, the latter refuses it because he correctly sees that only a small part of his plans are under scrutiny — and not the rapid expansion of AI power, as may have been first to Ilya and Helen’s mind. But with an ultimatum from the CIA burning in their pocket, the Board feels compelled to act and fires Altman.
“WHAT THE F*CK” the sleepy CIA agent, woken up early in the morning to the unexpected news would say “THAT’S NOT WHAT WE MEANT”.
Cue Ilya being reprimanded but kept on board because he’s too good, Helen being fired because she was too fast on the trigger, and adults being flown into the room to make sure runaway idealists don’t mess with American tech agendas. While we’re still in the midst of a fact-light environment for this month’s top tech drama, we can’t wait to see what really happened in the months ahead. Watch this space. — DGG
| DEFCON |
THOUSANDS OF CHINESE WORKERS were filmed leaving the Jiangsu shipyard as the country’s naval build-up continued in full force. 
Much has been made online, and on The Blind Spot, about the increase in China’s shipbuilding capabilities. We’re fans of comparing the rise in shipbuilding to the comparable increase undertaken by Germany in the run-up to World War 1. The rapid catch-up played by the German Kriegsmarine in the late 19th and early 20th century is often pointed to as the cause for the arms race between France, the UK and Germany which started the Great War.
Much is similarly made of the increase in the development of anti-ship capabilities, with cheap drone on one end and hypersonic missiles on the other. Oftentimes, such analysis is pointed at the American Navy, with claims that its carrier fleets will be unable to face up to China’s expanded navy and anti-ship arsenal.Just because China’s navy and anti-ship arsenal may be more recently made doesn’t mean they won’t be committing the same mistakes as the Americans. Chinese vessels and carriers are still American-sized (or almost), and I don’t see any evidence that they’re developing a different fleet suited to any novel naval combat ‘meta’, such as ultralight, autonomous, relatively tiny or extraordinarily cheap combat ships.I gift the crown of innovation to a country that consistently ‘wows’ in cheapskates but groundbreaking development: Iran and their drone carriers, two of which were set to sea this year.
Just look at this ugly beauty. It looks cheap, downtrodden and very much disposable — especially when compared to multi-billion American or Chinese carriers.While wealthier nations can afford to misuse public funds on ego-sized navies, scrappier but geopolitically competitive nations must eke out competitive gains based on superior and more innovative methodologies. Particularly since they cannot go toe to toe on military tech and spending.The prospect that this gives Iran any advantage over the American navy is laughable. But I suspect we will see Iran’s cheap capabilities cloned by American and Chinese shipbuilders once any upcoming naval conflict lays bare the costly vulnerabilities of large, nuclear-powered carriers. — DGG
WHY RUSSIA IS NOT ITALY. The National Review highlighted an excellent article by French economist Jacques Sapir on why PPP-adjusted GDP figures for Russia show the country is a giant compared to European economies, and far better suited to the conduct of warfare than previously told by mainstream media and American lawmakers.
I cannot confirm or deny that I have seen a pitch for a story that Russia has now won the economic war. — IK
SPACEX ROCKETS RE-ENTRIES have been causing blood-red auroras in the atmosphere, as scientists express concern these temporary holes in the ionosphere could be causing unknown problems for astronomy and communication.
| SPOOKS |
TETHER’S SECRET AGENT. Who exactly is Christopher Harborne? Dirty Bubble Media ran an exposé on the intriguing figure behind Tether’s success. According to the investigation, Harborne may be a far more important figure in Tether’s operations than previously thought; the man’s shady past includes a shareholding in CIA-connected QinetiQ. He is also the sole owner of a British fintech company that specialised in moving large sums of money around the world.
ICYMI: AWARD-WINNING LONDON BEAUTICIAN SPIED FOR RUSSIA whilst she claimed total political ignorance before her customers, like alleging she didn’t know who Vladimir Putin was.
The reason I’m posting this is because I had no idea that she was based out of the Spooksville capital of the UK that is Acton. Who knew?! — IK
| POLE-TO-POLE |
PRESIDENT DUDA SWORE IN MORAWIECKI as the Law and Justice cabinet continued to delay Donald Tusk taking office as Prime Minister of Poland. A vote in December will determine if PiS will be able to form a government.
FORMER POLISH PRESIDENT LECH WALESA WAS TO FACE TRIAL over allegations that he falsely testified to not having signed documents related to his alleged cooperation with the communist authorities. The Nobel Prize winner and Solidarity leader has long faced accusations of previous collaboration with security services.
| SPQR |
HOW OFTEN DO YOU THINK ABOUT THE ROMAN EMPIRE?
| COVID COLLATERAL DAMAGE |
COVID COULD BE ‘MAN MADE’ Michael Gove told the British government’s inquiry on Covid-19, arguing this was a part of the challenge in stopping Covid’s spread: “I think this probably goes beyond the remit of the inquiry this, a significant body of judgment that believes that the virus itself was man-made and that presents sort of challenges as well.”
THOUSANDS OF SLOVENIAN CITIZENS were set to receive Covid-19 fine refunds after the Slovenian Constitutional Court struck down the unlawful measures. Notably, one deliveryman will receive a refund of £350 after being fined for eating a burek on the steps of a church during lockdown.
| I WANT TO BELIEVE |
THE UNITED STATES SPACE FORCE declared that thousands of UFOs being detected in Earth’s orbit have become problematic because the sightings were so regular they are “hindering threat identification”, the branch’s core mission.
THE SPANISH GOVERNMENT RESTRICTED ROSARY CHANTS outside the Socialist’s headquarters in Madrid. Police will now be deployed to threaten Catholic chanters with fines should they continue. The Government delegate responsible for the law is now being sued by Christian delegations who judge that Francisco Martin has committed a crime of abuse of authority and prevarication.
