Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Did Burry, Altman, Friar, Huang, Karp and Sacks Just Pop the AI Bubble?

The stock market bubble inflated by AI hype since late 2022 might finally be popping. If this week’s reversals turn into a sustained downtown, analysts might look back at the actions of tech executives and Trump adminstration figures this week as the straw that finally broke the camel’s back.

The warnings have been coming for a while.

Ed Zitron (on the business side) and Gary Marcus (on the technical side) have been warning about the AI bubble for years now.

Even rubes such as myself noticed when 7 AI-fueled stocks exceeded 50% of NASDAQ’s market cap.

OpenAI CEO Sam Altman has been warning of an AI stock market bubble since August.

Dumbass META boss Mark Zuckerberg started saying bubble a month or so later.

JPMorgan’s Michael Cembalest noted that AI-related stocks have accounted for 75 percent of S&P 500 returns and 80 percent of earnings growth since ChatGPT launched in November 2022.

Harvard economics prof Jason Furman pointed out in late September that U.S. GDP growth in the first half of 2025 would have been 0.01% without AI capex investment.

Yet Another Bad News Cycle for AI

Meanwhile the litany of bad headlines for AI continued.

This is just a sampler and just from this week:

The Big Short Comes For AI

On Monday, November 3, legendary short seller Michael Burry shorted Nvidia, the chipmaker at the heart of the AI/LLM mania, and Palantir, the AI-powered government contractor.

As of Friday, he’s up about $1B.

Going for That Government Money

That’s when the AI hucksters blinked.

Well, Sam Altman had already blinked, flipping out at podcaster Brad Gerstner and walking out after a testy exchange:

Brad Gerstner: “How can a company with $13 billion in revenues make $1.4 trillion of spend commitments? You’ve heard the criticism, Sam.”

Sam Altman: If you want to sell your shares, I’ll find you a buyer. Enough.

I think there’s a lot of people who talk with a lot of breathless concern about our compute stuff or whatever that would be thrilled to buy shares. We could sell your shares or anybody else’s to some of the people who are making the most noise on Twitter about this very quickly.

We do plan for revenue to grow steeply. Revenue is growing steeply. We are taking a forward bet that it’s going to continue to grow and that not only will ChatGPT keep growing, but we will be able to become one of the important AI clouds, that our consumer device business will be a significant and important thing, that AI that can automate science will create huge value.

We carefully plan. We understand where the technology, where the capability is going to grow and how the products we can build around that and the revenue we can generate. We might screw it up. This is the bet that we’re making and we’re taking a risk along with that. A certain risk is if we don’t have the compute, we will not be able to generate the revenue or make the models at this kind of scale.

Palantir CEO Alex Karp went on CNBC’s “Squawk Box” on Tuesday and was asked about Burry’s bet:

“The two companies he’s shorting are the ones making all the money, which is super weird. The idea that chips and ontology is what you want to short is batshit crazy. He’s actually putting a short on AI. … It was us and Nvidia. I do think this behavior is egregious and I’m going to be dancing around when it’s proven wrong. It’s not even clear he’s shorting us. It’s probably just, ‘How do I get my position out and not look like a fool?’”

Wednesday OpenAI CEO Sam Altman went on the Conversations with Tyler podcast and openly called for a government backstop:

“ When something gets sufficiently huge … the federal government is kind of the insurer of last resort, as we’ve seen in various financial crises … given the magnitude of what I expect AI’s economic impact to look like, I do think the government ends up as the insurer of last resort.”

That same day, OpenAI’s CFO Sarah Friar echoed the same message at a Wall Street Journal technology conference.

The Journal led its story with “OpenAI Chief Financial Officer Sarah Friar said that …the company hopes the federal government might backstop the financing of future data-center deals.”

As OpenAI ramps up its spending on data center capacity to unheard of levels, the company is hoping the federal government will support its efforts by helping to guarantee the financing for chips behind its deals, Friar said. The depreciation rates of AI chips remain uncertain, making it more expensive for companies to raise the debt needed to buy them.

“This is where we’re looking for an ecosystem of banks, private equity, maybe even governmental, the ways governments can come to bear,” she said. Any such guarantee “can really drop the cost of the financing but also increase the loan-to-value, so the amount of debt you can take on top of an equity portion.”

Friar said OpenAI could reach profitability on “very healthy” gross margins in its enterprise and consumer businesses quickly if it weren’t seeking to invest so aggressively.

“I’m not overly focused on a break-even moment today,” she said. “I know if I had to get to break-even, I have a healthy enough margin structure that I could do that by pulling back on investment.”

OpenAI is losing money at a faster pace than almost any other startup in Silicon Valley history thanks to the upside-down economics of building and selling generative AI. The company expects to spend roughly $600 billion on computing power from Oracle, Microsoft, and Amazon in the next few years, meaning that it will have to grow sales exponentially in order to make the payments. Friar said that the ChatGPT maker is on pace to generate $13 billion in revenue this year.

Friar realized immediately she’d screwed up and went to LinkedIn to course correct:

Unfortunately for Friar, she couldn’t take it back nor did she address the other dumb things she said at the WSJ confab, per Bloomberg:

“I don’t think there’s enough exuberance about AI, when I think about the actual practical implications and what it can do for individuals. We should keep running at it.”

Regarding charts like this that argue that many of the AI industry’s recently announced deals are just a circular money-go-round, Friar said:

“We’re all just building out full infrastructure today that allows more compute to come into the world. I don’t view it as circular at all. A huge body of work in the last year has been to diversify that supply chain.”

Thursday, Nvidia CEO Jensen Huang flagrantly linked the fortunes of Amercian AI companies to American national security, telling the Financial Times that “China is going to win the AI race.”

The Nvidia chief said that the west, including the US and UK, was being held back by “cynicism”. “We need more optimism,” Huang said on Wednesday on the sidelines of the Financial Times’ Future of AI Summit.

Huang singled out new rules on AI by US states that could result in “50 new regulations”. He contrasted that approach with Chinese energy subsidies that made it more affordable for local tech companies to run Chinese alternatives to Nvidia’s AI chips. “Power is free,” he said.

Gary Marcus was on it fast, pointing out that he’d been warning that the AI bros would go for government funding since January:

Former Blackrock ace Edward Dowd quickly called out the scam as well.

Dowd also warned that:

A cluster of 3 Hindenburg Omens and Altman & Jenson signaling the end is near on the AI bubble by asking for taxpayer assistance does not bode well for the short term on $SPX.

Should Trump green light government assistance and we get a pump it will likely be faded as it will not be nearly enough. Congress has true purse strings.

The stink of desperation is in the air to keep the headline indices afloat with 7 AI stocks. Ends badly at some point.

Sam Altman went into backtracking mode too.

I’d quote the whole thing but it’s mostly bullshit and Altman is a known liar (just check out this 62 page deposition from OpenAI co-founder Ilya Sutskever which references Altman’s “consistent pattern of lying”).

Altman’s claims were complicated when this October 27 letter from OpenAI’ Chief Global Affairs Officer to Michael Kratsios, Executive Director of the U.S. government’s Office of Science and Technology Policy emerged. The letter says (via Simp for Satoshi):

The Administration has already taken critical steps to strengthen American manufacturing by extending the Advanced Manufacturing Investment Credit (AMIC) for semiconductor fabrication. OSTP should now double down on this approach and work with Congress to further extend eligibility to the semiconductor manufacturing supply chain; grid components like transformers and specialized steel for their production; AI server production; and AI data centers. Broadening coverage of the AMIC will lower the effective cost of capital, de-risk early investment, and unlock private capital to help alleviate bottlenecks and accelerate the AI build in the US.

Counter the PRC by de-risking US manufacturing expansion. To provide manufacturers with the certainty and capital they need to scale production quickly, the federal government should also deploy grants, cost-sharing agreements, loans, or loan guarantees to expand industrial base capacity and resilience.

Altman spoke to Reuters to “clarify”:

OpenAI has spoken with the U.S. government about the possibility of federal loan guarantees to spur construction of chip factories in the U.S., but has not sought U.S. government guarantees for building its data centers, CEO Sam Altman said on Thursday.

Altman said the discussions were part of broader government efforts to strengthen the domestic chip supply chain, adding that OpenAI and other companies had responded to that call but had not formally applied for any financing. He said the company believes taxpayers should not backstop private-sector data center projects or bail out firms that make poor business decisions.

Tech officials argue that these investments are tantamount to a national security asset for the U.S. government [Reuters supplies no source for this argument. Nat], given AI’s growing role in the U.S. economy. OpenAI has committed to spend $1.4 trillion building computational resources over the next eight years, Altman said Thursday.

Regardless of Altman’s backpedaling, the whole thing became moot after the Trump administration shut down talk of AI bailouts.

Trump Tech Czar Slams That Door Shut

David Sacks, the White House’s AI czar (and founding member of the PayPal mafia alongside Elon Musk and Peter Thiel) was quick to shut this talk down, tweeting Thursday morning:

I have to wonder if Sacks’ statement — which was a political must following GOP losses in Tuesday’s elections — might not be a Lehman Brothers moment for AI and the larger stock market bubble.

Ed Zitron’s latest report won’t stop the bleeding:

Based on analysis of years of revenues, losses and funding, from 2023 through 1H2025, OpenAI took in $28.6bn in cash and lost $13.7bn.

It was just reported that OpenAI ended 1H 2025 with $9.6bn in cash.

OpenAI has burned $4.1bn more than we thought.

And as long as we’re risking 2008 flashbacks, never forget that in 2023 the infamous Larry Summers joined the OpenAI board. I’m shocked Larry hasn’t already saved the day.

Sarcasm aside, this may be the beginning of the end for the Interregnum of Unreality that I posited began in 2008.

Pokrovsk Has Fallen, Now What?

~by Sean Paul Kelley

With the encirclement of the Pokrovsk-Myrnohrad pocket by Russia now complete, it is only days, a week or two at most, until mopping up operations are complete. This is an indisputable Russian victory, but don’t expect the war to change much. Russia’s strategy of attrition is about incremental gains that create unsustainable enemy losses, not the acquisition of territory. A fact that Western, especially retired American generals consistently get wrong. They expect the Russians to fight like Americans. That’s a terrible assumption to make.

On June 30 of this year I wrote that Russia was beginning its advance on Pokrovsk in earnest.  Now, a lot of Western commentators, like Gen. Keane, have made the claim in the legacy media, along with other retired US generals, that the Russian’s have been bogged down in and around the Pokrovsk area for a year and only have 30-something kilometers to show for their efforts. This is why I cite the above link about the start of Russia’s encirclement of Pokrovsk. American generals obsesses about big red arrows on maps, rapid armor advances taking territory, breakthroughs while Russia’s attrition of Ukrainian soldiers massively degrades the Ukraine’s ability to prosecute the war. US generals, however, display staggering amounts of hypocrisy in discussions about Russia’s massive and successful strategic bombing campaign. Those selfsame generals who cheered American Shock and Awe war porn that dominated the news coming out of places like Iraq, Afghanistan, and Libya. Funny how they now label the same strategy, employed now by evil Russia, as war crimes and focus on Russia’s killing of civilians, which the Russians are studiously trying to avoid and largely succeeding. But I digress.

American generals, think tankers and media personalities are ignorant, be it vincible ignorance or supererogatory, of what a strategy of attrition really is and what it looks like. Here’s the best definition I’ve got for you: using military power to gradually degrade an opponents military resources, i.e. killing as many of your adversary’s soldiers and wrecking as much of his kit as possible and/or breaking his will to fight. Nowhere in the generally accepted definition of attritional warfare does it say a word about occupying as much land as possible. That comes later. Much later.

With Pokrovsk surrounded what should we expect from the Russians? The landscape west of Pokrovsk is mostly open fields for many, many kilometers, with few tree lines, villages or ravines for Russian forces to utilize for an effective defense against the Ukraine’s drones; hardly an ideal landscape for attritional warfare. In fact, with the Ukraine’s ability to manufacture drones still intact it would be a killing field, littered with Russian armor, APCs, infantrymen and anything else the Russians might send into the open.

Make no mistake, the Russians are going to have to march across the landscape west of Pokrovsk at some point, but I posit the following near-term moves by the Russians. I’ll follow up with some developments I expect later in 2026.

First, Russia will continue encircling other salients, or cauldrons as the Russians prefer to call them, they appear to be enveloping, like the Kupyansk-Senkove salient or the potential envelopment of Konstantinivka. These areas offer excellent defensive positions and landscapes for Russia’s small-teams based attritional style of attack along the line of contact. It begins with artillery and/or missile bombardment, small teams then attack and destroy Ukrainian positions, kill or capture soldiers, retreat, then let the Ukrainians return. Rinse and repeat with drone coverage dominating overhead and you’ve got a style of war that chews up time like Andre the Giant hoovered up food at all you can eat buffets. It’s efficacy is not in doubt so long as you understand Russian strategy. If you’re ignorant of it, well, then you are expecting a big armored break-out after Pokrovsk, which won’t happen, because that’s not how Russia is conducting this war.

Second, Russia will consolidate its gains in and around Pokrovsk, after the Ukrainian soldiers in the pocket are killed or surrender. For some time after I foresee Russia utilization of tactical defense within an offensive framework, much like what American generals called the strategic defensive during our Civil War. In essence, at first they’ll capture positions, then dare the Ukrainians to take them back by appearing weak, digging in, rotating out tired soldiers, and firming up logistics. Subsequent Ukrainian attacks lead to mounting casualties. Then do it again.

In the context of capturing Pokrovsk, Russia will continue targeting the Ukraine’s industrial base, especially drone manufacturing sites. And it will hammer the nearby cities of Kramatorsk and Slovyansk with drones, missiles and FAB glide bombs, but it will be some time until Russian ground forces are within reach of mounting an attack on either city. Much will also depend on how well the Ukraine’s armed forces perform.

In war your opponent gets a vote on whether you succeed or not. Will the Ukraine’s armed forces hold up or might we see a general collapse in 2026? The Ukraine is now engaged in the widespread press ganging of men to fight on the front, reports this story at Responsible Statecraft. Some of the men press-ganged into service have reportedly died from blunt-force trauma, after beatings with iron bars and one young man died from injuries sustained attempting to jump out of the vehicle he’d been forced into. Most of the ‘busificaiton’ as it is euphemistically called has taken place in 2025 and thousands of such videos can be found here, proof that the Ukraine’s manpower shortages are growing to crisis levels. Such activities by Ukrainian recruiters also bodes ill for the armed forces, and adjacently indicative of the efficacy of Russia’s strategy of attritional warfare. Although press-ganging is not something Russia directly influences, it’s a clear symptom of the unsustainably large amounts of casualties the Ukraine has and continues to sustain.

In the near-term expect the war on the ground to continue as it has since 2023. Russia will grind it out, slowly and patiently. I always find it laughable when commentators claim that hardliners in the Kremlin are chomping at the bit for Putin to launch a massive offensive. This is stupid, Western group-think. Why is it so hard to understand that Russians are naturally endowed with a deep well of patience to draw upon? Especially Putin. That is not to say there will be no fireworks in the near future. But they will be arriving from a different direction than Russian soldiers will. They will come from above.

A near-term imperative for Russian forces is a way to achieve drone dominance along the line of contact. Russia has, by and large, achieved a hybrid-kind of air superiority. This has largely been achieved by its manufacturing prowess, producing, according to some sources, nearly a thousand Geran-2 drones a month. One report dated this September describes a new jet-powered version, the Geran-3, that is operational, largely resistant to electronic warfare and can be fitted with a 90 kilo thermobaric warhead, making them extremely lethal, inexpensive and plentiful. Russia also manufactures and utilizes on a daily basis hundreds of Gerbera decoy drones. By using the Geran-2 and 3s in conjunction with Gerbera decoys and higher value missiles like the Iskander and the hypersonic Kinzhal the Ukraine’s ability to mount anything approaching an effective air defense is nullified.

Achieving drone superiority over the line of contact is another matter altogether. The Ukraine can still manufacture enough FPV drones to give the Russians pause, forcing their continued use of small-teams to attack, destroy and then retreat. But, the Russian’s are innovating. For example, there are recent reports of the deployment of a mother-ship drone with two FPV drones attached with fiber optic cables. The mother ship drone flies at altitudes above the FPV’s alleged EW bubble and by connecting its two FPV drones via fiber optic cables achieves complete EW avoidance. While not a game changer, widespread deployment of such drones would make the war that much more difficult for the Ukraine to prosecute effectively.

Pokrovsk is a major victory for Russia, a significant morale booster for the troops and those on the home front and proves the efficacy of Russia’s strategy of attrition. But don’t expect much to change after Pokrovsk. It’s a loss for the Ukraine. The question, how big of a loss? How many troops died or will be captured once the pocket is completely mopped up remains the most important variable of the battle; how badly will it effect the Ukrainian armed forces morale is what bears watching, by Putin and Zelensky alike.

 

Mamdani Represents A New Era Of Political Conflict

As everyone’s probably aware, Mamdani, a brown muslim social-democrat who has promised, among other things, to open city grocery stories, make transit free, a rent freeze on stabilized units (about 40% of New York’s apartments), universal free child care and to build 200K new apartments. He’ll pay for it with tax hikes on rich New Yorkers and corporations.

(Read Mamdani’s Victory Speech. Powerful stuff.)

Mamdani’s extraordinarily charismatic, with an upbeat optimistic style and rarely shies from fights (though he has backed down on Palestine.) He’s a good candidate.

But he won because he was laser focused on the affordability crisis: food, housing, transit and child care. For many years now I have said that voters in most Western countries want real change, and they will vote for anyone who seems to not be like a status quo politician and for any promise to overturn the status quo. Like a wolf in a leg trap, they’re so desperate to escape from a future of eternally lowering expectations, one in which they can’t afford a home, can’t afford kids, can’t afford holidays, and are even told not to buy expensive coffees.

Trump doesn’t come across as an establishment politician, so many people voted for him. Corbyn’s wave was based on this. Brexit was based on “ever since we’ve been in the EU things have gotten worse for ordinary people in Britain.” Yes, the EU wasn’t the reason (though it is a pile of garbage, it’s a less rancid pile than British pols who wanted out of it), but that didn’t matter. “Get ground into the dirt slower, peons” doesn’t sell any more.

So people will vote for Britain’s Reform, or Canada’s Conservatives, or LaPen, or Germany’s AfD. Nasty piece of shit fascists, all of them. But they act differently from establishment politicians, and people will vote for that, even if their likely policy are vile and stupid and cruel.

It isn’t just Mamdani who won yesterday, ever major race outside Texas when Democrat, and all the Democrats ran on affordability issues.

Now one of the tropes is that young men have gone right wing in most countries. There’s some truth to it, but less than it appears:

NBCNews exit polling on young men (18-29) in VA, NJ and NYC VA: Spanberger +14 NJ: Sherrill: +10 NYC: Mamdani +40

If young men were solidly right wing, this wouldn’t have happened. What they want is change. They’ll take right wing change if that’s all that’s on offer, but just as Bernie was projected to beat Trump in a direct competition, they’ll take left wing change preferentially, because left wingers offer hope (free stuff) that right wingers just refuse to match. The right wing offer is “we’ll kneecap your peer competitors: women and immigrants, so you do better.” The left wing offer is “we’ll help everyone and we’ll actually give you shit and actually stop prices from increasing.”

The left wing offer is better just on straight up self-interest. And a lot of people hate the rich far more than they hate immigrants, so the “and we’ll soak the rich” left-wing offer goes over well. It’s also more realistic because it is the rich who actually destroyed America’s prosperity, and to the extent immigrants contributed, it’s because the rich used them force wages lower: the classic strategy of “pit one half of the working class against the other half.”

Alright, so that’s why Mamdani won. But what now?

New York city is a “creature of the state”. Kathy Hochui, the governor, and the NY State legislature have veto power over essentially everything Mamdani wants to do. Hochui endorsed Mamdani, BUT while she agrees with his policies, there’s one big exception: she doesn’t want to increase taxes on the rich and corporations, and she effectively has a veto.

So what’s likely to happen is that she kneecaps Mamdani by making it so he can’t get the money to do all that he wants to. (Saying you agree with Mamdani while making sure he can’t deliver isn’t actually agreement. It’s an attempt to pander to the left while still getting rich by actually protecting the oligarchy.)

Trump has said that he will cut funding to New York and we can expect the standard ICE and border patrol invasion.

Mamdani’s going to face to tidal wave of elite opposition to what he wants to do. If he’s to be successful, and the first exemplar of a new wave of left wing politicians in America (America’s only chance of a decent future) he has to figure out a way to still deliver on enough promises (rent freezes, for example) so that New Yorker’s feel better off AND he needs to frame his losses as because of enemy action which can be defeated in the future by electing his allies as New York state governor, to the state legislature, and to federal offices. He needs to become the linchpin of a larger movement. He cannot be seen as a failure, he must appear as a fighter who has some victories and part of a movement which can win overall.

All of this is possible. People hate, hate, hate the elites in America. Attacking landlords, health insurance executives and politicians who cover for them and want them to get even richer is popular. Taking action against them in whatever ways are possible is adored. Mamdani is lucky in this: his enemies are loathsome parasites who aren’t satisfied being the richest rich the world has ever seen, they want MORE and they want to take it from everyone else.

Mamdani knows a fight is unavoidable, so he’s squaring up and framing the fight as a mass fight against a corrupt bully. (From his victory speech.)

So Donald Trump, since I know you’re watching, I have four words for you. Turn the volume up! We will hold bad landlords to account because the Donald Trumps of our city have grown far too comfortable taking advantage of their tenants. We will put an end to the culture of corruption that has allowed billionaires like Trump to evade taxation and exploit tax breaks. We will stand alongside unions and expand labor protections because we know, just as Donald Trump does, that when working people have ironclad rights, the bosses who seek to extort them become very small indeed.

New York will remain a city of immigrants, a city built by immigrants, powered by immigrants, and as of tonight, led by an immigrant. So hear me, President Trump, when I say this. To get to any of us, you will have to get through all of us.

What Mamdani represents is America’s last hope. If the movement he exemplifies loses, America’s future is to slowly un-develop, becoming more akin to Brazil or India than to developed nations. Vast numbers of homeless, desperate workers, extended new slums and people absolutely desperate for food, healthcare and housing. In this he is similar to Corbyn: the last chance for America to turn it around before the shit hits the fan. If this movement fails, America fails. It may be able to get back up again, sure, but it will be far harder to do in twenty years than in three or seven years.

While it is in everyone’s interest, including over 90% of Americans for the American Empire to end, having America become a failed state, its likely prospect if current trends continue, will be horrific.

Avoiding that is, to a remarkable degree, on one Muslim social democrat’s shoulders.

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Two Quick Hits

~by Sean Paul Kelley

First, Dick Cheney died today. He was 84 years old. It’s a personal policy of mine to avoid speaking ill of the dead on the same day they die. I’ll comment on the consequences of his time in office some time soon. You are certainly free to say whatever you want in the comments.

Second, when it comes to military power, Singapore is a nasty, mean little porcupine crossed with a skunk whose motto is FAFO and if I were a neighbor I wouldn’t want to find out. (What a damned fine run-on sentence, yeah?) It’s also something their new Victory Class MRCV (multi-role combat vessel) makes abundantly clear and reminds me of an experience I had while living there.

In the run-up to National Day, or Independence Day, I don’t remember what it’s officially called but the military was out in full force, rehearsing its marching routes for the celebrations.

I lived on Beach Rd. and was sitting out in front of my favorite duck restaurant when an absolutely terrifying thunderclap occurred. I damn near pissed my pants. I looked up at the clouds, as thunder is kind of rare in Singapore, and saw the shadow of a triangle pass a kilometer down Beach Rd. from where I sat.

“What the hell was that?” I asked the waiter.

“Just a jet practicing for the parade down our street,” he said all nonchalantly.

Then the f**king thing made another run down Beach Rd. no more than 300 feet overhead. The windows rattled everywhere.

My experience in that moment gave me just a small inkling of how terrifying it must be to face the business end of a US F-15. It’s a feeling that cannot be described.

One I am not interested in repeating, either.

 

 

On the Public Abuse of Our Historical Ignorance

~by Sean Paul Kelley

When supposedly well-educated people abuse history, analogize incorrectly, or make ridiculous comparisons for political gain I lose all semblance of mindfulness, which results in a complete takeover of monkey-mind (a Zen Buddhist term for losing your shit). For example, a few days ago I watched this video of US Air Force Brigadier General Douglas Wickert asserting that China is preparing for a Pearl Harbor style-attack. After calming down, rewatching the video and reading the transcript in an attempt to confirm the Air Force general made such an ill-informed assertion it became clear he did not make the assertion explicitly, but implied it in multiple ways at multiple times. He also cited Army Air Force General Billy Mitchell, the father of the strategic bombing doctrine America so loves, several times. I’ll explain why citing Billy Mitchell is both correct and important, but indicative of a dangerously unimaginative strategic mindset. But first let’s discuss the You Tube video’s click-bait title “U.S. General Warns: China Prepping for ‘Pearl Harbor-style’ surprise attack.”

I don’t know about this. I’m ambivalent here.

Why?

Well, I’m unable to decide if this is just lazy, racist thinking, or plain old-fashioned historical ignorance, willful or otherwise. But I can state, without an iota of ambiguity that China, in its six thousand year history, has absolutely no history of conducting surprise attacks on non-combatant sovereignties.

Zero.

Even at the dawn of Chinese history there is no mention of surprise attacks against states one is at peace with. Not in Sima Qian’s ‘Records of the Grand Historian’, who is China’s version of Herodotus, nor in the Art of War, by Sun-Tzu, which is without question the greatest book on strategy ever written. Sun-Tzu was a Chinese general living during the Warring States Period. His realism and understanding of human nature reminds me a great deal of the Athenian general and author Thucydides, but I digress.

The assertion that China is preparing a sneak attack is so utterly ignorant of East-Asian history it’s embarrassing to read. And the parallels Gen. Wickert tries to make are like a thirsty man reaching down from the rim of the Grand Canyon to get water from the Colorado River: delusional. But, it’s also unsurprising.

Why?

Because what Gen. Wickert embodies is another in a long list of American generals competent in both tactics and the operational art of war—which includes exceptional prowess in utilizing America’s unparalleled logistical expertise—but a insipid and unimaginative general who has zero concept of strategy, historical, grand and/or otherwise.

Need another more obvious example?

Okey-dokey. Here’s a blast from the past: US Army Gen. Tommy “Catastrophic Success” Franks.

Here’s where the abuse of history gets worse and kind of sways me towards thinking this is kind of an unacknowledged form of racist thinking regarding East-Asians. I mean, seriously, aren’t they all clothes washers, little and yellow, and all look the same, right? Obviosuly East-Asian diversity is immense. If you’ve lived in Asia and traveled in several of the nations and are observant one can recognize by sight alone the facial incongruities between Japanese, Chinese, Koreans, Vietnamese, etc. But I again, digress.

Taking a Neo-racist interpretation further and adding a dollop of historical ignorance, let’s discuss Japan’s long history with surprise attacks. Anyone who has read Japanese and Russian history on even a basic level is aware of Japan’s most famous sneak attack: the Battle of Port Arthur.

Wait, what? You’ve never heard of it?

In short, the Battle of Port Arthur was a surprise night attack by the Japanese on the then neutral Russian fleet moored in the harbor at Port Arthur, Manchuria in 1904. So now you know.

But let’s push our historical horizon a bit further, shall we?

People who say “no one could anticipate Pearl Harbor” are fucking idiots. Japan proved at Port Arthur how far it was wiling to go to hobble an adversary it was at peace with. One could argue that Pearl Harbor was a clear failure of American strategic imagination. One could also argue that perhaps it was exactly what the historically well-informed president at the time was expecting when he ended the sale of oil to Japan, thus provoking an attack by Japan that would a.) hobble the US fleet and make the capture of the oilfields in the Dutch East-Indies easy and b.) force US entry into the war. That’s a debate honest people can have.

But arguing that China’s going to do it?

GTFO!

Now when it comes to 9/11—another great failure of the American strategic imagination—all the morons who said, “no one could ever have imagined such a thing” are fools. No less than seven years before author Tom Clancy sketched out a similar scene in his novel “Debt of Honor” in which a disgruntled Japanese jumbo-jet pilot crashes his jet into the US Capitol Building during a State of the Union address. Clearly imaginable. Clearly conceivable. Clancy was even interviewed many times after 9/11 about it. But those interviews disappeared down the memory hole.

Digressing. Digressing. Digressing. I know. My bad.

I’m going to state it again, unequivocally: China, i.e. the Han Chinese people, have no tradition of surprise attacks on non-combatant nations or polities they are at peace with. Of all the history I have read regarding the Chinese they have almost always approached jus ad bellum with honor. Jus ad bellum is a fancy smancy-pants way of discussing the laws a state or sovereignty must obey before engaging in war and sneak attacks are not only a huge no-no, but dishonorable as all get out.

Now let’s discuss suprise attacks in the context of jus in bello, meaning the conduct of war once declared, or how one acts during hostilities. Like how reprisals are allowed so long as they are proportionate, one principle the US has pretty much violated in every war since WWI. As for the element of surprise, or sneak attack? For fucks sake, that’s got to be obvious; everyone hopes and aims and seeks it and it is a totally legitimate aim to seek such an advantage. Take good ole Cherry Tree toppling General George Washington at the Battle of Trenton. His surprise attack across the Delaware River against the Hessians was a complete success and altered the course of the war. It also demonstrated Washington’s increasingly excellent grasp of strategy and its influence on morale. The Battle of Trenton galvanized his troops, and earned an enormous amount of loyalty, loyalty he truly needed after a long and mostly demoralizing year of campaigning. There is only polity I’m aware that has practiced sneak-attacks, jus ad belllum, on nations with which they were at peace: Japan. There may be others. If so, enlighten me. Sincerely.

To repeat, ad naseum, China has fuck-all history of acting this way. Zhuge Liang would rise from his grave and smite any Chinese leader who acted so dishonorably. Perhaps Gen. Wickert confuses China’s long history of attack through indirection, jus in bello, with sneak attacks, jus ad bellum, which would indicate he’s a pretty dim bulb.

Now, Wickert’s mentioning Army Air Force General Billy Mitchell’s prediction that the US and Japan would go to war was correct. It’s inarguable. But it’s Mitchell’s role as the father of the idea of strategic bombing that is problematic. The idea, refined, means a war can be won by air power alone. Only one war has ever been won by air power alone, the bombing campaign against Serbia to partition Kosovo. This air campaign was waged by Gen. Wesley Clark. The Serbs endured weeks of bombing and only relented when the US threatened to use ground troops. So, in a technical kind of way, it wasn’t won by air power alone. I’m already at a thousand words, so I’m not going to go into why such a strategy alone can’t win a war. The idea is problematic, nay, deleterious to US strategic thinking, inspiring ideas like missile defense and the like, which dumb down strategic thinking faculties in US generals, Air Force, Navy and Army alike.

The enduring use of the apocryphal story about the time the Soviet Premier asked the US President for permission to nuke China is another piece of history abused so frequently for so many different purposes I’m surprised no one has written a book debunking it. Historian Sarah Paine relays this Cold War anecdote for propagandistic purposes against contemporary Russia in this video. I didn’t go full monkey-mind listening to her, but I could not help but comment why this anecdote gained currency and how. I noted, 

The story that the Soviets asked the USA if they could nuke China is a fable. It is pure balderdash and a piece of Cold War myth that has metamorphosed into having some aspect of historicity and it does not. It never happened. Never. It was a lie whispered to certain sections of the US public to be spread in preparation for the opening to China that Nixon performed in 1972.”

I didn’t get this straight from the horse’s mouth, but I got it from a flag officer who got it from Henry Kissinger himself and I am fully convinced of my long-since passed friend’s veracity. Besides, Sarah Paine is wrong about everything she says in just about everyone of her lectures. Why people listen to her is simple: she reinforces their preconceptions, offering no challenge or opening for revision. The worst kind of historian in my opinion.

Finally, there is this video interview of ‘historian’ Sam Biagetti by Katie Halper.Starting around minute 5:37 Mr. Biagetti states that he doesn’t really believe there was ever anything like a unipolar moment. He then adds that people “assume” hegemony is the norm historically. He adds, “when it is not the norm,” and further indicates his ignorance by implying multi-polarity is the natural order of interstate relations. My head near exploded. I proceeded to write in the comments a brief history of hegemony/empire versus multipolarity, beginning with the Greek city states prior to the Persian wars and up to the end of the Peloponnesian as the first multi-polar system, that was followed by a long period of empire. In hindsight, I imagine there was a sort of multi-polarity in Mesopotamia in the 6th millenium BC but I can’t get it all right all the time. I’m not immune to forgetting. Anyway, this is the gist of my comment on his ignorance of ancient, medieval and modern history, including the post-Cold War era:

Sam B. is super misinformed and/or flat out wrong. The historical norm is empire, or hegemony. Mulitpolarity is actually very rare. Here are the only historical examples of mulitpolarity: Greece pre-Peloponnesian war, roughly 650 BC through the end of the Peloponnesian War in 404 BC. Soon thereafter Alexander conquered most of the known world and the classical Hellenistic world settled into empire and/or a handful of hegemonic powers. Likewise in East Asia, along the Yellow River basin in modern China, the Warring States period lasted from 475 BC – 221BC when Qin Shi Huang Di conquered all the warring states and united all of China. China has been a multi-ethnic empire to this day, ruled by rising and falling dynasties. As Luo Guanzhong wrote in his first sentence of China’s most famous novel: “”The empire, long divided, must unite; long united, must divide. Thus it has ever been” (話說天下大勢.分久必合,合久必分),” a statement that remains true to this day, even though the dynasty ruling now calls itself Communists.

There was a brief period in India of multipolarity, round about the time the Buddhist and Jain reforms of Hinduism gained traction. There was a handful of independent states along the Ganges River that warred against each other and made alliances when interests aligned.

Back in the West Rome’s rise acccelerated rapidly after winning the Second Punic War in 201 BC conquering the entire Mediterranean Basin by 14 AD, the basin remained uni-polar for a thousand years. After the fall of the Western half of the empire, conquerers ruled most of Europe, Charlemagne created the great Frankish empire. More unipolarity. The Eastern half of the Roman Empire, ruled from modern day Istanbul, lasted until 1453.

Renaissance Italy was a congeries of independent powers practicing a sort of balance of power multipolarity until France was invited into their politics and invaded. Empire reigned supreme in Europe for another two centuries. It was only until the peace of Westphalia in 1648 that the modern concepts of the soveriegn state, and the principle of non-interference in a sovereignty’s internal politics was forbidden, were codified by the international treaties signed in 1648. This concept spread throughout the world in the 19th century by the few states that could resist European colonization, such as Siam, Ethiopia (for a time), China and Japan and then grew exponentially during the decolonization era of the 1950-60s. But the successor states of the great Littoral empires of the UK, France, Dutch, Spanish, and Portuguese united in alliance under the auspices of a new hegemon after the second war of European suicide known as WWII: the United States, a hybrid-republican empire. It had one peer at the end of WWII: the USSR. But the USSR collapsed under the weight of mismanagement and stagnation of the 70s and recevied its death blow with Chernobyl. Had there been no Chernobyl glasnost and perestroika might have worked.

But by 1992 the US had no peer competitor, until the elite of the nation traded the foundation of its power, industry, to China for individual fortunes. It is unfortunate your interlocutor Sam B. is incapable of understanding post-Cold War history. Quite fascinating really. One wonders what subject of history he focused on, because geopolitics, war, empire, and the like are clearly not his strong suits.

Obviously my comment is a gross oversimplification, but necessary nonetheless. Miss Paine, Gen. Wickert and Mr. Biagetti are three easily found and disproven examples of the kind of a-historicity degrading political discourse in America.

As an historian myself, I am of course biased. So what? That doesn’t mean I’m wrong about this.

But how are we to learn to think with a national historical sensibility when the teachers of history in junior and high school double as the football and/or basketball coaches? You get what you pay for, and we aint getting nothing but shit. Our uniquely American scatalogical ignorance of history is dangerous, leads to easy political manipulation of an ignorant electorate and contributes to the rise of neo-quasi-racist belief system now taking over our public discourse.

These videos provide ample proof.

The State Of Play In Late 2025

Let’s run thru the important points:

Domestically in the US the only issue that really matters is affordability. Food, housing and medicine. This will dominate the next few years, maybe even the next decade. Mamdani will win, he will be blocked from doing much of he wants by courts and the the State and federal government, and his future will depend on him making those who stop him the villains. The mid-terms and the next election will be fought in bread and butter issues.

China is going to win the AI race, as predicted. 

This is, again, because Chinese models are at least 90% cheaper to run, and mostly open source. Only a complete and utter moron would run their business using proprietary models where OpenAI or Anthropic can jack up the price any time they want or depreciate the model you actually needed. Even US startups agree, 70 to 80% of them are using Chinese open models.

American AI either bursts or causes a great depression. Or perhaps bursts and causes a depression. There isn’t any other possibility. They’re spending trillions so American business can mass replace their workers. If it works, it causes a demand depression, a great depression like the Great Depression of the 30s. Who the hell do they think will buy their products? People can barely afford food and rent, let alone fancy AI crap. When they’re homeless they aren’t going to be customers. Meanwhile the rest of the world won’t be buying US AI crap either, they’ll be buying Chinese open source AI crap.

The War of attrition is nearly won by Russia. Ukraine just doesn’t have enough men and drones, it’s that simple. Next year, absent a peace deal, the big arrow moves everyone was wondering about will happen and Ukraine will be forced into unconditional surrender.

Europe is done. They’re losing their industrial base and their tech base. The people are unhappy and turning to populist opposition, either left or right. The Eurocrats are using lawfare to make outsider parties illegal if they look likely to win. This will take some time to play out. There will be changes in government away from neoliberalism, and if they can’t be achieved peacefully there will be a lot of violence. The EUs only play here is to try and gin up a war against Russia, but if they succeed, they’ll lose the war.

China and the US are now co-equal powers but that won’t last. China is on the rise, America is gutting its own science, arts and intellectual base while immiserating its own people and keeping smart foreigners out. (Or throwing them out.) All the big spend isn’t on re-industrializing, it’s on an AI moonshot which probably won’t succeed and will burst, or which if it does succeed will cause a Great Depression.

I will remind you that rich people have limited real power. They can buy a lot of influence, but if government turns on them they are done, because they do not have private armies capable of standing up to the State’s military and paramilitary forces. If the political zeitgeist turns against them, the government can make any changes it wants. Ask various Chinese billionaires how things worked out for them when the CPC decided they were too big for their britches.

One way they lose their influence is simply by having a real, undeniable depression. They’re doing everything they can to create one. If the Fed can’t bail them out, they’re done. The Fed’s ability to print dollars is going away, they have at most one large bailout left in them. After that, they can’t, because if the dollar isn’t the unit of trade for the world, over-printing will be catastrophic. Dozens of countries have found this out, again and again. Money can’t buy what your country can’t actually do, and the US can do less and less—the rich people sold America’s ability to do things to China to get three generations of fake wealth.

We are moving towards the end-game. It will take ten to fifteen years to play out. The West will be immiserated, neo-liberalism will end, US power and Empire will collapse. There will be wars and revolutions around the globe, because the force holding the world in its post-war, post-Soviet collapse state, including such things as borders, is going away. China is not likely to engage in massive military operations thousands of miles from its border and has shown itself uninterested in what happens in other countries domestically, unless they’re countries very close to it geographically.

Covid remains a thing, more specifically long Covid. We don’t measure it much any more, since governments don’t want to know, but there are multiple data points indicating its still disabling people. (I’ll do a proper article on this at some point.)

Likewise climate change and environmental collapse are real and so are resource issues. Farmland continues to lose fertility, the food-web is collapsing, the insects and fish and bird and everything else are dying and species are going extinct. This is going to cause huge problem. 1.4 billion Chinese cannot have a Western lifestyle without catastrophic environmental issues. If this is not dealt with (and it takes more than some orbital spraying to do so), the era of Chinese supremacy is not likely to last.

China will take the complete tech lead in essentially everything and they will also become the premier space-going nation. They have actually reduced carbon emissions, a good sign, and are massively planting forests. It’s not enough, but they are the only major nation taking these issues at all seriously. They look likely to start moving industry and power generation to space over the next 20 years and if they can get space mining and refining going, that offers some hope. (This is not space colonization, and the idea is to make it self-sustaining off world minus biologicals. Dropping resources from space is easy, getting resources into space is hard.)

The major geopolitical and economic issues I have been writing about for over 20 years are coming to fruition now and will play out over the next ten years. End of Empire. End of Neoliberalism. End of dollar hegemony. End of Europe. Western economic collapse. It’s all happening, exactly on schedule.

The glimmer of hope for Westerners is that political change is also coming. Put crudely, there are three possibility: authoritarian corporatism wins thru a nasty surveillance and police state; right wing populists take charge and go nasty and mean, or left wing populists take charge and actually try to help people.

The third world will find a great deal more freedom than they’ve had for a long time. China will be the superpower, but at least for the first while seems likely to be fairly laid back about it. These countries, if they cooperate with China intelligently, will have a chance to really develop, in most cases an opportunity to make it to middle income status, since they will no longer be forbidden from the policies required to actually develop, as was the case under the IMF/World Bank “development” duopoly.

This is where we are, and where we’re going. Tighten those seatbelts and make what preparations you can. Remember that things like power and water and food will become more and more unreliable. It’s been a long time since the West and westerners had to deal with such issues, but they will be on the plate for at least thirty to fourty percent of Westerners within fifteen years in nations which do not make the turn correctly, which seems likely to be the majority.

Fundraising Note: We’re about $900 from reaching our goal. Yadda yadda. If you value this site and can donate or subscribe please do. I’ll stop bothering you with these notes soon. My most profound thanks to everyone who has given and to all subscribers.

Week-end Wrap – Political Economy – November 02, 2025

by Tony Wikrent 

 

Trump not violating any law

‘He who saves his Country does not violate any Law’

Trump Stuns By Saying ‘I Don’t Know’ When Asked Directly NBC’s Kristen Welker ‘Don’t You Need to Uphold the Constitution?’

Joe DePaolo, May 4th, 2025 [mediaite.com]

MAGA’s 9/11 Is an Assassination — “Charlie’s death is like a domestic 9/11,” says Treasury Secretary

Ken Klippenstein, Oct 28, 2025

Within hours of Charlie Kirk’s shooting last month, politicos in the White House and lawyers at the Justice Department and Homeland Security scrambled to draft up back-of-the-envelope plans for a crackdown on their domestic foes, sources tell me. Illegal immigrants, anti-ICE protesters, leftists, trans people, gamers, Hamas supporters, Antifa; the administration had a hard time pinning down who exactly was the new enemy, so they ended up including them all.

But how to do it? How to destroy the “enemy within”? The answer was to frame the Kirk assassination and political violence generally as a national security problem and not merely one of law enforcement….

As one source close to the White House told me, the gruesome spectacle of Kirk’s bloody assassination was traumatic for the many administration officials who knew him personally; especially Donald Trump, who narrowly survived his own assassination attempt last year. Their anxiety about domestic terrorists walking among us, hiding in plain sight, is in large part attributable to this.

Asked if the murder was traumatic event for MAGA, Mike Howell, a former homeland security official and president of the Heritage Foundation-backed Oversight Project, replied simply: “100%.”….

The administration’s frantic planning session precipitated by Kirk’s murder was formalized days later in Trump’s National Security Presidential Memorandum 7. Called “NSPM-7” by insiders, the sweeping directive targets radical left “terrorism” by relying on so-called indicators like “anti-Christian” and “anti-American” speech. (I’ve reported on the significance of NSPM-7 here.)

Banking compliance expert Poorvika Mehra told American Banker that NSPM-7 “is basically asking you to follow the money, but within ideological movements, and compliance teams immediately ask which customers put the banks at risk.” She anticipates that banks will respond to NSPM-7 by simply dropping affected clients rather than deal with the headache….

ICE following orders from far-right activist Laura Loomer

Drop Site Daily, October 27, 2025

British journalist and political commentator Sami Hamdi was detained by U.S. immigration officers at San Francisco International Airport while on a speaking tour, reportedly after criticizing Israel’s actions in Gaza. The Council on American-Islamic Relations (CAIR) said Hamdi appeared to have been taken into custody following pressure from far-right activist Laura Loomer, who publicly claimed credit for the detention. Hamdi had just spoken at CAIR’s Sacramento gala on Friday and was scheduled to appear at the group’s Florida event the following night. Homeland Security spokesperson Tricia McLaughlin posted on X that Hamdi’s visa was revoked and that he was in ICE custody “pending removal,” adding: “Under President Trump, those who support terrorism and undermine American national security will not be allowed to work or visit this country. It’s common sense.”

Top Trump Officials Are Moving Onto Military Bases

Michael Scherer, Missy Ryan, and Ashley Parker, October 30, 2025 [The Atlantic]

How Designating Antifa as a Foreign Terrorist Organization Could Threaten Civil Liberties

Thomas E. Brzozowski, October 27, 2025 [justsecurity.org]

Foreign Terrorist Organization (FTO) designations are one of the most powerful legal instruments in America’s counterterrorism arsenal. Originally conceived to combat international terrorist networks like al-Qaeda and the Islamic State (ISIS), these designations trigger sweeping financial sanctions, severe criminal penalties, and extensive surveillance authorities. President Donald Trump’s comments at a White House roundtable on “Antifa” earlier this month make it likely that his administration will designate this decentralized anti-fascist movement as an FTO — a move that would create an unprecedented expansion of counterterrorism authorities into the domestic political space….

Once an organization is designated as an FTO, providing “material support” to it becomes a federal crime punishable by up to 20 years in prison, or life if the support results in death. The statutory definition of “material support” is intentionally expansive and includes providing: “currency or monetary instruments, financial services, lodging, training, expert advice or assistance, safehouses, false documentation, communications equipment, facilities, weapons, personnel, and transportation.” Only medicine and religious materials are explicitly exempted.

The breadth of this definition reflects Congress’s determination to eliminate all forms of assistance to designated organizations. The statute applies to U.S. persons regardless of where the prohibited conduct occurs, creating global reach for American terrorism prosecutions. The Supreme Court’s decision in Holder v. Humanitarian Law Project clarified that even speech intended to promote peaceful conflict resolution may constitute material support if provided to a designated organization….

Trump DOJ Charges House Candidate Kat Abughazaleh With Conspiracy for Protesting ICE

Jessica Washington, October 29 2025 [The Intercept]

The Department of Justice has brought federal charges against Illinois House candidate Kat Abughazaleh and five other activists for protesting outside of a U.S. Immigration and Customs Enforcement processing facility in Broadview, a suburb of Chicago.

The 11-page indictment, which was filed on October 23 and unsealed Wednesday, accuses Abughazaleh and the other protesters of using “force, intimidation and threat” as part of a conspiracy to prevent an unnamed ICE agent from “discharging his duties” and to “injure him in his person or property.”

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