Ian Welsh

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

American “AI” Is a “No Win” for Society

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On November 13, 2025

15 Comments

Let’s lay out the big picture for LLM-style AI.

It is a statistical prediction of what should be the next word or symbol. That is why it required so much data to train and why, even if we had the tech, we couldn’t have created it 20 years ago: There wasn’t enough data in digital format. It is not intelligent. It is not conscious. It is just an algo trained with a TON of data and which used massive amounts of processing power (and thus electricity) to produce results. Hallucinations are part of the tech, they cannot be eliminated, which means that LLM “AI” will always make mistakes and many will almost certainly be the sort of mistakes trained humans rarely make.

The current build-out in the US involves only a few companies, all in a huge circle jerk, and they make up 40% of the entire public stock market’s value. Neither Open AI nor Anthropic actually make a profit, and it costs more to do a query than is made even from paying customers, let alone all the free ones. There is absolutely no question in my mind that they are in a bubble.

The maximalist claim for “AI” is that it will become so smart it can replace at least 40% of jobs. (Or smart enough.) The more realistic claim is that it’s good for some things and can replace some workers by making those who remain more efficient. Plus, after all, most tech companies don’t care if their products are shit as long as they make money. See Google for “who cares what you think, it’s us or no one. You’ll use our product no matter how shit it is.” (Ironically, Search is one of the few things AI is better at than incumbents.)

So here’s the thing: no matter whether AI is a real tech or not, it’s in a bubble. (The internet was real, it had a bubble.) No one actually knows who’s going to make money from AI. The big internet winners (Amazon, Facebook, Google) came after the dot-com bust. The Feds may backstop and/or bailout, if they do, it will hurt everyone not involved.

If I am wrong about AI and the maximalist claims are true then what will happen is a massive replacement of tens of millions of workers. Since those people will now have almost no income, that will lead to a classic demand depression. A great depression like the one in the 1930s. The only way out would be a massive guaranteed annual income. Given our rulers and ideology, we’d probably have food riots long before they realized they were risking their own throats.

If it is a real tech, but not that big a deal, it will lead to a shittier economy where even more mistakes are made, and it’s even harder to find a human being to fix anything. Which is what tech wants: they want everything automated and certainly they don’t want to have real customer service.

And, if it is a real tech, as I have noted before, China is actually going to win. Their models are 20 to 30 times cheaper to run, and are open source. If your business uses AI you will use open source if  you have half a brain, because with open source one of two major providers (Anthropic/Open AI) can’t just raise prices or change the model. To use closed source would be so stupid that even most American CEOs will not do it. Certainly no one with sense outside American vassal swarm will be so stupid.

So:

  1. Maximal AI leads to a great depression.
  2. Moderate AI leads to a shittier economy and shittier projects.
  3. There’s a bubble either way
  4. At the end of it China’s AI models will be used far more than American ones anyway. The US has already “lost” the AI race and can’t even see that. (Why? Fundamentally because they’re greedy and want to become billionaires of trillionaires. Genuine open source AI won’t print nearly as many rich people.

America can’t win at anything that matters any more, because the people who lead America are stupid, liars and so greedy they can’t think of anything but money. (See Trump, who is the avatar of all these vices.)

 

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Trump Has Achieved Biden Levels of Delusion and Denial

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On November 11, 2025

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I mean…

Not to mention firing BLS workers because he didn’t like the stats, which even Biden didn’t do. Given how dubious most BLS stats relating to inflation are already, that’s some impressive cope.

The fact is that prices keep going up, and if you aren’t in the golden AI Ponzi Scheme, the economy sucks.

Rosenberg Research did some analysis:

If they aren’t in expansion, they’re in contraction. This is also known as a recession, even if they didn’t shade it.

Some further supporting data:

 

Sure doesn’t look like those tariffs are causing manufacturing to flood back into the US, does it? Data centers and power station building are both AI-related, and as for hospitals, they are part of a protected oligopoly, or, they were until the ACA subsidies were cut. That’s not likely to be good for the health “industry,” which would be wonderful — except that people will die and suffer as a result. “Get rid of part of the shitty way we provide health care now without replacing it with something else.”

Anyway, unless you’re in a monopoly/oligopoly, and have some control, or you’re connected to the AI spigot, the economy is ass. And remember, major tech companies are engaging in mass layoffs, so just working for tech companies won’t protect you; the reverse is true. Unless you’re actively working on AI, you’re first to the gallows, as their workers are where they’re starting with the replacements.

For decades, I warned coders (“engineers”) that their days of being King Shit of Turd Island, pretending their skills were super-special, would eventually come to an end. The moment senior management could figure out how to replace them, they would. Unless you’re truly at the very top of your field, you’re always replaceable — mediocre isn’t as good as average, but it’s usually a LOT cheaper.

Anyway, the end days are nigh. There isn’t much left of the middle class in America, with little left for the rich to steal. The US either changes its politics radically (and Trump has always been a billionaire whose policies are good for billionaires) or the US continues its descent to becoming an unutterable shithole for about 80 percent of its population.

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On the Necessity of Bearing Witness

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On November 11, 2025

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Some stories are too difficult to tell in the hours, days or weeks after you experience them. Over time, however, they fester; begging to be told; becoming more insistent as the months and years pass. Some even begin to haunt a writer more and more, day by day until the tale must be told. Last night’s nightmare compels me to relate my tale now.

In late November of 2008 my bus from Vietnam to Siem Reap developed issues and required a stopover in the Cambodian capital, Phnom Penh. It had been a sleeper bus so we were told we’d have a full day in the capital and the bus would leave the next day. Traveling plans like war plans rarely survive contact with the road. Growing ever more patient with detours, I inspected my guidebook, back when using Lonely Planet’s was a thing, and planned my day.

Let me be clear: I am no fan of war or atrocity porn, but I do understand its allure, although I am, thankfully, largely immune to it. On the other hand and possibly more importantly, I also recognize and empathize with the need to preserve places where truly reprehensible atrocities of human history occurred. They are to be preserved that future generations witness, feel, and have the opportunity to comprehend even the smallest portion of the enormity that took place underfoot. Maybe, just maybe, such lessons might be passed on to others who will never be able, or be allowed, to experience such hallowed ground.

Many practicing and secular Jews make pilgrimages to sites where the Shoah occurred. I’ve inquired why and each query has been answered universally. They describe a compulsion to bear witness, to honor the fallen, that they remain alive in living memory. Hard to argue with. Because the Armenian genocide occurred in a more dispersed manner Armenian pilgrims face much more significant hurdles. But, when possible Armenians likewise honor their ancestors. I cannot speak to what happened in Rwanda in 1994. I am aware of such places in Guatemala, heard in faint whispers where no gringos are welcome, nor visit, quite understandably.

How to explain how my choices that day were made? I may have only been 13 years-old but the 1984 movie ‘the Killing Fields’ left me with a powerful impression. An impression I recalled that November day and I felt oddly, inexplicably, duty-bound to see what I did not want to see. The killing fields were not my first stop that day however. That honor (poor word choice, I know) fell to the former interrogation and torture center of the Pol Pot Regime’s perceived enemies Tuol Sleng. Here I endured, what I can only describe as a feeling of almost unbearable witness to sickening crimes.

Two, and only two, examples need suffice.

First, in one room of the prison sat a metal frame bed where regime “enemies” were restrained. Once restrained, electrical leads were attached to the frame. Most expired for no reason at all. Sometimes the guards just left the room to have a smoke. At others they left to eat lunch. But most often the guards let them die because they knew no questions they might ask would be satisfactorily answered. They knew they were killing regular people, completely innocent.

The second example is this photo, a photo that haunts me to this day. The walls of Tuol Sleng are papered with them, all of them innocent and to this day they go unnamed. If you cannot feel the fear radiating from this photo you are devoid of the empathy gene.

In all I spent about two hours wandering through Tuol Sleng. I will never return.

But, my day was far from over. After walking out of Tuol Sleng I hailed a tuk-tuk and asked him to take me to the killing fields, which are about two kilometers outside of Phnom Penh. What I recall most vividly about this horrifying place was the care I had to take where I walked. (NOTE: click on the following links at your own risk.) The ground was uneven and I was told at the entrance to stay on the high ground, as the sunken spaces were mass graves. Christ, I shudder visualizing it even now. Then there were what I can only describe as large glass cases, best suited as terrariums for large pythons or boa constrictors. Each case was filled with one of the following: femurs of the dead, human ulnae and radii, and hip bones. Piling Pelion on top of Ossa, mason jars filled with human teeth sat atop each glass case. Finally, the Cambodians being Buddhists made a four story glass stupa—a Buddhist reliquary—filled with human skulls.

Towards the end of my increasingly heavy-hearted meanderings I noted crimson rays filling the sky. I hailed a cab to my hotel, shambled up to my room, slouched off my backpack and sank onto the bed, sighing deeply from emotional exhaustion. I didn’t know what I felt—except despair. I walked downstairs and asked where the nearest bar was. Now, I am not one to drink alone; but, I confess that I was incapable of dealing with what I was feeling at the time. So, I sat down, alone and in silence and got drunk. Not tipsy, but drunk. I barely recall making it back to my room, but I did. The last thing I recall thinking before I passed out was, “I’m going to be haunted by this for a long time.”

The next morning after dreamless sleep, no ghosts woke me up. All that greeted me were overcast skies, a wicked hangover and my noon bus ticket to Seam Reap.

It’s Difficult to Overstate How Concentrated Wealth Is in the US

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On November 10, 2025

31 Comments

These two charts tell a story. First, the top .1%.

Next, the top 1%. This chart is only to 2023.

Now what you’ll notice is that the top .1% holds about half the wealth of the top 1%.

It’s like this all thru the economy. Everything is flowing to the top, because that’s how the economy is set up. This is sheer insanity, among other things, especially when combined with AI sucking up jobs, its likely to lead to a demand depression. Most rich people don’t get, but a few are waking up.

Meanwhile Trump just went to the Supreme Court to not pay for SNAP food aid. “Starve, peons!” History tells us that food riots are the greatest danger to rulers and it doesn’t take long for them to happen.

As I said before, there is only ONE issue now. Cost of living. People keep telling me Zohran style policies can’t win outside of NYC. Well…

And the Republicans have a shutdown going to make health care even more unaffordable.

Crazed.

Things are going to start changing politically now, and over the next few years. This is the change, which I said decades ago would start in the mid 2020s. Again, it’s here now, though there’s a lot of slogging to go. It’s not a sure win, of course. Neoliberals or fascists may win (more likely fascists), but really the two main options are left wing populism or right (fake) wing populism. The generational pivot is here, and the “we can’t take it any more, you’ve destroyed the middle and working class” is here.

Oh, and one more pretty chart: the effect of our AI overlords on electricity bills:

What can’t go on, doesn’t. There’s not enough middle class wealth left to steal. The US either un-develops or there is a radical change in politics. Either way, politics is going to get a lot more turbulent. There’s a reason why most Trump’s cabinet lives (hides) on military bases now. They know how much they’re hated.

Week-end Wrap – Political Economy – November 09, 2025

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On November 9, 2025

13 Comments

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]

Bannon Tells GOP: ‘Seize the Institutions’ of Government Now or We’re ‘Going to Prison’ After 2028

Jon Queally, Nov 07, 2025 [CommonDreams]

It’s Dick Cheney’s World, We’re Just Living In It

[Talking Points Memo 11-08-2025]

Neither side would ever admit it, but MAGA’s ongoing authoritarian takeover is the heir of one man: Dick Cheney, the former Vice President who died this week.

Trump and his movement tried to distinguish themselves by loudly abandoning the Iraq War as a legacy of the Bush administration. During one debate in 2016, Trump pointed out to Jeb Bush that 9/11 wasn’t exactly an example of his brother having kept the country safe. Before the 2024 election, Cheney called Trump the biggest individual “threat to our republic” that the country has ever seen.

Now, now. It’s a shame they couldn’t get along, after all, they had so much in common.

Starting in the late 1980s, Cheney developed and implemented the dictator-like theory of executive power in which we all now live. The roots here lie in the long-held bitterness among many on the right over President Nixon’s resignation in the aftermath of Watergate, but, as NYT reporter Charlie Savage noted, Cheney expressed the idea fully as the Iran-Contra scandal wound to a close. That was a critique of what Cheney described as a “more assertive Congress that no longer honors the traditions” of executive power, but really a vision of a president who, when invoking national security concerns, could do whatever he or she wanted with backing by the full federal government.

At one point, in 2002, Cheney told Cokie Roberts that there had been an “erosion of the powers and the ability of the president of the United States to do his job,” citing both the War Powers Act and the Anti-Impoundment Act…..

The Trump Doctrine: If We Don’t Like Ya We’ll Kill Ya 

Mark Wauck [via Naked Capitalism11-02-2025],

‘At What Point Does This Cross a Line Into International Criminality?’ 

[Politico, via Naked Capitalism 11-02-2025]

 

Media Pontificating About Trump’s Motives for Attacking Venezuela Keep Ignoring that he Openly Admitted It Was to Take Their Oil 

[The Column, via Naked Capitalism 11-06-2025]

Trump throws himself a Great Gatsby party while people can’t even afford ketchup

Dean Obeidallah, Nov 02, 2025

Are You on Trump’s List of Domestic Terrorists? There’s No Way to Know. 

Nick Turse [via Naked Capitalism 11-06-2025]

Read More

The Evolution of Richard Bruce Cheney’s Foreign Policy Ideology

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On November 8, 2025

4 Comments

~by Sean Paul Kelley

Former Vice President Richard Bruce Cheney, the human manifestation of the US Deep State, died four days ago.

Good riddance.

The man was a war criminal. He is also the man singularly responsible for the US’s accelerating international decline. His policies effected the death of thousands of American soldiers and Marines, and the death of hundreds of thousands, perhaps millions of innocents. Here is Col. Larry Wilkerson, Gen. Colin Powell’s outspoken chief of staff, in a video from a few days ago everyone should watch, unequivocally called him a war criminal.

If there is a hell, he’s there.

If there is such a thing as reincarnation he’ll soon return as a cockroach. But I’m not here to discuss his afterlife.

It’s the evolution of his ideology that I want to consider.

Cheney was President Ford’s Chief of Staff from 1975-77. While Chief of Staff, he engineered Donald Rumsfeld’s appointment as the youngest SecDef ever. He did so on the basis that Rumsfeld would act as a successful counterweight to Kissinger, whose power and influence over President Ford was almost total in the foreign policy realm. All his life, Rumsfeld cultivated a persona of intelligence and wisdom, but ultimately he was an incompetent boob, losing himself in detail and missing the big picture, always. Sure, his comment about known-unknowns was actually insightful, but it was deriviative of a better thinker than he.

Rumsfeld’s two tenures as SecDef were both failures. But back in the 70s, he and Cheney stood no chance against Kissinger. They lost virtually all their foreign policy battles with the maestro. While National Security Advisor and then Secretary of State, Kissinger dominated American foreign policy-making like no other Secretary of State since John Quincy Adams and like no other since. Kissinger was a briliant man, a cunning bureaucratic infighter and skilled leaker. He was also an extremely self-serving memoirist.

Whether you like Kissinger or not, when in office, he co-created a diplomatic framework with Nixon and Chou Enlai that lasts, in many respects, to this day. They built something few men ever accomplish, and it deserves respect and an urgent reappraisal. Kissinger promoted detente, linkage, triangular diplomacy, and most importantly, prudence in the conduct of US foreign policy. Yes, I realize the irony of using prudence to describe Kissingerian foreign policy, but it’s true. Taking the long view, it’s hard to deny — especially when comparing his diplomacy with every SecState that came after him.

The world order Kissinger and Nixon created between 1969-74, endured for decades. But, as Nixon said, “in politics, nothing lasts.” Their order lasted until it was wrecked by a resentful Dick Cheney and his neocon acolytes during the presidency of Bush II. While Kissinger and Nixon engineered a time of great global stability, whatever you think of their politics or their actions while in office, they laid the foundations for the end of the Cold War, not to mention an era of relative peace between Israel and its enemies that endured until the assassination of Yitzakh Rabin in 1994. Cheney and Rumsfeld, on the other hand, inaugurated the era of the Empire of Chaos. When and where American power has been used since Dick Cheney’s rise, the result has been chaos. Name me a single American intervention since Cheney’s ascension as Vice President and after that has resulted in success. You can’t do it. Every single one is a master-class in the creation of chaos. We don’t nation-build; we manufacture failed states.

Ford’s loss to Carter in 1976 imbued Cheney and Rumsfeld with a lifetime resentment of Kissingerian diplomacy. Cheney and Rumsfeld took different paths, but had the same ultimate policy goal for the US: “Project for a New American Century with the central goal of promoting its “clean break” policy prescriptions. PNAC ideas soon became the sole driver of post-Cold War foreign policy in the US, especially when President Clinton adopted them, damn near wholesale.

This is a crucial point. Clinton adopted regime change in Iraq as a policy goal. He beefed up the no-fly zones over Iraq, as well. Indeed, Clinton’s foreign policy was totally incompetent. Seriously, we still have troops in the Balkans. And don’t forget the illegal partition of Kosovo from Serbia, which opened up the nasty can of worms affecting us even now. The main point here is: WE DID IT FIRST. The USA — not China, not Russia. The indispensable nation created the precedent. At the time, partition was vehemently opposed by the Russians. Russia was so incensed (though mostly impotent at the time) that they sent troops to occupy Pristina’s airport. US forces were ordered to overpower them. US Gen. Mike Jackson, to my eternal gratitude, defied the order saying, “I’m not having my soldiers responsible for starting World War III.”

I recount this episode of Bubba’s presidency because it represents what international relations scholars and historians call a “revolutionary diplomatic moment.” Spoiler: This is a big fucking deal. The partition of Kosovo was the exact moment when the US went from being a status quo power, defending the pre-existing order, adhering to the principle of non-interference in the internal affairs of sovereign nations (a principle established in 1648, by the way), to a revolutionary power, engaging in regime change, and the conduct of illegal aggressive war — neoconservatism in action. The kind of action whose results form a straight line from Kosovo to the war in the Ukraine. Bubba ain’t blameless by any stretch of the imagination. But Cheney represents “Boss Level” culpability.

Cheney’s final acts were many and deleterious, directly causing the decline he sought to avoid by abusing American power. First, he got himself appointed to Bush II’s Veep selection committee. He then chose himself. The rest of the story is a tragic recital of ignored intelligence, spilled blood, criminal invasions, vast American fortunes pissed away in the sands of Iraq and Afghanistan, and the senseless death of millions of innocents. All this because he got his feefees hurt by Henry Kissinger.

He may be dead, but his influence persists like a zombie, and I have no idea when it will finally be killed.

Open Thread

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On November 8, 2025

23 Comments

Use to discuss topics unrelated to recent posts.

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

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On November 7, 2025

8 Comments

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.

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