This complete divorce of incentives
The QE drug is wearing thin.
Actionable Information!
The Fed's "Core CPI" model, at 2.8% YOY, has been above their made-up 2% target since April 2021.
"European banks spend €1.1bn axing senior staff"
"The €1.13bn severance pot was shared between 2,100 material risk takers across the seven lenders"
'Risk takers' lol.
That's $1.307 Billion US, divided 2,100 ways = $622,512 EACH on average.
State Street’s private equity index — which tracks returns from private equity, private debt and venture capital funds — delivered a 7.08 per cent return last year, compared with a 25.02 per cent total return for Wall Street’s blue-chip S&P 500 index.
The data shows that the S&P 500 outshone private markets funds for the last three months of 2024, as well as on a one, three, five and 10-year basis. That marks the first calendar year that private markets funds have underperformed the stocks index across all measured time horizons since 2000.
Many critics of the article in the comments:
Private Equity in Media
A nice angry 2019 rant from Megan Greenwell, formerly of Deadspin
A metastasizing swath of media is controlled by private-equity vultures and capricious billionaires and other people who genuinely believe that they are rich because they are smart and that they are smart because they are rich, and that anyone less rich is by definition less smart. They know what they know, and they don’t need to know anything else…
The question I hear the most about the owners of this company is “Why did they buy a bunch of publications they seem to hate?” I and my colleagues have asked Spanfeller only slightly more diplomatic variants of that question on several occasions. The answer he has given is that the publications didn’t cost him much and that he liked their high traffic numbers. The unstated, fuller version seems to be that he believed he could simply turn up the traffic (and thus turn a profit), as if adjusting a faucet, not by investing in quality journalism but by tricking people into clicking on more pages. While pageviews are no longer seen as a key performance indicator at most digital publications—time spent on the site is increasingly thought to be a more valuable metric—Spanfeller has focused on pageviews above all else. In his first meeting with editorial leaders, he said he expected us to double pageviews. Several weeks later, without acknowledging a change, he mentioned that the expectation is in fact to quadruple them. Four months in, the vision for getting there seems less clear than ever.
How Private-Equity Billionaires Killed the American Dream
The central tension of the book is about the disconnect between what serves private-equity firms and what serves the communities that surround the businesses they buy. I’d love you to spell out how that disconnect manifests.
Leveraged buyouts are a huge percentage of what private equity does. The basic way leveraged buyouts work is that the private-equity firm bundles together money from their outside investors—university endowments, pension funds, ultrawealthy individuals. But that only ends up making up a small minority of the total money they use to acquire a company. The rest of the money is bank loans, and those bank loans are assigned not to the private-equity firm that made the decision to borrow that money, but to the company that they are acquiring.
So if I make an offer for your company, and I’m borrowing money to buy it, I’m not responsible for paying that money back; only you are. You end up with this complete divorce of incentives, where what is good for the private-equity firm is not necessarily what’s good for the portfolio company.
In industries that are real estate heavy—hospitals, retail, newspapers—private-equity firms will sell off the real estate assets of those companies to pocket the proceeds themselves. Then the portfolio company has to pay rent on the same land that they may have owned for years or decades. Now you have a situation where the private-equity firm is doing great because they’re collecting their management fees, plus they got this tidy little profit from the real estate sale, but their portfolio company is buried under debt from the acquisition and also rent payments where they previously owned their land outright.
You see the two paths start to diverge. The private-equity company is winning, and the portfolio company is getting weaker and weaker and weaker. That was the thing that really broke my brain.
The one stat that’s really lodged in my brain is that 20% of companies acquired by private equity enter bankruptcy proceedings within 10 years, compared to 2% of other types of other companies. There is this narrative that the private-equity industry is made up of, essentially, superheroes who can come in and save struggling companies, and the data just shows that it is the opposite.
If you ask private-equity people about this stat, they will say, “But we buy companies that are already struggling!” But they’re buying companies that are struggling while claiming that they are the people who can save the company. It doesn’t make sense that there would be such a vast difference between the number of companies that go out of business under any other kind of ownership versus what happens when, allegedly, the smartest people in the finance world take over. We’ve been sold a story that isn’t remotely true.
Data Center Boom May Turn Into Long-Term Glut Risk, Goldman Warns
Remember the fiber optics companies of 25 years ago? They laid a ton of infrastructure and then went bankrupt.
In “the decade of the 1970s…the US dollar in absolute terms lost 75% of its purchasing power over 10 years…and I think the dollar will lose 75% of its purchasing power in the next 10 years”
Below the fold, Dan Myrmikan on "the dollar’s demise as the primary international reserve asset," and "gold reestablishing its positive correlation to nominal rates," central bank swap lines, the BOJ rate mess, Williams White on complex adaptive systems, fallacious Zestimates, housing stats, carpetbaggers, poor Barry Sternlicht, D.C. office fire sales, CRE reality checks, Fannie and Freddie redux, bailing out Bill Ackman again, exploding mortgage securities, multifamily woes, rent disinflation(!!!), rich people problems, straight-shooter Sam Faddis on Chinese spies and Facebook and Youtube censorship, brain-eating amoeba, A.I. hallucinations, A.I is making us dumber, A.I. Kuru(!), George Washington and imaginary Thomas Jefferson quotes, Matt Stoller on Harvard, Nick Bryant on Pam and Kash ("LIARS"), Herb Alpert, and more.
Happy Father’s Day!
Dan Myrmikan
Dan’s a great market historian. Here’s a point I’ve noted that is often ignored or forgotten - we were rolling over pre-Covid:
“Long before COVID hit, the credit cycle was rolling over: In September 2018, the Federal Reserve signaled it was going to raise interest rates three times in 2019. In December, it reduced its projected rate hikes for 2019 to twice. Four weeks later, the number of forecasted hikes was down to zero. In March 2019, the Federal Reserve announced it would end the reduction of its balance sheet by that September. In August, the FOMC reduced the fed funds rate by 0.25 percent. In September, the repo market imploded and the Fed began printing (they called it LE, Liquidity Enhancement, instead of QE, Quantitative Easing).”
I’m reminded again of one of my favorite crackpot theories!1
“The Biden administration confiscated Russia’s dollar reserves in February 2022, and the long-term relationship between real interest rates and the gold price ended abruptly, heralding the dollar’s demise as the primary international reserve asset.”
“We have been writing for years that the end of the U.S. international dollar standard would be preceded by the price of gold reestablishing its positive correlation to nominal rates, reverting to a state in which the gold price cares more about the value of the Fed’s bond portfolio than about external demand for dollars to service non-U.S., dollar denominated debt. The chart above shows that this flip occurred in dramatic fashion when Biden and Blinken confiscated Russia’s foreign reserves. It would be too much to say that Biden caused the problem—the root cause being unsustainable deficits—but he certainly accelerated it.
Gold’s reestablished role as the best reserve asset means that its nominal price no longer must travel in the same direction as other asset prices. Gold completely ignored the stock market when it went into its swoon earlier this year, nor did gold soften when the market came roaring back in May…”
“The chart below shows that these two great credit orgies were pathetic compared to what Alan Greenspan wrought in the 1990s. That debauchery was such that even though Greenspan then Bernanke kept financial conditions lose after the 2000 peak, the bubble deflated in real terms anyway. It was only in 2008 that Bernanke panicked with his QE-blitz. The stock market sprang off the bottom but with much less vigor than before. It peaked in mid-2018, long before COVID; and the $5 trillion COVID QE barely got the market past its 2018 peak. The QE drug is wearing thin. What will prompt the next dose? How big will it have to be? With how much less effect?”
“Gold is still cheap. At $3,300/oz, gold comprises just 13% of the Fed’s assets, the same level as in 1971. As discussed in previous letters, the market demands one-third backing in normal times, assuming that the bank’s other assets are sound. These are not normal times, and the Fed’s other assets are not sound.”
Here’s the SPX total return to Gold ratio since 1990:
Oil priced in gold:
Central banks are beginning to fret about dollar swap lines
“…swap lines have been considered a core pillar of the global financial system in recent decades, since they have enabled major Asian and European central banks to get dollars from the US Federal Reserve in a crisis. This is crucially important because in times of market stress there is usually a “dash for cash” — that is, a scramble for dollars, given the greenback’s role as a reserve currency.
However, non-US entities cannot print those dollars, and so may not be able to meet demand. Thus during the 2008 financial crisis, the Fed activated some $583bn in swap lines for non-US central banks, to enable dollars to flow to commercial banks. It did the same during the Eurozone crisis and then provided $450bn during the Covid pandemic in 2020…But doubts are now creeping in about the reliability of that safety net…”
In an “article published by the influential CEPR think-tank has now called for non-US central banks to create a mutual pact to prepare for a worst-case scenario. The idea would be for 14 central banks to use their estimated $1.9tn dollar holdings to extend liquidity to each other, if the Fed retreated, in co-ordination with the Bank for International Settlements.
No central banker has publicly backed this idea. But some tell me that many contingency plans are being discussed. And in the meantime, they are quietly taking other defensive steps, such as raising their purchases of gold, and, in the case of smaller countries, cutting swap deals with China.”
I remember this from 2009:
Surge in bond yields adds to pressure on Bank of Japan
“Yields on 30-year bonds hit a record high of 3.2 per cent last month, pushed up by an ongoing buyers strike among domestic life insurers. While they have since dipped to about 2.9 per cent, many analysts see a tricky balancing act for the BoJ, which has been easing off on its long-running bond-buying programme.”
It was the long period of unnaturally low rates and resultant debt that make 2.9% dangerous.
Forecasting in complex adaptive systems is essentially impossible
“The objective of policy ought to be avoiding really bad outcomes…what also goes along with that is that, recognizing that absence of full knowledge, policy makers ought to take the Hippocratic Oath. You really should try to ensure that you do no harm….you should introduce really experimental policies in a very careful and prudent way, because changing the structure of the system using those kind of policies can lead to highly unexpected and often times quite undesired properties…
Forecasting in complex adaptive systems is essentially impossible.”
“that Zestimate is not anywhere close to reality”
New update from the best housing analyst, Melody Wright: “I think even the current administration has no real understanding of the health of the consumer”
U.S. mortgage holders carried a record $17.6 trillion in home equity entering the second quarter of 2025, with $11.5 trillion considered “tappable” — that is, available for borrowing while maintaining at least a 20% equity cushion.
Despite subdued withdrawal rates in recent years, early 2025 data points to shifting borrower behavior. First-quarter second lien equity withdrawals rose 22% year over year to nearly $25 billion — the largest first quarter volume in 17 years — suggesting increased interest in home equity access amid improving loan affordability…
The average introductory rate on second lien HELOCs has declined by 2.5 percentage points in recent quarters, dropping below 7.5% in March. If current market forecasts hold, HELOC rates could dip into the mid-6% range by 2026 — roughly on par with projected 30-year mortgage rates…
Lenders are becoming more aggressive with their HELOC rate offerings, with the spread to prime falling to the lowest levels since 2022.
Equity withdrawals — including cash-out refinances — totaled $45 billion in the first quarter of 2025, the highest first quarter volume since 2022.
Borrowers tapped just 0.41% of available tappable equity in the first quarter of 2025, still below long-term averages, indicating further room for growth.
Reminds me of a favorite Rick Rule quote: “I learned that my assets were ephemeral, while my debts were money-good."
Carpetbaggers in Single-Family Housing
A New York hedge fund is the largest homeowner in Clark County, Nevada
New York-based hedge fund Pretium Partners [founded 2012] is most likely the single largest homeowner in Clark County, according to an investigation of property records. Pretium-owned Progress Residential, a homes-for-rent management company, owns at least 3,190 homes in the county as of the end of February, according to property record data confirmed by Clark County officials.
Pretium, a hedge fund with more than $55 billion in assets under management, declined to confirm the exact number of houses it owns in Clark County but acknowledged the county’s tally is under 4,500 homes.
The exact number is difficult to track as its common practice for real estate investors to buy properties via limited liability companies with varying names, with Clark County identifying at least five with the word “Progress” in it. It’s an issue that UNLV’s Lied Center for Real Estate wants to see corrected.
The Lied Center for Real Estate estimates that as of 2023, investors owned approximately 15 percent of the county’s housing stock and close to 25 percent in North Las Vegas.
Other major homeowners in Clark County include Invitation Homes [founded 2012], FirstKey Homes [2015] and American Homes 4 Rent [2012], according to Clark County property records.
These Fed-created opportunist billionaires are all new in single-family housing since the 2008-2009 bankster coup.
Thanks, Obama (and ZIRP and QE)!
U.S. Rep. Steven Horsford, D-Nev., said institutional investment firms that own thousands of homes are destroying housing and homeownership opportunities for average citizens in his district and across the country…
He said companies like Pretium are targeting starter homes and low-income communities where they can easily outbid locals and obtain vast quantities of properties, essentially commodifying the housing industry.
I really hate this. This is a bad for our country.
“These predatory practices led by these Wall Street backed hedge funds are acquiring more properties, pricing out Nevadans and their ability to own their own home and in my research we’ve found that even when people are renting out these homes, they’re gouging renters with higher prices and lowering the value for the entire neighborhood, causing instability.”
Withdrawal Requests at Starwood Property Fund Are at $850 Million
One of Starwood Capital Group’s largest real-estate funds was overwhelmed with redemption requests last spring when a long line of investors tried to exit at the same time.
Rather than sell some of the fund’s commercial property into a poor market to meet those requests, Starwood chief executive Barry Sternlicht decided to impose strict limits on the amount of money investors could withdraw. Now, a little more than a year later, investors are still queuing up to yank about $850 million from the fund..
Sreit’s net asset value is now $8.8 billion, down 40% from its peak in 2022. The drop reflected declining real-estate values and investors pulling their money out between 2022 and the first quarter of 2024, before the stricter limitations went into effect…
The alternative would likely have been to sell properties at discount prices. Such a move would have hurt all fund investors, not just the ones trying to redeem shares, Sternlicht said.
“We’re not going to have fire sales,” he said.
With a minimum investment starting around $2,500, nontraded REITs are open to anyone who has that minimum. They invest in commercial property similarly to publicly traded real-estate investment trusts, but they aren’t traded on stock exchanges. Commercial real estate with a net asset value of $81 billion is held by nontraded REITs
You may remember my distaste for Barry Sternlicht due to statements like this one:
“Many office buildings in D.C. are now worth no more than the land they sit on…The bright side for the city, investors said Thursday at Bisnow's D.C. State of the Market event, is that values can't fall any further.”
"I think we’re at the bottom," Bernstein Management Corp. Senior Vice President of Investments Terra Weirich said at the event, held at 600 13th St. NW…A series of sales starting in 2023 showed many older buildings were trading for about a third of their prior sales price, and pricing was reaching as low as $150 per SF…some buildings were on the market at an even lower level of $100 per SF. Investors at Thursday's event said sales have now closed around that level. That is a fraction of the 2019 average for Class-B and C office sales in D.C. of $406 per SF…
Given that little demand exists to use these antiquated office buildings in their current state, their value comes from their location and the ability to convert them to another use or to renovate them to higher-end office space. But it is difficult to make the financial math of those repositioning deals work.
“It’s a tough conversation to convince them that their $10-million investment is worth zero”
New Bank of Canada data show that Canada’s chartered banks doubled the debt they have extended to real estate developers and builders in the last year, raising outstanding loan commitments to an unprecedented $85-billion.
The data reflect the financial standing from the first quarter of 2025, and the largest growth area of new lending comes from a subcategory called “interim construction lending” that rose to $32.9-billion, up 383 per cent from $6.8-billion in the same quarter in 2024. Interim lending spiked to $25-billion in the second quarter of 2024 and has been above $30-billion for three quarters now. The latest number is the highest ever recorded by the Bank of Canada (which began tracking interim lending in 1994), and is more than double the previous record of $16.2-billion in the second quarter of 2022.
“What everyone was doing was trying to recapitalize all their debt to a number where they could at least hold on,” said Steve Cameron, president and chief operating officer with Cameron Stephens Mortgage Capital Ltd., which specializes in “mezzanine” or interim real estate lending…“It was this chaotic run to the non-institutional lender for as much leverage as they can hold on, as tight as they can, while this market corrects.”
Mr. Cameron describes his fund and the banks as risk-averse. He said many lenders were caught off guard by the erosion of value in the condominium space, which has changed the underwriting math in many cases. “They are very conservative, and on a lot of deals [the banks] were at 50-60 per cent loan-to-value (LTV). Now, they are waking up and saying ‘Wow, these are actually more like 90-95 per cent LTV,’” he said…
The hardest group to convince may be land developers, which Mr. Cameron describes as an almost genetically optimistic group. “A lot of our clients, they are coming to the realization slowly that things have changed. It’s a tough conversation to convince them that their $10-million investment is worth zero.”
Fannie and Freddie
“…as a very general matter, Fannie and Freddie are giant companies that generate a lot of money. Right now, the US government is entitled to essentially 100% of that money. To re-privatize them, it would have to give up some of that money. The expectation, which is not unreasonable[???], is that the government will give up some of that money to Bill Ackman.” [WTF?]
Good explanatory article, but socializing the losses and privatizing profits is not the way to go.
The giant US mortgage twins Fannie Mae and Freddie Mac once broke the global economy by pretending to be utilities while behaving like hedge funds.
Now they’re profitable again, and Donald Trump wants to put them back in the hands of private investors with a structure that wreaked havoc last time around. Because what’s more American than a taxpayer-subsidized Wall Street windfall?
…This new version is just the old version. But worse. Privatize, subsidize and guarantize. Which is exactly how we got into this mess the first time…
Between 1998 and 2008, the GSEs spent $176 million on lobbying. They lobbied Congress. They lobbied their own regulator, OFHEO, which had all the spine of a jellyfish. They hired Congressional cronies. They confronted lawmakers at every opportunity. They even paid lobbyists not to lobby for their competitors. That’s textbook regulatory capture…
The mortgage securities that blew up AIG, German Landesbanks, Bear Stearns, and half the global financial system? Couldn’t have existed without Fannie and Freddie.
As a result, the indirect costs of the GSEs’ failures dwarf their direct bailout. Bloomberg Economics pegged the global cost of the GFC at $10 trillion. Academic estimates for U.S. GDP loss range from $6-14 trillion.
Multifamily Delinquencies Are Now Higher than During the Great Recession
Oh no! Rent disinflation, and even…deflation!
US apartment occupancy remained unchanged at 95.7% in May, holding gains made earlier in 2025.
National monthly rent growth slowed to 0.26%, roughly half the rate seen a year ago.
Annual rent growth remains strongest in the Midwest and Northeast, while the South posted a -0.9% decline.
Rent cuts deepened in many South region markets, while gateway cities like San Francisco and New York posted notable monthly gains.
Rich People Problems
“Lawyer Cheryl New says her Washington power-player clients are worried about how Trump's policies are affecting the valuation of their assets, businesses and investments, and how that will affect their divorce settlements. "They're thinking, 'Am I going to be able to pay my employees? Am I going to be able to afford the four homes that I bought and the three kids in the private school?'" New says.
Sam Faddis
“There's a huge amount of work to do. The size of the federal bureaucracy, and the power of the agencies, is almost incomprehensible, and in a lot of these agencies Donald Trump has replaced the head of the agency. Take CIA as an example. We have a new director and a new deputy director and as far as I could tell that's the extent of the personnel changes in the Central Intelligence Agency, if anybody thinks that that means that we have transformed CIA is not paying attention - and CIA is a relatively small agency actually. I mean, think about DoD or some of these other places.”
In February 2024, Faddis said:
“If you went into CIA tomorrow, where there are huge numbers of good people, you probably should fire everybody on the top floor, the 7th floor is the top floor in the headquarters building. You should probably tell everybody on the 7th floor that their services are no longer required, the first second of the first day…That’s the kind of decisive action that will be required to retake this.”
On Chinese students in the United States:
“You can't have 300,000 students on your soil and tell me that you're going to keep track of them from an intelligence or a counter-intelligence perspective. I don't care who you are - nobody on the planet would have the resources to monitor what those 300,000 people are doing. If you really are serious about that, you need to dramatically reduce the number of them, and then you really need to get serious about what programs they can be part of and what programs they can't be part of.
Just to be clear to anybody that's listening - this is not about racism or ethnicity. This is not about Chinese people are bad. The point is if you're a Chinese national and you're here studying and Chinese intelligence wants you to do whatever they want you to do, you don't have any choice. You can't say to Chinese intelligence, drop dead. Not, first of all, if you ever go back to China. The implications are immediate. You're going to pay for that. If you have any family or any friends in China currently, and you don't do what they tell you to do, well, they're going to go visit Grandma for real, and things are going to get really ugly, and they have also demonstrated the capacity to reach out and touch you even on U.S. soil, so it's not because you love communism or you want to help them - you have no choice. There's a hammer over your head. They tell you to steal stuff from the lab, you're going to steal stuff from the lab - unless you have a death wish, that's what you're going to do.
So you can't have a Chinese national in a lab and then say, "This person is is not a point of weakness." And, again, that's not about individuals, that's just they have means of compelling you to cooperate.”
“the Europeans [militarily] are going to talk a lot of smack, but in the end they write a lot of checks that they can't cash”
On Youtube and Facebook censorship:
“I did spend a big part of my my professional career chasing nuclear weapons around the world, and in fact at one point ran the unit chasing all terrorist nuclear radiological weapons around the world, and I'm just envisioning some 20-year-old intern somewhere - based on a Wikipedia article - decided that my viewpoint did not fit with what Wikipedia said, and based on that I was now fact-checked and told that I couldn't speak anymore. It is scary stuff.”
In related news:
A citizen of the People’s Republic of China was arrested and charged with smuggling concealed biological material into the U.S. from a university in Wuhan, the U.S. Attorney’s Office for the Eastern District of Michigan announced Monday.
The arrest of Chengxuan Han, who is currently pursuing a doctorate degree from the College of Life Science and Technology at Huazhong University of Science and Technology in Wuhan, China, is the third such arrest in the last few weeks related to smuggling of biological agents into the country involving the University of Michigan.
Texas woman dies from brain-eating amoeba after using tap water for sinus rinse
“The woman died of primary amebic meningoencephalitis, or PAM, a rare but often fatal brain infection caused by the Naegleria fowleri organism…The previously healthy 71-year-old developed severe symptoms, including fever, headache and altered mental status, within four days after using the nasal irrigation device…Despite medical treatment for a suspected PAM infection, eight days after the symptoms began, she developed seizures and died.
The tap water she used for the sinus rinse came from an RV's water system at a campground in Texas, according to the case report. The CDC recommends the use of distilled, sterile or boiled and cooled tap water for nasal irrigation”
I note this story because, last week - before reading this - I bought a nasal rinse for the first time in my life, and noticed the tap water warning on the box (and I often don’t read the box). I will admit that my tap water is probably safer than an “RV's water system at a campground in Texas”
I have not used the rinse.
We, Robots by Kate Epstein
Since the release of OpenAI’s ChatGPT-3.5 large-language model (LLM) in November 2022, AI has been all over the news. Media coverage typically communicates the same message: AI is smart and getting smarter. Sometimes stories hype its growing intelligence as ushering in a future utopia, and sometimes they warn against it as leading to doom, à la Skynet. In fact, the hype and doom are two sides of the same “criti-hype” coin, to borrow Lee Vinsel’s term, both conveying that AI will become smarter than human beings.
As a history professor at a state university, my concern is the opposite.
It isn’t that AI is becoming smarter than us. It’s that AI is making us—and particularly students—as dumb as it…
AI is antithetical to humanistic intelligence. LLMs like ChatGPT process data in order to calculate probabilistically about what word should follow the previous word, according to a human-produced algorithm and the human-produced data on which they were trained.
That’s it.
The threat from AI is not that it will gain self-consciousness or a soul.
The threat is that we will destroy ours.
There is a brand new podcast - which I have not heard yet - with Kate Epstein and Nick Halaris on this topic: What if AI Just Makes Us All Dumber?
A.I. Kuru
“I was researching something the other night called “model collapse,” and I personally can’t use ChatGPT for anything having to do with research anymore, because the models have gotten so out of control with their hallucinations.
It just makes shit up.
I’m like, list 15 scientists that came over on [Operation] Paperclip, and it makes up ten of them. They never existed. I look it up, can’t find anything. I just wasted a half an hour, because this thing just lied to me. So it’s useless in that sense.
It can help you construct an outline of a paper, but beyond that, I don’t trust it. I don’t think I can, because it’s just bullshit. And basically the problem there is that it keeps happening more and more, these hallucinations where the A.I. model just makes shit up. The more complicated these models get, the more often that happens we’re finding out. So I was looking into this thing called “model collapse”. It’s going to run out of data - and this is why they want to use people’s copyrighted material and essentially have no regulation on A.I. whatsoever, and their reasoning is that if we don’t do it, China will do it, and they’ll win. Basically, we have to become China to beat China is how I think of it.
These A.I. models are going to run out of data to train on, and it needs human-created data in order to train accurately for us to be able to use it. So when they run out of human data, and - if they’re using the internet to train still, a lot of the new stuff coming in post-ChatGPT is going to be A.I. It’s training on its own synthetic data. People call it A.I.-slop because A.I. spit it out, and now it’s out there on the internet, another model comes in and crawls it, and takes in the A.I. data that’s just in a loop of bad information that eventually causes what they call “A.I. model collapse.”
It’s useless. It’s essentially A.I.-Kuru, or mad-cow disease. I guess there’s way to go around it. You can synthesize 90% of data and that 10% human data, but there’s a limit, it sounds like. There’s a ceiling to how advanced these things can get without cannibalizing itself. And it makes you wonder what Palantir’s doing, or what it’s capable of.”
“…modern developers often sensationalize AI as nearing consciousness, while in reality, it remains a sophisticated, albeit constrained, set of algorithms. The illusion persists, but the true leap to sentience remains both undefinable and out of reach.”
There’s a line from George Washington to Thomas Stone on February 16, 1787 that I like to use as an A.I. test:
Who wrote, "if I had a voice in your legislature, it would have been given decidedly against a paper emission upon the general principles of its utility as a representative, and the necessity of it as a medium."
On February 1, 2025, this was the (wrong) answer:
On June 10, 2025, this was the (wrong) answer:
I will note that regular Google gave the correct answer, while DuckDuckGo and Bing “found no results.”
Duck.ai, however, gave me a different wrong answer:
Matt Stoller on Elite Failure
A few years ago, J.D. Vance made a powerful argument about the four recent great betrayals of the American working class - the war in Iraq, the offshoring to China/fentanyl epidemic, the financial/foreclosure crisis, and the post-Covid policies that split the country into “essential workers” and elites who baked bread. All four split the country by class. The Harvard class of 2000 was affected by these events, but largely as perpetrators who benefitted from enacting the policies that defined them. Certainly, my personal experience is living with the victors, not the victims…
Today, Trump’s attacks on Harvard are shaking the institution. Layoffs are starting. It feels a bit like a mill town where the mill has announced it is having financial troubles, and may move away. It’s not that different from D.C. under DOGE. This experience, of existential fear, that the community will be ripped apart, is not something Harvard is used to. And the parts of Harvard that are being wrecked do not deserve it; there won’t be layoffs in the economics or political science department, but among the people working on medical research or infant mortality.
That said, there is still broad confusion about the moral implications of what’s happening. Do we realize that the cruelty visited on us is cruelty we visited on mill towns all over America, many times over? When Larry Summers, once President of Harvard, lied to open up American markets to China, or helped destroy Russia, well, that was in our name, hurting people we would never know, as I, in my own minor way, approved of killing working class Americans and Iraqis I would never know. Thousands of Harvard affiliated staffers and members in Congress and clerks and judges and general counsels crafted the world of elite lawlessness we are in today. Facebook, one of the most destructive companies in history, one that has fostered many teenage suicides, was born at Harvard in the early 2000s. That is not something I heard much about at the reunion…
Harvard graduates are those who won the social lottery. For hundreds of years, we believed we had to act, or pretend to act, as stewards of a nation where all men are created equal…The class of 2000, and really classes going back to the 1960s, have not, or at least not so far. That is our legacy. That is elite failure. It is not inevitable, and it will change one day. Hopefully that day is sooner rather than later.
Jeffrey E. Epstein’s recent $30 million gift to Harvard was one in a series of donations that the elusive magnate has given anonymously to the University over the past decade.
The story behind Epstein’s deep connection with Harvard parallels his giving history, with close friendships with professors and administrators spanning the past 10 years. As an individual with no formal connection to the University, save for his donations, his Harvard ties highlight the meeting between the world of minds in the academy and the world of wallets in the business arena.
Yet Epstein appears interested in more than the large collection of planes, trains and automobiles which his fortune has allowed him to amass—and he has found Harvard the perfect staging ground for his intellectual pursuits.
Networking with the University’s greatest and most well-known minds, he has spurred research through both discussion and dollars he has contributed to various faculty—most often in the sciences…
Indeed, Epstein shares a special connection with one of the most prominent figures at Harvard—University President Lawrence H. Summers.
Summers and Epstein serve together on the Trilateral Commission and the Council on Foreign Relations, two elite international relations organizations.
Their friendship began a number of years ago—before Summers became Harvard’s president and even before he was the Secretary of the Treasury—and those close to Epstein say he holds the University president in very high regard.
“He likes Larry Summers a lot,” Epstein’s friend and Frankfurter Professor of Law Alan M. Dershowitz says. “He speaks well of Larry, and I think he admires Larry’s economic thinking.”
And Summers is not the only person at Harvard whom Epstein admires—or who admires Epstein.
The very loving [and now deleted] website Harvard set up for Jeff Epstein, the noted philanthropist, ladies man and very close friend of former Harvard President Larry Summers:”
‘Pam Bondi and Kash Patel are lying LIARS’ by Nick Bryant
After Whitney Webb, few know the Epstein case as well as Nick Bryant, and he is not one to lob accusations without significant evidence.
According to a July 8, 2019, New York Times article, federal authorities seized “hundreds—possibly thousands—of sexually suggestive photographs of girls who appear underage, as well as hand-labeled compact discs with titles like ‘Girl pics nude,’ and, with the names redacted, ‘Young [Name] + [Name].’”Judging by the titles on the discs, Epstein was a purveyor of child abuse material. The latter disc named by the New York Times is perhaps an indication of blackmail? Moreover, Business Insider reported that an FBI agent later divulged that “hard drives” were also taken from the safe.
Fast forward to February 21st of 2025: Attorney General Pam Bondi announced that the Epstein client list was “sitting on my desk” for review. On February 26th, she proclaimed on national television that the “Epstein files” would be released the following day: “What you’re gonna see tomorrow is a lot of flight logs, a lot of names, a lot of information.” But when the highly anticipated tranche of documents was released, her words had been much ado about nothing. She served us a nothing sandwich.
When the documents provided no new revelations, Bondi then declared that she had been bamboozled by the FBI’s New York field office. Regardless of how we slice Bondi’s actions, she has to shoulder the blame for the fiasco, because either she lied on national television, or she didn’t diligently review the documents on her “desk.” I’m a charitable person, and I initially ascribed her doublespeak to incompetence instead of mendacity.
But then she further tarnished her credibility when she said that federal law enforcement has a “truckload of evidence” on the Epstein case, and only matters related to “national security” would be redacted from the documents. So, now she has to explain the nexus between the most prolific child trafficker ever acknowledged by US law enforcement and his ilk of child molesters and national security.
But the crescendo of her mendacity was last month on May 7th, when Bondi assured us that the FBI and Justice Department would comb through Epstein’s huge cache of child abuse material. “There are tens of thousands of videos of Epstein with children or child porn and there are hundreds of victims,” Bondi told reporters at the White House. “And no one victim will ever get released. It’s just the volume and that’s what they’re going through right now. The FBI is diligently going through that.”
The aforementioned New York Times article from July 8, 2019, two days after Epstein’s arrest, noted that the FBI encountered “hundreds possibly thousands photographs of girls who appear underage.” So, Bondi’s May 7th statement is in line with the New York Times article, but it’s absurd to think that the FBI opened Epstein’s safe the day after he was arrested and it didn’t look at his discs and hard drives until now! The FBI and/or the malignant corner of our government that deployed Epstein was undoubtedly looking at the discs and hard drives that day or the day after the safe was opened.
Let’s take a look at Kash Patel regarding the maelstrom of lies that have been spewed about the Epstein case. He was initially framed as a straight shooter who would serve us a hearty helping of the truth. But Patel and the truth seemed to have had a quickie Tijuana divorce. Patel initially hawked Bondi’s lie about the FBI recently scouring the footage seized from Epstein.
“I’m not going to withhold information from the American public, ever,” Patel said when asked about the Epstein files. "So, on the Epstein matter and any other matters, we are diligently working on that. And it takes time to go through years of investigations, years of political maneuvering, and years of coverup to get the American people what they deserve. And that's what I'm gonna give them, on everything."
Again, to think that the FBI didn’t scour all of the footage seized from Epstein’s safe the day after his arrest is ludicrous.
But, now, Patel, appears to have taken quite the U-turn. On an episode of The Joe Rogan Experience taped last week on the June 5th, he seemed to disavow the existence of the tapes! “But the problem is there's been like 15 years of people coming in and creating fictions about this that doesn't exist,” Patel said.
So, Bondi says, “There are tens of thousands of videos of Epstein with children or child porn and there are hundreds of victims.” But Patel has apparently demoted the tapes to “fictions.”
For the Herb Alpert fans out there:
“The mainstream narrative should therefore be reversed: the stock market did not collapse (in March 2020) because lockdowns had to be imposed; rather, lockdowns had to be imposed because financial markets were collapsing. With lockdowns came the suspension of business transactions, which drained the demand for credit and stopped the contagion. In other words, restructuring the financial architecture through extraordinary monetary policy was contingent on the economy’s engine being turned off. Had the enormous mass of liquidity pumped into the financial sector reached transactions on the ground, a monetary tsunami with catastrophic consequences would have been unleashed.”
Multifamily Delinquents News :)
Re: “Many office buildings in D.C. are now worth no more than the land they sit on…The bright side for the city, investors said Thursday at Bisnow's D.C. State of the Market event, is that values can't fall any further.”
I think you'll find that some projects aren't even viable with land priced at $0. Looking at the Residual Land approach to value, higher construction costs and cap rates are both negative factors. Unless you can charge higher rents to offset those factors, there may be a less risky return available (buy T-Bills and go to the beach).