Kimmel part 2 -- the business

Yesterday, we talked about the politics of the Kimmel suspension in return. Today we’re going to focus on the business side, something I feel a bit more knowledgeable about and where the schadenfreude really starts to flow.

It is difficult to overstate just how badly ABC/Disney handled this and what a cautionary tale the company has become. It’s easy to understand that initial calculation. It was the same one so many companies have made in the past few months. When faced with an obviously illegitimate demand, they weighed the potential costs of pushing back against the loss of reputation and decided it wasn't worth fighting. However, even by this debased standard, this was taken to a new level. The company was so eager to comply that (unlike CBS with Colbert) they didn’t even bother to lay a bare minimum of plausible deniability or acceptable optics.

We’ve seen this story play out God knows how many times recently, but this time ending was different. Through some combination of the flagrancy of the attack on free speech, the naked lack of principle on the corporation’s part, and underestimating both how likable Jimmy Kimmel was and how many people were tired of this administration, this blew up in their faces and did considerable damage to the people they were trying to appease.

Disney is extremely—perhaps even uniquely—brand-dependent. This is the main reason it has historically defended its copyrights so obsessively. That silhouette of Mickey Mouse’s head generates huge profits, particularly with the company’s big cash cows: cruises, theme parks, and merchandising. While there are hardcore Disney fans who would book these vacations regardless, this story has the potential to cost the company billions of dollars in revenue in its most profitable business lines.

The company is also extraordinarily vulnerable with respect to what has historically been its biggest money-losing line: streaming. The previous management set out to make Disney the world’s largest streaming service, and if you count the combined audiences of Hulu, Disney+, and ESPN, they did it. They also lost billions of dollars in the process. While Hollywood accounting is always murky, the situation has certainly improved. Bob Iger seems to have managed to get the platforms at least close to profit-neutral. 

Though all of the major streaming services outside of Netflix lose money most of the time, they keep those losses manageable for their parent companies by leaning heavily on the gym membership model. People underutilize the service but never get around to unsubscribing—either because they kind of like having the option of watching something on the service, or because they are waiting for the debut of their favorite show, or simply because they forgot.

One problem with trying to apply the gym membership model to a streaming platform is that you can’t pack 6 to 12 months’ worth of exercise into a single month’s membership. (And that’s assuming you’re not locked into a 12-month contract.) Most streaming services don’t require extended contracts and most of their original series are short runs ranging from 6 to 10 episodes a year. As a result, most viewers can burn through about a year’s worth of programming from a service like Paramount in a month or two.

The rise of SBU customers—those who subscribe, binge, then unsubscribe—is the nightmare scenario for the services. I did that a few years ago with Hulu due to an overwhelming desire to revisit Justified (which was as good as I remembered). I discovered that, if I focused all my viewing on the one platform, the exclusives they offered that I really wanted to watch were exhausted in about 4 to 6 weeks.

It will take a long time for Disney+ to repair this brand damage and lure its lost subscribers back into the fold. This comes at an especially challenging time for the company, which was planning on a rate increase for the service and which has seen lackluster performance from such previously bulletproof business lines as Marvel and Pixar.

At this point, I don’t see Disney even considering getting out of the streaming business—they’ve invested too much—but based on what's been reported and Disney's reaction, the service was facing devestating losses and could be again if the now more popular than ever Kimmel is forced out a second time.

Kimmel: "Disney has asked me to read the following statement and I agreed to do it. 'To reactivate your Disney+ and Hulu account ... '"

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— Aaron Rupar (@atrupar.com) September 23, 2025 at 8:51 PM

Ironically, it is the lack of brand value that further complicates this situation—not the Disney brand, of course, but the largely non-existent ones of Nexstar and Sinclair. Under normal circumstances, virtually no one watching a linear television station could tell you the name of its owner.

For these companies, having no real brand has no negative effects and often plays to their favor. [Marshall makes some similar points here.] On net, people would be less likely to watch their local ABC station if they knew Nexstar owned it, even more so for Sinclair.  

In particular, Nexstar and Sinclair may well be looking at a rough stretch for one of their biggest sources of advertising, local news. By not only becoming the story but by reinforcing it every weeknight with the preemption, ratings are likely to suffer and advertisers are likely to be chased away. Disney has huge incentives not to back down again, while these two companies are looking at a fight with enormous downsides. It’s likely this will go on for a while. Sinclair, in particular, committed itself by making outrageous demands when it thought it had the upper hand. 

 Sinclair’s biggest advantage has always been the fact that most people neither know nor care who owns their local television station. They could put a heavy thumb on the news without consequence. They may be about to find out that some businesses are better off without brand recognition.

One aspect that almost everyone is getting wrong is the idea that Disney deserves credit for now taking a principled stand. That’s roughly analogous to arguing that a robber deserves credit for giving up a life of crime as he’s being arrested. Pressure was applied to suspend Jimmy Kimmel, they folded immediately. When they realized greater pressure was being applied from the other side, they immediately reversed themselves. It is possible that a sense of right and wrong played a role in there somewhere, but there’s no evidence suggesting it.

ABC/Disney pursued what has become standard operating procedure in 2025, treating pressure from the Trump Administration as a simple calculation of expediency versus principle, with expediency winning without a fight. This turned out to be a huge and immediately obvious miscalculation that threatened to do serious long-term damage to multiple major business lines.

It is very much an open question how applicable lessons from Bob Iger’s humiliation are to other industries. This was a special case along multiple dimensions — but it would be foolhardy for the next CEO publicly threatened by the Trump Administration to forget what happened to the last guy.

 

Kimmel Part 1 -- the politics

Well, that didn't take long. 

Within the course of a week, ABC totally capitulated to threats from the FCC and right-wing station owners, spectacularly screwed up the optics, completely failed to foresee the obvious business consequences, and then unconditionally surrendered six days later. I can't think of a more humiliating week for a CEO of Bob Iger’s stature, but we’ll get to that next time when we talk about the business side of the story.

For now, let's talk politics. 

In some ways, we are seeing people make both too little and too much of this story. In terms of stifling free speech, it is probably less significant than the firing of Washington Post op-ed columnist Karen Attiah. It might even be less significant than the Vichy water that Ezra Klein has been doling out at the New York Times.

With respect to other aspects, however, this is both huge and unprecedented. Josh Marshall, whose track record is unequaled in these matters, has argued that the key to understanding Trump is dominance and submission. I would add catharsis, distraction, and possibly feral disinformation, but Marshall is certainly right about the main driver. Marshall has termed this the “bitch slap theory” of politics, and that’s about the best description I’ve seen.

The approach of looking overwhelmingly dominant while making your opponent look and feel helpless and weak often works very well, but it has a couple of major downsides. First off, if it fails, you can often find the intended roles reversed, with the bully looking small and ineffectual. On a somewhat more subtle level, a focus on shock-and-awe politics can undermine more low-key and often devious tactics, particularly “boiling the frog.” If you start with boiling water and taunt the frog as you’re throwing it in, it is likely to notice the temperature change.

With the Colbert firing, CBS—in its attempt to appease Trump and the Ellisons—applied a veneer of plausible deniability. It was comically transparent, suddenly announcing that the number-one late night show was hemorrhaging cash (showing that enormous hits like Forrest Gump actually lost money has always been the foundation of Hollywood accounting). But the rules of the modern establishment press insisted that the obviously disingenuous claim be given equal coverage and virtually no scrutiny.

By comparison, Kimmel's suspension was an abuse of government power so flagrant it would make Richard Nixon blush, and it struck a nerve.   

Seems pretty clear to me: "the First Amendment forbids the government from using coercion backed by threats of punishment to suppress speech." Gift link. www.nytimes.com/2025/09/19/u...

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— Dan Froomkin/Press Watch/Heads Up News (@froomkin.bsky.social) September 19, 2025 at 10:36 AM

Keep cancelling! creators.yahoo.com/lifestyle/st...

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— DevinCow (@devincow.bsky.social) September 19, 2025 at 6:56 PM

"Regardless of the truth or falsity of Kimmel’s remark, the government should not serve as the arbiter of truth in public debate." It is all to easy for the government to use a truth-policing power "as a tool to threaten and punish disfavored speakers."

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— Thomas Berry (@thomasberry.bsky.social) September 18, 2025 at 3:34 PM

Rats-leaving-a-sinking-ship conservatives spoke up.

Wanna see a bigger sign? www.bbc.com/news/article...

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— docslacker (@docslacker.bsky.social) September 20, 2025 at 4:21 AM

The one person Bob Iger least wanted to speak up spoke up.

Like we said, dominance-based strategies have penalties for missed shots and they tend to be zero-sum games. The pro–Kimmel/anti-Trump side clearly won this last round, which means that someone else lost. Obviously, everyone slapped ABC around, but neither Nexstar, Sinclair, nor the administration came out of this looking stronger.

Elliott Morris argues that the backlash showed that the CEOs of companies like Disney don’t realize how unpopular Trump actually is. He might be right, but one thing’s for certain: they realize it now more than they did a few days ago.

I was going to start a two-part post on the Kimmel suspension, but given the news, I though I'd hold off

I work remotely so this probably wouldn't be as effective.

Apparently on Christian tiktok they're predicting a rapture on Tuesday. So I'm going in to work early, laying out an outfit of clothing in my office and pretending it got me.

— Elle (@elleisanisland.bsky.social) September 20, 2025 at 5:37 PM

I share your inclination to be skeptical, but it can't be a coincidence that this comes exactly a week after Peter Thiel's “off-the-record” lecture where he suggests that Greta Thunberg is the biblical Antichrist. (You think I'm joking, but I'm not.)

Fill in the _____

The following is from a YouTube transcript of this Patrick Boyle video, cleaned up by ChatGPT, but with one word removed to make things interesting.  

Well, his main trick was that whenever investors became agitated about a product not being delivered, he would dazzle them by announcing an even more exciting new product which was always right around the corner — one year away from being delivered.

_____ was a master in dealing with the press and managed to convince people that he was the greatest inventor to have ever lived.

The constant announcements of new products managed to distract attention from the shortcomings of the _____ Motor Company.

The new inventions meant that all of _____’s time was consumed working on new and exciting technologies that would change the world for the better.

To his believers, _____ was a savior of sorts.

Shareholders were sometimes frustrated with _____’s failure to produce these world-changing inventions in a timely manner, and he did face a number of shareholder lawsuits over the years. But these were big ideas he was dealing with — inventions that would revolutionize transportation and energy.

Fortunately for _____, most of his investors were believers in his genius. They believed that the great engineer would lift all of humanity up with his wonderful new ideas — ideas almost drawn from the world of science fiction.

The critics would eventually be humiliated when he finally delivered this more efficient and sustainable future. 

 Boyle has some fun with the visuals here, so make sure to pay close attention. 

Bluesky, Dark Clouds

[Picking up where our last post left off, this will give you some idea of what my Blue Sky feed looks like recently, at least among the econ crowd. Are these stories disproportionately pessimistic? Perhaps—but I would also argue they deserve more attention than they’ve been getting.] 

 

Increasing political pressure on the Fed by half as much as Nixon did, for six months, raises the price level more than 8%. www.nber.org/papers/w32461

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— Catherine Rampell (@crampell.bsky.social) August 31, 2025 at 11:18 AM

The FT matches Reuters’ reporting: “.. [Cook] declared on multiple documents that an Atlanta condominium at the centre of the controversy was a vacation home.” @financialtimes.com www.ft.com/content/e32d...

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— Carl Quintanilla (@carlquintanilla.bsky.social) September 13, 2025 at 7:15 AM

I would never defend Scott Bessent's habit of getting into physical altercations with White House colleagues, but if you're going to do that sort of thing, you might as well pick on Musk and Pulte.  

 

“.. It’s a scary thought to have the kind of Fed chair that’s willing to sacrifice the central bank’s independence out of loyalty to the president,” Mankiw said. @politico.com www.politico.com/news/2025/09...

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— Carl Quintanilla (@carlquintanilla.bsky.social) September 15, 2025 at 5:02 AM

Inside the Fed, there is a preoccupation with doing whatever possible to avoid provoking Trump, which at times has meant complying with his wishes. That cautious approach is drawing scrutiny as its independence comes under threat www.nytimes.com/2025/09/15/b... @nytimes.com @bencasselman.bsky.social

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— Colby Smith (@colbylsmith.bsky.social) September 15, 2025 at 4:55 AM

“.. the first sitting White House official to join the modern Fed’s board.” @wsj.com www.wsj.com/politics/ele...

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— Carl Quintanilla (@carlquintanilla.bsky.social) September 15, 2025 at 2:54 AM

 

I’m coming around to the opinion that the press has miscalculated, perhaps even reversed, the magnitude of the economic stories of 2025.

While the focus has overwhelmingly been on the impact of the tariffs, the potential risk of attacking the Fed has not gotten the attention it deserves, and the economic dangers associated with mass deportation have been largely ignored.

All of these things can have a catastrophic effect individually, let alone combined.

 

For the umpteenth time - immigration is a labor market problem

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— Kai Ryssdal (@kairyssdal.bsky.social) September 15, 2025 at 6:36 AM

With respect to agriculture, the political calculus behind using mass deportations to punish Democratic states was always doubly flawed. First, even in the most blue of states, the agricultural areas are mostly red. Second, Stephen Miller is a fanatical racist and will not stop based on expediency.

The worst of the worst? Produce rotting in the fields! m.youtube.com/watch?v=UqqG...

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— LibsLikeMe (@danihere.bsky.social) August 14, 2025 at 1:19 PM

Produce rotting in the fields ... AGAIN. I guess the racism was more important than growing food. GIFT: www.nytimes.com/2025/08/25/o...

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— litzz11 (@litzz11.bsky.social) August 25, 2025 at 3:45 AM

Guest Essay by Robert Rivas and Shannon Douglass

Mr. Rivas is the speaker of the California State Assembly. Ms. Douglass is the president of the California Farm Bureau.

California is by far the largest food producer in the United States. In 2023, our state’s agricultural economy was worth nearly $60 billion. The state’s roughly 63,000 farms grow over a third of all vegetables and around three-quarters of the fruits and nuts produced nationwide.

...

This bounty all depends on a reliable, skilled and experienced labor force that is overwhelmingly made up of immigrants: Over 80 percent of California’s hired farmworkers surveyed between 2015 and 2019 were from Mexico, and more than half were undocumented. Nationwide, an estimated 80 percent of farmworkers were born outside of the United States, and around half are undocumented.

...

What our immigration enforcement agencies are doing now, in many instances — treating hard-working, law-abiding immigrant workers as if they are violent criminals — is a mistake. Prior administrations, both Democratic and Republican, focused immigration enforcement on serious or violent criminals, with success. That’s a critical distinction that should also guide policy today. And it’s what most Americans want: In a July Fox News poll, 59 percent of voters said the government should deport only undocumented immigrants who’ve been charged with crimes.

In our state, we know that fear of immigration enforcement is keeping farmworkers away from the fields. Several weeks ago, ICE officers raided farms and fields in Ventura and Santa Barbara Counties that grow a large portion of the state’s strawberries. Similar raids have taken place at packing houses — locations where picked produce is boxed and shipped. These raids cause confusion and concern among farmworkers and farm owners alike. Lisa Tate, a Ventura County farmer, recently told Reuters that about 70 percent of the workers in the fields around her are no longer showing up. We have heard similar reports from farmers and ranchers across California.

 

Of course it's not just agricultural workers who are being deported. 

www.trouphoward.com/uploads/1/2/...

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— Ben Zipperer (@benzipperer.org) August 20, 2025 at 8:38 PM

Since I don't know enough about housing research to judge the quality of this paper, I checked out who had cited it. Here's what I came up with.

www.federalreserve.gov/newsevents/s...

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— markpalko.bsky.social (@markpalko.bsky.social) September 14, 2025 at 2:32 AM

My Bluesky

 Recently, there’s been another wave of think pieces arguing either that BlueSky is dying, or that BlueSky is thriving but rotting away liberal discourse, or somehow paradoxically doing both at the same time. Both Nate Silver and Noah Smith have recently weighed in, along with many other names I don’t keep up with (if I decide to discuss them, I'll link to them. In the mean time, they can get their own clicks).

Looking through these pieces, it strikes me that the social platform they describe doesn’t look much like the one I check in with once or twice a day. Perhaps this is on me. It’s entirely possible that my experience with and approach to BlueSky is grossly unrepresentative. But even if so, I thought it might be informative to explain what my feed looks like and what I use it for.

For those of you who haven’t used a microblogging site, most (all?) generally give you the option of either seeing posts from people you follow or from a list generated by some algorithm. I have a hard rule to only use the former. That means the posts and reposts I see are coming from fewer than 20 people, all of whom I know to be worth listening to. A little over a third of them are tech reporters or professionals focusing on some of my fields of interest such as AI, transportation, and robotics. The next biggest group are econ and business writers mostly associated with Kai Ryssdal and Marketplace. The list is rounded out by some journalism critics and a couple of personal acquaintances.

The majority of the posts I see cite articles, often but not always accompanied by some kind of comment, either in the form of a preface or a reply. When the source being cited is unfamiliar to me, I take a few moments to vet it, but most come from places like The Guardian, The Wall Street Journal, Reuters, etc.

The result is basically a curated and annotated news feed provided by a small group of distinguished journalists, technology experts, and business reporters.

Is this a broad, representative, unbiased cross-section of the news? Of course not. Josh Marshall, James Fallows, Ed Zitron, and Catherine Rampell are going to recommend stories that reflect their distinct interests and viewpoints. Certain topics will feature much more heavily in my feed than they do on the front page of The New York Times, and vice versa. This is not a bad thing. One of the reasons I follow the people I do is because I have come to trust their judgment and insight, and because they are highly knowledgeable in fields that are important to me. That’s something I can no longer say about the editorial boards of most major news organizations.

Of course, this is not the only place I get my news. I subscribe to the LA Times, listen to All Things Considered, check CNN (mainly for the business section—Allison Morrow is definitely someone you should be reading), and I keep an eye on the other major papers. For the most part Bluesky complements rather than supplants my news consumption and I feel better informed for it and certainly better informed than if I were using what remains of Twitter instead.

The tech right and fascism—Peter Thiel, Elon Musk, and Marc Andreessen have been checking this Overton window for years.

And for the most part, no one seemed to care.

It was this exchange on Fox News about the forced detention and possible euthanasia of the homeless and mentally ill that got me thinking along these lines. While Brian Kilmeade’s lethal injection comment proved to be outside of the Overton window, the earlier part of the exchange, which has gone largely ignored, had even clearer antecedents in Nazi Germany.

Brian Kilmeade endorses euthanizing homeless people: "Involuntary lethal injection, or something. Just kill them."

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— Aaron Rupar (@atrupar.com) September 13, 2025 at 7:56 AM

In the aftermath of the Kirk assassination, we are seeing a number of people on the right testing just how extreme and overt a fascist position can be without prompting mass disapproval. Kilmeade was outside of the pale, but it’s shocking just how much has managed to get through.

While it is possible to make too much of a few brief comments from a couple of Fox talking heads, the comments of the world’s second-richest man in Britain over the weekend had the same disturbing historical precedents and were far more potentially catastrophic.

Elon Musk is trying to violently overthrow the government of the UK and replace it with a far-right racist regime, a fact that will not inform how US elites see him at all

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— Will Stancil (@whstancil.bsky.social) September 14, 2025 at 7:28 AM

Elon Musk spoke by video to Tommy Robinson's anti-immigrant rally in the UK today. "You're in a fundamental situation here where, whether you choose violence or not, violence is coming to you," said Musk. "You either fight back or you die."

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— Matt Novak (@paleofuture.bsky.social) September 13, 2025 at 11:20 AM

Elon, fresh off attempting to incite race riots in England is now trying to incite pogroms against trans people.

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— Alejandra Caraballo (@esqueer.net) September 14, 2025 at 7:10 AM

These are deeply held and long-standing beliefs for Musk, most tracing back at least one and in some cases two generations, going back to his Hitler-loving maternal grandfather.

Along with credulously accepting every self-serving and delusional claim the man made, the mainstream press’s canonization of Elon Musk depended on willfully disregarding heaps of damning evidence that reporters like Lynette Lopez, Lora Kolodny, Michael Hiltzik, and Ed Niedermeyer were diligently uncovering.

Musk has always had, at the very least, serious fascist leanings, but that put him squarely in the mainstream of the Silicon Valley tech right. Racism and anti-feminism have been steeped into the culture from the very beginning, and yet, though this was reported, the editorial offices of places like the New York Times or NPR still aggressively promoted the tech Messiah narrative, which is one of the reasons we are in our current situation.

In case you’ve forgotten, here’s what Peter Thiel said in a widely disseminated Cato Institute essay from 2009. (Ever since then, Thiel and his apologists have been dancing around what he said about women's suffrage. It's best to ignore the distractions and focus on his actual words.)

Even beyond the fascism, these are bad people—greedy, power-hungry, devoid of empathy, and so convinced of their own worth, intellect, and general superiority as to often suggest messianic delusions. And yet, the press was so enamored of the story it was telling itself of a techno-optimist revolution that it ignored all evidence to the contrary.

They should have been calling out these people in real time. Having failed to do that, they need to start now.

p.s. I was going to talk about Andreessen here, but he probably merits a post of his own.

Insider trading is bad and other quaint notions

From Matt Levine's newsletter.  

OpenSea was, and as far as I can tell still is, a big marketplace for trading nonfungible tokens. These tokens had a vogue in crypto a few years ago, when NFTs from popular series like Bored Ape Yacht Club would sell for millions of dollars. Anyone can create NFTs, and they generally have no intrinsic value; their value is strictly memetic. If a lot of people have heard of Bored Apes and think they are cool, then they will be valuable; if not, not.

Given this, OpenSea played an important role in the NFT boom. Specifically, OpenSea has a website, and it would feature some NFTs prominently on its homepage. People would go to OpenSea’s website to buy NFTs, and they would see the NFTs featured on the homepage, which would make them more likely to buy those NFTs, so those NFTs’ prices would go up. So if you could buy an NFT before it was featured on the homepage, and then sell it after it was featured, you could pretty reliably make money. It is hard to convey how weird 2021 was.

...

But today the US Court of Appeals for the Second Circuit overturned his conviction. Here is the opinion. “Insider trading,” I like to say, “is not about fairness, it’s about theft.” Lots of people trade securities with an information advantage; you are very much allowed to trade while knowing things that other people don’t know. What makes insider trading illegal in the US is mostly that you are misappropriating that information from someone else. [1]  As I put it last year:

In the US, most of the time, it is illegal to trade on inside information about a company not because that’s unfair to everyone else who doesn’t have the information, but because you have some duty to somebody else not to misuse their information. So if you work for a public company, you have a duty to the shareholders not to trade on inside information before disclosing it to them. Or if you are the spouse or golf buddy or therapist of an executive at a public company, and she tells you about an upcoming deal, you have a “duty of trust or confidence” to her not to go trade on it, and if you do that’s a crime.

 The same logic applies to wire-fraud insider trading in NFTs. Chastain’s alleged crime is not quite “he ripped off NFT holders by trading on inside information.” It’s “he ripped off OpenSea by misusing its confidential information.” The wire fraud statute forbids “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.” You might think “yes, insider trading on NFTs is a scheme to defraud the people on the other side of your NFT trade,” but that is not how lawyers apparently think about it. Insider trading on NFTs is a scheme to steal OpenSea’s property, which is its confidential information about which NFTs will be featured on the website.

...

Two points here. One, this is a strange result, because obviously the information about which NFTs would be featured on the website was valuable. You can tell because Chastain (1) traded on it and (2) made money. OpenSea itself did not regularly exploit this value — it didn’t itself insider trade on its homepage picks — presumably because it thought it was better business not to. [2]  This is a weird feature of “insider trading is not about fairness, it’s about theft”: Chastain was charged with stealing something from OpenSea (information about its homepage) that obviously had value (he made money from it), but the theft didn’t obviously cost OpenSea anything (it wasn’t making money from the information). Chastain didn’t exactly make his $57,000 at the expense of OpenSea; he made it at the expense of other NFT traders. And insider trading laws do not protect other traders.

Two: What does this mean for actual insider trading law? Maybe nothing; the wire fraud statute is different from the securities fraud statute. But there are connections. [3] And I wonder a little whether, in this more fraud-friendly era, courts will be more hesitant to convict people of crimes for misusing corporate inside information. In particular, I wonder if this decision will mean anything for “shadow trading” cases, where an insider at a company gets information about that company (a merger, earnings, etc.) and uses that information to make trades in another, correlated company’s stock. Does that deprive the insider’s company of a “traditional property interest”? Is information about a pending merger a traditional property interest? If insider trading is about theft, not fairness, do you have to prove that the insider stole something that the company was using? How do you prove that? Or is insider trading a little bit more legal now?

Since we're talking about NFTs here, it is difficult not to, somewhere in the back of your mind, think of the line from The Magnificent Seven: “If God did not want them shorn, he would not have made them sheep.” But there are larger issues at play here.

With the penalties for financial fraud being probably the lowest they have been in almost a hundred years, and the incentives continuing to grow, it’s reasonable to expect it to take up a greater and greater share of our economic activity. This would seem like a good time to ask if there’s a cost to fraud beyond its immediate, narrowly and somewhat artificially defined victims. 

 Fairness is a social good in and of itself. Insider trading—the very concept of insider knowledge—inevitably tends to favor the rich, powerful, and connected. Though you'll find the odd exception now and then, the kind of information we're talking about is overwhelmingly held by the people who already have too much of everything else.

Beyond fairness, there's also the matter of well-functioning markets. The bigger the role played by cheating, manipulation, and fraud, the less the markets are able to perform efficiently, to best allocate resources where they need to go. Instead of being institutions that ideally drive innovation and progress, they increasingly become zero-sum games where the scam and the bubble outperform worthwhile investments. 

"Wonderful news, comrade! Based on the results of your tissue match, you have been awarded an all-expenses-paid vacation to..."

It's a really bad sign when dystopian sci-fi tropes start showing up in the news and people just shrug it off..

From the Guardian:

The authoritarian strongmen Vladimir Putin and Xi Jinping have mused on how organ transplants might lead to immortality, during a brief exchange of small talk caught on a hot mic at a military parade. [If you're going to have this conversation, a military parade is the perfect backdrop -- MP]

The Russian president was in Beijing on Wednesday with the Chinese leader, who hosted allies for a ceremony to mark the 80th anniversary of the end of the second world war.

As Putin and Xi walked at the head of a delegation of foreign leaders, state media aired live footage that captured parts of what appeared to be a private conversation. While they made their way towards a raised platform in Tiananmen Square, Putin’s interpreter could be heard saying in Chinese: “Biotechnology is continuously developing.”

After a brief inaudible passage, the interpreter added: “Human organs can be continuously transplanted. The longer you live, the younger you become, and [you can] even achieve immortality.”

 

Also a familiar plot element from hard-boiled thrillers.

 

 

Tastes vary, but Get the Gringo is probably the better of the two. No one does a violent but charismatic borderline sociopath like Mel Gibson.

On Tuesday, the world’s richest man was a far-right, Ivermectin-loving loon who used his money to buy major media platforms. By close of trading Wednesday, the new world’s richest man was a far-right, Ivermectin-loving loon who uses his money to buy major media platforms for his son.

[Not sure whether to go with a snarky comment about all this additional wealth making Ellison less of a wacko, or with a joke about Elon Musk not being able to buy television networks for all of his children.]

Though Ellison has always been filthy rich, his obscene wealth is very much the result of the AI bubble.  

 

 

Let's zoom in. It's not often you get to see a company jump by hundreds of billions of dollars in under an hour. 

 

 

 

From yesterday's Nightcap newsletter by Allison Morrow:

The stock shot up more than 40% Wednesday morning, its largest single-day jump ever. It was such big leap that it minted Oracle co-founder Larry Ellison $100 billion in less than an hour, making him the world’s richest person and bumping Elon Musk to second place.

The catalyst wasn’t a flashy product rollout or a surprise earnings beat — in fact, Oracle’s quarterly revenue and profit came in below Wall Street’s expectations Tuesday evening.

Instead, the fire came from Oracle’s outlook for the next few years, which, if it pans out, would cement the company as a power player in artificial intelligence. That’s a big “if,” though — especially given that the bulk of Oracle’s rosy outlook hinges on revenue from one major customer, the unprofitable OpenAI, according to the Wall Street Journal.

Oracle’s outlook is “so exuberant that if we’d gotten this sort of prediction from a less established company it might have been shrugged off as either a lie or a misplaced digit,” Steve Sosnick, chief strategist at Interactive Brokers, told me.

... 

• Oracle’s CEO, Safra Catz, said the company’s cloud infrastructure revenue would grow 77% to $18 billion by the end of May 2026. But that’s not all: It projects that revenue to hit $144 billion by 2030.
• Catz said Oracle had signed four multi-billion-dollar contracts with three different customers, giving the company $455 billion in “outstanding contract revenue” that it expects to collect on. That metric is up 359% from last year.

...

If Oracle’s head-spinning projections seem too good to be true, well, that’s all part of the fun-house mirror effect of the generative AI bubble (yes, I said “bubble”).

Because for any of Oracle’s future projections to make sense, its AI customers, including OpenAI, have to make, like, a lot of money — something the ChatGPT maker has shown no clear path to doing anytime soon. (The Information reported last week that OpenAI’s projected cash burn this year through 2029 will hit $115 billion — about $80 billion higher than the company previously expected.)

... 

“This data center buildout continues to be a major support to the US economy… so we of course hope that Larry Ellison is right and that this massive buildout is sustainable,” Peter Boockvar, chief investment officer of One Point BFG Wealth Partners, said in a note Wednesday.

But Boockvar also sounded a note of caution: “While Oracle just knocked the cover off the ball, when I see one-day market cap increases of such epic proportions, I can’t not think of what I witnessed in 1999.”

The bottom line is that if generative AI does not go from being a sector that is hemorrhaging cash to one that is turning in historic levels of profit—and do so fairly soon—companies like Oracle and Nvidia (which now has a higher market cap than any other company in history), though fundamentally sound enterprises, will almost certainly be trading at around a third or less of their current inflated valuations.

 

Everything about this feels bad. Analysts wholeheartedly believing that OpenAI and two unnamed companies will provide oracle with *more revenue than all of AWS* by 2029? Up from...$18bn in their next fiscal year? Come on man

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— Ed Zitron (@edzitron.com) September 9, 2025 at 8:34 PM

 

Also keep in mind that with one or two exceptions such as Apple, the top 10 companies in the S&P are all highly dependent on this bubble, and that the concentration in the sector is far higher than it was during the dot-com bubble. On top of that, the overall economy was stronger in the 1990s and was facing none of the unique challenges of 2025, including an administration that will almost certainly over-react to a financial crisis.

On the bright side, maybe the nepo baby will have to sell CBS/Paramount, and Stephen Colbert can keep his job. (Not going to happen, but I wanted to end on a cheerful note.)

It's not true that all techno-optimist ideas come from old sci-fi shows. Some of them come from old back issues of the National Review.

I’ve been blogging on, and some would say whining about, the cult of the tech messiahs for at least a decade now, but I’m still learning about new connections.

We’ve previously talked about Silicon Valley’s bizarre antipathy to the concept of experts and how it played out first with biohacking and then with the full-on crazy of ivermectin and hydroxychloroquine. We’ve discussed how Marc Andreessen singles out experts as villains not once but twice in his Techno-Optimist Manifesto. I believe we brought up the example of Steve Jobs basically killing himself with alternative medicine.

But this is not my day job, and even if it were, I doubt they could pay me enough to spend all my time going down these rabbit holes. As a result, mine is a layman’s grasp of the subject, and there are still lots of gaps.

For example, up until a few days ago, I had no idea how far back this hatred of credentialed experts could be traced.

This comes from a Bari Weiss interview with Andreessen. You can check out the whole thing, but I strongly recommend you don’t. I found it while researching this topic, read as much as I could stomach, and closed the tab. 

 James Burnham was super helpful on these topics. He was one of the smartest political scientists, philosophers of the twentieth century on American politics. He was a full-on communist revolutionary activist and a personal friend of Leon Trotsky in the 1920s and ’30s, and then he broke from communism in the ’40s, and he went hard to the right. And he helped found the National Review with William F. Buckley.

He wrote these two books in the 1940s, when the heart of the big three-way battle between communism, fascism, and liberalism was raging in the world. One’s called The Managerial Revolution. And it basically says, these movements have real differences, but there is something in common, which he called “managerialism,” which is the establishment of an expert class. The expert technocrats, who are assumed to be able to steer society in healthy and beneficial ways, and then often lead you in very bad directions. 

It took some tough bargaining, but the Tesla board managed to keep Musk's pay plan under $1 trillion

Tesla's nearly $1 trillion new pay plan for Musk would expand his voting power
Lora Kolodny

Tesla is asking investors to approve yet another outsized pay plan for CEO Elon Musk, according to a financial filing out Friday.

The total package is worth about $975 billion based on the maximum payout, assuming share count remains.

The proposed plan for Musk, already the world’s wealthiest individual, consists of 12 tranches of shares to be granted if Tesla hits certain milestones over the next decade. It would also give Musk increased voting power over the EV maker and aspiring robotics titan, which he has publicly demanded since early 2024.

Tesla Chairwoman Robyn Denholm told CNBC’s Andrew Ross Sorkin the plan was designed to keep the CEO “motivated and focused on delivering for the company.”

...

Denholm confirmed that the Tesla CEO pay plan, if approved by shareholders, would not put any limit on where and how Musk spends his time or require him to spend any minimum number of hours per week on Tesla business. 

To obtain the first award in the plan, Musk and Tesla would need to almost double their current market cap to reach $2 trillion. The final benchmark is reaching an $8.5 trillion market cap.

The operational milestones in the 2025 CEO Performance Award include: 20 million Tesla vehicles delivered, ​10 million active FSD Subscriptions, ​1 million robots delivered, ​1 million Robotaxis in commercial operation and a series of adjusted EBITDA benchmarks.

There's an old sales psychology trick where you start with the outrageous ask, then follow up with the merely exorbitant. While the full award is attached to a string of virtually impossible accomplishments, some of the lower tiers—each of which appears to come with its own absurdly generous payout—are within reach given creative accounting and assuming sufficient market irrationality and/or massive government corruption.

If Donald Trump were to announce a major initiative—buying robots, or a fleet of government robotaxis, or perhaps a joint project between Tesla and SpaceX to build an interstate hyperloop system—even if no real progress was ever made (a near certainty for the last example) and relatively little money actually changed hands, it is not difficult to imagine today’s febrile market pumping the stock up well past two trillion dollars. By way of precedent, remember that when last I checked, Tesla was trading at a price-earnings ratio of just over 200, while Musk’s longtime frenemy and classic Bond villain Peter Thiel’s company Palantir shot up to a P/E of over 500 shortly after the 2024 election.

As previously discussed, the idea that Elon Musk needs additional incentive to keep Tesla's stock price up is obviously absurd. He is the company's largest shareholder and, while the details can be a bit murky, certainly much and possibly most of his wealth would evaporate if Tesla implodes (i.e. starts trading at a reasonable level given the fundamentals). He quite literally has more to lose than anyone else if things go south.

He does, however, have real leverage here, though of a kind that no one involved with the company would ever admit: he is the face of the con. This is, and has been for years, the biggest and most brazen stock pump in history. Tesla is a 20-plus-year-old niche automobile company with a tiny product line and no new vehicles in the pipeline. The bull case for the stock is now based almost entirely on robotaxis and humanoid robots—despite the fact that the company is far behind the industry leaders in both fields in terms of technology, and even if it were somehow capable of leapfrogging the competition, those potential markets probably aren't big enough to justify Tesla's current market cap, let alone tell a story of explosive growth. 

In what should be related news... 

Tesla’s U.S. market share dropped to a near eight-year low in August as buyers chose electric vehicles from a growing stable of rivals over the aging lineup offered by CEO Elon Musk’s company, according to data from research firm Cox Automotive shared exclusively with Reuters.

The decline highlights the threat from automakers ramping up EV incentives at a difficult time for the industry. Analysts expect an EV sales bump to continue through September in the United States, then drop when federal tax credits expire at the end of the month, raising financial pressure on Tesla and other automakers.

Tesla, which once held more than 80% of the U.S. EV market, accounted for 38% of the total EV sales in the United States in August, the first time it has fallen below the 40% mark since October 2017, when it was ramping up production of the Model 3, its first mass market car, according to early data from Cox.

While other automakers are rolling out new EVs, Tesla has turned its focus to building robotaxis and humanoid robots, delaying and cancelling plans for cheaper electric vehicle models.

 

Not so much the fact itself as the fact people are talking about the fact

 

U.S. Stocks Are Now Pricier Than They Were In The Dot-Com Era - WSJ

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— Nicholas Brown (@nicholasabrown.bsky.social) September 1, 2025 at 5:38 AM

 

This story has been getting a lot of coverage, and I think it may be important, though not necessarily for the obvious reasons.

 

 

U.S. STOCK MARKET REACHES MOST EXPENSIVE LEVEL IN HISTORY, OVERTAKING DOT-COM ERA AND 1929 PRE-DEPRESSION PEAK

— FinTwitter (@fintwitter.bsky.social) September 1, 2025 at 7:07 AM

 

We've been running a lot of posts recently describing various worrying stats and trends for the markets and the economy in general, everything from attacks on the Fed to an apparent bubble adding more to growth than consumer spending to smart, experienced analysts start to to routinely use the word "stagflation." 

 Given all these previous alarming revelations, I’m not sure how big a deal this one additional statistic could be.

From a market psychology standpoint, however, this might be more notable. Recently, retail investors have come to make up a larger and larger chunk of the market. At the risk of being patronizing, I’m not sure how deep these people tend to dive into the economic news or how skilled they are in processing what they do read (it's worth noting that stagflation may be getting lots of attention among econ types but it hasn't been trending strongly on Google), but I’m betting most of them check The Wall Street Journal or the business section of CNN or subscribe to channels like FinTwitter.

I don’t have any special insight into the minds of retail investors and this is the most non-random of samples, but it certainly looks like the message that the music might be about to stop is gaining traction, and while that might not trigger an exodus, it seems likely to accelerate the slide if things go south.

 

 

 

 

Dispatches from a still-not-burning Los Angeles.

This is one of those times that you are faced with a lie so shameless, outrageous, and despicable that you need to step back for a moment and take it all in, letting the full weight of it settle on you. 

Kristi Noem: "I do know that LA wouldn't be standing today if President Trump hadn't taken action."

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— Aaron Rupar (@atrupar.com) August 31, 2025 at 7:37 AM

At the risk of pointing out the obvious, the little civil unrest that we did see here in L.A. was solely because the Trump Administration was doing everything in its power to provoke a reaction. Even with all that, the incidents (at least those coming from the people and not the ICE agents) were minor. Other than the vandalizing of a few unoccupied Waymos—it’s difficult to convey how much people around here hate those cars—the incidents were few and minor, leaving no residents feeling threatened (at least by the protesters). Noem is taking a few firecrackers and blocked streets and trying to convince people this was the second coming of the Watts Riots of ’92.

At this point in the story, we all need to acknowledge that there is no apparent lower bound here—that while there might be lines that members of the administration would not cross, we shouldn’t assume that any specific act or position is beyond the pale.

I’m not going to delve into the questions of psychopathy or moral character. I do, however, have something to say about this specific lie, how it’s part of a larger myth, one for which the Establishment press has considerable culpability.

Through a combination of sensationalism, laziness, provincialism, various prejudices and bigotries, and a willingness to let conservatives dictate the narrative, the Establishment press (and, as always, the New York Times in particular) have done everything they could to propagate a fantasy of cities—especially Los Angeles—as post-apocalyptic hellscapes.

Before going on, our standard note on these stories: the relevant unit in almost all these cases is L.A. County versus the city of L.A. The city is large; the county is huge. It covers thousands of square miles and is home to almost 3% of the United States population—more than even NYC. That footage you saw of burning buildings during the Black Lives Matter protests? Entirely outside of the city. Most of the casualties from fires a few months ago? Mostly outside of the city.

The New York Times has a history of reporting on California—and especially Los Angeles—disasters with a barely concealed sense of glee. This extends to disasters that haven’t actually happened yet and which, if anything, threaten NYC more than they do the West Coast. Case in point: numerous stories on rising sea levels that ignore the fact that Los Angeles has an elevation much higher than that of New York City. Furthermore, the West Coast seldom faces hurricanes and the storm swells that often follow them.

The wildfires of earlier this year provided a perfect example of the paper’s coverage of these stories. The fires were horribly destructive. Dozens of people lost their lives. Millions had to deal with heavy smoke for days, serious enough to be life-threatening for people with pre-existing conditions. All that said, however, only about one-half of 1% of the county was caught in the fires. Despite this, the New York Times ran a series of sensationalistic stories with headlines like “Can Los Angeles Ever Recover?”

The coverage of the wildfires also put the class bigotry of the Establishment press on full display. Though the fire in Pacific Palisades was less deadly than that in Altadena, it got the overwhelming majority of the attention because the residents there were rich and famous.

That was, however, far from the most embarrassing display of the press’s bigotries. For that, you need to look to the Black Lives Matter protests. Despite this being, given its tremendous scale, one of the most peaceful mass protests the country has ever seen, the coverage often made it seem like angry mobs of Black people were coming for the readers. Go back and look at Tom Cotton’s dangerous and dishonest piece in the New York Times and then read the paper’s opinion editor defending the decision to run it. While Cotton did not speak for the paper, its leaders were disturbingly close to his point of view.

Recently, quotes from Marc Andreessen emerged talking about how he was supposedly radicalized by the Black Lives Matter movement. This is, to a degree, disingenuous—we now know that Andreessen has always been a bit of a white supremacist, not to mention a hardcore anti-feminist—but his statement that Black people were declaring war on the rest of us would have been remarkably easy for New York Times readers to hold.

Nothing to worry about here -- Nvidia edition

As this chart dramatically illustrates, the story of Nvidia is the story of the AI bubble. This is a 32-year-old company which, up until 5 years ago, never traded at more than $6.50 a share.

While a price-to-earnings ratio of 50 is nowhere near the eye-popping excess of a Tesla or a Palantir, it’s not small either. It suggests the market believes the company is on track for substantial growth in the next 5 to 10 years.

That P/E ratio reflects the astounding rivers of money that are being poured into data centers by companies like Microsoft and Meta. If that level of spending has plateaued—or, worse yet, peaked—Nvidia is substantially overvalued. If the current push for AI is a bubble and we see a substantial rollback in capital expenditures combined with a more conservative consensus on the company’s growth potential, it’s not difficult to imagine the stock dropping by a factor of two or more. 

 And a big drop in this stock has even bigger implications for the wider market and the economy.

 

From the invaluable Allison Morrow's newsletter (I love that monopoly disclaimer): 

Here are some of the reasons people are beginning to worry about the Nvidia story.

 

Reason No. 1: Nvidia is huge. But not just, like, “Oh, it’s a big company!” It is bigger, in terms of market value, than any public company ever. We often toss around its market capitalization — $4 trillion — as if that number makes any sense.

Consider that the world had never seen a $1 trillion public company until Apple crossed the threshold in 2018. Now we have nearly a dozen, almost all of them in the American tech sector.

 

Reason No. 1(a): That size makes Nvidia (pronounced in-vid-ee-uh) on its own account for 8% of the S&P 500. So, even if you don’t hold Nvidia shares, you gotta watch its results because they could swing the entire market. Zoom out even further: Nvidia’s market cap accounts for 3.6% of global GDP, according to Deutsche Bank. Yes. One single company, which gets half its revenue from just three customers, is that huge.

 

Reason No. 2: When we talk about the AI industry, we’re mostly talking about Nvidia. If you use ChatGPT, that’s powered by Nvidia chips. The same goes for Anthropic’s Claude, Google’s Gemini, Amazon’s…whatever Amazon’s chatbot is called — all of those products are powered by the processors made by this company that up until a few years ago was just a tech workhorse churning out processors that make video games look cooler.

 

(You may be thinking, Hey, Nvidia sounds kinda like a monopoly, to which I say, Please do not use the m-word around here, or else I’ll have to call the lawyers. Let’s just say Nvidia almost exclusively controls the supply of vital resources to an entire industry and enjoys monopoly-esque profit margins.)

 

So, if you follow the Gospel of AI and believe that the technology has the power to dismantle the entire global economy, Nvidia is your clear picks-and-shovels play. 

...

But — and here’s why the focus on Nvidia is getting even more intense — what if the technology Nvidia is powering turns out to be, I dunno, not quite the revolution that your Sams Altman or Darios Amodei have promised? What happens to the picks and shovels when the gold rush goes bust?

If you want to delve further into the different ways a next-big-thing can under-perform, we've got a couple of metaphors for you here.