"A Self-Fulfilling Prophecy: Systemic Collapse and Pandemic Simulation"

From the Philosophical Salon, August 16, 2021:

A year and a half after the arrival of Virus, some may have started wondering why the usually unscrupulous ruling elites decided to freeze the global profit-making machine in the face of a pathogen that targets almost exclusively the unproductive (over 80s). Why all the humanitarian zeal? Cui bono? Only those who are unfamiliar with the wondrous adventures of GloboCap can delude themselves into thinking that the system chose to shut down out of compassion. Let us be clear from the start: the big predators of oil, arms, and vaccines could not care less about humanity.

Follow the money

In pre-Covid times, the world economy was on the verge of another colossal meltdown. Here is a brief chronicle of how the pressure was building up:

June 2019: In its Annual Economic Report, the Swiss-based Bank of International Settlements (BIS), the ‘Central Bank of all central banks’, sets the international alarm bells ringing. The document highlights “overheating […] in the leveraged loan market”, where “credit standards have been deteriorating” and “collateralized loan obligations (CLOs) have surged – reminiscent of the steep rise in collateralized debt obligations [CDOs] that amplified the subprime crisis [in 2008].” Simply stated, the belly of the financial industry is once again full of junk.

9 August 2019: The BIS issues a working paper calling for “unconventional monetary policy measures” to “insulate the real economy from further deterioration in financial conditions”. The paper indicates that, by offering “direct credit to the economy” during a crisis, central bank lending “can replace commercial banks in providing loans to firms.”

15 August 2019: Blackrock Inc., the world’s most powerful investment fund (managing around $7 trillion in stock and bond funds), issues a white paper titled Dealing with the next downturn. Essentially, the paper instructs the US Federal Reserve to inject liquidity directly into the financial system to prevent “a dramatic downturn.” Again, the message is unequivocal: “An unprecedented response is needed when monetary policy is exhausted and fiscal policy alone is not enough. That response will likely involve ‘going direct’”: “finding ways to get central bank money directly in the hands of public and private sector spenders” while avoiding “hyperinflation. Examples include the Weimar Republic in the 1920s as well as Argentina and Zimbabwe more recently.”

22-24 August 2019: G7 central bankers meet in Jackson Hole, Wyoming, to discuss BlackRock’s paper along with urgent measures to prevent the looming meltdown. In the prescient words of James Bullard, President of the St Louis Federal Reserve: “We just have to stop thinking that next year things are going to be normal.”

15-16 September 2019: The downturn is officially inaugurated by a sudden spike in the repo rates (from 2% to 10.5%). ‘Repo’ is shorthand for ‘repurchase agreement’, a contract where investment funds lend money against collateral assets (normally Treasury securities). At the time of the exchange, financial operators (banks) undertake to buy back the assets at a higher price, typically overnight. In brief, repos are short-term collateralized loans. They are the main source of funding for traders in most markets, especially the derivatives galaxy. A lack of liquidity in the repo market can have a devastating domino effect on all major financial sectors.

17 September 2019: The Fed begins the emergency monetary programme, pumping hundreds of billions of dollars per week into Wall Street, effectively executing BlackRock’s “going direct” plan. (Unsurprisingly, in March 2020 the Fed will hire BlackRock to manage the bailout package in response to the ‘COVID-19 crisis’).

19 September 2019: Donald Trump signs Executive Order 13887, establishing a National Influenza Vaccine Task Force whose aim is to develop a “5-year national plan (Plan) to promote the use of more agile and scalable vaccine manufacturing technologies and to accelerate development of vaccines that protect against many or all influenza viruses.” This is to counteract “an influenza pandemic”, which, “unlike seasonal influenza […] has the potential to spread rapidly around the globe, infect higher numbers of people, and cause high rates of illness and death in populations that lack prior immunity”. As someone guessed, the pandemic was imminent, while in Europe too preparations were underway (see here and here).

18 October 2019: In New York, a global zoonotic pandemic is simulated during Event 201, a strategic exercise coordinated by the Johns Hopkins Biosecurity Center and the Bill and Melinda Gates Foundation.

21-24 January 2020: The World Economic Forum’s annual meeting takes place in Davos, Switzerland, where both the economy and vaccinations are discussed.

23 January 2020: China puts Wuhan and other cities of the Hubei province in lockdown.

11 March 2020: The WHO’s director general calls Covid-19 a pandemic. The rest is history.

Joining the dots is a simple enough exercise. If we do so, we might see a well-defined narrative outline emerge, whose succinct summary reads as follows: lockdowns and the global suspension of economic transactions were intended to 1) Allow the Fed to flood the ailing financial markets with freshly printed money while deferring hyperinflation; and 2) Introduce mass vaccination programmes and health passports as pillars of a neo-feudal regime of capitalist accumulation. As we shall see, the two aims merge into one.

In 2019, world economy was plagued by the same sickness that had caused the 2008 credit crunch. It was suffocating under an unsustainable mountain of debt. Many public companies could not generate enough profit to cover interest payments on their own debts and were staying afloat only by taking on new loans. ‘Zombie companies’ (with year-on-year low profitability, falling turnover, squeezed margins, limited cashflow, and highly leveraged balance sheet) were rising everywhere. The repo market meltdown of September 2019 must be placed within this fragile economic context.

When the air is saturated with flammable materials, any spark can cause the explosion. And in the magical world of finance, tout se tient: one flap of a butterfly’s wings in a certain sector can send the whole house of cards tumbling down. In financial markets powered by cheap loans, any increase in interest rates is potentially cataclysmic for banks, hedge funds, pension funds and the entire government bond market, because the cost of borrowing increases and liquidity dries up. This is what happened with the ‘repocalypse’ of September 2019: interest rates spiked to 10.5% in a matter of hours, panic broke out affecting futures, options, currencies, and other markets where traders bet by borrowing from repos. The only way to defuse the contagion was by throwing as much liquidity as necessary into the system – like helicopters dropping thousands of gallons of water on a wildfire. Between September 2019 and March 2020, the Fed injected more than $9 trillion into the banking system, equivalent to more than 40% of US GDP.

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.

As claimed by economist Ellen Brown, it was “another bailout”, but this time “under cover of a virus.” Similarly, John Titus and Catherine Austin Fitts noted that the Covid-19 “magic wand” allowed the Fed to execute BlackRock’s “going direct” plan, literally: it carried out an unprecedented purchase of government bonds, while, on an infinitesimally smaller scale, also issuing government backed ‘COVID loans’ to businesses. In brief, only an induced economic coma would provide the Fed with the room to defuse the time-bomb ticking away in the financial sector. Screened by mass-hysteria, the US central bank plugged the holes in the interbank lending market, dodging hyperinflation as well as the ‘Financial Stability Oversight Council’ (the federal agency for monitoring financial risk created after the 2008 collapse), as discussed here. However, the “going direct” blueprint should also be framed as a desperate measure, for it can only prolong the agony of a global economy increasingly hostage to money printing and the artificial inflation of financial assets.

At the heart of our predicament lies an insurmountable structural impasse. Debt-leveraged financialization is contemporary capitalism’s only line of flight, the inevitable forward-escape route for a reproductive model that has reached its historical limit. Capitals head for financial markets because the labour-based economy is increasingly unprofitable. How did we get to this?....

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First posted October 8, 2021

"Money and Bookkeeping"

From one of the internet's tiny treasures, Delancey Place, February 27:

Today's encore selection -- from A Brief History of Money: 4,000 Years of Markets, Currencies, Debt, and Crisis by David Orrell. 

The expansion of money was made easier as it became more virtual with the arrival of the concept of negative numbers and double-entry bookkeeping:

"The fall of the Roman Empire saw a drastic reduction in trading activities, markets, and even the size of cities, with the population of Rome declining from as many as a million in the 2nd century AD, to about 30,000 by AD 550. The power vacuum was filled by the Christian and Islamic religious authorities who, instead of stamping out coins to pay soldiers, preferred to hoard precious metals in churches and monasteries, often melting it down as decoration for sacred symbols.

"One result of this transformation -- versions of which occurred also in China and India -- was that money became increasingly virtual. Like the Sumerian shekel, it was an abstract score-keeping device more than something you could weigh in your hand. And once again, the birthplace of this next monetary revolution was in Mesopotamia -- with the difference that this time it was led by Islamic money lenders. As today, Islamic finance did not allow usury, but did permit profit-sharing, or charging a range of fees. The system relied heavily on credit instruments, including the promissory notes known as sakk, or 'cheques'. The fact that such transactions were backed only by a signature meant that in business a person's reputation or credibility (from the Latin credere for believe or trust) was all-important.
"As seen in the previous chapter, the invention of money was closely tied to the invention of numbers. It is therefore unsurprising that this developing credit system coincided with the mathematical discovery of negative numbers (a concept which will be familiar to anyone who has overextended their credit card). The first explanation of how to work with both negative numbers, and the number zero was given in the 7th century by the Indian mathematician Brahmagupta, whose book The Opening of the Universe was written entirely in verse. He called positive numbers 'fortunes' and negative numbers 'debts', which made the connection with money clear. Zero was the unique number whose negative is itself (he didn't invent the concept, but he did show how to use it in equations). Translations of his book spread these concepts through the Islamic world, where the number zero was incorporated in the Arabic number system. From there, word spread to Europe through the Moorish conquest of Spain.

"The use of the Arabic number system was popularized by the Italian mathematician Leonardo Fibonacci (1170-1250), who learned the Arabic system as a child while growing up in Bugia (now in Algeria). In his 1202 book Liber Abaci (Book of Calculation) he showed how calculations such as division or multiplication were far easier using Arabic numbers than they were with the Roman system. Many of the examples involved financial activities such as money-changing, the calculation of interest, book-keeping, and so on, and the book soon found an audience with merchants....

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"Industrial Greatness Requires Economic Depressions"

From Palladium Magazine, February 21:

The state’s role in supporting economic growth is critical. Our wealth comes from industry, that is, from the ability to mass produce goods—more goods, better goods, cheaper goods, produced with fewer hours of labor. The biggest advances in industrial production have required massive investments and social transformations so large they can only succeed with the support of the state, including in countries where the state’s support comes largely via market mechanisms, like the United States and modern China. A well-designed industrial policy works by incubating new, better modes of production to move a nation from its current economic equilibrium to a new, wealthier equilibrium.

It is a tragedy, then, that our current economic policy does exactly the opposite. We are vastly poorer because, instead of supporting “infant industries” until they can stand on their own feet, the U.S. government has spent trillions of dollars to keep the most senile and sclerotic businesses on life support. This keeps millions of talented people and tens of trillions of dollars worth of plant and equipment locked up in decrepit enterprises run by mediocrities who specialize in preserving the status quo, or by outright incompetents running their businesses into the ground.

In the words of the economist Joseph Schumpeter, “[T]he problem that is usually being visualized is how capitalism administers existing structures, whereas the relevant problem is how it creates and destroys them.” If the government were willing to let big businesses die a natural death when their time comes, then these resources would be captured by better-managed firms, and our industrial and technological growth would proceed faster. In 2024, the largest 0.1% of businesses, those with over 500 employees, accounted for 54% of private sector jobs in the U.S. Firms with over 10,000 employees accounted for 18% of U.S. manufacturing jobs. Our prosperity, and especially our grandchildren’s prosperity, depends critically on how much of this is in the hands of companies like Boeing and how much is in the hands of companies like SpaceX.

The U.S. Government Keeps Zombie Companies Alive
If you listen to your schoolteachers and economics textbooks and the pundits on television and on Twitter, then you will learn that we live in a capitalist free market society. This means, we are told, that economic activity is a Darwinian contest of all against all. The most effective and efficient firms provide better products at lower prices, taking business away from their inferior competitors. Firms which cannot keep pace with the march of progress wither to dust and are blown away on the wind. In this way, the ruthless logic of the competitive market provides consumers with the best products at the best prices, driving improved living standards, technological development, and economic growth.

This has been roughly true in some times and some places—more on this later. But if you look at the present economy of the U.S. or any major nation, things seem very different now. Major companies simply do not collapse. If bankruptcy threatens, then the government will bail them out at any cost. If there’s a big disaster, then an individual executive might be fired, or not—more likely not. But either way, the company itself will persist. No matter how inefficient a company like General Motors or Boeing might become, no matter how much better and cheaper its competitors make their products, the state will not allow a major incumbent to die.

This is done to avoid the economic and political pain of companies failing. If the collapse of a major company were permitted, hundreds of thousands of people would lose their jobs. In the wake of the 2008 crash, General Motors went bankrupt. If it had collapsed and ceased operations, its 88,000 employees in the U.S. would have lost their jobs, along with probably a similar number of employees at companies directly supplying GM. This, in turn, would have caused devastating ripple effects as former GM employees stopped patronizing restaurants, buying homes, upgrading cell phones, and generally cut back spending.

Of course, these ripple effects are exactly what an economic depression consists of, and GM’s bankruptcy was itself triggered by ripple effects from the collapse of mortgage-backed securities. Rather than let the dominoes keep falling, the U.S. Treasury lent $50 billion to carry GM through bankruptcy and restructuring and preserved about three-quarters of the company’s U.S.-based jobs. Without this and similar bailouts, the 2008 depression would have been far worse than it was, at least in the short run.

In the long run, however, this retards U.S. industry below its potential by preventing badly-needed industrial restructuring. With the support of the explicit government loans and the implicit guarantee of an infinite federal backstop, GM has returned to profitable operations, but they are not actually very good at advancing American industry. Their best-selling cars are all variations of designs that are decades old at least, like the Chevrolet Silverado pickup truck, GM’s most popular product by volume, the first generation of which was sold in 1999.

The major advances in automaking technology—electric vehicles, self-driving vehicles, and, to a lesser extent, manufacturing process improvements like casting the chassis out of two large pieces rather than dozens of small pieces—are being driven by younger upstart companies without state backing. GM’s own entry into these advanced arenas has been lackluster at best. In 2024, electric vehicles accounted for only 4.2% of GM’s sales. Its foray into self-driving cars got underway with the 2016 acquisition of Cruise, an external startup company building self-driving taxis. Cruise began operating autonomous taxis in San Francisco, but their license to operate was revoked in 2023 after a Cruise vehicle struck a pedestrian, and the company attempted to withhold data on the accident from California officials. Cruise never recovered, and in 2024 GM shuttered the project.

An area related to this, but distinct, is the support of basic research, which can serve as a seed for industry. The U.S. excels at this, and while there is always room for improvement, we should mostly keep doing what we’re doing. Most famously, the Defense Advanced Research Projects Agency (DARPA) and the National Science Foundation housed and supported the projects which eventually became the internet. Or to return to the self-driving car example, the technology got started with DARPA challenges from 2004-2007, which incubated the teams of engineers that would go on to develop the first self-driving cars by offering cash prizes of up to a couple million dollars. That’s incredible bang for the buck, but not very many bucks. Most of the cost of research and development of self-driving cars has been borne by Google, which has probably spent billions on Waymo so far. The tasks of foundational R&D and of economy-scale economic policy are separate. The U.S. government is far better at supporting the former than the latter.

Prosperity Comes From Technology, Not From Full Employment

Much of the justification for our current policy of bailing out companies like GM was laid by the Keynesian economists, who take their name from the school’s founder, John Maynard Keynes. His magnum opus, The General Theory of Employment, Interest and Money, gives an algebraic model which argues that if technology and “technique” are held constant, then business cycles lead to depressions where employment and economic output are low, leading to unemployment and poverty with no purpose. This forms the main intellectual justification for the now-ubiquitous practice of massive “stimulus” spending in the face of economic depressions, where the government spends trillions of dollars on anything and everything in order to preserve employment and mitigate the slump, although the main political justification is simply that it wins votes from the money’s recipients.

Of course, technological improvement is by far the most important economic force in the world today, and any theory which assumes it away in order to simplify the algebra will be useless as a guide to steering a modern economy. Keynes repeatedly specifies that his theory is not concerned with technological development and focuses only on maintaining full employment assuming a static technology level. His theory’s recommendations do indeed help towards that goal.

However, the reason we are prosperous today is not because our forefathers maintained full employment. We are prosperous today because our forefathers developed and deployed better and better technology—cars, antibiotics, forge presses, container ships, cryogenic storage to transport liquefied natural gas, and thousands more. A society with full employment and the technology that existed in Keynes’s lifetime is vastly poorer than a society with high unemployment and today’s technology. Very few people would prefer being gainfully employed in the boom years of the late 19th century Gilded Age over struggling to find work in a sluggish 2020s economy—say, in Canada or Portugal.

In large part, this is because of the greatly expanded social spending and transfer payments, made possible by the gigantic increase in goods produced, which make it so that an unemployed American today consumes far more goods than a hardworking laborer or landowning farmer from the Gilded Age while living in bigger, better housing. Of course, the reason that Gilded Age society did not provide this is not because they were too unenlightened but because they were too poor. Most estimates place the U.S. per capita GDP in the year 1900 at around $10,000 in 2024 dollars....

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Sergey Brin Says Google Could Achieve Artificial General Intelligence If Employees Returned To Office, Worked Harder, Longer, Smarter (GOOG; AGI)

From the New York Times, February 27: 

Google’s Sergey Brin Urges Workers to the Office ‘at Least’ Every Weekday
The tech giant’s co-founder said that if employees worked harder and were in the office more, the company could reach an artificial general intelligence breakthrough.

Since the 2022 launch of ChatGPT set off an artificial intelligence frenzy in Silicon Valley, Google has tried to reassert its role as an A.I. pioneer.

On Wednesday, Sergey Brin, co-founder of Google, said the company could lead the industry in artificial general intelligence — when machines match or become smarter than humans — if employees worked harder.

“I recommend being in the office at least every weekday,” he wrote in a memo posted internally on Wednesday evening that was viewed by The New York Times. He added that “60 hours a week is the sweet spot of productivity” in the message to employees who work on Gemini, Google’s lineup of A.I. models and apps.

Mr. Brin’s memo does not represent a change to Google’s official return-to-office policy, which requires employees to work in the office at least three days a week. A Google spokeswoman declined to comment.

Still, the note highlighted Mr. Brin’s belief that A.G.I. — a long-sought goal in computing — could be within reach. And it shed more light on how he believes Google could achieve that technological leap.

“Competition has accelerated immensely and the final race to A.G.I. is afoot,” he wrote. “I think we have all the ingredients to win this race, but we are going to have to turbocharge our efforts.”

He highlighted the need for Google’s employees to use more of its A.I. for coding, saying the A.I.’s improving itself would lead to A.G.I. He also called on employees working on Gemini to be “the most efficient coders and A.I. scientists in the world by using our own A.I.”

More companies have ordered employees back to the office full time to improve productivity. In September, Amazon said its corporate employees must return to the office five days a week starting in 2025. AT&T, JPMorgan Chase and Goldman Sachs have also reversed hybrid-work policies.

Mr. Brin returned to Google after ChatGPT’s launch, The Times has reported, to help the company navigate the difficult moment when it lost its advantage in A.I. (Google had developed numerous technologies that make chatbots like ChatGPT adept at writing things like poetry, code and travel plans.) Ever since, he has spent a lot of time with the company’s A.I. specialists in its Google DeepMind division tasked with developing A.I., sometimes personally filing code requests....

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"Will Democracy Survive Big Data and Artificial Intelligence?"

That was a question being asked eight years ago. Still a good question.

From Scientific American, February 25, 2017:

We are in the middle of a technological upheaval that will transform the way society is organized. We must make the right decisions now

Editor’s Note: This article first appeared in Spektrum der Wissenschaft, Scientific American’s sister publication, as “Digitale Demokratie statt Datendiktatur.”

“Enlightenment is man’s emergence from his self-imposed immaturity. Immaturity is the inability to use one’s understanding without guidance from another.”

—Immanuel Kant, “What is Enlightenment?” (1784)

The digital revolution is in full swing. How will it change our world? The amount of data we produce doubles every year. In other words: in 2016 we produced as much data as in the entire history of humankind through 2015. Every minute we produce hundreds of thousands of Google searches and Facebook posts. These contain information that reveals how we think and feel. Soon, the things around us, possibly even our clothing, also will be connected with the Internet. It is estimated that in 10 years’ time there will be 150 billion networked measuring sensors, 20 times more than people on Earth. Then, the amount of data will double every 12 hours. Many companies are already trying to turn this Big Data into Big Money.

Everything will become intelligent; soon we will not only have smart phones, but also smart homes, smart factories and smart cities. Should we also expect these developments to result in smart nations and a smarter planet?

The field of artificial intelligence is, indeed, making breathtaking advances. In particular, it is contributing to the automation of data analysis. Artificial intelligence is no longer programmed line by line, but is now capable of learning, thereby continuously developing itself. Recently, Google's DeepMind algorithm taught itself how to win 49 Atari games. Algorithms can now recognize handwritten language and patterns almost as well as humans and even complete some tasks better than them. They are able to describe the contents of photos and videos. Today 70% of all financial transactions are performed by algorithms. News content is, in part, automatically generated. This all has radical economic consequences: in the coming 10 to 20 years around half of today's jobs will be threatened by algorithms. 40% of today's top 500 companies will have vanished in a decade.

It can be expected that supercomputers will soon surpass human capabilities in almost all areas—somewhere between 2020 and 2060. Experts are starting to ring alarm bells. Technology visionaries, such as Elon Musk from Tesla Motors, Bill Gates from Microsoft and Apple co-founder Steve Wozniak, are warning that super-intelligence is a serious danger for humanity, possibly even more dangerous than nuclear weapons.

Is This Alarmism?

One thing is clear: the way in which we organize the economy and society will change fundamentally. We are experiencing the largest transformation since the end of the Second World War; after the automation of production and the creation of self-driving cars the automation of society is next. With this, society is at a crossroads, which promises great opportunities, but also considerable risks. If we take the wrong decisions it could threaten our greatest historical achievements.

In the 1940s, the American mathematician Norbert Wiener (1894–1964) invented cybernetics. According to him, the behavior of systems could be controlled by the means of suitable feedbacks. Very soon, some researchers imagined controlling the economy and society according to this basic principle, but the necessary technology was not available at that time.

Today, Singapore is seen as a perfect example of a data-controlled society. What started as a program to protect its citizens from terrorism has ended up influencing economic and immigration policy, the property market and school curricula. China is taking a similar route. Recently, Baidu, the Chinese equivalent of Google, invited the military to take part in the China Brain Project. It involves running so-called deep learning algorithms over the search engine data collected about its users. Beyond this, a kind of social control is also planned. According to recent reports, every Chinese citizen will receive a so-called ”Citizen Score”, which will determine under what conditions they may get loans, jobs, or travel visa to other countries. This kind of individual monitoring would include people’s Internet surfing and the behavior of their social contacts (see ”Spotlight on China”).....

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Possibly also of interest:

"What If Stalin Had Computers?" 

"A new front: Iran is turning Algeria into an IRGC outpost and the West should be afraid - opinion"

Iran, Turkey and Russia all seem interested in establishing a presence in North Africa/the Maghreb while China has created an opportunity to acquire some real estate in Morocco, affording handy access to the Strait of Gibralter.

From the Jerusalem Post, February 23:

The IRGC, long the spearhead of Tehran’s expansionist ambitions and a state-within-a-state that thrives on destabilization, now finds in Algeria a new theater for its operations. 

Algeria’s deepening entanglement with Iran’s Islamic Revolutionary Guard Corps (IRGC) ought to send tremors through Western capitals, yet the response thus far has been one of strategic myopia.

The IRGC, long the spearhead of Tehran’s expansionist ambitions and a state-within-a-state that thrives on destabilization, now finds in Algeria a new theater for its operations.

This is not merely a matter of bilateral cooperation between Algiers and Tehran; it is the harbinger of a wider struggle that risks engulfing North Africa, destabilizing Europe’s doorstep, and shifting the geopolitical equilibrium of the Mediterranean in ways profoundly inimical to the interests of democracies.

For decades, Algeria has wrapped itself in the mantle of nonalignment, presenting itself as an unyielding champion of sovereignty and independence, a regional power beholden to none. But beneath this carefully maintained facade, its growing collusion with the IRGC is emblematic of a new and dangerous departure.

Intelligence reports, diplomatic briefings, and well-sourced analyses now converge on a singular reality: Algeria is poised to become Iran’s forward operating base in North Africa. Through it, Tehran seeks not only to exert ideological influence but to operationalize its wider vision of strategic dominance – one that threatens the security of Europe and beyond.

THE FIRST theater of this creeping entrenchment is, undoubtedly, the Sahel. A region already teetering on the edge due to jihadist insurgencies, criminal syndicates, and feeble state control, the Sahel provides fertile ground for Iranian proxies to embed themselves.

Algeria, long accused of tacitly supporting destabilizing actors when it suits its interests, now stands accused of allowing IRGC-linked networks to carve out a presence, training militants, channeling arms, and exporting Tehran’s doctrine of militant revolution.

How Iran is impacting the Polisario Front operations in Western Sahara
More worrying still, the IRGC’s fingerprints are increasingly visible in the Polisario Front’s operations in Western Sahara, an alarming echo of Iran’s well-worn strategy of leveraging non-state actors to expand its reach – whether Hezbollah in Lebanon or the Houthis in Yemen....

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The Russians want a Mediterranean naval base to replace the one they lost/will lose in Syria; I'm not sure what Turkey wants beyond Sultan Erdoğan's generalized dream of bringing back the Caliphate.

And the Chinese? They like the water. From the outro of September 2024's Meanwhile, In The Arctic: "Svalbard-research becomes more important for China, professor says": 

We've mentioned China's proclivity for establishing bases on international maritime chokepoints: the billion dollar bridge over the Panama Canal, the giant battery factories in Morocco - the eastern approaches to the Strait of Gibralter.

Also February 2024's "Red Sea Rivalries": 

The most amazing thing that has been pointed out over the last couple months is that China's base on Djibouti's Gulf of Aden coast, at the approaches to the Bab al-Mandab chokepoint into the Red Sea, gives them the perfect location to monitor Houthi action and American reaction:

—China Officially Sets Up Its First Overseas Base in Djibouti, The Diplomat

Also the Suez Canal itself: ""China & Egypt Strengthen Belt And Road Collaborations Including The Suez Canal International Logistics Zone"
I'm beginning to see a pattern here.*

And April 2024 Why the U.S. and China Suddenly Care About a Port in Southern Chile": 

 

And all of a sudden (after years of development) China is hanging out at the entrance to some very strategic sea lanes. In fact, the only major chokepoint not seeing a Chinese development that comes to mind is the Strait of Malacca between Singapore/Malay Peninsula and Indonesia's Sumatra.

The Bering Strait between the Russian far east and Alaska and South Africa are on a gentle simmer and back to Svalbard, one look at the map shows the attraction. Also from the Barents Observer, this time in 2021:

Geopolitics: "Moscow aims to enhance presence in Svalbard as part of hybrid-strategy, expert warns"

....Military speaking, Svalbard is of great strategical importance, located between the Barents-, Greenland-, and Norwegian Seas. The one controlling Svalbard is also likely to control the important gateway from the shallow Barents Sea to the deeper North Atlantic.

For Russia’s Northern Fleet, the so-called Bear Island Gap between mainland Norway and the archipelago’s southernmost island is key to conducting sea denial operations in and over the maritime areas further south, potentially threatening NATO’s transatlantic sea lines of communication.

Finally, back to the Persians, Iran seems to be cheering-on the not-quite-dormant anti-French sentiment among the Algerians once again. 

From LeMonde February 23: 

"After Islamist knife attack in Mulhouse, French interior minister blames Algiers"

And from Turkey's Anadolu Agency, February 26:

‘Long series of threats and harassment’: Algeria condemns fresh French sanctions

"Asian gold investors cash in on record prices, selling holdings amid global uncertainty"

To the surprise of absolutely no one, this reminds me of something.*

From the South China Morning Post, February 27:

Geopolitical tensions and Donald Trump’s tariff threats have fuelled a gold price surge, leading many Asian investors to sell off 

Asian investors have paused from purchasing gold and begun pawning family heirlooms and stashed away holdings to cash in on record-high prices, industry executives say, triggered by US President Donald Trump’s new trade tariffs and swirling geopolitical tensions.

Gold has long been viewed as a safe haven whose value tends to rise in times of uncertainty. Expectations that the US Federal Reserve will slow its cycle of interest rate increases have added extra shine to the metal, which has historically moved inversely to the dollar.

“We are definitely seeing some opportunistic sellers taking profits off the table and the structured investors like family offices are sitting on the fence and waiting for more clarity where the prices are going to go,” said Padraig Seif, founding partner of Hong Kong-based Precious Metals Asia.

Spot gold prices rose to a record high of US$2,936 an ounce on February 20 and on Thursday were hovering close to that level at US$2,895 an ounce. The metal’s price had risen by about 5 per cent since Trump assumed office in late January, creating uncertainty about whether the rally had peaked, analysts said....

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*January 28, 2008:
Gold loses its shine as high price hits Indian demand

This is a major low-I.Q. indicator.
Last year we had a post, EU Emission Caps, Kyoto and Three Ancient Civilizations, with this quote:

...There is no perfect answer but Kyoto wasn't even close.

The Europeans thought they were gaming the "Cap" by backdating the start date.
The Americans thought they were gaming the treaty by insisting on "Trade".

The Indians and Chinese said "Sure, send us the money".

The Westerners thought they would out-negotiate people who've been negotiating for 5000 years.

As a side note, in December 1979, as silver was making its historic run, an old Jewish trader told me he was lightening up on Ag.

When I asked why he said "I hear the Indian ladies are taking their bracelets off and they've been trading it longer than I have".....

Foodtech: "Could injection molding with metamaterials solve the scalability challenge for whole cuts of alt meat?"

Roast with a mirepoix, season to taste and your guests will be amazed!

From AgFunder News, January 21:

While most meat alternatives are processed products such as burgers, sausages, and grounds, multiple startups have sprung up in recent years attempting to produce whole cuts from plants and fungi. But none of them have really nailed it, claims Prof. Yaakov Nahmias.

Nahmias, who is best-known in the foodtech world as founder of cultivated meat startup Believer Meats (he remains on the board but stepped down as president two years ago), is founder of Tissue Dynamics, a startup that has developed a robotic automation platform enabling the formation and tracking of thousands of human organoids in parallel.

But he has also been working on a project at the Hebrew University of Jerusalem with his PhD student Mohammad Ghosheh to create plant-based chops and steaks that he claims both precisely replicate the texture of whole cuts of meat, but just as importantly, are suitable for mass production.

The tech combines two technologies: metamaterials—familiar materials with unique properties due to the way they are structured; and injection molding, a technique we associate with plastics that Nahmias claims could enable mass production of plant-based steaks at a fraction of the cost of 3D printing....

....MUCH MORE

That story was brought to mind by this, from CNBC, February 25:

Singapore alternative meat startups target resurgence after sector setbacks 

• Singapore, which imports most of its produce due to land scarcity, went big on the meat alternatives sector with generous funding for research and commercialization as it looked to boost food security.
• Recent progress cannot mask the troubles that weigh on the alternative proteins industry, however, as sales have lagged expectations.
• Alternative protein firms seeking market breakthroughs have been diversifying their offerings to include pharmaceuticals, dyes and pet food that can be made with the same ingredients.

After a spike in popularity during the pandemic era, hype — and funding — for startups developing meat alternatives has waned. But some Singaporean food-tech ventures are hoping innovations in cell culturing and microbial fermentation could be about to turn things around.

Factory-made proteins using animal, fungi or plant extracts trended during the Covid-19 years as a new way to eat sustainably. Meat and dairy currently account for around one-seventh of global greenhouse gas output, the United Nations estimates.

Singapore, which imports most of its produce due to land scarcity, went big on the sector with generous funding for research and commercialization as it looked to boost food security.

“There are very few places in the world … with such a fusion of cultures, for real market testing with a range of consumers of different backgrounds,” said Mihir Pershad, chief executive of Umami Bioworks, a local startup for cultivated seafood. Unlike plant-based proteins, cultivated products are lab-grown from animal cells.

The firm, founded in 2020, has expanded its operations, launching offshoots in the U.S. and Japan. It entered the United Kingdom last year and announced a new caviar product using sturgeon cells and plant ingredients in January.

Singapore consumers are still likely to be the first to taste an Umami Bioworks dish, however, as the firm seeks regulatory approval in Singapore. Umami Bioworks is looking to sell cultivated unagi – freshwater eel commonly grilled – this year, pending such regulatory checks and “if all goes well,” Pershad said.

Singapore was the first country to permit the sale of lab-grown meat products in 2020, with Israel and the United States following later. The United Kingdom has approved such products for use in pet food....

....MUCH MORE

We happened to catch the December 2020 news in S'pore:

"Singapore is the first country to approve the sale of lab-grown meat"
We don't much care for Just Mayo or its parent, Hampton Creek, before or after the name-change and before or after the pivot from vegan to meat. Just, a bit too skimmy, scammy, flim-flammy....

 Next up: "Next Up, Kosher Pork (but is it halal?"

And many, many more.

Nvidia Plummets 8.5% On Ennui, Boredom (NVDA)

I'm starting to think Mr. Huang is going to have to enter the big March conference by levitating, just to get the market's attention.

The stock ended the regular session down $11.13 (-8.48%) at $120.15.

TheStreet (and the Street) is laying the selling pressure off to margin compression as the new chips roll out in size but the market action looks more like something between satiation and anhedonia.

From TheStreet, February 27:

Surprising news hits Nvidia stock price 

Here’s what could be next for Nvidia stock.

Nvidia is trading lower Thursday even after reporting stronger-than-expected quarterly earnings.

The Santa Clara, Calif., AI-chip giant (NVDA) posted fiscal-Q4 revenue of $39.3 billion, a 78% surge from the year-earlier period. But growth slowed from the 265% the company posted a year earlier.

Fourth-quarter revenue from its key data-center segment, which provides chips and processors that power AI computing for megacap clients like Microsoft (MSFT) and Amazon (AMZN) , was a record $35.6 billion, up 93% from a year earlier. But again, the growth was slower than the 409% surge seen a year earlier.

Nvidia expects current-quarter revenue around $43 billion, a year-to-year increase of about 65%.

"The demand for Blackwell is extraordinary. AI is evolving beyond perception and generative AI into reasoning," Nvidia CEO Jensen Huang said.

But keeping up with that demand is starting to pressure the company's profit margins.

Gross-profit margin is Nvidia's problem
Nvidia reported a non-GAAP 73.5% gross margin for the quarter, 3.2 points narrowed from a year earlier. The company attributed the narrower figure to newer data-center products that were more complicated and costly.

"Initially, we are focused on expediting the manufacturing of Blackwell systems to meet strong customer demand as they race to build out Blackwell infrastructure," Nvidia's chief financial officer, Colette Kress, said during the earnings call. 

"When fully ramped, we have many opportunities to improve the cost, and gross margin will improve and return to the mid-70s late this fiscal year."

UBS analyst Timothy Arcuri commented that "the biggest nit might be gross margin, which was guided a little below expectations."

"However, we think this is entirely due to a big shift in mix in the April quarter, where Blackwell should be >60% of revenue and the company recommitted to being back in the mid-70s by year-end," the analyst added. He reiterated a buy rating and $185 price target on Nvidia stock....

....MUCH MORE

On the other hand Observer jumps ahead to what will most likely be a theme for the next twelve - fifteen months and/or until Blackwell's replacement is rolling off TSMC's assembly lines. February 27:

Nvidia CEO Jensen Huang Predicts the Next Big Thing After ‘Agentic A.I’ 

"Now is the beginning of the agentic A.I. era...then there's physical A.I. after that."

A.I. agents may be all the rage right now, but Nvidia (NVDA) CEO Jensen Huang is already looking beyond the hype. A.I.’s next phase will be “physical A.I.,” he said during Nvidia’s fourth-quarter earnings call yesterday (Feb. 26). Physical A.I. is a form of A.I. systems that can interact directly with the real world and encompasses products like autonomous vehicles and robots.

“Now is the beginning of the agentic A.I. era, and you hear a lot of people talking about it. Then, there’s physical A.I. after that,” Huang told analysts. He went on to explain, “They can’t just understand the meaning of words and languages, but they have to understand the meaning of the world, friction and inertia, object permanence and cause and effect.”

To this effect, Nvidia in January unveiled a platform of “world models,” which attempt to simulate real-world environments. Known as Cosmos, the new platform promises to advance the training of physical A.I. systems by providing highly realistic virtual worlds. Self-driving cars, for example, could be tested across various simulated weather conditions, while robotics companies could examine the safety of their products in different scenarios.

Cosmos has already been adopted by robotics companies like 1X and Neura Robotics and autonomous vehicle makers like Waabi and Wayve. The platform is also working with Uber (UBER) as it explores robotaxi products, Nvidia’s chief financial officer Colette Kress said yesterday. “Just as language foundation models have revolutionized language A.I., Cosmos is a physical A.I. to revolutionize robotics,” she added....

....MUCH MORE

We will once again refer our readers to the transcript of yesterday's conference call for a deeper dive into these and many other topics:

Nvidia Q4 2025 Earnings Call Transcript (NVDA)

In addition the round-up that Yahoo Finance did this morning is instructive: 

"Nvidia posts earnings beat, but future margins are a 'little concerning': What Wall Street is saying" (NVDA)

Possibly related:

The Week Ahead--"How to Gird Up Your Loins: An Illustrated Guide"
Although we don't plan a Dress & Grooming column, this may come in handy should the markets descend into madness....

Climateer, Privateer, Buccaneer: "Report to Congress on Letters of Marque and Reprisal"

 From the US Naval Institute, February 27:

The following are Congressional Research Service Legal Sidebar reports, Letters of Marque and Reprisal: Introduction and Historical Context and Drafting History and U.S. Practice.

From the report

Letters of marque and reprisal were once common tools for countries with small naval forces to augment their militaries by drawing upon the strength of their private merchant vessels. As a young country, the United States used the instruments with success in several early conflicts, including the Revolutionary War and the War of 1812. Over the course of the 19th century, however, commissioning private parties to use armed force fell out of favor in domestic and international practice, and Congress has not authorized a President to issue the instruments since the Civil War. (See CRS Legal Sidebar LSB11273, Letters of Marque and Reprisal (Part 2): Drafting History and U.S. Practice.)

During the era when the United States used letters of marque and reprisal, Congress historically authorized the President to issue the instruments, subject to statutorily defined requirements and conditions, rather than issue instruments directly from the legislative branch. Individual states, by contrast, are prohibited from issuing the instruments under Article I, Section 10 of the Constitution.

The Framers of the Constitution placed the Marque and Reprisal Clause between provisions that authorize Congress to declare war and to “make Rules concerning Captures on Land and Water.” These three authorities are interrelated and can function together. For instance, in conjunction with declaring war, Congress might authorize letters of marque and reprisal allowing private ship-owners to assist the war effort by targeting enemy vessels, as it did in the War of 1812. Holders of those letters could then capture enemy vessels and bring them into port to be condemned and sold as prizes of war. Using its authority to:

“make Rules concerning Captures[,]” Congress could define the legal framework governing how the condemnation proceedings would operate and how the proceeds of the sale would be distributed.

The Supreme Court has mentioned the Marque and Reprisal Clause most frequently when listing Congress’s war powers and authorities over foreign affairs. The Court has described the power to issue letters of marque and reprisal as an inherent feature of sovereignty that is national in nature. The Court has further observed that the Constitution expressly grants Congress the power to issue the instruments and that “no restrictions are imposed” upon that authority. Finally, in an opinion for the Court in Barron v. City of Baltimore, Chief Justice John Marshall observed that the Constitution grants power over the instruments to the federal government while denying states the ability to issue them because, “[t]o grant letters of marque and reprisal, would lead directly to war; the power of declaring which is expressly given to congress.”....

....The Decline of Privateering and Proposals for its Revival

By the latter half of the 19th century, the practice of privateering faded. Commissioning of private parties to use military force increasingly fell out of favor in international practice, and nearly all major European powers renounced the practice. In an 1856 international peace conference, a group of prominent maritime nations issued a declaration, known as the Declaration of Paris, providing that “privateering is and remains abolished.” Critics of privateering cited its negative impact on global trade and humanitarian concerns with privateers’ methods. As one 19th century American commentator on admiralty law stated, privateering was “liable to gross abuses” and “encourage[d] a spirit of lawless depredation” and plundering. Some U.S. officials also expressed these critiques, but President Franklin Pierce declined to sign the Declaration of Paris due to fears that abolishing privateering would provide a military advantage to European powers that had stronger navies and did not need to rely on private vessels to achieve maritime military goals. 

Although the United States did not renounce its legal right to engage in the practice, privateering largely faded as a strategic option in the late 19th century as a result of technological and policy developments,including a U.S. program to build a significantly larger and more advanced naval force. Developments in international practice and law also cast doubt on whether privateering remains compatible with international law. At the beginning of the 20th century, Congress removed the financial incentive for privateering by abolishing prize money in U.S. domestic law. Observers and Members of Congress haves sometimes called for revitalization of the practice by issuing letters of marque and reprisal designed to address contemporary problems, such as responding to international acts of aggression, apprehending terrorists overseas, combatting modern piracy, and responding to cyberattacks, but no legislation authorizing the instruments has been passed since the 1860s....

....MUCH MORE

 Related, April 2020 - The U.S. Naval Institute Hus Ungated All Issues Of "Proceedings"

Also Naval History Magazine.
Here's an article from Proceedings Vol. 146/2/1,406, April 2020:

U.S. Privateering Is Legal

Issuing letters of marque presents international legal risks—some real, others imagined—but these are manageable. Further, since a conflict with China might, to paraphrase Dean Acheson, threaten the power, position, and even the existence of the United States, the demands of the conflict would limit the salience of law.¹ 

...MUCH MORE

(See also: Unleash the Privateers!)

It's a fine line between being a privateer and a pirate, it pretty much depends on who catches you.

"There! That's what I think of ye. Before an hour's out, I'll stove in your old block house like a rum puncheon. Laugh, by thunder, laugh! Before an hour's out, ye'll laugh upon the other side. Them that die'll be the lucky ones..."

October 2020 - "Port Royal – The Sodom of the New World"

March 2022 - Yo Ho Ho, A Privateer's Life For Me: "Letters of Marque and Reprisal"

April 2022 -  Even Privateers Need Insurance

Tesla's Stock Is Nearing A Bottom (TSLA)

Whether or not it holds will depend on the broader market but for now the next stop for the elevator is within sight.

A partial repost (the outro) from February 11's Follow-Up: "China's BYD links up with DeepSeek in an AI threat to Tesla":

*****

....Tesla was down $22.23 (-6.34%) during the regular session and is down another $1.30 (-0.40%) in late after-hours trade. $327.20.

As to a potential bottom? Long time readers know where the gaps are:

FinViz

The stock is at $287.54 down $3.26 (-1.12%) after getting as low as $280.91 fifteen minutes ago.

The November 5 - 6 gap extends from $251.44 to the election day open at $284.67.

"Adam Smith argued that human beings naturally desire to dominate others and that they enjoy it."

From the Cambridge University Press' The Review of Politics, February 21:

Domination vs. Persuasion: The Role of Libido Dominandi in Adam Smith’s Thought

Abstract
Adam Smith argued that human beings naturally desire to dominate others and that they enjoy it. He showed how ancient masters, landlords, and economic actors in some eighteenth-century English and colonial markets were driven by their love of domination against their own economic interests. Recent scholarship argues that to fully understand the role libido dominandi plays in Smith’s thought, love of domination should be associated with the broader concept of vanity and esteem-seeking. This article challenges that interpretation, showing that, for Smith, the love of domination has nothing to do with the love of praise but that most of the pleasure people derive from it is to see their ends promoted by others without the need to persuade them about the utility of those ends. This understanding locates the love of domination outside commercial society where, under certain socio-economic circumstances, mutual persuasion among individuals is the rule....

....MUCH MORE

"Nvidia posts earnings beat, but future margins are a 'little concerning': What Wall Street is saying" (NVDA)

From Yahoo Finance, February 27: 

Only in the world of AI darling Nvidia (NVDA) are hypersonic growth rates not seemingly enough for the beloved stock's bulls.

Shares of the $3.2 trillion market cap chipmaker had reversed losses and were up nearly 3% in premarket trading on Thursday as investors digested a host of Nvidia earnings headlines.

In its earnings release on Wednesday evening, Nvidia said it expects gross profit margins of 70.6% to 71% in the first quarter as it contends with the production ramp-up of its new Blackwell chip.

The margin outlook of 71% is "a little concerning," Benchmark Company managing director and senior research analyst Cody Acree said on Yahoo Finance's Market Domination. "I think that's indicative of more pricing pressure, more competition from AMD (AMD), and more price sensitivity at their customers as they're investing their own dollars to create their own ASICs [application specific integrated circuits]."

Shares of chip rivals AMD (AMD), Broadcom (AVGO), and Qualcomm (QCOM) rose slightly in premarket trading.

Listen: why Nvidia may be unstoppable

Nvidia execs sought to push back on the bears on its earnings call. The bears have put forth a narrative that there will be a digestion period for AI investments by hyperscalers such as Amazon (AMZN) and Nvidia's margins may have peaked.

"We're going to have to continue to scale as demand is quite high, and customers are anxious and impatient to get their Blackwell systems," Nvidia founder and CEO Jensen Huang said. Huang teased several new powerful chips set to be unveiled at the company's March 17 GTC conference.

Added CFO Colette Kress: "Once our Blackwell fully rounds, we can improve our cost and our gross margin. So, we expect to probably be in the mid-70s later this year."

Lost in the intense focus on the outlook was another strong quarter from Nvidia.

Quarterly revenue rose 12% sequentially and 78% from the prior year. Datacenter sales more than doubled from the prior year. Earnings handily beat analyst estimates.

Here is what Wall Street is saying about Nvidia's quarter and outlook.

Citi analyst Atif Malik

• Rating: Reiterated Buy

• Price Target: $163, reiterated

"Blackwell sales of $11 billion exceeded expectations (Citi $10 billion) as ramp seems to be on track now after hiccups last year and Nvidia expects strong growth in 2025. Inference demand is accelerating post reasoning models like DeepSeek as long reasoning requires 100x more compute per task vs one shot inference. While GTC is typically a catalyst for the stock, overhang of potential new China restrictions, semis tariffs, and gross margins will likely keep the stock range bound in the near term. For long-term investors willing to look through these concerns, valuation looks attractive at 23 times calendar year EPS and stock offers an attractive entry point."

HSBC analyst Ryan Mellor

• Rating: Reiterated Buy

• Price Target: $175, reiterated

"Management did not give an explicit first quarter Blackwell revenue target but we raise our Blackwell revenue higher to $20 billion (from $10 billion)....

....MUCH MORE

As the article points out the stock reversed yesterday's after-hours decline (down $1.96) and is currently trading up $3.18 (+2.43%) at $134.46.

Previously: Nvidia Q4 2025 Earnings Call Transcript (NVDA)

Nvidia Q4 2025 Earnings Call Transcript (NVDA)

From Motley Fool Transcribing – Feb 26, 2025 at 9:30PM  

....Stewart Stecker -- Senior Director, Investor Relations

hank you. Good afternoon, everyone, and welcome to NVIDIA's conference call for the fourth quarter of fiscal 2025. With me today from NVIDIA are Jensen Huang, president and chief executive officer; and Colette Kress, executive vice president and chief financial officer. I'd like to remind you that our call is being webcast live on NVIDIA's Investor Relations website.

The webcast will be available for replay until the conference call to discuss our financial results for the first quarter of fiscal 2026. The content of today's call is NVIDIA's property. It can't be reproduced or transcribed without prior written consent. During this call, we may make forward-looking statements based on current expectations.....

*****

Colette M. Kress -- Chief Financial Officer, Executive Vice President

Thanks, Stewart. Q4 was another record quarter. Revenue of $39.3 billion was up 12% sequentially and up 78% year on year and above our outlook of $37.5 billion. For fiscal 2025 revenue was $130.5 billion, up 114% from the prior year.

Let's start with Data Center. Data center revenue for fiscal 2025 was $115.2 billion, more than doubling from the prior year. In the fourth quarter, Data Center revenue of $35.6 billion was a record, up 16% sequentially and 93% year on year as the Blackwell ramp commenced and Hopper 200 continued sequential growth. In Q4, Blackwell sales exceeded our expectations.

We delivered $11 billion of Blackwell revenue to meet strong demand. This is the fastest product ramp in our company's history, unprecedented in its speed and scale. Blackwell production is in full-year across multiple configurations, and we are increasing supply quickly expanding customer adoption. Our Q4 Data Center compute revenue jumped 18% sequentially and over 2x year on year.

Customers are racing to scale infrastructure to train the next generation of cutting-edge models and unlock the next level of AI capabilities. With Blackwell, it will be common for these clusters to start with 100,000 GPUs or more. Shipments have already started for multiple infrastructures of this size. Post-training and model customization are fueling demand for NVIDIA infrastructure and software as developers and enterprises leverage techniques such as fine-tuning reinforcement learning and distillation to tailor models for domain-specific use cases.

Hugging Face alone hosts over 90,000 derivatives freighted from the Llama foundation model. The scale of post-training and model customization is massive and can collectively demand orders of magnitude, more compute than pretraining. Our inference demand is accelerating, driven by test time scaling and new reasoning models like OpenAI's o3, DeepSeek-R1, and Grok 3. Long-thinking reasoning AI can require 100x more compute per task compared to one-shot inferences.

Blackwell was architected for reasoning AI inference. Blackwell supercharges reasoning AI models with up to 25x higher token throughput and 20x lower cost versus Hopper 100. It is revolutionary transformer engine is built for LLM and mixture of experts inference. And its NVLink Domain delivers 14x the throughput of PCIe Gen 5, ensuring the response time, throughput, and cost efficiency needed to tackle the growing complexity of infants of scale.

Companies across industries are tapping into NVIDIA's whole STAG inference platform to boost performance and slash costs. Now, tripled inference throughput and cut costs by 66%, using NVIDIA TensorRT for its screenshot feature. Perplexity sees 435 million monthly queries and reduced its inference costs 3x with NVIDIA Triton Inference Server and TensorRT-LLM. Microsoft Bing achieved a 5x speed up at major TCO savings for visual search across billions of images with NVIDIA, TensorRT, and acceleration libraries.

Blackwell has great demand for inference. Many of the early GB200 deployments are earmarked for inference, a first for a new architecture. Blackwell addresses the entire AI market from pretraining, post-training to inference across cloud, to on-premise, to enterprise. CUDA's programmable architecture accelerates every AI model and over 4,400 applications, ensuring large infrastructure investments against obsolescence in rapidly evolving markets....

*****

And jumping ahead to the analyst Q&A:

Thank you. [Operator instructions] And your first question comes from C.J. Muse with Cantor Fitzgerald. Please go ahead.

C.J. Muse -- Analyst

Yeah. Good afternoon. Thank you for taking the question. I guess for me, Jensen, as test-time compute and reinforcement learning shows such promise, we're clearly seeing an increasing blurring of the lines between training and inference.

What does this mean for the potential future of potentially inference dedicated clusters? And how do you think about the overall impact to NVIDIA and your customers? Thank you.

Jensen Huang -- President and Chief Executive Officer

Yeah, I appreciate that, C.J. There are now multiple scaling laws. There's the pre-training scaling law, and that's going to continue to scale because we have multimodality, we have data that came from reasoning that are now used to do pretraining. And then the second is post-training skilling, using reinforcement learning human feedback, reinforcement learning AI feedback, reinforcement learning, verifiable rewards.

The amount of computation you use for post-training is actually higher than pretraining. And it's kind of sensible in the sense that you could, while you're using reinforcement learning, generate an enormous amount of synthetic data or synthetically generated tokens. AI models are basically generating tokens to train AI models. And that's post-trade.

And the third part, this is the part that you mentioned is test-time compute or reasoning, long thinking, inference scaling. They're all basically the same ideas. And there, you have a chain of thought, you have search. The amount of tokens generated the amount of inference compute needed is already 100x more than the one-shot examples and the one-shot capabilities of large language models in the beginning.

And that's just the beginning. This is just the beginning. The idea that the next generation could have thousands of times and even, hopefully, extremely thoughtful and simulation-based and search-based models that could be hundreds of thousands, millions of times more compute than today is in our future. And so, the question is, how do you design such an architecture? Some of it -- some of the models are auto-regressive.

Some of the models are diffusion-based. Some of it -- some of the times you want your data center to have disaggregated inference. Sometimes, it is compacted. And so, it's hard to figure out what is the best configuration of a data center, which is the reason why NVIDIA's architecture is so popular.

We run every model. We are great at training. The vast majority of our compute today is actually inference and Blackwell takes all of that to a new level. We designed Blackwell with the idea of reasoning models in mind.

And when you look at training, it's many times more performing. But what's really amazing is for long thinking test time scaling, reasoning AI models were tens of times faster, 25x higher throughput. And so, Blackwell is going to be incredible across the board. And when you have a data center that allows you to configure and use your data center based on are you doing more pretraining now, post-training now, or scaling out your inference, our architecture is fungible and easy to use in all of those different ways.

And so, we're seeing, in fact, much, much more concentration of a unified architecture than ever before.

Operator

Your next question comes from the line of Joe Moore with JPMorgan. Please go ahead.

Joe Moore -- JPMorgan Chase and Company -- Analyst

Morgan Stanley, actually. Thank you. I wonder if you could talk about GB200 at CES, you sort of talked about the complexity of the rack-level systems and the challenges you have. And then as you said in the prepared remarks, we've seen a lot of general availability.

Where are you in terms of that ramp? Are there still bottlenecks to consider at a systems level above and beyond the chip level? And just have you maintained your enthusiasm for the NVL72 platforms?

Jensen Huang -- President and Chief Executive Officer

Well, I'm more enthusiastic today than I was at CES. And the reason for that is because we've shipped a lot more since CES. We have some 350 plants manufacturing the 1.5 million components that go into each one of the Blackwell racks, Grace Blackwell racks. Yes, it's extremely complicated.

And we successfully and incredibly ramped up Grace Blackwell, delivering some $11 billion of revenues last quarter. We're going to have to continue to scale as demand is quite high, and customers are anxious and impatient to get their Blackwell systems. You've probably seen on the web, a fair number of celebrations about Grace Blackwell systems coming online and we have them, of course. We have a fairly large installation of Grace Blackwell for our own engineering and our own design teams and software teams.

CoreWeave has now been quite public about the successful bring-up of theirs. Microsoft has, of course, OpenAI has, and you're starting to see many come online. And so, I think the answer to your question is nothing is easy about what we're doing, but we're doing great, and all of our partners are doing great....

....MUCH MUCH MORE

There is, to put it bluntly, no other company in the world that is doing what Nvidia is doing. 

That being said, the stock see-sawed after the earning release with the final after-market print being at $129.32 down $1.96 (-1.49%) from the regular session close.

"A beginner’s guide to sociopolitical collapse"

Contextualizing and expounding upon the post immediately below, Ahead Of The Spring Riot Season: "Taser Maker Axon Enterprise's Stock Soars on Strong Earnings, Outlook".

From Eli Dourado, May 6, 2024:

How (not) to end up in the ash heap of history

“A society does not ever die ‘from natural causes,’ but always dies from suicide or murder—and nearly always from the former.” — D. C. Somervell.1

À propos of nothing, I have found myself wondering recently what it would be like to live through a collapse. Would I see it coming? What would be the signs?

A number of times in human history, a society has gone from a relatively high level of sociopolitical complexity to a much lower one—rapidly, within the span of a few decades. This is what we will call collapse. Collapse manifests as a lower degree of social differentiation and economic specialization, less centralized control, less behavioral control, less investment in art and monuments, a lower flow of information within society, less sharing and trading of resources, a lower degree of social coordination and organization, and territorially smaller political units. And a lot of people probably starve, if they don’t meet more violent ends.

Collapse is a fate that befell at least the Western Zhou empire; the Harappan civilization of the Indus Valley; medieval Mesopotamia in parts of the Abbasid caliphate, including the Anarchy at Samarra; the Egyptian Old Kingdom; the Hittites; the Minoans; the Mycenaeans; the Western Roman empire; the Olmecs; the Lowland Classic Maya; Teotihuacan, Monte Albán, and Tula in the Mesoamerican highlands; Casas Grandes in northern Mexico; the Chacoans in what is today New Mexico; the Hohokam in southern Arizona; the Eastern Woodlands civilization, including the Mississippians centered on Cahokia in today’s East St. Louis; the Huari and Tiahuanaco in Peru; the Kachin of highland Myanmar, who oscillated between complex and egalitarian social forms as described by James C. Scott; and the Ik of northern Uganda, who have simplified society to such an extent that they allegedly reject familial bonds, although this has been disputed.

Granary and Great Hall, Mound F in Harappa. Photo by Muhammad Bin Naveed.

Collapse has happened often enough that it is not likely to be a series of flukes, but a general feature of human social organization. Not every society eventually suddenly collapses; it may be the case that when one does it is because some particular conditions obtain. What are those conditions? Can we come up with a general explanation? And while the subject is interesting as a pure matter of social science, we all want to know: could it happen here?

The GOAT on the topic of collapse is archeologist Joseph Tainter. His 1988 book The Collapse of Complex Societies weaves together historical and prehistorical fact, an insistence on explaining the cross-sectional variation, rigorous theorizing including an embrace of marginal analysis, and generally great social scientific judgment.2 It is a tour de force. If you want to understand why it has lived rent-free in my head for the last few months, as several friends can attest, read on.

Why complexity?
If we’re going to understand why societies sometimes spontaneously simplify, we must first have a solid theory about why they become complex in the first place. In both a historical and analytical sense, simple human societies arise first. These simple societies are highly egalitarian and non-hierarchical. Why do they move toward greater hierarchy, stratification, inequality, and complexity?

There are broadly two views on this question. One view is dominated by class conflict. The state reflects domination and exploitation based on divided interests. A ruling class coercively subjugates the population out of greed and selfishness. Marxists are not the only exponents of this view, but they are perhaps the most vehement, viewing society as sharply divided between workers who engage in social production and elites who appropriate the output. Of course, subjugation of subpopulations happens—American slavery is a gruesome example. The pure class conflict view is that subjugation explains the entirety of society, which is composed of ruling elites and subject populations.3

The Great Temple and surrounding storerooms, Hattusa, capital of the Hittite empire. 

Photo by Carole Raddato.

At the other end of the spectrum are integrationist or functionalist views, which are based on shared interests between members of society. Even an egalitarian society is going to face problems, and many of these problems are most readily addressed by creating some form of hierarchy and social division of labor. For example, limited water resources may require the creation and maintenance of an irrigation system, including the need to mobilize and direct labor. The threat of invasion may require the establishment of military defense, including a command and control system. In general, society faces some problem, which requires the creation of public goods, which requires the creation of administrators, who are rewarded for realizing the benefits of centralization. Complexity solves social problems and serves population-wide needs.

Tainter adopts a moderate position, one that leans integrationist but also includes a role for class conflict. Complexity in society does exist to solve problems and provide benefits to the populace. And yet, “compensation of elites does not always match their contribution to society, and throughout their history, elites have probably been overcompensated relative to performance more often than the reverse.” Public choice considerations mean that even if complexity arises to solve broad-based social problems, the ultimate distribution of the benefits can be influenced by greed and power. “Integration theory is better able to account for distribution of the necessities of life, conflict theory for surpluses.”4

*****

Although the distribution of the social surplus is not always fair, in what follows, the role of complexity in society as a problem-solving mechanism is what is most important. Without this foundation, collapse is no big deal, or good, or perhaps it is even the ascension of society to a Marxist anarcho-primitivist Utopia. We can sympathize with this view when true subjugation is occurring, while recognizing that, in the general case, complex society exists to solve social problems.

Collapse theory....

....MUCH MORE

You never know when the flight attendant is going to get on the speaker and ask "Does anyone onboard know anything about the Hittites?"
And should that time come, you will be ready. 

"The Hittites Lived in Interesting Times"

Related:

• "Lessons From The Last Time Civilization Collapsed"
• The Big Disruption: Iron Supplants Bronze
• This Year, Why Not Visit Sodom?
• World's Oldest Weather Report Found in Egypt: It Was Raining, People Were Crabby
• "COVID-19 and the Collapse of Complex Societies"
• "The Philosophy of Complexity: Are Complex Systems Inherently Tyrannical?" 

Yes.
In the end the universe itself is inherently tyrannical.
You are not the boss.

• "The Limits to Racketeering"
• It Wasn't 'Ecocide': What Happend On Easter Island