Trump runs amok - the US returns to type

 

I thought it would be a welcome relief to come to the wilds of Namibia to photograph wildlife and switch off from the world…but I was wrong. 

Almost as soon as we arrived after 18 hours in the air, news of the audacious kidnapping of Nicolas Maduro and his wife Cilia Flores broke, a story too big to ignore.

So while my companions are off Elephant and Hippo spotting, I’ve taken to the cozy camp bar to hammer out a few thoughts. 

First off, it’s nothing new for the Americans to stick their nose into South America affairs in an attempt to gain land, power, influence or impose their political and moralistic views on other sovereign nations. 

The latest outrage in Venezuela, which, let us not kid ourselves, is all about the US getting access to the world’s largest oil reserves of 300 billion barrels. Saudi Arabia comes in second with reserves of around 268 billion barrels.

There is some debate over the actual size of the Venezuela reserves as well as the cost of extraction, but the thick gloopy heavy crude of the Orinoco Belt is ideal to power America’s gas guzzling five litre pickups so beloved by the baseball cap wearing fraternity in the States. 

Trump denies it, but of course snatching Maduro was about regime change and nothing to do with the drugs so freely available on American streets and what Maduro is now charged with supplying. It’s about having a regime in place that he can control and milk the country’s natural resources. He is not doing this for the good of the Venezuelan people, although most will not be unhappy to see the back of the corrupt and awful Nicolas.

Historically, America’s first big punch-up was, somewhat ironically, with their British colonial masters and the American Revolutionary War of 1775. This saw them secure a decisive victory in the Siege of Yorktown in 1781 which led King George III to negotiate an end to the war. 

After that, there were various wars with the indigenous American Indians in the late 1700s, where the locals stood little chance with bows and spears against guns and shells.

The US got into its imperialist stride when, in 1846, President James Polk managed, by force of arms, to  force the so-called Mexican Cession and steal the vast territory which became the American Southwest, California, Nevada, Utah, and chunks of other states. A spectacular land-grab which kind of sowed the seed of the idea that regional domination by force of arms was entirely possible. 

The US has always been ready to go to war abroad to protect its economic interests, although this is no different to how other imperial powers behaved. Even in China around the mid-1800s they were ready to deploy troops to look after US interests to protect against civil unrest, local domestic uprisings and local squabbles between the British and the mainlanders. 

The Americans have done this regularly all over the world, interrupted by a spell between 1861 and 1865 when they were busy beating the hell out of each other during their own American Civil War between The Union and eleven Southern States. The Union won.

A small sidenote - In 1867 on June 13, a US naval force landed and burned a number of native huts as punishment for the murder of the crew of a wrecked American ship.

Broadly speaking, America's military involvement in other countries  appears to have mainly been one of protecting US economic interests, although some of these adventures were questionable as to their real motives. The weight and learning points of long-past US history is obviously highly debatable, questionable and arguable. 

There is a whole laundry list of past US military actions, so let's skip to what the world's No.1 military power has been up to since World War II, remembering that, without doubt, with no American involvement, that global conflict would have turned out very differently. 

If imperialist Japan had not launched its surprise December 7, 1941 attack on Pearl Harbour base, the US may not have entered the war. This is obviously a hypothetical question but at the time there was huge domestic resistance in the US to getting involved in 'foreign wars' following the bloodbath of the First World War which killed 120,000 American troops. 

America's vast resources, military and technological might secured ultimate victory against German fascism in Europe and Japan's imperialist aggression in the Pacific. However, it was not so successful against the Democratic People's Republic or Korea (DPRK) during the three year 1950 Korean War, or the 20 year battle against the North Vietnamese. The Vietnam War is technically dated 1955-1975, although the peak fighting was between 1965 and 1973 when the Americans finally fled from Saigon. 

These were proxy wars during the Cold War which developed after World War II and in which America took a lead role aided by various United Nations allies, with communist  Soviet Union and China on the other side. 

In Korea for all their equipment, training and sheer force of arms, the Americans ended up only holding the DPRK and Chinese troops at bay and the war ended in a stalemate with borders pretty much the same. Technically the DPRK and South Korea are still at war and are living with an uneasy ceasefire and separated by a four kilometer wide Demilitarized Zone (DMZ). (Well worth a visit if have spare time next time you are in Seoul)

The Vietnam War was similarly embarrassing for the Americans. Historians point to them not being able to deal with the guerrilla tactics of the enemy, lack of knowledge of how to fight in dense jungles and also not matching the motivation and unity of the North Vietnamese who were fighting for national unification and independence. 

Whatever the myriad background factors and arguments, the fact remains that despite the huge military strength of arms, men and equipment, the US did not do well at all, with Vietnam being a particular embarrassment. Neither was as Turkey Shoot as some had expected. 

Add to this the Bay of Pigs disaster. Cuba became communist after the 1959 Cuban Revolution  when Fidel Castro came to power. The Soviet Union suddenly had a friendly foothold right on America's doorstep. US President John F. Kennedy wanted Castro gone and a more US friendly regime, hence the disastrous invasion attempt. It was an abject foreign policy failure which killed well over 2,000 thousand soldiers in total.

In US involvement in Iraq between 2003 and 2011 is similarly seen as being a failure because of poor post-invasion planning, including disbanding the Iraqi army, underestimating the resulting insurgency by the locals and failing to understand Iraqi politics. All this led to a general breakdown in security, sectarian violence and the rise of groups like ISIS.

Finally, let's mention Afghanistan in the list of post World War Two military failures. Operation Enduring Freedom saw the United States pour in huge troop deployments and massive financial investment. It was a mess with a complex legacy of security challenges, humanitarian impacts, and political debate over its effectiveness hampering the entire operation. The Americans were in Afghanistan for 20-year until 2021 when it suddenly pulled out leaving the country in disarray and the Taliban back in charge. A hugely wasteful and ineffective foreign policy failure.

The point is, when you look back over recent history the United States, despite its massive and well-funded military machine and apparently super-smart intelligence services, has performed badly in terms of its military adventures. 

Trump may swank about the US military and try to make the world at large think it is so powerful it can do anything he wishes. The evidence of recent history would appear to show this is very much not the case. Foreign policy decisions have not exactly been America’s strong point in the past few decades. In fact, most have been downright embarrassing.   

Military analysts are saying ever more loudly that the 2-½ hour operation snatching Maduro would have been impossible without significant inside help by people inside the country who wanted to see the back of him. Trump's assertion that Maduro was caught in bed is absurd given a few 1,000 bombs had been dropped on Caracas before the snatch-squad moved in.

His threats against Greenland and taking it by force from Denmark appears not to take into account that the US Army, for all its might, has virtually no ability to wage war in Arctic conditions both in terms of equipment or training. The European armies do. Just as the terrain defeated the Americans in Vietnam, might not the conditions and terrain defeat them in the Arctic? Many military analysts are saying it would. 

Trump is a blow-hard and in my humble opinion an unwell, mentally unstable old man of limited intellect. Clearly a wannabe dictator, he is a dangerous individual. 

The world certainly should sit-up and pay attention to his bluster and threats but at the end of the day is it just that? Empty rhetoric which is certainly not backed up by recent military adventures. 

His army snatching one guy and his wife in the middle of the night with inside help and the massive resources at their disposal is one thing - waging actual war is quite another.

But Trump is threatening just that by talking about the Monroe Doctrine. President James Monroe first articulated the doctrine on December 2, 1823 in his State of the Union Address. It is a foreign policy position that opposes any interference in the Western Hemisphere and broadly flies in the face of modern international law. 

Trump adopting the Monroe Doctrine means he is claiming everything in the western hemisphere belongs to America, which would include all of South America, Canada and Greenland. Already Trump has laid claim to all of these but nothing much has happened other than him talking about it and kidnapping Maduro. 

Trump's hot air and bluster will certainly continue but he is obviously getting more concerned  about the forthcoming US mid-term elections in November. 

The mid-terms could well see the Republican Party lose control of the House of Congress which would put a spoke in Trump’s wheel in terms of the dictatorial way he is running the country. His recent comments show he is worried that recent polls will not improve and time is running out for him to behave like a King. His fellow Republicans are clearly worried too and more are speaking out against him for fear they will lose their jobs come the mid-terms.

The lead-up to November will be interesting in as much as observing Trump's antics on the world stage and how the over world leaders deal with his madness. You have to admire Canada’s Prime Minister Mark Carney who has basically just stuck two-fingers up at him while others like British Prime Minister Keir Starmer have embarrassed themselves by grovelling. Starmer invited him over for a state visit almost immediately after Trump was elected.

November could be a turning point and draw Trump’s teeth if his Republican party loses its majority in Congress. If that happens Trump would find it very much harder to push through his whims and crazy ideas. Sorry, I mean ‘policies’.     

So until November we are just going to have to wonder if we might eventually end up with four dictators, the first three of them imperialists, running the world for us all?

Russian President Vladimir Putin who is seeking to dominate Europe, China’s President Xi Jinping looking to dominate Asia and Africa, US President Donald Trump who has actually stated he wants to dominate the entire western hemisphere and Indian Prime Minister and Hindu nationalist Narendra Modi whose dictatorial style rules over the world’s biggest population.

Yikes!

Tinkerty Tonk...

The downfall of privilege and the Epstein effect

 The soap opera of the British Royal family is endlessly entertaining. The Brits love it. Tabloid newspaper front pages are seldom free of their images and TV chat shows discuss for hours the machinations of the royal household.

Likewise in the United States where President Trump tries to rule like a king. His administration fuels a daily outpouring of news which would not be made up by Hollywood screenwriters, because it is too implausible. The world laughs at Trump's goofy antics, just as the Brits are entertained by the shenanigans of the daft and dysfunctional royals.  

It is a stark reality that the shady and secretive world of a pervert the world had barely heard of five years ago, before he died in an American prison cell, is setting Jeffery Epstein up as one of the world’s most influential people of this decade. His actions and anyone associated with them are no laughing matter. The soap opera and knock-about entertainment you can pass off as  light-hearted has become much more serious.  

From beyond the grave, Epstein has already sent a wrecking ball through the British Royal Family and it is more than possible his ghost will do the same to the US Presidency. It remains to be seen whether the pedophile phantom will upend the Trump administration. It is a story you need to watch closely as it has global ramifications and could well affect your life here in Taiwan viv-a-vis China.

What links all this together is privilege and entitlement. The idea you are so privileged in terms of your position in society as to be untouchable under the law. Or that you are so rich, or have so many rich friends you can effectively ignore the law and behave in a way that ordinary mortals would suffer a fast arrest and imprisonment for.

The ability of the privileged to close ranks whether via the power of influence or money has rightly been bleeding away in the past decades largely as a result of the changing face of the media and the advent of social media. This has been evident in the west as the press barons of old are no longer free to control the narrative unless they pour money into doing so via other ventures.

It’s different in Taiwan where mainland money and ownership heavily influences the media here and the pro-China bias is glaringly obvious. Even then, dissenting voices soon step in to powerfully voice an opposing view on social media which is easily and freely available to ordinary people. Full disclosure, I’m married to one.

Let’s look at how this changing media dynamic has impacted the British Royal Family. The story is no longer frivolous nonsense about Princess Diana’s silly son Harry and his knockabout comedy routine with B-list actress Meghan Markle. Nor about King Charles decades long affair with now Queen Camilla while he was still married to Diana. That is all fairly vapid and light compared with what has just gone down with the third child and second son of Queen Elizabeth II, Andrew. 

His antics that were for so long kept quiet and covered up by those pandering to the privilege of power have been blown away. No longer can a few press barons aid the so-called ‘ruling classes’ in covering up bad behaviour as they have done so many times in the past. 

While the monarchy has been much reduced in terms of power, the vestiges of the establishment powerbase remain to this day. There are still many in the ranks of the nobility, otherwise known as the British peerage. In order of importance there are five hereditary titles: duke, marquess, earl, viscount, and baron. Titles are passed down through a family line, typically to the eldest son.

Historically, these people were powerful land owners and were in place to carry out the wishes of the monarch. The gang members and enforcers, if you like. Even the late Queen Elizabeth referred to her family as ‘The Firm’ which is a reference to the slang term for a gang of criminals or a group of hooligans. I’m sure she meant this to be seen as a joke, sadly it’s closer to the truth and is something that stains her legacy given her behaviour when alive.   

While the peerage system is pretty much symbolic today these people continue to wield influence on many levels, although their right to directly influence law making via their seats in the House of Lords was only taken away from them in 1999. They can still be disruptive however. 

So we come to the downfall of the now commoner Andrew Mountbatten-Windsor. A more spectacular fall from grace is hard to imagine and the titles lavished on this particular buffoon have now been taken away, exemplifies just how crazy this archaic system is. 

He is no longer a Prince and has been stripped of all his other titles, namely the Duke of York, the Earl of Inverness, and Baron Killyleagh. He has also lost the honors of the Order of the Garter and the Knight Grand Cross of the Victorian Order. He can no longer call himself His Royal Highness and has been stripped of his military titles.

All this because of his relationship with Epstein who helped him pander to his sexual proclivities and arrogance in treating people he considered as playthings in any way he wished. 

I met him once when he was Trade Envoy to the United Kingdom. I was South Asia Editor for Reuters at the time based in Mumbai and was invited to a reception to meet Andrew and his trade delegation when he came to the city.  I can best describe him as a preening, self-important dullard and so very like a number of his older family members. It was easy to see where he got his massive arrogance from.

I was personally embarrassed in the way he talked to the waiters and Indian officials. The many stories since about his awful behaviour towards his staff and others bear me out on this. He is a vile individual and in my opinion deserves everything that is happening to him. 

It is at least, justice at last. Particularly for Virginia Giuffre who was used by him and died by suicide aged 41 earlier this year at her home in Western Australia after what her relatives described as “being a lifelong victim of sexual abuse and sex trafficking.”

I have not lived in the UK for more than 25 years so it’s hard to judge, but it seems to me there is still a love-hate relationship for the Royal Family among Brits. There are many who love the royal family, while others despise the privilege they enjoy. In many ways it defies the left and right of UK’s politics and is counter-intuitive in as much as many working-class poorer families are fiercely pro-monarchy, while at the same time the richer elements of the UK establishment are also pro-royals.  

Go to many golf-clubs in rich areas and stockbroker belts around London and you will see a picture of the late Queen Elizabeth or now King Charles hanging in the clubhouse. At the same time, walk into many working men's clubs in the industrial north of the country and you will see the same. As a Brit, I’ve never understood quite how the Royal Family remains so popular across Britain's demographic, much less try to explain it.       

This despite the fact that details are now coming to light about the disgusting behavior of the past which the royal establishment managed to cover up at the time. Like The Kincora Boys' Home in Northern Ireland that was the scene of serious organised child sexual abuse. It caused a scandal and led to an attempted cover-up in 1980, with allegations of state collusion. 

Lord Mountbatten, the British statesman, Royal Navy officer and close relative of the British royal family is implicated in the abuse at that children’s refuge in the 1970 and there are ongoing investigations about a high level cover up by establishment about the abuse. 

There are other examples of how badly the royal family can behave such as Edward VIII, the former British monarch who abdicated his throne in 1936. Otherwise known as "The Traitor King" due to suspicions of his sympathy with Nazi Germany and potential treasonous actions during World War II. Britain has been ruled over by more than its fair share of kings, queens  and nobles who were everything from benign and good, to psychotic and tyrannical to useless and idiotic, and even traitorous.

The Epstein ghost has likely finished haunting the British Royal Family for now with Andrew thoroughly disgraced. It remains to be seen whether his spectre will find renewed energy to wreak havoc on the Trump administration, and others, a story which is currently unfolding in such dramatic fashion on the other side of the Atlantic.

The latest cringe news is former US Treasury Secretary Larry Summers has resigned from the board of OpenAI and paused all public engagements and teaching at Harvard because of his close relationship with Epstein.  He said he was “deeply ashamed” about his relationship with the convicted sex offender which makes you wonder why he has not said all this out-loud before the files proving his involvement were just released. 

If he was that ‘ashamed’ why did he not come forward earlier? Because he thought the files would not be released and the Trump administration’s suppression of them would succeed?

Trump’s giving in to the huge pressure to release the files is opening a can of ugly worms which will continue to play out in the coming days and certainly continue to be world’s top news story.

I covered Summers when I was on the global economy beat for Reuters and he was President Bill Clinton’s Treasury Secretary and I met him on a few occasions, although never interviewed him. My US colleagues did that and as a humble Brit, I never got the chance. He seemed a pleasant guy and quite ordinary, not power crazed or ranting like Trump and many of his current acolytes.

I’m filing this story on Friday so a lot can happen between me writing this and its publication so there could be huge developments in the meantime. Regardless of that, I think it is important to bear in mind that the common man, for want of a better phrase, is now more able to hold those in power to account. It beholds us all to care and watch for malpractice among those who put themselves up to rule over us. We need to be there to avoid those who chose to go-rouge.

The former Taipei Mayor is a case in point and while he is innocent until proven guilty, it remains to be seen whether privilege, or perceived privilege, played a part in the actions he is accused of. 

There is a select group of individuals who have influenced the world, most of which were from a time when the global population was counted in millions and not billions. On the religious side Buddha, Confucius, Jesus Christ and the Prophet Muhammad spring to mind. 

Various inventors like the Wright Brothers with flight, Thomas Edison with light bulbs and Ernest Rutherford's work on the nuclear front paving the way for nuclear energy also present themselves. Remembering, of course, Rutherford also gave us the knowledge of how to blow ourselves all to kingdom come. 

Genghis Khan, Mahatma Gandhi, Martin Luther King Jr. and Alexander the Great all shaped the world we live in today, as did Adolf Hitler. 

Epstein will never make this list but his name will certainly live on in the history books as the man who, even after death, had a huge impact on the order of things in countries of importance globally. (OK the UK not so much any more but the impact on the US has yet to fully unfold)  

Tinkerty Tonk

Bubbles - AI set to take a bath

Are we living in an Artificial Intelligence (AI) bubble which is about to burst? It is a question many are asking so it seems like a good time to take a step back from all the hype and reflect on lessons from the past, and the part human nature plays in all this. 

The first bubble I covered as a journalist was the 1987 stock market crash when the Dow Jones Industrial Average collapsed 22 pct in a single October day, which is still the largest ever single-day percentage drop.

There have been many bubbles including the Tulip Bubble in the 1630s, the Railway Bubble of the 1840s, the debt-fuelled Asian Crisis bubble of 1997, the Dot-com Bubble around 2000, the Cryptocurrency Bubble of 2017 and the Non-fungible Tokens (NFTs) bubble which burst in 2022. 

This is by no means an exhaustive list, but bubbles basically form as a result of two simple factors. Fear and Greed. Fear of losing out and greed in what is perceived to be an easy route to riches. Human nature takes over as rationally flies out of the window.  

There have been other market collapses such as the 2008 crisis which don’t strictly meet the criteria of a bursting bubble. Although even then you could argue that it was a bubble in terms of everyone wanting to invest in property which was, so they thought, an asset that would always go up in value. 

I was in Singapore when the Dot-com Bubble burst. I was heavily invested in tech-funds and riding the huge rally. My main fund was up 137 percent in just over a year but I took my profits at the end of 1999, much to the chagrin of my broker who said I was mad not to stay in the market. The market collapsed soon after with many analysts urging people to buy the dip. This was appalling advice as the tech-heavy NASDAQ continued to decline for the next two years. It only got back to pre-crash levels in 2014 - more than 10 years later.    

I got out because obviously unreasonable hype was circulating about what the internet could do. Claims that ignored not just reality, but human nature. There was a widespread belief that internet growth would be limitless, and that companies involved would expand exponentially.

What tipped the balance of my decision to exit came when I attended an in-house seminar and the presenter told me that I would soon be buying a refrigerator with a screen on the door connected to the internet which would automatically order butter or milk via the internet when I was running low. Apparently this smart fridge was coming to stores within a couple of years and this would help make my life perfect.   

I stuck my hand up and asked why that morning I had been sitting in a high-tech newsroom surrounded by the latest technology, my internet feed had been down for hours. This kind of ridiculous hype made no sense and I decided to take profits. Twenty-five years on, my current fridge can still only cool things down, freeze stuff and make ice.   

The internet did transform the way we live and many aspects of life, but when claims get exaggerated it is time to prepare for the bubble to burst. It is easy to see how those with a vested interest will claim almost anything to keep the investment money rolling in. This is why you can’t open a news feed without seeing Sam Alman, Mark Zuckerburg and their ilk pontificating on how AI is the absolute future for everything. (Ok Mark, we will quietly forget about the Metaverse disaster which was ‘the next big thing’.)

So we have an almost perfect bubble scenario with a new innovation which will make a material difference to the way we live, which has already created a huge flow of investment money on the back of fear of losing out and greed seeking easy large returns. All this is compounded by huge hype and unrealistic claims by those with a vested interest of what Artificial Intelligence can achieve in reality. 

Smart Money/Dumb Money

This where another financial market truth kicks in - Smart Money vs Dumb Money. Banks and large investors typify smart money, retail investors typify dumb money. Smart money has access to experts, analysts and market instruments that retail investors do not. They are pretty much fully invested by the time large fund managers get hold of the research and then their money helps keep the market rising.

Never lose sight of the fact that financial markets will only rise if money is flowing in, the rally stops when the liquidity flow stops. Rallies in any market run on liquidy, very often in all the hype, investors lose sight of that very simple fact. 

The end of a rally, such as that we are seeing now with AI, comes when the retail investors are sucked in with stories of untold riches mainly in the media and speeches by those with a vested interest in attracting more money to keep the rally going. 

Many years ago I was told by a trader “If you land in Hong Kong and your taxi driver tells you to buy a certain stock. When you get into the office, the first thing you should do is short-it.”

Which raises the issue that professional investors are able to play both sides of a market while, generally speaking, retail investors tend to only buy and hold as they don’t have access to short-selling instruments. It means retail investors are playing in the market with one hand tied behind their backs. It is an unfair fight and why money tends to flow away from retail investors into the hands of professional investors.  

Professional inventors are also able to track liquidity flows in the market and can see the end of any rally coming as the last vestiges of retail interest dries up. This when they aggressively take profits and short-sell, which explains why rallies are slowly paced and declines savage and steep.

The other issue which accelerates a market decline is margin calls, where investors who have borrowed money to buy stock turn into distressed sellers who are forced to sell stock to cover margin payments on the loans they took out. They have no option and have to sell. 

So such corrections can be extremely rapid and severe. Investors need to keep a close eye on their portfolios and not forget the Hong Kong taxi driver - if you are reading in a newspaper that xxx company is a good stock/bond to buy, you are already too late. Or, if you are invested, and the newspaper says buy, you should likely take profits.  

UBS, widely considered to be the largest and most sophisticated global investment banks, estimates that companies will spend $375 billion globally this year on A.I. infrastructure, and that is projected to rise to $500 billion next year. You have to question whether that level of investment is sustainable and also ask - where is that money going to come from? 

By their nature bubbles burst quickly. One day everything is fine, the next day it is not. The warning signs come slowly and are usually clearly observable, but fear of losing out and greed for profits clouds any rational viewpoint and the wagon keeps rolling. Until it doesn’t. 

The 1997 Asia Crisis was a classic in this regard. I was in Reuters Singapore newsroom on July 2 1997 when I received a call from the Bangkok bureau who read me a fax from the Thai Central Bank saying they had decided to devalue the baht. This came after months of speculative pressure on the fixed currency and precipitated the entire Asian Currency/debt/economic/financial crisis. On July 1 things were under pressure, but fine, by the next day all hell broke loose. These things happen quickly when the turning point comes.    

I believe the AI bubble will burst and when it does, it will be a fast and extremely rapid correction for the reasons outlined above. Retail investors beware and please keep a close eye on things. Wild claims about AI are not unlike Elon Musk’s claims of colonising Mars, at best, a long way off.  

It took years for the internet to really settle down and turn into something that was universally useful and helped companies become more productive. It was also years before the dark side of the internet revealed itself in terms of hacking, the potential harm social media can do, cyber bullying, spreading lies and conspiracy theories. 

Inflated expectations

It is possible to see a picture of this. It is called the Gartner Hype Cycle and while it has its critics, it demonstrates nicely what happened during the Dot-com bubble in the run up to it bursting in the early 2000s.

It has five stages -

New Technology - Research and development kicks things off and initial proof-of-concept stories find their way into the media and the hype starts to build. After all, everyone loves technology, right? Commercial viability is yet to be proved but everyone starts to believe - this is going to be huge.

Inflated expectations - The publicity becomes such that wild claims start to be believed, fear and greed kick in, venture capital pours in and it becomes difficult to persuade investors to put their money into anything else. The bubble forms at this point.

Disillusionment - Not all those who invested make money as the inflated expectations are not met and the technology is not as super-fantastic as it was hyped up to be. This is the “oh yes, it’s useful and will help, but we need time to implement it and we need to find more money” stage. Some early adopters fail.

Enlightenment - There is more evidence of its usefulness and productivity gains start to become real. The technology settles down, is more widely understood and next generation products come on line. Companies remain cautious.

True level of productivity - The technology becomes mainstream as early issues are resolved and viability become commercially proven and companies improve margins because of it. The slope from here depends on whether there are other or new adaptations for the technology or whether it is too niche.

 It is easy to see how you can apply this picture to the current position of AI in the global collective psyche. It tends to be confined to technology developments and certainly works for the way the internet Dot-com era panned out. 

Likewise, if you think about electric vehicles (EVs), it is turning out to be a similar picture. Early huge excitement and massive investment with governments falling over themselves to hand out huge subsidies and tax breaks and even passing laws banning the sale of petrol fuelled vehicles by a certain date. The peak of expectations was very clear. 

Then all the issues about range anxiety kicked in and the lack of infrastructure (charging points) coupled with the apparently unseen massive expense of changing batteries and the collapsing second hand value of EVs led to many early adopters being disappointed and disillusioned.

So having gone through the cycle, it would seem EVs are gradually approaching the Plateau of Productivity and things are settling down. There are still some big issues to be sorted out, but the world is getting there in terms of wider adoption of electric vehicles and governments are rowing back on dates for banning the sale of petrol vehicles. 

Elon Musk is a perfect example of a vested interest ramping up hype to ridiculous levels. “It’s financially insane to buy anything other than a Tesla,” he told a Palo Alto audience in 2019. 

“It would be like owning a horse in three years. I mean, fine if you want to own a horse. But you should go into it with that expectation.”

Like most of Musk’s shameless boasts and predictions, it has not aged well. But it perfectly demonstrates how those with vested interests are willing to say almost anything if it is to their benefit. 

For AI, it would appear clear that CEOs are believing the hype and the predictions of vast swathes of professions will disappear as a robot brian takes over their workforce's jobs. Free workers, what CEO could resist? (At this point I would be happy to argue with anyone who thinks just because someone reaches the heights of becoming a CEO, it automatically makes them a business guru. Look up the story of car hire company Hertz and the absolute shambles they made of piling into electric cars at the height of the Inflated Expectation curve.)

OpenAI CEO Sam Altman is telling us that 40 percent of jobs will be replaced by AI and predicted super intelligent AI in five years. Microsoft founder Bill Gates has confidently predicted that in ten years you won’t be able to see a doctor when you get sick as AI will have replaced him or her. He has also talked about teachers being unnecessary in this new world and AI will be doing that too. He even said humans will not be needed “for most things” in ten years time.

I'm cynical and don’t expect any of this to be a reality until I’m long dead. Sure it’s possible but is this going to happen as quickly as many predict? I doubt it very much. Like Musk’s almost constant ‘by the end of the year/next year this is possible’ predictions about several things - a lot of this is wishful thinking or just so much hot air.

Futurists

I remember well in the 1970s, so-called futurists were making a good living in predicting what the world would be like for us youngsters now at college. They were happy to go on TV and pontificate about robots doing all the manual labour and computers all the office jobs. When I was at college these people were telling me my biggest problem in life would be all the spare time I would have on my hands, as the huge productivity gains from free labour via robots and computers would mean I’d be paid for doing nothing. 

I remember thinking at the time…this is so cool, why the hell am I bothering with collage and exams? But my life has not been neverending leisure but slogs of 12 hour days and unpaid overtime for decade after decade.  

What they failed to predict was that while computers and robots have indeed made us all hugely productive with 100 car assembly workers replaced by a dozen robots with a single engineer keeping an eye on them. Salaries have stagnated in many countries while many companies have become hugely profitable on the back of increased productivity and created a world where billionaires now control governments.

Young people are already struggling to find work and salaries have stagnated to a level where buying a place to live is way out of reach for those exiting the education system. Many governments are so debt-ridden they can’t afford to help those who are not working. If Gates is right and humans will not be needed “for most things” he would appear to be predicting something close to the collapse of societies around the world.   

Yes, AI will be transformative and will affect the workplace but amid all the hype of the current bubble, the time for some more rational thinking must be close and the more crazy predictions will unwind. 

That will very likely lead to a shockwave through the financial markets. The trouble with that is it will drag the entire market down and impact everyone whether they are invested in AI or not.

Tinkerty Tonk