Group items tagged

— what exactly was the meme?

Cryptocurrency is little more than a decade old, and yet it has passed through several reputational phases: first, as the lawless province of black marketeers and hard-core libertarians obsessed with escaping government oversight; then as a speculative market in which many of those people made an astonishing and enviable amount of money; then as an investment sector for adventurous normies who might previously have turned to simple day-trading; then as an “asset class” eyed by big-money investors and establishment banks

it was very tempting to believe, and nobody was trying to look all that closely, it turns out — not the editors who put him on the covers of Forbes and Fortune; not the traders who trusted him with billions in daily trading volume; not the recipients of his philanthropic pledges, many of which will now go unfulfilled; and most conspicuously, not the investors who handed him millions without seeming to even bother checking the books.

To investors and legislators, he looked like the potential face of a new era for crypto, poised to legitimize through transparency and regulation what had always been an enormously shady, if often quite lucrative, sector.

To progressives, he looked like our kind of oligarch, a sort of boy wonder who seemed capable of conjuring up world-changing billions guiltlessly, effectively out of thin air.

And he had promised to give that magic internet money away just as quickly

It was part of his DGAF brand, like the unkempt hair and cargo shorts he wore onstage alongside Bill Clinton and Tony Blair

As recently as July 2021, FTX raised $900 million from, among others, Sequoia Capital, Daniel Loeb’s Third Point and SoftBank Vision Fund, which had previously written down billions of dollars in investments in Uber and WeWork. In January, a Series C round raised an additional $400 million.

In a now-legendary profile published on the Sequoia website just weeks before the collapse, almost every paragraph contained what should have been a red flag but was presented instead as a mark of Bankman-Fried’s special genius — and Sequoia’s, for endorsing it

The death of FTX has been called crypto’s “Lehman moment,” but it was not the first such collapse — it follows the implosions of Celsius, Three Arrows Capital, Terra and Luna, among many others. But it’s fitting that Bankman-Fried will now always be remembered as this crypto crash’s central figure, because he postured as someone who could rewrite not just the rules of the financial system but its morality as well.

Now the comparisons are less flattering: to Bernie Madoff, of course, and to Elizabeth Holmes of Theranos, even though Bankman-Fried has not been charged with any crimes; also to Adam Neumann of WeWork, Travis Kalanick of Uber and the other iconic start-up hucksters of this strange venture-capital era.

those founders were, for all their delusions and sociopathy, pitch-deck visionaries — persuasive proselytizers for not just new products but whole new worlds that could be simply invested into being.

In his self-presentation, Bankman-Fried seemed to be pitching something else: an outward indifference approaching disdain. His serious-seeming commitment to effective altruism underlined the impression: If he was earning his billions only to donate them, he represented a very different case study in the morality or moral potential of unregulated markets

he flatly described the crypto markets as pointless speculation bordering on fraud — one of the interviewers paraphrased Bankman-Fried’s summary as “I’m in the Ponzi business, and it’s pretty good” — it wasn’t a misstep

What stage of capitalism is this?

in the world of big money he was a genuinely new archetype: a smugly superior Gen X slacker and an entitled, world-changing millennial at once

it has also been the source of a lot of reflection and debate, about whether it had been at all reasonable to treat what made him distinct as a basis for lionization.

He said in the Sequoia profile, for instance, that no book was ever really worth reading, and he told the economist Tyler Cowen in a podcast interview that faced with a coin-flip game in which half the time he’d double the value of the world and half the time he’d destroy it, he’d choose to play again and again

he revealed himself to be wasn’t a singular bad actor but a representative one. Blockchain technology may well offer meaningful uses for the wider world in the future, but as of now, it is most significant as the basis for a realm of pure and unregulated speculation.

The volatility was not some deep secret only now revealed. It’s an almost inescapable aspect of a financial subculture erected outside the oversight and control of the law on the principle that they weren’t necessary

The world’s second-largest crypto exchange has gone belly-up, but the crypto market as a whole is down by only about 20 percent. For many speculators, it seems, collapses like these were already priced in.

It is the conflation of virtue with commerce.

Where did this ideology come from? An exceptional period of low interest rates and excess liquidity provided the fertile soil for fantastical dreams to flourish.

Cryptocurrency is the most ideal vessel of these impulses. A speculative asset with a tenuous underlying predetermined value provides a blank slate that meaning can be imposed onto

Anger after the 2008 global financial crisis created a receptivity to radical economic solutions, and disappointment with traditional politics displaced social ambitions onto the world of commerce.

The hothouse of Covid’s peaks turbocharged all these impulses as we sat bored in front of screens, fueled by seemingly free money.

The unwinding of magical thinking will dominate this decade in painful but ultimately restorative ways — and that unwinding will be most painful to the generation conditioned to believe these fantasies.

Pervasive consumer-facing technology allowed individuals to believe that the latest platform company or arrogant tech entrepreneur could change everything.

illusory and ridiculous promises share a common anti-establishment sentiment fueled by a technology that most of us never understood. Who needs governments, banks, the traditional internet or homespun wisdom when we can operate above and beyond?

Mainstream financial markets came to manifest these same tendencies, as magical thinking pervaded the wider investor class. During a period of declining and zero interest rates, mistakes and mediocrities were obscured or forgiven, while speculative assets with low probabilities of far-off success inflated in value enormously.

For an extended period, many investors bought the equivalent of lottery tickets. And many won.

The real economy could not escape infection. Companies flourished by inflating their scope and ambition to feed the desire for magical thinking.

Most broadly, many corporations have come to embrace broader social missions in response to the desire of younger investors and employees to use their capital and employment as instruments for social change.

Another manifestation of magical thinking is believing that the best hope for progress on our greatest challenges — climate change, racial injustice and economic inequality — are corporations and individual investment and consumption choices, rather than political mobilization and our communities.

Every business problem, I am told, can be solved in radically new and effective ways by applying artificial intelligence to ever-increasing amounts of data with a dash of design thinking. Many graduates coming of age in this period of financial giddiness and widening corporate ambition have been taught to chase these glittery objects with their human and financial capital instead of investing in sustainable paths — a habit that will be harder to instill at later ages.

The fundamentals of business have not changed merely because of new technologies or low interest rates. The way to prosper is still by solving problems in new ways that sustainably deliver value to employees, capital providers and customers.

What comes next? Hopefully, a revitalization of that great American tradition of pragmatism will follow. Speculative assets without any economic function should be worth nothing. Existing institutions, flawed as they are, should be improved upon rather than being displaced

Corporations are valuable socially because they solve problems and generate wealth. But they should not be trusted as arbiters of progress and should be balanced by a state that mediates political questions

Trade-offs are everywhere and inescapable. Navigating these trade-offs, rather than ignoring them, is the recipe for a good life.

So fear creates recessions in the long run — and if we continue to have rising fear, the probability of a European recession grows and the probability of a US recession grows. Geopolitics is playing a bigger role in everyone’s equations.”

Geopolitical risk is a major component in shaping all our lives. We are having rising fear throughout the world, and less hope. Rising fear creates a withdrawal from consumption or spending more.

“When the Russian invasion occurred in Ukraine, we said that the peace dividend is over,” Larry Fink, chief executive of investment giant BlackRock, told The Sunday Times. “Now, with the instability in the Middle East, we’re going to almost a whole new future.

Dimon noted that inflation had “levelled off a little bit” overall, but said: “It’s not clear to me that long-term forces are not inflationary … And that’s why I’m saying rates could possibly go up from here. That’s life in the fast lane.”

Higher borrowing costs have started to hit debt-fuelled sectors that boomed in the zero-rates era — such as commercial property, where $80 billion (£65 billion) of assets across the US are in some form of financial distress, according to MSCI, and private equity.

[the legendary investor] Warren Buffett says you see who’s swimming naked when the tide goes out. Not everyone is really ready for 6 or 7 per cent rates, but I wouldn’t rule them out.”

Fink pointed out that the transmission of rate rises into the US economy was less direct than in the UK

“I’m a fundamental believer that we’re going to have higher inflation for longer, and it’s going to require the [Fed] to raise rates higher — probably one or two more tightenings — and that will ultimately be the way we get into recession.”

Many senior figures on Wall Street worry about the US government’s ability to finance itself in the medium term. As in the UK, the market for government debt was underpinned by huge waves of quantitative easing (QE) after the financial crisis, as the Federal Reserve, in effect, bought assets including Treasuries to boost the economy. Following a revival of the programme during Covid, it came to an end in March last year.

The withdrawal of QE, combined with lacklustre appetite for Treasuries among US banks and international investors such as China, could force the government to pay higher prices at a time of near-record borrowing.

“It might be a 20km headwind right now, but next year it’s going to be 25km and it’s going to grow,” a top investor said of the decreasing international demand for US government debt.

US stock market floats and fundraisings, the heartbeat of capital markets, slumped to their lowest level since 1998 last year as the spike in interest rates punctured valuations of growth stocks in sectors such as tech and healthcare.

The cautious mood on Wall Street comes against a backdrop of surprisingly strong US growth. The economy expanded by an astonishing 4.9 per cent in the third quart

the Biden administration is shovelling stimulus into the system via big pieces of legislation promising to accelerate America’s adoption of renewables, rebuild its advanced semiconductor industry and increase its spending on roads, bridges and broadband.

We have huge stimulus,” said Fink. “People are not factoring in the Inflation Reduction Act, the Chips Act and the Infrastructure Act, which are about $970 billion of stimulus. Those are the largest stimuluses ever when there’s not a pandemic or a financial crisis ... And it’s at a time when you can have unions win a 25 per cent labour increase … These are very inflationary, whether it’s the fiscal stimulus or these wage increases.”

It all comes back to that word. Unexpectedly high growth, massive government stimulus and now two wars that threaten to spill out into broader crises — it all spells inflation. The flurry of hope in markets that Fed and the Bank of England have reached the top of their rate-raising cycles may yet prove premature

“As a venture-backed scale-up that will need to fundraise again in the future, we therefore need to adjust our business plan to reduce costs and accelerate our path to profitability.”

The recent raft of layoffs in the industry highlights a broader shift in investor sentiment toward high-growth tech companies, many of which have taken steps to cut down on costs recently against the backdrop of a sharp plunge in global stock markets. Earlier this week, buy now, pay later firm Klarna said it would lay off about 10% of staff following reports the company was seeking a new round of funding that would reduce its valuation by a third.

Meanwhile, New York start-ups Fridge No More and Buyk — which both raised money from Russian investors — wound down their operations after facing issues with fundraising after Russia’s invasion of Ukraine.

Earlier this month, London-based grocery service Jiffy said it would stop making deliveries and instead shift its focus toward in-person grocery collection, in a bid to convince investors that it can achieve profitability. The company has since announced plans to resume deliveries through a deal with Zapp.

They were offering nearly unlimited cheap debt to keep the wheels of finance turning, and when that didn’t help, the Fed began purchasing massive quantities of government debt outright.

Investors dumped whatever they could, including ostensibly “risk-free” U.S. Treasury securities. As a global dash for dollars unfolded, Treasurys were no longer serving as the market’s traditional shock absorbers, amplifying extreme turmoil on Wall Street.

By week’s end, the Dow had plunged more than 10,000 points since mid-February as investors struggled to get their arms around what a halt to global commerce would mean for businesses that would soon have no revenue.

“It was sheer, unadulterated panic, of a magnitude that was far worse than in 2008 and 2009. Far worse,”

The idea of shutting down markets was especially discouraging: “It was a profoundly un-American thing to contemplate, to just shut everything down, and almost fatalistic—that we’re not going to get out of this.”

nearly two years later, most agree that the Fed’s actions helped to save the economy from going into a pandemic-induced tailspin.

“My thought was—I remember this very clearly—‘O.K. We have a four-or-five-day chance to really get our act together and get ahead of this. We’re gonna try to get ahead of this,’” Mr. Powell recalled later. “And we were going to do that by just announcing a ton of stuff on Monday morning.”

It worked. The Fed’s pledges to backstop an array of lending, announced on Monday, March 23, would unleash a torrent of private borrowing based on the mere promise of central bank action—together with a massive assist by Congress, which authorized hundreds of billions of dollars that would cover any losses.

If the hardest-hit companies like Carnival, with its fleet of 104 ships docked indefinitely, could raise money in capital markets, who couldn’t?

on April 9, where he shed an earlier reluctance to express an opinion about government spending policies, which are set by elected officials and not the Fed. He spoke in unusually moral terms. “All of us are affected,” he said. “But the burdens are falling most heavily on those least able to carry them…. They didn’t cause this. Their business isn’t closed because of anything they did wrong. This is what the great fiscal power of the United States is for—to protect these people as best we can from the hardships they are facing.”

They were extraordinary words from a Fed chair who during earlier, hot-button policy debates said the central bank needed to “stay in its lane” and avoid providing specific advice.

To avoid a widening rift between the market haves (who had been given access to Fed backstops) and the market have-nots (who had been left out because their debt was deemed too risky), Mr. Powell had supported a decision to extend the Fed’s lending to include companies that were being downgraded to “junk” status in the days after it agreed to backstop their bonds.

Most controversially, Mr. Powell recommended that the Fed purchase investment vehicles known as exchange-traded funds, or ETFs, that invest in junk debt. He and his colleagues feared that these “high-yield” bonds might buckle, creating a wave of bankruptcies that would cause long-term scarring in the economy.

Mr. Powell decided that it was better to err on the side of doing too much than not doing enough.

, Paul Singer, who runs the hedge-fund firm Elliott Management, warned that the Fed was sowing the seeds of a bigger crisis by absolving markets of any discipline. “Sadly, when people (including those who should know better) do something stupid and reckless and are not punished,” he wrote, “it is human nature that, far from thinking that they were lucky to have gotten away with something, they are encouraged to keep doing the stupid thing.”

The breathtaking speed with which the Fed moved and with which Wall Street rallied after the Fed’s announcements infuriated Dennis Kelleher, a former corporate lawyer and high-ranking Senate aide who runs Better Markets, an advocacy group lobbying for tighter financial regulations.

This is a ridiculous discussion no matter how heartfelt Powell is about ‘we can’t pick winners and losers’—to which my answer is, ‘So instead you just make them all winners?’”

“Literally, not only has no one in finance lost money, but they’ve all made more money than they could have dreamed,” said Mr. Kelleher. “It just can’t be the case that the only thing the Fed can do is open the fire hydrants wide for everybody

Mr. Powell later defended his decision to purchase ETFs that had invested in junk debt. “We wanted to find a surgical way to get in and support that market because it’s a huge market, and it’s a lot of people’s jobs… What were we supposed to do? Just let them die and lose all those jobs?” he said. “If that’s the biggest mistake we made, stipulating it as a mistake, I’m fine with that. It wasn’t time to be making finely crafted judgments,” Mr. Powell said. He hesitated for a moment before concluding. “Do I regret it? I don’t—not really.”

“We didn’t know there was a vaccine coming. The pandemic is just raging. And we don’t have a plan,” said Mr. Powell. “Nobody in the world has a plan. And in hindsight, the worry was, ‘What if we can’t really fully open the economy for a long time because the pandemic is just out there killing people?’”

Mr. Powell never saw this as a particularly likely outcome, “but it was around the edges of the conversation, and we were very eager to do everything we could to avoid that outcome,”

The Fed’s initial response in 2020 received mostly high marks—a notable contrast with the populist ire that greeted Wall Street bailouts following the 2008 financial crisis. North Carolina Rep. Patrick McHenry, the top Republican on the House Financial Services Committee, gave Mr. Powell an “A-plus for 2020,” he said. “On a one-to-10 scale? It was an 11. He gets the highest, highest marks, and deserves them. The Fed as an institution deserves them.”

The pandemic was the most severe disruption of the U.S. economy since the Great Depression. Economists, financial-market professionals and historians are only beginning to wrestle with the implications of the aggressive response by fiscal and monetary policy makers.

Altogether, Congress approved nearly $5.9 trillion in spending in 2020 and 2021. Adjusted for inflation, that compares with approximately $1.8 trillion in 2008 and 2009.

By late 2021, it was clear that many private-sector forecasters and economists at the Fed had misjudged both the speed of the recovery and the ways in which the crisis had upset the economy’s equilibrium. Washington soon faced a different problem. Disoriented supply chains and strong demand—boosted by government stimulus—had produced inflation running above 7%.

because the pandemic shock was akin to a natural disaster, it allowed Mr. Powell and the Fed to sidestep concerns about moral hazard—that is, the possibility that their policies would encourage people to take greater risks knowing that they were protected against larger losses. If a future crisis is caused instead by greed or carelessness, the Fed would have to take such concerns more seriously.

The high inflation that followed in 2021 might have been worse if the U.S. had seen more widespread bankruptcies or permanent job losses in the early months of the pandemic.

an additional burst of stimulus spending in 2021, as vaccines hastened the reopening of the economy, raised the risk that monetary and fiscal policy together would flood the economy with money and further fuel inflation.

The surge in federal borrowing since 2020 creates other risks. It is manageable for now but could become very expensive if the Fed has to lift interest rates aggressively to cool the economy and reduce high inflation.

The Congressional Budget Office forecast in December 2020 that if rates rose by just 0.1 percentage point more than projected in each year of the decade, debt-service costs in 2030 would rise by $235 billion—more than the Pentagon had requested to spend in 2022 on the Navy.

its low-rate policies have coincided with—and critics say it has contributed to—a longer-running widening of wealth inequality.

In 2008, household wealth fell by $8 trillion. It rose by $13.5 trillion in 2020, and in the process, spotlighted the unequal distribution of wealth-building assets such as houses and stocks.

Without heavy spending from Washington, focused on the needs of the least well-off, these disparities might have attracted more negative scrutiny.

Finally, the Fed is a technocratic body that can move quickly because it operates under few political constraints. Turning to it as the first line of defense in this and future crises could compromise its institutional independence.

Step one, he said, was to get in the fight and try to win. Figuring out how to exit would be a better problem to have, because it would mean they had succeeded.

“We have a recovery that looks completely unlike other recoveries that we’ve had because we’ve put so much support behind the recovery,” Mr. Powell said last month. “Was it too much? I’m going to leave that to the historians.”

The final verdict on the 2020 crisis response may turn on whether Mr. Powell is able to bring inflation under control without a painful recession—either as sharp price increases from 2021 reverse on their own accord, as officials initially anticipated, or because the Fed cools down the economy by raising interest rates.

The Tesla Inc. CEO tweeted in February that OpenAI had been founded as an open-source nonprofit “to serve as a counterweight to Google, but now it has become a closed source, maximum-profit company effectively controlled by Microsoft. Not what I intended at all.”

Backers say his brand of social-minded capitalism makes him the ideal person to lead OpenAI. Others, including some who’ve worked for him, say he’s too commercially minded and immersed in Silicon Valley thinking to lead a technological revolution that is already reshaping business and social life. 

In the long run, he said, he wants to set up a global governance structure that would oversee decisions about the future of AI and gradually reduce the power OpenAI’s executive team has over its technology. 

OpenAI researchers soon concluded that the most promising path to achieve artificial general intelligence rested in large language models, or computer programs that mimic the way humans read and write. Such models were trained on large volumes of text and required a massive amount of computing power that OpenAI wasn’t equipped to fund as a nonprofit, according to Mr. Altman. 

In its founding charter, OpenAI pledged to abandon its research efforts if another project came close to building AGI before it did. The goal, the company said, was to avoid a race toward building dangerous AI systems fueled by competition and instead prioritize the safety of humanity.

While running Y Combinator, Mr. Altman began to nurse a growing fear that large research labs like DeepMind, purchased by Google in 2014, were creating potentially dangerous AI technologies outside the public eye. Mr. Musk has voiced similar concerns of a dystopian world controlled by powerful AI machines. 

Messrs. Altman and Musk decided it was time to start their own lab. Both were part of a group that pledged $1 billion to the nonprofit, OpenAI Inc. 

Mr. Altman said he doesn’t necessarily need to be first to develop artificial general intelligence, a world long imagined by researchers and science-fiction writers where software isn’t just good at one specific task like generating text or images but can understand and learn as well or better than a human can. He instead said OpenAI’s ultimate mission is to build AGI, as it’s called, safely.

“We didn’t have a visceral sense of just how expensive this project was going to be,” he said. “We still don’t.”

Tensions also grew with Mr. Musk, who became frustrated with the slow progress and pushed for more control over the organization, people familiar with the matter said. 

OpenAI executives ended up reviving an unusual idea that had been floated earlier in the company’s history: creating a for-profit arm, OpenAI LP, that would report to the nonprofit parent. 

Reid Hoffman, a LinkedIn co-founder who advised OpenAI at the time and later served on the board, said the idea was to attract investors eager to make money from the commercial release of some OpenAI technology, accelerating OpenAI’s progress

“You want to be there first and you want to be setting the norms,” he said. “That’s part of the reason why speed is a moral and ethical thing here.”

The decision further alienated Mr. Musk, the people familiar with the matter said. He parted ways with OpenAI in February 2018. 

Mr. Musk announced his departure in a company all-hands, former employees who attended the meeting said. Mr. Musk explained that he thought he had a better chance at creating artificial general intelligence through Tesla, where he had access to greater resources, they said.

OpenAI said that it received about $130 million in contributions from the initial $1 billion pledge, but that further donations were no longer needed after the for-profit’s creation. Mr. Musk has tweeted that he donated around $100 million to OpenAI. 

Mr. Musk’s departure marked a turning point. Later that year, OpenAI leaders told employees that Mr. Altman was set to lead the company. He formally became CEO and helped complete the creation of the for-profit subsidiary in early 2019.

A young researcher questioned whether Mr. Musk had thought through the safety implications, the former employees said. Mr. Musk grew visibly frustrated and called the intern a “jackass,” leaving employees stunned, they said. It was the last time many of them would see Mr. Musk in person.  

In the meantime, Mr. Altman began hunting for investors. His break came at Allen & Co.’s annual conference in Sun Valley, Idaho in the summer of 2018, where he bumped into Satya Nadella, the Microsoft CEO, on a stairwell and pitched him on OpenAI. Mr. Nadella said he was intrigued. The conversations picked up that winter.

“I remember coming back to the team after and I was like, this is the only partner,” Mr. Altman said. “They get the safety stuff, they get artificial general intelligence. They have the capital, they have the ability to run the compute.”   

Mr. Altman disagreed. “The unusual thing about Microsoft as a partner is that it let us keep all the tenets that we think are important to our mission,” he said, including profit caps and the commitment to assist another project if it got to AGI first. 

Some employees still saw the deal as a Faustian bargain. 

OpenAI’s lead safety researcher, Dario Amodei, and his lieutenants feared the deal would allow Microsoft to sell products using powerful OpenAI technology before it was put through enough safety testing,

They felt that OpenAI’s technology was far from ready for a large release—let alone with one of the world’s largest software companies—worrying it could malfunction or be misused for harm in ways they couldn’t predict.  

Mr. Amodei also worried the deal would tether OpenAI’s ship to just one company—Microsoft—making it more difficult for OpenAI to stay true to its founding charter’s commitment to assist another project if it got to AGI first, the former employees said.

Microsoft initially invested $1 billion in OpenAI. While the deal gave OpenAI its needed money, it came with a hitch: exclusivity. OpenAI agreed to only use Microsoft’s giant computer servers, via its Azure cloud service, to train its AI models, and to give the tech giant the sole right to license OpenAI’s technology for future products.

In a recent investment deck, Anthropic said it was “committed to large-scale commercialization” to achieve the creation of safe AGI, and that it “fully committed” to a commercial approach in September. The company was founded as an AI safety and research company and said at the time that it might look to create commercial value from its products. 

Mr. Altman “has presided over a 180-degree pivot that seems to me to be only giving lip service to concern for humanity,” he said. 

“The deal completely undermines those tenets to which they secured nonprofit status,” said Gary Marcus, an emeritus professor of psychology and neural science at New York University who co-founded a machine-learning company

The cash turbocharged OpenAI’s progress, giving researchers access to the computing power needed to improve large language models, which were trained on billions of pages of publicly available text. OpenAI soon developed a more powerful language model called GPT-3 and then sold developers access to the technology in June 2020 through packaged lines of code known as application program interfaces, or APIs. 

Mr. Altman and Mr. Amodei clashed again over the release of the API, former employees said. Mr. Amodei wanted a more limited and staged release of the product to help reduce publicity and allow the safety team to conduct more testing on a smaller group of users, former employees said. 

Mr. Amodei left the company a few months later along with several others to found a rival AI lab called Anthropic. “They had a different opinion about how to best get to safe AGI than we did,” Mr. Altman said.

Anthropic has since received more than $300 million from Google this year and released its own AI chatbot called Claude in March, which is also available to developers through an API. 

Mr. Altman shared the contract with employees as it was being negotiated, hosting all-hands and office hours to allay concerns that the partnership contradicted OpenAI’s initial pledge to develop artificial intelligence outside the corporate world, the former employees said. 

In the three years after the initial deal, Microsoft invested a total of $3 billion in OpenAI, according to investor documents. 

More than one million users signed up for ChatGPT within five days of its November release, a speed that surprised even Mr. Altman. It followed the company’s introduction of DALL-E 2, which can generate sophisticated images from text prompts.

By February, it had reached 100 million users, according to analysts at UBS, the fastest pace by a consumer app in history to reach that mark.

n’s close associates praise his ability to balance OpenAI’s priorities. No one better navigates between the “Scylla of misplaced idealism” and the “Charybdis of myopic ambition,” Mr. Thiel said. 

Mr. Altman said he delayed the release of the latest version of its model, GPT-4, from last year to March to run additional safety tests. Users had reported some disturbing experiences with the model, integrated into Bing, where the software hallucinated—meaning it made up answers to questions it didn’t know. It issued ominous warnings and made threats. 

“The way to get it right is to have people engage with it, explore these systems, study them, to learn how to make them safe,” Mr. Altman said.

After Microsoft’s initial investment is paid back, it would capture 49% of OpenAI’s profits until the profit cap, up from 21% under prior arrangements, the documents show. OpenAI Inc., the nonprofit parent, would get the rest.

He has put almost all his liquid wealth in recent years in two companies. He has put $375 million into Helion Energy, which is seeking to create carbon-free energy from nuclear fusion and is close to creating “legitimate net-gain energy in a real demo,” Mr. Altman said.

He has also put $180 million into Retro, which aims to add 10 years to the human lifespan through “cellular reprogramming, plasma-inspired therapeutics and autophagy,” or the reuse of old and damaged cell parts, according to the company. 

He noted how much easier these problems are, morally, than AI. “If you’re making nuclear fusion, it’s all upside. It’s just good,” he said. “If you’re making AI, it is potentially very good, potentially very terrible.” 

a “builder class”—a brains trust of youngish idealists, which includes Patrick Collison, co-founder of Stripe, a payments firm valued at $74bn, and other (mostly white and male) techies, who are posing questions that go far beyond the usual interests of Silicon Valley’s titans. They include the future of man and machine, the constraints on economic growth, and the nature of government.

They share other similarities. Business provided them with their clout, but doesn’t seem to satisfy their ambition

The number of techno-billionaires in America (Mr Collison included) has more than doubled in a decade.

ome of them, like the Medicis in medieval Florence, are keen to use their money to bankroll the intellectual ferment

The other is Paul Graham, co-founder of Y Combinator, a startup accelerator, whose essays on everything from cities to politics are considered required reading on tech campuses.

Mr Altman puts it more optimistically: “The iPhone and cloud computing enabled a Cambrian explosion of new technology. Some things went right and some went wrong. But one thing that went weirdly right is a lot of people got rich and said ‘OK, now what?’”

A belief that with money and brains they can reboot social progress is the essence of this new mindset, making it resolutely upbeat

The question is: are the rest of them further evidence of the tech industry’s hubristic decadence? Or do they reflect the start of a welcome capacity for renewal?

Two well-known entrepreneurs from that era provided the intellectual seed capital for some of today’s techno nerds.

Mr Thiel, a would-be libertarian philosopher and investor

This cohort of eggheads starts from common ground: frustration with what they see as sluggish progress in the world around them.

Yet the impact could ultimately be positive. Frustrations with a sluggish society have encouraged them to put their money and brains to work on problems from science funding and the redistribution of wealth to entirely new universities. Their exaltation of science may encourage a greater focus on hard tech

the rationalist movement has hit the mainstream. The result is a fascination with big ideas that its advocates believe goes beyond simply rose-tinted tech utopianism

A burgeoning example of this is “progress studies”, a movement that Mr Collison and Tyler Cowen, an economist and seer of the tech set, advocated for in an article in the Atlantic in 2019

Progress, they think, is a combination of economic, technological and cultural advancement—and deserves its own field of study

There are other examples of this expansive worldview. In an essay in 2021 Mr Altman set out a vision that he called “Moore’s Law for Everything”, based on similar logic to the semiconductor revolution. In it, he predicted that smart machines, building ever smarter replacements, would in the coming decades outcompete humans for work. This would create phenomenal wealth for some, obliterate wages for others, and require a vast overhaul of taxation and redistribution

His two bets, on OpenAI and nuclear fusion, have become fashionable of late—the former’s chatbot, ChatGPT, is all the rage. He has invested $375m in Helion, a company that aims to build a fusion reactor.

Mr Lonsdale, who shares a libertarian streak with Mr Thiel, has focused attention on trying to fix the shortcomings of society and government. In an essay this year called “In Defence of Us”, he argues against “historical nihilism”, or an excessive focus on the failures of the West.

With a soft spot for Roman philosophy, he has created the Cicero Institute in Austin that aims to inject free-market principles such as competition and transparency into public policy.

He is also bringing the startup culture to academia, backing a new place of learning called the University of Austin, which emphasises free speech.

All three have business ties to their mentors. As a teen, Mr Altman was part of the first cohort of founders in Mr Graham’s Y Combinator, which went on to back successes such as Airbnb and Dropbox. In 2014 he replaced him as its president, and for a while counted Mr Thiel as a partner (Mr Altman keeps an original manuscript of Mr Thiel’s book “Zero to One” in his library). Mr Thiel was also an early backer of Stripe, founded by Mr Collison and his brother, John. Mr Graham saw promise in Patrick Collison while the latter was still at school. He was soon invited to join Y Combinator. Mr Graham remains a fan: “If you dropped Patrick on a desert island, he would figure out how to reproduce the Industrial Revolution,”

While at university, Mr Lonsdale edited the Stanford Review, a contrarian publication co-founded by Mr Thiel. He went on to work for his mentor and the two men eventually helped found Palantir. He still calls Mr Thiel “a genius”—though he claims these days to be less “cynical” than his guru.

“The tech industry has always told these grand stories about itself,” says Adrian Daub of Stanford University and author of the book, “What Tech Calls Thinking”. Mr Daub sees it as a way of convincing recruits and investors to bet on their risky projects. “It’s incredibly convenient for their business models.”

In the 2000s Mr Thiel supported the emergence of a small community of online bloggers, self-named the “rationalists”, who were focused on removing cognitive biases from thinking (Mr Thiel has since distanced himself). That intellectual heritage dates even further back, to “cypherpunks”, who noodled about cryptography, as well as “extropians”, who believed in improving the human condition through life extensions

Silicon Valley has shown an uncanny ability to reinvent itself in the past.

The former seems to me a not unreasonable forecast — we’ve been losing good jobs for decades, while low-wage employment in the service sector has grown. But no paid work? That’s more a dream (or a nightmare) than a forecast

Farhad Manjoo: Because I’m scared that they’ll unleash their bots on me, I should start by defending the techies a bit

They see a future in which a small group of highly skilled tech workers reign supreme, while the rest of the job world resembles the piecemeal, transitional work we see coming out of tech today (Uber drivers, Etsy shopkeepers, people who scrape by on other people’s platforms).

Why does that future call for instituting a basic income instead of the smaller and more feasible labor-policy ideas that you outline? I think they see two reasons. First, techies have a philosophical bent toward big ideas, and U.B.I. is very big.

They see software not just altering the labor market at the margins but fundamentally changing everything about human society. While there will be some work, for most nonprogrammers work will be insecure and unreliable. People could have long stretches of not working at all — and U.B.I. is alone among proposals that would allow you to get a subsidy even if you’re not working at all

If there are, in fact, jobs to be had, a universal basic income may not be the best choice of policy. The lack of good work is probably best addressed by making the work better — better paid and more skilled — and equipping workers to perform it,

The challenge of less work could just lead to fewer working hours. Others are already moving in this direction. People work much less in many other rich countries: Norwegians work 20 percent fewer hours per year than Americans; Germans 25 percent fewer.

Farhad Manjoo: One key factor in the push for U.B.I., I think, is the idea that it could help reorder social expectations. At the moment we are all defined by work; Western society generally, but especially American society, keeps social score according to what people do and how much they make for it. The dreamiest proponents of U.B.I. see that changing as work goes away. It will be O.K., under this policy, to choose a life of learning instead of a low-paying bad job

Eduardo Porter: To my mind, a universal basic income functions properly only in a world with little or no paid work because the odds of anybody taking a job when his or her needs are already being met are going to be fairly low.

The discussion, I guess, really depends on how high this universal basic income would be. How many of our needs would it satisfy?

You give the techies credit for seriously proposing this as an optimal solution to wrenching technological and economic change. But in a way, isn’t it a cop-out? They’re just passing the bag to the political system. Telling Congress, “You fix it.

the idea of the American government agreeing to tax capitalists enough to hand out checks to support the entire working class is in an entirely new category of fantasy.

paradoxically, they also see U.B.I. as more politically feasible than some of the other policy proposals you call for. One of the reasons some libertarians and conservatives like U.B.I. is that it is a very simple, efficient and universal form of welfare — everyone gets a monthly check, even the rich, and the government isn’t going to tell you what to spend it on. Its very universality breaks through political opposition.

Eduardo Porter: I guess some enormous discontinuity right around the corner might vastly expand our prosperity. Joel Mokyr, an economic historian that knows much more than I do about the evolution of technology, argues that the tools and techniques we have developed in recent times — from gene sequencing to electron microscopes to computers that can analyze data at enormous speeds — are about to open up vast new frontiers of possibility. We will be able to invent materials to precisely fit the specifications of our homes and cars and tools, rather than make our homes, cars and tools with whatever materials are available.

The question is whether this could produce another burst of productivity like the one we experienced between 1920 and 1970, which — by the way — was much greater than the mini-productivity boom produced by information technology in the 1990s.

investors don’t seem to think so. Long-term interest rates have been gradually declining for a fairly long time. This would suggest that investors do not expect a very high rate of return on their future investments. R.&D. intensity is slowing down, and the rate at which new businesses are formed is also slowing.

Little in these dynamics suggests a high-tech utopia — or dystopia, for that matter — in the offing

Consider Yahoo. The company bought back shares worth $6.6 billion from 2008 to 2014, according to Robert L. Colby, a retired investment professional and developer of Corequity, an equity valuation service used by institutional investors. These purchases helped increase Yahoo’s earnings per share about 16 percent annually, on average.

a company’s overall profit growth is unaffected by share buybacks. And comparing increases in earnings per share with real profit growth reveals the impact that buybacks have on that particular measure. Call it the buyback mirage.

Those who run companies like buybacks because they make their earnings look better on a per-share basis. When fewer shares are outstanding, each one technically earns more.

But Mr. Colby pointed out that buybacks provide only a one-time benefit, while smart investments in a company’s operations can generate years of gains.

Given these figures, Mr. Colby reckoned that Yahoo, if it had invested that same amount of money in its operations, would have had to generate only a 3.2 percent after-tax return to produce overall net profit growth of 16 percent annually over those years.

But a good bit of that performance was the buyback mirage. Growth in Yahoo’s overall net profits came in at about 11 percent annually

Mr. Colby said his research “confirms my suspicion that while buybacks are not universally bad, they are being practiced far more broadly and without as much analysis as there should be.”

Perhaps the crucial flaw in buybacks is that they reward sellers of a company’s stock over its long-term holders. That’s because a company announcing a repurchase program usually sees its stock price pop in the short term. But passive investors, such as index funds, and other long-term holders gain little from the programs.

Another hazard: companies that spend billions to repurchase stock without substantially shrinking the number of shares outstanding. That’s because in these circumstances, prized corporate cash is used to buy back shares that offset stock grants bestowed on company executives in rich compensation plans.

And there are plenty of companies whose buybacks have simply left them with less money to invest in more promising opportunities. Advertisement Continue reading the main story “By throwing away money on buybacks, companies are giving up on the ability to grow in the future,”

proposals ask the companies to adopt a policy of excluding the effect of stock buybacks from any performance metrics they use to determine executive pay packages.

At 3M, for example, research and development expenditures plus strategic acquisitions have totaled $22 billion over the last five years, Mr. Kanzer said. In the meantime, the company’s buyback program has cost $21 billion.

“You really have to ask why a company’s board decides to return a big chunk of capital instead of replacing managers with ones who can figure out how to develop the operations,”

“If the board doesn’t think it’s worth investing in the company’s future,” Mr. Lutin added, “how can a shareholder justify continuing to hold the stock, or voting for directors who’ve given up?”

the strengthening dollar will destroy more of the jobs typically held by Trump’s blue-collar base. The president may have “saved” 1,000 jobs in Indiana by bullying and cajoling the air-conditioner manufacturer Carrier; but the US dollar’s appreciation since the election could destroy almost 400,000 manufacturing jobs over time.

Republicans can rarely resist the temptation to cut corporate, income and other taxes, even when they have no way to make up for the lost revenue and no desire to cut spending. If this happens again under Trump, fiscal deficits will push up interest rates and the dollar even further, and hurt the economy in the long term

The Nobel laureate economist Edmund S Phelps has described Trump’s direct interference in the corporate sector as reminiscent of corporatist Nazi Germany and fascist Italy. Indeed, if Barack Obama had treated the corporate sector in the way that Trump has, he would have been smeared as a communist; but for some reason when Trump does it, corporate America puts its tail between its legs.

Fifth, Trump is questioning US alliances, cosying up to American rivals such as Russia, and antagonizing important global powers such as China. His erratic foreign policies are spooking world leaders, multinational corporations and global markets generally.

To be sure, expectations of stimulus, lower taxes and deregulation could still boost the economy and the market’s performance in the short term. But, as the vacillation in financial markets since Trump’s inauguration indicates, the president’s inconsistent, erratic, and destructive policies will take their toll on domestic and global economic growth in the long run.

Hegel’s probing account means to show is that the defender of holier-than-thou virtue and the self-interested Wall Street banker are making the same error from opposing points of view.  Each supposes he has a true understanding of what naturally moves individuals to action.  The knight of virtue thinks we are intrinsically good and that acting in the nasty, individualist, market world requires the sacrifice of natural goodness; the banker believes that only raw self-interest, the profit motive, ever leads to successful actions.

Both are wrong because, finally, it is not motives but actions that matter, and how those actions hang together to make a practical world.  What makes the propounding of virtue illusory — just so much rhetoric — is that there is no world, no interlocking set of practices into which its actions could fit and have traction: propounding peace and love without practical or institutional engagement is delusion, not virtue.

Conversely, what makes self-interested individuality effective is not its self-interested motives, but that there is an elaborate system of practices that supports, empowers, and gives enduring significance to the banker’s actions.  Actions only succeed as parts of practices that can reproduce themselves over time.  To will an action is to will a practical world in which actions of that kind can be satisfied — no corresponding world, no satisfaction.  Hence the banker must have a world-interest as the counterpart to his self-interest or his actions would become as illusory as those of the knight of virtue.

Actions are elements of practices, and practices give individual actions their meaning. Without the game of basketball, there are just balls flying around with no purpose.  The rules of the game give the action of putting the ball through the net the meaning of scoring, where scoring is something one does for the sake of the team.   A star player can forget all this and pursue personal glory, his private self-interest.  But if that star — say, Kobe Bryant — forgets his team in the process, he may, in the short term, get rich, but the team will lose.  Only by playing his role on the team, by having an L.A. Laker interest as well as a Kobe Bryant interest, can he succeed.

Every account of the financial crisis points to a terrifying series of structures that all have the same character: the profit-driven actions of the financial sector became increasingly detached from their function of supporting and advancing the growth of capital.  What thus emerged were patterns of action which, may have seemed to reflect the “ways of the world” but in financial terms, were as empty as those of a knight of virtue, leading to the near collapse of the system as a whole.  A system of compensation that provides huge bonuses based on short-term profits necessarily ignores the long-term interests of investors. As does a system that ignores the creditworthiness of borrowers; allows credit rating agencies to be paid by those they rate and encourages the creation of highly complex and deceptive financial instruments.  In each case, the actions — and profits — of the financial agents became insulated from both the interests of investors and the wealth-creating needs of industry.

Nothing but fierce and smart government regulation can head off another American economic crisis in the future.  This is not a matter of “balancing” the interests of free-market inventiveness against the need for stability; nor is it a matter of a clash between the ideology of the free-market versus the ideology of government control.  Nor is it, even, a matter of a choice between neo-liberal economic theory and neo-Keynesian theory.  Rather, as Hegel would have insisted, regulation is the force of reason needed to undo the concoctions of fantasy.

To understand why this matters, you have to know a little bit about the many tribes within the world of economics.

There are the academic economists who study the forces shaping the modern economy. Their work is rigorous but often obscure. Some of them end up in important policy jobs (See: Bernanke, B.) or write books for a mass audience (Piketty, T.), but many labor in the halls of academia for decades writing carefully vetted articles for academic journals that are rigorous as can be but are read by, to a first approximation, no one.

Then there are the economists in what can broadly be called the business forecasting community. They wear nicer suits than the academics, and are better at offering a glib, confident analysis of the latest jobs numbers delivered on CNBC or in front of a room full of executives who are their clients. They work for ratings firms like S.&P., forecasting firms like Macroeconomic Advisers and the economics research departments of all the big banks.

they are trying to do the practical work of explaining to clients — companies trying to forecast future demand, investors trying to allocate assets — how the economy is likely to evolve. They’re not really driven by ideology, or by models that are rigorous enough in their theoretical underpinnings to pass academic peer review. Rather, their success or failure hinges on whether they’re successful at giving those clients an accurate picture of where the economy is heading.

worries that income inequality is a factor behind subpar economic growth over the last five years (and really the last 15 years) is going from an idiosyncratic argument made mainly by left-of center economists to something that even the tribe of business forecasters needs to wrestle with.

Because the affluent tend to save more of what they earn rather than spend it, as more and more of the nation’s income goes to people at the top income brackets, there isn’t enough demand for goods and services to maintain strong growth, and attempts to bridge that gap with debt feed a boom-bust cycle of crises, the report argues. High inequality can feed on itself, as the wealthy use their resources to influence the political system toward policies that help maintain that advantage, like low tax rates on high incomes and low estate taxes, and underinvestment in education and infrastructur

The report itself does not break any major new analytical or empirical ground. It spends many pages summarizing the findings of various academic and government economists who have studied inequality and its discontents, and stops short of recommending any radical policy changes

Shares of Morgan Stanley (MS.N) slid 6.9 percent in their largest one-day drop since November 2012, while rival Goldman Sachs (GS.N) fell 4.6 percent. Both closed at their lowest since 2013.

Facebook Inc (FB.O), Amazon.com Inc (AMZN.O) and other technology stocks that had lent strength to the market last year extended their decline from Friday. Fund managers said last year's outsized gains among some Internet stocks made them the first choice to sell now.

The Dow Jones industrial average .DJI closed down 177.92 points, or 1.1 percent, at 16,027.05, the S&P 500 .SPX lost 26.61 points, or 1.42 percent, to end at 1,853.44 and the Nasdaq Composite .IXIC dropped 79.39 points, or 1.82 percent, to 4,283.75.

Falling oil prices along with concern over a worsening global growth outlook have caused a sharp selloff in stocks this year. Investors have been searching for a catalyst that might change the market's course.

Adding to recent woes for the tech sector, Cognizant (CTSH.O) dropped 7.7 percent to $54.05 after the IT services provider issued a weak sales forecast. Amazon fell 2.8 percent while Facebook dropped 4.2 percent

Declining issues outnumbered advancing ones on the NYSE by 2,484 to 618; on the Nasdaq, 2,029 issues fell and 804 advanced. The S&P 500 posted 7 new 52-week highs and 97 new lows; the Nasdaq recorded 4 new highs and 495 new lows.

But they are not all that new, and to find these policies and values, we need new histories. Here are four things people believed a century ago, before our impoverished era:

1) People in a democracy have a right to control the parameters of economic activity that shapes their lives. Debate about this could be framed as a debate about where to draw lines in the economy between things that are tightly governed and things that are not

2) People in a democracy have a right to gather information about businesses and use that information in the regulation of business.

he aspects of business that touch upon the public lives of the people they come into contact with must not be hidden if we are to govern business fairly. Even such simple things as who owns a company, how much money it earns, how much (and how) it pays its employees and investors, how much (or whether) it pays in taxes are routinely hidden, guarded by lawyers and phrases such as “commercial sensitivity.”

3) There is no such thing as an abstract “market” separate from government. Ever since kings issued royal charters, markets have operated in public spaces under the control of government.

4) Not all business is bad. In almost any sector, in almost any time, there are examples of good practice, of business operating fairly, openly, legally, to the benefit of its employees, its investors, and the public at large. All too often, such companies are at a disadvantage compared to those less scrupulous. Without good governance, it is a race to the bottom.

These are not new ideas. They were articulated, argued over, and implemented long ago, in the Progressive Era. They were the basis of decades of prosperity and the greatest advances in democracy and equality the United States has seen. We need to reread our own history.

More than 180 countries have already submitted individual national plans, but a climate deal is by no means guaranteed.

Among several sticking points is money - how much rich countries should invest to help poor countries cope with climate change, how much should be invested in renewable energy, and how much traditional oil, gas and coal producers stand to lose if countries agree to forever reduce emissions.

Reviving the rich-poor differences that caused earlier climate talks to fail, Chinese President Xi Jinping said an eventual global deal must include aid for poor countries and acknowledge differences between developing and established economies.

Many of the leaders said the world must keep the average temperature within 1 degree Celsius (1.8 degrees Fahrenheit) of current levels - and if possible to half that, to spare island nations threatened by rising seas.

The world has already warmed nearly 1 degree Celsius since the beginning of the industrial age, and factories and cars continue to belch pollution around the world.

Many of the leaders framed the problem as a generational issue, where current leaders owe future generations a livable Earth.

Leaders called their attendance in Paris an act of defiance after the Nov. 13 attacks, some of which occurred near the airfield north of the city where the conference is taking place.

Many of the leaders paid their respects at sites linked to the attacks. Obama, in a late-night visit, placed a single flower outside the concert hall where dozens were killed, and bowed his head in silence.

To that end, at least 19 governments and 28 leading world investors were announcing billions of dollars in investments to research and develop clean energy technology, with the goal of making it cheaper. Backers include Obama, Microsoft co-founder Bill Gates, Facebook founder Mark Zuckerberg, billionaires George Soros and Saudi Prince Alaweed bin Talal, and Jack Ma of China's Alibaba.

Under the initiative, 19 countries pledge to double their spending on low- or no-carbon energy over the next five years. They currently spend about $10 billion a year, about half of that from the U.S.

Gates said he and other investors, including the University of California, are pitching in $7 billion so far and hope to raise more this week.

In another announcement, the United States, Canada and nine European countries pledged nearly $250 million to help the most vulnerable countries adapt to rising seas, droughts and other consequences of climate change. Germany pledged $53 million, the U.S. $51 million and Britain $45 million.

The money will be made available to a fund for the least developed countries. Other countries that contributed include Denmark, Finland, France, Ireland, Italy, Sweden and Switzerland.

Forecasters in The Wall Street Journal’s latest survey of economists said there is a 17% chance the U.S. will enter a recession in 2016,

Many investors have alternately feared the U.S. would succumb to global weakness or latched onto signs it would muddle through.

“I find it hard to believe that a quarter-point rate hike has created all this enormous uncertainty,” said Timothy Adams, head of the Institute of International Finance, a trade group representing financial institutions.

One reason economists aren’t even more worried: The U.S. relies less on trade than many of the world’s largest nations.

Still, the U.S. has more than 100 million people working in service industries—primarily transacting with other U.S. businesses and individuals

Some industries are sure to be hit harder than others if the global economy slows. Durable-goods makers

They forecast payroll growth falling from about 202,000 in the first three months of 2016 to 180,000 in the last three months

Little is known about how much emerging-market risk U.S. investors hold,” said Daniel Bachman, senior U.S. economist at Deloitte Services LP.

The modern GE was built by Jack Welch, the youngest CEO and chairman in company history when he took over in 1981. He ran it for 20 years, becoming the rare CEO who was also a household name, praised for his strategic and operational mastery.

their most obvious problem. GE couldn’t live without GE Capital, still so big it was essentially the nation’s seventh largest bank. But investors couldn’t live with GE Capital and its unshakable shadow of risk, either.

it worked more like a collection of businesses under the protection of a giant bank. As the financial sector came to drive more of the U.S. economy, GE Capital, the company’s finance arm, powered more of the company’s growth. At its height, Capital accounted for more than half of GE’s profits. It rivaled the biggest banks in the country, competed with Wall Street for the brightest M.B.A.s and employed hundreds of bankers.

The industrial spine of the company gave GE a AAA credit rating that allowed it to borrow money inexpensively, giving it an advantage over banks, which relied on deposits. The cash flowed up to headquarters where it powered the development of new jet engines and dividends for shareholders.

Capital also gave General Electric’s chief executives a handy, deep bucket of financial spackle with which to smooth over the cracks in quarterly earnings reports and keep Wall Street happy

GE shares were trading at 40 times its earnings when Welch retired in 2001, more than double where it had historically. And much of those profits were coming from deep within Capital, not the company’s factories.

When the financial crisis hit, Capital fell back to earth, taking GE’s share price and Immelt with it. The stock closed as low as $6.66 in March 2009. General Electric was on the brink of collapse. The market for short-term loans, the lifeblood of GE Capital, had frozen, and there was little in the way of deposits to fall back on. The Federal Reserve stepped in to save it after an emergency plea from Immelt.

the near-death experience taught investors to think of GE like a bank, a stock always vulnerable to another financial collapse

At its peak, General Electric was the most valuable company in the U.S., worth nearly $600 billion in August 2000. That year, GE’s third of a million employees operated 150 factories in the U.S., and another 176 in 34 other countries. Its pension plan covered 485,000 people.

What if the GE Jack Welch built didn’t work any more?

Cracks in the performance of the company’s industrial lines—its power turbines, jet engines, locomotives and MRI machines—would now be plain to see, some executives worried, without Capital’s cash to help cover the weak quarters and pay the sacrosanct dividend

Most of the shortfall came from its service contracts, which should have been the source of the easiest profits. Instead, the heart of the industrial business was hollow. And its failure was about to tip the entire company into crisis.

Former colleagues compared him to Bill Clinton because of his magnetic ability to hold the focus of a room. He sounded like a leader. He was a natural salesman.

Immelt was so confident in GE’s managerial excellence that he projected a sunny vision for the company’s future that didn’t always match reality. He was aware of the challenges, but he wanted his people to feel like they were playing for a winning team. That often left Immelt, in the words of one GE insider, trying to market himself out of a math problem.

Alstom’s problems hadn’t gone away, but now its stock was cheaper, and Immelt saw the makings of a deal that fit perfectly with his vision for reshaping his company. GE would essentially swap Capital, the cash engine that no longer made sense, for a new one that could churn out profits each quarter in the reliable way that industrial companies were supposed to.

To the dismay of some involved, GE’s bid crept upward, from the €30 a share that the power division’s deal team already believed was too high, to roughly €34, or almost $47. Immelt and Kron met one-on-one, and the deal team realized the game was over. The principals had shaken hands.

The visions for the present and the future were both fundamentally flawed. As GE’s research department was preparing white papers heralding “The Age of Gas,” the world was entering a multiyear decline in the demand for new gas power plants and for the electricity that made them profitable.

When advisers determined that the concessions to get the deal approved might have grown costly enough to trigger a provision allowing GE to back out, some in the Power business quietly celebrated, confiding in one another that they assumed management would abandon the deal. But Immelt and his circle of closest advisers wanted it done. That included Steve Bolze, the man who ran it and hoped someday to run all of General Electric.

“Steve’s our guy,” McElhinney said in one meeting. If Bolze was elevated to CEO, those behind him in Power would rise too. “Get on board,” he said. “We have to make the numbers.”

Immelt, trapped in Welch’s long shadow, craved a bold move to shock his company out of the doldrums that had plagued his tenure. It was time for GE to be reinvented again.

In the dry language of accounting in which he was so fluent, Flannery was declaring a pillar of Immelt’s pivot had failed: GE had been sending money out the door to repurchase its stock and pay dividends but wasn’t bringing in enough from its regular operations to cover them. It wasn’t sustainable. Buybacks and dividends are generally paid out of leftover funds.

when GE spun off Genworth, there was a chunk of the business, long-term-care insurance, that lingered. Policies designed to cover expenses like nursing homes and assisted living had proved to be a disaster for insurers who had drastically underestimated the costs

The bankers didn’t think the long-term-care business could be part of the Genworth spinoff. To make the deal more attractive, GE agreed to cover any losses. This insurance for insurers covered about 300,000 policies by early 2018, about 4% of all such policies written in the country. Incoming premiums weren’t covering payouts.

Two months after Miller flagged the $3 billion, it was clear the problem was a great deal larger. GE was preparing for it to be more than $6 billion and needed to come up with $15 billion in reserves regulators required it to have to cover possible costs in the future. The figure was gigantic. By comparison, even after the recent cut, GE’s annual dividend cost $4 billion.

JP Morgan analyst Steve Tusa, who led the pack in arguing that GE was harboring serious problems, removed his sell rating on the stock this week. GE’s biggest skeptic still thinks the businesses are broken but the risks are now known. The stock climbed back above $7 on Thursday, but is down more than 50% for the year and nearly 90% from its 2000 zenith.

Instead of forecasting, we could look for signs that money is tight by watching the most vulnerable markets. Turmoil in the Turkish lira and Argentine peso may be linked to the increased cost of borrowing in dollars

On the resource side, oil is a natural place to look for shortages that might constrict the economy and end a boom

If we knew the cycle would end soon, investing would be easy: Dump stocks for bonds. But the final phase can sometimes last for years, during which rising yields hit bond prices while stocks typically do very well.

Financial crises are worse, and we shouldn’t forget Lehman. But when the end of the economic cycle comes, investors should expect big losses even if banks don’t totter

in some of capitalism’s most rarefied circles including Harvard Business School, where last fall Seth Klarman, a highly influential billionaire investor, delivered what he described as a “plaintive wail” to the business community to fix capitalism before it was too late.

“It’s a choice to maintain pleasant working conditions . . . or harsh ones; to offer good benefits or paltry ones.” If business leaders didn’t “ask hard questions about capitalism,” he warned that they would be asked by “ideologues seeking to point fingers, assign blame and make reckless changes to the system.

Leading politicians, such as Trump, Sanders and Sen. Elizabeth Warren (D-Mass.), were advocating positions on tariffs, wealth taxes and changes in corporate governance that would have been unthinkable a few years ago.

One of the most popular classes at Harvard Business School, home to the next generation of Fortune 500 executives, was a class on “reimagining capitalism.” Seven years ago, the elective started with 28 students. Now there were nearly 300 taking it

“Winners Take All,” a book by Anand Giridharadas, a journalist and former McKinsey consultant, that had hit the bestseller list and was provoking heated arguments in places like Silicon Valley, Davos and Harvard Business School. Giridharadas’s book was a withering attack on America’s billionaire class and the notion that America’s iconic capitalists could use their wealth and creativity to solve big social and economic problems that have eluded a plodding and divided government.

For many of the students, schooled in the notion that business could make a profit while making the world a better place, Giridharadas’s ideas were both energizing and disorienting. Erika Uyterhoeven, a second-year student, recalled one of her fellow classmates turning to her when Giridharadas was finished. “So, what should we do?” her colleague asked. “Is he saying we shouldn’t go into banking or consulting?

Added another student: “There was a palpable sense of personal desperation.”

“The best thing that happened to me was that I lost my 2014 election,” he said. “Had I won . . . maybe I would’ve been a traditional neoliberal. It really forced my self-reflection and it pointed out every weakness I ever had.”

Mixed in with the valley’s usual frothy optimism about disruption and inventing the future was a growing sense that the tech economy had somehow broken capitalism. The digital revolution had allowed tech entrepreneurs to build massive global companies without the big job-producing factories or large workforces of the industrial era. The result was more and more wealth concentrated in fewer hands.

some feared things were only going to get worse. Robots were eliminating much factory work; online commerce was decimating retail; and self-driving cars were on the verge of phasing out truck drivers. The next step was computers that could learn and think.

thinking computers might be able to diagnose diseases better than doctors by drawing on superhuman amounts of clinical research, said Brockman, 30. They could displace a large number of office jobs. Eventually, he said, the job shortages would force the government to pay people to pursue their passions or simply live

To Brockman, a future without work seemed just as likely as one without meat, a possibility that many in the valley viewed as a near certainty. “Once we have meat substitutes as good as the real thing, my expectation is that we’re going to look back at eating meat as this terrible, immoral thing,”

The same could be true of work in a future in an era of advanced artificial intelligence. “We’ll look back and say, ‘Wow, that was so crazy and almost immoral that people were forced to go and labor in order to be able to survive,’ ” he said

Khanna had a different view. He saw the country’s problems primarily as the product of growing income inequality and a lack of opportunity.