Monday, June 17, 2024

Bloomberg on Our PEUture

Three Bloomberg stories portend a future of scarcity (Bitcoin), secrecy (private equity) and absurdity (artificial intelligence).  The Bitcoin halving story indicates more electrical power will be needed to mine new Bitcoin.  Great, a non-currency capable of a small number of transactions becomes more inefficient to generate.    

Bitcoin's future is in the hands of the crypto lobby, which somehow arose en masse from FTX's burial crypt to storm Capital Hill.

The Great Huckster said he wants to the Crypto President and have all Bitcoin mined in the U.S.  Flashback to 2019:

“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.  Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity.”
My wise friend noted crypto's use of the private equity playbook, the subject of the second video "How Private Equity Ate Britain."
If you think about it and go back 30 years, the Crypto Industry is using the same playbook as private equity. They used payoffs, consultants, lobbyists, capture, etc. to infiltrate the pension system and this is exactly what Crypto is doing.
It doesn't matter if it's a good asset or not. They want what they want and they'll get it.

My pet name for the greed and leverage boys is private equity underwriter (PEU).  The PEU infestation grew to the point someone noticed and made a Bloomberg video.  It's rather unappetizing.

Private equity has its sights set on professional sports, equity stakes in major college conferences (CVC and the Big12) and virtually anything a consumer spends their hard earned money on.  If you buy or rent it, they want to lever that asset, fee it up long term and flip it for massive gains.  Don't ask them to share their fee structure, it's a bleeping national secret.  

That leads us to our next video, an interview with an early visionary of artificial intelligence (AI).  Jaron Lanier excoriates social media for the damage it's done to individuals and society.  He's optimistic artificial intelligence will deliver something better.  He does recommend people ask AI where they got their information.  Knowing sources helped him understand when AI came in from left field.  

Neural networks learn from trial and error.  The sad thing is AI will learn from politics, a body known for manipulating, distorting and outright unethical behavior.  If the aim is to win, then anything goes.  Given the harms social media has done to society, I have no desire for AI to create a much bigger wake.  

Like Bitcoin, AI is expected to increase demand for electricity.  Rest assured they will lock up electricity at decent prices for a long term.  That leaves the little people to pay the full freight for new infrastructure.  Once again the monied get the subsidy.  The common person is on their own.

FT ran a story on preferred PEU carried interest taxation.

"Private equity firms have amassed $1 trillion in ‘carry’ fees as taxation debate mounts" 
In the US, recent presidents, including Barack Obama, Joe Biden and even Donald Trump vowed to end the special tax treatment but ultimately retreated.

Politicians Red and Blue love PEU and increasingly more are one.  The game is afoot and the worst of us wants to win.