Monday, March 18, 2024

The Register Weighs In On Nvidia (NVDA)

From The Register, March 18:

Nvidia turns up the AI heat with 1,200W Blackwell GPUs
Five times the performance of the H100, but you'll need liquid cooling to tame the beast

For all the saber-rattling from AMD and Intel, Nvidia remains, without question, the dominant provider of AI infrastructure. With today's debut of the Blackwell GPU architecture during CEO Jensen Huang's GTC keynote, it aims to extend its technical lead – in both performance and power consumption.

Given Nvidia's rapid rise in the wake of the generative AI boom, the stakes couldn't be higher. But at least on paper, Blackwell – the successor to Nvidia's venerable Hopper generation – doesn't disappoint. In terms of raw FLOPS, the GPU giant's top-specced Blackwell chips are roughly 5x faster.

Of course, the devil is in the details, and getting this performance will depend heavily on a number of factors. While Nvidia claims the new chip will do 20 petaFLOPS, that's only when using its new 4-bit floating point data type and opting for liquid-cooled servers. Looking at gen-on-gen FP8 performance, the chip is only about 2.5x faster than the H100.

At the time of writing, Blackwell encompasses three parts: the B100, B200, and Grace-Blackwell Superchip (GB200). Presumably there will be other Blackwell GPUs at some point – like the previously teased B40, which use a different die, or rather dies – but for now the three chips share the same silicon.

And it's this silicon which is at least partially responsible for Blackwell's performance gains this generation. Each GPU is actually two reticle-limited compute dies, tied together via a 10TB/sec NVLink-HBI (high-bandwidth interface) fabric, which allows them to function as a single accelerator. The two compute dies are flanked by a total of eight HBM3e memory stacks, with up to 192GB of capacity and 8TB/sec of bandwidth. And unlike H100 and H200, we're told the B100 and B200 have the same memory and GPU bandwidth.

Nvidia is hardly the first to take the chipset – or in its preferred parlance "multi-die" – route. AMD's MI300-series accelerators – which we looked at in December – are objectively more complex and rely on both 2.5D and 3D packaging tech to stitch together as many as 13 chiplets into a single part. Then there's Intel's GPU Max parts, which use even more chiplets.

AI's power and thermal demands hit home
Even before Blackwell's debut, datacenter operators were already feeling the heat associated with supporting massive clusters of Nvidia's 700W H100.

With twice the silicon filling out Nvidia's latest GPU, it should come as some surprise that it runs only a little hotter — or at least it can, given the ideal operating conditions.

With the B100, B200, and GB200, the key differentiator comes down to power and performance rather than memory configuration. According to Nvidia, the silicon can actually operate between 700W and 1,200W, depending on the SKU and type of cooling used.

Within each of these regimes, the silicon understandably performs differently. According to Nvidia, air-cooled HGX B100 systems are able to squeeze 14 petaFLOPS of FP4 per GPU, while consuming the same 700W power target as the H100. This means if your datacenter can already handle Nvidia's DGX H100 systems, you shouldn't run into trouble adding a couple of B100 nodes to your cluster.

Where things get interesting is with the B200. In an air-cooled HGX or DGX configuration, each GPU can push 18 petaFLOPS of FP4 while sucking down a kilowatt. According to Nvidia its DGX B200 chassis with eight B200 GPUs will consume roughly 14.3kW – something that's going to require roughly 60kW of rack power and thermal headroom to handle.

For newer datacenters built with AI clusters in mind, this shouldn't be an issue – but for existing facilities it may not be so easy.

Speaking of AI datacenters, reaching Blackwell's full potential will require switching over to liquid cooling. In a liquid-cooled configuration, Nvidia says the chip can output 1,200W of thermal energy when pumping out the full 20 petaFLOPS of FP4.

All of this is to say that liquid cooling isn't a must this generation but – if you want to get the most out of Nvidia's flagship silicon – you're going to need it....

....MUCH MORE

"Nvidia CEO Jensen Huang debuts new $8,990 lizard-embossed leather jacket, also says something about AI GPUs: (NVDA)

Two from Tom's Hardware. First up the headliner, March 18:

Jensen's jacket retails for nearly $9,000 and is currently on sale for 40% off.

Nvidia CEO Jensen Huang is well-known for giving his keynotes wearing a black leather motorcycle jacket. He hasn't addressed why he chose his (now iconic) black leather jacket specifically (considering other tech CEOs are known for hoodies and black turtlenecks, it's a pretty good choice), but he mentioned in an interview with HP last year that his wife and daughter are responsible for his current style. 

So we weren't terribly surprised to see Jensen in yet another black leather motorcycle jacket for the 2024 GTC keynote. But this time, it was a different leather jacket—still black but looking like it was made of lizard skin. Naturally, Tom's Hardware editors quickly went to the staffroom to discuss this fascinating disruption in Jensen's wardrobe. 

(Just kidding, it took me all of two seconds to find Jensen's jacket — I'm nothing if not a leather jacket connaisseuse.)....

....MUCH MORE

Nvidia’s next-gen AI GPU is 4X faster than Hopper: Blackwell B200 GPU delivers up to 20 petaflops of compute and other massive improvements
The dual-die B200 GPU has 4X the AI training performance and 30X the inference performance of its predecessor.

Nvidia currently sits atop the AI world, with data center GPUs that everybody wants. Its Hopper H100 and GH200 Grace Hopper superchip are in serious demand and power many of the most powerful supercomputers in the world. Well, hang on to your seats, because Nvidia just revealed the successor to Hopper. CEO Jensen Huang today dropped the Blackwell B200 bomb, the next-generation data center and AI GPU that will provide a massive generational leap in computational power.

The Blackwell architecture and B200 GPU take over from H100/H200. There will also be a Grace Blackwell GB200 superchip, which as you can guess by the name will keep the Grace CPU architecture but pair it with the updated Blackwell GPU. We anticipate Nvidia will eventually have consumer-class Blackwell GPUs as well, but those may not arrive until 2025 and will be quite different from the data center chips....

....MUCH MORE (they go deep) 

After trading up a bit in the regular session +$6.18 (+0.70%) the stock settled at $869.00 in afterhours trade, down $15.55 (-1.76%).

Earlier: In Nvidia's World, If You (and your company) Don't Have Money You Will Not Be Able To Compete (NVDA)

In Nvidia's World, If You (and your company) Don't Have Money You Will Not Be Able To Compete (NVDA)

The advantage flywheels keep spinning and reinforcing each other to the point that the Pareto distribution of profits - 20% of companies reap 80% of the profits - is becoming Super-Pareto where 5% of the companies reap 95% of the profits and is approaching Hyper-Pareto at maybe 2% of companies reaping 98% of profits.

It all comes down to having the resources to keep up. 

I watched Mr. Huang give the keynote and it's all a bit much to digest before firing out comments that would make any sense at all so here are some of today's headlines to give a taste of what the intro paragraph is based on.

These are Nvidia's press releases via GlobeNewswire

Some of the collaboration announcements went with PR Newswire e.g. "Microsoft and NVIDIA announce major integrations to accelerate generative AI for enterprises everywhere" and "Supermicro Grows AI Optimized Product Portfolio with a New Generation of Systems and Rack Architectures Featuring New NVIDIA Blackwell Architecture Solutions" while others are with companies that handle their own press releases.

NVIDIA Digital Human Technologies Bring AI Characters to Life
March 18, 2024 18:01 ET

NVIDIA Powers Japan’s ABCI-Q Supercomputer for Quantum Research
March 18, 2024 18:00 ET

NVIDIA Unveils 6G Research Cloud Platform to Advance Wireless Communications With AI
March 18, 2024 18:00 ET

NVIDIA Launches Cloud Quantum-Computer Simulation Microservices
March 18, 2024 17:58 ET

NVIDIA Announces Project GR00T Foundation Model for Humanoid Robots and Major Isaac Robotics Platform Update
March 18, 2024 17:54 ET

NVIDIA DRIVE Powers Next Generation of Transportation — From Cars and Trucks to Robotaxis and Autonomous Delivery Vehicles
March 18, 2024 17:47 ET

NVIDIA Announces Omniverse Cloud APIs to Power Wave of Industrial Digital Twin Software Tools
March 18, 2024 17:38 ET

NVIDIA Launches Generative AI Microservices for Developers to Create and Deploy Generative AI Copilots Across NVIDIA CUDA GPU Installed Base
March 18, 2024 17:18 ET

NVIDIA Healthcare Launches Generative AI Microservices to Advance Drug Discovery, MedTech and Digital Health
March 18, 2024 17:16 ET

NVIDIA Announces Earth Climate Digital Twin
March 18, 2024 17:11 ET

NVIDIA Announces New Switches Optimized for Trillion-Parameter GPU Computing and AI Infrastructure
March 18, 2024 16:30 ET

NVIDIA Launches Blackwell-Powered DGX SuperPOD for Generative AI Supercomputing at Trillion-Parameter Scale
March 18, 2024 16:30 ET

NVIDIA Blackwell Platform Arrives to Power a New Era of Computing
March 18, 2024 16:27 ET

TSMC and Synopsys Bring Breakthrough NVIDIA Computational Lithography Platform to Production
March 18, 2024 16:19 ET

Here's the keynote speech, the conference continues through the 21st:


More to come, probably tomorrow.

"Trump can’t secure $454 million appeal bond in New York fraud case, his lawyers say"

From CNBC, March 18:

  • Former President Donald Trump has been unable to fully secure a $454 million appeal bond in a New York civil business fraud case, according to a Manhattan Supreme Court filing.
  • Trump, the Trump Organization, and other defendants were found liable in the case, filed by New York Attorney General Letitia James.
  • The Republican, who is set to face President Joe Biden in November’s election, is also challenging defamation case judgments in favor of writer E. Jean Carroll, who accused him of rape. 

Former President Donald Trump has been unable to obtain an appeal bond to secure a $454 million civil judgment against him in a New York business fraud case, his attorneys said in a court filing Monday.

Lawyers for Trump and his co-defendants said it has been “impossible” for them to secure a complete appeal bond, which would effectively require “cash reserves approaching $1 billion,” which neither the former president nor his company has.

Trump’s team has approached, without success, around 30 surety companies through four separate brokers as he seeks an appeal bond, and they have spent “countless hours negotiating with one of the largest insurance companies in the world,” according to the filing with the Appellate Division of Manhattan Supreme Court.

Under New York court rules, Trump must post an appeal bond if he wants to avoid New York Attorney General Letitia James moving to collect on the fraud judgment in the state’s favor.

James has said she will seize Trump’s property if he is unable to pay the entire judgment or obtain an appeal bond.

Trump’s lawyers in their filing said that if the appellate division considers denying a stay of the judgment, it should schedule oral arguments on the issue.

And the attorneys asked that if the division declines to grant the stay, they be allowed to ask the Court of Appeals, the highest state court in New York, to pause the judgment without Trump having to obtain an appeal bond in the full amount.

Manhattan Supreme Court Judge Arthur Engoron in February ordered Trump and his co-defendants to pay a total of $464 million in damages and interest for violating a New York anti-fraud statute.

Engoron ruled in favor of James, who in a lawsuit had accused Trump, his two adult sons, the Trump Organization, and the company’s top executives of falsely inflating Trump’s asset values for years to boost his net worth and get financial perks.

Trump was ordered to pay the lion’s share of the judgment: $454 million. Post-judgment interest on Trump’s share of the damages continues to accrue at a rate of nearly $112,000 a day.

Trump, who has secured the Republican presidential nomination, in a deposition last year claimed to have “substantially in excess of $400 million in cash.”

Despite that, Monday’s nearly 5,000-page court filing by his lawyers detailed his inability to get a bond to secure the full judgment.

The filing includes an affidavit from Gary Giulietti, president of the Northeast division of the Lockton Companies, which he describes as the largest privately held insurance brokerage firm in the world.

Giulietti, who was hired to help the defendants to obtain a bond, in that statement wrote, “Despite scouring the market, we have been unsuccessful in our effort ... for the simple reason that obtaining an appeal bond for $464 million is a practical impossibility under the circumstances presented.”

Only a handful of bond surety companies are approved by the Treasury Department to underwrite a bond that large, and many of those firms will only issue a single bond to a maximum of $100 million, Giulietti wrote.

He also said that none of those companies will accept non-liquid assets — such as real estate — as collateral.

“Simply put, a bond of this size is rarely, if ever, seen,” Giulietti wrote. “In the unusual circumstance that a bond of this size is issued, it is provided to the largest public companies in the world, not to individuals or privately held businesses.”

The Trump Organization is privately held.

Giulietti wrote that it would be unattainable for a private company to obtain a bond to secure the $464 million total judgment unless it had around $1 billion in cash or cash equivalents to offer as collateral, while still being able to satisfy its other business obligations.

“While it is my understanding that the Trump Organization is in a strong liquidity position, it does not have $1 billion in cash or cash equivalents,” he wrote.

Trump’s attorneys also noted in the filing that bond issuers often will demand collateral totaling 120% of the judgment, which equates to over $557 million.

Those issuers are also likely to demand a two-year advance on a 2% annual bond premium, which would require the defendants to pay more than $18 million upfront, the lawyers wrote....

....MORE

Also at CNBC:

"Elon Musk says Trump ‘came by’ while he was eating breakfast, did not ask for money"

This Will Be A Bloodbath: "Biden Set to Crack Down on Auto Emissions to Accelerate EV Sales"

The net effect of this order will be to give the Chinese the auto industry.*
And maybe that's the intent.

From Bloomberg, March 16:

  • EPA expected to finalize tailpipe emission limits within days
  • Formula for calculating electric vehicle fuel use also coming

The Biden administration is preparing to roll out the toughest-ever limits on pollution from the nation’s cars and light trucks after making changes likely to mollify some automakers.

Emissions limits set to be finalized by the Environmental Protection Agency within days would propel electric vehicle sales well beyond current levels. The EPA has projected that to meet proposed mandates, electric models would need to make up roughly two-thirds of car and light truck sales in 2032 — up from less than a tenth last year.

The measure, which sets limits on smog-forming pollution, soot and carbon dioxide emissions, is seen as one of the most consequential climate regulations being imposed by President Joe Biden. It’s also key to helping the US fulfill its Paris Agreement commitment to at least halve the country’s greenhouse gas emissions by 2030. The transportation sector is the biggest source of planet-warming pollution in the US today.

“Cars and light trucks on their own are roughly 20% of the carbon footprint,” said Manish Bapna, head of the Natural Resources Defense Action Fund. Cutting that is “absolutely essential to real, concrete progress.”

Yet the regulation requires a delicate balancing act for Biden, who is courting voters in the swing state of Michigan, including autoworkers uneasy about a too-rapid transition to electric vehicles.

Read More: Biden EV Tax Credits Are Ripe Target for Gutting If Trump Wins

US carmakers warned the initial proposal wasn’t achievable — with EV penetration dependent on the installation of charging stations and other factors beyond the industry’s control.

The next few years are “absolutely critical” for developing the necessary supply chain and charging infrastructure, said John Bozzella, head of the Alliance for Automotive Innovation. “It is appropriate for policymakers and regulators to focus not only on the endpoint but what the next three or four years look like.”...

*Among others: 
December 8, 2023
Western Legacy Automakers Probably Won't Be Long-Term Survivors
Because their current business is being mandated and legislated out of existence the Western marques, barring some serious breakthroughs in small-scale hydrogen or methanol, will have to pivot to EV's.

And they won't be able to compete.

It almost appears that the gifting of the electric vehicle and solar industries to the Chinese was deliberate.

First up, from Electrical Engineering Times, December 6:
Experts See Rapid Rise of Chinese EV Makers...

And at Fortune, November 30:

Elon Musk suggests Tesla and 9 Chinese companies will be the top 10 carmakers
Tesla CEO sees big things ahead for China's electric-vehicle makers 

In 2011, Elon Musk ridiculed the quality of electric vehicles made by China’s BYD. Then he admitted this May that “their cars are highly competitive these days.” Now, the Tesla CEO is amping up his praise of Chinese EV makers.

“The Chinese car companies are extremely competitive,” Musk said at this week’s New York Times Dealbook conference. “China is super good at manufacturing, and the work ethic is incredible.” 

He even went so far as to suggest that the top 10 automakers of the future might be mostly Chinese ones—although he still envisions Tesla sitting atop them all.

“There’s a lot of people out there who think that the top 10 car companies are going to be Tesla followed by nine Chinese car companies,” he said at the conference. “I think they might not be wrong.” 

In the case of BYD, its manufacturing prowess had long impressed Berkshire Hathaway vice chairman Charlie Munger, who passed away this week. While Berkshire generally steers clear of the auto industry—it declined to invest in Tesla—Munger led an enormously successful investment in BYD. He called the carmaker’s founder and CEO Wang Chuanfu a “natural engineer,” adding that “the guy at BYD is better at actually making things than Elon is.”

‘Demolish the old legends’....
....MUCH MORE 
 
Of course the big media takeaway from the DealBook conference was Musk's F*** You to Disney et al.

Meanwhile, In Beijing: China Ponders Mass Production Of 'God Particle'

From the South China Morning Post, March 8:

‘Two sessions’ 2024: China’s construction of the world’s largest particle collider may start in 2027

  • The Circular Electron Positron Collider, known as a Higgs factory, will take a decade to build and become the next global centre of particle physics: Wang Yifang
  • Since first proposed in 2012, there have been doubts over the high cost and technical readiness of the CEPC project

Construction of the world’s largest particle collider could begin in China in three years, although it must still win government approval and secure funding, a leading scientist said.

The 36 billion yuan (US$5 billion) Circular Electron Positron Collider (CEPC), also known as a Higgs factory, will take about 10 years to build and become the next global centre of particle physics, according to Wang Yifang, director of the Institute of High Energy Physics in Beijing.

By accelerating electrons and their antiparticles – positrons – in a 100km-long (62-mile) underground tunnel to extremely high energies and smashing them into each other, the CEPC will create millions of Higgs bosons and allow scientists to make new discoveries beyond the Standard Model – our existing best theory to describe the basic building blocks of the universe.

The ambitious project would also help China rise into a world leader and “pacemaker” in the field of high-energy physics, Wang told the Global Times during the National People’s Congress on Thursday.

He said the CEPC “technical design report” – which took more than 1,000 scientists from 24 countries five years to compile – had passed an international review and was met with “overwhelming feedback” from the physics community when it was released in December.

The report, together with numerous prototype devices built and experiments run by his team in the past decade, “proved our ability to design and build such a large scientific facility”, he said.

The CEPC concept was first proposed by Wang and his colleagues in 2012 after the Higgs boson – the “God particle” that gives almost all other particles their mass – was discovered using Europe’s Large Hadron Collider (LHC).....

....MUCH MORE

If you've forgotten what the Large Hadron Collider does, here's a quick refresher from CERN:



In the meantime I have to check whether our agreement for Long or Short Capital's End of the Universe Puts is transferable to other particle accelerators or if we need a new license.

Back when the LHC was supposed to fire up the first time, we mentioned Long or Short Capital's End of the Universe puts:

...That is why Long or Short is now offering LHC End of the Universe Puts. It’s a simple put option wherein the buyer retains the right to sell the Universe at a strike price of “Existing”. Based on our Black-Holes model used to value all “end of the world” options, the July 2008 vintage options are currently priced at $20....
Followed by "Large Hadron Collider Starts Up, Earth Suvives, End of the World Puts Plummet":
UPDATE: The marketers at LoS Capital* are still pushing product:
...We continue to reiterate the importance of LHC End of the Universe Puts.
“The LHC is a discovery machine,” said CERN Director General Robert Aymar
If this is true and you extrapolate it out, it is only a matter of time until they discover the end of the Earth and existence as we know it. Who is to say they won’t do that tomorrow? Again, not us. 
Recommendation: These securities do NOT benefit from the implicit guarantee of the US government, God or your locally relevant deity. Wink wink nudge nudge, but between you and me, they DO.
*At Long or Short LLC, we leverage our superior intellect and extensive investing experience to recommend explicit Long or Short positions and related abstract trades, which may or may not be possible with real world financial derivatives. We use science to improve the lives of the rich.
More About LoS
From -Baguette breaks Large Hadron Collider (End of the Universe Puts Trade Down)

And many, many more.

"Elite-Only Financial Markets"

From Professor Hanson's mini-bio at George Mason University: 

Robin Hanson is associate professor of economics at George Mason University, and research associate at the Future of Humanity Institute of Oxford University. He has a doctorate in social science from California Institute of Technology, master's degrees in physics and philosophy from the University of Chicago, and nine years experience as a research programmer, at Lockheed and NASA.

Professor Hanson has 5555 citations, a citation h-index of 35, and over ninety academic publications, including in Algorithmica, Applied Optics, Astrophysical Journal, Communications of the ACM, Economics Letters, Economica, Econometrica, Economics of Governance, Foundations of Physics, IEEE Intelligent Systems, Information Systems Frontiers, Innovations, International Joint Conference on Artificial Intelligence, Journal of Economic Behavior and Organization, Journal of Evolution and Technology, Journal of Law Economics and Policy, Journal of Political Philosophy, Journal of Prediction Markets, Journal of Public Economics, Maximum Entropy and Bayesian Methods, Medical Hypotheses, Proceedings of the Royal Society, Public Choice, Science, Social Epistemology, Social Philosophy and Policy, and Theory and Decision....

....and on and on. I hate him.

From his Overcoming Bias substack (you may remember it as a stand-alone blog), January 31, 2024: 

Prediction markets are financial markets, but compared to typical financial markets they are intended more to aggregate info than to hedge risks. Thus we can use our general understanding of financial markets to understand prediction markets, and can also try to apply whatever we learn about prediction markets to financial markets more generally.

With this in mind, consider the newly published paper Crowd prediction systems: Markets, polls, and elite forecasters, by Atanasov, Witkowski, Mellers, and Tetlock.

They use data from 1300 forecasters on 147 questions over four years from the Good Judgement Project’s entry in the IARPA ACE tournament, 2011-2015. (I was part of another team in that tournament.) They judge outcomes by averaging quadratic Brier-score accuracy over questions and time. 

They find that:

  1. Participants who used my logarithmic market scoring rule (LMSR) mechanism did better than those using a continuous double auction market (mainly better when few traders), and did about as well as those using a complex poll aggregation mechanism, which did better than simpler polling aggregation methods. 

  2. One element of the complex polling mechanism, an “extremization” power-law transformation of probabilities, also makes market prices more accurate. 

  3. Participants who were put together into teams did better than those who were not. 

  4. Accuracy is much (~14-18%) better if you take the 2% of participants most accurate in a year, and then using only these “elites” in future years. It didn’t matter which mechanism was used when selecting that 2% elite. 

The authors see this last result as their most important:

The practical question we set to address focused on a manager who seeks to maximize forecasting performance in a crowdsourcing environment through her choices about forecasting systems and crowds. Our investigation points to specific recommendations. …Our results offer a clear recommendation for improving accuracy: employ smaller, elite crowds. These findings are relevant to corporate forecasting tournaments as well as to the growing research literature on public forecasting tournaments. Whether the prediction system is an LMSR market or prediction polls, managers could improve performance by selecting a smaller, elite crowd based on prior performance in the competition. Small, elite forecaster crowds may yield benefits beyond accuracy. For example, when forecasts use proprietary data or relate to confidential outcomes, employing a smaller group of forecasters may help minimize information leakage. 

This makes sense for a manager who plans to ask ~>1300 participants ~>150 questions over ~>4 years, and who trusts some subordinate to judge how exactly to select this elite, and how to set the complex polling parameters, if they use a polling mechanism. But I’ve been mainly interested in using prediction markets as public institutions for cases where there’s a lot of distrust re motives and rationality. Such as in law, governance, policy, academia, and science. And in such contexts, I worry a lot more about the discretionary powers required to implement an elite selection system.

To see my concern, consider stock markets, whose main social function is to channel investment into the most valuable opportunities. More accurate stock prices better achieve this function, and the above results suggest that we’d get much more accurate stock prices by greatly limiting who can speculate in stock markets....

....MUCH MORE

Hurricane Watch: One Of The More Accurate Models Is Looking A Bit Scary

A twofer from Artemis, first up, March 8:

ECMWF forecast for 2024 hurricane season seen as particularly aggressive

Seasonal forecasts for tropical storm and hurricane activity issued at this time of year are often seen as needing to be taken with a large pinch of salt, but another early forecast from the ECMWF is seen as particularly aggressive and so worth highlighting, in calling for 17 named storms and 9 hurricanes in the Atlantic before the end of September 2024.

The European Centre for Medium-Range Weather Forecasts, or ECMWF, runs one of the most highly respected meteorological forecast models and has one of the largest supercomputer data centres to run it on, so it deserves some attention.

As we reported the other day, early long-range forecasts for the 2024 Atlantic hurricane season are calling for it to be particularly active.

The timing of a shift to La Niña conditions is seen as one of the critical factors for the 2024 hurricane season, as that could make conditions more conducive to storm formation and reduce the wind shear that hinders tropical storm development.

Another key factor for the 2024 hurricane season is the fact sea surface temperatures (SSTs) in the tropical Atlantic are already above average and in some cases well above, providing conditions that should see a ready supply of the fuel hurricanes require to form and intensify.

Finally, forecasts for steering currents also suggest that the United States could be more under threat this year than last, while the Gulf of Mexico is also highlighted as a potential hotspot for 2024 tropical storm activity.

The ECMWF provides a seasonal outlook for tropical storm activity in the Atlantic from April through the end of September and during that period the model ensemble average calls for around 17 named tropical storms, with 9 of them becoming hurricanes.

The ECMWF model forecast also suggests accumulated cyclone energy (ACE) levels 170% above normal, which would translate into ACE of 165 by the end of September, which would signal an active first few months of the 2024 hurricane season.

Experts point out that forecasts at this lead time tend to lack skill, as do the ones from December we had covered in our recent article.

But, for insurance, reinsurance and insurance-linked securities (ILS) market interests, it’s still important to watch the evolving forecasts, to be informed as to how conditions may turn out.

Of course, this is an industry where decisions on portfolio construction are rarely taken due to long-range forecasts, but as the hurricane season approaches, any suggestion of more hurricane threat for one part of the coast or another can influence investment decisions, especially in the cat bond market (for example with Florida specific or Gulf Coast specific risks).

Some are saying that this ECMWF forecast is the most aggressive it has ever issued this early on, but there is a lot that can happen meteorologically and climatologically before the season begins, as well as lot that can happen through it.....

....MUCH MORE

And March 14:

2024 hurricane season – La Nina with lower odds of re-curving: Klotzbach at SIFMA ILS

Speaking today at the SIFMA ILS conference in Miami, Phil Klotzbach, Ph.D., a Senior Research Scientist at the Department of Atmospheric Science of the Colorado State University, provided some insights into what to expect for the coming 2024 Atlantic hurricane season.

 Klotzbach and his team provide one of the seasonal hurricane forecasts that the insurance, reinsurance and insurance-linked securities (ILS) community watches most closely.

His comments are telling, of the potential for an active year. While he also provided some insights that suggest the track of Atlantic tropical storms and hurricanes in 2024 could prove to be more threatening for losses than seen last year.

“There’s been a lot of discussion already, a lot of excitement about the 2024 hurricane season and one of the big reasons why is because we had El Niño last year which, at least somewhat put the brakes on the season for being too active.

“But that El Niño is going away, I would say right now it’s on life support and certainly likely to be knocked out here in the next couple of months,” Klotzbach explained.

“But if you look at the Atlantic, that’s a lot of very, very dark red and so that record warm Atlantic hasn’t gone anywhere. So the big concern is, if we have that record warm Atlantic, we don’t have El Niño putting somewhat of the brakes on, you know what the heck are we going to see for 2024.

“So when it comes to El Niño, the odds of it going away are very high. This is the forecast that has just come out from the Climate Prediction Centre, and they’ve actually upped the odds now to over 80% of La Nina for August through October.”....

....MUCH MORE

These follow on Hurricane Watch: "Long-Range Forecasts Suggest 2024 Hurricane Season From Hell":

This is part of what we were thinking about back on January 29 when we mentioned:

...An interesting situation. Depending on how the equities act over the next few weeks this may be setting up an odd little pair trade, long U.S. natural gas producers, short U.S. insurers  and/or international reinsurance companies....

Possibly of interest, January's " The Habitués Of London's Square Mile Like Them Some Catastrophe Bonds":

We shall mount an expedition to glean what we can of their manners and customs.

"Nvidia AI developer conference kicks off with new chips in focus" (NVDA)

The stock is up  $23.83 (+2.71%) at $902.19 in pre-market action.

Last week we were seeing quite a few pseudo-professional "buy the rumor, sell the fact" pronouncements regarding the GPU Tech Conference but I don't know if that is a good plan, you have a March quarter earnings report coming and though it is expected to be a blow-out, it will probably surprise on the upside. NVDA is selling every chip that they and TSMC can produce and will be for at minimum another quarter and maybe three.

Back to the commentators, you know they're pseudo because they don't use the rhymey "Buy on mystery, sell on history" that any seasoned denizen of the flashing red/green world would go for, if just to break up the monotony - sheer terror pattern of markets.

From Reuters, March 18:

Artificial intelligence semiconductor powerhouse Nvidia kicks off its annual developer conference on Monday, with investors focused on new chip announcements from Chief Executive Jensen Huang in an afternoon keynote address.

Nvidia's new chip and software announcements at GTC 2024 will help determine whether Nvidia can maintain its leadership position as the dominant seller of the tools needed to fuel the past year's frenzy around AI. Nvidia dominates the data center AI chip market, capturing roughly an 80% share last year.

Nvidia's market share is expected to drop several percentage points in 2024 as new products from rivals such as Intel and Advanced Micro Devices hit the market.

Huang is expected to announce the next generation of AI processors designed by the company. The forthcoming B100 chip is expected to include significant improvements over its predecessor, the H100.

Though Nvidia is widely regarded as a chip designer, the company has built a significant battery of software products as well....

....MORE

"Arms Maker Rheinmetall Forecasts Record Sales, Profit Growth Amid Rising Geopolitical Tensions" (RHM.de)

It was just a throwaway line in a March 7 post about possible Chinese yuan weakness but there must have been something in the air: 

The last time we saw this sort of stockpiling behavior the yuan was under 7-to-the-dollar and our guess was that the order had gone out to importers to convert currency into storable commodities ahead of a devaluation in the yuan....
*****
....So who knows? But if I was long the German export industry I would be concerned that further weakening in the yuan would make Chinese exporters even more competitive than they already are.
Except maybe for Rheinmetall. The armaments industry seems pretty well insulated from currency fluctuations. RHM.de 437.40 +1.18%

Getting a bit of that 'ol "Arms of Krupp" vibe.*

From the Wall Street Journal, March 14:

Rheinmetall expects sales and profit margins will continue to grow this year as the Ukraine and Israel-Hamas wars show little sign of abating and governments ramp up spending on military hardware.

The German arms maker said Thursday that sales should climb to around 10 billion euros ($10.95 billion) this year from the EUR7.18 billion reported for 2023. Rheinmetall expects an operating margin between 14% and 15%, above the 12.8% it posted for last year. Sales guidance is above analysts’ EUR9.64 billion projection, while the operating margin is within expectations of 14.5%.

The company’s sales forecast marks an improvement of roughly EUR2.82 billion on year and the first time in its history that sales are expected to reach the EUR10 billion mark, signaling confidence among Rheinmetall management that geopolitical tensions will continue to translate into orders in the coming months.

“A new decade of security policy has begun,” Chief Executive Armin Papperger said. “We are investing massively, building new plants and significantly increasing our personnel.”

Rheinmetall, best known for its armored vehicles and munitions production, emerged as a key beneficiary of Russia’s invasion of Ukraine in February 2022, securing a steady stream of orders from members of the North Atlantic Treaty Organization seeking to replenish their stockpiles after diverting significant caches of weapons to Kyiv.

In the fourth quarter alone, the group signed two contracts valued at about EUR860 million in total to modernize air-defense systems in Austria and Romania. Meanwhile, orders for ammunition continued to pour in, including one valued at more than EUR300 million to supply multiple-rocket launcher ammunition to an undisclosed European NATO member.

Rheinmetall’s weapon and ammunition division reported sales of EUR1.76 billion for 2023 as a whole, while the group’s vehicle systems business—which includes military wheeled and tracked vehicles—contributed EUR2.61 billion in sales. Rheinmetall’s order backlog reached EUR38.29 billion at the end of December.

The volume of orders shows demand for ammunition remains resilient after more than two years into Russia’s invasion of Ukraine. In a deal completed last year, Rheinmetall acquired Expal Munitions in Spain in an effort to boost production.

Meanwhile, the stock continues to climb. Shares were up about 4% at EUR438.00 on Thursday morning, giving Rheinmetall a market value of roughly EUR18.35 billion, according to FactSet. The stock traded at roughly EUR95.00 in the days prior to Russia’s invasion of Ukraine in February 2022, and at roughly EUR235.00 before the Israel-Hamas war broke out in October 2023....

....MORE

Also at the Journal this morning: "After the Putin Rally, Europe’s Defense Stocks Get a Trump Bump

RHM.DE 468.00 up 11.10 (+2.43%)
*And Krupp? Our last mention was in 2020:

One of the reasons we read books is so we can learn from the mistakes of other,s avoid making those mistakes, and get on with making mistakes of our own.
Here's the key takeaway from the insolvency of venerable and giant Krupp, brought low by what was in effect maturity transformation:

"Liquidity is expensive but illiquidity is much more so,
because it destroys the very existence of a firm"
-William Manchester, The Arms of Krupp

The family dynasty had a pretty good run, 1587 to 1968, for a while becoming the largest company in Europe before needing to be bailed out which required the fam to relinquish control.

Manchester's book is something like a half-million words long but it's those 18 in the quote above that really hit a nerve.
From an August 2007 post just after the quant-quake:
Liquidity in Business and Markets
I don't remember if it was Johannes or Ernst, it was a long time ago that I read Manchester, quoting one of the Schroeder boys on the insolvency of Krupp. That line has stuck with me. Here's the book.

Sunday, March 17, 2024

"Bankers Will See AI Transform Three-Quarters of Day, Study Says"

So it's back to 3 - 6 - 3 banking?*

From Bloomberg, February 27:

  • Accenture says banking sector has more to gain than any other
  • AI offers opportunity for firms to re-evaluate ways of working

Artificial intelligence is likely to replace or at least lend a hand in tasks that take up almost three-quarters of the time bank employees now spend working.

That’s the conclusion of a new analysis by consultancy Accenture, which said banking has the potential to benefit more from the technology than any other industry. Just 27% of employees’ time currently has a low potential of being transformed, according to the analysis.

“There is a reinvention that is happening across banks, a way for firms to step back and re-evaluate ways of working,” Keri Smith, global banking data and AI lead at Accenture, said in an interview.

The release of ChatGPT more than a year ago prompted many firms to boost hiring for AI-related positions and test more uses for generative AI, which can summarize documents, write emails and churn out responses to users’ questions. The world’s biggest banks have been experimenting, spurred by the promise that the technology will boost staffers’ productivity and cut costs.

“Every bank needs to think through their talent strategy, and how to take this technology to scale,” Smith said. 

At Citigroup Inc., all 40,000 coders will have the ability to experiment with different AI technologies by the end of March. Analysts at Bank of New York Mellon Corp. can wake up two hours later to write their research, because AI technology can create a rough draft and prepare related data for them overnight, Chief Executive Officer Robin Vince said on an earnings call last month....

....MORE
*
From the Federal Reserve Bank of Richmond Virginia's Economic Quarterly, Winter 2006:  

The 3-6-3 Rule: An Urban Myth?

Observers often describe the banking industry of the 1950s, 1960s, and 1970s as operating according to a 3-6-3 rule: Bankers gathered deposits at 3 percent, lent them at 6 percent, and were on the golf course by 3 o’clock in the afternoon. The implication is that the industry was a sleepy one, marked by a lack of aggressive competition. Further, the often heard phrase “bankers’ hours” also seems to point to a lack of competitive zeal. Tight regulation is thought to have limited competition and allowed the 3-6-3 rule and the concept of bankers’ hours to survive....

Ukrinform: Russia Carried Out The Drone Strike In Transnistria

Things are starting to get a bit confusing.

From Ukrinform, March 17:

Center for Countering Disinformation: Russia carried out provocation in Transnistria

Russia carried out a provocation in unrecognized Transnistria by attacking a military unit with a kamikaze drone.

The press service of the Center for Countering Disinformation at Ukraine's National Security and Defense Council said this in a Telegram post, Ukrinform reports.

"Russia carried out a provocation in Transnistria with a kamikaze drone attack on a military unit. The main logic of the Kremlin's actions is the information escalation of the situation, since the Russian Federation does not have a corridor to Transnistria to carry out military provocations," the center said....

....MORE

Daily Express USA had a picture:

https://img-s-msn-com.akamaized.net/tenant/amp/entityid/BB1k356z.img?w=590&h=350&m=6

And across the Dniester, from Radio Free Europe, March 17:

Man Detained For Setting Fire At Russian Embassy In Moldova  

Police in Moldova say a man threw Molotov cocktails at the Russian Embassy in the capital, Chisinau, while Russian voters were lining up outside the building on the presidential election day, March 17. As Moldovan officers were detaining the man, some of the voters scolded him and a woman kicked him. Authorities later identified him as a 54-year-old dual Moldovan-Russian citizen. Flames and rising smoke were seen across the embassy fence.

"India Tailors Electric-Vehicle Tariff to Lure Tesla" (TSLA)

 Mr. Musk has to thread the needle on this one lest his Chines supply chain begin experiencing, ah, slowdowns. Alternatively, he goes big fast, in which case he might just leave the Chinese market to BYD and the other half-dozen Chinese EV manufacturers that will be among the survivors of the coming shakeout.

From the Wall Street Journal, March 15:

Import-duty cut for manufacturers who invest big in domestic production follows months of talks with car maker

In a step largely aimed at wooing Tesla, India said Friday that it would drastically cut import duties on certain electric vehicles for manufacturers who invest at least $500 million to produce their cars in the country, the world’s third-largest automotive market.

The change in policy, which requires manufacturers to set up facilities within three years, comes after Indian Prime Minister Narendra Modi met Tesla Chief Executive Elon Musk on a state visit to the U.S. in June. Following the meeting, which Musk called “fantastic,” the Tesla chief executive said he hoped to visit India in 2024.

Modi “really cares about India because he is pushing us to make significant investments in India, which is something that we intend to do. We just have to figure out the right timing,” Musk told reporters.

Since that visit, months of talks have taken place between Tesla executives and top Indian officials. India wants to draw more global investment from high-tech firms as part of its efforts to become a technology manufacturing hub and create jobs. Musk has long expressed interest in being in India, but has also said that India’s import duties are far too high.

India taxes imported electric vehicles at up to 100% depending on their price. The new policy, which is effective immediately, would reduce duties to 15% for passenger EV cars with import prices of $35,000 and above. The tariff reduction would be available for up to 8,000 cars a year and a limit of 40,000 cars in total over a span of five years, according to the Trade Ministry.

Tesla’s Model 3 is listed on its website as starting at nearly $39,000 in the U.S., excluding any credits or discounts....

....MUCH MORE

Carbon: "Two scammers, a web of betrayal, and Europe’s fraud of the century"

Also known as Tuesdays, in Brussels.

From The Atavist Magazine, no. 148:

Watch it Burn

A good scammer sees opportunity everywhere, including their own downfall. In 2006, the police showed up at Gustav Daphne’s house in Beverly Hills. They had come once before, when a neighbor complained about his trash. Daphne happened to be swimming in his pool at the time, and because he is French, he came to the front door in a tiny little bathing suit. The police were appalled; they gave him a reprimand about storing his garbage more tidily and scurried away.

This time was different. The cops came straight into the house. There were a dozen of them, wearing bulletproof vests. They took him outside in handcuffs and put him in a car. Maybe he was paranoid, having built a multimillion-dollar empire on fraud and deceit, nurturing connections with international criminal rings, but at first he thought that he was being kidnapped. When he saw the jail, he was relieved.

The feeling was short-lived. The jail was cleaner than those in Europe where he’d been held, but after a couple of hours he demanded a cigarette and was informed that smoking was prohibited. OK, he thought. There must be a way. There’s always a way. He would find the right people, negotiate the right conditions. He had to smoke! He loved to smoke. He loved it more than anything, except for women. He loved women! And smoking, and art, and shopping.

He found someone in the prison whom everyone called El Gordo, a Mexican guy who could hook people up with anything. Daphne asked for cigarettes and was given an address on the outside where he would need to have $300 delivered. This was not a problem. He didn’t crave money, but it was useful, so he accrued it. His mansion had once belonged to a silent film star; he sometimes commuted by helicopter. There wasn’t much Daphne couldn’t afford.

After Daphne’s cousin drove a Bentley to a shady neighborhood and made the cash drop on his behalf, Daphne went back to El Gordo to collect his cigarettes. El Gordo looked at him, then gave him a nicotine patch. “No smoking in prison,” El Gordo said.

By the time Daphne was extradited to Europe to face money laundering charges, which was the reason he’d been arrested in the first place, he had kicked his cigarette habit. He felt great. He was buoyant with health. He boarded a plane to Switzerland in handcuffs, was whisked to a prison near the Alps, and was put in a cell. Waiting for him there was a pouch of tobacco. He resisted for a few hours. Then he smoked the whole thing.

Eventually, Daphne was sent to a prison in France, where he could get anything he wanted: magazines, special meals, the Israeli cigarettes he preferred. His lawyer could also bring him things. So when he saw a segment on TV about climate change policy, he asked his lawyer to bring him more information about France’s plans to reduce emissions. Daphne had a preternatural ability to sniff out criminal prospects, and he’d caught a familiar whiff.

When Daphne read the materials his lawyer provided him, he learned about Europe’s carbon-emissions trading system, the first of its kind in the world. It had grown out of the Kyoto Protocol, the landmark international agreement to reduce global emissions. Sure enough, Daphne told me, he saw the blueprint for what would become his next illicit enterprise. As soon as he’d finished his time in prison, he began gaming the new emissions-trading system.

The scam would help Daphne accrue even more money, and it would make him famous. In the media he cut a dashing figure, partying with celebrities and oligarchs. He maintained his slim physique by avoiding carbohydrates like they were venom and dressed in blazers cut from blue velvet or embroidered with shimmering brocade flowers. He liked to wear a diamond-encrusted Chopard sun pendant on his partially bared chest and was rarely photographed without one of his hundreds of pairs of Tom Ford sunglasses, all aviator-style with gradient lenses. Always, it seemed, he had a cigarette hanging out of the side of his mouth.

Reporters dubbed Daphne the “prince of carbon,” but it wasn’t just his flamboyant charisma that elevated him to criminal royalty. So did the nature of his new fraud. Daphne was scamming the fight against climate change by exploiting a policy flaw that left billions for the taking. 

No one was ever sure who was working with whom, who might be 
screwing someone else over, or who had started the whole thing.

I should say here that Gustav Daphne is a pseudonym. He remains a wanted man in France, so when I traveled to meet with him at his gated villa in Tel Aviv, he agreed to speak on the condition that I not use his name—any of his names. (He has a few aliases.) He kept saying what a bad idea it was to talk to me. He had turned over a new leaf, he insisted, and like a freshly avowed ascetic, he nurtured a few simple pleasures: taking his impeccably trained Belgian Malinois on sunset walks along the beach; going horseback riding with his daughters. He tried to steer clear of trouble, though it occasionally sought him out. A few weeks before we met, some masked guys on a motorcycle drove by firing guns at his home; when I visited, the front door was being replaced.

Still, his name is all over the French media. I warned him that, at least in some circles, a pseudonym would be a pretty weak shield for his identity. That was OK with him. He said that he wanted to put the past behind him and focus on his new ventures, like crypto investing. So, no name.

During my visit, Daphne took calls from his lawyers and asked favors of his wife and flirted with acquaintances over WhatsApp. He wore his Tom Ford sunglasses indoors and out. He showed me his art: a large Kandinsky painting in the foyer, a few Chagalls downstairs. The villa had some burly guys on staff and a cleaner from Sri Lanka who picked up after two fluffy indoor dogs that liked to avail themselves of the plush white carpets.

All this is part of Daphne’s downsized lifestyle. He used to have a bigger mansion, with a swimming pool and a tennis court, a gym and a movie theater. He once parked his yacht in the glittering harbors of the Côte d’Azur. But he has fashioned a new life for himself in Israel, which has yet to grant France’s request for his extradition.

Daphne wanted me to know that to him the carbon scam was a negligible chapter in a long and successful criminal career. It wasn’t his most lucrative scheme; it wasn’t even the first opportunity he’d pursued in the lumpish market of environmental interventions conceived by a civilization in ecological peril. Plus, he was just one of many people who ripped off the emissions-trading system.

Daphne and other scammers’ pillaging of Europe’s carbon market constitutes what the media have called “the fraud of the century”—billions of euros were stolen in a matter of months. The shadowy scheme attracted established crime rings and amateur hucksters alike, many of whom knew each other. But the scam lent itself to duplicity: No one was ever sure who was working with whom, who might be screwing someone else over, or who had started the whole thing. Its web reached the boxing rings of Las Vegas, the offices of Germany’s biggest bank, the caves along the border of Afghanistan and Pakistan where Osama bin Laden was hiding, and the gilded restaurants of Paris, where it also left blood spattered on the streets. It pulled in a playboy demi-celebrity, an Afghan refugee, a flashy street hustler who couldn’t accumulate enough bling, an immaculate businessman who hobnobbed with the queen of England, the doyenne of Marseille’s underground, and a man some people called the Brain.....

....MUCH MORE

"Elon Musk: AI will run out of electricity and transformers in 2025"

From New Atlas, March 1:

"I've never seen any technology advance faster than this." The chip shortage may be behind us, but AI and EVs are expanding at such a rapacious rate that the world will face supply crunches in electricity and transformers next year, says Elon Musk.

In a dial-in Q&A to close the Bosch Connected World conference, the recent Nobel Peace Prize nominee spoke about self-driving cars and humanoid robots, and hinted at what's coming next from Tesla in electric vehicles – but he clearly wanted to send the clearest possible signal to industry as well: Get going on clean energy generation, and make as many electrical transformers as you can.

We'll let Musk take it from here in his own words, lightly edited:

"The artificial intelligence compute coming online appears to be increasing by a factor of 10 every six months. Like, obviously that cannot continue at such a high rate forever, or it'll exceed the mass of the universe, but I've never seen anything like it. The chip rush is bigger than any gold rush that's ever existed.

"I think we really are on the edge of probably the biggest technology revolution that has ever existed. You know, there's supposedly a Chinese curse: 'May you live in interesting times.' Well, we live in the most interesting of times. For a while, it was making me a bit depressed, frankly. I was like, 'Well, will they take over? Will we be useless?' But the way I reconciled myself to this question was: Would I rather be alive to see the AI apocalypse or not? I'm like, I guess I'd like to see this. It's not gonna be boring....

....MUCH MORE

Mr. Musk may not know as much about electricity as Nikola Tesla but he does indeed know some stuff. 

"Everything is espionage: Things I learned researching Assange"

From Dynomight, March 2024:

(espissange? asspionage?)

Who is this Julian Assange guy? Is he good or bad? Did he do espionage? Why is the US so obsessed with getting its hands on him?

At dynomight.net we don’t like to answer questions. Instead, we prefer to replace them with more abstract questions that we also don’t answer.

Pop quiz

First up though—in which of the following scenarios would you be doing espionage?

  1. You work for the CIA. You’re a sweaty/greedy type and decide you want a Bugatti so you sell a list of CIA spies to Russia.

  2. You work for the CIA. You decide the US is an evil empire so you give a list of CIA spies to Russia for free.

  3. You work for the CIA. At a cafe, a barista is mean to you and in your grief you forget a list of CIA spies on a table. Russian agents later pick it up.

  4. You work for the CIA. You find some documents that prove the CIA is doing illegal stuff and give them to the New York Times.

  5. You work for the New York Times. You give a friend at the CIA some tips on how to steal some documents that prove the CIA is doing illegal stuff. The documents also contain a list of CIA spies, but whatever, you publish them anyway.

  6. You work for the New York Time. Unprompted by you, a friend at the CIA gives you some documents that prove the CIA is doing illegal stuff. There’s also a list of CIA spies, but whatever, you publish them anyway.

  7. You work for the New York Times. Unprompted by you, a friend at the CIA gives you documents that prove the CIA is doing illegal stuff. You redact any sensitive information and publish them.

  8. You have a blog. One day, you’re messing around with some publicly available datasets and realize that they prove the CIA is doing illegal stuff. You publish your findings.

  9. You have a blog. You don’t live in the US. You’re not political. One day, you get interested in, like, how much US natural gas production depends on machine tools imported from China, so you do some research and publish a post on that.

What is espionage?

You can take three legal views about Assange.

  1. He was a journalist and did nothing illegal.

  2. He did hacking or conspiracy or something, but not espionage.

  3. He did espionage.

Which is right? When I started looking into this, I expected the answer to be found in an examination of what Assange did. And, sure, that matters. But I quickly learned that I had no idea how the law actually works, and the reality is really weird. So let’s start there.

In US law, conspiracy is defined very broadly.
Say you and I decide to murder Alice. We agree that you’ll fill up your car with petrol and then we’ll go murder her. But when you get back, we remember that we love Alice and we take her out for dinner instead.

Well, good news! We’re both still guilty of conspiracy. Even though we didn’t do anything else illegal, conspiracy itself is still a crime. We conspired (“hey let’s murder Alice; OK cool”) and you took some action (getting petrol) and that’s all that’s required. Sound strange? Usually murder would be a state crime, and each state defines conspiracy slightly differently. But here’s the federal conspiracy statute (emphasis mine):

If two or more persons conspire […] to commit any offense against the United States […] and one or more of such persons do any act to effect the object of the conspiracy, each shall be […] imprisoned not more than five years

A lot of people seem to struggle to understand this, simply because it’s so strange. But that’s really how the law works—you “conspire” and then one person does some “overt act” and then you’re guilty. Prosecutors understand this very well and love charging people with conspiracy because it allows them to convict people even when they can’t prove anyone actually did any (other) crime.

(Incidentally, if you just ask me nicely to commit a crime, that would be solicitation rather than conspiracy. For reasons I don’t understand, no one ever talks about the possibility that Assange could be guilty of solicitation.)

In US law, espionage is defined very extremely very broadly.
When I hear “espionage”, I picture black turtlenecks and nuclear codes and exploding cigars. Is that what the law says?

Well, if you try to read the Espionage Act, it feels like it was deliberately written to be unreadable and unquotable. It’s insanely repetitive and annoying. So let me paraphrase:

Whoever does basically anything to obtain or communicate basically any information that could be harmful to the national defense of the United States shall be imprisoned for not more than 10 years.

I know this sounds crazy. If you have any doubt, please read for yourself. Note that classified information is never mentioned, as the act predates the classification system by decades. Also note that there is no mention of “spying” or “journalists” or “whistleblowers”. In fact, there’s no mention of “espionage”—it should have been called the Imprisoning People for Obtaining or Communicating Information Related to National Defense Act.

How the Espionage Act was used has varied throughout time....

....MUCH MORE

 Also at Dynomight:

Using axis lines for good or evil

Say you want to plot some data. You could just plot it by itself:

"This company intends to be the first to mine the moon"

From the Washington Post via MSN, March 13:

Nearly a decade ago, Congress passed a law that allows private American space companies the rights to resources they mine on celestial bodies, including the moon.

Now, there’s a private venture that says it intends to do just that.

Founded by a pair of former executives from Blue Origin, the space venture founded by Jeff Bezos, and an Apollo astronaut, the company, Interlune, announced itself publicly Wednesday by saying it has raised $18 million and is developing the technology to harvest and bring materials back from the moon. (Bezos owns The Washington Post.) 

Specifically, Interlune is focused on Helium-3, a stable isotope that is scarce on Earth but plentiful on the moon and could be used as fuel in nuclear fusion reactors as well as helping power the quantum computing industry. The company, based in Seattle, has been working for about four years on the technology, which comes as the commercial sector is working with NASA on its goal of building an enduring presence on and around the moon.

Earlier this year, two commercial spacecraft attempted to land on the moon as part of a NASA program designed to carry instruments and experiments to the lunar surface, and eventually cargo and rovers. The first attempt, by Astrobotic, a Pittsburgh-based company, suffered a fuel leak and never made it to the moon. The second, by Houston-based Intuitive machines, did land on the moon, but came in too fast and tipped over. Still, it was the first American spacecraft to land softly on the moon in more than 50 years, and it was the first commercial vehicle to achieve the feat.

NASA is planning additional missions in the year to come, which it says will not only help pave the way for humans to return to the moon but for private industry to begin commercial operations there as well.

Rob Meyerson, the former president of Blue Origin, co-founded Interlune with Gary Lai, another former executive at Blue, and Harrison Schmitt, a geologist who flew to the moon during Apollo 17. Also on the founding team are space industry executives Indra Hornsby and James Antifaev.

In an interview, Meyerson said that the company intends to be the first to collect, return and then sell lunar resources and test the 2015 law. There is a large demand for Helium-3 in the quantum computing industry, which requires some of its systems to operate in extremely cold temperatures, and Interlune has already lined up a “customer that wants to buy lunar resources in large quantities,” he said....

....MUCH MORE

Saturday, March 16, 2024

The Fall of Hong Kong: How China-US Rivalry Ended a Geopolitical Neutral Zone

From The Diplomat, March 16:

For decades, Hong Kong’s geopolitical neutrality was the very foundation of its freedom, autonomy, and prosperity. That’s no longer possible.

In a meeting of the U.S. National Security Council held on June 8, 1960, John F. Dulles, the secretary of state of the Eisenhower administration, made an interesting comment on Cold War Hong Kong: “Hong Kong exists because it is useful both to the Free World and the Sino-Soviet Bloc.” Sixty years later, Dulles’ comment remains insightful to understanding Hong Kong today.

In recent years, many people have talked about the fall of Hong Kong. But different pundits have quite different focuses. The first perspective attributes the fall of Hong Kong to the erosion of its political freedom, highlighting the backsliding of its freedoms of speech, press, and protest. The second perspective perceives the fall of Hong Kong as a breakdown of its autonomy, focusing on China’s absorption of its government, economy, and society into mainland systems. The last perspective sees the fall of Hong Kong as a decay of its status as an international financial center, indicating its exodus of capital and talents.

The loss of freedom, autonomy, and prosperity in Hong Kong are facts written on the wall. But they are symptoms – rather than causes – of Hong Kong’s decline. Fundamentally, the fall of Hong Kong is caused by its demise as a “geopolitical neutral zone” between China and the United States. 

From the Cold War to the post-Cold War, Hong Kong’s geopolitical neutrality not only attracted tremendous inflows of capital and talents, but it also enabled the city to be developed into a semi-democratic autonomy. But now it’s all over. For Hong Kong, the unfolding of China-U.S. New Cold War means that the city has lost the magic wand that has created its previous freedom, autonomy, and prosperity.

The Rise of Hong Kong From Cold War to Post-Cold War
In 1949, when the “Bamboo Curtain” had drawn down dividing Asia into communist and “Free World” countries, Hong Kong became an unique place in between the two rival camps. On the one hand, Hong Kong was geographically located at the doorstep of “Red China” and was a home to millions of ethnic Chinese. On the other hand, Hong Kong was a British crown colony and was diplomatically part of the Western bloc. Both the United States and China immediately realized Hong Kong’s unique geopolitical location and sought to make best use of the place to serve their own strategic interests.

For the United States, Cold War Hong Kong had critical strategic, political, and military values. Strategically, Hong Kong was the only place geographically connected with China while still being ruled by an ally. This made Hong Kong the best intelligence hub for the U.S. in Far East. Throughout the Cold War, the U.S. Consulate in Hong Kong served as Washington’s largest overseas intelligence apparatus. Politically, Hong Kong’s status as a capitalist enclave on Chinese soil also made it an ideal “political show window” for contrasting the backward conditions in communist China. To influence China through this show window, the United States provided massive economic aid to British Hong Kong government and opened up its market to facilitate Hong Kong’s industrialization. Militarily, Hong Kong was a major rest and recreation base for U.S. forces deployed across Asia, especially during the Vietnam War.

For China, well before the founding of the People’s Republic on October 1, 1949, Mao Zedong had already made a strategic decision not to recover Hong Kong by force – a decision that was later formalized as the policy of “long-term consideration, full utilization.” Economically, Hong Kong as a free port separated from China meant that Beijing could make best use of it to develop international trade. This function became especially critical after the Korean War. Since then, China had heavily relied on Hong Kong to circumvent the U.S. trade embargo, importing Western equipment and exporting Chinese food products through the city. Hong Kong’s position as the “capital of overseas Chinese” also meant that it was China’s principal conduit for absorbing foreign remittances sent from Chinese diaspora members to their mainland relatives.

The United States’ and China’s interests in Cold War Hong Kong were clearly not entirely compatible. But throughout the Cold War, both powers exercised a high degree of restraint toward each other’s presence in the city. Instead of risking a geopolitical showdown, both sides sought to optimize their own strategic interests without provoking the other side. 

For example, U.S. intelligence activities in Hong Kong were seen by China as a threat to its national security. In order not to provoke Beijing, Washington, London, and Hong Kong worked together to confine such activities within the scope of “information campaigns.” Similarly, the United States tolerated China’s use of the city as its trading hub after the Hong Kong government agreed to impose a system of import and export certification in 1952. Put differently, the tacit mutual accommodation of the U.S. and China in Hong Kong transformed the city into a de facto geopolitical neutral zone during the height of the Cold War of 1950s-1960s. 

Moving into the 1970s, Hong Kong’s unique status as a geopolitical neutral zone was further consolidated under the wider context of China-U.S. rapprochement. Following U.S. President Richard Nixon’s visit to China in 1972 and formal normalization in 1979, economic engagement had dominated China-U.S. relations for four decades. This proved to be a historical window for Hong Kong’s economic take-off, enabling the city to thrive by serving as a distinctive bridge between the United States and Chins....

....MUCH MORE

Related: 

Hong Kong: "How China strangled its golden goose – and paid a terrible price"
It's deliberate. Beijing has planned on bringing Hong Kong to heel since 2012 and possibly since 1997....

November 27, 2019
Hong Kong’s Demise

It appears that one of Beijing's options is to let Hong Kong die on the vine and wither away as a business center, with Shenzhen, Shanghai and even Hainan island assuming some of the various roles that Hong Kong has played over the years.

And if HK is no longer an entrepôt and the gateway to China it faces the possibility of becoming a colonial backwater but one that is so overbuilt it ends up as an urban hellscape. Imagine this:

http://amorq.com/uploads/tumb/title/201604/urbanjungle_tumb_660.jpg
From China Law Blog:
Hong Kong’s Demise
This blog has not minced words when it comes to describing the grim situation in Hong Kong, which, as one of my former colleagues at the State Department puts it, “will get worse before it doesn’t get better.”....
Hong Kong's history over the last couple hundred years is very different from Beijing's. 
 
October 6, 2022
Hong Kong: "Where Have the Traders Gone? A $4 Trillion Market Is Stuck in a Rut"