The Sunday Reed :: You Don't Matter

AI, Venezuela, and America's Financial Leviathans

South African folklore tells of the Kamappa, “a shapeless, gluttonous monster that swallows everything living it comes by and gets larger and larger the more it swallows. It has multiple sharp tongues which it uses as weapons.”

Only a young women remains. She gives birth to a son who magically grows to adulthood. The hero, Lituolone, is swallowed by the monster, but uses his knife to cut himself out, and frees thousands of humans trapped inside.

Welcome to The United States of America, circa 2025: Stuck inside a monster not of our making, waiting for a hero to save us.

We The People didn’t learn our lessons well enough after the crash of 1929. Nor after the Savings and Loan bailout ($150 billion in 1990 dollars) or after the last Great Financial Crisis of 2008-2009. With the US now sitting on $38 trillion of debt, a tab run-up on each and everyone of our financial lives, the Powers That Be are pushing us deeper into a financial hole (of their making) that we (the people) will have to clean up once again.

Don, the Bone Saw and the Oligarchs

The Kamappa took shape last week as it gathered at (what’s left) of The White House for a dinner featuring Mohamed bin-Salman and President Donald Trump sitting at the head of the Ruling Class.

Every guest at the table knew to whom they were bowing. They know that, even in their positions, representing trillions in personal wealth and trillions more in market capitalization, that the US and Saudi governments have money on offer for a simple trade: Do what you’re asked, do what you’re told, and watch the spigots of easy cash open wide.

The dinner should tell us what we already know: We can call ourselves a ‘democracy’ all we want. We’re not, though, not in the sense of what our mythology has taught us or in reality. Yes, we may go to the polls, it is rare indeed that the votes we cast will lead in any way to our own benefit. The irony, of course, is that someone like Donald Trump gets elected because we know how little authority We the People possess, and would rather see the system burn, than have our illusions further shattered.

Now we have both: A man who cares not a wit for any of use, who’s also a willing vehicle for the worst people, with the worst intentions. Bring him the gold telephones, the crypto scams, and the bags of cash (see Jared Kushner’s $2 billion) and he’s yours.

AI Bubble Blackmail

Despite their promises to the contrary, the AI industry has inflated a financial bubble that is on the precipice of popping. Given that the two legs propping up the American economy, AI investment (circular some say) and the top 1% responsible for 50% of consumer spending, a level of proactive restraint on the part of government regulators would make sense. As noted above, we’ve seen what happens in the wake of a non-existent regulatory scheme.

AI represents existential and financial risk. The chieftains of OpenAI, Nvidia, and (mis)-Anthropic haven’t missed an opportunity to tell us how many people will lose their jobs, how much investment will be necessary, and the non-zero risks of Skynet or The Matrix propagating out of their creation. They’re not so much Promethians as they are toying with Pandora’s Box.

Given the potential catastrophic nature of an AI bubble and/or the loss of millions of jobs, it would make sense for the Trump Administration to put the breaks on. That’s not going to happen, in fact, they’re going in the exact opposite direction, threatening states with penalties.

According to the National Conference of State Legislatures, states from Alabama to California have either considered or passed AI-related bills. The Trump Administration is now preparing an executive order that would:

• Challenge states’ efforts to enact their own artificial intelligence laws

• Establish an AI taskforce to launch lawsuits and threaten federal funding for states with contested AI laws

• AI industry leaders including Sam Altman’s OpenAI and venture capital firm Andreessen Horowitz oppose a state-by-state policy approach

According to CNBC, Trump’s order would direct the Commerce Department to withhold $42 billion in federal funds earmarked for broadband internet investment.

Author’s Note: It’s 2025 and we’re still talking about broadband internet adoption.

The threat of withholding federal funds to sway state behavior isn’t new. In 1984, Congress raised the legal drinking age to 21. To encourage states to follow suit, the feds tied highway funding to states revising their own alcohol laws. Only Louisiana attempted to skirt the rules but did eventually comply.

The idea of a uniform regulatory scheme is not, in and of itself, a bad idea. Given the nature of some modern industries, even basic operation may be difficult if laws change as you cross the border from Ohio to Indiana.

The difference here, of course, is that the Trump Administration is willing to harm the personal, professional, and educational prospects of American citizens to do more favors for their dinner guests and for a technology that has the potential to decimate the American workforce.

A War of Choice (Trump’s, Not Ours)

As you read this, the USS Gerald R. Ford and her strike group are patrolling the Caribbean Sea. Tens of thousands of US personnel and aircraft have been positioned on islands near the Venezuelan coastline. American forces are zapping boats in the open ocean, allegedly carrying illegal drugs.

For a president and a political movement who claim that Iraq and Afghanistan were examples of wars that America should not fight, the drumbeat of regime change in South America feels a lot like neo-conservatism. Two things can be true: Nicholas Maduro can be a monster and it’s not America’s role or responsibility to remove him from power.

Well under 50% of Americans believe we should enter a military conflict with Venezuela. Republican support for the idea dropped 10% between September and October. But what would an invasion look like. This is what War on the Rocks has to say:

Toppling Maduro is the easy part. What follows is the hard strategic slog of policing a sprawling, heavily armed society where state services have collapsed and regime loyalists, criminal syndicates, and colectivos — pro-government armed groups that police neighborhoods and terrorize dissidents — all compete for turf. Colombia’s National Liberation Army and dissident Revolutionary Armed Forces of Colombia factions operate openly from Venezuelan safe havens, running mining and smuggling routes, recruiting, and staging cross-border attacks. They would not go quietly.

What does THIS sound like?

Until someone convinces me otherwise, I assume most American foreign adventures are derivative of Three Days of the Condor. “What so important about…oil fields…?”

Nothing, Not Even College Football is Sacred

The Big 10 Athletic Conference, which now boasts 16 teams stretching from College Park, Maryland to Los Angeles, California, is considering a $2.4 billion agreement with a private equity firm. According to PE Insights, the Big Ten produced $880 million in revenue in 2023. The conference is in the middle of a $7 billion media contract that expires in 2036. Somehow, though, this money doesn’t represent a ‘viable funding source.’

The University of Michigan and the University of Southern California have thrown flags on the play. Neither school believes the deal has any upside for the schools in question or college athletics generally. Like so much of American life, top-tier public universities, their students and professors are now adjuncts to high-dollar athletic operations and federal research funding, to which they’ve become so addicted over the last 60 years, that they’re willing to enter into amoral agreements with the Trump Administration.

How many more bad examples do we need of private equity’s rapacious appetite for leveraged debt, shitty services, and wrecking the industries into which they ‘invest?’ From children being forced into unnecessary root canals to the systematic dismantling and dissolution of Toys R Us (a cornerstone of my childhood,) private-equity’s entry into any field results in a very small group of people making a lot of money while a great many people lose their jobs, work in terrible conditions, or lose their livelihoods altogether.

PE sniffing around college sports isn’t a surprise, it’s the next big pot of money these guys want to get their hands on. Given how they’ve wrecked emergency rooms and nursing homes, is there any doubt college football would be (further) ruined by their arrival?

Author’s Note: Steven Schwarzman, founder of PE firm Blackstone, was a guest at the White House last week.

A Marathon, Not A Sprint

We may not have their money or their power (at the moment) but we still have the numbers. We must begin to use what leverage we possess and begin the march toward a more equitable future. We have a recent example: When ABC pulled Jimmy Kimmel Live off the air, hundreds of thousands of us cancelled our various Disney subscriptions. After taking billions in losses for their supplication, the Mouse put Kimmel back on the air.

Disney lost an estimated $4 to $5 billion in market value in the week after they suspended Kimmel. They also lost an estimated 1.7 million subscribers which are the holy grail - recurring revenue - of many modern media companies.

We have an immediate opportunity to show our displeasure.

No-Buy Friday

You’ve already been inundated with Christmas sale ads. Every major retailer is touting their “Black Friday” sales. Amazon, Walmart, you name it, they’re trying to get you in their stores or clicking through their websites. Don’t give into the marketing.

Find your way out of the Amazon. Put off that trip to Walmart. Don’t take a bite of Apple’s deals. Leave Target, Best Buy, and Starbucks off your list this year. Send them a lump of goal with your absence.

If you are looking to buy for your friends and family, patronize small, local retailers. Don’t buy the book from Bezos when you can buy it from Dolly’s. Take a hard look at what we’ve become: Users of a consumer system that only cares to keep us swiping and tapping.

Maybe you’re over Christmas Commercialism. If so, consider a donation to a local food bank, your local NPR station, or another local non-profit that needs help as the temperatures drop and the lines grow longer.

These titans believe they can’t live without us. We have the ability to take those first jabs at the monster we’re stuck inside of and toward one where we see the light, spend more time with each other, in three-dimensions, away from doom-scrolling (guilty) on apps that feed us content to benefit them.

The silent majority, so long asleep, is beginning to stir. We’re far from wide awake, but the alarm is going off. Once we’ve fully opened our eyes, the change we want will appear begin to appear before us. Where we need to go has to be believed to be seen.

News and Notes:

Here’s the guest list from Trump’s White House dinner last week.

The Guardian produced this excellent report on private equity last year.

Don’t miss my wide-ranging conversation with Mike Brock.

Don’t miss my conversation with Elizabeth Rasmussen, Executive Director of Better Boundaries, about their successful fight to create a fair congressional map in Utah.