Forget the Asteroid in 2032 — Worry About the Here and Now

I am not among the people concerned about an asteroid, charmingly named 2024 YR4, that is reportedly hurtling through space on a collision course for Earth. Astronomers and physicists estimate that the space rock, which measures from 130 to 300 feet (a wide variance), has about a 1.5% probability of crashing into our planet in 2032. Those odds could change, so check your futures markets periodically if you’re intrigued by the prospect of placing a wager on the effect, timing, and location of the interstellar rockfall.

As for the question of where the asteroid might hit, scientists currently say oceanic waters are the most likely possibility, not surprising given our planet’s abundance of saltwater. Cities that might find themselves on the crash path include Mumbai, Lagos, and Bogota.

But fear not. If you live in those cities, or in others along the trajectory of the asteroid, don’t panic. Any prospective evacuation plans should be put on long-term hold. At this point, all we know is that there’s a large space rock that might collide with our planet in 2032. That said, the probability of it happening remains remote, and the odds might decrease considerably, perhaps down to zero, well before 2032 arrives.

Even if the asteroid makes an unwelcome scene, crashing our earthly party like a blundering space drunk, it might do little damage, especially if it is swallowed by oceanic waters. Even if the asteroid makes landfall, damage might be modest; the asteroid’s composition is unknown, meaning it could be hard, soft, or porous. If it’s soft or porous, it could dissolve or otherwise disintegrate long before reaching the ground.

In other words, the case of the hurtling asteroid might amount to much ado about nothing, just another alarmist story in a news cycle that is perpetually awash in sensationalism.

Given the precarious state of the world, I can’t get all that excited about an asteroid that may or may not be on a collision course with Earth in 2032. I’m even less worried about the errant asteroid when I consider all the attendant caveats, conditions, and qualifications pertaining to its trajectory and ultimate disposition.

Space Junk and Bursting Bubbles

Besides, as Devo once noted, space junk, which originates on Earth and is created by humans such as Elon Musk, is probably a greater threat from above to human health than any asteroid indigenous to space.

The Devo song Space Junk, by the way, appeared on the band’s 1978 album, Q. Are We Not Men? A: We Are Devo!. Music-loving humans bought and listened to vinyl records back then, and my copy was a mottled, multicolor vinyl that looked as if somebody had puked on it. Back then, I was a little too young to appreciate the band’s social satire, but I sensed that they were having some fun at somebody’s expense. If you haven’t heard the album, it has several tracks worth a listen, including a unique rendition of The Rolling Stones’ (I Can’t Get No) Satisfaction, as well as several original Devo compositions, the hyperactive Uncontrollable Urge among them.

Meanwhile, back on planet Earth in the here and now, we contend with threats that are more immediate, if less cosmic. Let’s turn to one that’s closer to home, impinging on aspirations of stratospheric growth in the technology industry.

Much of the current information-technology industry, and a significant portion of the stock market, is heavily invested in the fever dream of artificial intelligence. The big question is whether the inflated valuations on the public markets, represented by the share prices of market-leading technology companies, and the private markets, represented by a growing array of AI-related startup companies, are grotesquely and unsustainably inflated. If the answer is yes, what we have before us is a classic market bubble.

Call of the Wild

What happens when bubbles expand beyond their capacity to sustain themselves? That’s right — they burst.

In recent weeks and months, voices in the untamed wilderness — mine among them — have suggested that the valuations of AI-related public and private companies are nearing the bursting point.

A word on bubbles: What happens in these circumstances is that people create an alternate reality that exists entirely in the shared consciousness of their hive minds. What they believe to be true becomes their truth, until, of course, they think differently. Then, what they previously thought true implodes and dissipates like a rickety tenement during a slum clearance.

Perception, more than ever, is reality, and perhaps the effect has been intensified during the digital era, as more of what constitutes our daily experience is consumed and digested online. But we can only suspend disbelief for so long, and then we notice that the false gods are not what we thought they were. At that point, it’s game over, and we look for a new game, featuring other false gods in starring roles. We rinse and repeat, failing to recognize that we’re stuck in a spin cycle of our own making.

Warnings of an AI bubble are now coming from the centers of wealth and power, not just from the wilderness. Some shrewd investors, with better-than-average track records, are now wagering real money that the current AI mania has resulted in a market bubble that is on cusp of bursting.

Betting Real Money on the Bubble

Earlier this week, in fact, we learned that Elliott Management, the high-profile activist investment firm — perhaps insurrectionist investor would be a more accurate designation — has wagered against the appreciation in value of Nvidia shares. The basis for the move, according to the investment firm owned by billionaire Paul Singer, is that Nvidia’s stock is in a “bubble” and that artificial intelligence is “overhyped.”

This excerpt from a Business Insider article provides additional detail:

Between the three short positions, Elliott had "at least $600 million in downside exposure to Nvidia directly or indirectly" at the end of December, Gerry Fowler, head of European equity strategy at UBS, told Business Insider.

Elliott, which manages roughly $70 billion of assets, appears to have "specifically shorted Nvidia via put options" and bet against the largest US companies more broadly to hedge its risk on long positions such as Southwest Airlines and Pinterest, Fowler said.

However, Fowler emphasized the strike prices and maturities of the puts aren't disclosed, so the "cost of this protection could be quite low or high — we just don't know."

In a client letter obtained by The Financial Times last year, Elliott's bosses said that Nvidia and other Big Tech stocks were in "bubble land" and questioned whether the massive demand for Nvidia's graphics chips would last.

They also predicted that some AI applications were destined to always cost too much, function poorly, consume too much energy, or betray users' trust.

Regardless of how you feel about Elliott Management, and my opinion of the company is ambivalent at best, I can’t quibble with anything attributed to Elliott executives in that final paragraph.

AI applications do cost too much, and price reductions don’t appear imminent. AI applications do function poorly, particularly if one measures their performance against the ballyhooed omniscience and supreme intelligence touted by vendors and their cheerleaders. Further, can anybody seriously argue that AI infrastructure and datacenters are in any way energy efficient, even if, in Trumpian fashion, one disdains environmental concerns and considers the question purely from the perspective of energy costs.

Finally, do you unreservedly trust much of what’s being promoted as AI? I don’t. Anything that vitiates your freedom of thought, your ability to think for yourself and make your own decisions based on your own capacity to exercise logic and reason, is a threat to your independence, and ultimately to your personal freedom. AI is not some detached, objective entity. It is programmed and owned by people who, you can be sure, put their self-aggrandizement and self-interest above yours. If you use the technology, tread warily. Don’t anthropomorphize. Don’t treat AI as a confidante, much less as a friend.

Now that Elliott has legitimized dissent against AI in the public markets, others will follow. That doesn’t mean the bubble will burst tomorrow, but don’t be surprised if it does.