At this time of year, one plans festive material to view on the not-so-small screen, and the film I’m about to recommend is not exactly Christmas material. After all, who wants to watch a fictionalised version of how a few enlightened financiers made millions from the stock market crash of 2008 while in a turkey-induced coma of satiation?
Back in the news
Well, maybe save it for Boxing Day, or even more appropriately, the seemingly twelve-week period between New Year and the first paycheck of February, when the consequences of one’s over-indulgence are reflected in the meagre offerings on one’s table. Regardless of when you watch it, The Big Short is an entertaining account of how individuals – played by Cristian Bale and Brad Pitt – foresaw the crash coming, bet the house against the market, known as “shorting”, hence the film’s title. The rest is, as they say, history, with them being in the distinct minority of winners while the rest of us propped up the banks whose profligate loans crashed the system.
Despite being released ten years ago, the film is back in the news. Michael Burry, a hedge-fund manager who was played by Bale in the film, took to social media last weekend to warn of an impending “AI Bubble”. As the film shows, when he warned of the forthcoming financial crisis back in 2008, he faced an investor revolt, and was viewed as a maverick Cassandra when all anyone else could see were good times ahead. $100m later (and having earned his investors seven times that amount), perhaps this time his warnings will be taken more seriously – but are they prescient or does he just like taking a contrarian view?
AI: not what it’s cracked up to be?
At this point, I need to make a disclaimer. I have personally never invested in the stock market, bar my pension contributions which are managed for me. I am not a financial expert. What I do have is over 40 years’ professional experience in the IT industry, which in non-IT terms is pretty much the same as having seen the invention of the wheel and now being employed putting together interplanetary star-cruisers.
And [never start a paragraph with “And” – Ed] I tell you, this AI stuff is nonsense. Nonsense.
It’s a bold claim to make, and people far, far more intelligent than I are taking positions contrary to me on this matter. So, you have been warned.
However, many of the IT professionals I work with also think, in all honesty, that AI is ‘smoke and mirrors’; and we have our reasons why. This article, and the associated comments made below it, from a “trade” online news source, can explain it better than I can, and it’s worth a read.
The prize …
Currently, all of the big tech companies – which is basically, the top 10 of NASDAQ – have bet big on AI. Have gone “all in”; like a scene from Casino Royale, the “tech bros” are gathered round the table, cigars in clenched jaws, fingers tapping on the table a staccato only billionaires can comprehend, [stop stretching this simile – Ed] … anyway, you get the picture. The wealth (and indeed, the energy consumption) of a not-so-small country is being spent on attempts to create, if not supercede, human intelligence in silicon form. Prometheus, indeed, unbound.
If one individual company – Nvidia, or Apple, or whatever Facebook and Google are calling themselves nowadays, or (worst case) the dodgy-as-hell Palantir, best thought of as a fearsomely effective Capita – gets there first, “there” being best defined as opening the Pandora’s box of true “machine intelligence”, then that company scoops the pool, and walks off with the winnings, hence the truly implausible amounts of money being placed on the table.
… they might all lose
However, what if “the house wins”? What if the roulette ball ends up on 0 – i.e. there is no “machine intelligence”? Well, that is what Michael Burry is betting on. He’s backing the dealer, he’s confident that the AI bubble is about to burst; and I think he’s right.
Now, on the one hand, the bursting of this bubble could have consequences that dwarf those arising from the 2008 crash. One could argue, after all, that “austerity” was introduced after that financial shock wave, and we’ve never come out of it (excepting of course, the 1%). You don’t have to have invested into the stock market in any form to suffer when it has one of its turns, and this on top of the current realpolitik could become as historically significant as the Wall Street Crash. Fascism, anybody ?
Apocalypse … soon?
On the other hand, let’s consider what happens if the “tech bros” are correct. Now, I don’t think they’ve worked out what the consequences of humanities obsolescence are; or whether they care. The founder of Palantir for example is a full on “the Antichrist lives” type of guy. He’s going to welcome the Apocalypse. AI – if, if, it actually became intelligent and sentient and smarter than us – is literally an existential threat.
So, damned if they win, damned if they lose. Eat, drink and be merry this 2025; because Cassandra Smith here sees trouble ahead, either way that the coin lands.
Happy Christmas!
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