Moar History Rhyming

It appears that trillions of dollars in artificial intelligence related off-balance-sheet liabilities are going to come due in the next 2 years. 

We're not just talking about phony companies like OpenAI and Anthropic here.  We are also talking about companies like Nvidia, Microsoft, Oracle, Meta, etc.

Just like the 2008 housing crisis, the teaser rates are coming to an end, and this will be ugly. 

Nothing looked wrong in the summer of 2006. Home prices had risen for the better part of a decade. Delinquencies were near historic lows. Credit spreads were tight, the ratings held, and the securitization machine hummed. If you had asked a hundred people on a trading desk whether the American mortgage market was months from seizing, most would have laughed.

Millions of subprime borrowers were, at that moment, paying the low introductory rate on a two-year adjustable rate mortgage - the 2/28 ARM. A low fixed-rate for two years, then the rate reset to a payment 30% to 50% higher. During those first two years the loan performed beautifully: the borrower paid, the servicer collected, and the bond paid its coupon. Nothing looked wrong because the whole complex - housing, mortgages, securitization - was sitting inside the teaser period.

………

The AI boom has rebuilt this exact structure, and the market is once again underwriting the teaser.

It has a reset wall of its own - a schedule of dated, contractual, non-negotiable payment shocks - hiding inside the trillions of dollars of compute contracts signed by OpenAI and other frontier labs since 2024.

The take-or-pay compute contract - the instrument at the center of the AI build-out - has a structural feature that almost no one prices: its payments do not begin at signing. They begin at delivery. A lab signs a multi-year capacity commitment today, but the payments do not start until the data center is energized, the capacity is accepted, and the contractual ramp schedule commences - an interval set not by finance, but by construction: siting, powering, and filling a gigawatt-scale campus takes 24-to-36 months from signature - mirroring the two-to-three-year teaser of a subprime ARM. 

More than $2.3 trillion of compute contracts now sit on the books of the four largest American cloud providers as remaining performance obligations and contracted backlog - signed, celebrated, capitalized into equity prices, and, critically, not yet billing.

During the teaser period, everyone wins. The seller reports backlog growth that compounds at rates no operating business has ever sustained - Oracle’s RPO grew 363% in a single fiscal year. The buyer - a frontier lab burning cash at historic rates - books no expense because the capacity does not yet exist. The market capitalizes the booked number as if it were revenue and ignores the billed number as if it were a technicality. And then, on a schedule fixed at signing, booked compute becomes billed compute. The take-or-pay clock starts. From that day forward, the frontier labs and the hyperscalers incur those costs regardless of utilization. The invoice is a function of the contract, not of demand. That is the reset.

(emphasis original)

It's happening again, less than 20 years after it happened before.

H/t Naked Capitalism.

Holy F%$#ing Sh%$

We have a report that a a grad student synthesized dimethylmercury and possibly exposed themselves.

Dimethylmercury makes the Minimata Disease look like a trip to a pre-Amazon Whole Foods.

We had a weird story develop over the weekend here in the Cambridge area (and among organic chemists in general). I’m glad that I wasn’t trying to blog it as it happened, because it’s taken some turns!

This all started last Wednesday night, but most of us only heard something on Thursday when word came of an MIT chemistry building that was being closed off because of a report of someone who had been exposed to hazardous material. It became clear that said material was possibly dimethylmercury, which a graduate student had claimed to have synthesized, and who subsequently reported themselves to a local emergency room. And you can see why that caused a stir (but read on!)

Dimethylmercury is very, very bad news. It is obviously something I will not work with, but it’s never been the subject of a blog post here in that category because unfortunately there’s nothing lighthearted about the subject. Not after the death of Karen Wetterhahn in 1997. That story should be well known to chemists everywhere, but the short version is that Prof. Wetterhahn (at Dartmouth) was accidentally exposed in August of 1996 to a few drops of liquid dimethylmercury on her latex-gloved hand. What she didn’t know (and what none of us really knew) was that this compound rapidly penetrates such gloves, which meant that Wetterhahn was exposed to skin contact within seconds. Toxicologically, it is probably the worst of the organomercurys, which are of course a dangerously toxic group of compounds overall. Her precautions for handling the compound were the standard at the time, it should be noted.

Prof. Wetterhahn began to notice general symptoms within weeks. Early in 1997 she began to show neurological problems, and within weeks she had collapsed into a vegetative state. She was removed from life support in June. She had very high levels of mercury in her blood, and all attempts at chelation therapy to remove it were ineffective. That’s surely because it had spread throughout her body by the time the problem was recognized, but frankly no one can be sure if there were any measures that could have been effective enough after the initial exposure. This horrifying incident led to a complete re-evaluation of the use of dimethylmercury in synthetic and analytical chemistry, where among other things it had been the reference peak standard in mercury NMR experiments.

It appears that there was no exposure to anyone, and possibly that there was no actual synthesis of the ferociously toxic material, but someone was trying to make some.

Whoever they are should be blackballed from chemistry for the rest of their natural life. 

I don't just mean that they should be banned working in ans academic or industrial programs related to chemistry.  I mean that they should be banned from any work with chemicals at all, up to and including working as a pastry chef.

A Complete Sh%$ Show

Things have gotten so bad on the aircraft carrier USS Abraham Lincoln that sailors are literally jumping overboard to get off the ship.

Military families and Congress members are sounding the alarm about an intensifying mental health crisis onboard the USS Abraham Lincoln, as its 5,000 sailors and marines endure a record-breaking deployment at sea tied to the war with Iran.

Two leading specialist military papers, the Navy Times and Stars and Stripes, are reporting that there have been multiple attempts by sailors to jump overboard as poor conditions and mental stresses on the Lincoln reach the breaking point. The crew is in its ninth month at sea, and has spent 250 days consecutively without making land – a record for an aircraft carrier in modern times.

Not to worry.  I'm sure that once Hegseth's plan to give testosterone shots to sailors will fix everything.

……… 

The Navy Times gave details of thwarted suicide attempts onboard the aircraft carrier during the current deployment. Annabelle Loma told the outlet that her husband had tried to jump overboard after his spell at sea kept being extended. 

At this rate, we are going to start seeing a return of officers being fragged sooner rather than later.

The Black Death and Things

I was aware that the Black Death (Yeresina Pestis) has been around a long time, but I was unaware that it had left its homeland in Manchuria before the Plague of Justinian from 541 to 549 C.E.

Well, we now have evidence of a lethal plague outbreak around Lake Baikal circa 3500 BCE,

This is thousands of years before Y. pestis was thought to be virulent, and over 2000 km (1200 miles) from the primary reservior for this disease.

3500 BCE is largely before the advent or agriculture and long trade routes, so this is kind of weird.

Siberia 5,500 years ago, leaving dozens dead in its wake—with DNA from Yersinia pestis bacteria still trapped inside their teeth.

University of Oxford ancient DNA researcher Ruairidh Macleod and his colleagues recently sequenced the telltale bacterial DNA in teeth from plague victims at four ancient cemeteries in the area around Russia’s Lake Baikal. The tragedy that befell these communities is now the earliest known plague outbreak, courtesy of the oldest strain of Y. pestis ever sequenced.

Unearthing a new backstory for the plague

Until recently, scientists who study the evolution of diseases have held two fairly solid ideas about the origins of plague, the disease caused by Yersinia pestis bacteria. It’s a scourge so awful that it has gone down in history as not just a plague but the plague. The first idea is that the earliest strains didn’t have the right genetic traits to be really lethal. And the second is that the plague first began menacing humans when the first farmers settled in densely packed towns alongside rats and domestic animals.

But the dead of Ust’-Ida I cemetery, near Lake Baikal, tell a very different story.

“Our findings demonstrate that the earliest known outbreaks of plague occurred in prehistoric hunter-gatherers centuries before infections are observed in Neolithic farmers,” wrote Macleod and his colleagues in their recent paper.

That challenges our previous assumption that plague spillover was a side effect of people taking up farming and settling in permanent villages and towns, living closer to each other and to an assortment of animals (and their fleas).

“Much of the accepted theory around epidemiology of disease in the past is that this kind of thing shouldn’t occur in hunter-gatherers because hunter-gatherers are constantly moving around the landscape because they’re in such small groups all the time,” said Macleod in a press conference. “The theory, at least, is that infectious disease can’t really take hold and devastate entire communities in this way.” 

So much for that theory.

Fascinating.

Oh, Canada!

Smoke and Haze 

This picture was taken at about 6 pm Eastern Daylight Time today.

I can only imagine just how hellish this is north of the border. 

Just so you know, these fires are driven by anthropogenic climate change. 

If you need to outside, wear a mask. 

We Are Unbelievably Screwed

A pre-peer review study has concluded that the Atlantic Meridional Overturning Circulation (AMOC) may already be in the early stages of an irreversible collapse.

If this happens, we could see temperature drops of 5-15° C in parts of Europe and devastating temperature increases in the south east United States, along with sea level rises well in excess of a meter.  (Probably enough to submerge Mar-a-Lago, but I'm looking on the bright side here.)

As Earth rapidly warms, fears over the collapse of a critical ocean current system are mounting. This event would wreak havoc on the global climate, and the latest research suggests this catastrophe may already be inevitable.

In a study that has yet to undergo peer review, researchers used a climate model to estimate how likely it is that the Atlantic Meridional Overturning Circulation, or AMOC, is “locked in” to collapse. Under conservative assumptions of Greenland ice sheet melt—a key driver of AMOC slowdown—they estimate a 10% chance that collapse is certain, rising to 80% by 2100 under the worst-case emissions scenario. The findings are currently available on the preprint server Earth ArXiv.

Stefan Rahmstorf, an oceanographer at the Potsdam Institute for Climate Impact Research in Germany who was not involved in the research, noted in an X post that the study is based on a single model. However, he said its conclusions are plausible based on overall knowledge of how fragile the AMOC currently is. Rahmstorf has studied this current system for more than 35 years.

………

If the AMOC shut down, it would trigger global climatic changes with catastrophic regional impacts. Sea levels would rise dramatically along the U.S. East Coast and other densely populated shorelines. There would also be major temperature shifts—in northern Europe, for example, the average temperature could drop by 9 to 27 degrees Fahrenheit (5 to 15 degrees Celsius). The world would see changes in extreme weather too, including more severe storms and a shift in the tropical rain belt, causing widespread drought in some areas and excessive rainfall and flooding in others.

And all of this can happen WITHOUT the collapse of the Thwaites Glacier in Antarctica. 

The Big One

There are indications that the San Andreas and related faults have unprecedentedly high stress levels, raising concerns that a 7+ earthquake is due sooner and not later in the area.

Having had been in 2 earthquakes, and remembering one (I was less than 2 years old for the first one), I really hope that is not going to be as bad as it looks.

Earthquakes usually occur along fracture zones in Earth's crust, where large tectonic plates slide past one another and become locked. Stress builds up over long periods and is suddenly released in the form of an earthquake. In Southern California, the San Andreas and San Jacinto faults are among the most significant of these zones, accommodating most of the plate motion in the region.

Where the two fault systems approach each other northeast of Los Angeles lies the Cajon Pass—a tectonically complex junction where a rupture on one fault could potentially cross onto the other. Since the last major earthquake to affect the wider Los Angeles region, the Fort Tejon earthquake of 1857, with a magnitude of 7.9, tectonic stress along the fault segments has built up continuously during a prolonged quiet period that has long concerned researchers, given the potential for a large future rupture.

In a new study led by Dr. Liliane Burkhard of the Division of Space Research and Planetary Sciences (WP) at the Physics Institute of the University of Bern, an international research team modeled 1,000 years of earthquake history along the southern San Andreas and San Jacinto fault systems to estimate the present-day stress loading at Cajon Pass. Researchers from the University of Hawaiʻi at Mānoa, the U.S. Geological Survey Earthquake Science Center in Pasadena, and the Scripps Institution of Oceanography at UC San Diego were involved.

The results show that tectonic stresses in the region have reached and, in some cases, exceeded the highest levels of the last millennium.

In the study, the researchers also introduced the concept of Cajon Pass as an "earthquake gate," a junction that controls whether large earthquakes remain confined to a single fault or propagate across both systems simultaneously. The study has just been published in Journal of Geophysical Research: Solid Earth.

There are indications that stress is high in both the San Andreas and San Jacinto faults, meaning that there is an elevated chance of both faults rupturing at the same time.

Not good, but still better than Donald Trump. 

The Apotheosis of a Libertarian Community is an Out of Control HOA

Case in point, a massive survivalist bunker complex currently embroiled in litigation.

It sounds a lot like every Home Owner Association horror story that you have ever heard.

Row upon row of concrete bunkers with steel blast doors peek up from the rolling grasslands—like hobbit holes for the apocalypse.

There are 575 of them, clustered on a former munitions depot near South Dakota’s Black Hills and billed as “The Largest Survival Community on Earth.” The pitch: Ride out nuclear war, the next pandemic or societal collapse in relative comfort.

Yet for many residents, the dream has soured. The threat hasn’t come from Armageddon, but from friction that resembles a suburban homeowners’ association battle.

Lawsuits, countersuits and disputes are piling up over septic systems, property taxes, off-leash dogs and a growing list of community rules. The legal skirmishing has reached the state supreme court—twice. Promised amenities, including a restaurant bunker, a pool bunker and a horse-stable bunker, have yet to materialize. Guns have been drawn, and there have been offers to settle things with fists. The developer denies wrongdoing and says complaints come from a few malcontents.

………

The doomsday enclave, known as Vivos xPoint, is the brainchild of Robert Vicino, a Los Angeles-based entrepreneur who had a vision in 1980: He needed to build a large underground structure to protect 1,000 people from a coming “life-extinction event,” according to the company’s website. He since has developed a global network of such communities.

In 2016, Vicino began working with local ranchers to convert the long-abandoned South Dakota property—far from “known nuclear targets” and “high-crime anarchy zones” (read: cities)—into a compound for “like-minded survivalists to ride out ‘the event,’” as Vivos puts it. Vicino later bought the property outright, according to his son, Dante, Vivos xPoint’s director of operations.

No bear problem this time, at least not yet.

Bad Day st the Office

There was a midair collision at an air show in Idaho.

Two F/A-18G Growlers collided, but all 4 pilots ejected safely.

Two E/A-18G Growler electronic attack aircraft collided during the Gunfighter Skies Air Show in Mountain Home Idaho on Sunday, in a mishap captured in dramatic videos. The four crew members of the aircraft, from Electronic Attack Squadron (VAQ) 129‘s NAS Whidbey Island-based Growler Airshow Team, were able to eject right after the collision and are being evaluated by medical personnel, according to media reports. The incident took place two miles northwest of the base, according to the 366th Fighter Wing’s Facebook page. The Growler Airshow Team puts on two-jet displays.

Video of the incident showed the one of the Growlers close in on the other from behind and then collide, striking the lead aircraft’s rear with its nose from above. They then became entangled together, nose up, and then down, before tumbling to the ground. Four small explosions from ejection seats blasting out of the falling Growlers can be seen before the parachutes of the four crew members opened up. The Growlers hit the ground, exploding into a ball of flames, followed by the crew members floating down in their parachutes.

The latest report is that the pilots are being checked out, but it appears that there have been only minor injuries.

What Took Them So Long?

The DoJ has finally filed charges against the owner of the MV Dali for the destruction of the Francis Scott Key Bridge.

It's been pretty obvious that they f%$#ed up, on the day of the crash.

The Justice Department has filed criminal charges against a Singapore-based global shipping company and subsidiaries, accusing them of safety violations that led to the massive container ship crash that caused the 2024 collapse of Baltimore’s Francis Scott Key Bridge, according to an indictment unsealed Tuesday.

Prosecutors accused entities of Synergy Marine Group of fostering unsafe conditions by not maintaining proper systems aboard its ship, the Dali, and others in its fleet. Those lapses left the Dali unable to recover from a blackout of its systems and unable to veer away as it crashed into the bridge in the early hours of March 26, 2024, leaving six men dead.

The indictment, returned under seal in federal court in Baltimore last month, also alleges the company falsified safety inspection records and lied to investigators after the crash.

The company as well as the Dali’s technical supervisor, Radhakrishnan Karthik Nair, face charges including counts of conspiracy; misconduct or neglect of ship officers resulting in death; violations of the Clean Water Act and Ports and Waterways Safety Act; and obstruction of an agency proceeding.

 

We Are F%$#ed

It looks like the collapse of the Atlantic meridional overturning circulation (Amoc) is even more imminent than previously thought.

The critical Atlantic current system appears significantly more likely to collapse than previously thought after new research found that climate models predicting the biggest slowdown are the most realistic. Scientists called the new finding “very concerning” as a collapse would have catastrophic consequences for Europe, Africa and the Americas.

The Atlantic meridional overturning circulation (Amoc) is a major part of the global climate system and was already known to be at its weakest for 1,600 years as a result of the climate crisis. Scientists spotted warning signs of a tipping point in 2021 and know that the Amoc has collapsed in the Earth’s past.

Climate scientists use dozens of different computer models to assess the future climate. However, for the complex Amoc system, these produce widely varying results, ranging from some that indicate no further slowdown by 2100 to those suggesting a huge deceleration of about 65%, even when carbon emissions from fossil fuel burning are gradually cut to net zero.


The research combined real-world ocean observations with the models to determine the most reliable, and this hugely reduced the spread of uncertainty. They found an estimated slowdown of 42% to 58% in 2100, a level almost certain to end in collapse.

This would upend weather and climate in Western Europe and across the globe.

This is real end of the world stuff, and the actual situation is likely worse, since every major prediction regarding anthropogenic climate change has been too conservative.

It might happen in my lifetime. 

 

It Turns Out That Humanity is Worse than Radioactivity

At least if you are a wolf.

Despite the radiation, the wolf population surrounding Chernobyl has increased 7 fold.

The most expensive nuclear disaster in human history turned 40 on Sunday, but the consequences have been almost perversely benign for some of the region’s wildlife.

………

Environmental scientist Jim Smith at the University of Portsmouth, who has studied this “Chernobyl exclusion zone” (CEZ) for over 30 years, told The Guardian last week that wildlife in this would-be radioactive wasteland has improved even as it’s become surrounded by war.

“Wolf populations are seven times higher than they were before the accident because there is less human pressure,” according to Smith, who noted that populations of elk, roe, deer, and rabbit have also flourished in the zone.

“The ecosystem in the exclusion zone is much better than it was before the accident,” Smith opined. “It’s been a very powerful demonstration of the relative impact of the world’s worst nuclear accident, which is not so big, and the impact of human habitation, which is devastating.”

Humanity is not good wolves, or other living things. 

………

Evolutionary biologists at Princeton discovered something unique about this gray wolf population, which likely helped these predators carve out their new niche in the exclusion zone: mutations that appear to make Chernobyl’s wolves more resistant to cancer. 

This is not particularly surprising, though it is likely that there was a f%$#-ton of cancer on the way to this outcome. 

History Rhyming

The fact that private credit defaults in the United States hit 9.2% in 2025, sounds a lot like the leadup to money market funds "Breaking the Buck" in 2008.

The default rate among U.S. corporate borrowers of private credit rose to a record 9.2% in 2025, ​according to a report Friday by credit rating agency ‌Fitch Ratings.

In its monitor of 302 companies with outstanding private credit debt, Fitch recorded 38 defaults among 28 different borrowers. The 9.2% default rate in ​2025 follows a previous record 8.1% rate of defaults ​in 2024.

Smaller issuers with $25 million or less in earnings made ⁠up the majority of last year's defaults, which were diversified ​among sectors, according to the report.

………

Most of ⁠the private credit loans were floating rate and tied to the federal funds rate, which has ​persisted at a high level over the past three ​years. ⁠Fitch pointed to this as a catalyst for last year's defaults.

There are a lot of companies out there who could only service their debts when rates were near 0%.

They are now insolvent, and there is a non-zero chance that this will take down the private credit firms.

This is not good. 

We Are Unbelievably Screwed

Remember the claims that in the next few decades anthropogenic climate change will result in increases in sea level?

Well, it's already here, at least according to this study in Nature.

Abstract

The impacts of sea-level rise and other hazards on the coasts of the world are determined by coastal sea-level height and land elevation. Correct integration of both aspects is fundamental for reliable sea-level rise and coastal hazard impact assessments but is often not carefully considered or properly performed. Here we show that more than 99% of the evaluated impact assessments handled sea-level and land elevation data inadequately, thereby misjudging sea level relative to coastal elevation. Based on our literature evaluation, 90% of the hazard assessments assume coastal sea levels based on geoid models, rather than using actual sea-level measurements. Our meta-analyses on global scale show that measured coastal sea level is higher than assumed in most hazard assessments (mean offsets [standard deviation] of 0.27 m [0.76 m] and 0.24 m [0.52 m] for two commonly-used geoids). Regionally, predominantly in the Global South, measured mean sea level can be more than 1 m above global geoids, with the largest differences in the Indo-Pacific. Compared with geoid-based assumptions of coastal sea level, the measured values suggest that with a hypothetical 1 m of relative sea-level rise, 31–37% more land and 48–68% more people (increasing estimates to 77–132 million) would fall below sea level. Our results highlight the need for re-evaluation of existing coastal impact assessments and improvement of research community standards, with possible implications for policymakers, climate finance and coastal adaptation.

It turns out that the climatologists were wrong.  It's worse than they have ever predicted.

History Rhyming

The delinquency rate for commercial mortgage-backed securities has hit 12.3%, almost 1 in 8.

This is higher than it was in the worst parts of the Great Recession. 

Fasten your seat-belts, we are in for a bumpy ride. 

The delinquency rate of office mortgages that have been securitized into commercial mortgage-backed securities (CMBS) spiked by over a percentage point in January to 12.3%, once again the worst ever, and 1.6 percentage point above the worst moments of the Financial Crisis, according to data by Trepp , which tracks and analyzes CMBS.

The CMBS were sold to institutional investors around the world, such as pension funds, bond funds, insurers, etc. The banks that originated the loans are off the hook.

High vacancy rates in new fancy office towers allow companies to move from an old tower to a new tower when the lease expires, thereby upgrading and downsizing at the same time. This “flight to quality” is pulling the rug out from under older office buildings.

 This game of musical chairs is about fail catastrophically.

History Rhyming

While the market collapse of 2008-2009 came as a surprise to me, in retrospect, the signs were there.

They weren't big things, but an increasing number of little things.

Over the past few weeks, we have: 

• A stealth bailout of Wall Street by the Federal Reserve: Basically, they are shoveling money out the door using the Fed's repo (repurchase agreement) facility.  Basically selling assets overnight and buying them back in the morning for quick cash.
• Private Repo is skyrocketing as well: Meaning that there is a multi-Trillion game of musical chairs without any chairs.  Waiting for the music to stop.
• Home sellers are yanking their homes off of the market at an unprecedented rate, with listings falling to a 30 year low.
• Home buyers are walking away from signed deals at an unprecedented rate. ⅙ of all signed contracts were walked away from in December.

I cannot predict when, but we are careening toward a Lehman moment. 

It will appear that nothing is happening, and then it will happen all at once. 

We Are F%$#ed

Remember the 2008 melt-down? 

Well, it looks like one of the primary instruments of mass financial destruction is back, only this time, it has AI as its special sauce.

This is not gonna end well: 

If you weren’t alive, or weren’t news-cognizant, back in 2007 when the slow motion debt crisis all around us started to give way to The Great Recession, what was eerie was that it felt like you were always hearing about refinancing debt. You couldn’t turn on a TV, or click a page on MySpace, without someone offering to refinance your debt. This was because there was a huge—and for most people, hidden—market for things called mortgage-backed securities. This piece at the Onion captured the moment well.

………

Mortgage-backed securities were everywhere in the economy, and the entities that owned them were the pillars of economic stability. When, slowly but surely, people defaulted on their mortgages in higher and higher numbers, the mortgage-backed securities that had been thought of as valuable were suddenly thought of as doodoo. In 2008, Lehman Brothers went bankrupt, and the world was plunged into chaos. In this way, over $10 trillion in wealth vanished in the U.S. during 2008 alone.

That crisis has come and gone. We’re in a different world, where things don’t work the same way. We have different problems.

Today, all U.S. economic growth is driven by investment in AI. Entire U.S. towns are banking on the idea that data centers being built in their communities will sustain their economies forever, or at least until some other type of business exists to create a different kind of boom. The real estate biz, which caused the 2008 crisis, is also being propped up by the data center business. AI is inescapable. It’s the defining fact of this economic moment. But in surveys, people who don’t work in AI largely doubt it’s good for the world.

With that in mind, Ian Frish at the New York Times’ DealBook newsletter wrote something a little unsettling yesterday. It seems that a company called QTS Data Centers, “the biggest player in the artificial intelligence infrastructure market,” is entirely owned by the investment company Blackstone. And Blackstone, it seems, is seeking to refinance $3.46 billion in QTS’s debt. DealBook apparently got a peek at an offer sheet showing that Blackstone is about to put this debt up for sale. 

Mark my words, the taxpayer will be on the hook for this bailout.

McDonnell's Widebody, Huh?

Not good So, a UPS freighter lost an engine on takeoff at Louisville and crashed, killing its three crew and at least 9 more on the ground.

By, "Lost an engine," I mean that the engine fell off.

The aircraft was an MD-11, basically a rebadged DC-10.

If this scenario sounds familiar, it's because a DC-10 crashed at Chicago O'Hare in 1979 after its engine detached from the wing.

That plane is cursed.

An engine on the UPS cargo jet that crashed in Louisville, Ky., this week fell off moments before the plane took flight, the National Transportation Safety Board said on Wednesday.

The jet, with a crew of three, plunged to the ground seconds later and erupted into flames as it careened through industrial buildings at the edge of the Louisville Muhammad Ali International Airport Tuesday evening.

At least 12 people died, officials said on Wednesday. A coroner was at the crash site on Wednesday, and the condition of some of the bodies could make it difficult to confirm their identities,  Gov. Andy Beshear of Kentucky said. The identities of the victims have not been released.

At a news conference Wednesday afternoon, Todd Inman, a member of the transportation safety board, said that, according to security footage, the plane’s left engine had detached from the wing while the aircraft was rolling to take off. 

History Rhyming

In any discussion of the 1929 stock market crash, the problem of excessive stock margin debt is brought up.

By increasing leverage, market instability and fragility were magnified, with disastrous results. 

Well, it's back!

In the long-term view of margin debt, such as in the chart above, it’s not the absolute dollar amounts that matter, but the steep spikes in margin debt from new high to new high overinlouinvoitemt1590 multi-month pereverage in the stock market has been spiking since April. In September, margin debt – the amount investors borrowed from their brokers – spiked by another 6.3%, or by $67 billion, from August to a record $1.13 trillion.

Since April, margin debt has spiked by 39%, the biggest five-month increase since October 2021; it was in early November 2021 that stocks began to tank, with the S&P 500 ultimately dropping by 25%.

The additional leverage – borrowed money flowing into the stock market – creates buying pressure and drives stock prices higher. Leverage is the great accelerator on the way up, but it’s also the great accelerator on the way down. Multi-month surges in margin debt, jumping from new high to new high, indicate excessive speculation and risk-taking and have invariably led to sharp selloffs:

………

In the long-term view of margin debt, such as in the chart above, it’s not the absolute dollar amounts that matter, but the steep spikes in margin debt from new high to new high over a multi-month period.

I know that I have [predicted roughly 32 of the past 4 market crashes, but this ain't good.

 

H/T Naked Capitalism. 

Headline of the Day

Libertarianism, 13, Dies in Argentina Chainsaw Accident 

— The Nerd Reich, on the disaster that is Argentine President Javier Milei

It should be noted that Libertarianism has never worked.

Attempts have always devolved into allegations of fraud, infrastructure collapse, or bear infestations.

Even at the stage of the hunter-gatherer, which covers about 98% of human history, people did not exist alone.  They lived in communities, albeit small ones, and to be separated from the community was death.

I am sure that God is relieved that Libertarians believe that they have created themselves, but this does not make it true.

While it had been around for quite a bit longer, its basic concepts never progressed beyond the early stages of adolescent brain development. Libertarianism—which asserted that society would be better off with minimal government, laws, and taxes—succumbed after chainsaw-wielding Argentine President Javier Milei asked the United States for a massive economic bailout due to his catastrophic leadership.

Milei, a werewolf-clown hybrid in a suit who once hired a spirit medium to communicate with his dead dog, swept into office promising a libertarian-inflected miracle in Argentina. In an early preview of Elon Musk’s DOGE, he slashed government and social spending. Earlier this year, an essay published on the website of the libertarian Cato Institute mocked his critics as doomsayers who “warned that the profane self-described libertarian—who looks more like a still-touring ’80s rockabilly singer than the classically trained economist he actually is—would inflict on Argentina’s already-beleaguered economy ‘deep recession,’ ‘devastation,’ ‘economic collapse,’ and all sorts of other economic horribles.”

But the critics were correct. Instead of miracles, the self-described “anarcho capitalist” has delivered shocking disaster: collapsing institutions, chronic inflation, and the awkward realization that screeching about free markets doesn’t put bread on the shelves.

At the core of libertarian philosophy is the belief that they are all some sort of Randroid supermen.

They are not.