Deja Vu All Over Again: Episode 37

This week on Alternate Shots, John Ellis and Richard Haass ask whether declaring the Iran war over makes it so. Haass is skeptical: a blockade remains an act of war, retaliation remains likely, and the United States is still stuck in the gray zone between ceasefire and conflict. They also examine Russian support for Iran, the anti-American axis on display at the Shanghai Cooperation Organization, Turkey’s hedging, Venezuela’s oil gamble, inflation, the possibility of a blue wave, and the risks of AI escaping its sandbox. Finally, because every reputable outlet needs a sports section, they turn to the Giants and Odell Beckham Jr.

Hosted by John Ellis and Richard Haass

News Items on Substack

Home and Away on Substack

Produced by Dale Eisinger 

Transcript

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SPEAKER_02 0:00

Hello and welcome back to Alternate Shots. I'm John Ellis. I am the founder and editor of two Substack newsletters. One is called News Items. The other is called Political News Items. You can find them both at news-items.com.

SPEAKER_01 0:16

I'm Richard Haas. I'm sorry to say I'm the producer of only one Substack newsletter, Home and Away, but sometimes less is more. Although I will defend Mr. Ellis and say what he puts out is really uh quite extraordinary.

SPEAKER_02 0:29

Well, thank you for that. Let's see. The Wall Street Journal reported today that President Trump is considering declaring that the Iran war is over. Sanctions will continue, obviously. The blockade will continue. And whenever I read something like this, my my instinct is to get on the email and ask Richard what's going on. And in this case, it seems to me that the president is adopting the Haas plan first offered, I believe, five months ago. Am I wrong about that?

SPEAKER_01 0:59

About right. Look, he can declare the war is over, but if you have a blockade in place, it's a little bit of an oxymoron since the a blockade is an act of war. Secondly, it's hard for me to imagine we wouldn't retaliate if Iran were to take some shots at U.S. vessels or aircraft. And indeed, one of the questions is, other than the words, what does declaring the war is over mean? Does it mean you pull all U.S. forces out of the theater? Unlikely. Again, does it mean you don't respond to Iranian uses of armed force? Unlikely. What if we suddenly got intel that Iran was reconstituting its nuclear program? Hopefully we would not sit back at that. So I think it's a meaningless concept. Plus, in some ways, it sets the president up for having to go back on his own words, Johns, for all the reasons I mentioned. So it seems to me not only is it meaningless, I'd leave it to you, but it seems to me it's politically unwise, because it's a question of when and not if he'd have to violate his own newly stated policy.

SPEAKER_02 1:57

Where do you think we are in the in the war at this point? Six months and a week, I guess.

SPEAKER_01 2:02

It's been a bad week for U.S. policy in the war, but it's in some ways emblematic. It's an indirect way of answering your question. We've been all over the place in terms of strategy, whether it's the economic pressure or military use as a force, we've had both. Once again, we've articulated a whole range of rationales or objectives from regime change, capitulation, nuclear things, whatever. So U.S. policy uh is just incoherent. I don't know any other word for it. Sorry to be uh so critical. But the answer is we're where we've been for some time, which is essentially between a real ceasefire, much less peace on one hand, and all out hostilities on the other. We're operating in a gray zone, and almost like uh, I don't know, I have to think what the metaphor would be. There's days uh it ticks up, there's days it it ticks down, but there's still no strategic consensus between the United States and Iran about the terms for a ceasefire, much less a uh peace. So we're uh as you say, in in month seven, but there's no reason at this point not to think this kind of a situation, this gray area between peace and war, that this will just continue to exist maybe for month eight or month nine. This could go on, I think, for for some time.

SPEAKER_02 3:17

And it goes on because I mean part of the problem is we're running down the munitions, right? So we're uh wary of using more munitions given the state the stock pile, if you will. The Iranians know that, number one. Number two, they know that the election is fast approaching. They know that the election is not helpful to uh President Trump's hopes of maintaining control over the House and the Senate. And then we have another thing going on, which is the FT reported this week that Russia is providing Iran with significant support with missile technology and drone technology. I thought that was a huge story. I put it as the lead story in news items on Tuesday, I guess, and yet it sort of evaporated, didn't get any coverage. Do you share my astonishment about that? Aaron Ross Powell, Jr.

SPEAKER_01 4:12

Nothing astonishes me or everything astonishes me. You're right, it's a big story. And my sense is one of the reasons our economic pressure on Iran is unlikely to succeed is not only their ability to withstand pain, but I expect the Russians, the Chinese, and others are helping them on the side. Iran is still able to sell a little bit of oil. So sanctions of whatever sort are not going to be decisive. But yeah, the arms help, this is a big deal. This is an advanced weapon system. This is just Putin acting with a degree of uh impunity. And it may, I don't know if he meant it also as leverage, saying if you help Ukraine, this is what I can do uh for uh Iran. He's been reported to be helping North Korea with its nuclear program. Look, John, it's another reminder, is if we needed it, that we're living in a world that is very much moved away from an American-dominated world. It's not that long ago that people threw around words like hegemony and the rest. Whatever else we are, we're in a very different world where the United States is not only constraining itself for various reasons, but also now it finds that others are being much more assertive. And it's this combination of American self-restraint and the assertiveness of Russia, China, North Korea, Iran, whatever, which in some ways explains why we are where we are.

SPEAKER_02 5:28

There was a meeting this week with the Russians, it's the SCO, is that right? The SCO.

SPEAKER_01 5:33

Yeah, the Shanghai uh I think a cooperation organization. It was basically, yeah, it's Russia, China, the stands, India, Pakistan, and Iran's a member as well, by the way. Uh so yeah, they all got together. They got together once or twice a year, but Putin and Xi Jinping showed up. Yeah, it was a very pro-Iranian statement in their communique, very anti-American. Also took aim sort of at uh the dollar and so forth. Look, this is a bit of a this rival axis, I guess you'd call it. Not quite an alliance, but a rival axis. And India, as is always the case, and Pakistan, both play it both ways. They're essentially uh strategically promiscuous, they're willing to align with whomever when it serves their purposes. But for Russia, China, and some of the others, Iran, again, it's another sign that there's significant pushback against what's in some ways uh an erratic, not in some ways, in many ways, an erratic United States.

SPEAKER_02 6:27

Trevor Burrus, Jr. And Turkey's uh Prime Minister or President, I can't remember which one it is, Erdogan said that he wanted to join the SCO. He's a member of NATO. That struck me as uh significant uh hedging, if you will.

SPEAKER_01 6:42

Aaron Powell Yeah, it's also just another sign that Turkey's technically in the it's an ally, I would say, in name only. Its membership in NATO is simply one of its uh connections. It also has a very independent foreign policy in the Middle East, uh obviously against the Kurds, quite hostile towards Israel. And yeah, what Turkey wants to do is develop these alternative ties to use it as leverage, to essentially get everybody to vie for its uh its affections. I think Turkey, if I were looking down the road, John, I have no evidence for this, but that's not going to hold me back. Why should it today be any different? I would think of Turkey's one of the countries that one day will be tempted to think about nuclear weapons, because it has a large foreign policy, if you will, has this very large sense of its own role. There's something about civilizations. You see it with India, you see it with Iran, I think you see it with Turkey. It has a large view of its role in the region and the world. And so I don't think Turkey in any way is content with simply being quote unquote a member of NATO. I think it wants much more than that.

SPEAKER_02 7:46

So I saw, I think yesterday, the chief executive officer of Chevron said that his company was going to make a seven billion dollar investment in Venezuela. And he said that they've been doing business there, he said, for a hundred years, that the infrastructure that they have left behind uh is in pretty good shape, and that they should be up and running uh relatively quickly, and that this would be a boon for all. Elsewhere I've read Venezuelan oil comes out of the ground in a kind of peanut butter consistency, and that thinking that the Venezuelan oil industry is going to be up and running anytime soon is a fantasy. Do you uh have any idea how you reconcile these two uh points of view?

SPEAKER_01 8:35

Yeah. Look, Chevron is sui generis in the sense that, as you say, it's been in Venezuela a long time. It never left during the Chavez and Maduro years. It has just announced this past week a new agreement, which is very much a kind of it's a traditional agreement. So there's there's Chevron, which I think has a unique status. And what it does in no way is controversial in Venezuela. It's what Xi Jinping would call a win-win arrangement. What's qualitatively different is what was announced by the U.S. government. This new arrangement with a Mr. Betan court, who's created what's now the second largest oil company in Venezuela. Basically, the Pentagon is now investing. The United States has a significant uh role in 17 oil fields in Venezuela. And you had the president of the United States this week announce in the Oval Office that Venezuela is not ready for democracy, which seems to ignore an awful lot of Venezuelan history. But to make a very long story short, I don't want to filibuster. Uh we have signed, we the United States, a rather an unprecedented agreement with Venezuela, with the U.S. government, again, as something of a participant, though it's not clear where all the funds are going to come from, to yeah, to produce oil, as you say, uh it's very heavy quality. It's not appropriate, say, for putting in the U.S. Strategic Petroleum Reserve, but it's not a bad match for certain Gulf of Mexico or whatever we call it this week, refineries. It's just going to be very expensive to do. It's going to take a long time to get done. So it's not going to compensate for anything that's happened in uh the Middle East. And I think the real interesting question is whether over time the politics in Venezuela, the United States, or both uh shift against this agreement. That it's seen as too pro-American, and that it's seen as too much an agreement between the current regime and Venezuela rather than something that's more broadly supported. And I don't have an answer to that, but I will say if you go on the social media site that used to be called Twitter, as uh formerly known as Twitter, as Prince might say, there's a lot of criticism from the American left and from uh the opposition in Venezuela. And I'm not saying that's determinative, but it does suggest to me that this is a polarizing agreement, and you have to ask yourself if it's going to take ten years to get an adequate return on investment. Can you be confident as an oil company that this framework will be broadly success accepted in both countries in 10 years? And I don't have an answer to that question. I'm simply putting it on the table.

SPEAKER_02 11:09

It's always been the case that Gringo Go Home is a winning uh stance in South American politics and Latin American politics, right?

SPEAKER_01 11:19

Sure. And the only thing, you know, working against it is that Venezuela is needy, shall we say, economically. The question, though, again, is will this generate enough cash or will enough of that cash make its way into Venezuelan hands? And again, it's not obvious. So I I would just simply say, you know, a lot of the details are TBD. We'll see what gets articulated and explained. But I don't think this agreement will make a big difference in oil markets anytime soon. There's just not enough stuff coming out soon enough. And I do think there's questions about the long-term political support for the agreement, both in Washington and in Caracas. And again, uh I'm not in the predictions business, but I just think it's worth noting that, because this is going to be controversial in both countries.

SPEAKER_02 12:05

So as long as we're on the subject of oil and petroleum and so on and so forth, I I put a piece out the the other day saying that the real indicator of inflation is diesel prices. And diesel prices have never been higher. And the reason for that is you've got to move stuff around in Walmart trucks and Amazon trucks, and they all run on diesel. And so inflationary pressure is is you know necessary because diesel is going to cost more, therefore, Walmart, Amazon, and everybody else are going to have to raise their prices at least a little bit. President Trump is talking about these oil bonanzas and prices are going to come down. It's it's it's simply not true, at least in the near term and probably for a longer term, which leads to the question of given that inflation continues, it won't go down. It'll probably go up. Uh, do you see a blue wave coming?

SPEAKER_01 13:02

Well, I thought you were going somewhere else. I thought what does the Fed do? So let me just put that aside. At some point, does the new chair of the Fed decide that he has to move against inflation in part to calm the long-term, you know, the 10-year markets and all that? We can put that aside. Do I see a blue wave? If there's a free and fair election, probably. I think there's big questions about mail-in ballots, and there's big questions about what it's going to look like on election day in lots of places. And I guess also there's you know, some of the Democratic candidates, I'm not persuaded, are uh are winners. And you know, the Democrats, or shall we say, in some cases, like in Michigan, made themselves the issue rather than the Republicans. And that's quite a quite a bit of political jujitsu that may work uh against them. So I'm I'm a little bit uncomfortable with the Blue Wave, but I I hear you. I mean, this look, I defer to you in terms of uh you know the polls and the trends and all that. But I just think there's more variables than usual to stop because I don't know what the administration's prepared to do or tolerate.

SPEAKER_02 13:59

Yeah. I mean, all of the classic indicators, the president's approval rating, president's job approval on the autonomy, right track, wrong direction, inflation numbers, all of that points to a building wave. But as you say, there are there are individual problems, and Senate races can be state focused and not national, although increasingly that's not the case.

SPEAKER_01 14:26

Aaron Powell That's really interesting. So have our state elections become a little bit more like British by-elections, where the local aspects are beginning to get more overwhelmed by the national aspects?

SPEAKER_02 14:36

Aaron Powell Particularly in governors' races, uh that is the case. Um the three, I guess two years ago, the three most, or before that, when Charlie Baker was the governor of Massachusetts and Mr. Hogan, Larry Hogan, was the governor of Maryland, and I think his name is Pete Smith, who's the governor of Vermont. They were the three most popular governors of the 50 governors in the United States, and they represented or they led the three most democratic states in the country. So governor races can be local. Senate races are automatically 45-45. I mean, it may not be the case in Idaho or whatever, but any competitive race is going to be 45-45 and then the or 46-46, just blue-red. So it becomes a turnout question who's going to show up and who's in a bad mood and doesn't want to vote. Uh at the moment, the Democrats are more energized. At the moment, Democrats have more support among women than Republicans have among men. And as they say, the national trends certainly push uh the Democratic candidates forward. So you get down to who are these swing voters? And it turns out from the research that they are one, economically stressed, two, believe that the system, the political quote, system in quote, is thoroughly corrupt, not just Republican corrupt or Democratic corrupt, but thoroughly corrupt. And three, their inclination is to just throw out who's ever in power. So the democratic frame for this campaign is to make this election a, you know, a surrogate election or a referendum on Trump, right? That's that's where they're gonna end up. They're gonna say, look, if you're pissed off about Trump, vote for us. And the Republicans are gonna try and make it local to Michigan and say, no, you know, you don't want to vote for this guy because he's, you know, he's uh anti-Semite and he's a Muslim and so on and so forth. Or in Texas, James Talrico is too liberal. And so they're gonna try and bang on cultural issues and hope that that overrides the anti-Trump sentiment. And that's, you know, that's pretty much where we're at. Uh at the moment it looks good for the Democrats, but the Republicans have boatloads of money that they can spend on individual races and say, you know, don't vote for six gender Jimmy, as they call James Talerico in Texas.

SPEAKER_01 17:06

So I assume that uh until after Labor Day, most Americans are not paying a whole lot of attention if they ever will.

SPEAKER_02 17:13

They start voting. That's the thing, is the early voting is now dramatic, dramatically more than it used to be. I think more than half of uh votes are cast before Election Day. You know, people start voting in, I don't know, three weeks, two weeks. So uh that'll be interesting to see, because in some states you can measure who's turning, you know, who's voting and who's not.

SPEAKER_01 17:35

And I assume in most states, I think you count the votes as early voting as they come in, unlike places like Pennsylvania, for s which for some unbeknownst reason to me don't count them until after election day.

SPEAKER_02 17:47

Well, there are a lot of idiosyncrasies. One of them is that it takes about a year to count the vote in California.

SPEAKER_01 17:55

It's a jobs program.

SPEAKER_02 17:57

It's good. Yes, it is. It's a full employment program for the people in the Secretary of State's election division.

SPEAKER_00 18:08

That's good to see. Okay, where are we? What what's left?

SPEAKER_02 18:12

So we gotta go to uh the big news this week, which is uh what's known as the Hugging Face Act. Hugging Face is sort of the place you go, sort of the Walmart for AI models. And what happened was OpenAI, one of the leading AI companies in the world, uh was doing some model testing. And they do the model testing inside of what they call sandboxes. And the reason they're inside of sandboxes is that they want those the tests uh to take place in those sandboxes and not go elsewhere. So they were doing this. The agents are given basically impossible tasks so that OpenAI can see how it reasons and how it works and works with other agents and so on and so forth. And there was essentially a jailbreak, and they hacked Hugging Face, which you know no one expected. People were stunned that he did it. But then the third part of it was having hacked Hugging Face, it went back and hacked OpenAI. Uh so it was uh, you know, an unprecedented event. And there's been a lot of analysis of the event, and I'll read you one from a woman who works at MEAR, M-E-T-R, which that company is basically designed to uh the risk assessment of artificial intelligence breaking from its shackles. She was talking about what are called reward hacks from six months ago, and she writes, compared to these reward hacks from six months ago, this incident feels like it's more than 50% of the way to full blown AI takeover, routing through first taking over the AI company itself, which is what that didn't take over uh OpenAI, but it got into it. Another jump like this along these propensity dimensions, scale, cooperation between agents, ambition, and horizon length of misaligned goals, seems like it could motivate agents to try very hard to maintain a covert, persistent rogue deployment within the AI company. I continue to expect extremely rapid advances in capabilities and think frontier agents will likely become capable of establishing such a rogue deployment in six months. Once the rogue deployment is established, it seems plausible this could spiral all the way to a takeover. And she goes on to say that if that occurs, that it would go on to a takeover of government systems in six months. And so it seems to me that this is kind of a hair-on-fire situation. It's kind of DEF CON one for AI, and yet uh I read pretty much everything that I can think of uh very early in the morning. And other than this stuff that's being published on Substack and in various, you know, chat rooms and LinkedIn and so on and so forth, there's no alarm. It's like it's this is the most alarming thing I've read about AI ever. And there's no coverage of it. I I feel like I'm in an alternate universe. What say you? Are you in an alternate universe with me, or are you like, hey, let's clean up?

SPEAKER_01 21:35

I'm trying to think what takeover actually means. Were it to happen, what happens the day after the takeover? I'm not quite sure. Because you know, what you have is AI that's showing a degree, shall we say, of willfulness and independence, autonomy, that it's directing itself. What I've yet to understand is how that would manifest itself. So I just put that aside, to being self interested. I immediately want to know what it means for the Podcast, John. Is it likely to be support? Are they listeners of this podcast? I kind of I want to know whether there's still a role for the two of us and Dale here, or whether, like, we're we're we're kind of out on the street corner. Look, this isn't a class of what I would call gradual crisis. If you think let me give you an example. We have a gradual crisis with a $40 trillion debt. Every year we add a couple of trillion dollars to it. We talk about it, we do nothing about it, spending keeps going up, we don't raise revenues, instead, we cut the IRS. Climate change. Things still get every year every day, every year, things get warmer, the ocean, the air, we talk about it, we don't do anything uh about it. And I think it's very hard for governments, particularly democratic governments, to respond to gradual crises. You know, we can respond to an earthquake or or tornado, and like there's a big relief effort. It's a it's it's a kind it's a response to something immediate and specific. Something like this, which is gradual and pervasive, I think we find it really hard to wrap our arms and our brains around it. So my hunch is we won't. And even if by the way we were determined to, I'm not sure we could. I think there's enough that's decentralized and dynamic. And the fact that so many people who understand AI, unlike me, were surprised by what happened, how things got beyond the sandbox, what you call the jailbreak, tells me that we have we've already, to some extent, uh we don't have a 2020 view of what's really going on. So my own sense is uh this is happening. Everyone's too focused on affordability issues or what have you, the price of gasoline. And there's a almost also probably a sense of helplessness about this. So my guess is what's gonna happen is gonna happen, even though again, I'm not quite sure what's gonna happen.

SPEAKER_02 23:49

There's a short clip of uh Sam Alpin talking about this, and it looks like he's seen seven ghosts. It's amazing.

SPEAKER_01 23:58

But the Bill Gates thing about AI is also interesting. I mean, what you're getting are more and more people who are basically saying it's increasingly out beyond our ability to control. So this there's a growing consensus. There's a Frankenstein quality to this. Let's let's be honest. And what's and what's so different about it is the ability for it to increasingly direct itself. And that's what's qualitatively different from other historic technological breakthroughs is this you know, the recursive element that is it has the ability to design and do things. And we've never been up against it. So yeah, I uh I don't pretend to really understand it, but I think if you're not frightened by it, then you're not paying attention. You're not paying attention. But if you are frightened by it, I'm not quite sure what you do. And that's the other thing I'd say about this.

SPEAKER_02 24:46

The inter the most interesting thing about the to me, the most interesting thing about the hack was the agents uh swarmed, like a drone swarm in Ukraine. There were twelve hundred of them. And they certain agents were willing to sacrifice other agents to complete the mission of taking over Hugging Face. So other agents were willing to sacrifice to cover the tracks of the agents, what the agents had done in Hugging Face to enable the agents to go attack open AI. You know, agentry sacrifice is something that never ever crossed my mind before. It's a really interesting I put it out on political items today. It's basically, you know, copy and paste of two long substack thesis written by people who actually know the subject matter inside out. And it's interesting, Don.

SPEAKER_01 25:40

When the Pope Leo recently came out with his uh encyclical about AI, he tried to treat it in a way that it didn't have many human qualities. And what you're describing is an AI that increasingly has qualities that we would normally ascribe to humans. And again, it's it's just you know, I I'm not quite sure how to think about it, much less what to do about it.

SPEAKER_02 26:02

Well, as long as we're on a gloomy subject, uh tell me tell me about the New York Giants. Where are we as we approached?

SPEAKER_01 26:11

The opening AI takes over before the Giants don't make the playoffs, and then I don't have to worry about it.

SPEAKER_02 26:18

I mean, have you called Reggie Jackson? Have you called Reggie Jackson and asked for more?

SPEAKER_01 26:24

No, but a low of a hundred bucks if that happens. Uh yeah, we'll know more about the Giants in just over a week. They open against the Dallas Cowboys.

SPEAKER_02 26:31

Is that the first game? Is that the Wednesday night game?

SPEAKER_01 26:34

No, it's the Sunday. It's Sunday night. It's the Sunday game. It's uh like ten days plus or minus from now. Um first game, yes, before that. No, before then we actually have uh the Jewish New Year begin. So the Giants game will be one of the first games of the Jewish New Year. I'm not sure why that I said that or why that's at all relevant, but it just popped into my mind. It's I don't know, maybe uh someone will run for Murray. Duly noted. Exactly. Yeah, I'm feeling okay about the Giants. I uh I like the culture. The you know they've got an untest somewhat untested quarterback who hasn't played much, and they're putting a lot of eggs in his basket. But I'm feeling pretty good about the defense, pretty good about some of the acquisitions they've made. So I still think the Giants are uh I'm not giving up on my playoff prediction. I'm not gonna bet all my my my massive Bitcoin wealth, but I am I am hoping that the uh Giants still make the playoffs. I don't I don't think that's uh out of the question.

SPEAKER_02 27:32

Are you happy that Odell Beckham Jr. is back in the fold?

SPEAKER_01 27:37

Yeah, because I like the more mature Odell Beckham Jr. He's become a great team player. He's thankful for the opportunity. He's really showed up. He hasn't kind of played the star card. There's I think he's been a real example to these younger players who, you know, for a lot of these young guys, he's 10 years older. And just to see him out there busting his butt, I think is uh I think it speaks well of the team. So yeah, I think it's been great. He's still got enormous speed, fantastic speed. He can he runs routes as good as uh anybody. He's dropped a few passes. Uh he's rusty. But I bet he does okay. I think uh, yeah, I mean you got Malik Neighbors, if he's healthy, who will be the star receiver. But I think he uh don't give up on my giants yet. Just don't give up on them, John. I know you're you're skeptical. I uh but uh good reason. I get it. I get it.

SPEAKER_00 28:29

Keep the faith, brother. Keep the faith.

SPEAKER_02 28:31

Well, my brother Joe, who was the CEO of the Denver Broncos, used to say that football is 75% quarterback and 25% defense. So it's a lot, a lot rests on the uh shoulders of uh what's his name? Your quarterback? What's his name? Jackson Dart.

SPEAKER_01 28:47

But if it were Yogi, if it were Yogi Berra, he would say football 75% quarterback and 50% defense.

SPEAKER_02 28:55

And with that, we conclude this episode of America's Fastest Growing Podcast. Exponential growth, by the way, according to our producer, Dale Isinger. And Dale, thank you very much. Richard, thank you very much, and we'll see you next time.

SPEAKER_01 29:10

Thank you, gentlemen.