Today in one sentence: Voters are deciding whether Republicans will keep control of Congress for the final two years of Trump’s presidency; the Justice Department sent about 1,000 election monitors to more than 120 jurisdictions across all 50 states; U.S. military secretly carried out airstrikes on Iran’s Qeshm Island in the Strait of Hormuz on the eve of the midterm elections; Trump said he’ll cut off nearly $4 billion in annual U.S. military aid to Israel by the end of the year; D.C. and Virginia sued to block Trump’s planned 250-foot arch near Arlington National Cemetery; a federal judge dismissed Trump’s revised defamation lawsuit against the Wall Street Journal over its report on a purported birthday letter to Jeffrey Epstein; and a federal magistrate judge dismissed the Justice Department’s criminal complaint against two former FBI officials accused of lying to Congress about the Hunter Biden investigation.
1/ Voters are deciding whether Republicans will keep control of Congress for the final two years of Trump’s presidency. Democrats are favored to win the House, which would give them control of congressional committees and the power to investigate Trump and his administration. The Senate, however, is less certain. Republicans hold a 53-47 majority, and Democrats need to flip four Republican-held seats while defending all their own, with closely watched races in North Carolina, Maine, Texas, Kansas, Alaska, and Iowa, as well as Michigan, where Democrats are defending a seat. Trump’s approval rating stands at 32% as Americans weigh high prices, the war in Iran, and his immigration crackdown. Trump, however, claimed on Election Day that “Inflation is solved.” More than 59 million Americans have voted early, surpassing the 46 million who voted early in 2022. Republican turnout on Election Day, however, could determine whether it’s a “blue wave” or “blue tsunami.” Trump nevertheless claimed, “If our people vote, we win in a landslide.” The first polls close at 6 p.m. Eastern in parts of Kentucky and Indiana, but control of Congress might not be known for a few days, or longer. (Bloomberg / Wall Street Journal / ABC News / New York Times / NPR / Reuters / CNBC / Axios)
The top issues on voters’ minds ahead of midterm elections: 48% of voters say the cost of living is their top issue; 49% say their household finances have gotten worse since Trump returned to power; 48% said their ballots was a vote against Trump; 55% say Trump’s war in Iran hasn’t been worth it; and 77% say they’re confident that their ballot will be counted. (Reuters)
2/ The Justice Department sent about 1,000 election monitors to more than 120 jurisdictions across all 50 states – its largest monitoring operation ever. Nearly two-thirds of the jurisdictions selected have consistently voted Democratic in recent presidential elections. The Biden administration monitored Democratic-leaning areas in roughly the same proportion during the 2022 midterms. Democrats and local election officials warned that the deployment could intimidate voters or interfere with voting. Monitors, however, would be unarmed, out of uniform, and have no arrest powers. (Axios / Washington Post / Bloomberg)
3/ The U.S. military secretly carried out airstrikes on Iran’s Qeshm Island in the Strait of Hormuz on the eve of the midterm elections. U.S. officials described the attack as defensive after Iranian forces fired at American aircraft near the strait. The strike wasn’t initially publicly disclosed, and Trump previously promised to “not be attacking Iran at any time prior to the Midterm Elections.” He called the strikes “just a minor attack” after claiming on Monday that “we haven’t been doing any fighting for months.” Trump, however, has repeatedly threatened to resume major attacks after the midterms. (Wall Street Journal / CNN / Associated Press / New York Times / Washington Post / Reuters / NBC News / CBS News)
4/ Trump said he’ll cut off nearly $4 billion in annual U.S. military aid to Israel by the end of the year. “We won’t be paying anymore to Israel,” Trump said. “We’ve already agreed that by the end of this year, we won’t be paying Israel.” He claimed that he and Prime Minister Benjamin Netanyahu made the deal months ago, saying “they’re fine with it.” The current agreement provides $3.8 billion a year through 2028, and ending it early would require cooperation from Congress. Trump, however, said Israel could still continue to buy U.S. weapons. (Associated Press / New York Times / Bloomberg / Politico / Wall Street Journal / NBC News / CNN)
5/ D.C. and Virginia sued to block Trump’s planned 250-foot arch near Arlington National Cemetery, arguing it lacks congressional authorization and violates D.C.’s building-height law. (Politico / Washington Post / New York Times / NPR / Axios)
6/ A federal judge dismissed Trump’s revised defamation lawsuit against the Wall Street Journal over its report on a purported birthday letter to Jeffrey Epstein, finding that Trump failed to plausibly allege actual malice and blocked him from refiling the lawsuit again. (NBC News / Bloomberg / Wall Street Journal / CNBC / CBS News / Politico / Axios)
7/ A federal magistrate judge dismissed the Justice Department’s criminal complaint against two former FBI officials accused of lying to Congress about the Hunter Biden investigation. Judge Zia Faruqui found that prosecutors failed to show probable cause that Nikki Floris and Bradley Benavides knowingly made false statements in their 2023 testimony. He said the case couldn’t “be described as anything other than weaponization” and that it was “self-evident that the U.S. attorney’s office is avoiding taking this case to a grand jury.” (Associated Press / Reuters / NBC News / Axios / Washington Post / CNBC / New York Times / ABC News)
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Friday's piece is about fault lines - the areas most-exposed to the collapse of the AI bubble, the datapoints to watch to see the industry's deterioration, and what might cause things to fall apart.
If you want to get in touch — and especially if you have any juicy information about Anthropic, OpenAI, Blackstone or any other companies in the AI bubble — hit me up on Signal at ezitron.76. I’m also on IB on your Bloomberg Terminal.
As I’ve said for a while, all of this ends when the money runs out— when seemingly-unlimited data center debt becomes distressingly hard to raise, and when AI startups can’t rely on the perpetual availability of venture capital to keep them alive.
And it appears the well is running dry, just as it dawns on everyone that the underlying economics of AI, for labs and data center operators alike, don’t really make sense.
Last week — less than a month later — OpenAI raised $11 billion at a $1.25 trillion valuation “after receiving tepid interest from some large investments,” per the Wall Street Journal, who added that OpenAI had “...told shareholders it expects to try to raise more money…[and hoped] to raise up to $20 billion,” targeting “family offices and high net-worth individuals,” which means that sovereign wealth funds, venture capitalists, and private credit firms have given all they’re willing to.
In other words, that $11 billion round won’t even cover a quarter of OpenAI’s compute costs, and it’s fair to ask both why this round had to close right now and what exactly the company does going forward.
If OpenAI needed a paltry $11 billion, it’s likely that it raised it either out of some degree of desperation and/or an attempt to catch up with an Anthropic IPO that investors are now expecting to, per Bloomberg, price at $1.4 trillion to $1.5 trillion, down from less than a month ago when it was expected to price at $2 trillion or more. Anthropic is now, per the WSJ, being “urged by institutional investors to target a lower valuation of $1.5 trillion to $1.6 trillion.”
It is extremely bad that OpenAI raised at a lower valuation than planned, and even worse that it couldn’t raise as much as it wanted (needed?) at said valuation. In the absolute best case scenario, this was an attempt by OpenAI to bump its valuation up from its $852 billion par from March, I imagine to make its investors feel better about Anthropic’s upcoming IPO…potentially? The problem is that at $1.25 trillion, OpenAI would have to eventually go public at a $1.5 trillion or $2 trillion valuation to give its latest investors anything close to a positive return, at a time when Anthropic has already seen its expected market capitalization tank by hundreds of billions of dollars.
I think the answer is probably somewhere in the middle — OpenAI needed this money, needed to feel competitive with Anthropic, and realized that it should raise as much money as possible before the capital markets slam shut.
The question I ask is simple: what the hell does OpenAI do next?
OpenAI’s $1.25 Trillion Round Is A Bad Sign
At $1.25 trillion (as mentioned above), OpenAI would need a much better listing price than Anthropic is expected to have, for a company with objectively worse metrics, including slower growth, lower revenue, higher costs, and hundreds of millions of free users that generate, at best, about a billion dollars in “annualized” ad revenue against the billions of dollars it costs to serve their compute. Despite all the buzz around GPT-6 Astra — which was, according to NVIDIA’s Jensen Huang, “AGI” — it’s clear that its effect on revenues was insufficient to excite even the cash-rich and hype-friendly investors in the Gulf.
GPT-6 Astra was, I believe, expected to be the lipstick on an unmistakably feculent pig of a company — something that’ll disguise the horrendous fundamentals of OpenAI’s business and energize investors — and, based on its disappointing latest funding round, it failed. And I believe that things will get worse from here.
OpenAI will absolutely, without a doubt, need more money in the next few months, and will need to raise at some sort of valuation, one calculated based on both that $1.25 trillion valuation and the performance of Anthropic’s IPO.
Making things a little more challenging is the Financial Times’ report that Blackstone has told some investors that Anthropic “may not receive an investment-grade rating immediately after going public,” otherwise known as a junk rating, a point I made about a month ago based on the fact that it’s a negative-EBITDA company.
While inevitable, a below-investment grade rating essentially puts Anthropic’s debt outside the reach of the most prolific bond-buyers, like pension funds and insurers. And again, I couldn’t see this going any other way, but I would argue that this rating represents a psychological cold shower for investors — a reminder that this space is, using the most charitable language at my disposal, inherently speculative and rife with risk. Given that OpenAI’s past and future fundraising is contingent upon an investor class that’s drunk on exuberance and that has lost its senses, cold showers are a very bad thing.
OpenAI is a company with higher expenses, lower revenues, and the stench of an also-ran that got beaten by an aggressive competitor gunning at full speed to beat it to IPO, leaving it with few options outside of increasingly-illogical-yet-existential funding rounds that either scrape the bottom of the VC barrel or force it to take a down round to get cash through the door. Future investors will have to believe, somehow, that OpenAI will both actually go public and one day be worth $2 trillion to $3 trillion, as well as somehow being able to raise hundreds of billions of dollars of debt to keep up with its $750 billion in planned cloud spend through 2030.
And given that junk rating and the grim new data from Anthropic’s newly-amended S1 (called an S1/A), it’s unclear how any of this is actually meant to work.
Anthropic Has $895 Billion In Spending Commitments, With A Minimum Of $319.9 Billion Due In The Next Four Years
Let’s be clear about something: it only took a week for Anthropic to file an amended S/1 to include its Q3 numbers, which means (in my opinion) it was absolutely ready to go for the initial filing but chose to intentionally leave those numbers out.
You’re about to find out why.
Anthropic’s Q2 2026 Numbers Were An Anomaly Of Artificially-Depressed Costs and Revenues Inflated By Token-Maxxing
As I discussed last week, Anthropic’s initial S-1 filing — covering up to Q2 2026 — described a company that effectively no longer exists, with a “profit” driven by discounted SpaceX compute, $2.08 in revenue for every dollar of compute spend, $11.5 billion in revenue, and$430 billion in non-cancellable compute commitments, including a $161.2 billion deal with Broadcom to lease Google’s TPU chips at a remarkable scale.
Though we already knew some of the Q3 numbers thanks to the Financial Times’ reporting around Anthropic’s investor day, boosters and the otherwise cope-poisoned chose to do several consecutive victory laps, claiming that this was proof that A) Anthropic was a “profitable company” and B) that “the economics of generative AI work.”
In other words, Anthropic deliberately filed less information as a means of misleading the public into believing it was a fast, lean, profitable company with remarkably low compute costs and a large — yet indeterminately-timed — pile of obligations.
Having read the amended filing, I kinda get why it did so.
Anthropic’s Q3 Numbers Show Exploding Costs, Slowing Revenues, and $895bn to $1.07tn In Obligations, With At Least $69.8bn In Compute Costs In The Next Year and $437bn In Non-Cancellable Contracts
As part of its original filing, Anthropic included this delightful diagram of its “revenue per dollar of compute” — but left out Q3 numbers that we already know it had (because the Financial Times reported them weeks ago) for the obvious reason that its economics got worse.
While revenue grew about 46.9% ($11.5 billion to a little under $17 billion) quarter-over-quarter, compute costs nearly doubled from $5.6bn to $9.9bn (about 77.4%). This was partially driven by the fact that, per Bloomberg, Anthropic’s compute spend made up 34.5% — around $5.028 billion — of SpaceX’s Q3 revenue, making it Musk’s largest customer.
Sidenote: I’ll also add that Anthropic’s compute costs still, to this day, do not make sense in comparison to those borne by OpenAI and basically every other company renting GPUs and TPUs. While it still lost $567 million in Q3 (and had a negative 3% operating margin) it only spent $4.9 billion on compute (outside of SpaceX) across Google, and Amazon, despite Amazon opening an entire data center in Indiana for it last year and signing a deal worth “tens of billions of dollars” with Google in October 2025 that would “bring over a gigawatt of capacity online in 2026.”
As I reported a year ago, OpenAI — in a year where it made $13.01 billion in revenue — spent $3.64 billion on inference in Q3 2025. While it still had the burden of the free Sora app at this time, not to mention its free users, I find it hard to understand the significant gap between the companies’ costs, and do not buy that Anthropic has some super secret sauce that makes it significantly more efficient than OpenAI to the extent that we see in the numbers.
Per my own reporting on Anthropic’s Amazon Web Services bills from 2025, Anthropic spent $1.225 billion on AWS alone in Q3 2025, in a quarter that (per the S-1) had a total of $2.047 billion in compute costs, leaving about $1.71 billion in costs in that 9 month period unaccounted for, likely going to Google Cloud.
If I had to guess, Anthropic likely — as it’s mentioned it does — pre-bought capacity at discounted rates from Google and Amazon on sweetheart deals that are either running out or have run out this year. For example, UBS’ Stephen Ju cited in a note from earlier in the year that Anthropic had a deal to pay Google a mere $1.25 billion in annual revenue outside of a $25 billion commitment to TPUs, and another agreement beginning in FY2027 at $6.25 billion a quarter.
I guess we’ll never know, unless one of you wants to share Anthropic’s Google Cloud or Amazon Web Services spend! Ezitron.76 on Signal.
Anyway, Anthropic also filled in that contractual obligations chart, showing a minimum of $319.9 billion in payments through the end of 2030.
Yet before anyone starts suggesting that Anthropic has fewer obligations than we thought, it immediately goes on to add that there are $451.2 billion in leases yet to commence…
Further, the table above does not include leases executed and not yet commenced as of September 30, 2026, with total estimated future undiscounted lease obligations of approximately $451.2 billion. Generally, these lease obligations are expected to commence between 2026 and 2028, with lease terms ranging from less than one year to 20 years, with a weighted-average term of approximately 10 years.
…and, for whatever reason, leaves out over $100.2 billion in future obligations to hyperscalers and data center lessors, as well as “certain agreements that are short-term in nature” with a minimum spend of $6.6 billion.
In addition, the table above does not reflect commitments entered into after September 30, 2026, with aggregate future minimum payment obligations of approximately $100.2 billion, primarily consisting of data center leases and CSP hosting and other third-party infrastructure service agreements. We also entered into certain agreements after September 30, 2026 that are short-term in nature. Minimum payments under such contracts are approximately $6.6 billion. See Note 17 to our consolidated financial statements included elsewhere in this prospectus for more information on commitments entered into subsequent to September 30, 2026.
Anthropic does add that it expects to pay $69.8 billion of its contractual obligations in the 12 months starting October 1, 2026 — meaning Q4 2026 — which makes that “$29.1 billion in payments due by year” number extremely suspicious, to the point that it almost feels like Anthropic intentionally wants readers to get the wrong idea about the company.
I mean, I get it! Anthropic wants to sell itself as this fast-growing, lean, “profitable” AI lab that has worked out the messy economics of generative AI, when in fact it’s an overweight hog with nearly a trillion dollars’ worth of commitments, $437.4 billion of which are non-cancellable.
Anthropic Appears To Have More Than $1 Trillion In Compute Commitments, And Uses Legalese To Obfuscate Its Truth Obligations
Just to review, that’s…
$319.9bn in purchase commitments and commence leases
$451.2 billion in signed leases that haven’t commenced.
$17.4 billion in short-term commitments.
$100.2 billion in commitments signed after September 30.
$6.6 billion in additional short-term commitments signed after September 30.
$69.8 billion due to be paid within the twelve months starting October 1, 2026
Yet even then, there’s potentially hundreds of billions of dollars more in compute commitments that Anthropic vaguely describes, the first being underneath that chart in a footnote, emphasis mine:
Excludes certain other compute and infrastructure arrangements that do not specify a fixed dollar commitment which are not included in the aggregate above. Payments under these arrangements will depend on the capacity made available and deployed, delivery timing, pricing mechanics, and the satisfaction, or our waiver, of certain other deployment conditions. Because these factors are not yet determinable, the total amount of payments under these arrangements is uncertain, but we currently estimate such payments to be approximately $150 billion to $175 billion. We expect these amounts to be payable over time after the capacity is delivered.
No worries dude! Just $150 billion in compute commitments that might happen at some point or another with no explanation as to who the commitments are to, what they’re for, and when they might begin, other than that they might be part of a deal with a hyperscaler!
Say, talking about hyperscalers, Anthropic also apparently has another massive commitment to lease TPUs — apparently separate to the Broadcom deal! — that may or may not be worth as much as $125 billion to $150 billion, and deliver sometime in the next two to five years:
In addition, we also committed to procure additional TPU compute, without a fixed dollar commitment, via one of various delivery methods, including either a CSP hosting agreement with Google, direct purchase from Google with five-year financing, or direct purchase and/or lease from a third-party TPU provider with five-year financing. Such compute is expected to be delivered between 2028 and 2031 and the associated payment obligations are determined by the capacity made available, the delivery method, and the pricing and financing mechanics. We estimate the aggregate future payments for such additional compute to be approximately $125.0 billion to $150.0 billion, which are not included in the contractual obligations table above.
So, yeah, just another $300 billion or so of commitments on top of the others, disclosed in an opaque — and I’d argue deceptive — way.
But that’s just how Anthropic (and its former Blackstone private equity CFO) rolls. Anthropic wants to con as many retail investors — via the media, of course — into believing that this is a company that will only spend $30 billion on compute in 2027, and will somehow grow to meet its ridiculous, ever-expanding costs.
Anthropic’s Discounts Are Eating Into Its Revenues, Costing It $600 Million In Q3 2026, An Increase of 757% Year-over-year
Underneath the quarterly trends section of the S/1A, Anthropic added an entire paragraph underneath “quarterly revenue trends” on page 161 (158 in the original S-1):
For the three months ended September 30, 2025 to the three months ended December 31, 2025, the increase in revenue due to higher usage was partially offset by a decrease of approximately $70 million from price reductions introduced as part of new model versions and contractual discounts. For the three months ended June 30, 2026 to the three months ended September 30, 2026, the increase in revenue due to higher usage was partially offset by a decrease of approximately $600 million from price reductions introduced as part of new model versions and contractual discounts.
In other words, for every dollar that Anthropic makes, it’s cutting that by 3.4% or so via discounts, a fact it’s only including as a means of key-jingling for boosters to say “actually revenue would be so much higher, if…” even though this number doesn’t really tell us very much about Anthropic’s business. Are these discounts for enterprises buying tokens direct? What were the discounts in Q1 and Q2 2026? Don’t worry about it man, these numbers are not here for you to learn more about Anthropic, they’re about making sure you invest in it.
With A Junk Rating, It’s Unclear How Anthropic Affords Its $330bn to $447.5 Billion In Compute Commitments In The Next Four Years and Decaying Margins
Anthropic’s cash position is one of the weirdest things I’ve seen in a company, and I’ll explain why with this quote from economist Paul Kedrosky when he dug into its original filing, where he called it “a bank with a money-losing AI side gig”:
Anthropic held $112 billion in cash and equivalents at June 30, plus another $19 billion in short-term investments. It generated $1.1 billion in interest income on that balance in the six months. Granted, this won't get you a gig at PIMCO or Doubleline, but it is massive.
To put in context, Anthropic's interest income is larger than their operating losses of $700m+. It is also larger than many regional U.S. banks. While the interest income provides a cushion beneath operating losses, it doesn't change underlying operating economics. For now, being well-funded is itself a meaningful source of earnings. That benefit will go to zero as the cash gets spent.
In Q3, Anthropic’s cash position is largely left unchanged, with $16.8bn in cash and cash equivalents turning into another $17 billion in short-term investments (US Treasuries and securities), generating $1.248 billion in interest — a savvy move to generate capital for a company destined to burn billions of dollars in increasing intervals.
And the problem for anyone trying to digest this S-1/A is that there’s very little guidance as to how that might actually happen.
Let’s go back to the top of page 6:
These commitments include approximately $447.5 billion expected to be incurred before December 31, 2030, and substantially all of the remainder is expected to be incurred between 2031 and 2045. Approximately $69.8 billion of these commitments are due in the 12 months following September 30, 2026.
Now, that $69.8 billion could, in theory, include some of SpaceX’s $3.1 billion a month in compute costs — which are, of course, “short-term leases” that can be exited with 90 days of notice — but it’s impossible to tell thanks to this insipid company’s weasel wording. There’s also a compelling argument that it only includes a quarter’s worth, which would add another $27.9 billion on top of the $69.8 billion in the event that Anthropic used it for the entire year.
Nevertheless, Anthropic has a remarkable amount of compute commitments, and itself admits that it will have to cough up as much as $447 billion in costs in the next four years, and unlike previous years, it’ll have to pay for it up front in big, ugly chunks.
In Anthropic’s own words, it “expects an increasing portion of [its] compute and infrastructure investment to take the form of capital expenditures and other commitments,,” and that said commitments require “significant upfront payments well in advance of the related compute becoming operational.”
While one might be tempted to say that its current liquidity — about $95.5 billion in cash and $36.2 billion in short-term investments — in addition to potentially raising $100 billion at IPO might be enough to get it by for years, even Anthropic suggests that might not be the case:
We believe our existing available cash and cash equivalents, short-term investments, together with cash generated from sales and amounts available under our A&R Credit Facility, will be sufficient to support working capital, operating and finance lease payments, and capital expenditure requirements for at least the next 12 months from the date of this prospectus.
However, our future capital requirements will depend on many factors, including our revenue growth, the timing and extent of our investments in compute and infrastructure capacity, including additional or expanded CSP, equipment lease, and data center arrangements, the success and expansion of our sales, marketing, and business development strategies.
This suggests that fairly soon Anthropic will have to send a significant amount of cash out the door in the form of pre-payments, on top of the fact that it’ll be spending $9.3 billion a quarter, without fail, on SpaceX’s compute, assuming that that agreement doesn’t expand any further.
Anthropic’s Future Is Brittle, Its Obligations Ridiculous, And Every Bit Of Debt More Dangerous Than The Last
This leaves Anthropic in a worrying position where the only guarantees it has are that its costs will expand dramatically, every single year without fail. While revenue growth might continue (though Ramp, which was accurate with its predictions of Anthropic’s Q3 growth, now expects its Q4 numbers to be far more modest, ranging between 15% and 25%), said growth now has to compete with hard, inflexible costs regardless of any seasonal shifts, price increases (or decreases) or product changes that might hamper growth, and with the sheer scale of these costs, any mismatch between compute spend and revenues will cost the company billions of dollars.
And then there’s the problem of that junk rating. While we still don’t know what level of junk rating the agencies might award it, Anthropic is all but certain to have to raise debt in the 8% to 11% range — the kind of interest rate that can veer between harsh and unmanageable when you face rough headwinds, especially when you’re raising debt in the tens of billions.
Anthropic’s current obligations are priced for perfection, requiring the company to, by this time next year, be roughly twice its size and continuing at a similar (or better) growth rate, because the sheer scale of its compute commitments demands Anthropic maintains both perpetual growth and improved margins.
It is not enough for this company to be the fastest growing startup of all time — it must also be attractive enough as a potential debtor to appeal to an already-strained junk debt market, which will require it to become a better, stronger company in stark economic terms unrelated to any hype around AI, especially as Wall Street becomes, to quote the WSJ, “choosier about where to place their bets and are demanding tougher terms.”
To be clear, that’s referring to AI data centers that have physical infrastructure and actual assets rather than a negative-EBITDA software company with a very annoying CEO.
While Anthropic’s cash pile might make lenders a little bit calmer, we still have very little clarity as to the size and velocity of its prepayments, which makes it difficult to tell how big that cash pile might be in three, six or twelve months.
My question is simple: what happens when Anthropic’s revenue growth stalls as its costs naturally increase as capacity comes online? It’s deeply unattractive to lenders to say “well, we made all these commitments to pay hundreds of billions of dollars and it turns out our revenue growth slowed down, can you lend us money to cover the gap?” While in theory that might work, it’s the kind of thing that makes a lender ask “are you concerned about defaults?” or “what happened to all that cash you had?”
And as I discussed a few weeks ago, Anthropic will, outside of the very highest rung of junk, be limited in how much debt it can actually take on, and if it needs (as I estimate) around $50 billion a year, it’s hard to see how it pulls that off.
It’s getting dark outside, whether boosters will admit it or not.
The AI Trade Is Collapsing As Reality Dawns On The Industry, With Debt Markets Closing, AI Making Google Search Less Revenue, and The ROI Question Unanswered
While its rush toward IPO was arguably driven by its anomalous second quarter, Anthropic has also realized that the music is stopping, and everybody is beginning to ask worrying questions about the underlying economics that I was asking years ago.
Everything started to accelerate last week off the back of Anthropic’s S-1. The day before it was filed, Elon Musk closed a $40 billion debt deal to buy NVIDIA chips with interest rates for some parts of it as high as 8.75% per Semafor. A day later, Musk claimed that the markets had begun to shut out neoclouds entirely, per CNBC:
“As of the past few weeks, debt markets have almost entirely shut off access to money for any company that doesn’t have substantial revenue independent of AI data centers,” Musk, CEO of SpaceX and Tesla, said on a post on X on Sunday. “That means the 200+ neoclouds are going to see guppy-level death and consolidation. Some will make it through, but not many,” he added.
The new terms of trade are visible in every corner of markets. Bonds issued even by big tech companies such as SpaceX and Meta are trading at steep discounts. AI cloud companies such as CoreWeave, Nebius and Nscale that borrow big to build and sell capacity have effectively been shut out of the bond market in recent weeks, people familiar with the matter said.
It’s unclear how CoreWeave, which needs over $100 billion in debt through 2030 per Morgan Stanley, actually survives, let alone the gaggle of yet-to-IPO neoclouds like Firmus or Lambda make it through 2027. Their overstuffed backlogs and highfalutin revenue growth promises are no longer impressing anyone.
More tellingly, the mood around neoclouds have shifted — demonstrated most vividly by a piece published by the BBC’s North America technology correspondent Lily Jamali over the weekend, which essentially talked about the growing skepticism about the long-term health of neoclouds on Wall Street, and noted that many (in particular, Coreweave) have racked up debts that they really shouldn’t have been able to.
Neocloud firms often finance themselves by signing long-term lease contracts with major tech customers who need quick access to computing power.
Firms can then borrow money using those contracts – plus the AI chips they purchase – as collateral, explained analyst Cory Johnson of "The Quiet Period" IPO research outfit.
He said debt is common across neocloud firms because the hardware has to be paid for up front.
Take the industry leader: CoreWeave. It's a fraction of the size of some of the Big Tech companies it serves.
But Johnson believes lenders sometimes consider the creditworthiness of CoreWeave's customers, like Microsoft or Meta, more than the company's when they lend.
"This helps explain how CoreWeave accumulated $35.1bn (£26.3bn) in debt," he said.
I’ll simply note that I raised the alarm on Coreweave in March of last year (nearly 18 months ago), and many of the points that the article makes are ones that I’ve been raising in this newsletter ever since. In short, fears around neoclouds are now mainstream.
And while hyperscalers mightstillhavebeen able to raise debt this week, last week’s earnings have thoroughly panicked Wall Street.
Hyperscalers Are Now Dependent on Anthropic and OpenAI, With Slowing Revenue Growth Everywhere But Cloud Segments Pumped Up By AI Lab Compute/Revenue Shares
Per page F-16 of the amended S-1, 44% of Anthropic’s revenue (around $14.6 billion) for the first three quarters of the year came from Google and Amazon (and Microsoft to a lesser extent) selling its models through Vertex and Bedrock, which means both have seen billions of dollars of extra revenue both from selling Anthropic’s models and providing it with compute to deliver them.
In other words, in 2026, Anthropic got $10 billion in funding from Google, $5 billion in funding from Amazon, then spent billions of dollars on both Google Cloud and AWS to serve compute to sell access to models, which the hyperscalers then booked as revenue, on top of the revenue the hyperscalers booked from selling those models, which (due to the unique way that Anthropic itemizes its revenues) Amazon, Google and Anthropic all book as their own revenue.
While Amazon could explain away a bad quarter as a function of a flailing economy with spiralling inflation, Google had far grimmer news — that its use of AI overviews had led to “lower monetization” of search, meaning that despite spending hundreds of billions of dollars on AI, the only tangible effect appeared to be weakening the core product and creating a dependency on a pair of unsustainable, unprofitable AI labs.
This is extremely bad in a way that I’m surprised more people aren’t discussing. Per Bloomberg earlier in the year, OpenAI accounted for around 7% of Microsoft’s Fiscal Year 2026 revenues, or around 70% ($24.1 billion) of AI revenues. Within a single quarter, OpenAI has already accounted for nearly half of its last fiscal year contribution to Microsoft, with its concentration of overall revenues growing at an alarming rate at a time when, as discussed, the company is having trouble raising money to pay its bills.
There’s also the messy issue of Microsoft’s new revenue disclosures, announced back in September, that mean that we now know the quarterly revenue of its Azure cloud platform, which was an impressive-seeming $33.2 billion in its latest quarter until you, as nobody appears to have done, compare it to the $29.4 billion it made in Q4 FY2026.
That $3.8 billion in revenue growth is most-assuredly from OpenAI’s increased compute spend, especially given the dramatic jump from the end of the last fiscal year. If that’s the case, Microsoft’s “impressive earnings beat” is far more a function of OpenAI’s cash furnace than any success of its AI plays — especially as Microsoft neglected to update us on paid Copilot licenses outside of claiming that “Copilot daily users grew nearly 50% in the three months to September,” the kind of thing you tell an audience you are convinced is too stupid to see through your bullshit.
The Subprime AI Crisis Continues, And The Rugpulls Await
And just when we thought we’d escaped the fearmongering of a shitty earnings season, Uncle Elon decided to say the worst thing possible as users complained about their weekly usage of “Grok Bot” suddenly evaporating, per TechCrunch:
SpaceX CEO Elon Musk confirmed in an X post on Sunday that this was not a glitch.
“The cost of serving Grok Bot was unsustainably high relative to revenue,” he wrote in a reply to a question from a user. He has not addressed the issue on his main feed but has continued boasting that Grok Bot can help you buy gifts for your family.
Sidenote: The cost of running any kind of “agentic” service like Grok Bot is also much, much higher, as on top of the cost of inference, each one of them is given a virtual machine with an allocation of RAM and storage, and can spin up multiple different LLMs at once to work on a problem, with the underlying orchestration of all their actions (EG: connecting to APIs, databases, web searches, using applications) putting a heavy burden on the CPU.
Considering most AI services are billed on a monthly basis — and services like Muse and Instinct are free — these “agentic” features are a brand new infrastructural cost layer above and beyond the regular costs of LLMs. It’s a testament to the stupid amount of compute power necessary to get these things to do anything close to what we were promised with ‘agents’ over the last few years, and even then the results are mediocre.
After all, Masad would know — shortly following the June 2025 changes to priority processing, Replit introduced “Effort-Based Pricing” that jacked up pricing for users, a problem made worse by the launch of its “Agent 3” product a few months later, per The Register:
Part of the problem might be with Replit's June introduction of "effort-based pricing.Previously, it would charge $0.25 for each checkpoint, and a task with multiple checkpoints would simply be tallied up one by one to arrive at a total cost. But with effort-based pricing, it now bundles complicated tasks into a single more expensive checkpoint. The next month, Replit admitted "can end up being more expensive over the lifetime of a project." But the costs didn't really seem to hit users until Agent 3.
"The effort-based pricing never ran me as much before but Agent 3 has been exceptionally high," explained the user we spoke to.
Replit's new pricing is just the latest rug pull in a long line of half-baked rollouts. I’ve spent months building serious infrastructure on their platform—AI-driven automation, multi-role dashboards, recursive agent logic. What I got in return? An unstable, overpriced Agent that breaks more than it builds.
…
And now they’ve changed pricing again—with no warning—making it even less predictable. Their “effort-based” system means you can get charged more for the Agent’s failure loops than if you wrote it yourself. I’ve seen single-line fixes priced higher than full feature requests—and that’s assuming it even finishes.
Masad claimed in another post that Replit was “never subsidized,” something that you’d only say if you had a deep distaste for the truth.
For Replit and other coding startups, one of the biggest factors weighing on their gross margins is the fees they pay every time their assistants access large language models developed by Anthropic and others. Replit, which targets professionals without coding backgrounds, includes payments for Anthropic’s Claude models and Google Gemini models, as well as cloud computing costs to deliver its products, in the cost of its revenue.
In February, as revenue surged, Replit’s gross margins hit 36%. Then they fell to negative 14% in April when the company launched a new version of its agent product, which was more autonomous and spent more accessing large language models than the prior version.
As a result, the company repriced the product—charging for the amount of time and compute used for the agent to complete a task rather than for each completed request—to account for the additional costs. In July, the margins bounced back to 23%.
Riddle me this, Batman: what do you call it when a company sells a service at a price that does not cover its costs, absorbing said costs to retain the customer? I’m sure he has some sort of mental gymnastics routine where he considers that spend to be “marketing costs,” but we all know what actually happened.
Sidenote: Have you ever noticed how fucking dishonest this entire industry is? Perhaps this’ll be next week’s free newsletter, but it feels like AI is just a series of different scams — the obfuscated economics, the weasel wording around everything from revenues to how much actual capacity companies have, subsidized subscriptions that literally sell customers on a lie, it’s all so fucking grotesque! I hate it! Everyone involved should be ashamed of themselves!
In any case, I 100% believe Masad when he says that rugpulls are coming. A recent update to OpenAI's ChatGPT and Codex usage limits page revealed that starting in December, users’ use of chat and coding functionality will draw from the same rate limits (which had been largely separated to this point) and that said usage will “be measured in tokens,” suggesting that OpenAI’s subsidized subscriptions are coming to an end.
And I imagine this problem will flow throughout the industry as venture capital dries up.
It Ends When The Money Runs Out, And AI Is Priced For Perfection
I think I get asked five times a week when this all ends, and I truly cannot answer you and, as some of you have noticed, get criticized for having tried to guess in the past.
What I can tell you is that the bubble bursts when the money runs out.
OpenAI and Anthropic need endless venture capital to fund their operations, and when that runs out — unless they can make it to the public markets — they will be crushed under their trillion-plus in commitments.
AI data center capex is almost-entirely funded by debt, which means that when that debt runs out, NVIDIA’s growth — and overall data center construction — will slow.
Per Westside, data center construction starts fell by more than half in September 2026 month-over-month ($9.4bn, down from $25.8bn in August), as the median cost of a new build grew by 31% year-over-year.
Assuming that Anthropic makes it to the point that it will need debt, any hesitancy around data center debt will make it even harder for it to handle.
The signs are already there — OpenAI struggling to raise, Musk tightening rate limits on Grok Bot, debt markets shutting out neoclouds, Anthropic’s lower valuation and increasing scrutiny — and will only get increasingly-louder and more-deranged as things get desperate.
And now I’m even hearing low rumblings of a compute glut, with AI startups buying compute on the off-chance they might need it, assuming wrongheadedly that if they don’t they can sell it at a premium.
You know, kind of like how people said in 2006 that if they’d just refinance their mortgage.
After all, the price of housing never goes down.
If you haven’t subscribed to Where’s Your Ed At, now’s the best time. I’ve extended the sale — 10% off of the $70-a-year subscription for life (click here!) — for new subscribers for another week. It’s a great way to support my work, and you get an absolute ton of value at a lower price than basically every competing newsletter.
If you want to get in touch — and especially if you have any juicy information about Anthropic, OpenAI, Blackstone or any other companies in the AI bubble — hit me up on Signal at ezitron.76. I’m also on IB on your Bloomberg Terminal.
Ann Arbor (Informed Comment) – However the midterms turn out, the 120th Congress must cut off money to Trump for his ongoing Iran War. As an unresolved geopolitical issue, it threatens the future of the United States like no other issue.
In mid-September, Senate Republicans voted to allow Trump to continue his war on Iran, after several GOP House members had joined the Democrats in invoking the War Powers Act.
If Michiganders want a reason to vote against Mike Rogers for Senate, they just have to consider that Rogers would give Trump anything he wanted on the Iran War front. Rogers called the Iran War a “win-win-win” for the US. So much winning. He has flip-flopped now that high gasoline and diesel prices, caused by Trump’s attack on Iran, have made the GOP about as welcome in the voting booth as a skunk at an office party. He says he wants to see the war “wound down.” But would he vote to deny Trump the money to continue to prosecute the war? I wouldn’t bet the farm on it.
Since February 28, when Israel’s Benjamin Netanyahu and Donald Trump murdered dozens of high Iranian officials from the air, including the clerical leader Ali Khamenei, and initiated 13,000 strikes against Iranian targets with no provocation, the world has been on a knife edge.
We only avoided a global recession because China deeply cut its petroleum imports, from 11.5 million barrels a day to under 9 million barrels a day, releasing instead massive amounts of oil from both private and government strategic petroleum reserves. The US and Europe also released petroleum from reserves. These maintained enough oil on the market to keep prices of Brent crude around an average of $96 a barrel, which is a drag on the economy but not an existential crisis. The price averaged $69 a barrel in 2025, though, so the Iran War has had an inflationary impact that many ordinary families in the US and around the world are feeling.
But the war isn’t over. On Monday, the US military staged several strikes on Iran’s Qeshm island. Iran continues to report that tankers in the Persian Gulf have struck mines as they attempted to transit the Strait of Hormuz, though many observers believe the ships are more likely to have been hit by drones than to have struck mines. There may not be any Iranian mines remaining.
Then the prominent conservative commentator Tucker Carlson warned that outgoing Israeli Prime Minister Benjamin Netanyahu has been urging Trump to drop nuclear bombs on Iran. One doesn’t know what to make of this allegation, which Netanyahu’s office has denied. On the one hand, Carlson is well connected in Washington among people close to Trump, since he used to be in that camp himself. On the other hand, pundits make their living on the internet by seeking clicks and eyeballs, which sometimes drives them to sensationalism.
But this kind of report is as serious as a heart attack. And, let’s face it. Is there really any doubt that Netanyahu is capable of trying to get the US to nuke Iran? No, no there is not. And is there really any doubt that Trump is stupid enough to fall for this attempt to manipulate him? No, no there is not. So what Carlson is saying has to be taken seriously. Very seriously.
Iran has made it clear that it would retaliate for any such action, and the retaliation could have severe effects on the world economy. Tehran has shown that it can and will lash out at Arab Gulf neighbors that collectively used to export some 20% of the world’s petroleum through the Strait, and 20% of the world’s liquefied natural gas.
And this time, much of the world’s reserves have already fallen dramatically, so that China and Europe and the US won’t be able to continue to cushion the blow.
Trump is extremely erratic. He has already done irreparable damage to American scientific and technological research and has deeply undermined the Constitution by usurping the power of the purse that it awards to Congress. Parliament’s control of government spending is a centuries-old norm we inherited from the British.
Trump has instead been acting as a dictator, and the 119th Congress let him do it. They let him cripple the National Institutes of Health. They co-created a measles health crisis in which children have died. They sentenced millions to death by acquiescing in Elon Musk’s destruction of USAID.
But worst of all, they stood idly by while he took us to war against Iran, and the GOP majority in the Senate opposed a Democratic attempt to stop funding for the war in September.
This crisis is not like the Vietnam War or Iraq or Afghanistan, where the US could withdraw after failing to achieve its objectives, with no further harm to the continental US. If the Persian Gulf goes up in flames, it could lead to an economic downturn as bad as or worse than the Great Depression.
Whether by pressuring Republican members of Congress or by voting them out, the US electorate needs to bring this conflict to a negotiated end before it literally blows up in their faces.
( Michigan Advance ) – DETROIT — Key Democrats said Sunday they would not let Haley Stevens’ endorsement of Republican Mike Rogers divide the party ahead of Tuesday’s election.
Stevens, a sitting member of Congress, was all but formally exorcized by her party after she publicly endorsed Republican U.S. Senate nominee Mike Rogers over Democratic nominee Abdul El-Sayed, whom she had previously endorsed and pledged to support through the general election, despite lingering tensions from their August primary.
Over the past few weeks, the congresswoman has changed her position on supporting El-Sayed, moving from a position that was critical of the nominee but still supportive of the overall ticket, to outright joining Rogers at a Detroit church on Sunday where she heaped praise on Rogers for supporting some of her campaign platforms involving housing and Black-owned businesses.
Later, on CNN, Stevens said that she found El-Sayed’s campaign to be getting “angrier” against those who opposed him, and cited what she felt were instances of antisemitism from the campaign. Stevens said that ranged from campaigning with controversial Twitch streamer Hasan Piker to his lack of condemnation of an ad purchased by a political action committee run by Piker’s uncle.
“Abdul has been getting angrier and angrier, and I was just trying to help,” Stevens told CNN. “I endorsed him, and that ad was very painful. There are so many Democrats who want to vote for the Democratic nominee, and they’re just being told this is a party you don’t belong in. This is a campaign you don’t belong in. … I’m making a decision here, and that’s just where I landed on.”
Stevens could not, however, pinpoint an exact moment on when it was that she changed her mind, saying the decision had been building up for her and that Sunday’s turn to Rogers represented “a weight off her shoulders.”
Before Stevens decided to support Rogers, which appeared to be a snap decision earlier Sunday morning, as she told CNN, Stevens was set to attend a church service with El-Sayed and U.S. Rep. Jim Clyburn of South Carolina, a former Stevens supporter who was backing El-Sayed after he became the nominee. The engagement was brokered by U.S. Rep. Debbie Dingell of Ann Arbor, who had played the intermediary between El-Sayed’s campaign and Stevens.
State Sen. Mallory McMorrow (D-Royal Oak), U.S. Rep. Debbie Dingell (D-Ann Arbor) and state Rep. Alabas Farhat (D-Dearborn) listen to speakers at a Democratic Party unity rally on Sunday, Nov. 1, 2026 outside of the UAW world headquarters in Detroit, Mich. (Photo by Ben Solis/ Michigan Advance)
State Sen. Mallory McMorrow (D-Royal Oak), U.S. Rep. Debbie Dingell (D-Ann Arbor) and state Rep. Alabas Farhat (D-Dearborn) listen to speakers at a Democratic Party unity rally on Sunday, Nov. 1, 2026 outside of the UAW world headquarters in Detroit, Mich. (Photo by Ben Solis/Michigan Advance)
Former U.S. Rep. Andy Levin speaks at a Democratic Party unity rally on Sunday, Nov. 1, 2026 outside of the UAW world headquarters in Detroit, Mich. (Photo by Ben Solis/Michigan Advance)
State Rep. Stephanie Young (D-Detroit) speaks at a Democratic Party unity rally on Sunday, Nov. 1, 2026 outside of the UAW world headquarters in Detroit, Mich. (Photo by Ben Solis/Michigan Advance)
State Sen. Mallory McMorrow (D-Royal Oak) speaks at a Democratic Party unity rally on Sunday, Nov. 1, 2026 outside of the UAW world headquarters in Detroit, Mich. (Photo by Ben Solis/Michigan Advance)
The congresswoman had agreed but put conditions on the visit, including a call that El-Sayed disavow the ad produced by Ugyur, and other examples of rhetoric El-Sayed used to question the U.S. relationship with Israel. A major platform of El-Sayed’s campaign is acknowledging Israel has been committing a genocide in its war against Hamas in Gaza.
El-Sayed did not budge and asked Stevens’ campaign to stay out of the race through Tuesday’s election. Stevens repeatedly told CNN that being disinvited from the church event marked a turning point. It was reported that several of her staff were waiting for her at North End Church of God in Christ in Detroit, where El-Sayed and Clyburn were holding a Souls to the Polls event on Sunday.
Instead, Stevens showed up at the Perfecting Union church, led by Pastor Marvin Winans of gospel music fame, to take in a morning of worship with Rogers, his wife, and Stevens’ fiance, attorney Jason Turkish.
Gongwer News Service reported that former Michigan. Gov. Jim Blanchard said he had spoken to Stevens Saturday night and she said she would support El-Sayed. Blanchard told the outlet that Turkish, who had openly supported Rogers over the last few weeks, may have had a strong influence on Stevens’ decision.
“He was all distraught,” Blanchard told Gongwer. “He was all strung out about Abdul. I let her know, he’s not a good influence.”
Either way, the move sent shockwaves across the political universe in Michigan and beyond.
Rep. Haley Stevens’ endorsement of Mike Rogers was despicable, and she must be removed from the House Democratic Caucus, @hakeemjeffries.
Rep. Haley Stevens’ endorsement of Mike Rogers was despicable, and she must be removed from the House Democratic Caucus, @hakeemjeffries.
We will double down our efforts to elect @AbdulElSayed on Tuesday. Joint statement from @IfNotNowOrg @MPowerAction & @OurRevolution: https://t.co/iWZrrCKVP4
Several national Democrats, including those who had openly supported Stevens in the primary, said her endorsement of Rogers was a betrayal, including one of her biggest national surrogates, Neera Tanden.
Supporting Mike Rogers “is a betrayal of everything Haley Stevens has fought for her entire career,” Tanden said in an X post. “It’s also a betrayal of all of her supporters that believed in her.”
Michigan Democratic Party Chair Curtis Hertel wrote in an X post that Stevens was no longer a Democrat and she had no opportunity to run as a Democrat in the future after her stunt with Rogers.
The party removed Stevens from its elected officials page entirely, taking down both her name and her photo from the list.
Instead of going all in on Stevens, El-Sayed took the higher ground, called her antics a distraction, and urged members of the media to stay focused on his campaign messages rather than the drama of the race.
“At the end of the day, I don’t think about Haley Stevens,” El-Sayed said. “None of this matters.”
In a media scrum outside the church on Sunday afternoon, El-Sayed was adamant that he would only take questions that had to do with his campaign and its policy points and that he would end the press availability if any “horse race” questions emerged.
.@AbdulElSayed calls @HaleyforMI’s maneuvering today “a distraction” from the issues in the race. “None of this matters,” he said of the distraction. “I don’t think much about Haley Stevens. https://t.co/S8vEyUpvd8
Those types of questions were immediately shouted at El-Sayed, and he promptly ended the press event to begin his event with Clyburn.
U.S. Rep. Jim Clyburn (D-South Carolina), center left, speaks during a press conference supporting U.S. Senate nominee Abdul El-Sayed, center right, on Sunday, Nov. 1, 2026 at North End Church of God in Christ in Detroit, Mich. (Photo by Ben Solis/Michigan Advance)
Clyburn praised El-Sayed without mentioning Stevens on Sunday.
“We have been doing what we possibly can to make this great country of ours accessible and affordable for all of our citizens,” Clyburn said. “This campaign is about making healthcare and education accessible for all our citizens. It’s about making housing, and energy affordable for all of our citizens. And it’s about having candidates for office who will be accountable to all of our citizens.”
Clyburn said he was pleased to be in Detroit with El-Sayed and to stand “in solidarity” with his campaign.
Dingell, whose voice was hoarse, strained and dry by Sunday evening, was the one of several main speakers at a unity event held outside of UAW headquarters in downtown Detroit.
She also urged the national media to not become distracted by what she called drama in the 11th hour of the race.
“I’m just going to say it straight,” Dingell said Sunday. “There has just been too much drama created by national media and not enough attention on the people I talk to every day. If you’re worried about the direction that the country is going in, and what we have done to the African American community … Do you think that Mike Rogers, a Republican senator, will support us in doing any of that?”
Other speakers included state Sen. Jeremy Moss of Bloomfield, who is running for Stevens’ 11th District seat, state Rep. Donavan McKinney of Detroit, who is running to replace U.S. Rep. Shri Thanedar in the 13th District, and former U.S. Rep. Andy Levin, who was defeated by Stevens in the 2022 primary.
State Sen. Mallory McMorrow of Royal Oak, who had been in the race for the U.S. Senate before she dropped out, also spoke about the stakes of the election and called out Stevens — without naming her — for the dustup she caused on Sunday morning.
“The message that I hope you heard today is that we are locked in,” McMorrow said. “Are we ready to ignore all of the nonsense? Because let me tell you, my phone has been pretty busy today. I don’t know if you saw some news, but here’s the thing: a lot of those texts and a lot of those phone calls were not from Michiganders, they are from reporters all across the country who are treating this election like an episode of Real Housewives of Michigan.”
McMorrow was adamant that this was “not a reality TV show” or about “people’s emotions” or someone trying to get “their last 15 minutes before they no longer have a title.”
“This is about Michiganders, because today, while all of those messages were coming in, I heard from people in church this morning … who said what do we do to stop this president?” McMorrow said. “I want to answer all the reporters who texted me to ask, ‘is this going to change anything?’ Are we divided? No. Are we united? Yes. Are we going turn out every vote? Yes. Are we going to lock in and send Abdul El-Sayed to the Senate? Yes.”
Ben Solis is the senior reporter for Michigan Advance. Solis has covered state and local government for nearly a decade as a former staff writer with Gongwer News Service and multiple MLive newsrooms. He is an award-winning writer and editor and was a finalist for the Michigan Press Association Richard Milliman Journalist of the Year award in 2022 for his work covering Michigan’s independent redistricting process.
Michigan Advance is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Michigan Advance maintains editorial independence. Contact Editor Jon King for questions: info@michiganadvance.com.
(The Conversation) – Months after the US and Israel launched Operation Epic Fury against Iran, the Strait of Hormuz remains largely closed. The UK chose not to get directly involved in the conflict. Nonetheless, it has been exposed to the crisis through record-high diesel prices as well as a spike in inflation.
Seventy years ago, the Egyptian government nationalised the Suez canal, sparking the Suez crisis. The canal, which passes through Egypt from the Red Sea to the Mediterranean, was a vital link for ships travelling between Europe and Asia.
After its completion in 1869 by a French-led company, the Egyptian government held a 44% stake in it. However, financial difficulties forced Egypt to sell its shares to the British government in 1875, leaving Britain and France with substantial financial interests in the canal.
Following the Egyptian nationalisation of the canal, France and Britain – together with Israel – invaded Egypt in an attempt to regain control of the vital waterway. But the invasion was a spectacular failure that was condemned by the international community. The crisis came to symbolise Britain’s loss of superpower status.
Today, the US midterm elections are increasing the pressure on the Trump administration over the current conflict. Elections in Israel have also had some bearing on the conflict, with recent reports that Prime Minister Benjamin Netanyahu pushed for renewed strikes ahead of the election. Other reports suggest that the US and Israel have drawn up plans to resume strikes after the elections.
In 1956, US presidential elections were also an important part of the calculus. But back then, Britain and France had assumed that the elections would distract the US from their actions. This was a miscalculation. In communication with UK Prime Minister Anthony Eden the day after the vote, US President Dwight D. Eisenhower was clear that his administration would not tolerate the UK, France and Israel’s continued actions. He demanded a negotiated settlement through the UN.
The parallels between Suez and Hormuz go beyond the closure of two vital waterways. Both crises raise the same question: how far can geopolitical power outrun economic power?
Superpowers in decline
In 1944, the American foreign policy professor William T.R. Fox coined the term “super-power”. He defined it as the consequence of “great wealth, great population, and favourable geographic position”. This is similar to how the historian Phillips O’Brien defines great power today. Fox saw three superpowers at that time: the US, Britain, and the Soviet Union. He later acknowledged that including Britain had been a mistake, primarily because of its relative decline against the US and later the rest of Europe.
Arguably a similar shift is taking place today.
There are arguments over what is the best measure of an economy, but on the basis of purchasing power the shift is striking. China has moved from being a fraction of the size of the US economy in 1990 to being well ahead today.
In the 19th century, Britain was the dominant global power and benefited from what economists call “exorbitant privilege”. This was the ability to easily finance debt at favourable interest rates because sterling played a central role in the international monetary system. London was also the world’s leading financial centre.
But as Britain declined, this privilege gradually shifted towards the US. Its loss became particularly pressing during the Suez crisis as the pound came under intense pressure. Similarly today, there are signs of strain in the financial system that underpins American power.
During the Suez crisis, Britain’s currency weakness and dependence on American financial support constrained its ability to act independently, despite its considerable military power.
The crisis was also part of wider cold war geopolitics. An arms deal signed in 1955 between Egypt and the Soviet Union had upset the regional balance of power and contributed to Israel’s decision to get involved in a preventative war.
In response to the arms deal, the US withdrew financing for the Aswan Dam, a major infrastructure project on the River Nile. Then, in 1956, Egypt nationalised the Suez canal, sparking the crisis. British leaders sought to portray Egyptian president Gamal Abdel Nasser as a 1930s dictator, intent on regional dominance.
Egyptian president Gamal Abdel Nasser nationalised the Suez Canal in 1956. Wikimedia Commons
The US intervention in Iran has similar connotations. US secretary of war Pete Hegseth has presented the assassination of the Iranian leadership as necessary to prevent an existential threat from “America’s mortal enemy”.
Geoeconomics, the relationship between economics and geopolitics, also played a central role in the Suez crisis. The canal was a major conduit for Middle Eastern oil and there were fears that the nationalisation of the canal would disrupt UK oil supplies. But ironically, it was the decision to invade Egypt that led to a shortage of oil and fuel rationing in the UK.
The wider cold war was a key factor in the US stance on events. The US did not want to be seen to be condoning imperial actions in Egypt while condemning Russian imperialism in Hungary. Just as the Suez crisis needs to be understood in the context of the cold war, the current conflict should also be seen through the lens of “cold war II” geopolitics. Relations between the US and China have not thawed, while proxy wars bear similarities to the first cold war.
File photo of US Navy escorting a container ship through the Strait of Hormuz. US Navy photo by Mass Communications Specialist 2nd Class Michael H. Lehman. Public Domain. Via Picryl .
Today, the US is increasingly stretched, most clearly seen in the depletion of its munitions. These were already under pressure (in part because of its support for Ukraine) and have been further reduced by the war with Iran.
The Suez crisis illustrates how political leaders can be slow to appreciate the economic constraints on their geopolitical ambitions. The US today is not Britain in 1956, yet the conflict in Iran has prompted questions about the limits of American power. As its relative economic dominance is challenged, will the US also have to reconsider the extent of its global military commitments?
Today in one sentence: About 50 million Americans have already cast their ballots in this year’s midterm elections; Democratic Rep. Haley Stevens endorsed Republican Mike Rogers over Democratic Senate nominee Abdul El-Sayed days before the midterms in a race that could decide control of the Senate; House Democrats called for Rep. Haley Stevens to be expelled from their caucus; a federal judge dismissed the Trump administration’s effort to delay certification of Alaska’s Senate election if Republican incumbent Dan Sullivan lost to Democrat Mary Peltola; the Supreme Court rejected Trump’s last-minute attempt to set aside thousands of California mail-in ballots; Trump spent about half of his final speech before the midterms promoting his Washington renovation projects at the newly reopened Lincoln Memorial Reflecting Pool; Trump said he would become “Mr. Veto” if Democrats win control of Congress and would consider preemptive pardons for Elon Musk and his administration aides if Democrats start investigating them.
1/ About 50 million Americans have already cast their ballots in this year’s midterm elections, with early voting surpassing 2022 levels in every major Senate battleground and millions more votes expected Tuesday. The final New York Times/Siena polls show Democrats ahead in six of seven competitive Senate races, including Texas, Alaska, and Maine, and they’re effectively tied in Iowa. Most races, however, remain within the margin of error. To win a majority, Democrats need to defend every seat they currently hold and flip at least four Republican-held seats. 75% of Democrats say they’re certain to vote or had already voted, compared with 67% of Republicans. About a quarter of Republicans said they “probably will vote” or that the “chances are 50-50.” (New York Times / Washington Post / The Hill / Wall Street Journal)
The 2026 midterm election is tomorrow.
🏛️ House forecasts.
Democrats win 94 times out of 100. (The Economist) Democrats win 99 times out of 100. (FiftyPlusOne) Democrats win 96 times out of 100. (Nate Silver) Democrats win 92 times out of 100. (Split Ticket) Democrats win 84 times out of 100. (Decision Desk HQ) Democrats win 94 times out of 100. (Election Betting Odds) Democrats +24: 239 seats at least Leans Democratic. 196 seats at least Leans Republican. (Sabato’s Crystal Ball)
🏛️ Senate forecasts.
Democrats win 53 times out of 100. (The Economist) Democrats win 79 times out of 100. (FiftyPlusOne) Democrats win 81.5 times out of 100. (Nate Silver) Democrats win 77 times out of 100. (Split Ticket) Democrats win 65 times out of 100. (Decision Desk HQ) Democrats win 76 times out of 100. (Election Betting Odds) Democrats +6: 53 seats at least Leans Democratic. 47 seats at least Leans Republican. (Sabato’s Crystal Ball)
poll/ 32% of Americans approve of the job Trump is doing as president, while 64% disapprove. (Reuters)
poll/ 52% of voters prefer a Democratic-controlled Congress, while 45% prefer Republicans. (NBC News)
Editor’s note: Forecasts are probabilities, not certainties. They reflect the current vibes, not a future result.
How to manage stress and maintain perspective on election night in one sentence: Surround yourself with supportive people; set realistic expectations for results; mentally prepare for any outcome; accept uncertainty and lack of control; know the possibility of a significant polling error; limit social media and doomscrolling; focus on the bigger picture; and have a plan for post-election activities that bring you joy.
2/ Democratic Rep. Haley Stevens endorsed Republican Mike Rogers over Democratic Senate nominee Abdul El-Sayed days before the midterms in a race that could decide control of the Senate. Stevens had promised to support El-Sayed, who defeated her in the Democratic primary, as recently as Saturday night. But on Sunday, however, she attended a Detroit church service with Rogers instead of a planned unity event with El-Sayed, blaming her decision on being told to stay away. “I don’t belong in Abdul’s campaign,” she said after reportedly being asked to not attend the unity event because the dispute had become “way too distracting.” The feud dates to the primary, when El-Sayed criticized pro-Israel groups for spending millions to support Stevens. She accused him and his allies of antisemitic rhetoric, and later demanded that El-Sayed denounce an outside group’s ad blaming U.S. aid to Israel for high grocery prices, which she called antisemitic. El-Sayed, however, had already rejected the ad. “At the end of the day I actually don’t think about Haley Stevens,” El-Sayed said, adding later: “None of this matters.” (New York Times / Washington Post / New York Times / Washington Post / NBC News / Associated Press / Politico / NPR / ABC News / Politico / CNBC / Wall Street Journal)
3/ House Democrats called for Rep. Haley Stevens to be expelled from their caucus after endorsing Republican Mike Rogers over Democratic Senate nominee Abdul El-Sayed in Michigan. At least eight House Democrats privately supported removing or punishing Stevens. Senate Minority Leader Chuck Schumer, who had backed Stevens in the Democratic primary, called her endorsement a “despicable betrayal.” Michigan Democratic Party Chair Curtis Hertel declared that Stevens would be ineligible for future membership in the state party. And, several of Stevens’ staffers resigned, including her longtime chief of staff, who urged voters to support El-Sayed. Rep. Jamie Raskin, meanwhile, said he was “dumbfounded” after Stevens assured him the night before that she would support Democrats. El-Sayed’s campaign reported raising $1.2 million in roughly four hours after her announcement. (Washington Post / New York Times / The Hill / Semafor / Axios / Axios / The Hill / Politico)
4/ A federal judge dismissed the Trump administration’s effort to delay certification of Alaska’s Senate election if Republican incumbent Dan Sullivan lost to Democrat Mary Peltola. The Justice Department wanted the state to set aside the ballots cast for another candidate named Dan Sullivan and investigate whether voters had intended to support the incumbent. U.S. District Judge Sharon Gleason, however, ruled that the government offered “no workable plan” to investigate voters without violating their right to a secret ballot. A Democratic operative connected to Mary Peltola’s campaign and national Democrats reportedly recruited the second Sullivan to potentially draw votes away from the Republican incumbent. Peltola has denied any involvement. (New York Times / Washington Post / NBC News / Politico / CBS News / NPR / CNN)
5/ The Supreme Court rejected Trump’s last-minute attempt to set aside thousands of California mail-in ballots. The administration claimed that more than 20,000 people on California’s voter rolls were likely noncitizens and wanted to separate their ballots until their citizenship could be verified. California officials, however, said the list is filled with errors and warned that separating the ballots could disenfranchise eligible voters. Researchers found that about 42% of the names on the list aren’t on the state’s current voter rolls and that some were naturalized U.S. citizens. The Supreme Court issued its unsigned decision hours after the Justice Department filed its emergency appeal, offering no explanation and noting no dissents. (Associated Press / New York Times / Washington Post / CNN / Reuters / Bloomberg / NPR)
6/ Trump spent about half of his final speech before the midterms promoting his Washington renovation projects at the newly reopened Lincoln Memorial Reflecting Pool. He held up pictures of plumbing materials, promoted the new White House helipad, and discussed his proposed triumphal arch. He suggested renaming the pool the “Trump Reflecting Pool” before calling it a joke. Trump also repeated his claim that vandals had damaged the pool. His own Justice Department, however, had determined that a faulty installation had caused the damage. When Trump finally turned to the election, he called it “the most important midterm, I believe, in our lifetime,” accused Democrats of being “a party that hates America,” and acknowledged that the president’s party usually “doesn’t win the midterms.” Republicans, he nevertheless claimed, “gave this a very strong shot.” (Axios / Associated Press / Washington Post / Reuters / CNN / NBC News)
7/ Trump said he would become “Mr. Veto” if Democrats win control of Congress. “They’ll be sending stuff up, you veto it,” he said, predicting that after “a month or two” of vetoes, Democrats would make a deal. (Bloomberg / The Hill)
8/ Trump said he would consider preemptive pardons for Elon Musk and his administration aides if Democrats win control of the House and start investigating them. “I would if I needed to. Sure,” Trump said. Democrats have signaled that they could investigate Musk’s work with the Department of Government Efficiency, as well as his companies’ federal contracts. Any pardons, however, would cover only federal crimes, not state prosecutions or civil suits. (Axios / Bloomberg / USA Today / New York Post)
The 2026 midterms are in 1 day; and the 2028 presidential election is in 736 days.
The revived November 2024 Household Bundle featuring English-language .PDF ebooks of the wainscot fantasy tabletop roleplaying game, Household by Riccardo "Rico" Sirignano and Simone Formicola of Two Little Mice.
Welcome to the Stone Soup Digest! This is where I share what I'm up to and some of my favorite things from around the internet. Subscribe to Stone Soup to get this in your inbox on the regular.
Let’s Break Project 2025
Tomorrow is election day in the US! This midterm election is a big deal. We can break Project 2025 over our collective knee and find out how Bane felt when he did that shit to Batman. Strap in now so you can participate in this election and help turn the tide:
Thanks to Dana from the Stone Soup Supper Club for sharing some of these resources in the Supper Club Discord!
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In the meantime, remember: Do what you can. Care for yourself and the people around you. Believe that the world can be better than it is now. Never give up.
Belfast (Special to Informed Comment; Feature) – Israeli squatters in the Palestinian West Bank have intensified their violence towards the Palestinians during the current annual olive harvest season. The attack on the harvest comes on top of the squatters’ increased attacks on Palestinian hamlets, their animals, and crops in the West Bank, especially since the Gaza genocide started over three years ago.
According to the Palestinian Bureau for Defending Land, the Israeli settlers and soldiers carried out over 500 attacks against Palestinian farmers harvesting their olives during the month of October including 150 incidents of theft. As a result, the olive oil production is expected to be down by 50% producing 10,000 – 11,000 metric tons instead of 21,000. Furthermore, the cumulative loss for the olive farming sector since the year 2023 is estimated to be at $157 million. It is also estimated that 286,000 olive trees were damaged in the West Bank since 2023 including 100,000 trees in 2026 while 90% of Gaza’s two million olive trees have been destroyed over the past three years. Olive trees take ten years to mature once planted, and can remain fertile for 150 years, so they constitute generational wealth. Some of the trees being targeted were planted before there was an Israel, and some before there were any Jewish settlers in Ottoman Palestine. Burning them or chopping them down is an attempt to further impoverish the Palestinians and to sever their most essential link with their land. Even before 2023, the Israelis were estimated to have destroyed one million Palestinian olive trees. The total is now three times that.
Just as with the genocide in Gaza, the squatters’ violence was streamed to our phones. Their attacks ranged from physical assaults on Palestinians, including firing on them, to burning trees and homes. This year, they added to their tactic of economic warfare, including stealing livestock and other animals, by targeting the olive harvest. Not only that, but this year for the first time, they have acquired their own olive press machines so that they can produce oil from the olives they usurped, and sell it at a competitive price on the market.
During my last visit to the West Bank in July of this year, I saw Palestinian olive groves burned by the Israeli squatters. I witnessed the way their illegal outposts are scattered in many different locations, on land stolen from Palestinian owners. They also erected Israeli flags all over the main roads with no more than 20 meters distance between each flag and the next, as if they are declaring it their territory. The man sitting beside me on the bus told me that in his village of Jaloud, which has been subjected to a great deal of settler violence, the Israeli army does not allow them to so much as air dry their clothes on the terrace claiming the clothes block the view of the soldiers.
The squatters’ brutality is supported by both the Israeli religious and political authorities. Prominent Rabbi Dov Lior issued a religious ruling that allows the squatters to steal the Palestinian olives, claiming that this theft serves as a practical demonstration of the Jewish ownership of the land.
Moreover, as if it is not enough that the army often accompanies the squatters so that they can get on with their violence and theft with an armed guard, the outgoing Israeli government, which had a number of illegal Israeli settlers in its cabinet, allocated a budget for the settlers “Hilltop Youth” movement who are well known for their violence. Each member gets about $16 a day worth of vouchers for food and clothes. Additionally, the outgoing Israeli far- right security minister started handing out guns to Israeli squatters in Palestine, with 120,000 firearms distributed by October 2024.
Make no mistake about it, the squatters’ violence is well orchestrated and part of a wider strategy that involves the Israeli army and the government to force the Palestinians off their land and ethnically cleanse them. The olive harvest is targeted for different reasons. First, the olive is a source of food as olive oil and olives are a classic part of the Palestinian cuisine, especially breakfast and the famous Palestinian mosakhan dish. Second, its wood and pressing residuals are a source of fuel, especially for home heating. Third, it is part of some industries such as the traditional olive oil-based soap making, some artisanal crafts, and others. In fact Palestinian political prisoners made beads from the olive stones. Fourth and probably most important is the important place of the olive tree in the Palestinian culture and identity, as well as family life and society. As part of the Palestinian culture, we have always used the olive branch as a symbol of peace.
Therefore, Israel and its settlers’ attacks on the olive trees symbolize an assault on peace itself. It is also a form of cultural appropriation, especially last year when Israeli squatters posted videos trying to copy the Palestinian way of life. They imitated the way we eat and prepare our food and drink when in the olive fields, as if they are impersonating us.
Personally, I remember as a child planting olive trees with my late father. Seeing them again always reminds me of him. I also feel that trees connect different generations together especially when I’m near trees planted by my grandparents, whom I never knew.
The squatters’ violence is carried out under the protection of the Israeli army. Palestinians are left on their own without any protection. Even their own factions, referred to as the resistance factions, are satisfied with statements of condemnation and calling on the civilian population to defend themselves. In fact, all the Palestinian factions from the right to the left and from secular to Islamists have all failed to organize even one peaceful protest against the settlers’ assaults.
It is, therefore, important for the international community to step in, especially the genocide enablers. Sanctions imposed on the Israeli settlements by Canada and 11 European countries, including the UK, Ireland, France and Spain, are symbolic and ineffective. This is evidenced by the fact that they were imposed well before the olive harvest season but did nothing to stop the settlers. Countries whose official policy is the two-state solution, like the UK, EU, US, Russia, India and China must impose sanctions not only on the settlements but also on Israel, until it dismantles its illegal squatter-settlements in the West Bank, ends its genocide and siege of Gaza, allows the Palestinians to return to their homes and complies with International Law and UN resolutions.
Earlier this year, Mr. Bostoniensis got a spear phishing attempt in the form of a solicitation to renew his expiring passport, which was intriguing, because the nature of the con implied the US State Department had some sort of online renewal option to spoof in the first place. Lo and behold, the State Department is in fact doing online passport renewals. Thanks, random scammer!
My US passport was expiring in early December and they say to give them six to eight weeks to turn the new one around, so I did the online renewal process on October 18.
My passport arrived, 12 days later, in the mail October 30.
Anyways, if you're one of the many Americans who went "Oh, shit, I should get myself a passport", in the wake of the results of the 2016 presidential election: your passport is expiring! And as it happens, now is apparently an awesome time to renew.
That said, candor requires me to mention that – probably a total coincidence – the last charge on my credit card before the $12,000 compromise was that of the State Department charging my passport renewal fee.
Janine Jackson interviewed Citations Needed‘s Adam Johnson about his book How to Sell a Genocide for the October 23, 2026, episode of CounterSpin. This is a lightly edited transcript.
( FAIR.org ) – Janine Jackson: Winston Churchill did not, evidently, say “history is written by the victors,” but we’re given to understand that Hermann Goring did say, “The victor will always be the judge, and the vanquished the accused.” I went looking for a concept to anchor our understanding of the existential importance of how things are reported and recorded and described, with particular reference to Israel’s genocide in Gaza, acknowledged as genocide—the intentional, systematic destruction of a people—by numerousinternationalinstitutions whose job it is to study and define such things.
I went looking for it because, if there’s anything core to the work of media critics, it’s to counteract the idea that might makes right when it comes to knowledge, that our understanding of the world, and other people and political possibilities, should be utterly shaped by the people with the megaphone, just because they have the megaphone. That’s what we wake up every day and contest.
The book is called How to Sell a Genocide: The Media’s Complicity in the Destruction of Gaza, out from Pluto Press. The author is Adam Johnson, a media analyst and co-host with Nima Shirazi of the podcast Citations Needed. He joins us now by phone from Chicago. Welcome back to CounterSpin, Adam Johnson.
Adam Johnson: Thank you.
JJ: You can stick a pin in this book and spiral out and find the same coherent message, but it begins and ends, I think, with who we are told to see as human.
We’re influenced by news media. We can’t all have firsthand knowledge of everything. And as much as we may gird ourselves, and feel like we’re informing ourselves independently, you see a story in the paper, and you give it some meaning, you know?
But you literally can’t make sense of corporate news media’s conversation on Palestine and Israel unless you accept, at point of entry, that some lives just matter more than other lives. And that shows up in language, it shows up in what’s offered as acceptable ideas about what’s happened, and what can happen now. But that seems core, that notion of humanity, yeah?
AJ: Yeah. In theory, you would have these universalist liberal principles, and stick to them consistently. And what my book shows, I think with pretty definitive quantitative data—and indeed, the book’s critics haven’t been able to dispute the data itself, and they’ve tried—is that there is simply a tier of humanity, and that tier is evident, and most importantly necessary to the geopolitical interest of the US ruling class and Zionism. And without that tiered moral standing, the whole system falls apart.
And this has been a feature of liberal imperialism since liberal imperialism was invented, mostly by the British in the 18th century. You have to have these high-minded, supposedly universalist humanist ideals that exist in the same system as oppression, violence, dispossession and, in this case, obviously, mass killing.
So how do you do that? Well, that’s where the media comes in. That’s where liberal media in particular, with the lowercase L, comes in, and that’s why that’s the focus of the book.
JJ: Yeah. It’s so important to say that we’re not talking about Fox News necessarily.We’re not talking about Donald Trump, necessarily. We’re talking about folks who feel like they’re trying to do the right thing, trying to understand what’s happening in the world, and how those people can be massaged into an acceptance of genocide.
So in the book, there are a lot of examples, but listeners will understand that October 7, 2023, and the beheaded babies, this is what we’re given to understand was the start of the conflict. This is what changed everything. This is what changed us from saying, this is some kind of liberal project—no, no, no; now it’s a fight about “civilization.” October 7 and those beheaded babies seem to be in the back of every kind of news report that we’re reading now in 2026.
AJ: Yeah, that was one of the first big lies. I mean, unlike the Iraq War, which obviously was foundational to me, being a Millennial, there wasn’t one big WMD lie. There were dozens of what I call mini-WMDs, kind of mini lies. By the time you debunked them, we had just moved on to another mini-WMD. And indeed, in some days you would get several at once.
And one of the early ones was this idea that there were 40 beheaded babies, this kind of biblical round number, that anyone who knew anything about Hamas knew would make no sense. It had no precedent. But the goal, of course, was to ISIS-ify Hamas, so it could be put into this “war on terror” turnkey framework to justify a campaign of mass vengeance and revenge.
And I think to some extent, the Israelis who promoted it, and their confederates here in the United States knew it was not true, very much knew it was not true. They’re not stupid. They know Hamas’s MO, but they needed to promote atrocity propaganda to justify what was inevitably going to be a mass slaughter event of Palestinians.
To the extent that that mass slaughter, I think, was still up in the air, certainly that was the emergent consensus within hours of the attack. If one recalls, Tony Blinken called for a ceasefire on October 8 because that was pro forma, and then immediately deleted the tweet. So clearly there was some decision made that this was not going to be the normal kind of “mowing the lawns,” which is what Israel calls the bombing of Gaza, the killing of Gaza, to discipline the civilian population, as they had in 2018, 2021, 2014, 2012, 2009. This was going to be something much more horrific, expansive and deadly, which of course it was. And then on October 13, Tony Blinken issues a memo banning the word “ceasefire” from the Biden White House and the State Department.
So to maintain that level of raw carnage—which, again, if people recall, was 300, 400 people a day were being killed. Indeed, some days had 600 or 700, and one day in late October had 1,000 killed. And that level of just raw brutality and violence and mass killing needed to have a correspondingly horrific atrocity propaganda to justify.
And obviously you had 250 or so captives that were taken by Hamas, most of whom were released in the first few weeks when they had the initial exchanges, but that kind of ran out of gas, or was going to run out of gas, in terms of its moral justification. So you needed these stories about beheaded babies. And then by the time it’s debunked, three or four days later, and Biden falsely says he had seen pictures of it, and so reporters, somewhat politely, were like, “Well, OK, well where are the pictures?” Well, there are none, but it had already served its purpose.
And of course, you get atrocity propaganda with respect to these claims about Hamas having a policy of mass rape, to peel off female critics of Israel’s so-called military response. And the New York Timeslowers its editorial standards to publish that story in December of 2023, which really does provide the real propellant, the real accelerant of genocide, regardless of whether or not one believes it, if that’s its manifest effect, or believes the most maximum claims, because the claims somewhat vary.
And that kind of ISIS-ification was necessary to justify 20,000 children who were killed, because that’s what happened. I mean, 20,000 worlds, 20,000 universes, again, 500 times more than were killed on October 7. And that level of brutality in murder needs to, like any good screenplay, it has to raise the stakes. And to the extent to which journalists pushed back on it, or tried to complicate it and provide context, they were swiftly and severely disciplined, and accused of Hamas apologia or downplaying atrocities, or some other such manipulative extortion that’s leveled against people for doing the basic job of reporting.
You’re not allowed to provide context, you’re not allowed to humanize, you’re not allowed to provide any kind of secular political reasons why any of this would happen. It just has to be mindless jihadist barbarism and one-note and antisemitism.
And so these kinds of pathologizing, Islamo-pathologizing, is pretty much what you’ve got. You got a lot of “they hate us for our freedoms” claptrap, a lot of orientalist claptrap about civilized worlds. My book mentions 150-plus mentions of the word “civilized” or “civilization”; and “barbarity” and “savage” are used too, which are clearly meant to appeal to a certain orientalist worldview.
The emotive words I document, for example: On CNN and MSNBC, CNN used the word “savage” 13 times, “barbaric” 56 times. MSNBC used the word “savage” 23 times and “barbaric” 46 times. These words were never once used for Israel. The words “slaughter” and “massacre” were reserved exclusively for Palestinians killing Israelis.
The New York Times used “massacre” 124 times. They used “slaughter” 53 times. They used neither words to describe the killing of Palestinians. How the New York Times can assess that Israel managed to kill 21,000-plus children and somehow never once committed a “massacre” or “slaughter,” I submit it to the listener that it’s not mathematically possible, how you can commit such widescale death and carnage and killing, and not once commit a massacre or slaughter, or behave barbarically or savagely.
These are obviously loaded terms meant to, by implication, humanize the victims of Palestinian violence while dehumanizing victims of Israeli violence, the description of which is always kind of anhedonic and medical and detached.
JJ: We see them trying to find a comfortable liberal stance for people who want to be on the right side of things, and news media kind of helped them do that by saying, “Yeah, things are horrible, but….” And that’s part of the media critique, is not just the one-sidedness—and I would encourage folks to understand how data-driven this book is—but it’s also this conversation where, yeah, you feel bad about it, but you don’t need to feel that bad about it.
AJ: Yeah. So this was done through what I call in the book “modes of rationalization.” Very early on, in the first weeks especially, lowercase L liberals, institutions, media, of course the White House, President Biden, didn’t really even defend the carnage on first principles. What you usually saw was an excuse-making, a deflection regime.
So what they would do is they would acknowledge, yes, it’s bad. Yes, Israel is overdoing it, right? They love this line, “Too many Palestinians have died,” which would logically follow up with, how many Palestinians do you think should die?
And that’s where you get all these elaborate interventions by liberal media. The first, and I think probably most impactful one, is this idea of human shields. So this is the Jake Tapper, New York Times, Washington Post editorial board line that, yes, the carnage is bad. Yes, you can see it on TikTok and YouTube and Twitter, because obviously you can’t deny the carnage. There’s videos going viral every day of the most horrific thing you’ve ever seen in your life. So you do the next best thing, you can’t deny that there’s a murder, so you do what any good defense lawyer does. You try to plea down to manslaughter, or some other minor infraction, which in this case is, yes, Israel’s perhaps being overzealous in their “military campaign,” but: Hamas uses human shields.
Now, what’s important to understand is that absolutely no human rights group on Earth—even human rights groups that have been very critical of Hamas, like Human Rights Watch—have ever endorsed this definition of human shielding. That is not what the word “human shield” means. It doesn’t mean a military actor in proximity to civilians. And international humanitarian law, there’s a very specific definition with respect to, on pain of violence, either by gunpoint or strapping a bomb to someone, you make them defend you from enemy fire in active combat, or go disarm booby traps from a room or something. And we know Israel actually does use human shields, by the way. This was reported on in the Washington Post briefly.
So this definition is a purely media concoction. It’s an ad hoc media invention. It is by Zionist propaganda groups like Foundation for Defense of Democracies and Washington Institute for Near East Policy, which are of course the front groups of AIPAC. They just invented this kind of pseudoacademic, pseudo–human rights framework of human shielding. And it became conventional wisdom, despite the fact that, again, it’s not endorsed by any objective, neutral third party at all. Certainly no international legal organization and no human rights group has ever endorsed this definition.
And it’s a definition that has its antecedents in other US imperial conquests. It was very popular, of course, during Vietnam. Whenever a village would be bombed, US officials would repeatedly say, “Well, the Vietnamese Communists are using human shields.”
The first time it was used in earnest was during the US occupation in the Philippines in 1898 and ’99 and 1900. They would repeatedly accuse the insurgents of using human shields.
Because what else are you going to say when you decide to indiscriminately bomb civilians? You’re not going to say, “We are attempting to extract concessions from a military actor by disciplining the civilian population,” which of course is what they’re doing, and in British imperialism was called the moral effect. It’s the same principle. Because that sounds bad. So you say, “Oh, well, they’re keeping human shields.”
So it becomes this kind of what I call liberal SSRI. It sedates you into kind of going, “OK, well, I guess they have no choice, human shields.” And then you flip channels to watch The Masked Singer or whatever. It’s a way to sort of avoid the issue.
JJ: And it feeds into the idea that they are so craven that they are…. It takes me back to Golda Meir saying, “We wish they would love their children enough to stop”—the idea that these people are so craven that they’re offering up their children to be murdered because they hate us so much.
AJ: Yeah, inexplicably. And of course you can’t maintain—Hamas maintains roughly 40, 50% support in Gaza. It varies depending on how the poll asks the question, but that’s roughly their support. They have a base of support, obviously. You can’t maintain that level of popular support when you use a hospital over a command and control center. It’s obviously absurd. But it doesn’t matter if it makes any sense, because it’s premised on a bunch of glib racist assumptions about them having a kind of Arab brain disease
And then you have, of course, the second mode I detail, which is this idea that Biden was helpless. Or, correspondingly, that he was working hard on getting a ceasefire. And this goes in conjunction with the fake ceasefire talks, which begin in March of 2024, which were always a complete fiction. And they’re completely belied by the fact that the Israel ambassador to the US at the time, Michael Herzog, later told Israeli media in April of 2025 that Biden “never asked for a ceasefire, not once.” And they were largely there to get pressure off the White House.
And we know that, because the most powerful country in the world can unilaterally tell Israel to stop whenever it wishes, more or less. They could probably function for a few more weeks, but not really. And this was confirmed by the Israeli ambassador later, but anyone with two brain cells could see that Biden was not sincere about ending the bombing, because he repeatedly said he would not use the one tool in his arsenal that would’ve actually ended it, which was a genuine arms embargo, or the credible threat thereof.
And so the media completely, hook, line and sinker went along, and I mean the media in the most general sense; there’s not really any exceptions at all on mainstream media here. It goes along with this fiction that there are ceasefire talks, despite the fact that they’re premised on a completely nonsensical contradiction.
And indeed, they redefine the word ceasefire; in 5,000 years of human warfare, it means both sides cease firing, but then roughly on March 2 of 2024, it’s redefined to mean, actually, Hamas surrenders.
So you would get these Orwellian statements where Biden and Tony Blinken and Jake Sullivan and Kamala Harris would say these Orwellian phrasings like, “Well, we need a ceasefire in Gaza to rebuild it without Hamas in power.”
Well, wait a second, you just skipped a step. What, is Hamas going to magically surrender? What does that even mean? Clearly any post-war Gaza would have to involve Hamas and the other militant groups, whether it be PIJ or PFLP or others, because that’s how ceasefires work. You don’t just say, “I’m going to cease firing when the other side completely capitulates and surrenders.”
JJ: It’s interesting that media actually scurry to try to make an argument, because at the same time, we’re seeing a total shutdown on criticism of the genocide. It’s crazy, it’s wild, the way that people are being told, “No, no, no, no. Don’t even say. The. Word. You will be kicked off campus if you say genocide. You will lose your job if you say genocide.”
We’re pretending we’re having a conversation about it. We’re pretending that politicians are fighting something, or trying to have a conversation about something. And at the same time, people are being literally silenced from expressing one point of what we could consider to be an argument about this.
AJ: Well, yeah, because liberal imperialism is too big to fail. Obviously, there’s efforts to accountability. I’m hoping to work on one called “Drop the Genocide 20,” which you can check out.
But fundamentally, I think the extent to which people think there was some accountability for Iraq has been way over-indexed. That is not actually what happened. Of course, it’s primary promoters of conspiracy theories like Jeffrey Goldberg at the Atlantic, who of course, was one of the main promoters of the Gaza genocide. He promoted the idea that Saddam Hussein was behind 9/11, and now he has probably the single most important job in liberal media.
So I think everyone who promoted genocidal propaganda is going to be promoted. They already are promoted. They’re going to move up the ranks. Because of course, as you know, you’re not promoted and moved up the ranks in media by being truthful or accurate or adversarial to power; you’re there to sell whatever power decides to skeptical liberals. That high-leverage intervention is really where you make your bones, make your money.
And that’s what we’re seeing now, is that there’s no accountability, because this was bipartisan, this was supported by liberal institutions. And the extent to which they’re going to try to wriggle off the hook is going to be A) to blame Netanyahu, make Netanyahu the kind of omnipotent force that compelled every liberal to get behind this, with this manipulated Biden narrative. I mean, he’s not a scapegoat in the classic sense that he is, of course, very much responsible for the genocide. He’s chiefly responsible, but he’s not the only person involved.
And, of course, Biden wasn’t forced to do anything. He wasn’t manipulated. He knew what he was doing, and he never called for a ceasefire. So they’re hoping [Netanyahu] can lose the election so they can pin it on him and put it in a neat little box with a bow on it, and we can all move on and act like it was some fundamentally justified, but ultimately excessive overcorrection or overreaction, I think is the go-to narrative now, because the people who supported it are too big to fail.
JJ: Where do we go?
AJ: There’s obviously much one can do. I think you get involved in your local BDS organizing and other such interventions, but I personally am working on this Drop the Genocide 20 campaign that’s been organized by DSA and Track AIPAC and Just Foreign Policy, and supported by others. It’s been signed on by Rashida Tlaib and Chris Rabb. And that is basically a pledge to drop the Genocide 20, the 20 most influential people, most responsible people, in the Biden White House.
Obviously, the list is much longer, but it’s a place to start, and making a bare minimum pledge to not work with them, promote them or otherwise boost them. But it’s been pulling teeth getting so-called progressives like Ro Khanna and AOC to agree with it.
So I think what we’re doing is we’re trying to heighten those contradictions by beginning a campaign to lobby Alexandria Ocasio-Cortez, Ro Khanna, Chris van Hollen, these people who I think are running for president in 2028, and who are very much going to run on Gaza, as it were, and saying, “Will you commit to, at the very least, not hire the administration officials who had a hand in the role to lie, propagandize and otherwise cover up internal State Department reports showing genocide?”
That’s a good place to start, because a lot of people are going to want to be “good on Gaza” without really committing to anything. And one of the ideological leaps that actually, if you pay attention to what a lot of these progressives have said on this issue, whether it be Ro Khanna or AOC or Van Hollen or others, is that, unlike Rashida Tlaib, they have actually not made the ideological leap from genocide to blaming Biden for genocide. They have said it’s a genocide, but if you actually read carefully what they say, they’ve never actually formally blamed the Biden White House or any Democrats for their support for it.
And I think that’s actually a really important distinction, because blaming Israel for genocide is obviously going to give you a lot of flack, but it’s fundamentally easy to do, right? It doesn’t actually create any contradictions or cognitive dissidence or tensions within one’s own party, especially because they all told people to vote for Biden, right?
So I think that we need to get people who are supposedly good on this issue to be firm and clear about what the implications of the word “genocide” mean. Because, again, they’ve all used the word. (Chris Van Hollen uses “ethnic cleansing,” but even still.) The word “genocide” has implications and obligations. It’s not just a buzzword. It’s not just meant to convey maximum outrage. It actually compels the speaker to do something about it. And thus far, many of the people who have used that word, and I think are kind of trafficking in the goodwill and the political capital of that word, have not actually followed through on what it means.
JJ: We’ve been speaking with Adam Johnson. The book is called How to Sell a Genocide: The Media’s Complicity in the Destruction of Gaza. It’s out now from Pluto Press.
Adam Johnson has written for a number of respectableplaces, and also at FAIR.org. Thank you, Adam Johnson, for joining us this week on CounterSpin.
Janine Jackson is FAIR’s program director and producer/host of FAIR’s syndicated weekly radio show CounterSpin. She contributes frequently to FAIR’s newsletter Extra!, and co-edited The FAIR Reader: An Extra! Review of Press and Politics in the ’90s (Westview Press). She has appeared on ABC‘s Nightline and CNN Headline News, among other outlets, and has testified to the Senate Communications Subcommittee on budget reauthorization for the Corporation for Public Broadcasting. Her articles have appeared in various publications, including In These Times and the UAW’s Solidarity, and in books including Civil Rights Since 1787 (New York University Press) and Stop the Next War Now: Effective Responses to Violence and Terrorism (New World Library). Jackson is a graduate of Sarah Lawrence College and has an M.A. in sociology from the New School for Social Research.
( Human Rights Watch) – A UN Commission of Inquiry concluded on October 14 that Israeli authorities have committed the crime against humanity of persecution against Palestinian children. Their findings recognize an important dimension that has not been given enough attention: children in the West Bank have been deliberately targeted—not just because of their nationality, race or ethnicity but also due to their age—in attacks causing serious bodily and mental harm.
After making the same determination about Gaza in June, the commission expanded its finding to the West Bank, explaining: “the harm inflicted on children is not incidental or collateral to the broader violence affecting civilian population, but forms part of a pattern of intentional violence.”
Age-based persecution is not limited to Gaza or the West Bank. Last November, judges at the International Criminal Court confirmed 39 charges, albeit in absentia, against Joseph Kony, leader of the Lord’s Resistance Army, for crimes in northern Uganda including persecution on age grounds.
None of these findings required new laws. Currently, the International Law Commission’s agreed upon definition of persecution includes the catch-all “other grounds that are universally recognized as impermissible under international law.” Age is one such characteristic that someone could be persecuted for, as is disability.
But investigators and prosecutors work best from lists in front of them. That’s why, when creating a new treaty to codify crimes against humanity, countries should explicitly list “age” as a ground for persecution. This would make children, older people and other groups targeted for their age more visible as subjects of persecution and make it easier for judges to confirm charges when the evidence is there.
Already, sixteen countries proposed amendments adding age to the working draft of the new treaty on crimes against humanity’s definition of persecution. More should support the proposal before countries begin formal negotiations in 2028.
Making the law more explicit will pave a clearer path to justice for children who are targeted simply because they are children.
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