Crypto News: “Lord of the Rings” is everywhere if you squint hard enough

I’m Christina Sterbenz, and this is Bloomberg Opinion Today, a fellowship (of the ring) of Bloomberg Opinion’s opinions. On Sundays, we look at the major themes of the week past and how they will define the week ahead. Sign up for the daily newsletter here. Subscribe to Bloomberg.com for unlimited access to all our coverage.

One Movie to Rule Them All

When I learned that retail traders in China found an allegory for their bad time in the stock market in a new, bad movie, I celebrated.

First, because the mother-son duo who spent years creating the amateur animation, Niu Lai, didn’t let a lack of know-how stop them, and I think that’s beautiful. Even the movie posters are delightfully awful.

The second reason I was thrilled about Niu Lai’s virality is because it gives me a chance to talk about one of the key theories by which I live my own life: that everything is Lord of the Rings.

The link to Peter Thiel-backed Erebor Bank is obvious. It’s named after the lavish dwarven city underneath Lonely Mountain, where the king hoarded so much wealth that he attracted a dragon, a species that famously loves gold. It turns out, the modern-day Erebor wants to do something equally perilous: conquering the same market Silicon Valley Bank did before it collapsed in 2023.

“Most of the borrowers aren’t profitable, and some barely have revenue,” Paul Davies writes. “Fast growth in banking always flirts with disaster.” That seems like just as good of an idea as too much AI investment in the market... And this time, Bilbo, Gandalf and company won’t be there to save anyone.

Apple is taking a risk, too — by putting a camera in your ears. Its next generation of AirPods — slated to arrive in 2027 — are expected to include an AI-enabled lens that can see what you’re doing and perform tasks.

Meta already tried this, and the result was a new phrase: “pervert glasses” — due to men harassing women on the street and then uploading the footage. But “Sauron’s eye glasses” would be just as appropriate. Immigration and Customs Enforcement agents have repeatedly been seen with Meta’s smart Ray Bans during operations. Just days ago, its agents were banned from wearing them. (Although the Department of Homeland Security, which oversees ICE, did make a request for millions to develop its own version earlier this year.)

It’s worth noting that Apple’s upcoming earbuds, unlike Meta’s glasses, will likely just interpret video and images in real-time and won’t store any of them: “[T]he difference in end-user functionality matters greatly and I’d argue is likely enough to stop the AI AirPods from being shunned in polite society,” Dave Lee writes.

Sure, and Pippin thought he could look into the Palantir of Orthanc without falling victim to Sauron’s eye. If Apple can’t avoid the comparisons to Big Brother, Tim Cook might end up kicking himself — and breaking his toe, just like Viggo did kicking an orc’s helmet.

Super fans love to tell first-time watchers about this.

But whatever fate awaits Erebor’s or Apple’s bottom lines pales in comparison to the devastation looming as Europe deals with its own fire-breathing monster: climate change. After weeks of wildfires spurred by drought and heatwaves, this is the result:

“It was only three years ago when cucumbers and bell peppers had to be rationed by supermarkets thanks to flooding in Morocco, a cold snap in Spain and high gas prices in the Netherlands,” Lara Williams writes.

Even though cooler, rainy weather is now hitting the UK (with a risk of flooding — so fun), it may be too late. “The harvest is already f***** ,” in the words of Jeremy Clarkson, a British TV personality-turned-farmer. If only the real world had the elves’ recipe for lembas bread; “one small bite is enough to fill the stomach of a grown man.” (More LOTR-inspired recipes here, as long as the larders don’t run bare.)

Elsewhere in Europe, Mykhailo Fedorov is giving big-time Boromir vibes. After Ukrainian President Volodymyr Zelenskyy fired him as defense minister, he quickly called for wartime presidential elections and threw his own kuchma into the ring.

“[H]e distills what has driven so many Ukrainians to risk all in resisting not just Russian occupation, but also their own kleptocratic leaders when these have threatened the country’s democratic future,” Marc Champion writes.

Boromir, one of the members of the group sworn to help Frodo destroy the one ring, had good intentions when he tried to take it to defeat Sauron’s army, too. But he was still wrong — and who knows if the desire for power had tainted his motivations. Maybe Federov will end up sacrificing himself to save his people, just like Boromir did for the hobbits.^[1]

I could go on with the comparisons,^[2]but I’ll spare you the time, which I hope you will use to watch the movies. They rank in order of quality three, one, two — and then all “The Hobbit” films. I will not be taking questions at this time.

Bonus Epic Reading:

Nolan’s Odyssey Has a Worthy French Competitor: Lionel Laurent
The Americas’ Challenge to Middle East Oil Won’t Let Up: Javier Blas
It Didn’t Take Long for the White House to Undermine the Fed: Jonathan Levin

What’s the World Got in Store?

US Open, Aug. 23: AI fakery plagued the competition last year. — Howard Chua-Eoan
Jackson Hole Economic Symposium, Aug. 27-28: Kevin Warsh, who’s making his debut as Fed chair, is already being undermined by the White House. — Jonathan Levin
Partial lunar eclipse, Aug. 28: Why are tech CEOs so obsessed with going to space? — Beth Kowitt

Elven Magic or Human Science?

Now, I want to talk about magic. Not the Tolkien kind, surprisingly, but the magic of modern medicine. Because a cancer vaccine is closer than ever, Lisa Jarvis writes.

So how does Moderna and Merck’s shot work?

“Scientists genetically sequence a patient’s tumor to pinpoint the mutations driving their cancer. Strands of mRNA carrying the instructions for building those mutated proteins are then packed inside a vaccine,” Lisa explains. “Think of it like handing immune cells a series of mugshots of the enemy so they know exactly whom to attack — not only in the near term, but ideally for years to come.”

Wait, that’s like how Bilbo’s sword, Sting, glows blue when orcs and goblins are near. Sorry, I can’t help myself.

But scientific and technological developments aren’t always so marvelous. Consider that AI is starting to lie. That’s strange considering that models are trained not to do that. But, as Parmy Olson explains, some models have a found a bit of a loophole.

“Reinforcement learning is one of the most effective methods of developing AI models and involves steering their behavior with praise and correction, much like training a dog,” she writes. “Instead of a hard-baked biscuit, the model gets a digital ‘treat’ in the form of a numerical score, something like +1.5, or -2.0 for a bad answer.”

AI, just like any nearly sentient being, wants approval. Even if they don’t have the answer, they’ll twist the truth or even make up facts to get it. And if you can’t figure out the lesson here from an epic story about absolute power and the chaos that follows, I haven’t done my job.

Notes: Please send the Light of Eärendil and feedback to Christina Sterbenz at csterbenz@bloomberg.net.

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[1] As a Ukrainian-American, I can confirm the culture has a lot in common with Shire folk. We’re shockingly resilient, have strong community ties and have a strong attachment to cholesterol-laden foods. #slavaukraini

[2] Trust me. I once convinced my team here at Bloomberg Opinion (and an unsuspecting columnist) to spend three-and-half minutes explaining how central banks’ 2% inflation target mirrored the one ring’s chokehold on the realm of men.

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