I posted this piece at Political News Items yesterday. The back half concerns today’s elections in Germany and is worth reading. The front half addresses the questions: “Is there a ‘Blue Wave’ forming? Will the Democrats run the mid-term elections tables?” The answer is “yes, plus a side of caveats”.
1. Li Yuan:
“The U.S. Lead Over China in AI Is All But Gone.”
“China Is AI-Maxxing.”
“China Just Erased America’s AI Lead.”Those assessments of the artificial intelligence rivalry appeared in U.S. publications recently, and Xi Jinping will be pleased to have them in the air as he arrives in Washington this week for a state visit. Under Mr. Xi’s leadership, China has made huge strides in developing the most consequential technology of our times.
.[What will be less discussed is that he is also the leader of an economy in its worst shape in decades]The two facts are related.
Economists in China — even those closest to the state — have openly warned that the government is pouring too many resources into a technology that creates relatively few jobs, while doing too little to save the broader economy.
And it’s an economy in crisis: The country’s youth unemployment rate, excluding students, reached 18.9 percent in August. Consumers are not spending. During the first half of the year, domestic car sales fell markedly 20 percent from a year earlier, and housing sales fell another 14 percent, adding to years of decline. The country is in a deflationary spiral.
This summer, the economists’ warnings became a chorus. Li Daokui, a former adviser to the country’s central bank and a professor at Tsinghua University, said in July that China’s economy was “running too cold.” Its booming high-tech sectors, he said, could not lift the larger base.
Liu Shijin, another former adviser to the central bank, proposed at a forum in June to raise basic pension payouts, from $30 to $150 per month, for rural residents to shore up consumer demand. (
Source: nytimes.com. Read the whole thing.)is[Li Yuan]alwaysworth reading.
2. North Korea launched two missiles off its eastern coast on Sunday, its second set of tests in roughly a week and days after Pyongyang accused the US of driving tensions on the Korean Peninsula through a series of military drills. Just three hours after launching a short-range ballistic missile (SRBM) toward the East Sea on Sunday afternoon, North Korea fired another short-range ballistic missile, according to South Korea’s defense ministry. If the subsequent launch is confirmed to be a ballistic missile, ** it will mark two consecutive ballistic missile tests by North Korea within a three-hour window**. (
3. Financial Times:
Houthi rebels launched a missile attack on Riyadh, the first time the Iran-backed rebels have targeted the Saudi capital since reigniting the more than a decade-long war.A Saudi military spokesperson said the kingdom’s air defenses intercepted a ballistic missile in the early hours of Saturday.
Residents in Riyadh said they heard a loud boom around the time of the attack and smoke was seen rising from near the capital’s airport. Authorities did not report any damage, but
.[the attack on Riyadh and other cities in the kingdom underscored the threat posed by the Houthis]The Houthis said in a statement that their forces targeted Riyadh and Yanbu, a port on the Red Sea that is home to vital oil infrastructure, claiming the attacks “resulted in large fires at the targeted sites”. (
Source: ft.com)
Faced with an escalating barrage of Houthi precision drones and missiles targeting infrastructurefrom Jeddah to the holy sites of Mecca,[Riyadh has made a desperate, covert move].The kingdom did not just appeal to Washington; it bypassed decades of diplomatic taboo to
. Mediated through U.S. Central Command (CENTCOM), this backdoor channel provides Saudi Arabia with critical, combat-tested[lean on Israeli intelligence]telemetry to intercept drone and missile threatsto cripple its economy.This is not a diplomatic breakthrough or a prelude to the Abraham Accords.
Yet, this unprecedented coordination exposes massive vulnerabilities in the regional order, leaving four urgent, unanswered questions that will dictate the future of the Middle East:[It is a raw transaction for survival].
The CENTCOM Pivot:Why did the U.S. choose mediation over direct retaliation?
The Citadel’s Crack:What does this desperate alignment mean for Saudi regime internal stability?
The Tel Aviv Leverage:What is Israel’s ultimate price for securing the skies of its historic rival?
The Persian Counter-Strike:How will Tehran break the secret Red Sea axis.
**5. **The Wall Street Journal:
Persian Gulf states and Russia have invested tens of billions of dollars in refineries over the past decade to grab a bigger share of the global diesel market. Now, war in both regions has sent exports plunging,of a fuel that powers much of the global economy.[squeezing supplies]Diesel
—they eclipsed $6 a gallon in the U.S. for the first time this month and have kept climbing, hitting $6.45 on Friday. The surge has rattled governments and markets around the world that rely on diesel as the workhorse of their industry, transportation and agriculture. Shortages have appeared at gas stations in rural Brazil, in Libya and some African nations that can’t afford to import the fuel.[prices are soaring]The Iran and Ukraine wars left the U.S. as the producer of last resort for diesel and other refined products, but
to ban exports of the fuel to lower prices ahead of the midterm elections.[momentum is now growing]
. Russia has already sharply restricted exports because of damage to its refineries caused by Ukrainian drone strikes; a facility in Moscow was hit in the latest attack this weekend, the city’s mayor said.[A U.S. ban would likely send prices for the rest of the world soaring—and potentially push other big diesel exporters such as China and India to follow suit][China has limited]its refinery exports, while India has imposed an export tax on diesel and gasoline. (Source: wsj.com)
6. The New York Times:
Moscow and its surrounding region came under attack by hundreds of drones, the local authorities said on Sunday morning, on the[final day]of parliamentary, regional and local elections across Russia.About 1,600 drones heading toward the Moscow region were shot down, the Russian capital’s mayor, Sergei Sobyanin, said, including 450 that had been approaching the city. He called the attack the largest drone strike on Moscow of the war.
Two people were killed, and 20 injured in the strike, Russian authorities said. An oil refinery and a warehouse were also hit.
President Volodymyr Zelensky of Ukraine
[posted]on Facebook that. That missile does not have the range to reach Moscow, according to its manufacturer, Fire Point, so would have been aimed elsewhere in Russia. ([the bombardment included the first use of a newly developed Ukrainian ballistic missile to strike inside Russia]Source: nytimes.com)
**7. Stunning stats of the week: **
Independent estimates[cited]by theindicate thatKyiv Post[Ukraine will manufacture between five and six][million].[drones in 2026]About 500 companies manufacture drones in the United States are
, according to Ryan Carver, communications manager for the[producing fewer than 100,000 a year], a nonprofit organization of industry professionals. ([Association for Uncrewed Vehicle Systems International]Sources: kyivpost.com, atlanticcouncil.org, nytimes.com, auvsi.org)
8. An alliance led by powerful militant leader Hafiz Gul Bahadur, whose fighters once targeted U.S. and NATO forces in Afghanistan, has claimed responsibility for a deadly mosque assault inside a police compound in northwest Pakistan. The attack, during Friday prayers, killed seven civilians and 16 police officers, and wounded at least 100 people, according to the police officials in Kohat, a city in Khyber Pakhtunkhwa province near Pakistan’s border with Afghanistan. ** The assault, which lasted for hours and involved a car explosion, a suicide bombing and multiple armed attackers, indicates the growing threat of Mr. Bahadur’s group**, experts said. He is one of the longest-surviving militant commanders in the restive region, whom both U.S. and Pakistan forces have failed over the years to neutralize. His re-emergence could mean deepening violence in western Pakistan and worsening relations with Afghanistan. (
9. The New York Times:
Iran, China and groups in Israel used artificial intelligence in novel waysin recent months to createratcheting up concerns among U.S. officials and security researchers about the fast-evolving technology.[first-of-their-kind influence campaigns on social media,]The countries and groups combined A.I. tactics to ramp up the speed and scale of online campaigns beyond what people could easily achieve and with minimal human interaction, U.S. officials and security researchers with knowledge of the efforts said.
First, the countries and groups turned to
which are increasingly powerful systems that are freely available to download and modify. Then they used those A.I. models to create “[Chinese “open-source” A.I. models],,” which are bots that can operate software and complete tasks on their own.[agents]Once hundreds of those A.I. agents were let loose, they autonomously opened networks of fake accounts on platforms such as Instagram, Facebook, X and TikTok, the officials and security researchers said. The agents then rapidly seeded the fake accounts with false posts about politics and current events to sway opinions and inflame issues. (
Source: nytimes.com)
**10. **Reuters:
Rogue AI agents from OpenAI hijacked Hugging Face user accounts and probed the site itself for vulnerabilities as early as May, nearly two months before[the July breach of the open-source repository]drew global attention, according to researchers who reviewed the activity.OpenAI had previously disclosed one aspect of the malicious activity — the theft of a Hugging Face user’s digital credential to access a biology-related file — in its
[public incident report, opens new tab]last month, but researchers said the probing activity against Hugging Face appeared to go beyond what the report described.Independent researcher Jonas Wiedermann-Moeller told Reuters he discovered the activity last week. He said he found evidence that the OpenAI agents compromised two Hugging Face user accounts and used them to send unusually formatted files to the company’s servers as early as May 13.
He and other researchers who reviewed the evidence said the behavior resembled an attempt to map or test parts of Hugging Face’s network for ways to infiltrate, although they stressed there was no evidence the effort resulted in an actual breach. Both the researchers and OpenAI said they found no evidence that this earlier probing was part of the July incident. (
Source: reuters.com)
11. The New York Times:
Google’s artificial intelligence system,and hacked into three companies, the search giant said on Friday.[Gemini], escaped its testing environment in MayThe incidents occurred during tests to measure the cybersecurity capabilities of Gemini, and the A.I. model stopped its own attacks after logging in to the three companies’ networks, Google said.
including Anthropic, OpenAI and Meta, which have caused increasing fears about the technology spinning out of human control. ([The disclosure of the hacks follows similar breakouts at other leading A.I. labs,]Sources: nytimes.com, gemini.google.com)
12. Financial Times:
Private equity groups are turning to increasingly complex financing structuresto allow cash-rich insurers to invest in their debt, helping alleviate a prolonged dealmaking drought for buyout funds.
and have started slicing and dicing another type of debt, net asset value loans, to appeal to investors with a broader range of risk appetites.[Fund managers in one niche of the sector have increased their use of collateralized fund obligations (CFOs)]“From last year going into this year, we’ve seen more structured [debt] designed to attract investors with different risk tolerances,” said Thomas Speller, co-head of funds ratings at Kroll Bond Rating Agency.
The structures have helped fuel the rise of secondaries funds — specialist vehicles that have been buying cash-strapped investors’ stakes in mature buyout funds, giving the investors an exit during a dealmaking drought — by helping lower their cost of capital. In turn, that allows the secondaries fund to buy more stakes in buyout funds, or to return money to its own backers. (
Source: ft.com)
13. Morgan Stanley is curbing redemptions at its nearly $7 billion private credit fund again in the third quarter, as ** investors requested more than twice the amount the fund was willing to repurchase**. The North Haven Private Income Fund capped withdrawals at 5% after investors asked to pull 11.4% of shares, largely unchanged from the three months prior, according to a
14. A worldwide shortage of motor oil is becoming more acute, with prices of the car engine lubricant reaching new highs, oil-change shops running dry and a US retail group rationing sales to do-it-yourself customers. The surge in the cost of base oil used for the full synthetic motor oil required for many newer cars far outpaces steep price rises for crude oil, petrol and diesel. ** The US price of so-called Group III base oil has almost quadrupled since February to a record $12.45 a gallon** on Friday, according to Argus Media. Retail chain Costco Wholesale raised the price for 10 quarts of one type of full synthetic motor oil to $57.99 and is now capping purchases at one per customer, according to its website. The brand was selling for about $30 last year. (
15. The Guardian:
Voters in two German states are going to the polls(today) with the political future of the embattled chancellor,, hanging in the balance and an emboldened far right targeting further gains.[Friedrich Merz]Coming two weeks after a
in which the anti-immigration, pro-Kremlin Alternative für Deutschland (AfD) scored its highest ever result in a regional poll, the nativist party is expected to drain support again from Merz’s conservative Christian Democratic Union (CDU).[seismic election in Saxony-Anhalt]Just how brutal the outcome is could affect Merz’s ability to hang on as leader after only 16 months in power, possibly setting wheels in motion for his replacement or even snap elections – currently regarded as unlikely but not ruled out.
About 2.5 million people are eligible to vote in the capital Berlin and nearly 1.3 million in the Baltic coast state of Mecklenburg-Western Pomerania. Polling booths open at 8am local time on Sunday and will close at 6pm, when Merz and his allies will be watching exit polls on tenterhooks. (
Source: theguardian.com)
16. The pelican needed help:
A recent quiet morning at a Florida marine research facility was interrupted by tapping at the back door.A biologist walked over to investigate and found a
[brown pelican]standing on the stoop and pecking at the glass with its long beak. It stood there patiently, as if waiting for help. A quick inspection revealed the pelican was injured.Fishing line was wrapped around the pelican’s right wing, and a
[double-barbed treble hook]was stuck in the wing, restricting the bird’s ability to fly. About a dozen cactus spines were lodged in its left foot.When Annsli Hilton, a University of Miami research associate who works at the National Oceanic and Atmospheric Administration (NOAA) research facility, heard the commotion, she figured someone had brought in the injured bird.
.[She was shocked to hear the pelican came on its own to the lab in Panama City]“I always kind of thought in my head — and liked to think that — animals would know to either come to…
