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China is the Real Problem, Apartments Looking Ugly, and the AI Org
What I’m Reading, Watching, and Listening To
Alan Pentz
August 09, 2024
Welcome back to The Small Business Mentor!
A quick message before we jump in:
If you haven’t already, be sure to check out the Small Business Mentor Podcast wherever you listen to your podcasts
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Let’s dive in…
China is a Giant Paperclip that will Eat the World: In my view, the most under rated issue in the world today is the huge problem China is creating with its export driven model. I think it’s a if not the key cause of many of the issues we are experience economically with wealth inequality, the elite/working class divide, and animates many of the problems in places like the UK which is experiencing widespread riots linked to what I think is the decline of blue collar jobs and domestic investment. Guess whose causing that?
I will be writing extensively about this going forward. The GOAT of people who understand this is Michael Pettis. He’s a professor a China’s Tsinghua University and writes on behalf of the Carnegie Endowment.
A recent piece In Foreign Affairs set off a flurry of responses. The author gets the diagnosis write but avoids the inevitable conclusion. China is destabilizing the world economy. Economist are stuck in David Ricardo fantasy land as China threatens to impoverish itself and the rest of the world.
If we go to war with China, it’s as likely to be precipitated by this as Taiwan.
Multi-family is a Bloodbath: It seems like there’s been a shoe waiting to drop in the real estate sector. We all know about office taking a dirt nap but multi-family is looking bad too.
The market went crazy in 2021 into 2022. Rates were low, values were high, and everyone wanted in. Value added projects were the hot thing. You buy a shabby building, fix it up a bit, and then re-rent at much higher rates. They were typically financed on adjustable or shorter term loans, many of which are now coming due.
Rates are 10 times higher now, rents have stagnated, and lots of new buildings are coming on the market particularly in the Sun Belt. The WSJ writes:
Few apartment properties have gone into foreclosure yet, which is disappointing for opportunistic investors that hoped to pick up cheap assets in fire sales. Lenders are proving more flexible with apartment loans than offices.
This may be because they think that if the loans can limp along for a few more years, apartment rents should eventually start to rise again. A less charitable take is that CLO lenders at the bottom of the capital structure have so much to lose that they are doing everything possible to keep deeply troubled loans afloat.
A recession would be the final straw for some landlords.
The AI-centric Company: A very good piece by Oran Sham from Mutable.ai on how AI centric organizations could operate in the future. Essentially, he sees LLMs’ ability to take in information about what everyone in an organization is doing, analyze and summarize it, and suggest actions based on it reducing the cost of managing organizations, allowing them to scale even bigger.
Just one snippet:
Right now we’re hand-designing information flows and team structure. Instead, let’s use LLMs to share information between teams and help route important work to the right people.
-LLMs can summarize what work everyone does in an organization by parsing over their code, messages, and documents.
-LLMs in conjunction with other AI techniques can also identify common problems in an organization and rank them by severity.
-These models can then group the work of each team member by reviewing their code, messages, and documents, providing a comprehensive summary of their roles.
-We can then route important information to the right people in the organization who have the relevant expertise.
I’m working on a piece summarizing the current state of AI, the difficulties in implementing it in organizations, and the “bubble” talk coming from many quarters right now.
Keep growing,
Alan
P.S.
P.P.S.
Welcome back to The Small Business Mentor!
A quick message before we jump in:
If you haven’t already, be sure to check out the Small Business Mentor Podcast wherever you listen to your podcasts
If you’re reading this online, subscribe HERE and join thousands of business owners and professionals receiving these emails every week.
Let’s dive in…
Keep growing,
Alan
P.S.
P.P.S.
Welcome back to The Small Business Mentor!
A quick message before we jump in:
If you haven’t already, be sure to check out the Small Business Mentor Podcast wherever you listen to your podcasts
If you’re reading this online, subscribe HERE and join thousands of business owners and professionals receiving these emails every week.
Let’s dive in…
Keep growing,
Alan
P.S.
P.P.S.
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