I didn't publish the newsletter this weekend because I was walking around SXSW for the first time since I moved to Austin three and half years ago. I walked a couple of miles from my place near 45th to 6th, and it was interesting to note how much of the city is empty, and how concentrated SXSW activity is around two or three blocks in every neighborhood. The busy neighborhoods could best be described as a spectacle of pointless entropy. People with and without orange badges moving from one long queue to another across events that range from decidedly mediocre car exhibits to movie screenings, somehow bundled together under one festival. As I move through the crowd, I suspect I've fallen for the mimetic desire induced by the question, "what are you doing for SXSW?" which has been put to me every other day this month. The same has probably happened to many in this crowd I'm trying to wade through. This is why I don't dunk on all the smart venture capitalists who decided to put their money in the same not-so-smart bank (SVB) and then synchronously chose to stage a bank run. Even Peter Thiel, who apparently bases every investment decision on Mimetic Desire fell for it.
This paragraph from Ben Thompson's coverage of the collapse of SVB captured my attention. Writing on the loss of trust induced by zero-sum environments with high stakes, he writes:
The irony in this loss of trust is that the ultimate driver is tech itself. What made the Silicon Valley Bank run unique was (1) the ease with which its customers could execute withdrawals and (2) the speed with which news of Silicon Valley Bank's impending demise spread. Just to put the scale of this collapse in context, a total of $7 billion in depositors' assets was lost in The Great Depression; $7 billion then is $161 billion today. Silicon Valley Bank, meanwhile, processed $42 billion in withdrawals in 24 hours. It was the speed, fueled by zero distribution costs for both rumors and withdrawals, that was so destabilizing for an entity predicated on arbitraging time
It's easy to see how the downsides of convenience and speed, the two things that modern software worships, have driven a loss of trust in other spheres such as politics, institutions, and created conditions for hypercomplex problems that have no solution. It's a topic that has been written to death by the likes of Hartmut Rosa and Byung-Chul Haan. It is the sublime horror at a distance of our generation - something so vast and impossible to comprehend that it produces a strange feeling of both awe and terror. This strangeness of sublime horror is captured perfectly in the 2022 Jordan Peele movie Nope. (light spoilers ahead)
Nope is set around a brother and sister that trains and provides horses for Hollywood. Their father dies in a freak incident, and the brother, Otis, played by Daniel Kaluuya, starts selling the horses to an Asian former child star, Ricky "Jupe" Park, who runs a western-themed park called Jupiter's Claim. Otis discovers a "UFO" in the sky that has been taking away their horses one by one. He suspects that the UFO caused his father's death. It's at this point that the movie takes an interesting turn. Instead of going the route an investigative horror, Jordan Peele transforms it into a spectacle about people who have to make a living regardless of the sublime horror that haunts them. The siblings decide to capture a video of the UFO that eludes any kind of direct vision, so they can profit from the horror instead of running away from it.
Meanwhile, we discover that Ricky Park has been monetizing the sublime horror all along for his western-themed park. He has been feeding the horses he buys from Otis to the UFO. He sets up an event where visitors can sit around a rodeo venue and watch the spectacle of the UFO taking away the horse. And so the movie unfolds, I highly recommend watching it.
It seems like a characteristic of sublime horror that it only directly affects people with fewer options to escape it. Natural disasters like storms and forest fires are good examples; the only people who suffer fatal loss are the ones who can't leave. For everyone else, it's at a distance. As Ben Thompson notes in the article, eventually, the venture capitalists will be fine:
There will, though, be long-term consequences for fundamentally changing the nature of a bank: remember, depositors are a bank's creditors, who are compensated for lending money to the bank; if there is no risk in lending that money, why should depositors make anything? Banks, meanwhile, are now motivated to pursue even riskier strategies, knowing that depositors will be safe; the answer will almost certainly be far more stringent regulation on small banks, of the sort imposed on the big four after 2008. That, in turn, will mean tighter credit and more fees for consumers,
It's unfortunate that Nope did not win any Oscars, and performed mediocrely at the box office. Although, I think the essence of Nope is subliminal in the Oscar best picture of the year - Everything Everywhere All At Once, a great movie in its own right that panders a bit too hard to its audience and wraps everything up in wholesome positivism. Watching it win the Oscars, I couldn't help but wonder if the makers took a leaf from the Ricky Park playbook to monetize the sublime horror.
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