CMR is the leading provider of funding and management support for small to medium-sized businesses and entrepreneurs 

More than two months ago, long before most Wall Street analysts had any clue that the bulk of the AI buildout commitments were diligently hidden in various off-balance sheet SPVs and other (perfectly legal) accounting gimmicks, we wrote a lengthy article detailing just that, and explaining why far beyond the $1 trillion (and rapidly rising) in annual plain vanilla capex -- all of which now has to be funded through debt issuance since free cash flow across the hyperscaler universe is negative for the foreseeable future (if not forever) -- which most pundits obsess over daily...

... the real risk was in the "The $1.8 Trillion Off-Balance Sheet Time Bomb At The Heart Of The AI Supercycle."

The $1.8 Trillion Off-Balance Sheet Time Bomb At The Heart Of The AI Supercycle https://t.co/2IAxYrTXjL

— zerohedge (@zerohedge) June 12, 2026

We followed up on this critical topic after the latest batch of hyperscaler earnings in late July, which revealed that the nearly $2 trillion in spending commitments had exploded in the second quarter, with just GOOGL and META north of $1.5 trillion, which prompted us to conclude that "across all hypers, off BS commitments are now $3+ trillion, double in one quarter."

*MICROSOFT: LEASES THAT HADN'T COMMENCED $329.1B AS OF JUNE 30

we will be updating the off balance sheet obligations/debt for Q2 soon. It will probably rise by $1TN+ to $3TN.

— zerohedge (@zerohedge) July 29, 2026

The SPV bubble is batshit insane

GOOGL is $826BN and now Meta said it has already committed almost $700 billion in future AI spending (BBG).

Across all hypers, off BS commitments are now $3+ trillion, double in one quarter.
GLTA https://t.co/HyV9ZGgFu5

— zerohedge (@zerohedge) July 30, 2026

Many, traditionally those who had no idea what we were talking about or the implications of the above findings, took the conventional route and either mocked or slighted what we had found. 

But not everyone: first it was Nvidia which, scrambling to distance itself from the circular financings that were meant to fund precisely these kinds of gargantuan off balance sheet SPVs, unveiled its $500 billion arrangement with a handful of private credit firms (an arrangement that was nothing new, as Nvidia had already done just that particular deal on numerous occasions, and it merely formalized it in the form of an open-ended MOU).

Second and more important, two months after our first warnings, the WSJ finally caught up, and in an article over the weekend titled "Why Big Tech’s AI Spending Is $3 Trillion Higher Than It Seems", it confirmed everything we have been reporting since early June.

Not to put too fine a point on it, but WSJ authors Rudegeair and Santilli echoed everything we said in our original report more than two months ago, to wit: 

Each quarter, big tech companies disclose their massive capital expenditures on artificial-intelligence infrastructure, from data centers to chips. But those figures don’t come close to expressing the full extent of future spending to which Google parent Alphabet, Meta Platforms, Oracle and many others have committed. That is because a huge swath of their coming financial obligations aren’t reflected on their balance sheets.

Nine top tech companies had some $3 trillion of off-balance-sheet commitments mostly related to AI, according to a Wall Street Journal analysis of footnotes in their most recent securities filings. Those obligations are growing faster than traditional “capex,” which totaled about $600 billion over the past year they reported, and were about triple what the companies owe under their outstanding leases and long-term borrowings.

Back in June, we showed this staggering surge in off balance sheet purchase commitment as follows. Needless to say, the latest number is substantially higher.

And this is how the WSJ compared side by side the on (capex) vs off balance sheet obligations at the 6 hyperscalers. Needless to say, the management teams at the big AI spenders are doing everything in their power to cover up just how spectacularly massive their true spending plans are.

The WSJ also takes a look at the off B/S SPVs we have been discussing ever since we explained back in January why Meta's Beignet funding model will be imitated by all of its peers throughout 2026 and onward.

As a reminder, META is already neck deep in off-balance sheet debt. Here is a schematic of its $27.3 billion SPV with Blue Owl "Project Beignet" for the Hyperion data center. None of this touches META's balance sheet.

Expect hundreds of billions of these in 2026 https://t.co/794EgSiiZ9 pic.twitter.com/7hMyVW6Lno

— zerohedge (@zerohedge) January 29, 2026

Of course, that's precisely what happened and this is how the WSJ lays out the funding of Meta’s gigantic “Hyperion” data-center project in Louisiana, which is the size of about 1,700 football fields, and which "helps explain how big obligations wind up off tech companies’ balance sheets."

Meta initially agreed to lease Hyperion for a four-year term starting in 2029, with options to renew for up to 20 years. It guaranteed that it would make bondholders whole if it doesn’t stay the entire two decades. The company doesn’t think payments under that guarantee are probable, so it hasn’t recorded any liability on its balance sheet.

In accordance with accounting rules, Meta’s Hyperion lease obligations will remain off balance sheet until it starts paying rent. It said its aggregate initial lease commitment is about $12.3 billion. Meta disclosed $347 billion in total obligations for leases that haven’t kicked in yet, including for Hyperion, as of June.

This is the WSJ's version of our graphic from 8 months ago: 

Remember what we said about expecting "hundreds of these in 2026?" Apparently it came as a surprise to the WSJ, which writes that "across the companies the Journal analyzed, promises of payments under these uncommenced leases totaled $1.2 trillion in off-balance–sheet obligations, or about four times more than what was disclosed a year earlier. In addition to Meta, the Journal reviewed commitments for Alphabet, Amazon.com, Microsoft, Oracle, Nvidia, Broadcom, SpaceX and Advanced Micro Devices."

Of course, as we explained two months ago, the uncommenced leases are just a part of the off B/S liabilities. There's much more: 

"Data centers get stuffed with a lot of hardware, including the Nvidia chips that are used to train and run models and memory chips that store information. To buy all that, companies sign long-term contractual agreements well in advance to lock in production from their suppliers."

... which is why Nvidia has the most to lose if funding deals that enable the AI bubble aren't in place, which is precisely why the company rushed and forced the various private credit firms to deliver the $500 billion deal announced last week. Putting a number to it: 

"Those and other purchase obligations at the companies the Journal examined stand at a whopping $1.9 trillion. Under accounting rules, purchase commitments typically remain off balance sheet until a product or service is delivered."

The uncommenced leases and purchase commitments are the bulk of the off balance sheet "ticking time bomb" we discussed in June. Only then it was $1.8 trillion. It has since grown by 50% to $3 trillion.... in two months! And this is how the WSJ redid another one of our June charts:

What happens next depends very much on whether or is an optimist... or not.

For the former, the WSJ says that "there are reasons to believe tech companies will make good on all their obligations. Optimists see the skyrocketing demand for AI tools—which has lifted the stock market and led to shortages of key hardware—as a proof point that demand is going to be strong for years, and the money to pay off all these bills will be rolling in."

As for the others, well the problems are only starting. First, this unprecedented explosion in off balance sheet liabilities in "a worrying sign that some tech companies that once seemed to have fortress balance sheets have needed to tap the capital markets frequently."

Alphabet and Amazon recently posted results showing negative free cash flow, meaning their capital spending exceeded the cash they brought in from operating their businesses."

And that is before considering the implications of trillions in off-balance–sheet commitments. Whether or not the revenues ever arrive, purchase commitments and signed leases can’t be canceled, for the most part. 

The worst case scenarios is that these tech giants companies, which until recently had pristine balance sheets will be paying an expensive tab for infrastructure that they can’t profitably use "if things go wrong." These obligations could also lead increasingly indebted companies to have to borrow even more.

One way such a catastrophic scenario may happen, is if Chinese open-weight models accelerate their market share grab by dramatically undercutting the token prices of frontier models (as they have been doing), and lead to a collapse in hyperscaler profits as compute creation shifts to China and its far cheaper chips, not to mention far more abundant sources of cheap energy... which is precisely what is happening right now, with token prices in historic free fall, crashing more than 50% in just the past few weeks as Chinese open-models unleash a historic race to the bottom.

And since the entire WSJ is effectively re-print of what we said in early June, we will leave readers with our conclusion from then as it is just as accurate today as it was two months ago (and $1.2 trillion less in off balance sheet obligations).

Vendor financing and repurchase-style arrangements mean a single counterparty's stress can propagate through several balance sheets at once. Think of it as rehypothecated leverage. Concentration compounds it: the >$2tn of remaining performance obligations across major AI players is built on a handful of very large, long-duration contracts, so the backlog that justifies the spending is also a concentrated counterparty exposure.

The off-balance-sheet items aren't fraudulent or even unusual accounting — they're mostly standard treatment. The hazard is timing and visibility, and it shows up in three deferred effects:

Capex is being committed ahead of the revenue and free cash flow meant to support it; capex revisions have run well ahead of sales and FCF revisions. The depreciation from all this spending is largely still deferred, rising construction-in-progress balances (ORCL ~+200%, META ~+90% YoY) mean today's margins haven't yet absorbed the expense already locked in. And when it does land, cumulative depreciation for MSFT, ORCL, META, and GOOGL could exceed $520bn over three years, pushing depreciation as a share of revenue sharply higher (ORCL potentially 7%?28%, META 9%?19% by FY28). To hold margins, every other cost line has to fall — which only works if sales rise to match, and so far they haven't kept pace.

Even a careful analyst can't fully size the exposure, because classification and disclosure are inconsistent. Whether a compute-capacity deal even counts as a lease turns on judgment calls (does the contract specify a particular GPU/rack, who controls the workloads, etc.). Disclosure varies accordingly: Nvidia quantified $30bn of cloud-service commitments and Oracle $10bn, while Meta declined to quantify the cloud-capacity portion of its $238bn in commitments. That inconsistency means any cross-company comparison of "true" leverage rests on differing materiality judgments — so the aggregate numbers, large as they are, are themselves uncertain.

The good news is that, for now, the risks aren't an imminent solvency problem, but a set of timing and disclosure mismatches - a deferred depreciation wall, capex running ahead of monetization, leverage migrating into the supplier/private-credit layer, and classification judgments that make true capital intensity hard to compare across companies. For their part, hyperscalers have taken advantage of the current moment of market euphoria to raise as much capital as they can, aware that the window will eventually shut. The question is when sentiment turns, and when all these funding conduits are shut, will there be enough funding to sustain the AI revolution for the foreseeable future. Of course, this question becomes moot if demand shifts, and instead of buying the latest and greatest offering from Anthropic or OpenAI for a stratospheric number of tokens, consumers and enterprises turn to dirt-cheap alternatives from China which offer 90% of the performance of frontier models for a fraction of the cost, then all bets are off.

Much more in our full must-read (as the WSJ clearly found) report from June, as well as the  "AI Ecosystem: Charting Recent Trends"  report available to pro subs.

Earlier today we reported that China's highly touted DRAM memory maker CXMT recently surpassed Tencent to become China's most valuable company.

That may be just the start, because hot on the heels of the biggest Chinese IPO this decade, comes that "other" Chinese memory maker, Yangtze Memory Technologies Corporation (YMTC) which has now broken into the world’s top three NAND flash memory suppliers by volume for the first time, marking a milestone for China’s semiconductor ambitions as it strives to narrow the revenue gap with global rivals in high-value data-center storage.

The Wuhan-based chipmaker captured 14% of global NAND bit shipments – a measure of total storage capacity shipped rather than total chip units – in the second quarter, narrowly overtaking Japan’s Kioxia, according to data from Counterpoint Research published on Wednesday.

Samsung Electronics retained the global lead with a 25% market share, while SK Hynix – including its Solidigm subsidiary – was second at 22%.

YMTC’s shipments climbed 22% year on year and 5% quarter on quarter, driven by expanding supplies to domestic electronics manufacturers and the increased production of its latest-generation 3D NAND architecture, Counterpoint said.

Despite its surge in shipment volume, YMTC’s market position lags in dollar terms. The company ranked fifth globally in NAND revenue for the quarter, placing it behind both US-based Micron Technology and Kioxia.

The gap stems from YMTC’s heavy exposure to lower-margin consumer products and a relatively small footprint in enterprise solid-state drives (eSSDs), which command higher pricing.

The product mix imbalance is increasingly squeezing revenue as artificial intelligence reshapes global storage demand.

eSSDs accounted for 48% of total global NAND bit shipments in the second quarter, nearly doubling their 26% share from a year earlier. Counterpoint attributed the surge to a broader shift in AI workloads from model training towards inference, which requires vast amounts of fast storage for frequently accessed data sets.

The research firm projected server eSSDs would account for more than half of all NAND bits shipped by the end of the year.

To capture this higher-margin market, YMTC planned to shift its product mix further towards eSSDs in the second half of the year to cement its third-place global standing, supported by expanding avenues for capital, Counterpoint said.

The strategy comes as YMTC continues to scale its manufacturing operations despite years of US trade restrictions designed to limit its access to advanced semiconductor manufacturing equipment.

Morgan Stanley said in May that YMTC was increasing utilization in its second fabrication plant in Wuhan while advancing construction and tool installation at a third facility. The bank estimated the company would add about 35,000 wafers per month of capacity this year, with substantially larger increases planned for 2027 and 2028.

The expansion aligns with Beijing’s push to localise China’s AI infrastructure, which would drive growing domestic demand for home-grown eSSDs and high-bandwidth memory through installation in data centres, Bernstein Research said in May.

Authored by John Maxwell Hamilton via RealClearPolitics,

In 1896, a daring journalist covering the Cuban revolution against their colonial masters crossed the Spanish lines three times to interview insurgent leaders. William Francis Mannix's final trip into the Cuban interior was made at the request of the leader of the insurgent government, Salvador Cisneros Betancourt. El Presidente Cisneros wanted the intrepid correspondent to carry back an appeal begging for support from the American people.

Mannix's riveting reports appeared on the front page of the New York Times and other leading newspapers. After the Spanish expelled Mannix from Cuba, he was invited to speak to the National Geographic Society and other prestigious gatherings. The Cuban appeal was published in the Congressional Record. "I applaud and approve every word in that splendid appeal," said Alabama Sen. John T. Morgan, who supported U.S. government intervention to help the Cuban rebels.

The nation's leading newspapers decried Spain's subsequent expulsion of Mannix from Cuba. The Washington Star, another newspaper that carried Mannix's dispatches, said he was being banished "for having told the truth about insurgents and their cause."

Mannix scored a journalistic triumph, but it was not one that his editors, legislators, or readers imagined. His three trips over enemy lines and his stories, including the Cisneros appeal, were all fakes. Mannix wrote them while sitting in the bar of the Moscotte Hotel in Havana or - for a change of scenery - on the hotel's veranda.

In an October 2017 interview on Fox News, President Donald Trump said, "I've really started this whole 'fake news' thing." He called it "one of the greatest of all the terms I've come up with." But faking has a long history. No journalist surpassed Mannix as a fabulist in Cuba, but many followed in his footsteps on the island. Their fabricated sensationalizing reached such proportions that a book-length expose was devoted to the subject on the eve of the United States entering war with Spain. It was called Facts and Fakes About Cuba.

This article and two that follow give perspective on three aspects of fake news: its long history, its attraction to readers, and the consequences of political fake news.

The power of modern technology to pollute streams of information has made fake news seem terrifyingly new. Russian bots flood the Internet with horrifying stories that did not happen. Political operatives produce AI-generated videos of despicable speeches their opponents did not deliver. Your crazy cousin spreads word in his social media posts that President Trump's supporters staged the assassination attempts on his life. As to the latter, a NewsGuard/YouGov poll recently found that almost one-third of Americans believe at least one of the three attempts on Trump's life was staged.

Modern technology is a force multiplier for falsehood. But technology is not the root cause. The launching pad is and always has been people: people who for a variety of reasons want to mislead, and people who for a variety of reasons find falsehood more satisfying than fact. Fake news goes back much further than the computer, the television, the radio, the typewriter, or the printing press.

The history of mankind has been a history of the battle between truth and falsehood. The ancient Greeks created gods in their own image by naming them Apate (fraud), Dolos (guile), and Pheme (rumor). The Roman poet Virgil wrote in the Aeneid of the goddess Rumor:

Her frightening mingle of truth and lies,/ Rhapsodically singing about them in the darkness,/ And all the people hear what she is singing.

One place Rumor did her work was on a busy street corner near the Piazza Navona. Beginning in the 16th century, Romans surreptitiously placed false malicious notes about public figures on a statue of Pasquino, who in legend was supposed to be a local tailor and wit. The name of the mendacious notes lives on as pasquinades.

Buttered news

In the years leading up to the French Revolution, historian Robert Darnton documented that France was awash in misinformation. Craque was slang for fake news. The word mimicked the cracking sound of branches around the Tree of Crakow in Paris, where people gathered in the same way the English did at St. Paul's Cathedral. St. Paul's, where pamphlets were sold and gossip exchanged, was called "the mint of all famous lies."

A hinge point in fake news came in the 1620s, when London printer Nathaniel Butter published the first serialized English-language commercial newspaper, "The News of this Present Week." As soon as it and others like it appeared, discerning critics ridiculed the emergence of "buttered news."

Butter's newspaper could not have appeared without moveable type and the printing press, but this technology had been around for some time. What changed was the emergence of a growing middle class who could read and had disposable income to spend on news - even news of dubious provenance.

Butter and those who joined him in the newsbook business were only beginning to understand journalism. They sometimes published the oldest news first, as if to keep things in order. The British crown constrained them by forbidding the publication of domestic news. Forced to go abroad, they relied on second-hand reports, the spicier the better. A typical article read, "A strange apparition at Rome, of two mighty armies," whose battle in the air was followed by a storm of "blood and fire from heaven." According to one historian, "Roughly one-tenth of these early newspapers contained some sort of apparition, vision, or monstrous-birth item," such as boy-girl twins born to a Swiss cow.

Not all falsehood is fake

We need to be clear about definitions. Fake news is intentional falsification. A factual error in a newspaper is not fake news. It is a mistake. A mistake may be due to sloppy newsgathering or an accidental slip. It may call for firing the reporter. But the author did not aim to deceive. It wasn't a hoax.

Politicians find it convenient to overlook these definitional niceties. They discredit factual news that makes them look bad by calling it "fake news." They become the fakers.

The term fake news was routinely splashed across the pages of American newspapers in the late 19th and early 20th centuries. Each day readers were greeted by headlines like these: "Malicious Fake News." "Fake News Again." "Bit of Fake News." "Concerning Fake News." "More Fake 'News.'" "Fake Stories Afloat." "Fake News. Pope Has Died Twenty-Two Times in Five Years."

The faking habit waned as the 20th century rolled on. First, the cost of starting a new newspaper soared, so it was more difficult for scallywags to wade into the gutter. Second, the intense competition for readers drove the least profitable newspapers out of business. Those that were left found they earned more money by competing on the basis of reliability. Balanced fact-based reports attracted more readers than partisan news. Advertisers preferred to see their products promoted in credible publications.

Of course, some newspapers were outliers. The New York Graphic billed itself as offering "Nothing But the Truth" and then made a merry practice of lying. Long before modern technology made it easy to fake photographs, the Graphic pasted real-life faces on posed bodies. These appeared alongside made-up lonely heart stories.

Many years later fakes still appeared newspapers. In 1980 the Washington Post won a Pulitzer Prize for "Jimmy's World," a story about an 8-year-old heroin addict fabricated by reporter Janet Cooke. A fake in the New York Times the next year was eerily similar to William Mannix's in Cuba. Freelancer Christopher Jones, hired by the Times magazine, invented a detailed story about spending a month with Khmer Rouge guerrillas, who were in hiding in Cambodia. He never left Spain.

But ethical standards had set in by that time. The Graphic went bankrupt in 1932. Its debts amounted to millions. The Post issued a lengthy mea culpa and returned the Pulitzer Prize. When the New York Times realized that Jones might not have been on the up and up, the executive editor assigned three reporters to determine conclusively that the story was a fabrication and then apologized profusely.

We are now back to the buttered days of journalism for the opposite reason we left them behind. The legacy media, as the old established media are called, carry on, albeit in smaller numbers and with generally lower profits. Meanwhile a tidal wave of new, irresponsible media has emerged. The costs of entry are low, and ethics is often considered a nuisance. These news outlets are as eager to fake as Nathaniel Butter and William Mannix were.

Our attraction to fakers like these will be the subject of Part II.

John Maxwell Hamilton, an RCP columnist, is at work on a biography of the journalist-faker William Francis Mannix. His recent book Manipulating the Masses: Woodrow Wilson and the Birth of American Propaganda won the Goldsmith Prize.

Large US naval battleships continue to suffer problems at sea. While there have been many headlines of late detailing the problems of the USS Abraham Lincoln carrier connected to its extended deployment amid the Iran war, a separate warship is having serious problems in Pacific waters, quite apart from the crisis in the Persian Gulf.

"A US Navy guided-missile destroyer spent four days last month without working toilets, galley services and air conditioning in the blistering heat of the South China Sea after the warship lost power," CNN reports.

The military has since confirmed an engineering failure which caused the significant outage, which basically shut down all the ship's systems, including the ability to maneuver on its own.

A US 7th Fleet statement identified that the USS Benfold, an Arleigh Burke-class guided-missile destroyer, was on routine operations in the Indo-Pacific on when an "engineering casualty involving its generators" occurred. 

It happened on July 24, and has now set back additional operations. It was supposed to be part of the USS George Washington strike group which is at the moment headed to the Middle East in order to relieve the Lincoln carrier. 

However, the Benfold is still stuck in Asian waters. "There were no injuries to the crew, who demonstrated resilience, grit, professionalism, and unwavering steadiness in their response," the US Navy statement said.

The four-day crisis impacted the ship's galley services, toilets, air conditioning and potable water, the 7th Fleet also confirmed. The heat would have been sweltering.

No explanations have been given as to how the crew managed the waste problem. USNI, which first reported the crisis, describes of the repair process:

The George Washington Carrier Strike Group supported the destroyer, according to 7th Fleet. USS Robert Smalls (CG-62), the cruiser attached to the George Washington Carrier Strike Group, helped provide meals for the crew, Comer said.

Contractor tugboats towed Benfold to Subic Bay where it was met by personnel from the Ship Repair Facility – Japan Regional Maintenance Center on July 28, with crew receiving contracted lodging off the ship the next day. Power was restored on July 30, Comer said.

All repairs were completed by Aug. 7 when the ship completed a berth shift for fuel. The destroyer left Subic Bay on Aug. 8.

Benfold, which had been sailing with the George Washington Carrier Strike Group, pulled into Yokosuka, Japan, on Thursday, according to ship spotters. It did not transit the Malacca Strait with the other ships of the GW CSG, which are likely heading toward the Middle East.

The timing of this engineering failure incident is very bad for the navy, given already there's much scrutiny being placed on long deployments at sea connected to the Iran conflict.

US Navy destroyer left without working toilets, food service or AC for FOUR DAYS after losing power in sweltering South China Sea

USS Benfold suffered generator failure on July 24, leaving its crew without basic amenities amid blistering heat — 7th Fleet spox confirms to CNN pic.twitter.com/CJBm5r7jv1

— Michael Ashura (@MichaelAshura) August 17, 2026

Congressional leaders are currently focused on the beleaguered USS Abraham Lincoln, amid reports of problems in supplying the ship and mental health problems following a record-deployment.

The Hill reports Monday that "A group of 15 senators said Defense Secretary Pete Hegseth owes Americans answers about the ongoing deployment of the USS Abraham Lincoln aircraft carrier strike group after reports of low morale and a mental health crisis among service members aboard."

The establishment media commonly uses strategic phrases to hide or omit the truth behind certain uncomfortable situations.  Since the BLM era, journalists cannot simply describe a violent mob as a "black mob", even if that description is generally true.  Today, one must say the words "teen brawl" in order to avoid any implications of race. 

It's a very similar tactic to those used by the media in the UK whenever a migrant (or child of migrants) commits a brutal crime - Simply call the suspect a "London Man" or a "Liverpool Man" or a "Glasgow Man" and hope no one asks questions.

In the US, whenever the media uses the words "teen brawl", it's easy to conclude who was involved.  The fatigue is real.

Over the weekend the Wisconsin State Fair in West Allis (a suburb of Milwaukee) experienced yet another of these seemingly spontaneous outbreaks of chaos when a horde of "teens" flooded into the event and began randomly attacking anyone nearby.  It should be noted that even the witnesses are reticent to admit who the culprits were, choosing their words carefully. 

Witness accounts report that law enforcement officers on scene were also targeted, with multiple police suffering injuries.  Dispatch audio indicates chaotic moments near the rides. "They need some help at Spin City. Send anybody extra you have," one police officer could be heard saying. 

??#BREAKING: Absolute CHAOS broke out at the Wisconsin State Fair as "teens" began BEATING ANYONE IN SIGHT.

MULTIPLE police officers were badly beaten, as families with kids were seen RUNNING FOR THEIR LIVES as teens began brawling.

WE DON'T HAVE TO LIVE LIKE THIS!!! pic.twitter.com/gBbE73ph3f

— Matt Van Swol (@mattvanswol) August 17, 2026

Last day of the Wisconsin State Fair.

They went on a rampage. Anyone they could get their hands on. Shots were allegedly fired.

They’re calling it Killwaukee now.

We can’t keep living like this, something has to change. pic.twitter.com/AJ7Xi3BPiZ

— Kim "Katie" USA (@KimKatieUSA) August 17, 2026

Local news reports show police attempting to break up the fights, but the assailants swarm into the fairground crowds to avoid arrest.  Roving mob fights involving black "youths" are common at state fairs across the region every year.  The Minnesota State Fair reported similar incidents last year and rumors suggest a "bigger brawl" is likely this year.

It’s not just Wisconsin.

This was the Minnesota State Fair last year—and the year before there was a shooting in the midway.

Every year it gets more and more violent. I wonder why??#fight#statefair https://t.co/ktUFWO8377 pic.twitter.com/7Um9Tc6oYy

— AmyLouWho (@perseverare1776) August 17, 2026

Why start brutal fights at the state fair?  Maybe because the whole point is to ruin everyone else's day.  Maybe the point is simply to create chaos and bask in the violence and misery.  What is clear is that events that used to be safe for families are being turned into open melees just so urban demographics can revel in their own lack of impulse control.

Authored by Sofia Karstens via Brownstone Institute,

Woodrow Wilson holds a distinction no other American president has: he earned a Ph.D., completing his doctorate in political science and history at Johns Hopkins University in 1886. That same year, he wrote an essay called "The Study of Administration," later published in the inaugural volume of Political Science Quarterly. Historians widely credit this essay as the founding document of public administration as a formal academic field, and Wilson himself as the father of that discipline.

Wilson's central argument was that government should be split into two separate domains: politics, where elected officials set broad goals and policy direction, and administration, a technical, expert-driven sphere that should be run with "large powers and unhampered discretion" and insulated from day-to-day political interference.

Wilson suggested that government ought to be removed from the political process...in other words: "Democracy is too important to be left to voters." He explicitly encouraged American reformers to study European administrative models - including Prussia's - for lessons in efficiency, arguing that the US had fallen behind other nations in developing a science of government administration.

Later scholars have debated how far Wilson actually intended this separation to go, and some interpret his argument as calling for administrators to be almost entirely removed from political accountability. His essay laid the intellectual groundwork for what would become the modern professional civil service - insulated from patronage and run by career administrators rather than political appointees or elected officials.

The Frankfurt School's American Exile

Nearly 50 years later, a very different intellectual tradition found refuge in the same city that Wilson's ideas would eventually help administer. Max Horkheimer became director of the Institute for Social Research in Frankfurt, Germany in 1930, leading a group of thinkers who developed what became known as Critical Theory. Its core members included Theodor Adorno, Herbert Marcuse, Erich Fromm, and Leo Lowenthal. Critical Theory is a philosophical framework that analyzes power structures and social inequalities.

Developed by the Frankfurt School in the 1930s and 1940s, it shifted Marxism from a strict economic focus to a critique of culture, media, and modern society. Critical Theory was a different way of looking at philosophy; where philosophy was a search for truth - trying to explain phenomena and things that were not easily proven by science (ethics for example) - Critical Theory shifted to look at philosophy specifically through the lens of Marxism. It became no longer a search for truth but a means of propagandizing, which some would argue was a betrayal of philosophy.

When the Nazis seized power in 1933, Horkheimer was forced to relocate the group first to Geneva and then to New York, where it formed a loose affiliation with Columbia University in 1934-35. Horkheimer's actual scholarly project - laid out in works like Dialectic of Enlightenment and Eclipse of Reason - described how instrumental reason, mass culture, and authoritarianism are able to take hold in modern societies.

It was also between 1933 and 1937 that several regulatory agencies were established that would come to form the backbone of the modern Administrative State.

Port Huron and the Old/New Left Split

By the early 1960s, the American left was largely defined by an older tradition: labor unions, industrial organizing, and class-based politics rooted in the fights of the 1930s and '40s. In June 1962, a group of Socialist Organization representatives, student activists, organized labor unions, civil rights leaders, and foreign observers gathered in Port Huron, Michigan, and produced a document that would come to mark a generational break from that tradition.

Students for a Democratic Society had grown out of the Student League for Industrial Democracy, the youth wing of an older Socialist educational group called the League for Industrial Democracy, which itself traced back to the Intercollegiate Socialist Society founded in 1905. In early 1960, that student branch renamed itself Students for a Democratic Society.

The manifesto produced at Port Huron was drafted primarily by Tom Hayden, a University of Michigan student and former editor of the Michigan Daily, working from ideas that blended the sociology of Columbia's C. Wright Mills and Walter Reuther with the direct-action tactics of the Student Nonviolent Coordinating Committee. The week-long meeting brought together groups who wrote, debated, and voted on a 60-page document. Notably, it took place at a United Auto Workers retreat, with the UAW under Reuther's leadership covering a range of the convention's costs. Inside circles among Reuther's contemporaries referred to it as "The Long Journey."

The statement opened with a line that became its signature: "We are people of this generation, bred in at least modest comfort, housed now in universities, looking uncomfortably to the world we inherit." Its authors argued that two forces had shaken them out of complacency - the civil rights struggle against racial bigotry in the South, and the threat of nuclear war under the Cold War's shadow.

Where the Old Left had organized around labor and class struggle, Port Huron's New Left shifted the terrain. It called for a "participatory democracy" in which ordinary people - not just union leaders or party bosses - would have a direct hand in the decisions shaping their lives, workplaces, schools, and government. It criticized both American Cold War policy and Soviet communism, explicitly opposing the Soviet system's suppression of organized dissent. And because the statement judged the civil rights, peace, and student movements too poor and marginalized to drive change on their own, and organized labor too quiet, it looked instead to universities - which it saw as institutions open to people of nearly any viewpoint who could be recruited as "useful innocents" (often mistranslated as "useful idiots") to carry the water - as the engine of a new movement. Media, unions, high schools, and elementary schools were to follow.

The Port Huron Statement went on to shape the framing of Great Society-era politics, the anti-Vietnam War movement, and the broader counterculture that carried into the early 1970s. Historians and participants alike have described it as the founding document of the New Left and a turning point.

The Modern Left's Long March

The strategic logic for how a university-centered movement might expand its influence beyond campus came from Germany. West German student movement leader Rudi Dutschke, nicknamed "Red Rudi," coined the phrase "der Lange Marsch Durch die Institutionen" (the long march through the institutions), borrowing the "long march" imagery from Mao's Chinese Communist Red Army march of 1934-35. The idea was that instead of pursuing a frontal revolutionary confrontation with the state, radicals should embed themselves inside existing institutions and overtake them from within over time. The name (and indeed his nickname) was a deliberate echo of the Chinese Communist Party.

Herbert Marcuse (The Frankfurt School) explicitly endorsed the approach of pursuing radical change not through revolution but by working patiently inside the institutions of government and civil society until they were captured and transformed from within. Writing to Dutschke in 1971 he intoned: "Your notion of the 'long march through the institutions' is the only effective way" forward for the movement. Marcuse became an enthusiastic backer of the strategy, and summarized Dutschke's strategy in his 1972 book Counterrevolution and Revolt as "working against the established institutions while working within them."

He described infiltrating while learning their actual skills and functions rather than simply obstructing them; by "not simply 'boring from within' but by 'doing the job'...learning how to program and read computers, how to teach at all levels of education, how to use the mass media, how to organize production, how to recognize and eschew planned obsolescence.

Writing nearly three decades later, cultural critic Roger Kimball invoked this same Marcusean formulation to explain how the radicalism of the 1960s ultimately achieved its aims not through revolution but through patient institutional capture - "by insinuation and infiltration rather than by confrontation" (The Long March: How the Cultural Revolution of the 1960s Changed America). The result, as later commentators (The Successful Long March Through the Institutions, The American Vision) have characterized it, was a transformation accomplished without open conflict: "Not a shot was fired. No one was forced into concentration camps. Millions of parents willingly sent their children into public schools and universities systems..." that had, by then, been reshaped from within. Effectively replacing "bloody revolutions from without" with institutional capture from within.

Dutschke's thinking is often linked to the earlier work of Antonio Gramsci, the imprisoned Italian Marxist theorist who argued that revolution in developed Western societies wouldn't come from a single decisive uprising but from a slow "war of position" - a patient campaign to win cultural and institutional influence over time. While there's no direct evidence Dutschke had read Gramsci when he coined the term, notably, his diaries and biography reference other influences, including Georg Lukacs, Che Guevara, and Mao Zedong.

Khrushchev famously said "We will bury you," which he later clarified to mean that communism would trounce capitalism. The Long March Through the Institutions is reminiscent of the Marxist/Communist concept of the "Vanguard State" as the "bridge" between a Capitalist state and a Socialist/Communist state.

Marcus Raskin and the Institute for Policy Studies

One American figure who embodied this institution-building, infiltrating strategy was Marcus Raskin. Born in Milwaukee in 1934 to Russian immigrant parents, Raskin studied at the University of Chicago, where he earned his law degree in 1957. During his time at Chicago, Raskin studied under Rexford Tugwell, who was a Columbia economist and a key member of Franklin Roosevelt's "Brain Trust."

It was Tugwell who had suggested that it would be necessary to collect money (from the American people) to begin the process of creating an Administrative State.

In 1933, President Franklin Roosevelt issued Executive Order 6102, requiring most Americans to surrender their gold coins, bullion, and certificates to the Federal Reserve in exchange for paper dollars, citing that private gold hoarding was worsening the Depression. The following year, the Gold Reserve Act of 1934 revalued gold from $20.67 to $35 an ounce - a roughly 69 percent devaluation of the dollar against gold - which meant the government profited handsomely on the gold it had just collected at the lower price. Tugwell was among the New Deal's most influential architects of expanded federal planning, helping design agencies like the Agricultural Adjustment Administration and the Resettlement Administration. The devaluation, paired with an expanded money supply, gave Washington greater fiscal room to fund Administrative State projects.

After Chicago under Tugwell, Raskin went on to work as legislative counsel for several Congressmen in the late 1950s, then joined the Kennedy administration's National Security Council in 1961 as an aide to McGeorge Bundy. He resigned in 1962, citing his opposition to the Cuban Missile Crisis response. In 1963, alongside fellow Kennedy-administration alumnus Richard Barnet, Raskin co-founded the Institute for Policy Studies (IPS) in Washington, D.C. - widely described as the first independent progressive think tank, built explicitly on the idea that the systemic change they wanted couldn't be achieved from inside government, and would instead have to come through social movements and infiltrating institutions.

IPS was closely tied to the New Left from the start. Historian Brian Mueller has written that IPS "epitomized the ideals of the New Left, especially those found in the 1962 Port Huron Statement" and, in fact, a 1962 prospectus Raskin wrote for IPS contained ideas strikingly similar to Port Huron's. Fellow IPS founder Arthur Waskow joined SDS in 1963, and both men wrote for the New Left magazine Ramparts.

IPS drew sustained scrutiny throughout the Cold War for its foreign-policy positions. The House Committee on Internal Security and later conservative critics documented Raskin and Barnet's contacts with North Vietnamese communist officials during the Vietnam War, Raskin's board membership at Ramparts (which the same committee called "pro-Hanoi, pro-Castro") and, later, in the 1980s, IPS-organized conferences with Soviet officials that a bipartisan group of roughly 80 members of Congress warned could be used for Soviet intelligence purposes.

Carter, Ink, and the Reshaping of Federal Administration

The administrative machinery Wilson had theorized decades earlier took its modern shape under President Carter. By 1977, Carter had concluded that the federal civil service system needed its first comprehensive overhaul since the Pendleton Act of 1883. The opportunity came in the aftermath of Watergate and amid broader public distrust of government institutions. In March 1978, he sent Congress his reform proposal; after 13 days of hearings and testimony from more than 200 witnesses, Congress passed the Civil Service Reform Act, and Carter signed it into law that October - just over seven months after it was introduced.

The Act abolished the US Civil Service Commission and split its functions among three new agencies: the Office of Personnel Management (OPM), which handles federal personnel policy; the Merit Systems Protection Board (MSPB), which adjudicates federal employee appeals; and the Federal Labor Relations Authority (FLRA), which oversees federal labor-management relations.

The reform's chief architect and implementer was Dwight Ink, a career federal executive who had served in every presidential administration since Eisenhower. Ink had already built a formidable reputation of cutting through red tape and quickly executing major government overhauls, earning him the nickname "Mr. Implementation." Ink himself later wrote that he couldn't recall any other government-wide management reform as broad as the 1978 act being enacted so quickly. The transformation was praised by Marcus Raskin's intellectual incubator, IPS, which has documented ties to the American Communist Party and drove DNC capture between 1972 and 1978.

That same year, Carter signed a second landmark law. The Inspector General Act of 1978 established 12 statutory offices of Inspector General across major federal departments and agencies, giving each the authority to audit internal agency documents, investigate fraud, and report findings both to their agency heads and directly to Congress every six months. By 1988 additional IGs had been added for smaller independent agencies, and there are now 73 statutory Inspectors General across the federal government. By systematically replacing public servants with IGs and positions functioning as commissars who decide investigative targets, including the US elections commission, the landscape for a coup became fertile.

Marching Along

CIGIE, created in 2008, was established by the Inspector General Reform Act by merging two earlier coordinating bodies: the President's Council on Integrity and Efficiency (PCIE) and the Executive Council on Integrity and Efficiency (ECIE). Those two predecessor councils themselves went back to 1992, created by executive order under President George H.W. Bush. Between the original 1978 IG Act and the 2008 creation of the unified CIGIE structure are three decades of Long March institutional groundwork.

CIGIE functions as a coordinating and standard-setting body for the IG community - running training, setting audit and investigation standards, and housing an Integrity Committee that investigates allegations against IGs themselves. Its voting members include not just the Inspectors General of individual agencies, but also representatives from the CIA, the Office of the Director of National Intelligence, the FBI, the Office of Government Ethics, and the Office of Special Counsel - a genuinely broad cross-section of oversight and intelligence-adjacent offices sitting on one council, which could be described as a "control layer."

The IG Act has continued to evolve since 1978: notably, the 2022 Securing Inspector General Independence Act added new protections against politically motivated IG removals, requiring the President to give Congress 30 days' notice and a substantive, case-specific rationale before removing an Inspector General.

CIGIE today represents a sui generis entity where one office effectively oversees software integrity across 3,143 counties. This structure echos Woodrow Wilson's administrative state-framed government as "too important to be left to the voters," relying on a political-technocratic elite and completes the Marxist Commissar model.

The GAP

In 1977 the Institute for Policy Studies formed the Government Accountability Program (GAP). On its surface it looked like a place for whistleblowers to find shelter, especially after the Pentagon Papers, and indeed many whistleblowers from the intelligence community and national defense program gravitated there. Critics suggest, however, that it was actually used as a honeypot to entice, contain, and control the whistleblowers, even as it collaborated and often even worked directly with the US Office of Special Counsel (OSC).

The Office of the Whistleblower Ombudsman was created in January 2019, as part of the House rules package adopted at the start of the 116th Congress (when Democrats took control of the House). It established, within the House of Representatives, a mandate to develop practices for House offices receiving confidential information from whistleblowers about government wrongdoing - including setting up reporting systems, maintaining confidentiality, and training staff.

It sat without a director for about a year. Then in February 2020, shortly after the conclusion of Trump's first impeachment trial (which had been sparked by a whistleblower complaint), Speaker Nancy Pelosi announced that she had appointed Shanna Devine as the inaugural director of the office. Devine had previously worked at GAP.

Critics questioned whether someone from an advocacy group could serve a "nonpartisan" role, citing concerns that the position could function as a filter protecting officials from exposure, and worrying whether this infrastructure meant this office could effectively legally spy on everyone - including Congress.

GAP also had a prominent role in advocating for the office's creation. Samantha Feinstein, GAP's senior legal and international analyst, testified before Congress to request the creation of the Ombudsman Office, which meant GAP was influencing policy from the outside as well.

The Modern Left's Electoral Rise

Decades after Port Huron, the left flank that it and IPS helped seed has grown into an electoral force. The Democratic Socialists of America was formed in 1982 through the merger of two left-wing organizations: the Democratic Socialist Organizing Committee, founded in 1973 by socialist Michael Harrington, and the New American Movement. For decades it remained small and aging - its median member age was 68 in 2013.

That changed after 2016. Bernie Sanders' presidential campaign highlighted disaffection with mainstream Democratic politics and helped consolidate a younger left wing, and DSA's median member age dropped to 33 by 2017. One commentator described the shift as transforming the group from a "musty debate club for retired social democrats into an electoral powerhouse of young, ecumenical radicals."

Electoral wins followed quickly. In 2017, fifteen DSA members won local and state offices, including Lee Carter's election to the Virginia House of Delegates. The breakthrough came in 2018, when DSA member Alexandria Ocasio-Cortez defeated incumbent Congressman Joe Crowley in a primary upset in New York's 14th District, becoming a national figure. She and Rashida Tlaib became the first two DSA members elected to Congress that year.

The organization's footprint in elected office has continued to grow, with Ashik Siddique, a research analyst at one IPS program (National Priorities Project) who is also separately, and much more significantly, the current national co-chair of the DSA. That means that a sitting IPS staffer simultaneously holds DSA's top elected position.

Notable DSA-linked officials now include Ocasio-Cortez, Tlaib, and New York City Mayor Zohran Mamdani, elected in 2025. By 2025, more than 250 DSA members held elected office across 40 states, with 90% of them elected after 2019. As of mid-2026, DSA has grown to more than 120,000 members and now plays an influential role within the Democratic Party, and the group and its local chapters have endorsed 150 candidates this year, claiming 38 wins so far.

The group draws sharp fire from opponents. President Trump has characterized Mamdani and other DSA-backed candidates as "communist," exposing their links to adversaries like the CCP - though DSA describes itself as aiming for "democratic socialism."

Expert Colonel Tim Shindelar describes The New Left's methodical inching into the Modern Left as "The Final Mile." The Old Left (Marxism, 1908-1962; 54 years) was about class struggle and establishment of unions. The New Left (Social Justice, 1962-1982; 20 years), focused on issues like abortion, capital punishment, civil rights, environmentalism, feminism, gay rights and gender roles, and immigration. The Modern Left (Final Mile, 1982-present; 44 years) has evolved into policies like the Green New Deal, making higher education free, social ownership of the American economy (placing governors on true free market capitalism), national defense reduction, a Democratic Party shift into the progressive far left, along with pro-Palestinian and anti-Zionist causes.

The Media and The Last Mile

This shift to administrative power effectively renders elected officials powerless. Just because someone is elected to office doesn't mean they have any real power; the administrative state will allow elected officials (even executive ones) to ride in the back but they cannot drive the car.

Which means that voters are at the kids table, because it doesn't matter who the elected official is if the power lies with the Administrative State...thus embodying and defining Wilson's vision of keeping politics out of government because democracy is too important to be left to voters. The politics in which we all engage is merely a rubber match, and is unconnected to the outcome; the real match is occurring in a different stadium entirely.

Much of this neutralization and marginalization of the actual people (voters), while maintaining the illusion that it is neither by validating the scrimmage to its participants, traces to mid-20th-century globalist planning (1952-1956), building on Wassily Leontief's 1953 work aimed at phasing American labor to China while addressing excess human labor and galvanizing wealth concentration among a technocratic elite. Individual self-interest via game theory was expected to align populations toward what we now describe as the Singularity, but Marx's framework did not anticipate AI collapsing labor demand to zero - accelerating the need for focused population control programs. But there would be no buy-in unless a different diorama was presented.

The 1928 book Propaganda was written by the nephew of Sigmund Freud, Edward Bernays (1891-1995). Bernays was the son of Freud's sister and also related through his mother, who was Freud's sister. His father was also the brother of Freud's wife Martha.

Bernays is often called the "father of public relations" and Propaganda argued that manipulating public opinion is a necessary part of a functioning democracy. It drew heavily on his uncle's psychoanalytic theories to explain how to influence mass behavior through unconscious desires rather than rational argument.

George Orwell didn't invent the world of 1984 out of thin air - he drew it directly from Stalinist Russia, where erasing and reshaping history was institutionalized state policy. Not long after Stalin consolidated control, images of Leon Trotsky, the driving force behind the 1905 and 1917 revolutions, started vanishing from public life. In their place came grand, fictionalized depictions of Stalin standing shoulder to shoulder with Lenin as co-architects of the Bolshevik uprising, while Trotsky, despite having founded the Red Army himself, was written out entirely. These doctored scenes became fixtures of Soviet propaganda, plastered across office walls, towering billboards, museum halls, and postage stamps.

The effect on public memory was profound. Younger citizens absorbed the fabrication as historical fact, while older ones who had lived through the actual events found their genuine recollections gradually blurring with the state's preferred narrative - a strange kind of political false memory syndrome. People who reconciled what they actually remembered with that which the government insisted they believe developed what Orwell described as "doublethink." Those who refused - old revolutionaries who knew firsthand - were branded traitors, class enemies, or fascist sympathizers; they faced arrest, torture, forced public confessions, and execution.

With total command over media and law enforcement, it is possible to rewrite the collective memory of an entire population if you have one generation in which to accomplish it. With fully infiltrated and captured institutions it is possible to take control over an entire country without firing a shot if you have two. We are in the final mile, and the ghost in the machine has a government ID.

Sofia Karstens is an activist in California who worked closely with publisher Tony Lyons and Robert F. Kennedy Jr on several projects, including Kennedy's best-selling book: The Real Anthony Fauci. She collaborates with several organizations in the legal, legislative, medical science, and literary spaces and she is co-founder of Free Now Foundation, a non-profit preserving medical freedom and children's health.

Vista Energy SAB's American depositary receipts are up 5% Monday on news that Peter Thiel's hedge fund disclosed a $76 million stake in Argentina's largest oil exporter.

Thiel Macro LLC reported owning almost 1.2 million shares of Vista at the end of the second quarter, valued at about $76 million. This was the fund's second-largest disclosed holding after Amazon.

Thiel, the co-founder of Palantir and PayPal, has deepened his ties to Argentina. He recently bought a home in Buenos Aires and met President Javier Milei in April, fueling speculation about increased investment in the country, which is undergoing a radical shift from failed socialism toward free-market capitalism.

Vista Energy is a Mexico-incorporated independent producer focused almost entirely on Argentina's Vaca Muerta shale formation. Latest data show that the formation's combined oil and natural gas output has surpassed 1 million barrels a day.

Bloomberg noted:

Under Milei, Argentina has removed controls on oil prices and exports, and regained access to global financial markets, jump-starting growth in its Vaca Muerta shale patch in Patagonia, where combined crude and natural gas production has already surpassed 1 million barrels a day. The boom is starting to transform Argentina's economy.

Since Milei was sworn in on December 10, 2023, taking the oath of office in Buenos Aires, Vista ADRs have risen 139%.

Bloomberg data show that Theil now ranks as the 15th-largest shareholder. 

Milei's economic reforms are aimed at attracting foreign investment, particularly in the country's natural resources, including oil, rare-earth minerals, and lithium.