Short seller Jim Chanos spoke with the Institute for New Economic Thinking about crypto, Tesla and artificial intelligence.
“You have to understand that the crypto ecosystem is very well suited to the dark side of finance,” he said.
Here are his top four quotes on the development of crypto and other technologies.
Although crypto markets are recovering In the face of promising developments such as the approval of the first US spot bitcoin ETF, the sector still suffers from the same fundamental flaws, noted short-seller Jim Chanos said.
In a new interview for Institute for New Economic Thinkingthe founder of Chanos & Company outlined how the cryptosphere can be the way for financial fraudthe challenges Tesla faces and his views on the emerging artificial intelligence space.
Here are the legendary short seller’s best quotes from an interview:
Crypto and dark foreign finance
“You have to understand that the crypto ecosystem lends itself to the dark side of finance for many reasons. It’s perfect for enabling money laundering and illicit transactions. But also, there’s the nature of unregulated homes for a lot of activity where someone can defraud clients, whether it’s NFT ‘s or ICOs or all sorts of digital fires – it’s perfect.”
Bitcoin spot ETFs
According to Chanos, recent efforts by investment giants to set up the first bitcoin spot ETFs in the US are another iteration of the scam, with the hope of cashing in on the cryptocurrency’s high transaction fees.
“(Retail investors) think the price of the asset is going to go up. It’s like a Nasdaq stock, not a currency. So they’re going to pay, and Wall Street wants fees. The cost structure in cryptocurrency is pretty high, so the fees are really high. You need small investors because institutions aren’t going to pay 4% round trip to buy and sell Bitcoin. Mom and Dad are, so Wall Street has to keep the public interested in the crypto space.”
Tesla’s biggest challenges
“When you look at the actual numbers, which is what we do, it’s a car company. (Elon Musk’s) margins are car company margins, his returns are car company returns. It’s a dichotomy: the challenge of running a true global car company versus the hype of leaving on Mars or selling robots to do housework.”
Chanos also noted that the recent United Auto Workers strike against Tesla’s competitors did not benefit the electric vehicle maker, although it did give union workers a raise.
“Interestingly, if you look at employment costs per vehicle, the good news is that based on the latest UAW contract, Tesla’s hourly or wage per employee is about half that of the UAW, but this is a paradox: it has many more employees per vehicle produced than the U.S. companies. American companies are actually more automated than Tesla. So the labor cost per vehicle is not much different.”
The price of AI
“Growth in the 10 years before the Internet, 1989-1999, was greater than in the period 1999-2009. While the Internet created a lot of businesses and wealth, it also destroyed a lot – creative destruction. The businesses we thought were approved no longer with us because of the digitization of products. I suspect AI will be similar.”
Chanos offered an example: “When the AI hype started in the spring, IBM’s CEO said something to the effect of, well, we’re looking at all of our employees to see if AI is going to make any of them redundant. I joked that they they better hope their clients don’t say the same thing. IBM is a consultant! You have to think through all the iterations.”
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