Vol. II, No. 51
Covering 18 November - 1 December 2024
Monday, December 2, 2024
Late edition · A Relentless publication
All the fortnight that mattered, in technology and in the world, read next to what we were building at the time.
THE MIDDLE EAST

A ceasefire finally silences the guns in Lebanon, as Syria's frozen war suddenly thaws

After a year of escalation, Israel and Hezbollah agreed to stop fighting, a rare piece of good news. Days later, in a shock nobody predicted, rebels swept out of Syria's dormant civil war and seized a major city, the whole rotten regional order cracking at once.

A ceasefire between Israel and Hezbollah took hold on November 27, ending, at least for now, more than a year of fighting that had killed thousands in Lebanon, displaced over a million, and, in its final months, decapitated the militia and devastated its strongholds. The deal, brokered by the United States and France, requires Hezbollah to pull back from the border and Israel to withdraw over 60 days, and while few expect it to resolve the underlying enmity, it silenced the guns on one front of the region's war, a rare and genuine relief. In Gaza, however, the war ground on, the hostages still held, no equivalent deal in sight, and the suffering undiminished.

And then, in the last days of the fortnight, a shock: the Syrian civil war, frozen and half-forgotten for years, roared back to life as rebel forces launched a lightning offensive out of the northwest and seized Aleppo, the country's second city, in days, against a regime whose grip had seemed, if brutal, secure. The suddenness stunned everyone. Bashar al-Assad's government, propped up for a decade by Russia and Iran, both now distracted and weakened, by Ukraine, by Israel's blows to Hezbollah, found its protectors unable or unwilling to save it, and a war the world had written off as a stalemate cracked open in a week. Where it leads, no one knows, but the whole regional order, the alliances and dependencies that had held a rotten stability in place, was visibly coming apart at once, faster than anyone had imagined possible.

AMERICA

The transition takes shape, and it is a revolution in loyalists

Donald Trump's transition to power took shape this fortnight as a deliberate assault on the institutions he blames for constraining his first term. His cabinet and senior appointments, a parade of loyalists, disruptors and provocateurs chosen for their fealty and their hostility to the agencies they would run, signalled unmistakably that the second term will not repeat the first, in which establishment figures acted as guardrails. Some nominations were so incendiary they collapsed within days; others advanced. The message was consistent: the checks that held the first time, the officials who resisted, the norms that constrained, are to be removed, and a government reshaped to answer to one man's will.

IN BRIEF

A warrant for a leader; a bumper year for the machines; a founder's fortune

The International Criminal Court issued arrest warrants on November 21 for Israel's Prime Minister Netanyahu and its former defence minister, alongside a Hamas commander, over alleged war crimes in Gaza, an unprecedented step against the leader of a close Western ally that drew fury from Israel and Washington. Artificial-intelligence companies closed a frenzied year with a wave of new models and features, the pace of release relentless, even as the question of profit lingered. And the fortune of Elon Musk, now an intimate of the president-elect and tapped to lead a new government efficiency effort, swelled past $300 billion, the largest in history, as the political bet he had made paid off spectacularly.

The Column

The regime that looked solid until the week it wasn't

Syria's frozen war cracked open in days this fortnight, a regime that seemed permanent suddenly crumbling. It is the second time this year we have watched entrenched power collapse faster than anyone imagined, and the pattern is worth understanding.

For the second time this year, this paper is watching an entrenched power that looked permanent crumble with astonishing speed. In the summer it was Bangladesh, where a government of fifteen years fell in weeks. This fortnight it is Syria, where a regime that had survived a decade of civil war, that had seemed, however brutally, to have won, suddenly lost its second city in days to an offensive nobody saw coming. And the two collapses, superficially unrelated, share a structure that is worth understanding, because it recurs throughout history and applies far beyond the fall of governments, to any power, any institution, any system that appears solid right up until the moment it does not.

Here is the pattern. A structure that looks strong, a regime, a company, a market position, is often not strong in the way it appears; it is propped, held up not by its own internal soundness but by external supports, alliances, dependencies, the distraction or the will of others. Assad's regime did not survive on its own strength; it survived because Russia and Iran propped it up, and it looked permanent only as long as they could and would keep doing so. This fortnight they could not, Russia bogged down in Ukraine, Iran reeling from Israel's blows to Hezbollah, and the moment the props weakened, the structure that had seemed solid for a decade turned out to be hollow, and it fell in a week. The strength was never in the thing itself. It was in the supports, and supports can be pulled away, suddenly, by events far from the thing they were holding up.

This is why these collapses are so fast and so surprising, and why the surprise is built into the situation. From the outside, and often from the inside, a propped structure is indistinguishable from a sound one; both look stable, both persist, both command the deference that stability earns. You cannot see, from the surface, whether a thing is standing on its own foundations or leaning on supports that could vanish, and so the collapse, when the supports go, appears to come from nowhere, a sudden implosion of something that seemed eternal the week before. But it did not come from nowhere. It came from the hollowness that was always there, hidden beneath a stability that was borrowed rather than owned, and that became visible only when the loan was called. The regime was rotting inside its propped shell the whole time; the world just could not see it until the props were pulled.

The lesson generalises to anything that looks solid, and it is one I apply constantly in my own domain of judging whether a system, a company, a technology position is as strong as it appears. Ask not whether it looks stable, because propped things look stable, but what is actually holding it up, and whether those supports are its own or borrowed, durable or contingent on someone else's continued will and capacity. A market leader propped by a temporary monopoly, a company propped by cheap money, a regime propped by foreign patrons, a technology propped by hype rather than profit, all look permanent, and all are one withdrawal of support away from the Syrian week. The most dangerous kind of strength is the borrowed kind that looks like the real kind, because it commands the same confidence and none of the same durability, and it fails not gradually but all at once, in the week the props are pulled, to the astonishment of everyone who mistook the shell for the structure.

The Ledger
AI
The year closes with a relentless cadence of AI releases and the same unanswered question underneath: where are the profits to justify the spending. The Trump administration's friendlier posture will accelerate the build-out; whether it accelerates the returns is a separate matter entirely.
Data centers & power
The AI companies' year-end model deluge means more compute, more data centres, more power, into a policy environment that will now favour fossil generation to feed them. The build-out speeds up; the grid strains further.
Rates
Markets expect the Fed to cut again in December, but Trump's inflationary policy mix, tariffs, tax cuts, deficits, has bond yields elevated and the path of 2025 cuts looking shallower. The easy-money hopes of the autumn are tempered.
Real estate
US 30-year mortgage 6.81 percent (November 27). Range-bound and elevated, the thaw stalled by the jump in yields that followed the election. Affordability remains the worst in a generation.
India tech
The ICC warrants and the fracturing regional order are a reminder of how much the world India trades with is in flux; the Syrian collapse, the Lebanese ceasefire, all reshape a Middle East where millions of Indians work and on whose energy India depends.
What we called wrong
Nothing to retract. The Syria column extends the Bangladesh column from No. 43: entrenched power is more fragile than it looks, because so much of it rests on supports, foreign, financial, or borrowed, that can vanish faster than anyone expects.
The Back Page

Three hundred billion

Elon Musk's fortune passed $300 billion this fortnight, the largest personal fortune in the history of the human species, and it did so as a direct result of a political bet. Musk spent much of the year and a great deal of his money backing Donald Trump, appeared at his rallies, ran a get-out-the-vote operation, and has emerged, in the weeks since the election, as an intimate of the president-elect, tapped to lead a new effort to slash government spending, his companies' fortunes and his own now entwined with the state in a way no private businessman's have been in living memory. His electric-car company, his rockets, his satellites, his social network, his AI venture, all stand to benefit from an administration he helped elect and now helps staff. There is no precedent for it, a single individual, the richest who has ever lived, having bought his way to the inner circle of a government whose contracts, regulations and subsidies shape his empire. Whatever one thinks of the man, and opinions could not be more divided, the concentration is the story: of wealth, in one person, at a scale never before seen, and now of political power alongside it, the two fused. This paper has spent two years writing about concentration as the defining fragility of the age, the single bank, the single supplier, the single point of failure. Here is concentration of a different and newer kind: the fusion of the largest fortune ever assembled with the machinery of the most powerful state on Earth, in one restless, unpredictable, unaccountable man. What could go wrong is a question the coming years will answer. That something might is the only safe prediction about a concentration that complete.