The $45 Billion Blow-Up

On Leopold Aschenbrenner and the demise of Situational Awareness.

A. X and YouTube traffic for the past 24 hours has hyperfocused on the doomed AI hedge fund Situational Awareness LP. Founder Leopold Aschenbrenner came to public prominence in 2024 with an influential essay series on the need for AI infrastructure buildout. 24 hours ago news leaked that its portfolio was 30% down. Now, the hedge fund is essentially dead, after being picked over by its competitors. Ken Griffin’s Citadel has purchased the public portfolio. Wall Street has a long history of such cases - Long-Term Capital Management, Jim Chanos shorting Enron Corporation, Amaranth blowing up, MF Global, Sam Bankman-Fried and FTX, SVB, and of course the ‘Lehman moment’ of Lehman Bros that began the 2008 Great Recession or Global Financial Crisis. There is lots of interesting commentary. Martin Shkreli on TBPN (with a few nods to his past career with Jim Cramer) is notably fun as a doomwatch. Leopold Aschenbrenner is this weekend marrying Anthropic’s COO Daniela Amodei. Final Draft scriptwriters and pre-nup lawyers are going to be very busy.

B. During my MSc studies at Swinburne University of Technology, I wrote an essay on Long-Term Capital Management that you can download here.

C. Today’s MIT OCW free course is The Art and Science of Happiness, created by Dr Holly Sweet.

D. UC Berkeley Professor Frank Partnoy’s collective work - which goes back to facing financial crashes and derivatives challenges in the early-to-mid 1990s - is well worth reading, right now. See his Google Scholar profile.

E. How Susquehanna International Group uses mathematics (the comment on the importance of scalar laws is a key insight).

F. Bloomberg on how private credit (which has been freezing up) is now entangled with insurance. This is relevant to structured products discussions.