Finance

Larry Summers Warns Asset Prices Are Reaching Pre-Financial Crisis Levels

Larry Summers warns that investors have become overly complacent about risk, falling into the kind of overconfidence seen before the 2008 financial crisis and the dotcom bubble. He points out that equity market valuations are at the top of their range, and cryptocurrencies are surging.

Summers noted that fear has been replaced by greed, with investors ignoring growing imbalances in U.S. asset markets. Speaking to German business daily Handelsblatt during the World Economic Forum in Davos, the former Treasury secretary likened the current bullish sentiment to the euphoria before the 2008 crisis and the dotcom bust.

However, Summers argues that this optimism is misplaced, given weak global growth, a Federal Reserve with limited options, and a U.S. economy facing its worst fiscal challenges in over 160 years. He described the nation's fiscal situation as the most critical since the Civil War, warning that the real danger is a lack of fear in the face of these growing risks.

Summers also expressed concern about the sustainability of long-term investments, noting that with risk-free Treasury returns near 5%, companies may struggle to access capital without high costs, potentially depressing earnings growth. He highlighted the difficulty of making long-term investments under uncertain government policies, referencing the Trump administration’s withdrawal from the Paris climate accords as a sign of instability in policy direction.

TECH

Big Tech's Growing Influence on U.S. Politics: A New Era of Power

In normal times, Inaugurations are full of gossip, with the political media’s most entertaining (and perhaps least serious) tendencies on full display. We focus on everything from the hats worn by figures like Aretha Franklin or Ivanka Trump to speculating about who has aged well or terribly over the past four years, and who looks bored among the spouses. We read body language, interpret eye rolls, and scrutinize the guest lists of various balls and parties to find clues about potential influencers on the incoming president. Donald Trump’s second inauguration on Monday felt like a return to this tradition, especially when compared to the somber, humorless coverage of his first. Among the notable guests was Shou Zi Chew, TikTok’s CEO, who attracted attention following the platform’s temporary shutdown over the weekend. Seated behind the Trump family, alongside Mark Zuckerberg, Jeff Bezos, Tim Cook, Sundar Pichai, and Elon Musk, they formed a powerful image. It signaled that Silicon Valley—once politically neutral or even libertarian—had shifted allegiances and would now play a pivotal role in Trump’s vision for a "golden age of America."

In the opening column for Fault Lines, I attempted to update Neil Postman’s 1985 thesis in Amusing Ourselves to Death, which argues that revolutions in information technology, like the rise of television, profoundly shaped political messaging in ways we didn’t expect. The traits that define modern political discourse—polarization, personal conflicts, and the constant need for anti-establishment figures—were more or less inevitable, given the speed of online communication, the adversarial nature of online interactions, and the isolation that comes with screen-based interactions.

In politics today, social media is no longer just a tool for spreading a message; politicians must now mold themselves into figures optimized for social media. In 2016, Trump became the "Twitter President," but the landscape has changed since then. Now, Trump, who has always understood the power of catchphrases like "You’re fired!", fits perfectly into the short-form video culture popular on platforms like TikTok. While his long-winded rallies might have been criticized by the press, Trump shares the same editing instincts as Twitch personalities like Kai Cenat and podcaster Joe Rogan, who create hours of content that gets chopped into viral clips. These long-form creators understand that not everyone watches everything in full, but viral clips take advantage of the spontaneous energy of continuous recording—much like documentary filmmakers. Trump, already a social media icon, now controls the stage, the direction, and the distribution all at once. He also grasped that the attention economy had shifted toward these new media celebrities, and with the advice of his son Barron, he tailored his campaign to engage directly with the influencers who command algorithms. The Inauguration, attended by tech moguls and influencers like Jake and Logan Paul and Rogan, marked the ceremonial rise of this new media establishment.

CRYPTO

Trump's Crypto Ambitions Spark Division Within the Industry

Dressed in ball gowns, tuxedos, and "Make Bitcoin Great Again" baseball caps, a crowd of some of the country’s top cryptocurrency executives gathered just a few blocks from the White House for an extravagant celebration three days before President Trump’s inauguration. They toasted to an incoming administration that had pledged to support the industry’s interests.

Even Snoop Dogg joined the event, performing a rendition of "Don’t Stop Believin’."

But the crypto moguls were blindsided by what happened next.

At 9 p.m. on January 17, with the party in full swing, Trump took to social media to announce the launch of a new cryptocurrency—a memecoin named simply $Trump.

The unexpected reveal raised new ethics and legal questions about how Trump continues to capitalize on his influence and fame, this time by marketing a volatile digital asset to millions of his followers.

The move also sparked significant backlash from within the industry he claimed to support.

Crypto executives condemned it as a money grab, arguing that Trump’s actions undermined the industry’s credibility at a time when advocates were striving to integrate digital currencies into mainstream finance and business. They criticized the venture for creating a brief, highly publicized bubble that quickly deflated, while Trump’s family and business partners pocketed millions in fees from coin transactions.