There are scary downsides to Xi ditching Covid Zero

Plus: Crypto had a credit bubble. [Bloomberg]( Follow Us [Get the newsletter]( This is Bloomberg Opinion Today, a chillingly lifelike chatbot of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - China’s people may have [won a pyrrhic victory](. - [FTX’s enablers]( have some explaining to do. - There’s a lot at stake in [the Georgia runoff](. - We have a [$65 trillion hidden-debt problem](. Xi Vs. the Monorail American society and the economy are built on faith in the wisdom of human crowds, at least until [the chatbot]( takes over. But dude: Have you seen crowds? Are you familiar with their work? Among their greatest hits are the Soviet Union, the ape JPG bubble and the time Springfield bought a [monorail](. Niall Ferguson, arguably an even better history-knower than me, has many more troubling examples of [the questionable judgment of crowds](. The latest could well be the one in China that has apparently convinced the Communist Party running things (speaking of famously bad crowd choices) to ease up on Covid restrictions. At first blush — especially to Westerners who have made it their mission to ignore Covid restrictions since roughly March 2020 — this might seem like a good thing. China’s endless lockdowns are bad for the economy, public health and the human spirit. On the other hand, Niall points out, China is so poorly vaccinated that a surge in Covid cases could well swamp hospitals and further expose Xi Jinping as an [incompetent]( ideologue.   And that in turn could lead Xi to lash out at Taiwan or elsewhere, to distract people from how badly he’s doing. It’s a worst-case scenario, but then you have to account for those when crowds have their way. Bonus Watching-History-Unfold Reading: India’s efforts to [replace China in the supply chain]( won’t stop a downturn. — Andy Mukherjee Crypto Reinvents Finance A theory, with apologies to [Tolstoy](: Efficient markets are all alike; every credit bubble is dumb in its own way. The crypto/ape JPG credit bubble is especially dumb, in that it was [made of mostly vapor](, as Matt Levine notes. Other bubbles have at least involved tulips you could plant or [eat](, or houses you could live in. Leading up to the 2008 crisis, people took risky mortgages and mashed them into loaves shaped like AAA debts. Dumb in its way, but with at least a toe in reality. Leading up to the crypto crash, people tried to make AAA debts out of bluster and wishes. Crisis ensued. A big problem with my theory is the depressing number of mistakes people keep making in every credit bubble. In this case, as with pretty much all of them, there were [supposed geniuses taking big risks]( without doing enough due diligence, Robert Burgess and Chris Hughes write. The many VC firms enabling FTX, for example, have got to feel lucky that Sam Bankman-Fried can’t seem to shut up. He’s taking the heat off them. But they should have to start answering questions soon about how they got him so wrong. 51 > 50. Senator Raphael Warnock is the [odds-on favorite]( to win a full term in his runoff tomorrow against football star, [child forgetter]( and [vampire hunter]( Herschel Walker. Unlike the 2020 election, in which Warnock and Jon Ossoff were trying to win the Senate for the Democrats, control of that body has already been decided. That doesn’t mean the race isn’t important. [With 51 votes instead of 50](, Jonathan Bernstein notes, the Dems can control committees and speed up the pace of confirmations and investigations. And with such wafer-thin margins, any extra padding helps. In becoming Georgia’s first Black senator, Warnock has already defeated history, Frank Wilkinson notes. But every day he goes to work, he confronts a far more daunting history: His office is in a building named after a different Georgia senator, Richard Russell, who was [a die-hard White supremacist](. However far we think Americans have come on race, there is still so much further to go. Bonus Politics Reading: [Strengthen the child tax credit]( instead of expanding or killing it. — Ramesh Ponnuru Telltale Charts Like the dark matter that clogs up the universe, the financial system has some [$65 trillion in derivative debts hidden]( from public view, writes Paul Davies. Should be fine! American exceptionalism at its worst: The US suffered [many more excess deaths during the pandemic]( than other developed countries, Faye Flam writes, mainly because it did such a bad job vaccinating people. Lisa Jarvis [talked to Anthony Fauci]( about lessons we’ve learned from this debacle. Further Reading Europe has good reason to object to President Joe [Biden’s protectionism](. — Bloomberg’s editorial board Biden has good reason to [object to Big Oil’s windfall profits]( in a crisis. — Matthew Winkler People are prematurely declaring victory over [Europe’s energy crisis](. — Javier Blas Hope Rishi [Sunak likes labor unrest](, because that’s what he’s getting this Christmas. — Martin Ivens The Supreme Court is quietly [hamstringing the executive branch](. — Noah Feldman [Tesla’s electric semi trucks]( just might work. — David Fickling Companies are [bombarding us with smells](, whether we want them or not. — Ben Schott ICYMI Senators may have struck a [bipartisan deal to help Dreamers](. SPACs had [a terrible day](. [Hertz will pay $168 million]( to settle claims it got customers arrested. The whole internet loves the new [chillingly lifelike chatbot]( ChatGPT. Kickers FINALLY, you can pretend to [hit New Jersey with an asteroid](. It’s a lot harder to [destroy a nuclear weapon]( than you think. France won’t let [Microsoft or Google apps into school](. Some people think [humanity was a mistake](. Notes:  Please send asteroids and complaints to Mark Gongloff at mgongloff1@bloomberg.net. [Sign up here]( and follow us on [Instagram](, [TikTok](, [Twitter]( and [Facebook](. Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. You received this message because you are subscribed to Bloomberg's Opinion Today newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( [Ads Powered By Liveintent]( | [Ad Choices]( Bloomberg L.P. 731 Lexington, New York, NY, 10022