Elon Musk’s electronic music phase may have been a bit of a joke, but it captures the spirit of capital. His 2020 single, “Don’t Doubt ur Vibe (because it’s true)”, is a mantra for self-reliance in the hungry market, for trusting a feeling — perhaps no more than the shiver of an instinct — that could be the difference between winning it all and being left holding the bag. “Vibe”, a term born in the Sixties drop-out era, is now part of the remix of counter and business culture perfectly embodied by Silicon Valley — and, on a smaller scale, Musk and Tesla.

Musk built his empire on vibes, and used Twitter to circulate hype and tempt investors with risk. In May 2021, his tweets about holding Dogecoin turned what was essentially an internet joke into a legitimate stock. After buying Twitter, he briefly switched the Twitter bird to the Doge logo in April 2023, adding as much as $4 billion to its market value. He had a knack for harnessing vibes for profit.

Now, however, clean-living Tesla drivers are beginning to doubt his vibe. According to a report in Reuters, Tesla’s consideration score — a measure of a consumer’s confidence in the brand and how likely they are to purchase a car from the company in the future — has fallen by more than 50% since November 2021. In addition, Tesla’s Q1 sales this year were 14% below forecasts and the slump was attributed to Musk’s personality.

The problem is not carbon emissions, in other words, nor Houthi attacks in the Red Sea nor a fire in Tesla’s German factory. It is Musk’s bad vibes. Tesla’s downfall began around the same time that Musk acquired Twitter and rebranded it as X. Since then, many argue that X has become a site for misinformation and trolling rather than informed debate. Musk himself is the archetype, airing extreme Right-wing views on issues such as immigration, trans rights, Disney’s inclusion (DEI) policies, the Ukraine war and all-round “wokeness”. Only last week, Brazil’s attorney-general called to regulate social media after a clash with Musk over free speech. The billionaire is known for his ability to move markets with a single tweet, but this is probably not what anyone in Tesla had in mind. So why did his vibes sour so quickly?

In his 1936 book The General Theory of Employment, Interest, and Money, John Maynard Keynes wrote of the “animal spirits” that mould the market: his term for the lurking vibes and contagions that shape consumer confidence. Markets are not just rational systems, Keynes wrote. They are shaped by irrational forces; the animal nature lurking in the brain of homo economicus. Before the idea was applied to markets, animal spirits were already spoken of as a sub-human consciousness — something unknowable, unquantifiable. Something like violence or risk or chaos. Something like a vibe, maybe.

The whole point of a vibe is that it isn’t rational; it’s hard to quantify. As philosopher Robin James explains, a vibe is an ambience, but also an intuition that lacks empirical explanations. Peter Thiel once described Musk as speaking with a “super-heroic, almost Homeric kind of vibe” that was out of sync with Silicon Valley.

Nowhere oozes vibes more than social media, which privileges images, audio and video over text. The internet is no longer a place for those looking for truth or narrative, so much as somewhere we go for “moments of audio-visual eloquence” — for a vague undefined feeling of rightness, or even profound wrongness. There’s a definite vibe to an image of Donald Trump’s latest electoral campaign or a trad-wife making sandwiches draped in Cottagecore — even if it is a #cursed vibe for cursed times. Right now, our visual culture, and as a result our politics and markets, are all dictated by vibes.

“We live in a moment where our visual culture, and as a result our politics and markets, are all dictated by vibes.”

Take GameStop as an example. In 2021, coordinated decisions by a group of retail investors to buy call options for an apparently worthless game company cost hedge funds who were shorting the stock a lot of money. The value of GameStop emerged, not from any strong correlation between share price and the underlying asset, but from the vibe. The SEC report on GameStop in October 2021 concluded that “it was positive sentiment, not the buying-to-cover, that sustained the weeks-long price appreciation of GameStop stock”. The space between illegitimate gambling and legitimate investment narrowed. So did the space between taking an economic stake and posting an unasked-for opinion on the internet. Finance apps emerged as a new kind of social media.

Or consider the collapse of Silicon Valley Bank in 2023. One explanation for the failure of SVB is the Federal Reserve raising interest rates. As tech stocks were devalued by rising interest rates and venture capital funding began to dry up, many investors withdrew money from SVB to meet their liquidity needs. But another explanation for the collapse was a bank run caused by bad vibes. A user goes to the bathroom, checks their phone, sees or more accurately feels something they don’t like and decides to move their money all in the time it takes unzip their trousers. A student with a loan and a Robinhood account watches a video or sees a meme telling him he likes the stock. Don’t Doubt ur Vibe. The fall of SVB was the result of a vast throughput of rumours and transfer requests that traditional risk assessments were not equipped to measure and financial institutions were not built to withstand. Vibes shifted the index.

And if, in this world, Musk is the ultimate market maker, then Donald Trump is the populist president of vibes. News of a dip in Musk’s reputational capital coincides with the public launch of his Truth Social on the stock exchange. Like Musk, Trump is all vibes and no substance. And this is what makes him so successful as a politician: he can be whatever you want him to be. For a nostalgic Boomer generation, he promises a pathway back to the American dream. For downwardly mobile Americans who never believed in that dream in the first place, Trump’s idiocy confirms their nihilism. So what else than for the meme president to shill his own meme stock? Despite a loss of $60 million in 2023, and reports from the company that revealed “greater profitability challenges” (or “jargon for ‘we don’t make sh*t’”, as one Reddit user put it), Truth Social is still incredibly overvalued. It is also incredibly erratic because its value is entirely divorced from underlying fundamentals. Vibes not verifiable reality.

Yet perhaps this moment is coming to an end. Tesla’s downfall may be a sign not just that Musk is losing his grip on what’s hot, but that the economy is unhitching itself from the universe of vapourware vibes. Companies such as SVB and Tesla are creatures of the Zero Interest-Rate Policies (ZIRP) that shaped the high-tech venture capital economy from 2008–2023. The policy was an economic move designed to stimulate investment in the years following the financial crash — and it encouraged risky investment based on vibes. But today, the tide has turned. The real economy is back, and it may not be kind to the titans of tech.

Will Musk and Tesla survive the new regime? Many of the business practices that we associate with Big Tech today are, arguably, features of the ZIRP era: companies that operate without making a profit, or that may make a profit in some inscrutable way from consumer data at some point in the future; the practice of poaching engineering talent from one tech enclave to another for eye-watering salaries, and that of “blitzscaling” (expanding production so quickly that competitors go bust competing). Combined, this allowed the Bankman Frieds and Musks of the world to rise to improbable levels of wealth, without actually producing any real wealth at all. Musk’s hyperbole vibed with a high-risk, low-interest-rate economy. But how long can one of the richest men in the world be the CEO of a car company that makes a net loss every year? Maybe this #cursed vibe has finally run its course.

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Source: UnHerd Read the original article here: https://unherd.com/