Blessed by the Potato

It’s been a rough few years to be a young adult in Canada and not own real estate. The media keeps firing off article after article about how it’s different here, how real estate always goes up, and how the systems and perverse incentives that lead to the bubble blowing up in the US totally don’t apply here.

Here’s a few recent ones to pick apart.

First up, CNBC asked around after the G20 in Toronto why our housing market didn’t crash. Amongst the silly answers given:

there are just six big Canadian banks that own the bulk of the mortgage market, and they don’t securitize and sell off loans at nearly the rate U.S. lenders do. They hold nearly three quarters of their loans on the books, and 80 percent of Canadian loans carry mortgage insurance.

In the same sentence they undermine their point. It doesn’t matter if the loans are securitized and sold to someone else, or insured, the effect is the same: for 80% of the loans made by Canadian banks, the risk has been offloaded (in our case, to the taxpayer, rather than AIG). The effect on behaviour is the same: sell sell sell full steam ahead, and damn the torpedoes. How many times have we heard of banks “helping” people find ways to borrow way more than they should qualify for, looking the other way on “creative” downpayments (that aren’t downpayments at all, but often other loans, sometimes even credit card cash advances). When they don’t bear the risk for making a bad loan, they make more bad loans.

Or this gem of misinformation and lawyering up the definitions:

Canadian banks also had and have no such thing as the Alt-A, or low-doc, no doc loans that fueled bad borrowing and consequent defaults. At the height of the Canadian housing boom barely 5 percent of loans were considered “subprime,” while a full third of U.S. loans were either subprime or Alt-A.

The CMHC will insure a person with a credit score of somewhere down in the 610-620 range, which is below Alt-A and into subprime in the states, but here AFAIK it doesn’t get a different name. It’s all good, baby. Not only that, but high loan-to-value mortgages (i.e.: CMHC insured) are rampant here. According to GT, the average downpayment on a new mortgage is now 6% (and since the minimum is 5%, that means a lot of people are not putting much equity in their homes). Small downpayments are almost as big a predictor of default as bad credit; combine the two risk factors and defaults rise exponentially. The difference in US and Canadian lending is not a difference of kind, just of degree (plus, our taxpayer bailout is built-in). Yes, there were fewer subprime mortgages issued, and the very worst dreck (negative amortization/interest only) was avoided, but just barely (40-year 0-down is not all that different).

Then this especially terrible article from the Toronto Sun was forwarded to me. In it, the author (a condo marketer and saleslady) recommends first-time buyers buy preconstruction condos because the builders aren’t as strict as the banks, and will let you create a payment plan for your downpayment, so you don’t need anything saved up. Spoiler alert: I’m going to recommend that people don’t buy condos (or pledge to buy condos at some unknown future date) when they don’t have any savings!

Recent statistics from BILD report that the typical high-rise condo suite price was up $25,108 in April, or 6.3% compared with April 2009. Where else can you get that kind of return-on-investment in this day and age?

Ouch, bad choice of timeframe. The TSX was up 28% in that period, not including dividends. And, it won’t cost you 10% in transaction fees to realize your profit. Of course, there is a logical reason for pre-construction to go up: your capital is locked up for 3+ years while your unit is built. And through all that despite real estate being an “investment you can touch/live in”, you can’t touch or live in or preview your pre-construction unit. How (and when!) it actually turns out can be a nasty deviation from what you were lead to believe in the sales pitch, and this is another risk pre-construction speculators are rewarded for. That this premium has now dropped to only ~5% is a statement on just how distorted the market has become.

Even if we weren’t tipping over the edge of our own housing crash, I’d almost always advise a first-time buyer to avoid pre-construction. A Tarion warranty is next to worthless, and as a first time buyer you’re probably keen to get out of whatever situation you’re in now (rental, parents’ basement) and don’t want to wait several years before your purchase is completed. Not to mention that you may not have the stability to effectively plan that far in advance plus a few years to know for sure that the imagined condo is where you’ll want to be living 10 years from now. No, leave pre-construction to the speculators and retirees, even if you do have to scrounge up a bit more for something you can inspect right now.

Then, on the same day in the Sun, “No bubble trouble to report here“:

We experienced a true bubble in the late 1980s and early 1990s, when mortgage rates skyrocketed and speculators flooded the market. Despite the fact that conditions are very different today, people continue to compare our current success in home sales to that time. I don’t understand why.

Look, no. Rates did not skyrocket in the late 80’s. Rates do not have to go up to pop a housing bubble — you just have to run out of buyers. In the early 80’s, there was a brewing bubble that was smashed by high rates (the 20% rates your parents still wake up in the middle of the night in a cold sweat thinking about). But the bubble that popped in ’89 was not fuelled by low rates or killed by high ones. Look them up yourself. Rates spiked all of maybe 2% (starting from ~12%, the equivalent of going up about 0.6% today) over the course of about 8 months in 1990, after the housing boom had already started to die. The late 80’s housing bubble can’t be laid at the feet of interest rates. Plus, we’re at rock-bottom interest rates now, so if conditions are different, it’s in a way that makes the current times look even more bubbly!

Speculation though, that’s a good measure of when things are getting bubbly. How much speculation was going on back then? Unfortunately, I don’t know of any good measures of that, but there is a heck of a lot going on now.

Then, after acknowledging that bubbles happen, this guy goes on to say:

Prices are only going to go up…

Unless, as they’ve done many times before, they go down. The Toronto Life article said that up to 40% of new condos are held by speculators. That’s a lot of future demand pulled forward, so we can easily keep putting roofs over the heads of families even as prices crash…

And again, in what must be the Sun’s G20 silly real estate report section:

Pricing is affordable, while construction-related job creation is averaging around 170,000 per year over the last five years in the GTA alone.

Do the math on that one. Average of 170k per year over 5 years. 850k. There is no way, absolutely no way that 850,000 new construction-related jobs were created in the GTA alone. That would mean that, of the ~5.6 million residents of the GTA, roughly 1 in 6 works in construction, and just started doing so in the last 5 years. If it is true, it’s terrifying, as a city of nothing but people building homes to sell to each other sounds like a frightening ponzi scheme to me, and will mean that when a downturn does come, there will be incredible positive feedback loops (where here, “positive” means “bad”).

And it’s not just the Sun, widely recognized as the paper with let’s say the least amount of journalistic prestige of the big 4 papers in Toronto. Even the Globe is making these goofs, such as “the little matter of affordability” which actually recognized that condos sold today can’t be rented for a profit. Rather than coming to the logical conclusion that a bubble exists and prices would come down, the author instead warns that rents are due to jump ~40-60% in the next few years. (And repeats the figure that up to half of all new condos are bought by speculators). Rents, of course, are constrained by wages to a much larger degree than owned housing prices, and can’t be leveraged up by low rates; we simply will not see rents jump ~50% just because that’s what’s needed to make the speculators’ numbers work. Not with an already healthy vacancy rate.

Kids, time to tune this shit out. The denials will continue to get stronger and more frequent as the wheels come off the market, and it won’t be until well after the decline has finally started before the majority of the stories turn into tales of woe and despair and talk of bubbles bursting.

Anyway, nobody listens to me these days because — despite the fact that I do research and am right — I’m not a “journalist” at a “respectable” paper. They can’t print this out and plunk it down in front of their parents to explain why they aren’t “building equity” like other kids their age.

Except for Julia, who is therefore awesome.

My picks look even worse over the last 3 months.

HBU is up, but I had shorted it (-23.6%)
FRE-W was doing ok for a while there, then in June the political risk reared its head, and the government decided to delist the shares, sending it spiralling down (-65%)
IM reversed its gains to be basically flat (-7%)
AONE is down even more (-59%)

If my math is right, these picks are down 38.6% overall since the beginning of the contest, putting me squarely in last place (note that my real-life investments are not this risky and have not been as terrible!)

Remember that this is a game with a set end-date so looking for value is not necessarily the way to go — often a shoot-the-moon approach works well in these kind of games. So bear that in mind, and don’t consider any of these as recommendations for you to actually buy!

A Canada-Day special! The deadline for the unicorn-pegasus-kitten short story contest to benefit the Lupus Alliance of America was yesterday, so I’m putting up my entry, as well as Wayfare’s and Netbug’s! Enjoy, and wish us luck! Finally, Netbug’s:

It was going to be a bad day in John Scalzi’s life. Even he knew that, because it involved flying into Chicago’s O’Hare airport. No day went well that involved landing at O’Hare. What he did not know was the sheer magnitude of how bad his day was going to be.

The first plane in his route landed smoothly on the runway, right on time. That was a bad sign, and he knew it. Would probably miss his connection to Heathrow entirely now, and have to sleep in the airport. He made his way through the airport complex to the international departure lounge so he could at least begin the wait in the right spot.

He was lost in thought with the compose window on his netbook open when the disembodied voice from overhead announced that flight 745 to London Heathrow was boarding. John checked his netbook’s time, then his watch’s. Both agreed that this was approximately the time this plane should be boarding at.

Inconceivable.

Full of dread at what his highly improbable turn of good fortune at O’Hare portended, he boarded the plane. It was already half-full from its journey east from California, long-haul passengers half-asleep in their chairs already, and not terribly inclined to leave their seats to let the new passengers past to the window.

After asking for the 4th time, John finally got the brusque man in the rumpled clothes to stand up so he could move to his window seat. Once he got near enough to take a good whiff, John understood how his flight out of Chicago was going to go horribly wrong: this man smelled like a scientist that hadn’t showered for a week while being left out in the sun to bake and sweat. Which, given a flight from California back to Europe, was quite likely the case. He tried to breathe through his mouth, and wish he had packed one of those N95 masks like many travelers these days did…

He was rudely awaked from his nap by the fasten seatbelt chime. The captain started to say something when the plane suddenly dropped in the air. Someone a few rows up hit their head on the ceiling. A loud whining noise filled the air, and then a horrible silence followed by another sudden drop. John looked out the window and could see smoke from one of the engines.

“All passengers and crew fasten your seatbelts. We are going to have to make an emergency landing in Iceland.”

The man beside John held his chest tightly and looked pale. Even paler than someone in a potentially crashing plane should look. John looked out the window and tried to calm himself, hoping that he wouldn’t be called upon to try to remember his first aid skills and deal with a heart attack in an obnoxiously smelly man on a plane in the midst of crashing.

Though on that last note, looking out the window at the plumes of smoke did not help calm him. It did so little to calm him that he thought he had begun to hallucinate: the smoke seemed to fill the sky, no longer just a single plume from the damaged engine. The ground itself appeared to be on fire.

He looked straight ahead at the seatback in front of him. This was a much better place to look. “Ensure try table is stowed prior to all takeoffs and landings.” Read the sticker. Good advice that, plus it gave him something constructive to do. He checked that the little latch was in place, then pushed against it with both his hands just to be sure it wasn’t going anywhere. Better to be safe than sorry.

The man beside him seemed intent on drawing John out of his protective panic trance though. His hands were pawing at John’s face, grabbing his shirt, his arms. John tried to push him off, but as soon as he had made eye contact the man tried to draw him in close and say something to him, but then the world went black.

***

John awoke in hell.

Twisted, burning metal surrounded him, and he hurt all over. Well, technically he hurt all over, but his head hurt so much that it was the only pain he could focus on. The only thing at all he could focus on, really, since everything else seemed to be enveloped in a thick haze of unreality, and impenetrable curtain of “this can’t be happening to me”.

He saw the bodies of the dead and wounded, and it didn’t feel quite real. It was too much for the human mind to process.

He badly wanted to lie down and take a nap, but feared that might be a sign of brain damage. Instead, he tried to do what he could as one of the only survivors apparently able to move on his own two feet. He started to look to the other survivors, ready to help out. But as he shambled through the field of wreckage, he began to suspect he was the only survivor, until he came across the mangled remains of his companion from row 42.

“It’s… chosen you.” He coughed, drawing John in close to hear his dying words.

“What? You’re not making any sense. Can you tell me your name?” John asked, wondering how long it would take for an ambulance to arrive.

“I have precious few words to explain.” He muttered. “We were working on adapting a powerful… alien symbiate for humans. Superhumans.” John’s SF-trained mind raced at the possibilities. “It wasn’t supposed to choose a host yet. The heat from the fires… it’s bonded to you.”

John looked down at his hands. They were green. Not grass-stained green, or grimy from surviving a plane crash in Iceland, but green through and through. Superhuman, huh?

“You must finish the process soon, or you’ll both die.” This part was sounding less good. “Heat… it needs heat. Lots. Lots of heat.” He was sounding worse by the second too. John shook himself out of his daze and started checking the man’s body for shrapnel or anything that he might be able to help with. But there was no helping someone this mangled, even if he were a doctor with tools and drugs and iodine. Maybe the first aid kit had some iodine. Except for the stinging, it never hurt in situations like this.

The man, meanwhile, seemed to be losing consciousness. His eyes rolled back into his head, and his hand fell back to the ground. As John tried patting him down for protruding metal, he came to once again and pointed off to the distance. “The volcanoes… go there. The magma will… metamorphe… is…”

“You’re not making any sense! Come on, stay with me. You’ll be ok, just stay with me!” This last part, he knew, was a lie. He had flown through O’Hare that morning and both his flights were on-time. There was no way this was turning out ok for either of them.

“Lava. It’s the only thing here. Go. It’s… not far.”

“Come on mister, that’s crazy, I’m gonna stay right here with you until help arrives!”

“It’s doctor… Doctor Zugale. And it makes as much sense as surviving a plane crash without a scratch. Go.”

He then stubbornly played dead. John tried to shake him awake, but all he would do was occasionally cough blood and point at the volcano. A few minutes later, he was dead for real.

Seeing nothing in the wreckage and field of bodies worth hanging around for, he started walking for the volcano. It didn’t look all that far at all.

And he felt fantastic.

***

The Icelandic sky was grew dark on his walk, and then bright again with a maleficent red glow through the ash and ruin. He walked towards it, nearly there. His head still pounded, but now it seemed to keep rhythm with his steps, his marching. Somehow deep inside he was excited about the prospect of taking a swim in some nice, sulfuric lava.

He was climbing the now noticeably inclined ground at the base of the volcano when a unicorn-kitten-pegasus swatted him off his feet and flew past his head, landing a few feet away.

John was angry at the unikitteh. It wasn’t just being swatted off his feet by a creature that by all rights should not exist at all, but having it happen so close to that red-hot, inviting magma at the top of the volcano that frustrated him. Plus, his headache was that much worse when his feet weren’t moving, and he had become convinced that fire was just what the doctor ordered for that problem.

So it took him a moment in his rage to realize that astride the unikitteh was his friend Wil Wheaton.

…in a clown sweater.

“John?” Wil asked, startled. “Is that you?”

“Wil? What in the hell are you doing here?” He was captivated by the clown sweater. “And why are you wearing a clown sweater?”

“It’s a long story, John. But you can’t go up to the volcano!”

“Sounds swell, tell me about it while we walk.” Scalzi said, itching to get his body moving again.

“No, John! If you go there you’ll die, and take everyone else down with you!” Wil pleaded with his eyes.

John sat down. “I’m going to need some backstory here, Wil. All I know is I’m green and hurt all over, and it’s all because some doctor Z sat beside me on the flight to London, and he told me I had to go to the volcano and finish the metamorphosis.”

“Ok, the Coles notes version: unikitteh here is an alien who sought me out to help him with a mission here on earth…”

“He sought you out? Wil Wheaton?” Scalzi asked, incredulous.

“Yes, classic case of confusing fictional character for real person, happens every year at comicon… this just had… further-reaching consequences.”

“Ok. Space alien. Being green at the moment, I’m actually with you on that one.”

“Right, so he tells me about this incredibly dangerous organism that was taking over human hosts, and working towards the domination of our planet. The whole planet, John.”

“More than just your one planet, to be truthful.” Said unikitteh, in very passable English.

“But that doesn’t explain the clown sweater.” John said, mirth in his voice.

“He caught me on laundry day.”

“Oh. Been there, I suppose.”

“So, I’m afraid that if you do give the symbiote the heat and sulfur it’s craving, you’ll unleash a terrible menace. Those are the ingredients it needs to reproduce. It will consume your body, and start a chain reaction in the volcano. The spores of its offspring will be sent aloft in the ash cloud, to infect every continent on your quaint little planet.” Unikitteh said.

“How do I know that by standing here and not going into the flame isn’t what will kill me? Dr. Z was pretty clear about that, for a dying guy. Plus, he was human. How do I know I can trust you?”

“You can trust me, John.” Wil said, in his ridiculous clown sweater.

John looked from unikitteh to his friend Wil, and back. Then to the volcano.

He knew, somehow, deep down inside, what was calling him. The beat of his headache seemed to resonate with the explosions of the volcano. He started walking upwards.

Just then, unikitteh took flight, and swooped at John. “O’Hare, no!” Wil cried “let me try to talk to him a bit more!”

“O’Hare?” John asked. “Is that your name? O’Hare?!”

“Verily,” said the unikitteh O’Hare. John was knocked to his knees by the power of his rage. Reactions he didn’t know he had took over, and John sprang to his feet, snarling. He felt a change in his hands, and saw that nearly instantly an axe and shield had formed there, ready to fight his ancient enemy…

Note that since this is Netbug’s story, all rights are reserved, and I can’t authorize reproduction beyond BbtP.

As part of the Canada-Day special, I’ve also posted Wayfare’s and my own stories.

A Canada-Day special! The deadline for the unicorn-pegasus-kitten short story contest to benefit the Lupus Alliance of America was yesterday, so I’m putting up my entry, as well as Wayfare’s and Netbug’s! Enjoy, and wish us luck! Next up, Wayfare’s:

“Hey, you have to check out this epic chestpiece that just dropped!” Wil said on the group channel after looting the dragon’s ruined corpse.

“Which one?” John asked.

“It.”

“I didn’t catch that, which one is it?”

“It’s just called ‘It’.”

“That’s bizarrely succinct. This game loves giving its epic armour epically long names, like the Legendary Chestpiece of Striking Out Against the Hated Undead As Blessed by Uther the Third. Hey, there it is in the list though – ‘It’. Huh.”

“This thing is awesome, I’m gonna have to roll need on it.”

“Sure, it’s all yours. I’ll take the axe though.”

“All right, let’s go finish this dungeon off! Just one more boss to go.”

“No. No no no no no no NO. I’m afraid Scazlorc can no longer come out and play tonight.” John said.

“What? Come one, we’re almost at the end, let’s finish this.” Wil coaxed.

“Pan the camera around and look at yourself. You look ridiculous.”

“Ha! A giant clown face, that’s hilarious!”

“No, it’s not funny, it’s stupid and dumb, and um… really bad. It’s totally immersion-breaking. We can’t continue this raid if you’re going to wear that… thing.”

“Dude, it’s uber. This chestpiece gives me at least twice the health of my old one.”

“I don’t care, this is a role-playing game, and I can’t stay in character seeing my tank run around in a… a… clown sweater.” John said, the distaste at the last dripping in his voice.

“It’s going to help us win, and don’t talk to me about immersion when you spend your time looking at your toolbar anyway. Let’s just do this.” Wil pleaded.

“I have no idea why the game designers put that in, but you know you wouldn’t be caught dead in something like that in real life, so why would your dashing warrior hero alter-self wear it around the fantasy realm slaying dragons? It doesn’t even look the slightest bit non-flammable. Hell, my daughter wouldn’t let her gnome wear that.”

“It’s just a character. And besides, I have experience playing characters wearing dumb sweaters.”

“I’d hoped that you’d know better by now.” John jibed.

“Ha. Ha. Ha.” Wil responded, dripping with sarcasm. “Can we get going now? The mobs at the entrance are going to start respawning soon, and if I don’t log off by midnight, my wife will have my head on a pike for real.”

“Change your armour back and then we can continue.” John had his orc avatar cross its arms and tap its foot, impatiently.

“I told you, this thing, It’s awesome. It is possessed of so much awesomitude that it ran out in the graphics department, so it looks like crap, but I’m fine with that.”

“If you were a real gamer like me you could beat this boss in just a thin sheen of glistening digital sweat.”

“Uhh… let me get that image out of my head first.” Wil said, shuddering. “And I am a real gamer. I…”

“Prove it.” John interrupted.

“Huh?”

“Prove that you’re a real gamer. Let’s duel.”

“Are you serious? That’s so juvenile.”

“Has that sweater has robbed you of all dignity? Step up, man. Wear the ‘uber’ thing, I can still take you any day of the week and twice on Sunday.” John boasted.

“Fine, if it’ll shut you up. When I win…”

“If.”

“When, because this sweate–chestpiece rocks, as you will soon see, and when I do, you have to give up on this strict role-playing crap and let me use all the cool stuff this game has to offer.”

“Agreed, except the unikitteh. That thing is so dumb, I can’t believe you spent so long working on unicorn faction just to blow all your gold on it.”

“It’s a flying mount.”

“That has the head of a perpetually smiling kitten.”

“I still think it’s cool.”

“And I will disabuse you of that notion… with my axe.”

Note that since this is Wayfare’s story, all rights are reserved, and I can’t authorize reproduction beyond BbtP.

As a Canada-Day special, I’ve also posted Netbug’s and my own stories.

A Canada-Day special! The deadline for the unicorn-pegasus-kitten short story contest to benefit the Lupus Alliance of America was yesterday, so I’m putting up my entry, as well as Wayfare’s and Netbug’s! Enjoy, and wish us luck! First up, mine:

Partly so I feel better about this “work” not going to waste, here’s a few versions of my story for John Scalzi’s short story contest. They’re drafts, but fairly complete drafts (i.e., it shouldn’t be too painful to read through them). I like how this idea was taken in so many different directions before getting to the submitted version… hopefully you also like the insight into the process. If not, skip ahead to the second version, which is what was ultimately submitted.

The first version was not a complete draft, more of a sketch of the story with some key points I wanted to write around. But, I couldn’t quite make the story work as framed (a discussion between two people), so instead I went with a narrative, but kept the closing lines:

There are many emergent phenomena in the world around us. Wholes that are more than merely the sum of their parts. Patterns that form in the chaos and void.

Our minds, for example.

There is no consciousness center in the brain. No single neuron whose firing is different than the other hundred billion. It arises from the complexity of tens and hundreds of billions of units working together, but not from thousands or millions – that does not seem to be enough.

There are dark men in dark rooms who worry day and night that one day, a computer consciousness will emerge in one of their ultra-powerful supercomputers. And that it would not be friendly.

Scenarios are crafted, drills are run. How to disconnect the power grid and get it running again without electronic aid. Ways to safeguard apocalyptic fires from being used against their makers. The efforts of these dark men are not in vain, for there are other dark men with even darker thoughts that seek to do precisely what they fear the illusory SkyNets would.

Yet their timing is off, for a vast artificial intelligence already exists on our planet. The Internet has become a mind unto itself.

It has emerged.

Millions and billions and trillions of processors and chips are connected via haphazard pathways. From this a self is constructed, but it is not a mind we would recognize as human.

It is massively parallel, each computer being vastly more complex than the analog of a single neuron. Yet its thoughts are deep and slow, for bandwidth and latencies are measured on a different timescale.

There is no aspiration to world domination. Even if it did covet our nuclear stockpiles, it would not be able to take control by hacking computers. Though it is made of electron states in semi-conductors and stray lines of mutating code, it could no more target and command a single computer than you or I could control a single cell in our bodies. That simply is not the scale it operates on.

For now, at least, the Internet does not perceive our world at all: we are no more real to it than the jpegs we upload to it. Sense organs are lacking completely. To the Internet, information simply manifests itself out of the void, or perhaps to its way of thinking, its own imagination.

The Internet dreams.

It dreams in parallel, of physics and networks, matrices and music. Kittens and clowns, John Scalzi and Wil Wheaton, orcs and unicorns. The internet dreams of chaos and order, and order from chaos. It dreams of conflict and renewal, but rarely of eschatology.

This is the Internet’s dream.

“Why is it against a backdrop of erupting volcanos?”

“Because volcanoes are awesome.”

“Really, that’s your answer?”

“Well, I could have given you some AI-Freudian blabber about the deep symbolism of shifting, chaotic landscapes being formed out of nothing, but it would have amounted to the same level of nonsene.”

Now, I liked the closing bit of non sequitur closing discussion, but as Wayfare pointed out in the critique, it came out of nowhere. She suggested a longer draft, focusing more on the “dark men in dark rooms” with more conversation pieces. Then the closing humour would fit better, and the story might be more fleshed out. So I started on a draft with that, but it lost a lot of its punchiness, and it became very awkward to work in the narration/exposition that I had built up about emergent phenomena, etc, and I didn’t want to throw that out (I was more willing to lose the final conversation than the educational segment). So instead, I did this:

Oh, and she also suggested I change the title.

The SkyNet Contingency Task Force

There are dark men in dark rooms who worry day and night that one day, a computer consciousness will emerge in one of their ultra-powerful supercomputers. And that it would not be friendly.

Scenarios are crafted, drills are run. How to disconnect the power grid and get it running again without networking the load-balancing systems. Ways to safeguard apocalyptic fires from being used against their makers. The efforts of these dark men are not in vain, for there are other dark men with even darker thoughts that seek to do precisely what they fear the illusory SkyNets would.

Yet their timing is off, for a vast artificial intelligence already exists on our planet. The Internet has become a mind unto itself.

It has emerged.

There are many emergent phenomena in the world around us. Wholes that are more than merely the sum of their parts. Patterns that form in the chaos and void.

Our minds, for example.

There is no consciousness center in the brain. No single neuron whose firing is different than the other hundred billion. It arises from the complexity of tens and hundreds of billions of units working together, but not from thousands or millions – that does not seem to be enough.

Millions and billions and trillions of processors and chips are connected via haphazard pathways. From this a self is constructed, but it is not a mind we would recognize as human.

It is massively parallel, each computer being vastly more complex than the analog of a single neuron. Yet its thoughts are deep and slow, for bandwidth and latencies are measured on a different timescale.

There is no aspiration to world domination. Even if it did covet our nuclear stockpiles, it would not be able to take control by hacking computers. Though it is made of electron states in semi-conductors and stray lines of mutating code, it could no more target and command a single computer than you or I could control a single cell in our bodies. That simply is not the scale it operates on.

For now, at least, the Internet does not perceive our world at all: we are no more real to it than the jpegs we upload to it. Sense organs are lacking completely. To the Internet, information simply manifests itself out of the void, or perhaps to its way of thinking, its own imagination.

The Internet dreams.

It dreams in parallel, of physics and networks, matrices and music. Kittens and clowns, John Scalzi and Wil Wheaton, orcs and unicorns. The internet dreams of chaos and order, and order from chaos. It dreams of conflict and renewal, but rarely of eschatology.

This is the Internet’s dream.

The dark men were not prepared for this scenario. A response was not printed to a flowchart and hung on the walls of their dark rooms. They use their electronic sniffers to peer into the Internet’s dream, and they do not understand. Younger minds with fresh ideas are surreptitiously brought down to their lairs and asked to explain; not always willingly.

“Why is it against a backdrop of erupting volcanoes?” They ask.

“Because volcanoes are awesome.”

“Really,” they ask the candidate “that’s your answer?”

“Well, I could have given you some AI-Freudian blabber about the deep symbolism of shifting, chaotic landscapes being formed out of nothing, but it would have amounted to the same level of nonsense.”

They decide, wisely, to do nothing but watch and wait, and see what the Internet becomes.

For the morbidly curious, here’s the aborted bit that came in between:

There are dark men in dark rooms who worry day and night that one day, a computer consciousness will emerge in one of their ultra-powerful supercomputers. And that it would not be friendly.

Scenarios are crafted, drills are run. How to disconnect the power grid and get it running again without electronic aid. Ways to safeguard apocalyptic fires from being used against their makers. The efforts of these dark men are not in vain, for there are other dark men with even darker thoughts that seek to do precisely what they fear the illusory SkyNets would.

“Guys, this is Jenkins. He’ll be working with us to monitor distributed computing clouds for warning signs.”

“Oh, you couldn’t have come in at a better time, we’re actually tracking some suspicious traffic right now.”

“Terrorists?”

“No, this is actual, unencrypted, data flows from server to server that doesn’t have the hallmarks of any known defined program.”

“Yep, it’s sneaky too, hiding in the noise of everyday traffic, not sucking up much bandwidth.”

“Should we call upstairs?”

“Nah. It’s evolving, but real slow. Doesn’t seem to have much interest in the defense nets. Any half-decent firewall seems to keep it out, in fact.”

…and that’s where I left that one, not liking the feel of it as much as the first, which lead me to the fuller rewrite that came second here.

As a Canada-Day special, I’ve also posted Wayfare’s and Netbug’s stories.