You are reading a newsletter from The Planet Money indicator. Once a week, we select our favorite stories and ideas about business, finance, economics and why they matter. Subscribe here to receive it in your inbox every Friday.
After winning the Nobel Prize in Economics, what would be your first act? Buy a Corvette? Looking forward to your childhood bully? For co-winner Michael Woodford, his first act was… to proctor an exam. THE DAY Columbia professor Michael Woodford found out he and Robert Hall had won the Nobel Prize in economics, he returned to his classroom with the pithy title “Cognitive Mechanisms and Economic Behavior” to give an exam. He was welcomed into the classroom with cheers and applause. He raised his arms in triumph.
Michael Woodford, professor at Columbia University and winner of the 2026 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel.
Andrew Harrer/Bloomberg via Getty Images
hide caption
Andrew Harrer/Bloomberg via Getty Images
Future :
- Character.ai is bankrupt. What can we learn from the decline of AI startups?
- Why President Trump wants to import diesel fuel from Russia
- Why stagflation was John Maynard Keynes’ Achilles heel
News we watch
When AI startups are sidelined, what’s left?
What you need to know: Character.ai is a company that lets you talk with a “companion” – an AI-powered fictional character, a historical figure, or whatever you decide to construct. It was released just before ChatGPT and quickly went viral thanks in part to its adoption on TikTok. It reached 28 million monthly active users at its peak.
Character.ai had a lot of engagement, a large customer base, a lot of talent… and Google quickly scooped them up for $2.7 billion in 2024. But Google didn’t buy the company and absorb it! No, this traditional “acquire“ This model would require all kinds of legal and regulatory approvals. Instead, they hired the founders (and other heavy hitters on the team) and purchased the non-exclusive license to the technology, leaving the company itself behind. It’s called a “reverse acquisition”, and it’s happened at least six times in the last two years with AI startups. This week, Character.ai files for bankruptcy (Chapter 11).
Some of the “Characters” available to users
Gabby Jones/Bloomberg via Getty Images
hide caption
Gabby Jones/Bloomberg via Getty Images
Why it’s important: A “reverse acquisition” does not leave a company in the best position. After the deal with Google, Character.ai had to change its business model by abandoning the rather expensive LLM course and switching to AI character development. Its founders had left. Sure, the downsized company had $2.7 billion in the bank, but executives were still looking to raise cash as they struggled to monetize their user base.
So, is “reverse acquisition” the cause of the pain? Or was it a symptom of a larger problem? Character.ai has faced a mountain of litigation over alleged harm to minors and copyright issues from Disney. So what’s left? A once very promising business, which Disney is very excited to take over for part of it for $20 million.
Will this Russian diesel deal have an impact on prices?
What is happening: President Trump signed a deal last week to obtain diesel from Russia in an effort to lower fuel prices ahead of the midterm elections. Two weeks ago we talked in the newsletter about the possibility that a ban on diesel exports could lower prices. This did not happen. A week ago we talked again about Trump issuing an executive order to postpone a tax on diesel. Now this!
It’s safe to say people were surprised by the move, given that Trump signed a Russia sanctions bill last month that aimed to reduce their energy revenues. Beyond any surprise, a bipartisan group of senators is openly calling on the president to cancel the deal. They said this gives Putin the funds to fuel his war machine and “allows Russia to continue its brutal attacks on Ukrainian civilians.”
Will this do anything? The same bipartisan group of senators said the deal would mean “limited, if any, relief to Americans.” Goldman Sachs estimated that the release of Russian oil would affect wholesale prices by $1 to $2 per barrel. The price of a barrel of diesel is around $200. So an impact of $1 to $2? Neil Atkinson, an independent energy analyst, said: “Frankly, it’s a rounding error. This makes no fundamental difference to the global diesel market. »
But what’s stranger to Atkinson… Russia doesn’t really export diesel. Its refineries have been damaged and the country is literally importing diesel to make up its deficits. “Where these barrels of Russian diesel are coming from destined for the United States or elsewhere on the global market remains a mystery,” Atkinson said.
The indicator of the day
The Nobel Prize that was not
If you HAVEN’T listened: Journalist Greg Rosalsky opens the article by describing WHY exactly Michael Woodford and Robert Hall won the Nobel in Economics. They helped shape what is known as NEW Keynesian economics by integrating microeconomic principles with the traditional models of John Maynard Keynes. BUT THEN Greg goes on to explain that initially the Nobel Prize did not include an economic reward. No, that changed when the Swedish Central Bank, the oldest central bank in the world, wanted to celebrate its 300th anniversary with fanfare. They would finance a new economy price. It’s a fascinating story that you can listen to below.
Listen to the full episode
If you HAVE listened: One of the main philosophies of John Maynard Keynes is that governments could fight recessions by increasing spending and deal with inflation by curbing spending. In the initial version that wasn’t included in the final episode, Greg talked about how STAGFLATION was a central spine in this concept. Specifically, in the 1970s, during the Arab oil embargo, the United States faced a double whammy of unemployment and high inflation, causing stagflation. This challenges the Keynesian idea that when many people are unemployed and spend less, inflation falls. Because at that time unemployment and inflation increased together. Isn’t that nice? Greg Rosalsky writes the Planet Money newsletter… you can see it here.
Rest of the week
During our free time
Producer Cooper Katz McKim is reading The Chronicles of the AGI
Man, oh man, this is the most turning non-fiction book I’ve read in a while. Kevin Roose, co-host of the upcoming NPR podcast Machine Godsformerly THE New York Times‘ Hard forkfollows the handful of characters racing to make AI a commercial reality. This is far from a clear story. No single character came up with the idea and executed it… the existence of AI today is reduced to many articles, many individual discoveries, and many obsessions. I didn’t realize how much progress had been made in the field of AI before 2020 and how concerned many industry leaders were about even creating AI (looking at you, Amodei) for fear of creating super-intelligence that is beyond human control. It’s gossip, it’s a fact… I recommend.
Gn bussni
