They have unlimited resources and can keep this floating longer than any of us can imagine.
Like the article says, their internal risk management models are telling them to get the risk off their books.
Taking on the debt in the first place is like agreeing to store a gallon of milk in a fridge for an undetermined amount of time. The milk is going to go bad, and when it does the jug (or bag) might explode forcing a cleanout of the fridge, throwing out other things in the fridge, and maybe replacing the fridge altogether if the milk leaked down into a lot of crevices. Everyone knows the milk will go bad, but the big banks will know how old the fridge is, what coolant it uses, how old the compressor is, how many times a day the fridge has been opened, the average time it stays open, the dairy the cow who produced the milk, and the name of the cow if they can get it. The milk is going bad quicker than expected, and they’re finding out they don’t want to be the ones to guess when the jug will explode, and they’re also finding out that nobody else wants to buy the jug.
Oracle pulling a “god did it” was probably a part of this, but nobody involved is going to give a real answer.
No they can’t do it forever. Exponentially growing demands outrun everything eventually. The onl, way out of this are either controlled deflation of the bubble or a hard crash. The former is possible but unlikely.
Property has been crashing since covid. They circular financing for as long as they can, which might be quite a while.
What’s fun is now you can stick it to a bank easily by taking out all your money and investing it yourself. Make money off your own money. Cuz they sure do when they have it. (Hence the wait time when withdrawing large amounts)
Lots of trade apps out there now. You only need banks for holding small transaction amounts for paying bill. Soon they won’t even be required for that.
“Markets can remain irrational longer than you can remain solvent.” - John Maynard Keynes
But fact of the matter is that the people who run the market are the ones that decide who wins and loses. And they never lose.
Is this similar to the Dot.Com bubble burst?
Speaking as an ancient person that has survived 40+ years of a capitalist hellscape, Yes. The bubble always bursts.
It is a thing that bubbles do.
I remember the wall coming down and Denmark winning the UEFA cup in '92…
I think the AI bubble is gonna be so much worse than dotcom or housing in 2008. To me this AI bullshit is the dotcom on steroids.
Also like the 2008 housing crash.
I think we’re getting close to a pop.
People always say that, never happens
Enron never happened. Let’s check on my Lehman Brothers position.
Dude my pets.com stock is hot💎 🙌💎 🙌
Steve Eisman has entered the chat
??
I’ve been hearing that since LLMs started gaining popularity. Doesn’t seem any closer today than, say, 2 years ago. But someone always makes this comment.
I’ve also been expecting a general stock market crash for a decade+. Somehow still hasn’t happened.
Because they don’t need us. As long as they trade amongst themselves the price goes up. We can all die for all they care.
Doesn’t seem any closer today than, say, 2 years ago.
Have you seen what small, open-weight models from Chinese labs are capable of doing on consumer-grade hardware? They’re much more advanced than any flagship LLM running on VERY expensive hardware, 2 years ago.
I have no idea how close we might (or might not) be to the bubble bursting, but surely it’s closer than 2 years ago.
It’s fairly clear that the big ai companies are trying to get some form of general artificial intelligence because that’s basically a pot of infinite money, if they find it the rest of the economy is fucked and they skyrocket in value if they don’t find it the rest of the economy is fucked from debit and they go belly up.
It sounds like a couple of billionaires are staking their fortunes on a dice roll because the world bores them and fuck everyone else. Right?
Edit: I meant a couple, two three billionaires.
right now they are trying t get governments to buy into slop for AI surveillance purposes.
My youtube algorthim is filled with AI-skeptics (Eli the Computer guy, Ed Zitron, Prof G Markets) so this has been the slowest car crash I’ve ever gotten to watch happen. If Donald had actually focused on inflation all of these debt-sensitive AI plays could’ve continued to whistle through the graveyard. The skeptics have called out coreweave as being potentially the first domino to topple and their 6 year debt is trading at 15% right now. Thanks to plummeting token costs, they need to double their token sales every 90 days.
My youtube algorithm
Why are you deliberately living in a bubble that shows you what you want to hear? Like I have a cousin convinced for years that either the US or China is >6 months from total economic collapse, because that’s their algo is showing them reinforcing narratives they want to hear.
AI bubble is light speed car crash compared to the climate crisis.
Stop using YouTube. The algorithm is not good for your mental health, nor to learn anything of substance.
You can learn more about this on youtube
The algorithm is dog ass. YouTube is still full of plenty smart people with something to say, though. It’s a video sharing platform; that doesn’t inherently mean every content creator who uses it is also dog ass.
I don’t use the algorithm
I would love it if people just did the bare basics and posted to multiple sites but they refuse to.
I mean, maybe they do with shorts + Tiktok or some of that shit
I wish the same things, but, post to YT -500k views-paycheck. Post to Obscure Streaming Service- Only fans see it/care.
I love Nebula, but I always make sure my favorite creators get clicks on both platforms, because I’m unsure of the pay model.
Please correct my ignorance.
I watch more perfect union and the good liars. They’re not good at pointing out major issues? They bring receipts.
I have never heard of these channels. But if they are on YouTube to generate money, then they must grow views, and thus they’re subject to the algorithm. And thus you are getting your information filtered through the algorithms preferences.
It’s not censorship, but it’s a constant force that pushes content creators into one direction, and if you’re somewhat informed I don’t need to line out what direction that is. It’s just another algorithm based anti social media.
As long as it’s not showing me pro trump shit, I’m good.
Ignore pretty much anything farming related from More Perfect Union - they tend to provide farm lobby propaganda without actually fact checking it. I’ve become much more sceptical of their other coverage based on how bad that segment of it seems to be.
Do you have insight on farming issues to provide an example? Whenever we near election dates in the US we know farm lobbies always push for bailouts that usually end up benefiting corporations instead of farmers. I’m sure there are issues that exist but it’s hard to sort through what’s legit and what’s a money grab. I thought MPU was doing a good job but 🤷🏻♀️
It’s true, disable YouTube feed and only look at subscription.
You can do it at https://myactivity.google.com/myactivity
i dont log in to youtube, but if i see a pattern i just refresh it by closing the browser.
Wow. I didn’t know you could do this. Ty
I have to second that, yeah, YouTube’s Algo is insidious and drives my binge-watching, but I’ve been able to curate a subscription list of solid content creators.
Each one of the content creators ais subject to the same forces that the algorithm creates. No matter where you start, the content plus the algorithm slowly pushes you as well as the content creators into one direction. It may be a weak force, but it’s always there. content creators who want to grow their views do not have the liberty to evade it.
The direction is always towards divisive positions and decreasingly evidence based arguments, generally anti institutional, anti science, anti journalistic media.
YouTube as a feed is poison for a healthy mindset.
Sounds like movable mortgage debt from 2008
Banks are in the business of underwriting debt and reselling it to private investors.
We’ve been reading this “End is Near” shit since COVID. Put something more on the table.
Bad tech rapidly became a central pillar to that buying/selling and everyone is realizing it may be worthless.
everyone is realizing it may be worthless
Idk who you think “everyone” is
I’ve been reading, “the end is near,” since HIV/Aids, y2k, 9/11, the SARS outbreak, the anthrax scare, the swine flu/h1n1 and the several ebola outbreaks. Oh yeah all those wmd scares and the potential for a world War after 9/11.
The end is always fuckin’ near. If it’s all gonna end fuckin’ do it already!!! That’s what I think and it’s the waiting and the probabilities of the what-ifs that I can’t fucking take.
Seriously, if they wanted to end it all they could, they just make threats to control everything with fear because all governments are terrorist fucking babys that ironically, need to maintain a society.
Owning a debt from the AI industry is a fairly insane amount of risk
Is it? They’ve been outperforming every other debt class for five years running.
Even Enron was outperforming, just saying…
Spoken like a person familiar with the scandal
Their yields going higher and higher is not “outperforming”, it’s the opposite. Higher yield = higher risk.
Do you think they can maintain that for another 5 years? Another 20? Is the product AI companies providing worth the valuations?
Are 5 AI companies providing more value than every other tech company in the last 50 years? Thats what the valuations are trying to say. Im still waiting on ChatGPT to cure cancer.
I don’t see it happening; Copilot was a failed proof of concept that crippled the Windows ecosystem and permanently tarnished Microslop’s reputation as the premier operating-system developer; the Linux community doesn’t openly embrace AI much at all, and gamers couldn’t care less about it… All the LLM services have been running at a consistent loss/debt, and CoreWeave is propped up by the only 2 companies that couldn’t even successfully launch a finished product. They need to cut their losses and pack it in; call it a day!
TBF windows has been going steadily downhill since XP, but yeah, the copilot shit certainly made a whole lot of people start looking for the exit. I think a bunch of people had been getting increasingly sick of the windows experience for years but kept using it because it was just there, and they couldn’t be bothered to change. Actually, I was one of them. Copilot was just the final straw.
Do you think they can maintain that for another 5 years? Another 20?
I think expecting NVIDIA to fail inside the next five years is a wild reach. You might expect Oracle to take haircut in the next five years, based on their atrocious debt load. But even then, the idea that they’ll miss a credit payment?
Twenty years out, these firms are an even safer bet. Long term demand for compute and hosting services is only going up. And they’re so heavily consolidated. Too Big To Fail in every sense of the word. Are you going to bet against JP Morgan and Goldman Sachs on the eve of the financial crisis, even? Twenty years later, how are they doing?
Are 5 AI companies providing more value than every other tech company in the last 50 years?
It’s not a question of value, it’s a question of earnings growth. Will these top 5 AI companies be seeing stratospheric earnings growth in the next ten years? All signs point to “Yes”. The race to cement these data center footprints is a scramble for limited resources. The Capex budgets won’t be inflated to this degree forever.
Dismissing them for their rapid expansion would be like betting against New York and Chicago real estate markets because you didn’t trust skyscrapers to be profitable in another 20 years. Or betting against U.S. Steel and Standard Oil at the apex of WW2, because the resource demand from the conflict can’t go on forever.
I’m not saying they will fail I’m saying they will not maintain their rate of growth. Very, very different things but i guess you can pretend i said something else and argue against that or whatever idk dude lol
I’m not saying they will fail I’m saying they will not maintain their rate of growth.
They’ll hit a saturation point eventually, sure. But demand for capacity continues to outstrip supply.
If you will hit a saturation point, at some point the demand will stop outstripping the supply. Once you cannot exapand, the supply will catch up simply because the demand decreases, not considering that the supply could simply increase.
So did .com in the early 00’s and houses in the late 00’s
If you bought into Microsoft in '01 and have owned a REIT since '07, you’ve made oodles of money.
Yes, if you invested in the right company you made a lot of money, if you invested in the wrong company, you lose all your money. The onvestment was high risk back then it is high risk now.
Yes, if you invested in the right company you made a lot of money, if you invested in the wrong company, you lose all your money.
That’s how investing works.
The onvestment was high risk back then
I would be curious to see how you try and calculate EV on a stock.
I’d argue that Microsoft really didn’t do anything .com-ish. Amazon would have been a better choice for your argument.
And noone’s arguing that no companies flourished during those years. Just that a fuckton of them drug the market back to hell with their overpriced evaluations. (people laying fiber and buying 1.2M sock puppet ads in the super bowl)
I’d argue that Microsoft really didn’t do anything .com-ish.
They’ve been the pack leader in the tech sector for decades.
And noone’s arguing that no companies flourished during those years.
The MAG7 have been outperforming the rest of the market since COVID, often by 5+%
This is very different than betting on some small cap IPOs
They’ve been the pack leader in the tech sector for decades.
So what did they do that was crazy long bad bet .com? Them existing in the .com days leaves nothing to the discussion at hand.
Amazon was at least standing up storefronts and cloud at that point.
The MAG7 have been outperforming the rest of the market since COVID, often by 5+%
What does this have to do with Tech bubble vs AI bubble? Are you interested in being on topic or just arguing?
What about pets.com?
In the end, Chewy.com was the better investment.
Do you have any statistics?
The part nobody prices in is the stranded-asset scenario. These underwritings assume a demand curve that keeps rising for a decade. If inference efficiency improves the way training efficiency did — and there’s real pressure in that direction now — a lot of this capacity gets repriced hard.
The bank behavior is the tell: debt that gets packaged and sold on right after underwriting is the classic ‘we have concerns but we’re not holding the bag’ move.
I would say there are definite advances for inference. Custom backends built by AI for specific models, such as Strata, makes efficient leveraging of hardware much easier. Engrams, such as those in Qwen Next-Flash, allows for using more parameters via SSD, rather than memory alone.
These and other things over the past few years have allowed me to use bigger models, faster. Given another year of such progress, I think the value of subscribing to big American companies would start drying up.
Sorry, ignorant question from someone who didn’t understand much of your comment - do you mean that AI models are writing code that improves them? Cos that would be interesting.
Not improvements to the AI themselves, but rather the software that runs them. Backends like Unsloth are typically generalists - they are compatible with all sorts of hardware, but in exchange, they don’t incorporate the latest improvements or ideas. Projects run by pure human implementation tend to require a lot of oversight to ensure that additions don’t break functionality.
AI is really good at collecting and aggregating information. This makes them ideal for creating tailor-made products that have a narrow focus, since they raid many Githubs and papers, then attempt to make them into a product. Strata is one such backend, which is specially designed for Qwen Next-Flash.
Strata runs much faster than Unsloth and other generalist backends, but lacks flexibility in what it is suited for.
At least, that is my admittedly basic understanding of the situation…
Ooo I know this one! I won’t give out any spoilers.
Apparently they’ve spent 10 trillion in commitments that soan to 2032… And have to get AI earning to 3 trillion a year to avoid a crash.
…and there’s 8 billion people on earth. So I assume they’re hoping for some lucrative corporate/government contracts and bailouts.
So how would a (by now inevitable) government bailout not trigger an untenable treasury yield?
Quantitative easing.
The same shit that put us right here after the GFC
Print more money lol, although that’s sometimes referred to as a “soft default”
Free enterprise, privatize profits, socialize the losses
Is the bailout going to be because of national security or is it going to be a to big to fail situation.
If they get a bailout, are we ready to drag recipient ghouls through the streets?
Pin incoming…
Well now, that looks familiar. Rats leaving a sinking ship.
The thing is the boat was very clearly going down when they got on.
Everyone knew it was a pyramid scheme from the start they just thought there were at the top of the pyramid and now they’re worried because it looks like they’re a little further down than that so they’re trying to minimize their losses.
the boat has cheese, and as long as you get off before it sinks too much you come out ahead.
It’s about time for the ultra-wealthy to create another 2007 so they can wrench the last bits of wealth off anyone who isn’t already a $100Ms-billionaire.
they were mad because they dint get away with enough in 2008 and we still feeling the repercussions from that era.
That has been the plan since the oligarchs took off their masks.
Buckle up kids. It’s gonna be a fun ride.
Another once in a lifetime event.
GenZ Literally never having seen a functioning economy (at least while being old enough to meaningfully comprehend its existence) I imagine Generation Alpha is gonna have it even more fucked.
2008 calling? 📞 ✨
2008 USA had the financial means to avoid the worst. This isn’t the case anymore.
2008 will be a nice memory compared to what’s coming
Yeah, this will be like 2008+dotcom×2
I saw someone break down this bubble vs 08 and IIRC it’s something like 10x.
You’re actually correct. These mfs gonna make us all fucking starve. Fuck billionaires.
Don’t worry, the people responsible in 2008 were held accountable. They also didn’t profit massively off the economic collapse. Frodo also got the ring to Mordor. He had some help, but the ring was ultimately destroyed.
One brown man faced legal consequences for the 2008 crash. One brown man.
My favorite quote from The Big Short:
In the years that followed, hundreds of bankers and rating agency executives went to jail. The SEC was completely overhauled, and Congress had no choice but to break up the big banks and regulate the mortgage and derivatives industries.
Just kidding. Banks took the money the American people gave them, and they used it to pay themselves huge bonuses, and lobby the Congress to kill big reform. And then they blamed immigrants and poor people, and this time even teachers.
They blamed all the foreclosees loudly and publicly despite it being their own fault, while they got bailed out on our tax dollars. Insult to injury the rich blaming the foreclosees hardly even pay any taxes.
Obama’s biggest failures are not going after these fuckers and the W war criminals
I thought his biggest failure was his raining hellfire on whistleblowers, kids protesting, and immigrants, but I’m willing to debate this. The real sting is that we had such high hopes and we got …that, instead, and then Biden after. I was so happy when Obama was elected the first time.
HOPE was his campaign slogan, after all…
I never had high hopes, sadly I called it.
For the most part, as usual the democrats did even worse than I thought they would, but I also called that, but they did worse than even I knew they would do worse.
2009 should have been the end of trying to “reach across the aisle.” 2010 should have been the end of the filibuster.
Dr. Burry! If the investors withdraw, what’s gonna happen here? Are we done?
Honestly, I don’t know! The… the… The bonds aren’t going down! They won’t move! It’s possible that we are in a completely fraudulent system.
Or… you’re, you’re wrong.
Sure! It’s possible, I just don’t know how!
You’ll never guess Burry’s current companies he’s shorting lol
So true, and God damn so effective.
Who was held responsible? That was a big joke.
Sauron
One part of that is just a story. As for the other part: I’m glad Frodo made it with help from his friends.
Marge is calling
The Simpsons prove to be good prophets again.
If by fun, you mean existentially bad and the death of the republic in all but name to be replaced ultimately with military rule that will become increasingly despotic while the country burns, then yes, I would agree.
I’d love it if it was packaged up into securities and credit rating agencies gave those securities an A+++ would buy again rating so my wallstreet-managed 401k knows where to steal my money.
I HATE this part. I have no power to just not invest, because Vanguard or whoever owns the portfolio and they think this stuff is just going up-up-up, but they are playing with my money since I only have 4 flavors of their choosing for my 401k.
They might be right in the short term, and this used to be a thing (I think, in my parent’s age) where you could assume that number-goes-up over time and you could ignore minor dips, and maybe it’s still true for a long enough duration… but:
In this thread, I think we all see that this isn’t sustainable, but we, normal people just hoping to retire someday, don’t have the ability to disconnect from the bubble even if we want to. There are too many public companies involved and they’re all interconnected.
I despise that I’m probably invested in spacex, nvidia, oracle, etc. I’d sacrifice short term gains to let other people take this risk if I could.
Stop contributing. Once the spigot turns off the casino collapses.
If things are going to collapse in a year, is the employer match even worth it?
