This is a most excellent place for technology news and articles.
: dips toe in water:
Holy shit! This bitch be wet! Just as our forefathers be-claimed.. .'
-'WTF! There's more water now! What ever will we do with all this water!?'
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.
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.
Owning a debt from the AI industry is a fairly insane amount of risk
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.
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.
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.
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.
Probably related to the now three Oracle data center that can’t get electricity.
Wisconsin passed a law that fast tracking large projects requires a high credit rating or collateral, to pay secure costs for building the power plants needed for the data center. In July Oracle’s debt rating was downgraded to near junk levels.
That means Oracle can no longer get Wisconsin to supply power to the data center so it’s a $15 billion dollar paper weight. Thats putting even further downward pressure on their credit rating and ability to secure loans to meet their $500B in obligations.
Now Oracle’s New Mexico data center is stuck due to contract issues with water and gas turbines, so they can’t move foreward. Oracle has a 9% interest rate on the loans to build that, then they raise 2% after construction, because their credit rating is dogshit. So now Oracle is claiming force majeur to get out of their increased debt obligations, which you can imagine, is killing interest in lending to them.
In Texas they just blocked new grid hookups over political backlash to skyrocketing electricity prices. That killed another Oracle expansion they just canceled, and another one is trucking in gas for gas turbines as an alternative to the electrical grid, which you might imagine is expensive.
Which brings us to now. The banks are looking at local opposition blocking these projects (local action is working), states are blocking them to avoid getting voted out, hardware costs are shooting up, and the assets backing these loans are too small for so much investment.
So the level of risk no longer works.
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My personal theory is that Oracle is a sacrificial lamb. It’s a dead end tech company that lives on licensing fees, and they’ve fucked themselves on these expansions. They’re failing at being a hyper-scaler as margins decrease.
I bet we see someone take Oracle private when their stock collapses, freeing the board of fiduciary duty to the stakeholders with a payout. This move is critical because it blocks other hyperscalers from putting in an offer to acquire their assets to shore up debt.
OpenAI will acquire the now private Oracle through a special funding round and buy up their hardware for pennies on the dollar. This will absolve them of the debt obligations Oracle has to OpenAI that have killed their credit ($500b), and stabilizes the Oracle balance sheet.
OpenAI will write this down and offer Oracle’s creditors equity stakes in lieu of cash, and will have acquired all their next gen hardware far cheaper than their competitors.
This might even fuck over Nvidia, the incestuous funders of the AI circlejerk. If Oracle gets to write off their GPU debts then Nvidia loses a fuck ton of sales, tanking their stock price — they take that OpenAI equity offer and look like they’re playing the game. OpenAI wants to build their own chips anyways, just look at jalapeño.
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.
So how would a (by now inevitable) government bailout not trigger an untenable treasury yield?
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.
