AI's debt binge can't last, hidden borrowing reaches $1.65T

Sorry to break it to you but you are neither immune nor a bystander to the fortunes of AI going down. You are part of it all whether you like it or not.

We have only begun to extract the value of commoditized intelligence. Sure there are arguments on local models and pricing power.. but I think we will be compute constrained for the near future.

Yeah, this is what I'm thinking. New ways of productizing the technology are still be defined as people are using it. The pricing models are evolving in real-time as the providers figure out what the market will bear.

Ever since the 2008 housing crisis, people have been predicting the next bubble-burst/black-swan event.

The one that really crushed the markets was the one almost body saw coming: Covid-19.

Fiber and railroads don't need tens of billions of dollars in continuing yearly maintenance expenses to keep them from going stale.

A lot of publications pay attention to that.

A lot of people love reading things (often only reading things) that make then feel right/correct/justified.

A lot of publications live or die on ad views.

And just like that we have a viable media business model!

FWIW Enron was also a „sophisticated company“ at the time

There's an old WSB saying: the market can remain irrational longer than you can remain solvent. The AI craze is that but on 'roids.

> These are incredibly sophisticated companies so presumably they wouldn’t let themselves get into a company ending bind.

The problem is, company C-levels don't care about the long term health of the company. They only think about next quarter (in a misguided interpretation of "shareholder duty/fiduciary duty") and their bonuses tied to their KPIs.

> But what are the chances this is actually an MBS type situation where the system is truly overloaded and a few sacrificial lambs are needed?

The system definitely is overloaded to hell and beyond after well over a decade of ZIRP. That money never got deflated out of the system in a healthy way and now everything is looking to fall apart.

Unfortunately, such events are already "priced in". VC essentially is built on 1 of 100 investments striking it big and 99 going bust. A market correction won't hurt the big guys, but it will definitely hurt all the small guys.

eh trolling for clicks. It's just not on the balance sheet (if i have my terms correct) so you have to look in a different report to find the numbers. If it was truly hidden then discovery of the debt would trigger lawsuits from investors. Major investors know about it already that's why no one is getting upset over it except for laymen. btw, laymen in the stock market (retail investors) just serve as red meat or cannon fodder for actual traders with real money and real information.

edit: there will def. be significant winners and losers, the stakes are very high and the dollar amounts are very large.

You say this as if when "lending stops", it isn't a big deal. What you're describing is a concern for a collapse in finance markets.

My future's so bright I gotta' wear million dollar shades.

chuckle

That setup isnt true for the US, not even close.

> And unlike earlier periods of heavy debt, the Federal Reserve is no longer a big buyer of Treasuries, placing a heavy burden on private-sector investors.