4 ms·

The 40% historical recovery rate comes from a long line of companies that actually built things and produced products, often in factories with equipment in them

by dsr_ 1y ago

The 40% historical recovery rate comes from a long line of companies that actually built things and produced products, often in factories with equipment in them... and a warehouse full of product that didn't sell at full price. If OpenAI folds, there are two basic scenarios: - one: the LLM crash has come, and OpenAI barely has any material assets. Microsoft isn't putting more money into it, and they won't take it over -- people with seven figure salaries will be looking for six-figure jobs. - two: somehow, only OpenAI crashes, and the rest of the LLM boom continues. This likely involves OpenAI being extraordinarily outcompeted, so it's a long slow decline as contracts run out and are not renewed. 40% is probably high, but if JPM can retract the revolving debt before it all goes out the door, not ridiculously high.

JumpCrisscross 1y ago
> the LLM crash has come, and OpenAI barely has any material assets They have claims on the use of assets via their leases. More directly, if AI crashes in the next 2 years, they get bailed out. Between OBBA, tariffs and immigration enforcement, the American economy less AI is probably already in a recession. Trump and the GOP would get desperate if the political leash the AI boom has granted them is shortened. Borrowing another few trillion dollars to fix it would be worth the gamble.
- dsr_ 1y ago
  You are much more optimistic than I am about the attention the present regime pays to anyone who wants money from them, versus those who are promising them planes and donations and outright cash bribes. Bluntly: nobody in the Trump administration has the ability to soft-land the economy. When the ship is undeniably sinking, the rats will flee.
- array_key_first 1y ago
  The American economy minus AI is most definitely in a recession. The common people are struggling to buy groceries. Wages have been stagnant and prices go up and up. The problem is that AI is ultimately a luxury good. Even at it's currently ultra-subsidized rate, it's hard to justify. If it gets any more expensive, no consumers will buy it. Which might be fine, if we turn to enterprise. Except: a problem. Companies produce goods, which people then buy. AI can replace labor maybe, but it can't replace consumers.

by dsr_ 1y ago

JumpCrisscross 1y ago

> the LLM crash has come, and OpenAI barely has any material assets They have claims on the use of assets via their leases. More directly, if AI crashes in the next 2 years, they get bailed out. Between OBBA, tariffs and immigration enforcement, the American economy less AI is probably already in a recession. Trump and the GOP would get desperate if the political leash the AI boom has granted them is shortened. Borrowing another few trillion dollars to fix it would be worth the gamble.

dsr_ 1y ago
You are much more optimistic than I am about the attention the present regime pays to anyone who wants money from them, versus those who are promising them planes and donations and outright cash bribes. Bluntly: nobody in the Trump administration has the ability to soft-land the economy. When the ship is undeniably sinking, the rats will flee.
array_key_first 1y ago
The American economy minus AI is most definitely in a recession. The common people are struggling to buy groceries. Wages have been stagnant and prices go up and up. The problem is that AI is ultimately a luxury good. Even at it's currently ultra-subsidized rate, it's hard to justify. If it gets any more expensive, no consumers will buy it. Which might be fine, if we turn to enterprise. Except: a problem. Companies produce goods, which people then buy. AI can replace labor maybe, but it can't replace consumers.