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Still too verbose. Here's a TL;DR. Meta is borrowing a whole lot of money and they're lying about it to investors.
by bregma 11mo ago
Still too verbose. Here's a TL;DR.
Meta is borrowing a whole lot of money and they're lying about it to investors.
- loeg 11mo agoNo one is lying or deceived here.
- toomuchtodo 11mo agoEhh, tell me the credit ratings assigned by rating agencies to mortgage backed securities circa 2005-2007. Its an ecosystem with misaligned incentives, and some cohort of investor will be left holding the bag. Big Tech, investment banks, and ratings agencies will get off with no consequences when this Jenga-esq capital apparatus eventually collapses.
- SpicyLemonZest 11mo agoI don't see what's Jenga-esque about this capital structure. You've got some AA- bonds issued directly by Meta having to do with their core business, and some A+ bonds issued by different entities to fund their riskier and more speculative datacenter construction. If anything, wouldn't it be harder to track the risk if both these bonds were stuffed into the same bucket?
- robocat 11mo agoA nice article on the underlying systemic causes of the crash: https://archive.ph/2015.11.08-145615/http://www.wired.com/2009/02/wp-quant/ https://archive.ph/2015.11.08-145615/http://www.wired.com/20...
- lazide 11mo agoExcept for a few instances, there wasn’t any lying or outright fraud in that situation, just like there probably isn’t here either. Just desperate, stupid, or naive lenders trying to get solid returns (and convincing themselves there are no major risk). Just like ‘08, frankly. Have enough lawyers, and you can make almost anything legal and aboveboard, no matter how sketchy it actually is. Buyer beware!
- emp17344 11mo agoIt’s not necessarily lying, but it’s certainly deceptive.
- ejoso 11mo agoNot even deceptive. This is relatively normal business practice. It’s easier to think of this as “project risk” as opposed to corporate risk overall. This isn’t different than creating a subsidiary to embark on a new program, with its own debts and assets, collateralized by a parent company. It’s effectively the same as what happens every time a major movie studio starts a new film project.
- svnt 11mo agoUsually subsidiaries’ debt is not also debt on the parent company, especially when said parent is publicly traded and subject to accounting/disclosure rules.
- bregma 11mo agoInvestor: Is this your debt, Meta? Meta: (hiding debt behind its back) No. It's Jimmy's. Investor: Now Meta, you know lying is wrong. Meta: No it's not. All the kids do it so it's OK.
- cyanydeez 11mo agoIf it's related to AI, it's more like wash trading. The entire business interest in AI is making things look like there's a lot of investment when it's really just a small circle jerk of business interests. It's just a more advanced crypto fraud.