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Wall Street races to protect itself from AI bubble
- dentemple 10mo agoDon't worry, once the Wall Street tap runs dry, the U.S. government will be more than happy to step in and bail out the AI corps. at the taxpayer's expense.
- jgalt212 10mo agoYou're being downvoted, but a number of AI actors certainly taking actions to become "too big to fail".
- vondur 10mo agoI said the same thing on a different post and people downvoted it. The current administration believes that the US can't fall behind China in this AI arms race. So don't expect anything too drastic to happen to the large players in the game.
- zerosizedweasle 10mo agoMaybe, but a clear Republican bailout of AI might wipe them out for several election cycles / foreseeable future. Big tech isn’t popular, AI isn’t popular and bail outs aren’t popular
- nebula8804 10mo agoWhat evidence do you have that that's going to be the case? I ask because my entire life, I've seen terrible things done by the Republican Party. And regular people get really hurt. For example, the great financial crisis. Yet, a little bit of time passes, and that 30-some-odd percent goes right back to voting for them.
- nine_zeros 10mo ago[dead]
- rchaud 10mo agoThe public voted for Republicans in their highest-ever numbers in 2020 when the party did everything possible to denigrate public health efforts and scientific research at a time when hundreds of thousands were dying of Covid, with no Mexican wall or Obamacare repeal promises met. There is no scenario where the American vote for a party will fall below 48%, and elections will continue to be decided by how 3-4 states vote.
- vanattab 10mo agoThere is a scenario, when the public wake's up and demands the right to rank their vote. https://en.wikipedia.org/wiki/Ranked-choice_voting https://en.wikipedia.org/wiki/Ranked-choice_voting
- malka1986 10mo agoChina made the us fall in kinda the same trap that the us madeade ussr fall into with the moon race.
- 1718627440 10mo agoDoes anybody know how much an ML model is actually worth to build a new model? Like when they start making a new model, do they modify the old or do they start from scratch? I'm asking to know how much owning a model is actually worth, not in how much it could make money by selling use, but in how much it deprecates and keeps value to make a new one. If say one side of China/US lacks out on a model generation, do they only need to follow progress on the science behind it and when they own the data, the algorithm and the hardware all they need is "just" time and energy or is it important, that they actually have their on instance of a large model from every generation continuously?
- daedrdev 10mo agoWith what money? US debt is owned by mostly US residents. US defecit is already absurdly high. Not to mention the looming social security failure
- stvltvs 10mo agoYou print more money. The only limit is the inflation you create.
- anonymars 10mo agoNot to disagree with the overall point, but because this comes up a lot I'll nitpick it: issuing debt is not the same as printing money With debt, along with the proverbial "cash" comes an opposing "IOU" -- any change* is thus only temporary, in the time dimension (essentially that's what's being exchanged: time) Printing money out of nowhere is different, because it's missing that other half * at the risk of stating the obvious: "change" meaning "difference" and not "cents"
- seanmcdirmid 10mo agoA lot of debt also arises because of savings needs. If everyone is saving for retirement, for example, that savings has to be debt marked somewhere else. Examples: * Social security used to have a huge surplus, that was savings that had to go somewhere (even if it was just a savings account in a bank, the bank would then be able to lend it out). They instead buy treasuries and that savings becomes debt to the USG. * China likewise needs to save dollars because it doesn't want them sloshing around in their economy leading to inflation, so instead of using it to buy things they buy treasuries, and their savings becomes debt to the USG (not always a great deal for China if interest rates are below inflation). The dollar has been so useful in the past as a currency of trade because you could save large amounts of it easily by buying US treasuries. One reason China doesn't want the RMB to be used so heavily for trade is that they don't want to do the same yet.
- somewhereoutth 10mo agoActually it kind of is, in as much as it expands the money supply. When a bank issues debt, the money is created 'out of thin air'. When the debt is paid off, that money is destroyed. However usually more debt is being created than redeemed as things go on, so the total money supply increases (this is a good thing, as it allows the economy to expand). Various regulations and central bank market interventions (quantitative tightening/easing) control this process, which thus can be induced to 'print money' if the government wishes - assuming they have a sovereign currency.
- sethops1 10mo agoSee: the Genesis Mission https://www.whitehouse.gov/presidential-actions/2025/11/launching-the-genesis-mission/ https://www.whitehouse.gov/presidential-actions/2025/11/laun... I complained about it already https://tickerfeed.net/articles/whitehouse-genesis-mission-bailout-openai-nvidia https://tickerfeed.net/articles/whitehouse-genesis-mission-b...
- roadside_picnic 10mo agoIt's national defense! Imagine if China had more slop than us!
- seanmcdirmid 10mo agoChina is focusing heavily on AI applications. They have basically decided already to deal with their coming demographic bust with robuts/AI rather than immigration. Its not even about military applications, the US is just afraid that China will shoot so far ahead of us economically that they won't have any leverage over it in the future at all.
- nebula8804 10mo agoThere's a lot of nonsense that comes out on both sides of the aisle. I wish there was a solid single source of truth to figure out what's really going on in China and what's really going on behind the scenes in the U.S. Some talk about how China has some strategic issues, such as do they have a reliable supply of food and energy? (Zeihan etc.) I guess the energy portion is being solved with renewables. And I guess if they solve the issue of demographic collapse with robots and AI, that's something. But really, if there's less people and they're getting older, what's the point? What are they really working towards? This question is also becoming a problem post-Trump immigration ban in the U.S. Who knows what the U.S.'s demographics are going to look like now? Trump inherited a U.S. with some of the best demographics of all nations on the planet, especially in the West. And he managed to throw that in the garbage.
- alexashka 10mo ago> There's a lot of nonsense that comes out on both sides of the aisle. I wish there was a solid single source of truth to figure out what's really going on in China and what's really going on behind the scenes in the U.S. Isn't this simply the answer? That what's going on is gaslighting of the public and that there are people behind the scenes and they don't want hoi polloi to know what they're up to? This geo-politics (or politics) talk is 'intellectual' men's astrology. When a woman asks me my astrological sign, I know she's a deeply unserious person. When a man says 'do they have a reliable supply of food and energy'...
- dataviz1000 10mo ago> Don't worry, once the Wall Street tap runs dry, the U.S. government will be more than happy to step in and bail out the AI corps. at the taxpayer's expense. I have a brilliant idea. Why not start this now? The US government will give every child born $1000 in money in order to hand it to the small number of families who own 70% of equities in order to purchase equities the child can't touch for 18 years. That is US Government -> child -> rich person who currently owns the equity, although the rich person gets the cash in hand the child has to wait 18 years to sell the equity. Where does the US Government get this $1000 per child from? Borrow it, adding to the $38,000,000,000,000 in national debt. Here is the interesting part of my brilliant plan. That child will inherit, calculated per capita, $111,000 in debt the moment she is born. That child will be responsible, calculated per capita, for ~$3,000 a year in interest on that debt. In order to sell the idea, every time the US Government gives $1000 to a child to purchase stocks I own, I will give $250 to another child to purchase stocks I own. Let's do the math: $1000 profit - $250 loss + $250 profit = $1000 profit. Best part is the media will run this as the leading news story for 3 days making me look like God. It is a brilliant idea.
- glitchc 10mo agoI love it, except there's no point in providing debt to a party with no ability to pay for ~18 years.
- bdangubic 10mo agodue to ever-increasing income inequality the legal age for being able to have a job will be reduced to 6 in the coming years :)
- dataviz1000 10mo agoThe new AI data center I build to do what ever it is that AI Clippy does over at Microsoft will run on coal energy and those dirty chimneys are not going to clean themselves.
- Retric 10mo ago
- robocat 10mo agoMake America Bankrupt Again!?
- boh 10mo agoThat's why they're hedging. US government regulation has liquidity requirements so it doesn't occur.
- Nasrudith 10mo agoHistory reminder to everyone: The dot com companies were not bailed out. Only the Detroit auto industry. What is with this rage-bait assumption that a bailout is guaranteed?
- thunky 10mo agohttps://en.wikipedia.org/wiki/Greenspan_put https://en.wikipedia.org/wiki/Greenspan_put
- jbverschoor 10mo agoIn the meantime, people who are actually working with it only become more bullish, and see a world where most people are first willing, and later basically required to pay 20-200 per month
- thatguy0900 10mo agoThis really doesn't make sense to me. I see no world where Ai is so useful that the common man is willing to pay 100+ a month for it, but it's also a world where the common man has a job. There's too many people for everyone to have some niche job the Ai can't do.
- bojan 10mo agoAnd if such a job would carry a work week of, say, 5 or 10 hours?
- MSFT_Edging 10mo agoThen they would be paid for 5-10 hours and have to ask the government for benefits. In what world would a corporation pay a full yearly salary for 1/8th to 1/4 the labor hours? The current world already looks to labor as the juiciest place to cut cost for the profit margin.
- HPsquared 10mo agoThat's not enough time to maintain skill. Experience would build very slowly in people working so intermittently.
- thatguy0900 10mo agoSomeone is working 20 hours a month and paying for a 100$ subscription on top of bills? And this isn't a isolated case, this is the expectation for the normal person? Is the job supposed to be real or is the government just giving out universal basic income while being petulant about people not working at all
- lm28469 10mo ago
- jtf23 10mo agoprofits have not materialized, nor can they: machines can only transfer value, they cannot create it
- ubercow13 10mo agoWhat?
- jtf23 10mo agoit turns out capitalists do not understand economics
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- mikepurvis 10mo agoTwo responses to this: - Most participants in the economy are creating very little real value. They're shifting things around or temporarily solving problems that are highly localized to the organization they're in. - There's a lot of unrealized value stored in the corpus of knowledge that AI companies have ingested— the millions of webpages, the scanned books, wikipedia, the blogs and Q&A sites. So even if AI companies are not creating new insights, just the act of locating, filtering, and summarizing knowledge that was already present somewhere in the world is valuable. Indeed, one could use this same argument to declare that Google in 1999 was creating no value, which is of course obviously untrue.
- zerotolerance 10mo agoGoogle created two kinds of value: content discovery via connection (value to the consumer), and market reachability for advertisers. Oh, and also the world's most inconvenient spell check. AI proposes to solve: a content supply side problem which does not exist, and an analysis problem which also only maybe exists. Really what it does in the best of cases (assuming everything actually works) is drive the cost to produce content to zero, make discovery less trustworthy, make the discovery problem worse, and launder IP. In the best case it is a net negative economic force. All that said, I believe the original comment is about the fact that the economy exists to serve market participants and AI is not a market participant. It can act as a proxy, but it doesn't buy or sell things in the economic sense. Through that lens, also in the best case the technology erodes demand by reducing economic power of the consumer. That said, I'm stoked to hear about the next AI web site generator or spam email campaign manager. Lets setup an SPV to get it backed off-balance sheet.
- encyclopedism 10mo agoWhat bubble? Where is it? I haven't seen it! Here, try my SOTA AI toothbrush.
- red-iron-pine 10mo agopresumably it data mines plaque locations while providing no actual hygiene benefit whatsoever
- lambdaone 10mo agoThis makes the hair rise up on the back of my neck; it reminds me the sub-prime crisis - "they can't all default at once!"
- JohnMakin 10mo agoIt does look and feel very similar - particularly the risk shedding and assumptions made there
- thewebguyd 10mo ago> "they can't all default at once!" Narrator: As it turns out, they can. The difference now is instead of banks holding the risk, they are now the safest portion of the loans. The risk is now moved to private credit, so if this bubble bursts, they will panic sell other assets to cover the AI losses, which will crash unrelated sectors as well. Since the now bad AI loans can't be sold, they need liquidity form elsewhere to cover. AI bursting means other S&P 500 stocks, treasuries, gold, crypto, commercial real estate will all go down with it.
- Ekaros 10mo agoI wonder how much other bad private credit there is. If you want liquid funds, rolling it all over time and time again might stop working... Maybe it is really time to clean it all up.
- marcosdumay 10mo agoYes. And they always start trying to diversify only after they work years forcing everything to be correlated to it... The .com bubble wasn't like this, but it was a minority between bubbles.
- vb-8448 10mo agoOne thing it's not clear to me: the amount of money is colossal, where the one who are supposed to refund banks will get the money?
- thewebguyd 10mo ago> where the one who are supposed to refund banks will get the money? Liquidating other assets. The point of the banks using SRTs is to push the default risk off of the bank and onto investors. So now, instead of banks failing, private credit gets to bear the risk of the bubble popping. Since they can't sell the (now bad) AI debt, they will need to liquidate all of their other assets to pay the banks. That's why a potential AI bubble burst can cause the markets to enter a death spiral and bring down a bunch of other, unrelated markets. If private credit can't cover the losses by liquidating everything else, well, then they fail, and we either let it all crumble or do bailouts again.
- spwa4 10mo agoYou forget the single greatest source of money for investors: loans. Sorry "margin". With the banks. And margin is nonnegotiable because the whole point of the stock market is to massively increased loaned money because that is the real advantage to the economy they provide. Plus the problem of 2008. You cannot offload risk if everything is synchronized, the math still works but doesn't take "either everything crashes or nothing does" into account.
- voxleone 10mo agoLooks like we might be witnessing a textbook cycle of self-fulfilling prophecy in the making. As the article suggests, once large investors and institutions start calling this an “AI bubble,” the narrative alone can drive more capital, inflating valuations further just because everyone expects growth. When price → expectation → price becomes the dominant feedback loop, fundamentals matter less. That kind of reflexivity has powered past bubbles. George Soros’ reflexivity thesis applies: rising prices attract more investment, which inflates prices further, until reality forces a reset. If many AI-related companies can’t quickly deliver expected growth, the eventual correction could be sharp. In short: hype begets cash, cash begets price, price begets more hype, and at that point, we’re no longer betting on value, we’re betting on the belief itself.
- alecco 10mo agohttps://archive.ph/kwD1t https://archive.ph/kwD1t > Banks are lending unprecedented sums to technology giants building artificial intelligence infrastructure while quietly using derivatives to shield themselves from potential losses. And who is their counterparty? Aliens? What a dumb click-bait article.
- jesuslop 10mo agoIs there a web that calculates implicit credit ratings of the hyperscaler companies?
- boh 10mo agoBanks hedge investments-it's pretty standard and lowers their risk-weighted assets. If their investments are big, their hedges are big. If banks have a net negative view towards their AI investments, this article fails to articulate that (regardless of how many exciting adjectives they choose to use).
- spwa4 10mo ago$5 trillion dollars in loans? Pretty standard?
- boh 10mo agoI think you're filling in the blanks for a pretty detail light-broad brush-click baity article. The $5 trillion that it cites is by its own words what they're "expected to spend". Also the global bond market is trillions of dollars worth and yes it is typically hedged.
- hackable_sand 10mo agoNeeds to pop faster.