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I’m not sure I understand these references. The banks were too big to fail specifically because they were banks involved with the finances of every major indust

I’m not sure I understand these references. The banks were too big to fail specifically because they were banks involved with the finances of every major industry and government, not simply because their (arguably specious) valuations, or even market caps, had a ton of zeroes on them. What’s the argument for OpenAI being so inherently critical and interweaved with the rest of the economy that it can’t be allowed to fail? What’s the argument for how such a bailout would result in greater economic outcomes? The banks that got bailed out continued lending and immediately resumed profitable business, how will the AI companies offer value towards such a proposition?

datakan 3mo ago
“National security! We can’t let China win the AI race!” Or some BS
- cindyllm 3mo ago
  [dead]
aurelius_v 3mo ago
Who do you think the private credit lenders are exactly?
boccaff 3mo ago
The value of AI and related companies on retirement funds
jordanb 3mo ago
Moreover what would a bailout even look like? The banks got loan guarantees from the government essentially. But like what happens if the government guarantees open ai's loans if the company is structurally unprofitable? Does the government create an operating subsidy?
- iambenm 3mo ago
  Modeled on Chrysler, perhaps?
  - andsoitis 3mo ago
    > Modeled on Chrysler, perhaps? The government intervened to prevent massive job losses, protect the domestic auto industry, and, in the 1979 case, preserve critical national security manufacturing, as Chrysler produced the M-1 Abrams tank. Now, I suppose it is possible to imagine that the US government might bail out either or both of OpenAI or Anthropic (whether or not there's an ROI like there was with the Bank Bailout of the 2008 crisis) if the govt. deemed the technology critical to keep a fast pace on (I think we can say without doubt that requirement is satisfied) but, crucially, the government's calculus is that it is better to have these companies compete rather than bring the knowhow in-house. Is that what you're thinking?
    - iambenm 3mo ago
      What came to mind to me was a bailout shaped to benefit the public even if the company failed post-bailout, specifically the Chrysler Tech Center and how it was designed as a building that could be repurposed as a shopping mall if it fell through. Odd, interesting place.
- etskinner 3mo ago
  Inference is cheap, only the training is expensive. Both Bernie and Trump have suggested doing a partial government takeover of the big AI companies to start a sovereign wealth fund. So it would look like the government taking ownership, letting investors lose their stake, and then operating as inference-only, which would turn a profit
  - oblio 3mo ago
    > Inference is cheap We have absolutely 0 hard proof of this. We have a lot of wishful thinking but no hard numbers, audited numbers from any public entity. I'd love to see them if they are available.
BrenBarn 3mo ago
The argument has already been made. They argued that their business model would collapse if they weren't allowed to train on a bunch of data that wasn't theirs, and nobody stopped them. The argument will be made even more later, as they will argue that too many companies are dependent on their technology, etc.
yndoendo 3mo ago
Too big to fail is an oxymorononic statement. Bailing out bad businesses retains those that poorly managed them. Those organizations should of been sold off to remove the bad actors. AI is currently a sunk cost to the US stock industry that is repeating the bad actor scenario. Not a single AI company is profitable and none of them produce deterministic nor cost effective solutions Microsoft's statment of using AI to find the most resource intensive applications being ran highlights this. Task Manager does the same thing and does not need a server farm for training. It also uses MB of RAM vs GB. If manufacturing had the same error rate in production as AI, those plants would of went out of business. Both industries heavy use legal bribes, donations. Politicians will gladly bail them out to take ℅ of the cut in bribes. Too big to fails are false claims to retain the bad actors that fund politicians. Bad actors need to fail so the good ones can properly operate. Too big to fail is also allowing large corporations to skirt copyright laws. You or I seeding TB of copyright content would be thrown in jail. Too big to fail is rebranding of legalizing corruption.
- andsoitis 3mo ago
  > Both industries heavy use legal bribes, donations. Politicians will gladly bail them out to take ℅ of the cut in bribes. Are you saying that it is likely that at some point in the not too distant future, OpenAI and Anthropic will need bailout-size cash infusions from the US Government to continue existence and that the US government will do it and not face severe political consequences? I just don't think that chain of events is likely. The current administration pays very close attention voter sentiment.
  - drdexebtjl 3mo ago
    It wouldn’t be the first time the US government made expensive and unpopular moves in the name of national security and walked away largely unscathed.
    - andsoitis 3mo ago
      That’s not a convincing argument that it is likely to happen in this case. For me to be more convinced, it would be helpful understand what similar specific example you have in mind that points to such likelihood in this case.
watwut 3mo ago
> The banks that got bailed out continued lending and immediately resumed Pushing against regulation supposed to prevent this happening again. They also resumed taking a lot of risks, just like before. Their managers got rich while doing the same decisions as before, because other people paid the price. > What’s the argument for OpenAI being so inherently critical and interweaved with the rest of the economy It does not need to be inherently critical and interweaved with the rest of the economy. It has to pay the bribe to the right president. The "military necessity" excuse will be used then.
misja111 3mo ago
> What’s the argument for OpenAI being so inherently critical and interweaved with the rest of the economy that it can’t be allowed to fail? AI companies are more and more interweaved with the economy because half the world is owning their stocks or has lent them money. Or, they have invested in companies that in turn have invested in AI. It is very similar to the situation before the credit crisis.
- disgruntledphd2 3mo ago
  Sortof, much of the financing up to now has been from equity, rather than debt (with the exception of Oracle). As the funding profile moves more towards debt, there's a bigger chance for problems as leverage tends to amplify the bad outcomes. If Big AI (basically Mag 7) continue to issue debt, then there may be financial stability risks if it all blows up. The numbers are fine now, but the trend line is concerning (hence the BIS paper).

datakan 3mo ago

“National security! We can’t let China win the AI race!” Or some BS

cindyllm 3mo ago
[dead]

aurelius_v 3mo ago

Who do you think the private credit lenders are exactly?

boccaff 3mo ago

The value of AI and related companies on retirement funds

jordanb 3mo ago

Moreover what would a bailout even look like? The banks got loan guarantees from the government essentially. But like what happens if the government guarantees open ai's loans if the company is structurally unprofitable? Does the government create an operating subsidy?

iambenm 3mo ago
Modeled on Chrysler, perhaps?
- andsoitis 3mo ago
  > Modeled on Chrysler, perhaps? The government intervened to prevent massive job losses, protect the domestic auto industry, and, in the 1979 case, preserve critical national security manufacturing, as Chrysler produced the M-1 Abrams tank. Now, I suppose it is possible to imagine that the US government might bail out either or both of OpenAI or Anthropic (whether or not there's an ROI like there was with the Bank Bailout of the 2008 crisis) if the govt. deemed the technology critical to keep a fast pace on (I think we can say without doubt that requirement is satisfied) but, crucially, the government's calculus is that it is better to have these companies compete rather than bring the knowhow in-house. Is that what you're thinking?
  - iambenm 3mo ago
    What came to mind to me was a bailout shaped to benefit the public even if the company failed post-bailout, specifically the Chrysler Tech Center and how it was designed as a building that could be repurposed as a shopping mall if it fell through. Odd, interesting place.
etskinner 3mo ago
Inference is cheap, only the training is expensive. Both Bernie and Trump have suggested doing a partial government takeover of the big AI companies to start a sovereign wealth fund. So it would look like the government taking ownership, letting investors lose their stake, and then operating as inference-only, which would turn a profit
- oblio 3mo ago
  > Inference is cheap We have absolutely 0 hard proof of this. We have a lot of wishful thinking but no hard numbers, audited numbers from any public entity. I'd love to see them if they are available.

BrenBarn 3mo ago

The argument has already been made. They argued that their business model would collapse if they weren't allowed to train on a bunch of data that wasn't theirs, and nobody stopped them. The argument will be made even more later, as they will argue that too many companies are dependent on their technology, etc.

yndoendo 3mo ago

Too big to fail is an oxymorononic statement. Bailing out bad businesses retains those that poorly managed them. Those organizations should of been sold off to remove the bad actors. AI is currently a sunk cost to the US stock industry that is repeating the bad actor scenario. Not a single AI company is profitable and none of them produce deterministic nor cost effective solutions Microsoft's statment of using AI to find the most resource intensive applications being ran highlights this. Task Manager does the same thing and does not need a server farm for training. It also uses MB of RAM vs GB. If manufacturing had the same error rate in production as AI, those plants would of went out of business. Both industries heavy use legal bribes, donations. Politicians will gladly bail them out to take ℅ of the cut in bribes. Too big to fails are false claims to retain the bad actors that fund politicians. Bad actors need to fail so the good ones can properly operate. Too big to fail is also allowing large corporations to skirt copyright laws. You or I seeding TB of copyright content would be thrown in jail. Too big to fail is rebranding of legalizing corruption.

andsoitis 3mo ago
> Both industries heavy use legal bribes, donations. Politicians will gladly bail them out to take ℅ of the cut in bribes. Are you saying that it is likely that at some point in the not too distant future, OpenAI and Anthropic will need bailout-size cash infusions from the US Government to continue existence and that the US government will do it and not face severe political consequences? I just don't think that chain of events is likely. The current administration pays very close attention voter sentiment.
- drdexebtjl 3mo ago
  It wouldn’t be the first time the US government made expensive and unpopular moves in the name of national security and walked away largely unscathed.
  - andsoitis 3mo ago
    That’s not a convincing argument that it is likely to happen in this case. For me to be more convinced, it would be helpful understand what similar specific example you have in mind that points to such likelihood in this case.

watwut 3mo ago

> The banks that got bailed out continued lending and immediately resumed Pushing against regulation supposed to prevent this happening again. They also resumed taking a lot of risks, just like before. Their managers got rich while doing the same decisions as before, because other people paid the price. > What’s the argument for OpenAI being so inherently critical and interweaved with the rest of the economy It does not need to be inherently critical and interweaved with the rest of the economy. It has to pay the bribe to the right president. The "military necessity" excuse will be used then.

misja111 3mo ago

> What’s the argument for OpenAI being so inherently critical and interweaved with the rest of the economy that it can’t be allowed to fail? AI companies are more and more interweaved with the economy because half the world is owning their stocks or has lent them money. Or, they have invested in companies that in turn have invested in AI. It is very similar to the situation before the credit crisis.

disgruntledphd2 3mo ago
Sortof, much of the financing up to now has been from equity, rather than debt (with the exception of Oracle). As the funding profile moves more towards debt, there's a bigger chance for problems as leverage tends to amplify the bad outcomes. If Big AI (basically Mag 7) continue to issue debt, then there may be financial stability risks if it all blows up. The numbers are fine now, but the trend line is concerning (hence the BIS paper).