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I thought Ed Zitrons argument was just corroborated by Nikkei last Friday with the new report that 1.6 Trillion in SPVs accounts for off-books debt, on top of t

I thought Ed Zitrons argument was just corroborated by Nikkei last Friday with the new report that 1.6 Trillion in SPVs accounts for off-books debt, on top of the $1.4 Trillion of on-books debt that's in these AI companies? The main argument of Ed Zitron is just that. Huge huge amounts of debt that's due "soonish". Every SPV is different but we are fast approaching the point where this all starts to become real. Now I dunno why Ed Zitron feels the need to write 10,000++++ word articles that only says "more leverage than people expect", but that's really the crux of things.

tptacek 3mo ago
If that's all Zitron wrote, I don't think he'd be as polarizing (or as dunked on). But he goes way, way past that.
- ghjkghjkghj 3mo ago
  I don't understand how that affects what he has written here? How does his data not make sense?
- dragontamer 3mo ago
  It all comes down to the fact that Zitron thinks these AI companies are over levered and have significant chances of collapsing industry wide. Yeah he uses more words to say it and bad arguments as part of it. But so did Galileo's "The tides prove that the Earth is moving around the sun" argument. Some arguments are bad, even if the overall point was correct. I think given the new Nikkei report from last week, we are seeing more and more of Ed Zitrons arguments bear fruit, after years (literally) of him calling wolf. It all is crazy talk until real numbers come out and prove him correct. But it seems to take a long time for those numbers to materialize.
  - tptacek 3mo ago
    He doesn't like or believe in the economics of the frontier labs and then works backwards from that, which takes him to some very strange places.
    - dragontamer 3mo ago
      And I'm sure Galileo didn't like the idea of geocentrinism either for irrational reasons. Seriously, good enough telescopes havent been made yet and he's all confident etc. etc. But Galileo was still had a useful framework for his criticisms despite all of his faults. ---------- I see Ed Zitron in virtually the same spot. Especially now that the SPVs thing is publicly confirmed by 3rd parties. I agree he made a bunch of shitty arguments over the years but Ed Zitron has seemingly stumbled upon something true and worth investigating now
      - keeda 3mo ago
        The SPV thing has been known for months though; here's Matt Levine talking about it in his inimitable way last October: https://www.bloomberg.com/opinion/newsletters/2025-10-29/put-the-data-center-in-the-box https://www.bloomberg.com/opinion/newsletters/2025-10-29/put... (https://archive.md/A40Fv https://archive.md/A40Fv) Maybe what's become more public is the scale of these SPVs, but Matt Levine's writing makes it seem like a sensible thing to do given the $$$ amounts involved.
        dragontamer 3mo ago
        Matt Levine doesn't talk about what's good in finance. Matt Levine talks about what's bad in finance. Very consistently. If you think that Matt Levine is making something sound sensible, you probably are falling for his dry sense of ironic writing.
        keeda 3mo ago
        That's totally fair, I was saying that Zitron has not discovered anything new, he just seems to have latched on to the next thing that lets him harvest anti-AI sentiment. What I meant by "sensible" is, if you were in the hyperscalers' shoes and wanted to spend a trillion dollars that you didn't have while minimizing your risks and it's all legal, why would you NOT engage in this kind of financial engineering? (I know the answer is something like "to avoid a potential economic crash," but hey, we're playing Capitalism here!)

tptacek 3mo ago

If that's all Zitron wrote, I don't think he'd be as polarizing (or as dunked on). But he goes way, way past that.

ghjkghjkghj 3mo ago
I don't understand how that affects what he has written here? How does his data not make sense?
dragontamer 3mo ago
It all comes down to the fact that Zitron thinks these AI companies are over levered and have significant chances of collapsing industry wide. Yeah he uses more words to say it and bad arguments as part of it. But so did Galileo's "The tides prove that the Earth is moving around the sun" argument. Some arguments are bad, even if the overall point was correct. I think given the new Nikkei report from last week, we are seeing more and more of Ed Zitrons arguments bear fruit, after years (literally) of him calling wolf. It all is crazy talk until real numbers come out and prove him correct. But it seems to take a long time for those numbers to materialize.
- tptacek 3mo ago
  He doesn't like or believe in the economics of the frontier labs and then works backwards from that, which takes him to some very strange places.
  - dragontamer 3mo ago
    And I'm sure Galileo didn't like the idea of geocentrinism either for irrational reasons. Seriously, good enough telescopes havent been made yet and he's all confident etc. etc. But Galileo was still had a useful framework for his criticisms despite all of his faults. ---------- I see Ed Zitron in virtually the same spot. Especially now that the SPVs thing is publicly confirmed by 3rd parties. I agree he made a bunch of shitty arguments over the years but Ed Zitron has seemingly stumbled upon something true and worth investigating now
    - keeda 3mo ago
      The SPV thing has been known for months though; here's Matt Levine talking about it in his inimitable way last October: https://www.bloomberg.com/opinion/newsletters/2025-10-29/put-the-data-center-in-the-box https://www.bloomberg.com/opinion/newsletters/2025-10-29/put... (https://archive.md/A40Fv https://archive.md/A40Fv) Maybe what's become more public is the scale of these SPVs, but Matt Levine's writing makes it seem like a sensible thing to do given the $$$ amounts involved.
      - dragontamer 3mo ago
        Matt Levine doesn't talk about what's good in finance. Matt Levine talks about what's bad in finance. Very consistently. If you think that Matt Levine is making something sound sensible, you probably are falling for his dry sense of ironic writing.
        keeda 3mo ago
        That's totally fair, I was saying that Zitron has not discovered anything new, he just seems to have latched on to the next thing that lets him harvest anti-AI sentiment. What I meant by "sensible" is, if you were in the hyperscalers' shoes and wanted to spend a trillion dollars that you didn't have while minimizing your risks and it's all legal, why would you NOT engage in this kind of financial engineering? (I know the answer is something like "to avoid a potential economic crash," but hey, we're playing Capitalism here!)