As long as this debt does not make it into life insurance and pension funds, we are fine. The trouble is that private credit is taking control of some life insurance companies and off-loads this debt to these. When these fail, it will become everyone's problem.
> Risks to financial stability may also stem from entities with particularly high exposure to private credit markets, such as insurers influenced by private equity firms and certain groups of pension funds. The assets of private‐equity‐controlled insurers have grown significantly in recent years, with these entities owning significantly more exposure to less‐liquid investments than other insurers
Couldn't it be a problem given the concentration of the S&P in these companies?
At this point these companies make up a huge portion of 401k's for a huge chunk of Americans. How would it affect retirees if they dropped 40-50%, likely taking the market with them?
NVidia makes up 7.5% of the SP500. If it lost 50%, it would be a 3% loss for the index. The concentration is bad, but it would not cause a drop of 50% retirement funds by itself. If you take an all world index, it's even less.
Still, if NVidia lost 50% of their market share, we would probably see a big collapse of the stock market.
EDIT: to note, the top ten companies in SP500 make up an unprecedented concentration but they're not "mostly AI".
For those who stick to a meaningful asset allocation (e.g. 60/40, 80/20, etc), this does not pose significant problem -- they would not be buying much stock in the last 3 years. Instead, they would be buying mostly fixed-income. Probably mostly in 401k/IRA accounts.
It’s an interesting thought. The growth is so extreme that if the S&P 500 fell 50% today it would reach levels last seen in 2022. Given that the timespan is so short, I’m honestly not sure it would be as bad for 401ks as people expect unless all of your investment was concentrated in the last 4 years.
I suppose it’s worse if your calculation is, “I’ll retire when my 401k hits $X absolute value,” but I think most people just retire at a certain age instead with risk spread across decades.
The problem some have pointed out is that these companies are such a huge portion of the market right now.
The sound advice for the past decades has been, just invest in a low-cost ETF tracking the S&P instead of picking stocks to minimize risk and invest in the market broadly.
So a huge number of people have done that, believing they're diversified, while tech makes up 40% of the index.
Yes you could sell your S&P and find things to invest in least likely to be impacted by a potential bubble, but your average 9-5'er with automated contributions to their 401k is probably not sophisticated enough to do that.
And that's assuming only these companies would be affected if there was a massive draw-down in tech/AI related stocks. We haven't really seen a situation like this before, so it's not easy to predict what effects there might be in the broader economy.
The employer selects a financial company to manage the 401k. When you switch jobs, you can roll the 401k from the previous employer into the new one, or into an IRA (Individual Retirement Account).
Usually the financial services company will offer several options: more aggressive/high risk, or less aggressive/lower risk. Most people will just go with whatever is the default option.
So much of the American S&P 500 is dominated by handful of companies that the risk is not that easy to avoid. If or when the AI bubble pops, it's going to take down a lot of the economy with it. You can direct your retirement savings into the lowest yield/lowest risk assets offered by the firm, but you'll forego whatever growth happens in the mean time.
Will the bubble pop next week? Next month? Next year? Who knows. Timing the market is incredibly difficult.
There's a famous quote, attributed (perhaps apocryphally) to John Maynard Keynes: "The market can remain irrational longer than you can remain solvent."
You probably meant to say that practically, high leverage tends to leak into companies of public interest. For example, when high net worth individuals start trimming their private credit holdings, which eventually end up with insurers. That is why the regulators have to watch carefully that it does not happen.
Do they? Is a company with $200 billion annual revenue and earnings (EBITDA) of $100 billion having $420 billion of off-balance-sheet debt really staggering?
In many other industries that would be a perfectly normal amount of debt to have. It's only unusual because we are used to tech companies having so much cash on hand they don't know where to put it
These companies have valuations reflecting a debt light business. At a minimum, 420 billion in debt is enough to change the stock price by 10-20%. If the company plans to add another 400 billion in debt you need to give it the side eye.
If 50 billion in revenue is from other companies debt spending… then You have a problem.
> These companies have valuations reflecting a debt light business.
Sorry, but this doesn’t make sense. The valuations of these companies reflect their growth.
In finance there’s nothing inherently virtuous about a “debt-light business”. It’s all an allocation decision based on how you expect to grow relative the cost of that growth. Think about it this way.
Try and reframe it: are cash-heavy businesses given a premium?
"Companies disclose such future debt not in their balance sheets, but in annotations to their quarterly financial statements. This is a legitimate practice under accounting rules, but may make it difficult for retail investors to recognize risks."
"Today's AI industry is partly supported by demand generated by circular investment. Nvidia and tech giants invest in data center operators and AI companies, with that money then turning into GPU and cloud usage fees. Actual demand is difficult to see, increasing the likelihood of over investment in data centers."
>but may make it difficult for retail investors to recognize risks
Ok, so just to be clear: institutional investors are (a) the ones investing the large proportion of capital in these companies and (b) are well equipped to decipher financial statements. The idea that any significant amount of retail investors have even seen a financial statement, let alone is making decisions based on their analysis of a financial statement, is laughable. And, even then, if someone is putting in that effort, then presumably they're not going to get tripped up by a legitimate practice that they ought to specifically be looking for given the context.
And all of that doesn't even take into account that every article discussing the financials of AI firms over the last half a decade have been pointing out these dynamics. We're literally in a thread discussing this exact dynamic. Retail investors are certainly far more likely to make investing decisions based on these kinds of articles and threads than they are based solely on independent financial statement analysis that they're conducting. At a minimum, I think anybody taking any of this seriously has gotten the hint by now.
If it comes out that these firms are committing straight-up fraud, then there will be a lot more to discuss. But, as of now, the sentiment is that these firms are behaving perfectly legitimately, just abnormally and maybe irresponsibly compared to their historical context. If an investor isn't equipped to handle this kind of analysis under these circumstances, then I'm not going to feel too bad if they lose their money "investing" when they're really just gambling.
Retail investors shouldn’t be investing in individual stocks outside of industries they understand well. Following GAAP is the definition of not hiding the obligations.
Are they really "trying to hide" this debt? I think it's pretty common knowledge that a lot of these companies are using debt/bonds for funding. The debt not showing up where the author wants is a reporting formality not an attempt to hide it.
I think the point is that it’s not showing up on the standard financial filings. If you were to pull the annual reports for these companies, you wouldn’t see it. That doesn’t mean it’s impossible to find it. Obviously, it is otherwise the article wouldn’t have been written. But you’re going to have to go the extra mile. To be clear, none of this is illegal. It’s just covered in the advanced CFO accounting class.
It's not hidden at all. Financial blogs very accessible to laymen like Matt Levine's Money Stuff have talked about this structure months ago. If you are an investor and surprised by this news you weren't sufficiently prepared and shouldn't have been investing in the first place.
Take-or-pay contracts appear as "contractual commitments" in 10-K. They are not hidden. That's the way they are reported in all industries where take-or-pay contracts exist. There's nothing nefarious about it.
If it didn't matter, why would they bother jumping through hoops to keep the debt off their balance sheet?
In the run-up to 2008 a big factor in the bubble forming was that poor quality loans were packaged in a way to hide the risk in those investments. I'm not expert enough in finance to know if it's the case now, but we do know that clever accounting to hide debt can lead to the incorrect valuation of assets, potentially leading to financial ruin.
They're not jumping through any hoops, I think they're simply complying with reporting requirements. It's not on their balance sheet because being recorded as strait debt would itself be misleading. My understanding is that these sort of off-balance sheet "debt" is mostly in the form of deal terms that may or may not be expressed at some point in the future.
An analogy that comes to mind is when companies used to book future sales in the present. They got in trouble for this and is now forbidden. I recall reading that one deal had terms that transferred assets if certain conditions were not met. If terms-based debt should be booked now, then terms-based assets should as well. This stuff makes my head hurt.
Either way, as long as it's not hidden (and it's not for the public companies), then it's fine.
Something doesn't quite smell
right about this story. Here's a key paragraph from the Nikkei story that this Futurism story re-tells:
> Companies disclose such future debt not in their balance sheets, but in annotations to their quarterly financial statements. This is a legitimate practice under accounting rules, but may make it difficult for retail investors to recognize risks.
Does that justify a "tries to hide" headline?
This is also one of those cases where the headline is free but the details are behind a paywall.
I do think the story itself is notable, but I expect the discussion is going to lack some nuance.
Really feels like the govt + industry, through protectionism and fear-mongering, are propping up a "Too big to fail" situation.
Long term, I think the best thing the economy could do is to make training on model outputs fair-use, as suggested by Ben Thompson[1]. Short of that, the companies should enter into distillation agreements with other US labs to let them make near-Fable models.
As it stands now, the companies want to hold all the upside. While also being culturally so safety focused - "only we have the right to regulate this" that its IMO counterproductive to US leadership in AI.
A different universe where X.ai, Meta, and everyone were also building Fable competitive open weights models - because they can distill - would probably be better for the US long term. But there's too much capital on the line right now behind OpenAI / Anthropic for them to do this.
We also may be at the wealth inequality level where prices become… weird.
If there is really only a few dozen people doing the buying and the selling at the top on a weighted basis, then the prices are whatever they convince themselves of.
Wouldn't improving LLM efficiency make them even more useful across the board, then they can enjoy the nice economies of scale?
The plan is to have LLM working completely autonomously, in that case, the more resources you have, the better.
Perhaps people will use local LLM to ask questions, or coders use them for their personal projects, but that's not where the real money is.
We haven't even started with a lot of things were we need a lot more compute:
Your real personal agent which knows you and helps you like "good morning elmer2, your calendar invite for dinner is today, you will need to leave at 18:18 if you want to use your normal public transport route per train. I put an alarm in your phone for you"
Agents to agents
Agentic teams.
Finetuned models for everything like Java/spanish coding model.
Very long term research like multiply hours or days or weeks and plenty of these in parallel.
Given how heavily subsidized it is at the moment, the efficiency isn’t as important. Typically efficiency would give you more at lower cost, but with token prices so removed from actual cost that plays less of a role here.
If the inference gets an order of magnitude cheaper, labs can afford to subsidise an order of magnitude more usage for the same marketing cost. So that part of usage will, if not accelerate with efficiency, at least still grow linearly with it. And there is a substantial amount of usage at or above true costs - everyone using a 3P harness, everyone on enterprise contracts, and everyone self-hosting an open weights model in a 3P cloud.
I assume the reference was to the Jevons paradox, as described in Jevons' 1865 book, "The Coal Question". Watt's steam engine massively increased the efficiency of coal in steam engines, which increased the use of coal fired steam engines, which increased coal consumption.
The (any!) comparrison to photovoltaics is
not acurate.Photovoltaics (PV) are primary energy producing infrastructure that produces its own fuel and is now verticly integrated into it's own supply chain, nothing other than life itself posseses this atribute.
AI, is exceptionaly likely to work in exactly the opposite fashion and take its host out as it goes down.
PV had to prove that it was truely indispensable and also prove to have realistic prospects for improvement and volume production before investments were made, and then prices came down.
AI has proven that it burns more money faster than anything else, ever.
I will admit that I am an early adopter of solar, but an AI refusenic, but still there is no reasonable comparison of AI and
anything outside of religion.
I disagree in a way, part of the reason they can't really succeed at the moment is because it's way too expensive to really deploy at scale for most companies, but even for those AI companies themselves. If they can make business access subsidized/cheap the same way pro/plus/max/whatever plan are for regular users while still being profitable, this can work out. The other solution is if they do reach that "it's so super smart it's reinventing the world every day", but that one is much more of a maybe possibly one day.
What they can't do is the rug pull of pricing like Fable did, hoping for profitability while playing the "it's so super smart" card. It's very profitable, but customer will be very happy to leave for cheaper pasture and that's why the recent news about this or that cheaper chinese models make headlines.
Essentially, the rush now is "if I make it a boring profitable company I'm not worth a trillion AND i'm overshadowed that plays the singularity card even if they're bullshitting"
You do realize "subsidizing" means charging less for something than it costs to provide, right? So they'll lose a dollar on every sale, but they'll make up for it in volume? E2E is usually where the profit comes from. If they're subsidizing getting regular users on board (pro/plus/max), and they're subsidizing to get businesses on board (massive deploys), where can the profit possibly come from without a pricing rug pull?
I do, my point was answering to the "if it comes so cheap that" they would stop losing money of that, they would still need to subsidize for acquisition or some big clients or for rush times. It's the all-you-can-eat-buffet strategy.
I'm not saying I see them going that way or that I would, but at least THAT would possibly work.
Jevon's Paradox ("As efficiency of resource use increases, usage of the resource increases") says otherwise. One things become more efficient, we can use them in lots of ways that would not have been viable before, driving up usage.
If they continue investing in compute, memory, memory bandwidth, network infrastructure, etc. it makes a relevant contribution of progress in all of these fields which I will leverage.
A small form factor PC with 100gb fast memory and being able to run something like sonnet or opus level LLM would be massive.
I have so many things i want to do and still sitting it out due to cost.
Lots of people didn't invest in mortgage backed securities but still got screwed in 2008. When something is systemic, you don't have to be directly exposed to be effected when it goes sideways.
Is this in practice what's going to happen, or are (1) the prices going to hike (and never go down) for the consumer and (2) the memory companies will just continue doing what they already do because they're still selling their old shovels to the gold diggers?
I don't see how this will benefit the consumer, but I might be missing some second order effect?
I read somewhere that the memory companies were massivly pushed for lowest prices especially by companies like apple.
I want to hope that this money will lead to more capacity, more R&D and lower prices in the long term again.
Nvidia would have changed its GPU strategy a long time ago if the demand wouldn't be real. They still can afford the GPU prices. But memory is not a monopoly.
For memory though i do assume a lot more people and companies want a massive amount more memory than ever before. I have 64gb in my pc for a few years now, i was quite happy with that. It became a no brainer. But today? Hey give me 100, 300 and even more. I really want to run bigger LLM models locally.
Yes that is unfortunate for sure don't get me wrong this affects me but the overall benefit will still be bigger i assume.
10 years ago i watched a talk about the problem of compute vs. memory. Compute increased significantly while memory speed did not.
This gigantic investment will solve this problem.
So either this blows and we will have way too much capacity which will lead to cheap and mass amount of memory for everyone + cheap GPUs again OR AGI. So win - win.
If hyperscalers flop, and there’s a good chance they will, memory and disk prices will crater. They are historically the most volatile asset in tech. If Samsung, Micron et al can’t sell to hyperscalers they will switch back to consumer, because they can’t just turn off a memory fab without losing billions.
only that is not so. disk prices maybe, the memory will not be available to consumers because it's a tech that makes sense only for datacenters and massive power, by know all fabs have converted to it, there might be a lot of HBM capacity freed but no consumer devices that can use it. retooling all fabs to produce consumer level memory will take a lot of time if they even do it all...
There are several ways that ordinary investors and even simple pension holders could end up stuck with the downside of this.
The debt hidden in CDOs wasn't your debt either but if you had a pension plan, the crisis absolutely cost you money you would have earned, and in many cases pension fund values dropped by five to ten per cent within a year.
The SPV/CDO comparison being made is by no means exact, but hidden debt at this scale surprising analysts tends to cause problems. If more institutions are severely exposed than anyone thought, it is bad.
Especially since any success strategy is predicated on literally unbelievably rosy predictions.
Exactly, this is how capitalism works. Let them shoot for the moon and let them fail. Worst case their over-valued assets are liquidated and continued on with at a more reasonable valuation. Just make sure they play by the rules and don't make new rules in the name of national security, ie boxing out open source.
You could say this but the previous administration was not talking about taking a 10% share in both companies; this one is (thanks to Sam Altman's very personal lobbying of the president)
Except this is not how American capitalism works at this scale, and it’s ridiculous to think their debt isn’t your debt when you have the entire country’s history to look back on and count the numerous government bailouts.
AFAIK they have heavily relaxed the rules for IPO. Pension funds are practically forced to buy from the top-100 companies, and these companies risk crashing much more than the others.
SpaceX value is already lower than at launch. If this costs are externalized to the common public, this will be your debt.
All these companies are too big to fail, in an environment where you can buy pardons and laws.
Hell, a 3T$ crash will have global repercussion and probably partially crash many other countries, too.
If it crashes the global economy will crash and they will have to print money for a bail out which means another 30% increase to the price of everything
> Risks to financial stability may also stem from entities with particularly high exposure to private credit markets, such as insurers influenced by private equity firms and certain groups of pension funds. The assets of private‐equity‐controlled insurers have grown significantly in recent years, with these entities owning significantly more exposure to less‐liquid investments than other insurers
https://www.imf.org/-/media/files/publications/gfsr/2024/apr...
https://www.imf.org/-/media/files/publications/gfsr/2024/apr...
At this point these companies make up a huge portion of 401k's for a huge chunk of Americans. How would it affect retirees if they dropped 40-50%, likely taking the market with them?
Still, if NVidia lost 50% of their market share, we would probably see a big collapse of the stock market.
EDIT: to note, the top ten companies in SP500 make up an unprecedented concentration but they're not "mostly AI".
I suppose it’s worse if your calculation is, “I’ll retire when my 401k hits $X absolute value,” but I think most people just retire at a certain age instead with risk spread across decades.
If one is over concentrated its easily avoided.
The sound advice for the past decades has been, just invest in a low-cost ETF tracking the S&P instead of picking stocks to minimize risk and invest in the market broadly.
So a huge number of people have done that, believing they're diversified, while tech makes up 40% of the index.
Yes you could sell your S&P and find things to invest in least likely to be impacted by a potential bubble, but your average 9-5'er with automated contributions to their 401k is probably not sophisticated enough to do that.
And that's assuming only these companies would be affected if there was a massive draw-down in tech/AI related stocks. We haven't really seen a situation like this before, so it's not easy to predict what effects there might be in the broader economy.
Usually the financial services company will offer several options: more aggressive/high risk, or less aggressive/lower risk. Most people will just go with whatever is the default option.
So much of the American S&P 500 is dominated by handful of companies that the risk is not that easy to avoid. If or when the AI bubble pops, it's going to take down a lot of the economy with it. You can direct your retirement savings into the lowest yield/lowest risk assets offered by the firm, but you'll forego whatever growth happens in the mean time.
Will the bubble pop next week? Next month? Next year? Who knows. Timing the market is incredibly difficult.
There's a famous quote, attributed (perhaps apocryphally) to John Maynard Keynes: "The market can remain irrational longer than you can remain solvent."
if say meta owes 720Bn, they wouldn't have trouble paying that back in 10 years.
this doesn't take away the fact that 'a.i' right now is a bubble.
In many other industries that would be a perfectly normal amount of debt to have. It's only unusual because we are used to tech companies having so much cash on hand they don't know where to put it
If 50 billion in revenue is from other companies debt spending… then You have a problem.
Sorry, but this doesn’t make sense. The valuations of these companies reflect their growth.
In finance there’s nothing inherently virtuous about a “debt-light business”. It’s all an allocation decision based on how you expect to grow relative the cost of that growth. Think about it this way.
Try and reframe it: are cash-heavy businesses given a premium?
They aren't hiding it though. The contracts are recorded in regular filings.
https://asia.nikkei.com/business/technology/five-us-tech-gia...
"Companies disclose such future debt not in their balance sheets, but in annotations to their quarterly financial statements. This is a legitimate practice under accounting rules, but may make it difficult for retail investors to recognize risks."
"Today's AI industry is partly supported by demand generated by circular investment. Nvidia and tech giants invest in data center operators and AI companies, with that money then turning into GPU and cloud usage fees. Actual demand is difficult to see, increasing the likelihood of over investment in data centers."
Ok, so just to be clear: institutional investors are (a) the ones investing the large proportion of capital in these companies and (b) are well equipped to decipher financial statements. The idea that any significant amount of retail investors have even seen a financial statement, let alone is making decisions based on their analysis of a financial statement, is laughable. And, even then, if someone is putting in that effort, then presumably they're not going to get tripped up by a legitimate practice that they ought to specifically be looking for given the context.
And all of that doesn't even take into account that every article discussing the financials of AI firms over the last half a decade have been pointing out these dynamics. We're literally in a thread discussing this exact dynamic. Retail investors are certainly far more likely to make investing decisions based on these kinds of articles and threads than they are based solely on independent financial statement analysis that they're conducting. At a minimum, I think anybody taking any of this seriously has gotten the hint by now.
If it comes out that these firms are committing straight-up fraud, then there will be a lot more to discuss. But, as of now, the sentiment is that these firms are behaving perfectly legitimately, just abnormally and maybe irresponsibly compared to their historical context. If an investor isn't equipped to handle this kind of analysis under these circumstances, then I'm not going to feel too bad if they lose their money "investing" when they're really just gambling.
In the run-up to 2008 a big factor in the bubble forming was that poor quality loans were packaged in a way to hide the risk in those investments. I'm not expert enough in finance to know if it's the case now, but we do know that clever accounting to hide debt can lead to the incorrect valuation of assets, potentially leading to financial ruin.
An analogy that comes to mind is when companies used to book future sales in the present. They got in trouble for this and is now forbidden. I recall reading that one deal had terms that transferred assets if certain conditions were not met. If terms-based debt should be booked now, then terms-based assets should as well. This stuff makes my head hurt.
Either way, as long as it's not hidden (and it's not for the public companies), then it's fine.
Couldn't you characterize Enron that way? The liabilities are there, you "just" have to look at Raptor II or whatever!
And even if you look at the debt, even companies like meta make 200 billion revenue in 2025 alone.
Isn't it good that these companies with these massive massive deep pockets invest?
Why?
"Because it isn't; okay?!"
oh ok.
> Companies disclose such future debt not in their balance sheets, but in annotations to their quarterly financial statements. This is a legitimate practice under accounting rules, but may make it difficult for retail investors to recognize risks.
Does that justify a "tries to hide" headline?
This is also one of those cases where the headline is free but the details are behind a paywall.
I do think the story itself is notable, but I expect the discussion is going to lack some nuance.
Meta, Google, Amazon, .. they can take the hit and go on.
Long term, I think the best thing the economy could do is to make training on model outputs fair-use, as suggested by Ben Thompson[1]. Short of that, the companies should enter into distillation agreements with other US labs to let them make near-Fable models.
As it stands now, the companies want to hold all the upside. While also being culturally so safety focused - "only we have the right to regulate this" that its IMO counterproductive to US leadership in AI.
A different universe where X.ai, Meta, and everyone were also building Fable competitive open weights models - because they can distill - would probably be better for the US long term. But there's too much capital on the line right now behind OpenAI / Anthropic for them to do this.
They're really in a bind IMO.
1 - http://stratechery.com/2026/whos-afraid-of-chinese-models/
AI outputs have been ruled as not even copyrightable, isn't that even better than fair use?
https://asia.nikkei.com/business/technology/five-us-tech-gia...
Simply choosing not to get involved might be most reasonable action.
If there is really only a few dozen people doing the buying and the selling at the top on a weighted basis, then the prices are whatever they convince themselves of.
It's a huge gamble.
The plan is to have LLM working completely autonomously, in that case, the more resources you have, the better. Perhaps people will use local LLM to ask questions, or coders use them for their personal projects, but that's not where the real money is.
Your real personal agent which knows you and helps you like "good morning elmer2, your calendar invite for dinner is today, you will need to leave at 18:18 if you want to use your normal public transport route per train. I put an alarm in your phone for you"
Agents to agents
Agentic teams.
Finetuned models for everything like Java/spanish coding model.
Very long term research like multiply hours or days or weeks and plenty of these in parallel.
Very much unlike with software. Where the goal for long while is to burn as many resources as possible on end user devices.
What they can't do is the rug pull of pricing like Fable did, hoping for profitability while playing the "it's so super smart" card. It's very profitable, but customer will be very happy to leave for cheaper pasture and that's why the recent news about this or that cheaper chinese models make headlines.
Essentially, the rush now is "if I make it a boring profitable company I'm not worth a trillion AND i'm overshadowed that plays the singularity card even if they're bullshitting"
I'm not saying I see them going that way or that I would, but at least THAT would possibly work.
If they continue investing in compute, memory, memory bandwidth, network infrastructure, etc. it makes a relevant contribution of progress in all of these fields which I will leverage.
A small form factor PC with 100gb fast memory and being able to run something like sonnet or opus level LLM would be massive.
I have so many things i want to do and still sitting it out due to cost.
I don't see how this will benefit the consumer, but I might be missing some second order effect?
I want to hope that this money will lead to more capacity, more R&D and lower prices in the long term again.
Nvidia would have changed its GPU strategy a long time ago if the demand wouldn't be real. They still can afford the GPU prices. But memory is not a monopoly.
For memory though i do assume a lot more people and companies want a massive amount more memory than ever before. I have 64gb in my pc for a few years now, i was quite happy with that. It became a no brainer. But today? Hey give me 100, 300 and even more. I really want to run bigger LLM models locally.
10 years ago i watched a talk about the problem of compute vs. memory. Compute increased significantly while memory speed did not.
This gigantic investment will solve this problem.
So either this blows and we will have way too much capacity which will lead to cheap and mass amount of memory for everyone + cheap GPUs again OR AGI. So win - win.
For the moment.
There are several ways that ordinary investors and even simple pension holders could end up stuck with the downside of this.
The debt hidden in CDOs wasn't your debt either but if you had a pension plan, the crisis absolutely cost you money you would have earned, and in many cases pension fund values dropped by five to ten per cent within a year.
The SPV/CDO comparison being made is by no means exact, but hidden debt at this scale surprising analysts tends to cause problems. If more institutions are severely exposed than anyone thought, it is bad.
Especially since any success strategy is predicated on literally unbelievably rosy predictions.
Your view seems very myopic.
AFAIK they have heavily relaxed the rules for IPO. Pension funds are practically forced to buy from the top-100 companies, and these companies risk crashing much more than the others.
SpaceX value is already lower than at launch. If this costs are externalized to the common public, this will be your debt.
All these companies are too big to fail, in an environment where you can buy pardons and laws.
Hell, a 3T$ crash will have global repercussion and probably partially crash many other countries, too.
How much real impact is this really though?
But minimal real impact
bailout incoming
will make subprime crash seem like child's play
sure you won't be able to ever afford a home but we'll have tons of cheap super-hardware barely used