Privatize the losses. These are the largest companies the world has ever seen, sitting on piles of assets like dragons. They have hyped AI endlessly to the point that everyone else is sick of it. If they haven't saved any money, and can't bail themselves out, they deserve bankruptcy.
> If they haven't saved any money, and can't bail themselves out, they deserve bankruptcy
Agree.
What we need is a revocation of the Exchange Stabilisation Fund [1] as well as hard limits on the Defense Production Act’s Title III [2] and whatever the fuck in the CHIPS Act let the President unilaterally invest taxpayer funds in Intel.
This announcement of a non-binding resolution does none of that. It’s pure puffery.
And in case anyone thinks this is hateful or harsh, remember: bankruptcy doesn’t mean we space laser these companies. Shareholders get wiped. Creditors take over. Services probably keep getting rendered, GPUs probably keep running.
How exactly are House Democrats supposed to revoke the Exchange Stabilization Fund or change the Defense Production Act when they don't have a majority in the House? All they can do is signal what they intend to do if they regain the majority.
> How exactly are House Democrats supposed to revoke the Exchange Stabilization Fund or change the Defense Production Act when they don't have a majority in the House?
Introduce an actual bill. Draft and debate something specific so that when they are in power they don’t have to start from scratch.
Use procedure to try and bring it up for a vote. At least try to legislate.
I believe it was mitch mcconnell back during obama that said he never wanted to see another democratic bill passed again-to the point he voted against his own bill he signed just because it received dem support
> to the point he voted against his own bill he signed just because it received dem support
Who cares. Write a damn bill. Get agreement among your members that specific text works. That is the first step to any legislating. It’s also something Democrats know how to do—even the CPC has an energy bill drafted. It’s what you do when you’re being serious about prioritizing legislating versus tweeting.
If you care about this issue and have D representation, call and demand an actual bill.
Irony of ironies, McConnell's seat is up for grabs Tuesday, with a bright young go-getter on the Democratic ticket, and a wishy-washy, Trump-brown-nosing nepobaby on the Republican side, in a state that stunned everyone by electing a Democratic governor last go-round. One might say that the Democrat is about to get stomped for obvious and unmentionable reasons (it's Kentucky, he's black), but it's actually because the DSCC is still bitter that he almost beat their preferred candidate in the 2020 primary; they've contributed a fraction to his general election campaign of what they spent defeating him so that Temu Mitch could lose to the Real McConnell.
Everyone is complaining that the current Democratic candidate has had basically no ad presence. The Republican would be in the same boat, as they both received about the same amount in individual donations, but the latter actually got national and PAC support to run ads.
> Use procedure to try and bring it up for a vote. At least try to legislate.
They do introduce bills in committee. Which are shot down in committee by the instrangient Republicans that lead the committees refusing to compromise often before the bill can come to the full congress. You are asking Dems to do something they literally cannot do while minority party. You are asking Dems to do an impossible thing and then complaining they cannot.
> Introduce an actual bill. Draft and debate something specific so that when they are in power they don’t have to start from scratch.
You're also complainging about democrats not introducing bills... on a post from Democrats proposing bills (well, resolution. whatever, still not starting from scratch then)!!!! You're complaining about something that literally already exists! Stop being so blind.
That lets folks comment and edit and build consensus while the other guys are in power. (Or snatch some across-the-aisle votes.)
It’s how effective shadow governments work in parliamentary systems. It’s what the GOP was up to while it was out of power. It’s what the Congressional Progressive Caucus does when it actually plans on passing laws about something [1].
Just not here. Because this is puffery.
> on a post from Democrats proposing bills (well, resolution
Big difference! You float a resolution when you want to tweet about it. You publish a draft bill when you want to legislate.
So try to pass it, let it fail, and then publish the bill text as an example of what you’ll pass when you win the election. Then when you win, actually pass the damn bill. “Promises kept.” It’s not rocket science.
Edit: love the downvotes, keep them coming. “We’ve tried nothing and we’re all out of ideas.” Classic Big D.
It doesn’t have to reach the floor. Even introducing an advanced draft in committee can be a signal of intent to voters and a plank for campaigning.
Resolutions are cheap theater. There’s been a huge number from both parties over the last decade, with very few tangible results except from some joint resolutions that stripped away regulations.
Well great, then stop saying that people who want this are somehow wrong for wanting it. You were responding negatively to someone who was asking for more of this, saying it’s somehow not possible.
He wasn’t saying that it had to actually get into the floor. Just make an effort and use that as an explicit position when campaigning, then follow through.
No, that is not what they are saying. Can we stop pretending like people are saying things other than they are
From them:
"Use procedure to try and bring it up for a vote. At least try to legislate."
"Edit: love the downvotes, keep them coming. “We’ve tried nothing and we’re all out of ideas.” Classic Big D."
They literally are. This guys is explicitly bitching about things actively happening.
From you:
"Just make an effort and use that as an explicit position when campaigning, then follow through."
He literally called making an explicit promises "pure puffery" and they cannot follow through until they are seated so no, they are not saying that. This person isn't worth defending and is not saying any of the things you are assigning to them.
Promises aren’t worth anything without action. Drawing up an actual bill and gathering early feedback/support is action, as real work is being accomplished through that process. Better to do the bulk of the work early and use it as proof to voters that there is real intent.
> That's what they're doing now in this exact case
They’re absolutely not. This is a non-binding resolution. It’s had none of the hard discussions around what should be revoked and how what isn’t revoked should be revised. It’s a nothing burger.
And you think there'd be that from a draft bill? That also will have none of the "hard discussions" that you want in a committee led by Republicans who don't let anything Dems to come to the table to even be talked about. The difference between them is negligible. But hey, you work in private equity, so of course you're just gonna try to hate on Dems no matter what
Then bypass them. Shop it internally among the party, and privately with defecting Rs who see which way the wind is blowing. Bring the results to the committee as a “show your work” moment for voters and draw a line in the sand.
It is still "puffery" if they don't have the needed majority to pass it. I am sorry, I can see you try to find any excuse, purity test, "no true Scotsman" fallacy, to rationalize not voting for the Democrats, but you will have to if you want anything to happen.
It's difficult for a politician to do something that isn't political, so I think we can let them off the hook for making symbolic gestures.
However, putting legislation up for a vote is not puffery. Establishing what parties vote against and why is actually an important part of what the opposition does. Otherwise they may as well not turn up.
Yeah, so, it won't be put up for a vote before the midterms. So? Are you going to vote for the party that at least proposes to do something you want, or will you vote, or leave in place, the party that has proposed nothing or the opposite?
Democrats aren’t a unified block, and they have some bright stars coming into their own this year. Their future looks bright, if people vote their interests the signal is getting through and change is possible.
And because republicans are a unified block whose entire platform is to serve you for dinner. Their whole existence is dedicated to reversing any change.
Perhaps, just maybe, like i mean its possible, we live in a world where chains of events happen, markov style. So that when a bill that can't currently passed gets voted on, there is an event where the politicians who opposed it can be held accountable by thier constituent in later elections.
I know it sounds strange, but what if the math is right, and there can actually be casual relationships?
A voter who won’t vote for anyone but their perfect candidate is electorally useless in a country of hundreds of millions. Democracy is about compromise, and compromise often means nobody is particularly happy about the outcome because nobody gets all of exactly what they want.
They realized that diminishing women's rights, just to please a few men who desire to be women, was a significant vote loser, and changed their policy positions accordingly.
This is a good thing. Though it would have been better if they hadn't pushed these policies in the first place. Still, it's progress.
for some reason I can't replay to jumpcrisscross below, so I'll put this here:
Just cuz you can't get everything you want, doesn't mean you should have no 'hard lines' you're not willing to compromise on. So no, the past 20-30 years of 'the lesser of two evils' doesn't cut it anymore. I've voted for Dems. my whole life, but if they don't get a lot more effective, I wont be doing it in the future. When they had all 3 branches of legislature, they couldn't get stuff passed - everything got gutted or given away (remember the last shutdown when people begged them not to cave ?). Anyway, here's hoping for more independents and BrandNewCongress to pickup steam.
Look at the opponents of Democrats (the party), and where they stand on trans rights. Most Democrats support trans rights, almost no Republicans do. We can all close our eyes and wish we had a system that didn't reduce down to two parties, but at the end of the day we're all going to get either a Democrat or a Republican representing us unless you live in a hyper specific part of the country.
Earlier today I had to grit my teeth and vote for Josh Turek in Iowa, even though I think he's a shithead who threw trans people under the bus just to eke out a few more votes from conservative fence sitters. I could've made a protest vote, but the realpolitik of the situation is I'm either getting Turek or his Republican opponent, and I think Turek will do a much better job representing me despite his dumbass about-face on trans issues, whereas the Republican will be actively harmful.
Fortunately, more Democrats are waking up to the fact that so-called "trans rights" are actively harmful to women and children, and are swiftly walking back their support for such policies. It's just unfortunate that the Republicans had to hold their feet to the fire on this rather than it being a policy position changed with respect for women's rights and reducing iatrogenic harms. It's progress nonetheless.
So you think you are better? What have you achieved? Your own purity, at the expense of your trans friends' rights? "Yeah, you are hounded now by crass Republicans who use every lever of power to make your life hell, but at least I didn't vote for a Democrat who may or may not have lied about his support! Praise me!"
You're an example of what's wrong with the system, you hold Democrats to the standard of a functional political party, while the other party is openly corrupt with respect to this topic and hasn't even bother with "puffery" legislation even though they dominate every branch of government.
The other party in question is the problem, and you're nitpicking an utterly powerless minority party's efforts to make things better.
to the dead reply: "is currently the problem" then. The party alignments have completetly flipped in 150 years. Nothing is permanent, and I thought that didn't have to be explicitly stated. Since I was incorrect about that I'm talking about the current state of the world, with no naive attachement to a particular label.
If you can't see the rather stark difference between the two parties, and which one is obviously better for the country and not just the wealthy or hateful, then you are a broken person. And there are a lot of broken people so you've got plenty of company.
> How exactly are House Democrats supposed to revoke the Exchange Stabilization Fund or change the Defense Production Act when they don't have a majority in the House?
Even when they’re in the majority they play victim. “Oh no Mitch McConnell doesn’t like our bill :( We can’t do anything”. The party is too busy trying to court Republicans to get anything done.
Or they sabotage themselves. Pushing Hillary and losing was preferred to risking a Sanders win and losing corporate funding. Pushing Biden, who promised to run one term, then running him a second. Only to undemocratically replace him cause people didn’t want a senile candidate.
You have Bush-era never-MAGA Republicans publicly making statements on how they’re voting Democrat. They seem more willing to vote D than their actual base. It’s ridiculous.
Meanwhile, Republicans actively court their base and seem to accomplish things when they’re the minority party.
> How exactly are House Democrats supposed to revoke the Exchange Stabilization Fund or change the Defense Production Act when they don't have a majority in the House?
They're going to have a majority in about 3 days. They won't have a veto proof majority but they will have a majority.
without a veto proof majority, they might as well not be in the majority. Trump could become the most veto happy POTUS ever and stay his course. If they do not have a veto proof majority, they also won't have enough to convict on any potential impeachement. So all of this hope/prayer for a "blue wave" is not going to be worth much.
> without a veto proof majority, they might as well not be in the majority.
I don't understand this position. Two years of stalled government would be a godsend after the past two years. Dear lord, if we could just slow the daily assaults on people and the environment, domestically and abroad, I'd sing Hallelujah.
If they win congress and the senate every bill will be vetoed anyway and they won’t have the votes to override the veto. It will be two years of paralysis.
Everybody hates AI, even Republicans hate AI. Republican members of congress might not want to explain to their constituents why they are going to vote against an anti-bailout bill for AI, so some of them might opt to support such bill, fearing their constituents may vote them out of office.
The entire republican party is built on the image of Donald trump who loves AI so much that he tried to rename it to his liking. The reps who owe their power and grift to him may not like it personally but they have to support it which amounts to effectively the same thing as liking it.
It's unclear to me that Republican unity in Congress will continue to hold if there really is a giant blue wave. It certainly isn't holding out in the infosphere, pundits are peeling off from MAGA left and right. And obviously it isn't holding among the voters.
I think so too. The “I get elected if I am pro Trump” factor seems to have flipped in spots to where he is a negative. Seems obvious when a wannabe king dies there is a power struggle that can rip the party apart. That might be the only hope for America to salvage a decent future, if like 1/3 of republicans started thinking about what’s best for their constituents and voters instead of how to funnel the most money to their pockets. There will still be a lot of grifters trying to hold on to squeeze out a few dollars but maybe a couple of the party grow some principles.
Many of the US Democrat party apparently love this kind of thing
In the past couple days I’ve heard glee and celebration at the idea of more non-binding things “getting things onto the record so everyone can see where loyalties lies”
So if you are a politician catering to your constituents, that makes sense to do
US Democrat Party are expected to obtain a majority in the House and Senate, remaining unable to pass any law through the Senate except an annual budget reconciliation, the vessel will continue to be stalled by the Filibuster needing 60 seats, vote to remove power that needs 67 seats, veto override ability that also needs 67 seats. Nobody in the opposition party will vote in favor, barring one or two, which will not be enough. This effectively keeps the US legislative body paralyzed but even more so than now. It will now also stall appointments from the President, so additional agency heads and judges won’t be installed but the Federal Government already did that for the last 2 years and will continue all of its own causes unabated
I think one criticism of that party are the performative nature of its constituents and representatives, where a “virtue” is demanded to be shown more than legislative change, as opposed to focusing on things that could garner consensus of which there are many, revisiting other causes when the seats are actually there. Seems to match the criticism, I suppose the other party does it too? Thats what is generally revealed to me when I make an observation. Just doesn’t seem like an identity of the other party as their control of the executive branch, military and courts is more than performative.
We should have let the auto industry fail in 2008 too. The factories and IP still would be there for more innovative entrepreneurs to buy and make use of. Instead we have 3 legacy companies that can't even deliver an EV to compete with Tesla after 15 years of pretending to try.
You can argue that did actually happen. China invested in GM through their partnership during that crisis and in exchange got anything that was left worth having from GM. Now GM is an old husk lumbering along waiting to die.
So I watch a lot of auto industry news and from their point of view and everything that has happened has made perfect sense. They react to the demands from the government in power. They got a mandate from Biden to go EV so they invested heavily into retooling and dropping their ICE programs. They were not going to piss off whoever was in power, especially not the Democrats so they did it.
When Trump took over, he scrapped so many of these programs and the companies were forced to take massive writeoffs in their investments. Those executives that championed these moves to EVs are persona non grata now in the industry(at least for the time being). These back and forth demands is really causing a lot of trouble for the legacy makers.
Tesla managing to be able to detach themselves from having to answer to wallstreet and not actually caring about what the government says has allowed them to go at their own pace. The other American EV companies are on life support and the Chinese companies have always answered to one entity: the CCP.
Disagree. The auto industry was not the cause of the great recession, and the money put into the auto manufacturers did help to remove excess capacity. Their subsequent failure to innovate is not Obama's fault.
If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem. If you owe the bank $100 billion, that's country's problem.
If it’s the country’s problem, then nationalize them. Not loans, not bail outs. Confiscate and figure out how to wind them down in a way that benefits the taxpayers.
Didn't even have to wind them down to benefit in some cases. I can't remember if it was the automaker or some of the 08 bank bailouts where the stock the government took as part of the bailout turned a profit after a few years.
Well the US nominally put in more safeguards against the same thing happening again. We've just dismantled them in record time and are moving on to those put in place after the 20s for some reason.
Icelander here. The banks were only temporarily nationalized, the plan was always to privatize them as soon as possible. Only a handful of bankers went to jail, their sentences were extremely light, and every single one of them returned to investing as soon as they were able (or even kept investing via family members while in prison). Today they are still the richest people in Iceland and own the majority of all assets.
I think the only reason Iceland nationalized the failed banks in the first place was because they had no other option, the economy is too small, and they simply could not afford to bail them out, the money literally did not exist.
Also, today’s Iceland is extremely troubled by austerity. Schools and healthcare is extremely underfunded. Teachers- and nurses strike almost every 2 years. The city of Reykjavík just started their biggest round of mass-layoff ever.
They were. Or rather they were all friends/family/the same people. Iceland is one of the most corrupt countries in Northern Europe. What happened is due to how small the economy is, the country simply could not afford to bail out the banks. The money required to do so simply did not exist, so they had exactly one option.
Note also that since then, all the nationalized banks are back on the public market with the state only holding plurality or even minority shares. Investment/retirement funds and private investors together hold bigger share then the state. These shares were more often then not released on a steep discount allowing investors (many of whom responsible for the 2008 crash) essentially free money from the state.
Iceland isn’t a global financial powerhouse and it has a low population. My county has twice as many people as Iceland, the city I live in has as many residents as Iceland has citizens.
I am confused. In my country that is what a bailout means. How do you pay money to a company but not buy them? What is it that the state buys from the company, if not ownership, then? Or is it a gift? That would be insane.
The phrase is "that would be good for the economy".
It’s still the notion of trickle down economics at play.
But they did get a 3.5% return on their investment (but not comparable to the equivalent return in the market or even in bonds for the same duration).
That return was in turn used to justify the bailout, but the global macro effects weren’t accounted for: the banks’ fuckup caused misery all over the world for the best part of a decade.
It's a gift. No matter how you structure it - maybe subsidized loans, or anything like that - any bailout that doesn't transfer equity to the government is a gift
Does the US have anything going for it right now besides ai and supporting industries? Something like nationalize or anything extreme would wreck the economy.we would all suffer
You have a point here. It doesn't make sense that a company should get to keep the upside while having downside protection from the government. The problem is that the government makes the biggest bloated legacy nightmare of a corporation look like a 10 person startup. Between the two options I would rather have a pile of my tax money set on fire once every decade decade or so.
Anything critical for the nation should be run by the nation. I'd rather have a voice and the ability to vote out the people running that corporation. You don't get to elect CEOs.
> That will make a lot of businesses focus on success here and not somewhere else.
You have a weird definition of theft. We're talking about nationalizing them instead of handing their shareholders a bunch of free money to bail them out. Not getting free money is theft now?
But, more broadly: there's more to the social contract than private property rights. And it's really hard to bring myself to care too much about the private property rights of entities who have shown themselves to not be very respectful of that contract.
We're explicitly talking about a situation where BigTech and AI labs ask the government for money or (very hypothetically) allow coordinated defaults to spill out into the banking fabric
In those cases, the economy and society you want to externalises losses onto has every right to negotiate something in return. We are not in the business of just forgiving multi billion debts.
> Some people find authoritarian despotism attractive as long as it targets their perceived enemies
It's not that simple. For instance: a prison sentence is "authoritarian despotism" from the perspective of a murderer subject to it (or his apologists).
Is it "theft" when someone who pays off another's loans takes legal possession of the debtor's assets as compensation? Or only when the government does it?
If the gov't made bad decisions letting us get to some situation, it doesn't make sense to reward the government and give it even more authority.
That's got perverse consequences. Just like with the corporate leadership, you're encouraging bureaucrats to make bad decisions because (a) they don't have to answer for their bad decisions, and in fact (b) they'll get to expand their authority should their decisions go bad.
The corporate leadership that got us to the problem should suffer, but so should any bureaucrats who had a part it allowing it to happen.
It's kinda like taxes. Who among us would say their tax dollars are and have been well spent? Then why on earth would any of us want to give these idiots more of our hard earned dollars.
Everybody can find some government programs they like, and some they hate. I would rather my tax dollars were spent differently than they are. This is normal.
I actually like parks and roads and fire departments and social services. I'd happily pay more in taxes for things that are worthwhile. If you don't want your tax money spent on bullshit maybe you should vote for democrats since they're promising not to use your tax money to bail out AI companies.
Yes, but it appears that the banks are not over levered like they were during the housing crisis. They will take a hit, but presumably will not need bailing out.
> Yes, but it appears that the banks are not over levered like they were during the housing crisis
Banks weren't over levered back then either because all the mortgages went straight into CDOs held by other people/institutions.
The problem was that nobody trusted each other because Lehman could just fail. So they stopped lending to each other (like the daily loans they give each other). Trust evaporated and the whole system stopped dead in its tracks.
And the funds that were over-levered were just barely over-levered. One of the funds that failed had 97% coverage. But that's enough to trigger a run -- you pull your money out ASAP to ensure you're part of the 97%, not the 3%.
This was true last year, but it would be risky to assume it remains true from one week to the next.
The rate of growth in this sector is "1. move so fast legislators can't keep up; 2. keep going until you hit a limit, then find a way to hack around that limit; 3. GOTO 2".
I notice these comments everywhere now. It's some rhetorical sleigh of hand that the absence of a refutal leads to a false assumption that their claim is obvious and needs no support.
I mean, I've certainly used these cheap rhetorical tricks myself offhand, but I'd at least try to avoid using it when vagueposting something this out of pocket.
Not the person, but I think a corporation, whose main business is or a sizable part of the business is, that hands out money that you then owe them, is called a bank.
I think you may be confusing the (temporary) improved stock price with improved/recovered profitability? I see the (temporary) stock price recovery, as driven PURELY by valuation, i.e. an increase in P/E (instead of EPS).
Intel’s revenue is currently worse than 10 years ago, and gross profits are 2/3 of what they were around 2012.
The temporary price hike was caused by a huge temporary jump in relative valuation (probably because the US Gov started subsidizing).
I think you are presenting this as true, but all the evidence points to the bailout as having no effect. You aren't presenting any counter evidence other than just saying it worked and to wait.
> Trump admin, to their credit, seem to have somehow figured this out.
> They bailed out Intel and the stock recovered.
This is not demonstrated. What did the Trump admin "figure out"?
Socializing private losses (especially if it's only temporary), is another problem, not a solution.
AMEN AMEN AMEN! This doesn't mean ai goes bust, this actually would force innovation even more. AI isn't going anywhere anytime soon. We have the CEO of OpenAI claiming that models running on consumer hardware is a waste of resources and encouraging that it should stay in big data centers that are extremely wasteful when it comes to resources. Most consumers couldn't afford to waste away their resources to run consumer models. I love technology. I have a deep-seated level of resentment of the difference in treatment these big corporations get vs the people.
Edit: Taking bailouts off the table forces discipline, it strips away the bloat and forces real efficiency.
Can you privatize the losses if the banks are investing, providing debt to and repackaging that debt into broader instruments?
I worry that one of the reasons that Anthropic has 500 billion in commitments and everyone is running to the credit markets is to make it so that if they fail everyone suffers.
I mean sure, I agree with you in principal, but if not bailing out someone brings down the country or global economy? In a democracy that government is getting punished hard.
If the failure of a private company can bring down the country the government should either break it up or take it over immediately as a national security issue. Too big to fail means too big to exist.
The only reason this can happen is because of bailouts. When companies know they can be bailed out they will take far larger risks than they should. Instead governments should put policies and laws in place that prevent these types of problems from happening.
Well, in some ways that would mean the "running the government like a business" people would get their wish. They allowed the business to get so big, it failed, they are punished alongside the company for the failure.
If they can't privatize the loses, they should definitely not be allowed to privatize the gains. AI should be a public utility and be required to open source their models.
All the more reason to make them fail. FDIC should pay insurance and otherwise fail the banks. Capitalism cannot work if there isn't feedback that not watching for things like this will hurt you.
I actually liked the approach that happened with several large companies in 2008 - the stockholders get wiped out, the senior management is gone, but the depositors get protected.
Where did depositors almost get wiped out in 2008?
At NetBank? Only if they were over the FDIC limit. Stockholders got destroyed, though.
At Bear Stearns? No, depositors got protected in a convoluted deal. The shareholders got very close to nothing.
At Lehman Brothers? They did "break the buck" on money market funds for a bit, but weren't depositors made whole? And weren't stock owners wiped out in the bankruptcy?
Washington Mutual? Depositors were covered by the FDIC.
Where were depositors "almost wiped out"? Where specifically? Where were stockholders bailed out?
> Where did depositors almost get wiped out in 2008?
“The [Deposit Insurance Fund] fell to the lowest point in its history, a negative $20.9 billion on an accounting basis, by year-end 2009.
…
To address this issue, the FDIC adopted a novel approach that required the banking industry to prepay its quarterly risk-based assessments for the fourth quarter of 2009 and for the next three years” [1].
Where did “significant amounts of cash” this was funded out of, which “banks were holding at the time,” come from? From the Fed and the bail-outs.
Without the bail-outs, banks wouldn’t have been able to fund the DIF and the FDIC would have faced the threat of insolvency.
No. The FDIC can borrow from the Treasury. Not the Fed. The Fed backstops’ banks liquidity. The FDIC backstops banks’ solvency inasmuch as it affects insured deposits.
We needed new laws in 2008 because the Fed’s backstop alone was insufficient. These banks weren’t just illiquid, they were insolvent. TARP gave them liquidity for “troubled assets.”
Sure. We're still waiting to hear how that translated into depositors taking losses and shareholders getting bailed out, though.
I mean, look, you can point to some losses by depositors - those over the FDIC limit, and when two money market funds broke the buck. You can also point to some instances where the rescues helped stockholders, at least compared to what their losses would have been. But the general trend was that shareholders took a bath, and depositors did not.
Are you talking about SVB? Because FDIC paid out much more than just insurance, it made sure everyone was whole. I think that set a very dangerous precedent.
No, it is not. The way the SVB et al. collapse was handled was highly unusual. FDIC guaranteed deposits in excess of the insurance cap, bailing out (wealthy tech and VC) depositors to the tune of 30%ish of the fund set aside for such purposes. The Treasury stood up a new facility to prevent contagion to other banks.
You cannot do this if the big Wall Street firms collapse.
> You cannot do this if the big Wall Street firms collapse.
I'm not sure what you mean by this. Wall Street firms as such don't have deposits; Wachovia, Washington Mutual, and a number of smaller but still large banks were handled in similar ways to avoid any loss of even uninsured deposits.
Perhaps you're under the impression that the FDIC paid out of its fund for those deposits? (e: Originally I claimed this impression was wrong, but in fact I was wrong.)
That was my claim, but it does seem like I was wrong. I'm going to have to figure out where I got this bad information from.
I do think that "Wall Street firms" in even the most expansive sense isn't generally understood to include large commercial banks. Some companies like JPMorgan are big enough in investment banking to kinda land on both sides of the line, but I've never heard anyone refer to Bank of America or Wells Fargo as a Wall Street firm.
Colloquially, I do feel that "Wall Street" is strongly associated with the banking system that people touch regularly, and not boutique funds and offices that they've never heard of. Might be a jargon issue.
Privatizing the losses doesn't mean the rest of us are going to escape without a scratch. It just means that we let fail the things that are going to fail.
What makes this so politically unpalatable is that having constantly bailed out the last few cycles, everyone is now operating on the assumption that they will be bailed out, so many entities who in a more perfect world would know better have done a lot of stupid things, like pensions that have a lot of bonds that will go bad if the AI bubble collapses.
Frankly we're looking at massive problems and upheaval at this point no matter what we do. But the advantage of not socializing the losses is that the signals of what needs to be changed go directly into the economy. Socializing the losses means that the signals get muted, confused, and mangled and people in the future end up doing the wrong things as a result.
Unfortunately, at this point I think the choice is between people clearly and forthrightly losing massive portions of their retirement as visible losses, or people deceptively losing massive portions of their retirement as the bailout creates massive inflation and their retirement is inflated until it has a fairly similar amount of losses. Unfortunately, it is a feature for the rulers that the bailouts obscure the losses and dampen the correct apportionment of blame, even as it destroys the underlying economy. Giving people clear, correct targets for their rage, the same process of correct pain apportionment the economy needs to become healthy again, would point people at the "wrong" clear, correct targets, and the clear, correct targets are the ones deciding whether or not a bailout occurs. Not just the literal lawmakers nominally making the call, but the entire system that makes the decision.
Plan on them trying bailouts. Every inch of us should resist.
We've been living in an economy distorted by the forces that lead us to this point. We've been locked into the decisions necessary to keep things going as they have been, whether or not they make sense.
The correction that you're talking about frees us to actually make choices. Some of them will be tough choices, but we finally get to make them, with all of our resources and work ethic intact, which don't just disappear because a stock index craters.
If we want trains and local farms instead of data centers and new iPhones, we can actually make that choice, instead of being forced into the latter because every investment fund is pumping them to the point of being a foregone conclusion.
To borrow an aphorism: the bust is a feature, not a bug.
I think the precedent folks were pointing to was the great depression--no strong signal of assurance to temper public concern means things like bank runs and sudden collapses of institutions that would have otherwise made it because of group fear. Not sure how accurate that comparison is though.
We do definitively know, with climate change level certainty (read: there is still the odd ball expert that dissents), that it absolutely needed to happen.
What is much less known, because it kinda kills the talking point, is that the "too big to fail" bailouts were fully repaid with interest, to the tune of an ~$17B profit.
The losses from the program were from the auto industry ($12B) and the struggling homeowners fund ($31B). Which is a bit ironic, because those two are probably the ones that would have the most public support.
Doomsday scenario is a self-reinforcing feedback loop of:
1) economy tanks, people earn less disposable income or become unemployed
2) consumers spending less tanks the economy even more
We have historical precedent for this in the great depression, and the government going hands-off back then made the problem almost certainly much worse.
You could even make a pretty credible argument that the Nazis only got into power thanks to this, so there's your doomsday scenario.
I don't think this characterizes the situation accurately. The economy doesn't cease to exist, it moves out of the existing financial system. Able-bodied workers, supplies, equipment, knowledge all still exist, they're just awaiting orders. You have your choice of how to spur productivity with the extant resources, including direct investment and propaganda. Many people credit WWII for the recovery, but it was actually just those two things, with the war as the excuse. But you can do it without a war, as with the Japanese economic miracle: some amount of austerity, everyone works towards a common goal, the government backstops the effort. Bonus: no golden parahute overhead.
I think we screwed up after 2008 and I would like to see us get it right this time. The government absolutely should be hands-on, but the focus should be on raw productivity and public well-being, not making certain that certain firms survive the bloodbath.
You know what's a great economic stimulus? You now own the house you owe a mortgage on, clear and free. "But that would bankrupt the mortgage-holding bank!" Okay.
I don't disagree with most of what you say, but one crucial point you miss in my view is that letting public trust in banks & "the economy" collapse is really "expensive" (in hard productivity, not just on paper).
This is what was allowed during the great depression and what we desperately tried to avoid in later crises.
Western democracies are not set up at all to let the government direct and compensate millions of workers on the turn of a dime; micromanagement by government in such a situation can be expected to be extremely wasteful and ineffective, and this only got worse, because we have less generic/unqualified use for human labor than in the past (construction, railroads, motorways, heavy industry), and specialists are even harder to manage.
If everyone stops even just believing in the ability of local supermarkets to provide toilet paper next week or, on the other end of the spectrum, starts distrusting the banking system/dollar entirely, then the consequences can be extensive, expensive and slow to recover.
It might even be worth it to feed taxpayer money to rich greedy capitalists because the public comes out on top still by avoiding that trust collapse.
Some countries like Iceland let their banks fail (in no small part because their total debt was something like 10x their gdp), and they even successfully prosecuted a number of executives. They got moderate slaps on the wrist but did serve some token time in prison as opposed to having to pay a ground-breaking fine of 5 minutes of revenue as is more typical. It wrecked their economy in the short-term but they were back to growth by 2011, and had a larger than ever economy by 2015.
But I think more than the one-off situation is also the precedent it sets. When you can bank on the government bailing you out (pun intended I guess?), it creates a perverse incentive of just trying to get as large as you possibly can, all foundation or principles absolutely be damned - because once you get big enough you win, even if you're the biggest loser ever. And I do think that's what we're probably seeing with LLM companies.
Not that LLM's a loser - it's a revolutionary tech and will only become more so. But multi trillion dollar valuations for a product that has viable open competitors already available and whose operating requirements continue to plummet and will almost certainly continue to plummet? This is extremely amusing, but absolutely batshit insane. It's like paying millions for a pretty flower because it's novel in spite of the fact that you know, and everyone else knows, that once people start planting them there will be endless amounts available for negligible cost.
Anthropic is not going to fail. Claude does amazing things and all the companies built on top of it are more likely to fail because at the end of the day, we can remake their value proposition by using Claude and a few command line tools…
If Anthropic has made promises that its wallet cannot keep (as it looks like), it will fail. Let me remind you that Anthropic isn't profitable yet, and there's no clear path that it will be.
Okay fair enough. I don’t track the finances just what the tools are doing. And on that all these AI-Ifying documents and stuff doesn’t really have a moat, but Anthropic has a great product.
Either way the people should never bail out corporations.
To be fair: You'd need to make at least several billions of revenue by selling pencil sharpeners while mostly spending the $100b on R&D (not the production of individual sharpeners)!
The market for AI is very clearly there; people are willing to pay more than enough so that providing LLM infrastructure (inference) is profitable.
Just the SOTA model R&D is pretty unsustainably expensive right now, but this only means that if the status quo "bursts" (because people realize that pushing the frontier is not paying off), model improvement will (probably) be slower afterward.
Note: this could also happen because expensive SOTA progress fails to keep ahead of "garage-trained" models, in such a case SOTA-AI lab investments collapsing would not really slow AI progress anyway.
Because (some) investors with money still believe that this overspending (tbd.) on R&D is gonna pay off in the form of market share (or the generosity of our future AI overlords ;), and (some) dumb money is just following it.
An investment that needs to return 7x, alone, on hundreds of billions to trillions of investments... While not destroying the entire economy, or replacing it?
great products only take them so far, the question is are they great enough so people would be willing to pay the prices they'd need to ask if they would want to at least match their spending with their income
Yeah Pro subscription. I realize building something targeting API is probably astronomically more expensive.
And I realize also that they are reducing churn by keeping the value there for subscribers. Not sure what that’s costing them, but it’s definitely holding me as a customer. The product works so well for me that I honestly don’t need to even glance at the competition.
And honestly, this has been the case since day one. I’ve always used Claude. ChatGPT a bit in the beginning, but it’s emoji fetish and “bro” personality gave me the ick so I dropped them.
> I don’t track the finances just what the tools are doing.
Then you have absolutely no idea what is going on. It has exactly zero to do with what AI can do, and everything to do with how the companies are being run. The technology will not die, but the AI bubble will pop, regardless of what Claude can do.
Jet airliners do amazing things, moving people across continents. But they are seldom profitable. Airlines, in general, struggle to make money and have to try every trick in the book to sometimes squeeze a profit.
Chapter 7, please! I would like them to *liquidate* Smaug's GPU hoard; and I would like them to do that all at once, in a swift and efficient fire sale.
I'd expect them to give "trusted partners" first dibs. You know, firms that can warehouse the chips and keep prices high. Gotta protect NVDA at all costs. I'd love to be proven wrong.
A lot of those are datacenter GPU racks which will be difficult to operate for most people, even for smaller companies that don't have watercooling setups.
Sure, but reallocating those to their AI competitors would offset those competitors' demand for AI GPU's and HBM RAM. Which frees up the TSMC, Samsung, Micron fabs to shift back to consumer production. Displaced demand.
It’s not hard. It’s power intensive. It’s $15k/mo at 15 cents / kWh. If you want the experience there’s a massive A100 liquidation sale that happened recently https://www.ebay.com/itm/178522410497
These come around once in a while. Go get that seller’s Gaudi rig if you want to test the experience. It costs one-time as much as the monthly power cost on a B300 NVL72 and uses a fifth the power.
Likely with no place to run it. I considered an old (circa 2017) retired DGX-1 which has 8x V100 32GB GPUs as an alternative to an M5 Ultra Mac Studio. The problem is the power draw. The modern GPUs AI companies are sitting on draw vastly more power.
They (the AI companies) are sitting on piles all right, but not "assets like dragons". Rather, what they are sitting on is piles and piles of debt that eventually will come due to be paid back. The "bet" their CEO's are making is that some "profit angle" will materialize at some point that provides the funds to pay back that debt when the bills start coming due.
> If they haven't saved any money
They have not "saved any money" (not in the sense of a "saving account" in a bank). They are leveraged as far into the future as one can see, and betting that before that lever starts to move they will have a revenue stream sufficient to pay it back.
I doubt bailout was originally introduced to help the companies. I think the point is rather that not bailing out has worse outcomes and higher costs for the general population than wasting public money. Of course the companies need then still to stop doing their harmful operations, otherwise you need to bail them out again and then the costs of bailing them out will eventually become higher.
The issue is that this gives perverse incentives for companies, unless you also have proper regulation, which you should have anyway. The issue is that you don't.
But in this case I agree with you, because in addition to the costs, there are also huge benefits for the general population to letting these companies fail. Both in actual behaviour and power right now, but also as a future incentive for all other companies.
Indeed they may, but they will be taking a lot of people's 401k's with them. Does anyone here have a 401k and have they analyzed the portfolio to verify none of the assets are related to the AI companies? In some cases it will not be obvious.
If one owns a standard cap-weighted S&P 500 index fund or a default target-date fund in their 401k then about 30% to 40% of every dollar contributed goes directly to the dominant tech giants driving AI.
I am not a financial expert and this is not financial advice.
> they will be taking a lot of people's 401k's with them
The US needs to stop allowing this kind of thing to happen, where the economy gets so hyper-concentrated in a few companies that they can hold the entire country's (and arguably much of the world's) retirement savings hostage.
We had that happen in the late 90s/early 2000s with Nortel. Before they collapsed (and infamously devastated their current and former employees' pensions in doing so), Nortel represented a THIRD of the TSX. The TSX responded by capping any individual stock at 10% of the exchange's overall value, with a forced rebalancing in the event that cap is struck.
At this point, that 10% is probably higher than it should be, since it doesn't account for entire extremely-well-funded sectors being caught up in a hype cycle like AI's, the sum of whose component stocks could easily exceed 10%.
Forced breakup of any company that gets too big to fail. Give them 1 year to produce and execute a plan to do so or the government takes receivership and does it for them.
I'd really love to see a version of this that wouldn't get gutted between wild swings in government sentiment towards corporations (goes for a number of countries, though certainly the US more than most).
That's the scam, man. The managed funds are the marks in the room.
When I first heard the scheme as a kid[1] -- that my retirement depended on giving my money back to the owners, all in the hope that it will come back to me in fifty years -- my first thought was, "I'm never seeing that money". I signed for the matching contribution and not a cent more -- getting 2 bucks of Funny Money for each buck seemed like a decent gamble. As I got older I started thinking that the system must work, all the grown ups know what they're doing, "it's the responsible thing to do". Etc etc etc. Now, I'm coming back around to my teenage opinions: they're going to figure out a way to take every single cent of my money.
Shit like this makes people into goldbugs and ammo hoarders. Or worse.
[1] My generation had some of the last pension positions, and 401ks were fairly the new thing.
That's the scam, man. The managed funds are the marks in the room.
You won't get any arguments from me. I have chased many 401k grifters and hawkers off corporate property. I'm just saying people may not realize that upwards of 30% to 40% of their portfolio may be impacted by a crash and maybe there is something they can do proactively (or not, I am no expert on this). It's just something to investigate, I think.
Let's keep in mind that many hedge, pension and retirement funds have investments in these big companies. In short, the potential losses are already socialized.
I was pretty vocal here about covering losses for depositors at Silicon Valley Bank because they were mostly small businesses who have more important things to do than manage the risk of their bank deposits.
I won't make a similar argument here because about an AI bailout because the counterparties know the risks, but there are pensions with requirements to hold high-grade debt buying these bonds. An AI bubble burst doesn't just show up in the Nasdaq, it hits pensions.
I hate this phrase. It's simultaneously self-aggrandizing and dishonest.
If you're silent, you're literally indistinguishable from any silent fringe minority. You have no assurance you even hold a majority opinion!
And besides, if you were a majority, the solution is easy: stop being silent.
I agree with you that we should privatize the losses; I'm just not going to make (and dishonestly push) the idea that what I believe is somehow a majority opinion.
The IPOs are for "socializing" the losses, in the sense that the losses are dumped on retail investors, who are the general populace. Especially if you consider big pension funds
Nobody who has ever run a business or knows about how a business runs would think that any business "sits on piles of assets like dragons." Very little cash sits idle, usually for anticipated operational expenditures with a reserve for unanticipated expenditures; the rest is invested, loaned, spent on building the business, or returned to investors. If OpenAI is holding $25 billion in cash, it's because they anticipate spending that much in the near future, not because they're sleeping atop it in a mountain cave.
Is the idea that buying GPUs before you buy the datacenters is hoarding but buying datacenters before you buy the GPUs is not? Everyone would prefer to put all their capacity into play. Demand is so high that every marginal computer here is marginal operating revenue.
There are definitely datacenters that aren’t live due to power hookups. Is the idea that we should precisely time both? I think everyone would love to do that. To the extent that GPUs are not in production, it’s not because they could be and are not so. Literally everyone who buys them is trying to put them into production because they’re as close to a money printer as one can legally have. The operating margins on a running GPU are incredible.
Even my old RTX 6000 Pros would be profitable if I rented them out.
That's the usual approach yes. You want to have equipment you buy show up where it's going to be installed, installed and activated in as short a time possible. You don't want to have it sit in a warehouse for 6 months while you try to get permission to break ground because, in a normal market, the equipment will be losing value during that time.
That’s the dream (which is what I meant by “everyone would love to do that”), but what you gain in the cost of money you lose as demand eats into supply ahead of you.
Right now, the lead time of these racks is like 36 weeks and they’ll want payment down unless they’re sure you’re good for it which is in the $100m range. You just try to get them as soon as you can because and when the integrator and Nvidia can get them to you.
I don’t understand what the problem is here. You think they’re damaging their own economics on purpose? Every time I’ve been involved in hardware procurement, it’s been the case that you try to get things as fast as possible on everything because you never know which seemingly fixed lead time suddenly clears.
If you intentionally bake in delays you’re guaranteed to not make it work, esp. in a demand crunch. My GPUs are SMB/prosumer range and even they are much harder to get now. The smartest thing I did was lock in my purchases in January. If I had been unable to negotiate the rack space it would have been suboptimal but if I had decided to wait for guaranteed time I would have been screwed. As it so happens I should have gone to 2TB VRAM instead of aiming low.
This is the calculus that all businesses are facing, not just mine.
I was so terribly sad to learn that gold is much more dense than a duck, and thus Scrooge would have certainly floated on top of his pool of coins. My childhood was ruined.
Now that I think about it, it would seem this may also apply to witches.
In this particular case and with these particular companies... yes, they were sitting in a hoard of cash like dragons. They literally didn't know what to do with it, so they gambled on The Next Big Thing™....
Either way, it's more efficient to give whatever money to bail out individuals/consumers than to bail out rent seeking organizations
A lot of comments read this is as fluff. And in some ways it is.
However, looking at the other side, I think what this might do is add some barrier or consideration when a bailout is considered.
The last time we did large scale bailouts (TARP[0], in 2008), It was rushed through and ratified in around two weeks following the sudden collapse of Lehman.
Any measures we can take to ensure that we don't fall into a situation where there is only one choice is sensible.
There is really no comparison. Frozen credit markets would have dragged the global economy into depression. A crash in tech stocks will just cause investors to lose some wealth. Nobody depends on AI for core operations. Not yet at least.
Also, we did a long-term fix for a 2007-style crisis already with Dodd-Frank. Government can now invoke "orderly liquidation" before a crisis happens. When commercial banks failed a few years ago, FDIC solved it in a matter of weeks with no outlay of money from Congress.
Propping up the stock market to fuel consumer spending is extremely regressive. The top 10-20% make up ~50% of consumer spending. [1] Effectively you're giving the wealthy a risk-free bet with huge payoff if it succeeds. If that bet succeeds it consequentially means a ton of job displacement which will mostly affect the other 90%.
I didn't advocate for propping up the stock market. I only disputed OP's assertion that a tech selloff wouldn't be so bad and wouldn't affect much else. This is what they said
> A crash in tech stocks will just cause investors to lose some wealth. Nobody depends on AI for core operations. Not yet at least.
which government lever can increase the wealth of the lower 80% of income earners in the way you want? the problem with the kind of progressive taxation to fuel "wealth redistribution" (really, job programs) you're imagining is that government spending is inefficient - do we want to pay the prices it costs to convince people to do backbreaking work building ghost cities and bridges to nowhere, it's not like in China where everything is driven by fakery and coercion. compare that to the seemingly unlimited cushy office bullshit jobs that bloat in the private sector creates.
Just because I am anti-propping-up-the-stock-market does not mean I am a communist. I am a liberal who believes in capital markets.
For the 10%, the stock market crashing just means cutting back on primarily discretionary spend - think no new car and maybe not buying the family new iPhones every year - they're not in any danger of going hungry, especially if they have any sense.
There are plenty of arguments to be made for infrastructure projects, for example, why not build out more power generation and transmission?
Why is the “bust” part of the economic cycle something to be avoided at all costs? Isn’t this a natural part of the cycle, like smaller fires that clear out undergrowth in the forest? Isn’t it possible that preventing this by any and all means will lead to much worse outcomes in the long run?
Moral hazard as a concept (as something to be avoided) basically doesn’t exist anymore. Or rather, the whole market now embodies moral hazard. This seems bad.
Because if you let the market fail then people suffer. If people suffer they vote the incumbent out.
Could somewhat help break the cycle by having a safety net for people instead of for overleveraged companies and banks but the US is allergic to that concept.
This is bad, but it seems better than a complete collapse of the economy, mass starvation, and a bloody revolution, which is what often happens when a declining status quo is maintained by force. Reality has a way of exerting itself, eventually.
Financial failure of an AI lab wouldn’t make that AI disappear.
If people depend on them (aka demand) the IP of the labs would be valuable, someone would purchase it in bankruptcy, and they would continue serving the model.
There is basically no comparison to the credit market collapse, even though all of the simplified comparisons try to draw a straight line between the two.
The real concern is different: The theory is that if the frontier labs start collapsing, they will argue that their failure is equivalent to the US losing AI supremacy, which is equivalent to losing the future if you believe AI is winner take all. The argument is that they’ll be financially reckless and then ask the government to backstop losses if it falters, both to retain their lead and to protect the overall economy.
The other part that of this is the increasingly widespread belief that AI is a total bubble without demand and it’s all going to collapse because there’s no profits to be found at all because it’s all financial theater. That argument is harder to make if you’ve looked at the actual unit economics of these companies (hint: Anthropic isn’t subsidizing inference like so many believed). AI is not going away and the demand for compute will only increase. The question is how accurately these scale ups track it and if they’re going to dip below the insolvency threshold from getting it wrong.
But if the companies blow up, the technology doesn’t go away. The model weights aren’t deleted. The ML engineers don’t retire. Companies get restructured, IP assets can be sold to new operators, and engineers move to new companies with new business models.
It is funny how this is the race that is framed to be the one to not loose. Never mind literally any other economic sector where we seem to be content with china eating our lunch. This is the sole industry where suddenly we care. The horror of us having to use outsourced AI when literally every other good and product in our life is already outsourced.
> A crash in tech stocks will just cause investors to lose some wealth.
The number of broader funds that are heavily invested in these companies as well, plus the unprecedented municipal, state, and national investment in data centers and the like, make this far more rippling than you think.
That's my horror/worry. The 2008 was started by the collapse of the real estate market. Banking collapsed because they were absurdly overleveraged.
Are the banks currently being stress tested? Is the testing honest?
Is anyone evaluating the potential impact to the other funds? Or are people being sidelined if they're not on the bandwagon, given that the non-AI market is in overall decline? Are pensioners _not_ going to receive help if an AI collapse tanks their retirement, despite them having basically zero control over the investment?
Yes, by the same logic manifestos and other statements of intent are also "pure puffery" as they're not yet law either.
Or even proposing new laws by floating bills when they don't already have the guaranteed votes - or even know they'll never pass. I'm sure many here would also want to dismiss that as "pure puffery".
Really why do we let anyone but the current majority party say anything at all? It's just puffery.
Again, you're just dismissing it rather than engaging with any reasoning, and putting a rather arbitrary requirement on "real" signalling - one that has been repeatedly shown to be costly and difficult for the non-majority party to even get out of committee to a vote.
And I generally hope that actually bills have a much higher required level of analysis of details and interactions than more general direction statements. Requiring that for every statement would just put a massive burden on the minority party, as they would have to always do that level of due diligence just to be "allowed" to propose a direction.
> Requiring that for every statement would just put a massive burden on the minority party
It’s the burden of work required to get lawmaking done!
Here are the bills the CPC has actually written or endorsed [1]. They’re the ones that could turn into a law in 2027. This crap won’t because it’s not designed to—non-binding resolutions basically never turn into law, and most laws introduced after the Congress flips aren’t preceded by resolutions.
> I generally hope that actually bills have a much higher required level of analysis of details and interactions
They don’t. They’re introduced all the time and then edited and revised.
And by doing so you have immediately excluded anyone who doesn't have an army of lawyers on the payroll from politics. And massively benefitted the incumbent, an icumbant who has, I should remind you, repeatedly stated they would reject any bill out of hand based on the party it was proposed by rather than any contents. The idea that everyone even considered for politics must have an entire, complete government apparatus ready to slot in with zero warning is crazy - it's why public offices come with funding and staff.
I do somewhat wonder if people's opinions about this would survive the current incumbent changing. From previous experience, I have my doubts.
> They don’t. They’re introduced all the time and then edited and revised.
Trying to claim that revising a bill based on feedback is the same as "no need to consider those specifics yet" is crazy to me.
The problems with floating a bill is that it would be killed by the Republican-controlled branches (all of them). Best to hold it back in the hopes that Americans show up to save the coutnry.
A bill with opposition from the president brought by a minority party that currently has no majority power in any area of government... I think this is probably a better thing to do than a bill at the moment.
After midterms, they would still need significant public support to pressure against a veto regardless. So what you call puffery, is probably a very necessary first step.
Well that's your incorrect opinion and you're welcome to it. It's wrong though.
Juneteenth national holiday, Emmett Till Anti-lynching act, Inflation reduction act to name a few. Plenty of budget resolutions are also made that eventually become law.
It's a signal to voters sure but it's also a signal to AI companies and investors to hedge their bets because there's not going to be a backstop if they come crying. That's not puffery, it's forward guidance.
There was never any backstop to equity investors at any time.
Even during GFC, equity investors were wiped out. Same with Silicon Valley Bank.
This trope that investors are bailed out is doing more harm than good. Because intervention and backstops actually helps the economy from not going into a death spiral that destroys the poor and middle class
Or rather to show they are "willing to do something if you allow us to" as opposed to the party currently in power who has demonstrated that they are willing to screw the American public over to fill their own pockets with cash
In a similar scenario though I would imagine there would likely be a similar level of urgency to act quickly that would likely steamroll or sidestep in many ways whatever barriers or considerations such a resolution might enact.
Maybe I'm just jaded but this just seems to be how the world works.
> Any measures we can take to ensure that we don't fall into a situation where there is only one choice is sensible.
Amen. Prepare for a disaster tomorrow by planning for it today. The specific implementation might be mediocre, but we should be pushing for more, especially vis-a-vis pushing for anyone in the company who knowingly was involved in fraud to go to prison.
Treasury's summary is missing important pieces of the story. TARP failed its first vote in Congress, with opponents rightly pointing out that it was being rushed through and alternatives ought to be considered. But five days later, no concrete alternative had arisen, and it was clear to at least 60 reps who flipped their vote that something had to be done or the financial system was going to collapse.
2008 was rushed, but at least the people rushing it were competent.
What would happen if the bubble burst tomorrow, with the clowns sitting at the helm of the USA?
I'm not sure your president would choose to save the American people rather than bailing our his CEO friends.
There's money to be made as backshish if Trump bails Altman and Altman gives back a %age of this to his helper..
It’s worth noting, though, that TARP succeeded in saving the US economy, which was much less affected by the crisis, and turned a profit for the US government.
I dunno, man, you’ll have to figure that out for yourself. Wikipedia says “ In total, U.S. government economic bailouts related to the 2008 financial crisis had federal outflows (expenditures, loans, and investments) of $633.6 billion and inflows (funds returned to the Treasury as interest, dividends, fees, or stock warrant repurchases) of $754.8 billion, for a net profit of $121 billion.”
This makes me think about a really interesting discussion on the awesome History of Business podcast with Adrian Wooldridge[0].
Adrian Wooldridge was essentially arguing that especially with the shift towards more privately owned companies (as in, non-publicly traded) that we've seen in the US, limited-liability companies give an incentive for a large amount of risk.
Essentially there's an asymmetry, because companies going bankrupt have no liability for debts, but they gain all profits if things go well. This has always encouraged risk (and often in a good way), but publicly traded companies are ultimately owned by retirement funds etc, which is not the case for private companies. So the risk of bankruptcy is still covered by the general public, but a lot less of the benefits are felt by the public.
I think we're in fairly uncharted waters for what this risk asymmetry means for the US and global economy. It doesn't sound like something that'll end well, I expect we'll see a lot of public fall out at some stage.
I hope this doesn't sound rude, but I think you've interpreted my point in the least charitable way possible.
Non LLC are not unlimited liability companies. Those have existed historically, and mean that owners themselves are legally on the hook for any company debt, without limit.
Since I'm trying to repeat back something I heard elsewhere, I'll link to the original discussion. Adrian Wooldridge is a long term writer for Bloomberg and not sine random guy on a soapbox. The discussion is well thought out, and not emotionally charged. Sorry if I've accidentally given a different impression.
You're talking past the OP commenter. Not all companies whose owners enjoy the benefits of limited liability are Limited Liability Companies (LLCs). The other commenter was discussing the general concept of a company whose owners enjoy limited liability, meaning they cannot be held responsible for the company's debts or other financial obligations beyond the value of their ownership stake, i.e. their _liability_ for the company's obligations is _limited_. There are many corporate forms that provide this benefit to their owners, including common US corporate structures like LLCs, C Corps, S Corps, and Limited Liability Partnerships (LLPs). It's important to note that the terminology varies across jurisdictions, so the specific structure we call an LLC might be called something else entirely or might not exist at all.
Which is precisely why the OP commenter framed their argument in terms of the general concept of limited liability. The argument applies to any company structured with joint ownership and limited liability, whether we happen to label that corporate structure C Corp, Private Limited Company (Ltd.), Gesellschaft mit beschränkter Haftung (GmbH), or even Limited Liability Company (LLC).
There are many meaningful differences, from corporate structure to ownership and tax classifications. For example, LLCs cannot issue private stock to shareholders. PBCs are effectively C corporations[0], but with bylaws that include making a positive impact on society (not just maximizing profit)[1].
Institutional investors, including retirement funds, university endowments, etc. invest in private companies, either directly or via private equity. I believe Harvard's endowment, for example, has a significant portion of its portfolio in non-public companies.
> Essentially there's an asymmetry, because companies going bankrupt have no liability for debts, but they gain all profits if things go well. This has always encouraged risk
Companies are liable for debts. I don’t know why you would conclude they’re not. If a company can’t or won’t pay their debts, they go into bankruptcy, which has significant consequences up to the company losing its assets to the creditors.
Lenders are not dumb. They collect interest in exchange for the risk of lending. This is the symmetry that you’re not seeing. The lenders can also structure their lending in ways that if the company can’t pay, the lenders get assets from the company in exchange.
LLCs apply at a lower level (not AI lab scale), and shielding individuals from downside risk is a feature, not a bug. It’s by design. There are a lot of countries where the only way to get startup funding involves signing your personal finances away in the event of failure. Financial ruin if the company doesn’t work out, aside from some minimal protections. Do you know what the small business and startup environments are like in those countries? Abysmal. Nobody can afford to take the risk, so the big establish companies are the place to work.
(Note the discussion is about the evolution a of the concept of a company generally, the point I mentioned gets made towards the end, but I'd highly recommend listening to the whole thing)
Sam Altman has been pushing for the US to own a chunk of OpenAI since February 2025. Literally the earliest he could get back into the Oval Office after the inauguration.
What's your long position? You can't pick winners or losers in a bubble. All the leading AI companies are valuing themselves as if they each own the entire TAM without any clear moat. It's obviously not going to work out.
For years the consensus on Hacker News was that the ride share companies were a bubble and it was all going to collapse. Nobody would pay profitable rates once the early discounted rides ended, everyone said.
Then the rideshare companies became sustainable and they’re accepted as a normal part of life.
It was part of the bubble. Amazon's stock lost over 90% of it's value. The company survived, but many other companies did not. A bubble does not mean a company fails just that valuations are too high and that there will be a massive correction over a short period of time. Some companies fail, others survive.
You mean the dot com bubble, which was in fact a major bubble that caused a lot of huge financial issues in the country? You'd think someone on a tech forum would have heard of it, but I suppose some of us would rather make asinine clapback comments than think about what we're saying.
Bubbles don't mean the tech won't one day be great and materialize into something great.
They mean there is a mismatch in valuations/equity/debt to revenue today, putting far too much emphasis far too quickly on potential revenue some time tomorrow.
There's an existing concept of and precedent for, "Too big to fail."
The wikipedia article gets the idea across [0].
This creates an implied "insurance" program, tilting the risk profile toward being aggressive. Taking a moon shot isn't so scary when you think the government will probably step in if it blows up bad enough.
This fluffy, political statement is a message: don't count on it.
Perhaps it will give investors/executives a few thoughts on preparing to deal with a potential blowup themselves?
It’s a resolution, so pure fluff. That said, a prohibition on bailing out this sector in particular might make it possible to claw back anything this regime illegally gives.
For some reason* the rhetoric is focused on bank bailouts in 2008, but the more direct analogy is the auto bailouts in 2008, which weren't strictly necessary but did protect an industry many Americans felt attached to. I think it's reasonable to worry that the same thing could happen to AI companies.
I have no idea who would they even bailout. Investors? Why? What for? What would that change?
Bailing out banks made some sense so that they couldn't operate. Without the bailout there would be no more banks and a hundred million of people left on the ice.
If you want to keep AI operating you can just (temporarily?) ban investors from tearing down the AI companies they invested in for parts. You could say they are important for national security or something. I'm sure they are already earning enough to keep the lights on. Just not enout to give investors payback for insate capital expediture to set up.
Such ban wolud the governement zero, especially if you write the law well enough, so that it can't be succesfully challenged in court.
Yeah, probably it wouldn't be as bad as they made it seem to be, but still, there was a reasoning behind the bailout. I see not reasoning for AI bailout.
The investment to date has been ridiculous and undisciplined. It’s very hard to understand the valuations of these companies. If this wasn’t an election year I think there would be more oversight and critical review. But we have a very unserious party in charge right now.
It’s good that it’s being discussed. We’re tired of the wealth class privatizing the profits and leaving us to cover the costs.
Then the bill will never become relevant and it’ll just be a waste of time and you can laugh at it in hindsight. And I’m sure none of these companies will lobby against it, since it’s just tilting at windmills and won’t mean anything.
There are almost certainly bank execs who are looking at Anthropic's IPO and thinking "if it crashes, we'll get bailed out". Saying "no you won't" now, before the IPO, when it has a chance to affect peoples' behavior, is a worthwhile thing to do.
How? Since when do banks care about IPO crashes? A lot of IPOs crashed after listing; I can’t remember a single time when a bailout was needed after an IPO.
I agree with much of your sentiment, but if the lack of bailout (which let me reiterate, I agree with) leads to a recession, it will kill the D chances in 2028. They will apply this calculus to their political behavior, and (as is typical for the Ds) will do nothing.
The Democrats I suspect are planning on doing the exact opposite unfortunately. They were very wimpy on the bubbly ai stuff under Biden, why would they change when they don't get punished from their own constituents for going against their promises. Same party apparatus as a whole that existed under Kamala. We need a Trump style clean out of the Democratic party because the brand is as bad as the Republican brand at this point. I can't with surity say that the Democrats are going to do anything to reign in big tech, all I can hope for is that they will be slightly better than trump or if not that, no worse.
Too bad this is just pre-election grandstanding. It's a really good idea.
Usually we don't talk about a bailout until a catastrophe is underway. Then they say "We need to fix this now, because of systemic risk, and we'll worry about preventing future problems later". Declaring "we will not bail you out" before the bankruptcies tells everybody that they'd better protect themselves from moral hazard.
This is a good test case, too. The AI companies aren't nearly as intertwined with the rest of the economy as the banks are. They can fail without kicking off a domino effect. Let them.
For the people in the comments stating that this is just fluff for voters, that may be true. But consider that this memo has another target audience: Investors, Banks, and VCs.
I know that many people in those spaces are investing in AI precisely because they believe that should their AI investments fail, the industry will be bailed out by the federal government. Getting AI to be seen favorably by the administration and putting AI within civic government systems and inside defense contracts is a pretty big push towards that outcome.
It seem very unlikely AI will get a bailout. Politicians don’t want to touch that with a 100 ft pole. This is very different than 2008 in that regard.
This is going to be a “let it burn” scenario that will be absorbed by VCs and private credit markets.
Remember too though that even if a bailout does occur investors typically get wiped out. The companies live on but the investors and employee equity typically get reset to zero.
This doesn’t actually require anything like a law, it’s basically a verbal promise. Or am I misreading?
If AI companies were to go bankrupt, it’s possible they’d be nationalized. I don’t see any other feasible option besides that or a bailout (or one but it’s effectively the other, e.g. “nationalized” but the employees including leaders are the same, or bailed out but already subservient to the military). I think the best case is for the compute to be made effectively public: giving every citizen free access, since we’re paying taxes that prevent their bankruptcy.
You are reading this exactly correct. It's the most government-coded kind of resolution: it sounds impressive, but means nothing. It is kinda nice to get that narrative out there though, we shouldn't bail out companies, we should let them fail and re-organize into companies that can work. "Bankrupt" doesn't necessarily have to mean you disappear and go away, it can mean you shuffle people and equipment around and get a new name and logo that makes more sense.
> Special assistance like emergency lending or direct capital infusions to prop up insolvent A.I. companies’ operations or prevent their orderly resolutions through ordinary bankruptcy processes
I appreciate the signal to the lending industry to cool the brakes on this stuff, and that the they are specifically targeting golden parachutes. But legislation like this is at best largely performative.
If the economy ends up crashing because the bubble popped, and legislators can't intervene to prevent a knock-on collapse, they are going to be out of their jobs anyway.
It's a very ugly thing about political polarization. It's easier to destroy than to build, and both sides seem gleeful about tearing down whatever is (rightfully or not) perceived to be aligned with the 'other'.
The reaction to Charlie Kirk's murder (not even the murder itself, but the celebration of it) made it the most shocking political event for me personally, in my lifetime. And it seems like it might be like this from now on - ripping things apart, destroying lives, and then cheering about it.
When Pinochet died, people threw parties in Chile. It's always been like this when things are taken to the extreme (and these days everything is extreme)
Did anyone aside from terminally online edgelords cheer for that though? I don't know that I saw anyone serious celebrating his death, certainly no members of congress. I do find it odd that the reaction from twitter and reddit bottom feeders (and the likes) stirred you so much. For me politicians actual vile comments and complete indifference to the assassination (or attempts) of state representatives and their families is much more disturbing than what people on some Sopranos meme subreddit had to say about Kirk - but perhaps the Hortman's were those 'others' you mentioned?
I think with the kirk issue it was because most of the time when someone is killed for political reasons, they were the right kind of divisive. Kennedy killed over civil rights for example. Kirk though might be one of the few cases where someone who was inflammatory and the wrong kind of divisive was killed. For that, you can expect some dancing in the streets. Expect fireworks and a week of partying whenever Trump kicks the bucket.
No, these companies know they don't have a moat, so have been laying the groundwork for a bailout (e.g. Altman pushing the idea of "Universal Basic Compute", essentially a forced subscription to ChatGPT through your taxes).
The politicians rising through the ranks now lived through 2008 as young adults, and they watched politicians cutting checks to companies who ruined the economy, only to emerge richer; while regular folk got foreclosed on and never recovered. They heard the rise of the phrase "too big to fail".
Well now we have a group of companies that clearly want to be too big, so now is exactly the time to make clear to them they aren't too big to fail. Maybe, just maybe if they know they can't count on a UBC bailout on the other side of a bubble pop, they will act a little more responsibly (which they have not demonstrated they're capable of that to date).
I think they're trying to build a moat through regulation, I think that's different from laying groundwork for a bailout. They clearly don't think they are going to fail.
They don't think they're going to fail or else they wouldn't be doing it. But they do think they need a government moat to succeed. Whether that's framed as a "bailout" or "regulation", it's still the government stepping in to save the day.
In terms of "act responsibly" what I mean in this case is the perception that there's a lot of money flowing in circles here, where customers are investors and investors are customers and competitors. That's how I see this whole party crashing down if it does, if there's too much creative accounting going on when the music stops, some companies might not find a chair to sit on.
>"Better to just oppose all bailouts for all sectors, always."
This is exactly the line of thought that turned the Wall Street crash into the Great Depression, which we learned from and did not repeat in 2008. The answer lies somewhere in the middle.
That's the logic that led to "Let's just let Lehman fail" and precipitated the 2008 crash. At scale, markets are not zero sum and failures sink all boats.
There are no good answers here. But pointing fingers and assigning blame is for sure one of the worst ways to do the analysis.
I don't doubt that there are possible bailouts with potential net positive outcomes, just that legislatures are capable of distinguishing them with an overall net positive outcome. Or that the benefits would outweigh the moral hazard of becoming reliant on them.
I agree that there aren't any "silver bullets", but I think there are some decent pieces of regulation like, forced splits between investment banking and commercial banking, and heavy regulation of high risk markets, especially when it comes to inclusion in retirement funds etc.
Those aren't going to single-handedly solve the boom bust cycle, but they are amongst other similar policies, a bunch of levers than governments can use if they want to in order to shield the public from risks caused by financial speculation.
Eh, no. The reality is that we are still paying for unresolved issues from 2008 crash. If anything, each time we kick the can, the worse the next iteration will be.
> reality is that we are still paying for unresolved issues from 2008 crash
Because it was a mess. Compare it with the bank failures in 2023. Shareholders wiped out, multiple collapses, yet many people have forgotten it even happened.
> At scale, markets are not zero sum and failures sink all boats.
At scale, this boats sink somewhere, not disappeared into the void. And yeas, markets are not zero sum, amount of goods may increase and may decrease, and we should let agents that decrease them fail.
Lehman failed because of the 2008 crisis; its failure did not cause or precipitate it. Even Wikipedia lays it out in the opening summary (emphasis mine):
> “A liquidity crisis spread to global institutions by mid-2007 and climaxed with the bankruptcy of Lehman Brothers in September 2008…”
Letting Lehamn fail was the right call, because it allowed the Fed to bulldoze TARP through and save the wider economy as a result. If anything, I would say the subsequent bailouts were too generous in letting the companies retain controls and returns; the government should’ve kept a permanent, partially-nationalized control of those shares and added them to a sovereign wealth fund instead of selling them back on the market. “You fucked up so bad the entire system almost failed, so clearly you cannot be trusted to self-govern” should’ve been the unambiguous messaging from the Fed.
How many people in this thread think that when the Dems win midterms the AI boom has a hard switch to a bust? I really feel like they will rapidly expedite the process instead of having air come out. I definitely didn't think the market would run up right to the date though.
Marginally greater skepticism is probably a good thing in terms of avoiding a big shock when some big AI player, like Oracle for example, gets into serious financial trouble.
The major buyers of inference are not government. The major funders are not government. And the industry isn’t predicated on some sort of government backstop (like perhaps banking).
What’s your proposed mechanism here? Maybe data center buildout risk, but that seems mostly local policy?
1. The AI race has been essentially been a nation cold war arms race with China - so that would be the government backing the race.
2. The previous Biden administration was going to put a lock down on all things AI (remember: The 10²⁶ FLOPs Rule)
3. The populist anger about data centers will have a strong political arm to investigate and shut down efforts (at all levels).
4. Energy buildout will be intentionally slow down through various mechanisms controlled by dems.
5. Financial regulatory bodies will have strong teeth.
FWIW this isn't meant to be political but more a state of play looking at the real factors of Dems getting power and the impact to the market place.
As a Danish zillennial I think the average American zillennial is far more radically anti-capitalist, anti-business than the average Danish one. Half of them may be good at hiding the sentiments behind right-wing-coded "anti-globalist" and "anti-H-1B" narratives but it's obviously left-wing coded populism.
For the rest of us, that also means the S&P 500 free lunch* will soon be over.
American zillennials are going to get their free healthcare and free higher education, and they'll do it in a way that makes France look like a well-managed, investor-friendly country.
*Unless you own real estate in Copenhagen, one of the biggest sources of wealth creation in Denmark since 2015 has been our pension funds and their exposure to US stocks.
The Danish status quo is radically anti-capitalist and anti-business by American standards. Do you think the average Danish zillennial is in favor of moving to a more American model (privatized healthcare, minimal union protections, etc.) ?
On the other hand Bernie wants the government to take a 50% stake in the AI labs. Can we make up our minds, do we expect the bubble to burst or do we expect a windfall? ;-P
Either way Anthropic will IPO soon and we’ll be one step closer to finding out.
One thought I had is that, bubble or not, this technology is likely going to upend economies of entire nations and impact all people, so it would be better if controlled by the people which is (in theory) represented by the government.
Looking at this as a backdoor bailout is the wrong perspective; it should be more like giving the people control over their economic future.
One way to look at the current AI economics is that consumers and businesses are subsidizing training for super intelligence only available to government.
Do you think Claude and GPT refuse doing calculations for the national ignition facility? Or for STRATCOM?
Congressional Progressive Caucus (CPC) Chair Rep. Greg Casar (TX-35) House Financial Services Committee Ranking Member Rep. Maxine Waters (CA-43) joined by Representatives Danny Davis (IL-07), Chris Deluzio (PA-17), Valerie P. Foushee (NC-04), Jesús “Chuy” García (IL-04), Pramila Jayapal (WA-07), Analilia Mejia (NJ-11), Delia Ramirez (IL-03), André Carson (IN-07), Jan Schakowsky (IL-09), Brad Sherman (CA-32), and Rashida Tlaib (MI-12).
I am extremely wary of progressive(socialists) and their agenda
Maybe I'm just jaded but I don't see Big Tech just taking this on the chin.
I imagine tens, even hundreds of millions will be spent on ensuring this resolution never passes. Or if it does pass, those millions go towards lobbying politicians to still somehow find a way to insulate Big Tech as much as possible and externalize their costs onto us.
Re-reading what I just wrote, I'm definitely jaded...
It's not being jaded, it's being realistic based on past trends and the current admin being 100% ok with padding corporate pockets instead of the working class
Gosh I really gotta get a real job again. The RLHF gig work has been great while I’ve been in school - flexibility, good pay - but I’ve known the whole time that it won’t last. Gig workers will be the last consideration when it all falls apart
Any pulse on how likely this is to pass or what hurdles it faces? Neews like these give me hope but often they are written before anything materializes.
The bigger issue is not that the direct AI companies go down in this bubble, its that they likely take Nvidia, Microsoft, Google, Intel, AMD and other big tech companies with them, hardware and software that are hugely intertwined with the global economy and many other businesses and underpin the modern computing world. Letting all them go bankrupt will have a huge impact. The problem with AI is the people exposed to it are not just AI companies, existing big tech has overinvested in it.
I wonder how we'll look back at the last 30 years at this point:
- We have a total lack of oversight, transparency on private companies and their finances
- We have VCs that very much have the capability to pump up value in a way that is detached from reality.
- The language of startups discourages saying "We are trying to..", you just say "We are". This is a launch pad for a more general culture that lacks integrity.
- The founder has become more and more of an idolized archetype. Character flaws are accepted as part of "what it takes". We accept dishonest behavior as hacks and part of the hustle.
I think this is a risk that applies to the whole VC backed tech startup economy.
Good thing Elon Musk told us that AI will make saving for retirement pointless, as it seems all those retirement accounts with index funds are about to get nuked.
This ain’t rocket science. Capitalism demands that the investors carry the losses.
If the United States thinks it is a strategic investment of critical importance in the battle for the future with China, it should either nationalize the frontier labs OR build its own.
Have you guys actually tried getting allocation for frontier models on something like Bedrock as a smaller company? :) What bailout? Everyone is desperate for compute. Sure, some funds probably overextended themselves financing data center buildouts for smaller players. So what? Big Tech is critically short on compute, and not by a small margin. Google Cloud grew 100%+ in a single year, and if you actually listen to Sundar, they have at least 2x the demand they can currently serve.
HN has lost its fucking mind with fear-driven hatred of the big AI labs. Never mind that virtually every metric points to the same thing: this isn't a bubble, inference is wildly popular, AI company revenue is growing faster than anything in history, on and on and on.
But to hear HN, AI is useless, all the demand is fake, the valuations are based on nothing, it's all just a few companies investing in each other, they're dangerous and reckless, they want to control everything, they want regulatory capture, it's all a marketing stunt, the open weight models are about to catch up, soon everyone will run their own models on their own hardware, on and on.
It's all bullshit. None of it makes any sense, none of it can be backed up by the data, little of it is even internally coherent, and these skeptics and haters have been consistently wrong for the last few years, with apparently zero self-reflection or awareness.
But sure, let's pass a grandstanding resolution that has no teeth to oppose a bailout that no one is asking for, for a collapse that isn't coming. Makes sense.
Not going to happen. Friendly reminder that when it came to money, politicians know exactly where the bread is buttered. When it came to Silicon Valley Bank bailout, Summers himself personally intervened[1]. Naturally, that is perfectly fine, but if one was to suggest the same for .. say.. students loan, immediately people will descend crying horrified cries of 'but but fiscal responsibility'.
Yeah it's a bet. They shouldn't be bailed out if it doesn't work out but they should enjoy the benefits if it does. Maybe a bi-partisan bill that states both sides?
Has there ever been a more predicted bubble? We’re passing laws ahead of time.
I feel like real estate in 2007 was mostly in denial about a bubble. People would mention it but generally list reasons why it’s not a bubble. Same with 1999.
What does it mean when everyone agrees there’s a bubble?
I don't think many people were even aware that there was a market betting on mortgages. People could see that rates were low and people were getting mortgages that couldn't pay them but the enormous credit market betting on it and bundling them together was something only the finance people and the ultra wealthy knew about.
This one everyone can see it, its very public, it has daily enormous public marketing from all the sellers of AI in the press.
But this is really socialism. It was not a bailout of banks, it was socialism for wealthy. Did the people lose their houses? Yes! What about the people who made obscene profits from lending money to people when they should not? Did they lose their money? No. We - the taxpayers, the ex home owners - gave them money.
What about socialism for the egg industry? When the centralized chicken stocks got a disease, we people who were paying usurious prices for food, also provided payments to ensure the wealthy owners did not suffer.
Socialism for the wealthy === good, socialism for the poor === evil. Hmmm. Oh no that can't be so lets call socialism for the rich "a bailout".
Since we force people on food stamps to work now, maybe with this "bailout" we should force those people to work minimum wage jobs?
Nah, the wealthy would have been fine either way. Bailouts are done to placate the common voter and keep their lights on. The great depression didn't see the rich and powerful starving in most cases.
The bailouts were loans, which returned slightly more than was borrowed.
Besides, business were net tax payers. It's perfectly reasonable we lend them back some of their own money so they can continue to pay taxes next year.
Fully support it. We’ve had a moral hazard in the USA for half a century with constant bailouts for speculation and gambling by businesses.
We must let them fail, no matter how many jobs it costs, no matter what the harm looks like in the short term, to send a clear and unambiguous signal to others that the government won’t backstop your shitty bets.
a) How courageous for them declaring wanting to ban something that isn't being proposed
b) if an AI bubble burst were to happen, the fallout would be severe, ie. hard to abstain for policy makers from giving the public ease of mind
c) All this proposal wants is to drive a wrench between the GOP and its new (?) populist voters, that don't want any favors given to any Big Tech oligarchs, regardless of it being AI or not.
d) this may work or not – neither party is going to abstain from bailing them out, anyways.
I seem to recall OpenAI's CFO inadvertently proposing a bailout about a year ago. I'm fairly confident that the industry has been considering the possibility of one since before that statement.
Not sure why you're downvoted because you're right. If there wasn't a major election next week this would not even be happening. It's meaningless theatre to get the public cheering or jeering on their way to the polls.
In the 2008/2009 crisis the bailouts were approved by a red admin (Bush) and then the check signed, delivered hat in hand, by a blue admin (Obama). If they want a bailout they will get a bailout no matter which party is in charge.
This was my thought. The last recession bailout was by democrats (in 2008), and they did so to influence the industry in their direction. I have a hard time imaging republicans would do a bailout, because they have no interest in creating new regulations even in their benefit.
The AI bubble is not going to burst. At my company, we could easily spend 2x more per employee on AI. Easily. And I know at several other companies that is also the case.
So, very easily these companies can get twice as much revenue over night. And that’s only the beginning. AI has very low churn.
absolutely ZERO Ai companies need bailouts. this is complete theater.
if you are reading this, please do some research on how much money inference prints? its not wildly spoken about because people don’t yap about printing money.
“Oh but it’ll all come crashing down” - say you don’t work at a lab or know anyone at a lab.
My greater annoyance is HN becoming annoying political in the past few years. Sure, everything is political now but the moderation siloed these posts better. Maybe the user base is too old now. Fresh blood went to Discord or X.
Please do some research on the other costs involved in AI. Not a single AI company is making any profit and realistically are not close. Training models costs billions of dollars. There is no moat for these companies. If an open model comes out tomorrow that is better than Claude what happens to Claude's 1.5 trillion dollar valuation? What happens if revenue does not grow as fast as anticipated when Anthropic alone has 750 billion dollars in obligations? How do they pay their bills? What happens then.
The only company making money are hardware manufacturers who are throwing logs on to keep the fire burning through direct capital investments in their customers. Without Nvidia some of these neoclouds would already have failed.
OpenAI/Anthropic's purchase obligations don't matter. They are made to companies with plenty of cash, real assets, and other revenue streams. The only thing that happens is that AMZN, MSFT, GOOG squeeze out some upstart rivals and stay on top.
All of the compute being built will be consumed very profitably, that profit just won't be captured by delusional weirdos who believe they can build an AI god because machine elves showed them the future in a DMT trip at a poly sexy orgy, or whatever the case may be.
I think the “it’ll come crashing down” argument comes from cheaper inference, not more expensive. The frontier labs have to pay for these massive training runs. If inference gets cheap enough that you can run it yourself, why run it on their side? Open weights are (much) less than a year behind.
Projecting that none of these AI companies will demand bailouts after the bubble crash is wildly speculative in the other direction. This has nothing to do with politics.
like anyone don't have a 401k, if AI crashes, say goodbye to 401k. This is not really constructive to the situation. What is constructive is thinking about how to improve the country's electricity system, which will benefit the people and industry alike. This country charges generally 10 to 40% of taxes yet industry have to buy their own generators for power. You know a lot of capex spending by companies which is fueling the AI bubble debate is to cover job functions that should be provided by government with existing tax dollars. And these politicians have no problem voting for 1+ trillion defense spending a year.
Signed, the Silent Majority
Agree.
What we need is a revocation of the Exchange Stabilisation Fund [1] as well as hard limits on the Defense Production Act’s Title III [2] and whatever the fuck in the CHIPS Act let the President unilaterally invest taxpayer funds in Intel.
This announcement of a non-binding resolution does none of that. It’s pure puffery.
And in case anyone thinks this is hateful or harsh, remember: bankruptcy doesn’t mean we space laser these companies. Shareholders get wiped. Creditors take over. Services probably keep getting rendered, GPUs probably keep running.
[1] https://en.wikipedia.org/wiki/Exchange_Stabilization_Fund
[2] https://www.govinfo.gov/content/pkg/COMPS-8323/pdf/COMPS-832...
How exactly are House Democrats supposed to revoke the Exchange Stabilization Fund or change the Defense Production Act when they don't have a majority in the House? All they can do is signal what they intend to do if they regain the majority.
Introduce an actual bill. Draft and debate something specific so that when they are in power they don’t have to start from scratch.
Use procedure to try and bring it up for a vote. At least try to legislate.
Who cares. Write a damn bill. Get agreement among your members that specific text works. That is the first step to any legislating. It’s also something Democrats know how to do—even the CPC has an energy bill drafted. It’s what you do when you’re being serious about prioritizing legislating versus tweeting.
If you care about this issue and have D representation, call and demand an actual bill.
Everyone is complaining that the current Democratic candidate has had basically no ad presence. The Republican would be in the same boat, as they both received about the same amount in individual donations, but the latter actually got national and PAC support to run ads.
We do this to ourselves.
They do introduce bills in committee. Which are shot down in committee by the instrangient Republicans that lead the committees refusing to compromise often before the bill can come to the full congress. You are asking Dems to do something they literally cannot do while minority party. You are asking Dems to do an impossible thing and then complaining they cannot.
> Introduce an actual bill. Draft and debate something specific so that when they are in power they don’t have to start from scratch.
You're also complainging about democrats not introducing bills... on a post from Democrats proposing bills (well, resolution. whatever, still not starting from scratch then)!!!! You're complaining about something that literally already exists! Stop being so blind.
Sure. They also publish draft bills.
That lets folks comment and edit and build consensus while the other guys are in power. (Or snatch some across-the-aisle votes.)
It’s how effective shadow governments work in parliamentary systems. It’s what the GOP was up to while it was out of power. It’s what the Congressional Progressive Caucus does when it actually plans on passing laws about something [1].
Just not here. Because this is puffery.
> on a post from Democrats proposing bills (well, resolution
Big difference! You float a resolution when you want to tweet about it. You publish a draft bill when you want to legislate.
[1] https://progressives.house.gov/endorsed-bills
Edit: love the downvotes, keep them coming. “We’ve tried nothing and we’re all out of ideas.” Classic Big D.
but then the speaker also controls the schedule so republicans will just shut it down and not work for 2 months to avoid the vote.
Resolutions are cheap theater. There’s been a huge number from both parties over the last decade, with very few tangible results except from some joint resolutions that stripped away regulations.
He wasn’t saying that it had to actually get into the floor. Just make an effort and use that as an explicit position when campaigning, then follow through.
From them:
"Use procedure to try and bring it up for a vote. At least try to legislate."
"Edit: love the downvotes, keep them coming. “We’ve tried nothing and we’re all out of ideas.” Classic Big D."
They literally are. This guys is explicitly bitching about things actively happening.
From you:
"Just make an effort and use that as an explicit position when campaigning, then follow through."
He literally called making an explicit promises "pure puffery" and they cannot follow through until they are seated so no, they are not saying that. This person isn't worth defending and is not saying any of the things you are assigning to them.
They’re absolutely not. This is a non-binding resolution. It’s had none of the hard discussions around what should be revoked and how what isn’t revoked should be revised. It’s a nothing burger.
Yes. I just had a markup of one floated to me by a New York member. This is what you do when you’re preparing to go back into power.
It is still "puffery" if they don't have the needed majority to pass it. I am sorry, I can see you try to find any excuse, purity test, "no true Scotsman" fallacy, to rationalize not voting for the Democrats, but you will have to if you want anything to happen.
However, putting legislation up for a vote is not puffery. Establishing what parties vote against and why is actually an important part of what the opposition does. Otherwise they may as well not turn up.
And because republicans are a unified block whose entire platform is to serve you for dinner. Their whole existence is dedicated to reversing any change.
I know it sounds strange, but what if the math is right, and there can actually be casual relationships?
This is a good thing. Though it would have been better if they hadn't pushed these policies in the first place. Still, it's progress.
And why? Aren't you forgetting something?
Who is hurt most by a government shutdown? What does it solve? Would Democrats have gained something politcally or lost more support?
Earlier today I had to grit my teeth and vote for Josh Turek in Iowa, even though I think he's a shithead who threw trans people under the bus just to eke out a few more votes from conservative fence sitters. I could've made a protest vote, but the realpolitik of the situation is I'm either getting Turek or his Republican opponent, and I think Turek will do a much better job representing me despite his dumbass about-face on trans issues, whereas the Republican will be actively harmful.
The other party in question is the problem, and you're nitpicking an utterly powerless minority party's efforts to make things better.
to the dead reply: "is currently the problem" then. The party alignments have completetly flipped in 150 years. Nothing is permanent, and I thought that didn't have to be explicitly stated. Since I was incorrect about that I'm talking about the current state of the world, with no naive attachement to a particular label.
I’m holding the party that has a hope of saving our republic to account for not repeating the messaging-BS mistakes from the later Biden years.
Non-binding resolutions are a mockable waste of time. They do nothing for affordability or corruption or reducing the chances of an AI bail-out.
Nobody's perfect, sure. But can one side be significantly better than the other in politics at times?
https://polymarket.com/predictions/midterms
Even when they’re in the majority they play victim. “Oh no Mitch McConnell doesn’t like our bill :( We can’t do anything”. The party is too busy trying to court Republicans to get anything done.
Or they sabotage themselves. Pushing Hillary and losing was preferred to risking a Sanders win and losing corporate funding. Pushing Biden, who promised to run one term, then running him a second. Only to undemocratically replace him cause people didn’t want a senile candidate.
You have Bush-era never-MAGA Republicans publicly making statements on how they’re voting Democrat. They seem more willing to vote D than their actual base. It’s ridiculous.
Meanwhile, Republicans actively court their base and seem to accomplish things when they’re the minority party.
They're going to have a majority in about 3 days. They won't have a veto proof majority but they will have a majority.
They’ll try to pass the bills they’ve actually written and published and debated and built consensus around.
I don't understand this position. Two years of stalled government would be a godsend after the past two years. Dear lord, if we could just slow the daily assaults on people and the environment, domestically and abroad, I'd sing Hallelujah.
They can force compliance with the Epstein Files Transparency Act and release the documents currently being illegally hidden.
Conviction requires 2/3rd of those present in the Senate.
There's no veto possible.The power is exclusive to the legislative branch, the other two branches have no say at all.
In the past couple days I’ve heard glee and celebration at the idea of more non-binding things “getting things onto the record so everyone can see where loyalties lies”
So if you are a politician catering to your constituents, that makes sense to do
US Democrat Party are expected to obtain a majority in the House and Senate, remaining unable to pass any law through the Senate except an annual budget reconciliation, the vessel will continue to be stalled by the Filibuster needing 60 seats, vote to remove power that needs 67 seats, veto override ability that also needs 67 seats. Nobody in the opposition party will vote in favor, barring one or two, which will not be enough. This effectively keeps the US legislative body paralyzed but even more so than now. It will now also stall appointments from the President, so additional agency heads and judges won’t be installed but the Federal Government already did that for the last 2 years and will continue all of its own causes unabated
I think one criticism of that party are the performative nature of its constituents and representatives, where a “virtue” is demanded to be shown more than legislative change, as opposed to focusing on things that could garner consensus of which there are many, revisiting other causes when the seats are actually there. Seems to match the criticism, I suppose the other party does it too? Thats what is generally revealed to me when I make an observation. Just doesn’t seem like an identity of the other party as their control of the executive branch, military and courts is more than performative.
When Trump took over, he scrapped so many of these programs and the companies were forced to take massive writeoffs in their investments. Those executives that championed these moves to EVs are persona non grata now in the industry(at least for the time being). These back and forth demands is really causing a lot of trouble for the legacy makers.
Tesla managing to be able to detach themselves from having to answer to wallstreet and not actually caring about what the government says has allowed them to go at their own pace. The other American EV companies are on life support and the Chinese companies have always answered to one entity: the CCP.
If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem. If you owe the bank $100 billion, that's country's problem.
https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
TARP delivered a $15.3B surplus on $426.4B invested for a roughly 3.5% return.
I think the only reason Iceland nationalized the failed banks in the first place was because they had no other option, the economy is too small, and they simply could not afford to bail them out, the money literally did not exist.
Also, today’s Iceland is extremely troubled by austerity. Schools and healthcare is extremely underfunded. Teachers- and nurses strike almost every 2 years. The city of Reykjavík just started their biggest round of mass-layoff ever.
Note also that since then, all the nationalized banks are back on the public market with the state only holding plurality or even minority shares. Investment/retirement funds and private investors together hold bigger share then the state. These shares were more often then not released on a steep discount allowing investors (many of whom responsible for the 2008 crash) essentially free money from the state.
https://www.reuters.com/article/business/us-government-says-...
GM lost taxpayers $11B, Chrysler lost $1.2B.
The phrase is "that would be good for the economy".
It’s still the notion of trickle down economics at play.
But they did get a 3.5% return on their investment (but not comparable to the equivalent return in the market or even in bonds for the same duration).
That return was in turn used to justify the bailout, but the global macro effects weren’t accounted for: the banks’ fuckup caused misery all over the world for the best part of a decade.
> That will make a lot of businesses focus on success here and not somewhere else.
You have a weird definition of theft. We're talking about nationalizing them instead of handing their shareholders a bunch of free money to bail them out. Not getting free money is theft now?
But, more broadly: there's more to the social contract than private property rights. And it's really hard to bring myself to care too much about the private property rights of entities who have shown themselves to not be very respectful of that contract.
If you dont want to provide a loan, fine. I dont see how you justify seizing the company.
Imagine asking the bank for a loan and they say "no, and we are also taking your car".
In those cases, the economy and society you want to externalises losses onto has every right to negotiate something in return. We are not in the business of just forgiving multi billion debts.
>Not loans, not bail outs. Confiscate and figure out how to wind them down in a way that benefits the taxpayers.
Some people find authoritarian despotism attractive as long as it targets their perceived enemies
It's not that simple. For instance: a prison sentence is "authoritarian despotism" from the perspective of a murderer subject to it (or his apologists).
Don't ask for a loan if you don't want a loan.
That's got perverse consequences. Just like with the corporate leadership, you're encouraging bureaucrats to make bad decisions because (a) they don't have to answer for their bad decisions, and in fact (b) they'll get to expand their authority should their decisions go bad.
The corporate leadership that got us to the problem should suffer, but so should any bureaucrats who had a part it allowing it to happen.
It's kinda like taxes. Who among us would say their tax dollars are and have been well spent? Then why on earth would any of us want to give these idiots more of our hard earned dollars.
Banks weren't over levered back then either because all the mortgages went straight into CDOs held by other people/institutions.
The problem was that nobody trusted each other because Lehman could just fail. So they stopped lending to each other (like the daily loans they give each other). Trust evaporated and the whole system stopped dead in its tracks.
Leverage is not the only thing that matters...
https://www.bloomberg.com/opinion/newsletters/2026-10-29/run...
The rate of growth in this sector is "1. move so fast legislators can't keep up; 2. keep going until you hit a limit, then find a way to hack around that limit; 3. GOTO 2".
They bailed out Intel and the stock recovered.
Might do the same.
Intel’s revenue is currently worse than 10 years ago, and gross profits are 2/3 of what they were around 2012.
The temporary price hike was caused by a huge temporary jump in relative valuation (probably because the US Gov started subsidizing).
See the historical graphs:
- https://www.macrotrends.net/stocks/charts/INTC/intel/pe-rati...
- https://www.macrotrends.net/stocks/charts/INTC/intel/revenue
- https://www.macrotrends.net/stocks/charts/INTC/intel/gross-p...
Big companies are like big ships. Takes a LONG time to turn.
Game is not over yet.
> They bailed out Intel and the stock recovered.
I don’t think the stock (or the company) has recovered at all. Neither profits nor revenue (see my links above).
But hey, who knows what the future brings.
It takes forever to do anything new in hardware.
This is unfortunately a VERY long game.
> They bailed out Intel and the stock recovered.
This is not demonstrated. What did the Trump admin "figure out"? Socializing private losses (especially if it's only temporary), is another problem, not a solution.
How to abuse their position to stuff insane amounts of money into their own pockets at the expensive of the American people and get away with it.
Edit: Taking bailouts off the table forces discipline, it strips away the bloat and forces real efficiency.
I worry that one of the reasons that Anthropic has 500 billion in commitments and everyone is running to the credit markets is to make it so that if they fail everyone suffers.
Ever is a stretch. Government shouldn’t be bailing out shareholders and senior managers.
Who are you thinking of?
That’s what happened in 2023. In 2008, depositors almost got wiped out and a lot of senior managers and stockholders got bailouts.
At NetBank? Only if they were over the FDIC limit. Stockholders got destroyed, though.
At Bear Stearns? No, depositors got protected in a convoluted deal. The shareholders got very close to nothing.
At Lehman Brothers? They did "break the buck" on money market funds for a bit, but weren't depositors made whole? And weren't stock owners wiped out in the bankruptcy?
Washington Mutual? Depositors were covered by the FDIC.
Where were depositors "almost wiped out"? Where specifically? Where were stockholders bailed out?
“The [Deposit Insurance Fund] fell to the lowest point in its history, a negative $20.9 billion on an accounting basis, by year-end 2009.
…
To address this issue, the FDIC adopted a novel approach that required the banking industry to prepay its quarterly risk-based assessments for the fourth quarter of 2009 and for the next three years” [1].
Where did “significant amounts of cash” this was funded out of, which “banks were holding at the time,” come from? From the Fed and the bail-outs.
Without the bail-outs, banks wouldn’t have been able to fund the DIF and the FDIC would have faced the threat of insolvency.
> Where were stockholders bailed out?
Every institution that participated in TARP [2].
[1] https://www.fdic.gov/bank/historical/crisis/overview.pdf
[2] https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
No. The FDIC can borrow from the Treasury. Not the Fed. The Fed backstops’ banks liquidity. The FDIC backstops banks’ solvency inasmuch as it affects insured deposits.
We needed new laws in 2008 because the Fed’s backstop alone was insufficient. These banks weren’t just illiquid, they were insolvent. TARP gave them liquidity for “troubled assets.”
I mean, look, you can point to some losses by depositors - those over the FDIC limit, and when two money market funds broke the buck. You can also point to some instances where the rescues helped stockholders, at least compared to what their losses would have been. But the general trend was that shareholders took a bath, and depositors did not.
That’s what happened in 2023.
FDIC didn’t pay anything out. The new capital requirements and conservatorship processes worked.
> that set a very dangerous precedent
I don’t like how it happened. But codifying universal deposit insurance in U.S. banks isn’t a bad idea. Maybe one caps it for foreign deposits.
You cannot do this if the big Wall Street firms collapse.
I'm not sure what you mean by this. Wall Street firms as such don't have deposits; Wachovia, Washington Mutual, and a number of smaller but still large banks were handled in similar ways to avoid any loss of even uninsured deposits.
Perhaps you're under the impression that the FDIC paid out of its fund for those deposits? (e: Originally I claimed this impression was wrong, but in fact I was wrong.)
Are you further claiming that large commercial banks don't have depositors?
I do think that "Wall Street firms" in even the most expansive sense isn't generally understood to include large commercial banks. Some companies like JPMorgan are big enough in investment banking to kinda land on both sides of the line, but I've never heard anyone refer to Bank of America or Wells Fargo as a Wall Street firm.
What makes this so politically unpalatable is that having constantly bailed out the last few cycles, everyone is now operating on the assumption that they will be bailed out, so many entities who in a more perfect world would know better have done a lot of stupid things, like pensions that have a lot of bonds that will go bad if the AI bubble collapses.
Frankly we're looking at massive problems and upheaval at this point no matter what we do. But the advantage of not socializing the losses is that the signals of what needs to be changed go directly into the economy. Socializing the losses means that the signals get muted, confused, and mangled and people in the future end up doing the wrong things as a result.
Unfortunately, at this point I think the choice is between people clearly and forthrightly losing massive portions of their retirement as visible losses, or people deceptively losing massive portions of their retirement as the bailout creates massive inflation and their retirement is inflated until it has a fairly similar amount of losses. Unfortunately, it is a feature for the rulers that the bailouts obscure the losses and dampen the correct apportionment of blame, even as it destroys the underlying economy. Giving people clear, correct targets for their rage, the same process of correct pain apportionment the economy needs to become healthy again, would point people at the "wrong" clear, correct targets, and the clear, correct targets are the ones deciding whether or not a bailout occurs. Not just the literal lawmakers nominally making the call, but the entire system that makes the decision.
So plan on bailouts.
We've been living in an economy distorted by the forces that lead us to this point. We've been locked into the decisions necessary to keep things going as they have been, whether or not they make sense.
The correction that you're talking about frees us to actually make choices. Some of them will be tough choices, but we finally get to make them, with all of our resources and work ethic intact, which don't just disappear because a stock index craters.
If we want trains and local farms instead of data centers and new iPhones, we can actually make that choice, instead of being forced into the latter because every investment fund is pumping them to the point of being a foregone conclusion.
To borrow an aphorism: the bust is a feature, not a bug.
What is much less known, because it kinda kills the talking point, is that the "too big to fail" bailouts were fully repaid with interest, to the tune of an ~$17B profit.
The losses from the program were from the auto industry ($12B) and the struggling homeowners fund ($31B). Which is a bit ironic, because those two are probably the ones that would have the most public support.
1) economy tanks, people earn less disposable income or become unemployed
2) consumers spending less tanks the economy even more
We have historical precedent for this in the great depression, and the government going hands-off back then made the problem almost certainly much worse.
You could even make a pretty credible argument that the Nazis only got into power thanks to this, so there's your doomsday scenario.
I think we screwed up after 2008 and I would like to see us get it right this time. The government absolutely should be hands-on, but the focus should be on raw productivity and public well-being, not making certain that certain firms survive the bloodbath.
You know what's a great economic stimulus? You now own the house you owe a mortgage on, clear and free. "But that would bankrupt the mortgage-holding bank!" Okay.
This is what was allowed during the great depression and what we desperately tried to avoid in later crises.
Western democracies are not set up at all to let the government direct and compensate millions of workers on the turn of a dime; micromanagement by government in such a situation can be expected to be extremely wasteful and ineffective, and this only got worse, because we have less generic/unqualified use for human labor than in the past (construction, railroads, motorways, heavy industry), and specialists are even harder to manage.
If everyone stops even just believing in the ability of local supermarkets to provide toilet paper next week or, on the other end of the spectrum, starts distrusting the banking system/dollar entirely, then the consequences can be extensive, expensive and slow to recover.
It might even be worth it to feed taxpayer money to rich greedy capitalists because the public comes out on top still by avoiding that trust collapse.
But I think more than the one-off situation is also the precedent it sets. When you can bank on the government bailing you out (pun intended I guess?), it creates a perverse incentive of just trying to get as large as you possibly can, all foundation or principles absolutely be damned - because once you get big enough you win, even if you're the biggest loser ever. And I do think that's what we're probably seeing with LLM companies.
Not that LLM's a loser - it's a revolutionary tech and will only become more so. But multi trillion dollar valuations for a product that has viable open competitors already available and whose operating requirements continue to plummet and will almost certainly continue to plummet? This is extremely amusing, but absolutely batshit insane. It's like paying millions for a pretty flower because it's novel in spite of the fact that you know, and everyone else knows, that once people start planting them there will be endless amounts available for negligible cost.
Either way the people should never bail out corporations.
Give me $100 billion and I will make the greatest pencil sharpener that has ever existed, and possibly that will ever exist.
The market for AI is very clearly there; people are willing to pay more than enough so that providing LLM infrastructure (inference) is profitable.
Just the SOTA model R&D is pretty unsustainably expensive right now, but this only means that if the status quo "bursts" (because people realize that pushing the frontier is not paying off), model improvement will (probably) be slower afterward.
Note: this could also happen because expensive SOTA progress fails to keep ahead of "garage-trained" models, in such a case SOTA-AI lab investments collapsing would not really slow AI progress anyway.
At the debt levels they have, they need to start shoreing up their books or else the ramifications for the entire market will be apocalyptic
Let me guess, subscription user?
And I realize also that they are reducing churn by keeping the value there for subscribers. Not sure what that’s costing them, but it’s definitely holding me as a customer. The product works so well for me that I honestly don’t need to even glance at the competition.
And honestly, this has been the case since day one. I’ve always used Claude. ChatGPT a bit in the beginning, but it’s emoji fetish and “bro” personality gave me the ick so I dropped them.
Then you have absolutely no idea what is going on. It has exactly zero to do with what AI can do, and everything to do with how the companies are being run. The technology will not die, but the AI bubble will pop, regardless of what Claude can do.
The demand and profit margins for inference at the moment means that all these companies will make money off the physical investment.
So are they showing a profit that can pay off these data centers before the turn of the decade? If not, they aren't profitable enough to succeed.
I have seen this used abusively too many times.
The moral majority is neither.
If your opinion is the majority opinion you do not need to say so.
Chapter 7, please! I would like them to *liquidate* Smaug's GPU hoard; and I would like them to do that all at once, in a swift and efficient fire sale.
These come around once in a while. Go get that seller’s Gaudi rig if you want to test the experience. It costs one-time as much as the monthly power cost on a B300 NVL72 and uses a fifth the power.
They (the AI companies) are sitting on piles all right, but not "assets like dragons". Rather, what they are sitting on is piles and piles of debt that eventually will come due to be paid back. The "bet" their CEO's are making is that some "profit angle" will materialize at some point that provides the funds to pay back that debt when the bills start coming due.
> If they haven't saved any money
They have not "saved any money" (not in the sense of a "saving account" in a bank). They are leveraged as far into the future as one can see, and betting that before that lever starts to move they will have a revenue stream sufficient to pay it back.
This is hyper capitalism and accelerationism at its finest.
Dragons are famous for sitting on gold.
Today, approximately 7%–12% of gold is used for micro-plating connectors, contact pins, and circuitry in smartphones, computers, and GPS devices.
> 1. Total AWS Gold: 10,000,000 servers multiplied by 1.875 grams equals 18,750,000 grams (18,750 kg).
> 2. Bezos's Share: 18,750 kg multiplied by an 8.5% ownership stake equals 1,593.75 kg
Surely this isn’t pure coincidence!?
Jeff, the Origin https://imgur.com/gallery/jeff-origin-lp9Q2tC
The issue is that this gives perverse incentives for companies, unless you also have proper regulation, which you should have anyway. The issue is that you don't.
But in this case I agree with you, because in addition to the costs, there are also huge benefits for the general population to letting these companies fail. Both in actual behaviour and power right now, but also as a future incentive for all other companies.
Indeed they may, but they will be taking a lot of people's 401k's with them. Does anyone here have a 401k and have they analyzed the portfolio to verify none of the assets are related to the AI companies? In some cases it will not be obvious.
If one owns a standard cap-weighted S&P 500 index fund or a default target-date fund in their 401k then about 30% to 40% of every dollar contributed goes directly to the dominant tech giants driving AI.
I am not a financial expert and this is not financial advice.
We had that happen in the late 90s/early 2000s with Nortel. Before they collapsed (and infamously devastated their current and former employees' pensions in doing so), Nortel represented a THIRD of the TSX. The TSX responded by capping any individual stock at 10% of the exchange's overall value, with a forced rebalancing in the event that cap is struck.
At this point, that 10% is probably higher than it should be, since it doesn't account for entire extremely-well-funded sectors being caught up in a hype cycle like AI's, the sum of whose component stocks could easily exceed 10%.
Agreed. I have no idea how to stop it. People push for legislation and then there is always some loophole that quietly appears.
I know, I know, I’m delusional.
When I first heard the scheme as a kid[1] -- that my retirement depended on giving my money back to the owners, all in the hope that it will come back to me in fifty years -- my first thought was, "I'm never seeing that money". I signed for the matching contribution and not a cent more -- getting 2 bucks of Funny Money for each buck seemed like a decent gamble. As I got older I started thinking that the system must work, all the grown ups know what they're doing, "it's the responsible thing to do". Etc etc etc. Now, I'm coming back around to my teenage opinions: they're going to figure out a way to take every single cent of my money.
Shit like this makes people into goldbugs and ammo hoarders. Or worse.
[1] My generation had some of the last pension positions, and 401ks were fairly the new thing.
You won't get any arguments from me. I have chased many 401k grifters and hawkers off corporate property. I'm just saying people may not realize that upwards of 30% to 40% of their portfolio may be impacted by a crash and maybe there is something they can do proactively (or not, I am no expert on this). It's just something to investigate, I think.
I won't make a similar argument here because about an AI bailout because the counterparties know the risks, but there are pensions with requirements to hold high-grade debt buying these bonds. An AI bubble burst doesn't just show up in the Nasdaq, it hits pensions.
I hate this phrase. It's simultaneously self-aggrandizing and dishonest.
If you're silent, you're literally indistinguishable from any silent fringe minority. You have no assurance you even hold a majority opinion!
And besides, if you were a majority, the solution is easy: stop being silent.
I agree with you that we should privatize the losses; I'm just not going to make (and dishonestly push) the idea that what I believe is somehow a majority opinion.
- your elected representatives
Isn't that what the IPOs are for?
Also funny enough - AAPL is siting on 62B$ cash according to google search.
Does someone have a storage room full of data centers?
Even my old RTX 6000 Pros would be profitable if I rented them out.
That's the usual approach yes. You want to have equipment you buy show up where it's going to be installed, installed and activated in as short a time possible. You don't want to have it sit in a warehouse for 6 months while you try to get permission to break ground because, in a normal market, the equipment will be losing value during that time.
Right now, the lead time of these racks is like 36 weeks and they’ll want payment down unless they’re sure you’re good for it which is in the $100m range. You just try to get them as soon as you can because and when the integrator and Nvidia can get them to you.
I don’t understand what the problem is here. You think they’re damaging their own economics on purpose? Every time I’ve been involved in hardware procurement, it’s been the case that you try to get things as fast as possible on everything because you never know which seemingly fixed lead time suddenly clears.
If you intentionally bake in delays you’re guaranteed to not make it work, esp. in a demand crunch. My GPUs are SMB/prosumer range and even they are much harder to get now. The smartest thing I did was lock in my purchases in January. If I had been unable to negotiate the rack space it would have been suboptimal but if I had decided to wait for guaranteed time I would have been screwed. As it so happens I should have gone to 2TB VRAM instead of aiming low.
This is the calculus that all businesses are facing, not just mine.
Now that I think about it, it would seem this may also apply to witches.
> Microsoft CEO says the company doesn't have enough electricity to install all the AI GPUs in its inventory
https://finance.yahoo.com/news/microsoft-ceo-says-company-do...
Either way, it's more efficient to give whatever money to bail out individuals/consumers than to bail out rent seeking organizations
However, looking at the other side, I think what this might do is add some barrier or consideration when a bailout is considered.
The last time we did large scale bailouts (TARP[0], in 2008), It was rushed through and ratified in around two weeks following the sudden collapse of Lehman.
Any measures we can take to ensure that we don't fall into a situation where there is only one choice is sensible.
[0] https://home.treasury.gov/data/troubled-assets-relief-progra...
Also, we did a long-term fix for a 2007-style crisis already with Dodd-Frank. Government can now invoke "orderly liquidation" before a crisis happens. When commercial banks failed a few years ago, FDIC solved it in a matter of weeks with no outlay of money from Congress.
1. https://www.wsj.com/economy/consumers/us-economy-strength-ri...
> A crash in tech stocks will just cause investors to lose some wealth. Nobody depends on AI for core operations. Not yet at least.
For the 10%, the stock market crashing just means cutting back on primarily discretionary spend - think no new car and maybe not buying the family new iPhones every year - they're not in any danger of going hungry, especially if they have any sense.
There are plenty of arguments to be made for infrastructure projects, for example, why not build out more power generation and transmission?
The rest of the economy is being asphyxiated due to lack of investment, and wouldn't be so anemic without the AI bubble.
Moral hazard as a concept (as something to be avoided) basically doesn’t exist anymore. Or rather, the whole market now embodies moral hazard. This seems bad.
Could somewhat help break the cycle by having a safety net for people instead of for overleveraged companies and banks but the US is allergic to that concept.
Feel free to run for office on a "periodic culling" platform, though
Financial failure of an AI lab wouldn’t make that AI disappear.
If people depend on them (aka demand) the IP of the labs would be valuable, someone would purchase it in bankruptcy, and they would continue serving the model.
There is basically no comparison to the credit market collapse, even though all of the simplified comparisons try to draw a straight line between the two.
The real concern is different: The theory is that if the frontier labs start collapsing, they will argue that their failure is equivalent to the US losing AI supremacy, which is equivalent to losing the future if you believe AI is winner take all. The argument is that they’ll be financially reckless and then ask the government to backstop losses if it falters, both to retain their lead and to protect the overall economy.
The other part that of this is the increasingly widespread belief that AI is a total bubble without demand and it’s all going to collapse because there’s no profits to be found at all because it’s all financial theater. That argument is harder to make if you’ve looked at the actual unit economics of these companies (hint: Anthropic isn’t subsidizing inference like so many believed). AI is not going away and the demand for compute will only increase. The question is how accurately these scale ups track it and if they’re going to dip below the insolvency threshold from getting it wrong.
But if the companies blow up, the technology doesn’t go away. The model weights aren’t deleted. The ML engineers don’t retire. Companies get restructured, IP assets can be sold to new operators, and engineers move to new companies with new business models.
There is at least $1.5T in "dark" investment, in the SPVs building the actual data centres, off the major tech companies' books.
Enough that "investors" could mean almost anyone is exposed, internationally, through any number of funds and schemes.
The number of broader funds that are heavily invested in these companies as well, plus the unprecedented municipal, state, and national investment in data centers and the like, make this far more rippling than you think.
Are the banks currently being stress tested? Is the testing honest?
Is anyone evaluating the potential impact to the other funds? Or are people being sidelined if they're not on the bandwagon, given that the non-AI market is in overall decline? Are pensioners _not_ going to receive help if an AI collapse tanks their retirement, despite them having basically zero control over the investment?
It’s a resolution. Pure puffery. A serious effort would have involved floating a bill.
Or even proposing new laws by floating bills when they don't already have the guaranteed votes - or even know they'll never pass. I'm sure many here would also want to dismiss that as "pure puffery".
Really why do we let anyone but the current majority party say anything at all? It's just puffery.
No, a manifesto or a platform guides drafting and candidate recruitment. Resolutions don’t.
> Or even proposing new laws by floating bills
Again, no. This leads to actual laws. Resolutions don’t.
Sure, this is a joint statement. Published days before the election. Meanwhile, for actual legislative priorities, draft bills are proposed.
And I generally hope that actually bills have a much higher required level of analysis of details and interactions than more general direction statements. Requiring that for every statement would just put a massive burden on the minority party, as they would have to always do that level of due diligence just to be "allowed" to propose a direction.
It’s the burden of work required to get lawmaking done!
Here are the bills the CPC has actually written or endorsed [1]. They’re the ones that could turn into a law in 2027. This crap won’t because it’s not designed to—non-binding resolutions basically never turn into law, and most laws introduced after the Congress flips aren’t preceded by resolutions.
> I generally hope that actually bills have a much higher required level of analysis of details and interactions
They don’t. They’re introduced all the time and then edited and revised.
[1] https://progressives.house.gov/endorsed-bills
I do somewhat wonder if people's opinions about this would survive the current incumbent changing. From previous experience, I have my doubts.
> They don’t. They’re introduced all the time and then edited and revised.
Trying to claim that revising a bill based on feedback is the same as "no need to consider those specifics yet" is crazy to me.
This is a legitimate strategy that is wholly undone by announcing a public resolution.
After midterms, they would still need significant public support to pressure against a veto regardless. So what you call puffery, is probably a very necessary first step.
Nope. Bills that become laws don’t tend to be preceded by non-binding resolutions. They are preceded by draft bills.
Juneteenth national holiday, Emmett Till Anti-lynching act, Inflation reduction act to name a few. Plenty of budget resolutions are also made that eventually become law.
Even during GFC, equity investors were wiped out. Same with Silicon Valley Bank.
This trope that investors are bailed out is doing more harm than good. Because intervention and backstops actually helps the economy from not going into a death spiral that destroys the poor and middle class
Maybe I'm just jaded but this just seems to be how the world works.
Amen. Prepare for a disaster tomorrow by planning for it today. The specific implementation might be mediocre, but we should be pushing for more, especially vis-a-vis pushing for anyone in the company who knowingly was involved in fraud to go to prison.
What would happen if the bubble burst tomorrow, with the clowns sitting at the helm of the USA?
I'm not sure your president would choose to save the American people rather than bailing our his CEO friends. There's money to be made as backshish if Trump bails Altman and Altman gives back a %age of this to his helper..
Accounting for inflation and opportunity costs?
Adrian Wooldridge was essentially arguing that especially with the shift towards more privately owned companies (as in, non-publicly traded) that we've seen in the US, limited-liability companies give an incentive for a large amount of risk.
Essentially there's an asymmetry, because companies going bankrupt have no liability for debts, but they gain all profits if things go well. This has always encouraged risk (and often in a good way), but publicly traded companies are ultimately owned by retirement funds etc, which is not the case for private companies. So the risk of bankruptcy is still covered by the general public, but a lot less of the benefits are felt by the public.
I think we're in fairly uncharted waters for what this risk asymmetry means for the US and global economy. It doesn't sound like something that'll end well, I expect we'll see a lot of public fall out at some stage.
That's not what a limited-liability company is, not what it means. Anthropic and OpenAI are not LLCs.
>So the risk of bankruptcy is still covered by the general public, but a lot less of the benefits are felt by the public.
That's not how any of this works. Reading comments like this on HN and from elected officials is disappointing.
Non LLC are not unlimited liability companies. Those have existed historically, and mean that owners themselves are legally on the hook for any company debt, without limit.
Since I'm trying to repeat back something I heard elsewhere, I'll link to the original discussion. Adrian Wooldridge is a long term writer for Bloomberg and not sine random guy on a soapbox. The discussion is well thought out, and not emotionally charged. Sorry if I've accidentally given a different impression.
https://www.pushkin.fm/podcasts/business-history/how-the-com...
Which is precisely why the OP commenter framed their argument in terms of the general concept of limited liability. The argument applies to any company structured with joint ownership and limited liability, whether we happen to label that corporate structure C Corp, Private Limited Company (Ltd.), Gesellschaft mit beschränkter Haftung (GmbH), or even Limited Liability Company (LLC).
[0] https://en.wikipedia.org/wiki/C_corporation
[1] https://en.wikipedia.org/wiki/Benefit_corporation
Companies are liable for debts. I don’t know why you would conclude they’re not. If a company can’t or won’t pay their debts, they go into bankruptcy, which has significant consequences up to the company losing its assets to the creditors.
Lenders are not dumb. They collect interest in exchange for the risk of lending. This is the symmetry that you’re not seeing. The lenders can also structure their lending in ways that if the company can’t pay, the lenders get assets from the company in exchange.
LLCs apply at a lower level (not AI lab scale), and shielding individuals from downside risk is a feature, not a bug. It’s by design. There are a lot of countries where the only way to get startup funding involves signing your personal finances away in the event of failure. Financial ruin if the company doesn’t work out, aside from some minimal protections. Do you know what the small business and startup environments are like in those countries? Abysmal. Nobody can afford to take the risk, so the big establish companies are the place to work.
https://www.pushkin.fm/podcasts/business-history/how-the-com...
(Note the discussion is about the evolution a of the concept of a company generally, the point I mentioned gets made towards the end, but I'd highly recommend listening to the whole thing)
A bailout is part of their planning.
Also, if I lose my money I am not in position to get bailout.
Also, shorting requires managing to not only predict drop in price but also when it will happen.
Also, I do not have large amount of money investable into risky instruments.
For years the consensus on Hacker News was that the ride share companies were a bubble and it was all going to collapse. Nobody would pay profitable rates once the early discounted rides ended, everyone said.
Then the rideshare companies became sustainable and they’re accepted as a normal part of life.
Oh, you mean the period that is colloquially referred to as "the .com bubble?
The vast majority of companies failed almost immediately.
Bubbles don't mean the tech won't one day be great and materialize into something great.
They mean there is a mismatch in valuations/equity/debt to revenue today, putting far too much emphasis far too quickly on potential revenue some time tomorrow.
There's an existing concept of and precedent for, "Too big to fail." The wikipedia article gets the idea across [0].
This creates an implied "insurance" program, tilting the risk profile toward being aggressive. Taking a moon shot isn't so scary when you think the government will probably step in if it blows up bad enough.
This fluffy, political statement is a message: don't count on it.
Perhaps it will give investors/executives a few thoughts on preparing to deal with a potential blowup themselves?
[0] https://en.wikipedia.org/wiki/Too_big_to_fail
https://youtu.be/FvBf9HBT_F8?t=1672
* yes, I know what the reason is
Bailing out banks made some sense so that they couldn't operate. Without the bailout there would be no more banks and a hundred million of people left on the ice.
If you want to keep AI operating you can just (temporarily?) ban investors from tearing down the AI companies they invested in for parts. You could say they are important for national security or something. I'm sure they are already earning enough to keep the lights on. Just not enout to give investors payback for insate capital expediture to set up.
Such ban wolud the governement zero, especially if you write the law well enough, so that it can't be succesfully challenged in court.
> and a hundred million of people left on the ice
That is not true. There would be a lot of banks and people would have lost only part of their money.
It’s good that it’s being discussed. We’re tired of the wealth class privatizing the profits and leaving us to cover the costs.
So there will be a huge pressure. Trump Jr. and the Kushners are invested in all sorts of bubbly assets, too.
The Democrats should do this however, and if they win the midterms keep their promises for once and block everything. Then 2028 is easy.
Promises in the wind.
Usually we don't talk about a bailout until a catastrophe is underway. Then they say "We need to fix this now, because of systemic risk, and we'll worry about preventing future problems later". Declaring "we will not bail you out" before the bankruptcies tells everybody that they'd better protect themselves from moral hazard.
This is a good test case, too. The AI companies aren't nearly as intertwined with the rest of the economy as the banks are. They can fail without kicking off a domino effect. Let them.
I know that many people in those spaces are investing in AI precisely because they believe that should their AI investments fail, the industry will be bailed out by the federal government. Getting AI to be seen favorably by the administration and putting AI within civic government systems and inside defense contracts is a pretty big push towards that outcome.
This is going to be a “let it burn” scenario that will be absorbed by VCs and private credit markets.
Remember too though that even if a bailout does occur investors typically get wiped out. The companies live on but the investors and employee equity typically get reset to zero.
Everything else is theft and money laundering and criminality.
Why no credit based bailouts?
If AI companies were to go bankrupt, it’s possible they’d be nationalized. I don’t see any other feasible option besides that or a bailout (or one but it’s effectively the other, e.g. “nationalized” but the employees including leaders are the same, or bailed out but already subservient to the military). I think the best case is for the compute to be made effectively public: giving every citizen free access, since we’re paying taxes that prevent their bankruptcy.
Check out this excellent article for more background: https://www.theatlantic.com/ideas/2026/10/bubble-bailout-tru...
I appreciate the signal to the lending industry to cool the brakes on this stuff, and that the they are specifically targeting golden parachutes. But legislation like this is at best largely performative.
If the economy ends up crashing because the bubble popped, and legislators can't intervene to prevent a knock-on collapse, they are going to be out of their jobs anyway.
This generates ZERO passed bills, but lots of pre-election rage bait donations.
End-stage Alexis de Tocqueville material.
The reaction to Charlie Kirk's murder (not even the murder itself, but the celebration of it) made it the most shocking political event for me personally, in my lifetime. And it seems like it might be like this from now on - ripping things apart, destroying lives, and then cheering about it.
The politicians rising through the ranks now lived through 2008 as young adults, and they watched politicians cutting checks to companies who ruined the economy, only to emerge richer; while regular folk got foreclosed on and never recovered. They heard the rise of the phrase "too big to fail".
Well now we have a group of companies that clearly want to be too big, so now is exactly the time to make clear to them they aren't too big to fail. Maybe, just maybe if they know they can't count on a UBC bailout on the other side of a bubble pop, they will act a little more responsibly (which they have not demonstrated they're capable of that to date).
What does "act responsibly" mean in this context?
In terms of "act responsibly" what I mean in this case is the perception that there's a lot of money flowing in circles here, where customers are investors and investors are customers and competitors. That's how I see this whole party crashing down if it does, if there's too much creative accounting going on when the music stops, some companies might not find a chair to sit on.
This is exactly the line of thought that turned the Wall Street crash into the Great Depression, which we learned from and did not repeat in 2008. The answer lies somewhere in the middle.
There are no good answers here. But pointing fingers and assigning blame is for sure one of the worst ways to do the analysis.
I agree that there aren't any "silver bullets", but I think there are some decent pieces of regulation like, forced splits between investment banking and commercial banking, and heavy regulation of high risk markets, especially when it comes to inclusion in retirement funds etc.
Those aren't going to single-handedly solve the boom bust cycle, but they are amongst other similar policies, a bunch of levers than governments can use if they want to in order to shield the public from risks caused by financial speculation.
Because it was a mess. Compare it with the bank failures in 2023. Shareholders wiped out, multiple collapses, yet many people have forgotten it even happened.
At scale, this boats sink somewhere, not disappeared into the void. And yeas, markets are not zero sum, amount of goods may increase and may decrease, and we should let agents that decrease them fail.
> “A liquidity crisis spread to global institutions by mid-2007 and climaxed with the bankruptcy of Lehman Brothers in September 2008…”
Letting Lehamn fail was the right call, because it allowed the Fed to bulldoze TARP through and save the wider economy as a result. If anything, I would say the subsequent bailouts were too generous in letting the companies retain controls and returns; the government should’ve kept a permanent, partially-nationalized control of those shares and added them to a sovereign wealth fund instead of selling them back on the market. “You fucked up so bad the entire system almost failed, so clearly you cannot be trusted to self-govern” should’ve been the unambiguous messaging from the Fed.
What’s your proposed mechanism here? Maybe data center buildout risk, but that seems mostly local policy?
1. The AI race has been essentially been a nation cold war arms race with China - so that would be the government backing the race. 2. The previous Biden administration was going to put a lock down on all things AI (remember: The 10²⁶ FLOPs Rule) 3. The populist anger about data centers will have a strong political arm to investigate and shut down efforts (at all levels). 4. Energy buildout will be intentionally slow down through various mechanisms controlled by dems. 5. Financial regulatory bodies will have strong teeth.
FWIW this isn't meant to be political but more a state of play looking at the real factors of Dems getting power and the impact to the market place.
Why? Democrats still care about electrification because of climate change. If anything I think energy buildout will accelerate.
The rest is balanced on a knife edge.
For the rest of us, that also means the S&P 500 free lunch* will soon be over.
American zillennials are going to get their free healthcare and free higher education, and they'll do it in a way that makes France look like a well-managed, investor-friendly country.
*Unless you own real estate in Copenhagen, one of the biggest sources of wealth creation in Denmark since 2015 has been our pension funds and their exposure to US stocks.
Either way Anthropic will IPO soon and we’ll be one step closer to finding out.
One thought I had is that, bubble or not, this technology is likely going to upend economies of entire nations and impact all people, so it would be better if controlled by the people which is (in theory) represented by the government.
Looking at this as a backdoor bailout is the wrong perspective; it should be more like giving the people control over their economic future.
Do you think Claude and GPT refuse doing calculations for the national ignition facility? Or for STRATCOM?
I am extremely wary of progressive(socialists) and their agenda
I imagine tens, even hundreds of millions will be spent on ensuring this resolution never passes. Or if it does pass, those millions go towards lobbying politicians to still somehow find a way to insulate Big Tech as much as possible and externalize their costs onto us.
Re-reading what I just wrote, I'm definitely jaded...
- We have a total lack of oversight, transparency on private companies and their finances
- We have VCs that very much have the capability to pump up value in a way that is detached from reality.
- The language of startups discourages saying "We are trying to..", you just say "We are". This is a launch pad for a more general culture that lacks integrity.
- The founder has become more and more of an idolized archetype. Character flaws are accepted as part of "what it takes". We accept dishonest behavior as hacks and part of the hustle.
I think this is a risk that applies to the whole VC backed tech startup economy.
If the United States thinks it is a strategic investment of critical importance in the battle for the future with China, it should either nationalize the frontier labs OR build its own.
Not sure why there's a Google Drive URL for the resolution
Alternative to Google Drive:
https://progressives.house.gov/_cache/files/f/c/fc0cb325-7d5...
https://web.archive.org/web/20261030122958if_/https://progre...
But to hear HN, AI is useless, all the demand is fake, the valuations are based on nothing, it's all just a few companies investing in each other, they're dangerous and reckless, they want to control everything, they want regulatory capture, it's all a marketing stunt, the open weight models are about to catch up, soon everyone will run their own models on their own hardware, on and on.
It's all bullshit. None of it makes any sense, none of it can be backed up by the data, little of it is even internally coherent, and these skeptics and haters have been consistently wrong for the last few years, with apparently zero self-reflection or awareness.
But sure, let's pass a grandstanding resolution that has no teeth to oppose a bailout that no one is asking for, for a collapse that isn't coming. Makes sense.
[1]https://en.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Ban...
I feel like real estate in 2007 was mostly in denial about a bubble. People would mention it but generally list reasons why it’s not a bubble. Same with 1999.
What does it mean when everyone agrees there’s a bubble?
This one everyone can see it, its very public, it has daily enormous public marketing from all the sellers of AI in the press.
But this is really socialism. It was not a bailout of banks, it was socialism for wealthy. Did the people lose their houses? Yes! What about the people who made obscene profits from lending money to people when they should not? Did they lose their money? No. We - the taxpayers, the ex home owners - gave them money.
What about socialism for the egg industry? When the centralized chicken stocks got a disease, we people who were paying usurious prices for food, also provided payments to ensure the wealthy owners did not suffer.
Socialism for the wealthy === good, socialism for the poor === evil. Hmmm. Oh no that can't be so lets call socialism for the rich "a bailout".
Since we force people on food stamps to work now, maybe with this "bailout" we should force those people to work minimum wage jobs?
Besides, business were net tax payers. It's perfectly reasonable we lend them back some of their own money so they can continue to pay taxes next year.
You end on petty vitriol, tsk tsk.
Niki Parmar: am I a joke to you?
We must let them fail, no matter how many jobs it costs, no matter what the harm looks like in the short term, to send a clear and unambiguous signal to others that the government won’t backstop your shitty bets.
b) if an AI bubble burst were to happen, the fallout would be severe, ie. hard to abstain for policy makers from giving the public ease of mind
c) All this proposal wants is to drive a wrench between the GOP and its new (?) populist voters, that don't want any favors given to any Big Tech oligarchs, regardless of it being AI or not.
d) this may work or not – neither party is going to abstain from bailing them out, anyways.
In the 2008/2009 crisis the bailouts were approved by a red admin (Bush) and then the check signed, delivered hat in hand, by a blue admin (Obama). If they want a bailout they will get a bailout no matter which party is in charge.
So, very easily these companies can get twice as much revenue over night. And that’s only the beginning. AI has very low churn.
If they know it will burst, then maybe prevent the bubble in the first place.
if you are reading this, please do some research on how much money inference prints? its not wildly spoken about because people don’t yap about printing money.
“Oh but it’ll all come crashing down” - say you don’t work at a lab or know anyone at a lab.
My greater annoyance is HN becoming annoying political in the past few years. Sure, everything is political now but the moderation siloed these posts better. Maybe the user base is too old now. Fresh blood went to Discord or X.
The only company making money are hardware manufacturers who are throwing logs on to keep the fire burning through direct capital investments in their customers. Without Nvidia some of these neoclouds would already have failed.
All of the compute being built will be consumed very profitably, that profit just won't be captured by delusional weirdos who believe they can build an AI god because machine elves showed them the future in a DMT trip at a poly sexy orgy, or whatever the case may be.
If you're lucky enough to be in this field and you're not managing your finances, that's not the governments problem to fix