AI slowdown calls justified but collapse of bubble may be more immediate threat
Away from the risk that their product might obliterate human life, there are more old-fashioned reasons for tech bosses to be fearful – including the fundamental one of whether the economics of their businesses work. The first worry is the sheer scale of debt issuance being used to fund the hectic pace of the datacentre rollout by the hyperscalers building them – Google, Amazon, Microsoft, Meta and Oracle – $132bn (£99bn) this year alone on one estimate.
A little more detail on the REAL risk posed by AI to the global financial system. It's similar to the debt crisis of 2008 in some respects, but much larger because it features an equity component as well, and the debt isn't distributed amongst millions of individual debtors like the mortgage crisis. In this case the debt is concentrated amongst the very rich and the stock purchases are counted as part of the capital structure of banks & hedge funds that bought the stock. A large loss in the stock value would force many of these owners into bankruptcy or at least a liquidity lockup, soit wouldn't just be the Hyperscalers going bust, it would be the TBTF Banks who underwrote the stock on them as well. IOW, not just one AIG to bailout, there could be a dozen or more of these systemically important banks in the deep doo doo. With Goobermints already in a deep debt crisis of their own, it's not clear how they could do a bailout of this scale. The longer the bubble goes, the worse it gets. In terms of equity losses, it's far more than $132B, it's in the $TRILLIONS$
A real clusterfuck in the making.
RE