Banks are in the business of underwriting debt and reselling it to private investors.
We’ve been reading this “End is Near” shit since COVID. Put something more on the table.
Owning a debt from the AI industry is a fairly insane amount of risk
Is it? They’ve been outperforming every other debt class for five years running.
Ooo I know this one! I won’t give out any spoilers.
So how would a (by now inevitable) government bailout not trigger an untenable treasury yield?
Quantitative easing.
The same shit that put us right here after the GFC
Print more money lol, although that’s sometimes referred to as a “soft default”
Free enterprise, privatize profits, socialize the losses
Is the bailout going to be because of national security or is it going to be a to big to fail situation.
If they get a bailout, are we ready to drag recipient ghouls through the streets?
Well now, that looks familiar. Rats leaving a sinking ship.
The thing is the boat was very clearly going down when they got on.
Everyone knew it was a pyramid scheme from the start they just thought there were at the top of the pyramid and now they’re worried because it looks like they’re a little further down than that so they’re trying to minimize their losses.
the boat has cheese, and as long as you get off before it sinks too much you come out ahead.
I’d love it if it was packaged up into securities and credit rating agencies gave those securities an A+++ would buy again rating so my wallstreet-managed 401k knows where to steal my money.
It’s about time for the ultra-wealthy to create another 2007 so they can wrench the last bits of wealth off anyone who isn’t already a $100Ms-billionaire.
Like when they underwrote the twitter purchase debt…
If theres one thing the US stock market has, its plenty of clueless bagholders with more money than common sense.
Oh NO! We NEED to Raise Taxes to PAY for these things OTHERWISE who’s going to Take Our Jobs while Poisoning Our Water while Killing Our Children while making Subpar Fruit Videos?
-US Politicians!
We NEED to Raise Taxes
Nonsense. We’ll just cut spending, instead. Donnie Deals will try and plunder SS/Medi, after he scours away anything that’s left of public education and transportation.
Dont worry, they will wait for the current tranche of laws to pass cementing that we can never create taxes specifically on the wealthy in the future. Like Californias prop 42
https://calmatters.org/politics/2026/10/newsom-tax-propositions-november-election/
Wasington’s IP26-645. Iowa’s comnstitutional ammendment. North Carolinas “constitional taxpayer protections”. Missouri’s ammendment 5.
Protecting the wealthys money is all the rage lately, a brand new booming legislative goldrush.
Then they will let the AI bubble implode-- not before. We have a few months still. Live it up. Play the market like its still the gilded age.
laws tend to stop mattering when the vast majority of people stop believing in a legal system and start rioting and dragging the rich from their homes and bunkers though
The US has been hosting riots for decades. It hasn’t changed anything. It has, if anything, cemented fascist rule.
It’s happening!!! Bubble pop is happening!!! article is underplaying it.
Coreweave debt pushed towards 16% yield today. The worst of the AI clusterfuck. Oracle, 2nd worse, move to 8% which is still absurdly low, but was holding 6% a week ago.
Main headline, yes the big banks are selling off debt to losertards. At a discount. Insurance companies are the losertards chasing yield, but have big losses today.
Nvidia, the circular financing backstop for the bubble, signaled today that it is just waiting for bankruptcies to swoop in instead of propping up the fraud. Bond/share holders will get crushed, and bubble dead, but still Nvidia will drive rampocalypse if the datacenters are still alllowed.
If they bubble can take down oracle on the way out I suppose it will have been worth the cost of entry.
yep, adding in open AI’s oopsie accounting - https://www.theguardian.com/technology/2026/oct/09/openai-forecast-revenue-gap
burst, baby, burst!
they shouldve known like 1-2 years ago.
They made money during those 1-2 years.
Probably related to the now three Oracle data center that can’t get electricity.
Wisconsin passed a law that fast tracking large projects requires a high credit rating or collateral, to pay secure costs for building the power plants needed for the data center. In July Oracle’s debt rating was downgraded to near junk levels.
That means Oracle can no longer get Wisconsin to supply power to the data center so it’s a $15 billion dollar paper weight. Thats putting even further downward pressure on their credit rating and ability to secure loans to meet their $500B in obligations.
Now Oracle’s New Mexico data center is stuck due to contract issues with water and gas turbines, so they can’t move foreward. Oracle has a 9% interest rate on the loans to build that, then they raise 2% after construction, because their credit rating is dogshit. So now Oracle is claiming force majeur to get out of their increased debt obligations, which you can imagine, is killing interest in lending to them.
In Texas they just blocked new grid hookups over political backlash to skyrocketing electricity prices. That killed another Oracle expansion they just canceled, and another one is trucking in gas for gas turbines as an alternative to the electrical grid, which you might imagine is expensive.
Which brings us to now. The banks are looking at local opposition blocking these projects (local action is working), states are blocking them to avoid getting voted out, hardware costs are shooting up, and the assets backing these loans are too small for so much investment.
So the level of risk no longer works.
—
My personal theory is that Oracle is a sacrificial lamb. It’s a dead end tech company that lives on licensing fees, and they’ve fucked themselves on these expansions. They’re failing at being a hyper-scaler as margins decrease.
I bet we see someone take Oracle private when their stock collapses, freeing the board of fiduciary duty to the stakeholders with a payout. This move is critical because it blocks other hyperscalers from putting in an offer to acquire their assets to shore up debt.
OpenAI will acquire the now private Oracle through a special funding round and buy up their hardware for pennies on the dollar. This will absolve them of the debt obligations Oracle has to OpenAI that have killed their credit ($500b), and stabilizes the Oracle balance sheet.
OpenAI will write this down and offer Oracle’s creditors equity stakes in lieu of cash, and will have acquired all their next gen hardware far cheaper than their competitors.
This might even fuck over Nvidia, the incestuous funders of the AI circlejerk. If Oracle gets to write off their GPU debts then Nvidia loses a fuck ton of sales, tanking their stock price — they take that OpenAI equity offer and look like they’re playing the game. OpenAI wants to build their own chips anyways, just look at jalapeño.
Oracle can no longer get Wisconsin to supply power to the data center so it’s a $15 billion dollar paper weight.
Fucking lol
At least Wisconsin learned something from the Foxconn scam.
It’s even better because they signed contracts that guarantee that capacity to OpenAI, guarantee payments to their creditors, and Oracle is on the hook for it all with no outs.
Which is why I think it’s all a play, oracle famously is very lawyer heavy, they wouldn’t sign such stupid deals for no reason.
they wouldn’t sign such stupid deals for no reason.
Greed. The reason was greed. They bought into the hype and thought they could print money.
And all the tech companies are doing it, Oracle was just the sick man of the bunch, and will be the first to fall, dragging the rest down with them.
All because they’re offloading trillions in debt to special purpose vehicles, the same thing that tanked Enron, the difference is that Enron, with $400 million in debt, was lying about it, and the current tech companies doing the exact same shit, are disclosing the debt legally, but still hiding it in the fine print of their disclosures.
The debt will still crash the economy, but at least it’s out in the open?
Also Larry is not nearly as sharp or thorough as he used to be, and he’s turned into a bit of a crumugeonly headstrong dick in his old age. No 82 year old is as sharp as they ised to be, despite how people like to lie about it. No 70 year old feels 40 anymore either. He has made numerous mistakes inside Oracle, and now he has run the whole company straight off a cliff, as aging boomers will tend to do.
Getting AI FOMO and mortgaging your entire company’s future for it. smh
And tanking the entire economy is the process.
Also, Larry Ellison (who can fuck right off) has leaned on his Oracle stock to fiance the buyout of all the media companies he’s gobbling up to build yet another right wing propaganda ecosystem.
a bit of leverage against the fed never hurt anyone
I don’t think it says anything about specific data center risks: capitalizing loans is standard operating procedure for these banks. It gets the loans off their account books, so they don’t have to hold capital to balance the risk, but they still get to collect management fees on the loans, regardless of whether they default. The big stories back in the 00s were residential real estate loans, but they do the same thing for commercial and industrial property.
Isn’t fact they are having a hard time offloading that debt an indication that other investors are shying away from it because they see the data centre risk?
Yes. The banks are there to just be an intermediary for this crap. The part where they unload at a loss was not part of their plan.
this finbabble makes my head spin bois how is all this even allowed
The golden rule: he who has the gold makes the rules.
Any sufficiently advanced financial instrument is indistinguishable from fraud
I offer you an IOU. I’m on a good streak, and the IOU is that I’ll pay you back over time with interest.
You accept. You then find 9 other people offering IOUs of varying reliability.
You package up all the IOUs into an asset group. In theory we all pay you back regularly, but some of us will not. With 10 IOUs it’s unlikely we’ll all default, so the asset is safer and your risk models can assess this.
You still have the same amount of debt and risk on your hands.
You turn sell the rights to the payouts from the group, in exchange for cash now, because paying $X for payback of Y% interest over Z years with Q risk is an easy to reason about deal.
But your potential buyers squabble over Q, some don’t want to lose anything, some want to be risky.
So you split that risk level out into groups and say “if the overall goes down, this group pays first, then this group, then this group”, and you’ve created a securitized asset.
You’ve now sold off these assets to various groups, with defined risk levels, and you’ve made back money to offset what you paid out to the initial 10 IOUs.
Now imagine you took IOUs from crack addicts who are talking a lot about the power transformer behind the mall. They say they need money for tools and this will be the big one. You’re intrigued.
Odds are good this will pay off you think, those crackheads were excited and confident.
Later that day you hear sirens. Like, a lot of sirens. It’s coming from the mall area. Huh.
You still haven’t sold off all the slices of your asset, you were maybe hoping for more upside, and selling can take a while. But those sirens… they’re concerning.
Maybe it’d be a good idea to swap out your asset for another one, or offer those slices at a discount for some higher than expected risk. So you go out and start making phone calls hoping someone else isn’t worried about it. The only people who are less worried are a biker gang you normally wouldn’t do business with, but you figure for a discount they’re happy to deal with the crackheads.
(This was more about securities than recapitalizing, but kinda the idea)
My impression is that commercial loan securitization is a little different.
When you’re talking about residential mortgages, you’re talking about loans of a few hundred thousand, which is kind of too small for capital markets to bother. So the banks bundle them, like you say, and sell them in $1e8-1e10 offerings… Pension fund’s gotta park $100,000,000 somewhere, and that MBS is easier than actually managing 500 separate loans.
When you’re talking about commercial real estate - and especially things as big as data centers - it’s the opposite problem. They need such big loans that only a big bank or even consortium of big banks can get all the capital together, then the big bank turns the loan into a bond offering, so investors can buy them in slices as small as $1e4… That bond may only have one or two loans in it, so it can’t necessarily get broken into risk tranches like the MBS.
With 10 IOUs it’s unlikely [they’ll] all default, so the asset is safer and your risk models can assess this.
This is where my spider senses go off. Are we assuming that these IOUs defaulting are independent events? Even though they’re from 10 crack heads talking about stealing the same generator?
Yeh and they all hang out with each other and bribe the same
policesenators and bulk buy theircrackdreams from the samedealer3 AI companiesYes, probability gets much messier with correlated events, and most models assume independence. You can vary intensity/hazard in counting processes, but really there’s not much you can do at a certain point.
- be rich
- write the rules
- own the lawyers.
- Own the politicians
- Get bailouts
- Avoid any legal or financial consequences
That is on top of the $18 billion in bonds it sold in a single day last September
That’s $6.57 trillion in annualized debt using AI bubble math.
I dont know that we can collectively understand a number that big and what it means to us. People barely comprehend what a billion is.
The year my paycheck lands on Jan 1, my personal financial projections are gonna look SO AMAZING
Clearly you aren’t a megacorp. Just set your fiscal year to begin on the day of your paycheck. Checkmate, YNAB.
