> SpaceX (whose valuation is based on the assumption that demand for inference is effectively unlimited, and that everyone will prefer hardware in space over Earth).
Well, that and being the only reusable rocket company ever with an even bigger version on the horizon and a global Internet service that's about to get a whole lot better thanks to aforementioned rocket. Both of which are hugely profitable.
You might as well say that banks giving mortgages caused that. Sure it happened as part of the process but that wasn't the thing that caused the problem.
> In the early 2000s, the debt underpinning CDOs was generally diversified, but by 2006–2007—when the CDO market grew to hundreds of billions of dollars—this had changed. CDO collateral became dominated by high risk (BBB or A) tranches recycled from other asset-backed securities, whose assets were usually subprime mortgages. These CDOs have been called "the engine that powered the mortgage supply chain" for subprime mortgages, and are credited with giving lenders greater incentive to make subprime loans, leading to the 2007–2009 subprime mortgage crisis.
No, to be more specific, banks selling the collateralized mortgages that were subprime in risk as if they were prime and these risk ratings being accepted at their word and via collusion with the ratings agencies is what caused this.
There is no issue with collateralized debt as long as the risk is properly assessed, the whole point of securitization is that you can take on higher risk for higher reward of an asset that was previously just one single piece of risk.
> Cloud computing giant Oracle Corp is on the cusp of a junk-grade credit rating and its shares have tanked as the artificial intelligence hyperscaler becomes the fall guy of investors' concerns over the sector's debt-fuelled spending binge.
Honestly, that would be more like the railway mania in the 1840s or, really, insert any "Panic of X" here. Speculative mania has been a thing for centuries and will continue to be a thing for a centuries.
The specific problem of the 2008 financial crisis was that the banks were going out of their way to obfuscate the source of their CDOs so that, even when it was clear in 2007 that the subprime mortgage market was unraveling, you couldn't look at your instruments and figure out whether or not you were affected. The problem wasn't the CDO, it was the obfuscation. And as far as I'm aware, the current debt offerings aren't being obfuscated--if you want to avoid the data center debt because you think it's junk, just avoid the stuff being touted as data center debt.
> The problem wasn't the CDO, it was the obfuscation.
yes, i specificly remember when Lehman went under the banks stopped trusting each other's ability to assess their own exposure. The banks stopped lending to other banks and that's when Paulson got on his knees (literally, i think there's a picture of him on his knees in front of Nancy Pelosi) asking congress for cash to guarantee loans. The side effects started squirting out everywhere i think even Mcdonald's was hours away from bankruptcy because the corporate paper market suddenly ceased to exist. Also, money market returns turned negative briefly, that's like a negative interest rate on a traditional savings account bad. It was bizarro world for maybe 72hrs.
The movies don't really do justice to just how upside down and nonsensical the financial world became. It was a knife's edge for 2 or 3 days.
One complication this time is that the picture is reversed. Both the executive branch and Congress have massive incentives to keep the music playing. Nobody is going to have to beg Mike Johnson to step in, as he'll happily do whatever the White House says. Yes, there will presumably be a new Speaker after the election, but how much will that matter?
My fear is that this is all going to turn into one big front-running exercise where those connected with the Trump crime family are warned to get out first, banks that swear allegiance are bailed out next, and the rest of us get to hold the bag.
The nuance here, though, was that the CDOs and similar instruments were sold in a tranched fashion, and the super-senior tranche was made to look as if it was very low risk, as normal for tranches instruments.
But when your entire series of tranches all consists of trash, then which tranche you were in didn't really matter.
CDO and CDO2 instruments hid this distinction really well, and unfortunately the ratings agencies bought into it and sold crap as AAA securities.
This is an oversimplification. It is straightforwardly correct that, for any imperfectly correlated basket of assets, the senior slice will be safer than the junior slice. If you hold the most senior 10% of a basket of mortgages, 90% of those mortgages would need to default for you to start taking losses. That is rare in any context and in fact there is a good bit of evidence that AAA-rated mortgage-backed securities didn't actually do all that badly in the 2008 crisis: https://www.nber.org/papers/w24509
There were a lot of factors that contributed to the 2008 crisis: adverse selection leading to low quality portfolios, mispriced assets, high leverage which magnified losses, lower-quality securities being held by investors who couldn't really afford to bear the losses on them, etc. But the fundamental concept of tranching is not actually that bad, even though every time people read about it they think it's the exact same as 2008. Banks have been tranching debt since long before 2008 and they have been tranching debt ever since. Not just mortgages either, but all kinds of debt.
Another factor in that case was that the government regulated, in some cases, the ratings of bonds that entities were allowed to buy (they couldn't be as highly levered with lower rated bonds) and so there was an incentive for bond ratings to be falsely inflated, happily carried out by the rating agencies. Of course collateralized junk is still junk, and many people at the time knew that, but there was money to be made in looking the other way.
It’s also hard to ignore differences. Bubbles gonna bubble, but the consumer is quite healthy this time around. Burry being short doesn’t make it 2008.
> Wage growth has remained relatively muted over the past year. That, combined with higher inflation, means Americans are earning less for an hour of work. Average hourly earnings, adjusted for inflation, fell 0.5 percent in September, and were down 0.7 percent from a year earlier. It was the sixth straight month of year-over-year declines in real earnings.
> The share of seriously delinquent auto loan balances has hit a record high this year, while nearly 13% of credit card balances are seriously past due — close to their 2010 peak in the aftermath of the housing crisis — according to recent data from the Federal Reserve Bank of New York.
> The ability of U.S. families to stay current on their debts worsened over the past three years, hitting levels not seen since the aftermath of the global financial crisis, the Federal Reserve reported Friday.
> Wage growth has remained relatively muted over the past year. That, combined with higher inflation, means Americans are earning less for an hour of work. Average hourly earnings, adjusted for inflation, fell 0.5 percent in September, and were down 0.7 percent from a year earlier. It was the sixth straight month of year-over-year declines in real earnings.
Where are they getting this data? This directly contradicts their claim:
> Real average hourly earnings for all employees decreased 0.5 percent from August to September,
seasonally adjusted, the U.S. Bureau of Labor Statistics reported today… From September 2025 to September 2026, real average hourly earnings decreased 0.7 percent,
seasonally adjusted.
Your chart appears to be weekly earnings, not per-hour wages. Having to pick up more shifts or a second job to make ends meet supports the point, in my book.
> but the consumer is quite healthy this time around
This is one of the more out of touch things I’ve read today. I’m not sure from where you’re sourcing your economic data.
Maybe you’re saying this financial collapse won’t be as bad as 2008? I’d agree with you, that one was singularly dangerous and required large scale government intervention to guarantee that the global financial infrastructure didn’t bust. But this bubble will hurt very badly at a time where the consumer is not as strong as you think.
Adjusting for inflation, though, things also can happen faster now than, say, thirty years ago, and there's more centralization in quite a few industries.
> Adjusting for inflation, though, things also can happen faster now than, say, thirty years ago, and there's more centralization in quite a few industries.
Not sure its just related to centralization, probably more so that information can flow more freely now, but I fully agree.
And for this one when insurance companies are forming syndicates because their underwriting becomes greater than any one company, it just sounds frightening, the sound this thing is going to make when it finally pops.
People doing illegal things is the problem. Change the law if you think it's wrong but it's the executive branch's duty to enforce the law.
You can't sit back here and be upset that Trump decides to selectively enforce the law in the ways he sees fit while approving of the exact behavior when there's a different executive.
This is why the problem of executive power exists, people only care when they disagree and actively approve when they agree.
Nope, I can distinguish between what is right and "wrong" without arbitrary laws decided by <1k corrupt politicians (Ds and Rs).
I dont make judgements about what a problem is based on whether a law says it is. You should be experiencing the world outside the framework of imaginerary legal constructs.
If America tends to create laws that are antithetical to common sense and goodness, maybe its the problem. Maybe we need to do away with the whole system, not patch it.
I think you've misjudged me, I think Biden, and Trump should be sharing the same jail cell. I dont approve of basically any US politician, they're all morally corrupt and outright evil.
> If America tends to create laws that are antithetical to common sense
That isn't the root of the problem at all. The root of the problem is we have certain laws that, under some administrations, are barely enforced. Then, under another administration, there are a large group of people who have been flouting the law because it wasn't being enforced.
You've now created huge class of people who have very tenous legal status, based on the whims of the executive. That's the problem.
US immigration laws are some of the most relaxed in the world. There's plenty of debate on whether that should change or not (and how). But circumventing the legislative process might make you feel good about the immediate problem but it creates a side effect of having an underclass of non-citizens that live under constant threat of deportation and have limited access to social programs.
The only judgement I've made of you is that you seem to think not enforcing the law based on personal feelings is right and you've only confirmed that.
In a democracy, the law isn't just some words on papers, it represents the collective moral judgement of the voting population. It is inherently antithetical to democracy to ignore laws you don't agree with.
> Maybe we need to do away with the whole system, not patch it.
Pretty ironic considering this entire situation is caused by people ignoring the system rather than patching it.
I think it's the hugging face one where they gave it instructions that they didn't think it could follow in the sandbox and then left it unsupervised while it did what it was told.
I always assumed that all of those people were correct, everyone they were arguing with is a bot. What I think they overlooked is that everyone they agreeing with is a bot too.
Because they want to move in and can afford it. Same reason that apartment complexes have to add greenspace or subsidized apartments as a condition of getting a zoning variance.
Maybe not a great example. Municipalities should fund public works projects themselves using sane taxation revenue instead of cryptically taxing private land improvement projects.
That's just what the poster above decided, not "the people" / legislation. Key words "I think" in the comment. Asking that person why they are going after datacenters specifically is a valid question.
I'd be wary of what people say they prefer in tests. People also prefer Pepsi to Coke in blind taste tests but they don't prefer it to drink an entire can.
Pepsi tastes much sweeter than Coke and I wouldn't be surprised if corn syrup Coke was sweeter than sugar Coke.
I clearly stated that there isn't one ... ? It's a matter of if you care about process (ie inputs) versus end result. Generally labels are already much closer to the former than the latter given that they typically list multiple natural products.
Well, that and being the only reusable rocket company ever with an even bigger version on the horizon and a global Internet service that's about to get a whole lot better thanks to aforementioned rocket. Both of which are hugely profitable.
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