alt Hacker NewsThere 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.
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> Nobody depends on AI for core operations.
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.
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.
"Investors".
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.
Yea, if we bail out, we should nationalize the failed companies through the failure chain. Not just give them free money.
> 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.
Print enough money and the credit markets would have no choice but to unfreeze. Picking winners with fiscal policy was always the wrong solution.
I don't know about that. Consumer spending is being held up by stock market gains. And most of those gains are tech.