It’s not that there isn’t tangible value in AI, I mean the subprime crisis is an apt comparison. Packaged tranches of subprime mortgages had value too, hell they are still traded today. They had value too, it just became a question of was what the hell was that value, and the models and assumptions made to assign the value to them evaporated pretty much overnight, because there were a lot of flaws in the assumptions. As there is here. So then all of the sudden there was no bottom to be found, and trillions of dollars evaporated in the ensuing panic.
It’s kind of the same thing here, like what is the actual value of AI? It’s obviously got some uses, but other uses are massively overexagerated, at least in the current conditions of it. Maybe for the foreseeable future. Maybe forever, who knows?
No, the difference is that when those subprime mortgages were bundled as assets, they were intentionally classed as AAA debt when they were worth much less. This created value out of thin air and allowed a shell game to be played by Bear Sterns and Lehman Brothers with the big banks. The AI stuff is paid for in cash. It’s real money. It is still an incestuous investment and contracting game between the 7 major players. But that money came from the sale of stocks that are worth what they are due to market valuations and real trade (which is still bullshit).
When the public and investors come to realize AI was oversold and its abilities were exaggerated and AGI is still a decade+ away, the valuations won’t just vanish. The circular investing game will absolutely cause stock devaluations and they will be sudden. That $560 MS stock will poof go back to $420 when they first invested in OpenAI. That will really fucking hurt the average 401k. OpenAI will probably go bankrupt. Meta will still be fucking worthless as a societal drain but paradoxically worth nearly a trillion dollars. Over 10% of the GDP of the entire US in capital will absolutely be destroyed. But it won’t take place in a moment. Investors will be stubborn and bet on the dead cat bounce and hope and pray for their gambling addiction to pay off and keep those companies on life support.
The same shell game these companies are currently playing trading stock for rapidly depreciatibg assets then borrowing heavily against those assets which each unit represents a daily liability because they operate at a loss. When the investment capital runs out all these companies operating overheads will kill them in days/weeks, and the hardware they actually own, which loses about a third of its value vs purchase price upon first install, will flood the 2nd hand market at probably 5-10% it’s current value.
As usual panic in the markets will be driver of a fast crash. Nothing is certain but this is currently the most likely outcome based on past precedent of such a large majority of all investment capital being funnelled into something with such low (negative in this case) economic productivity.
It’s funny money. The story is always generally the same when it comes to this stuff. You sell to me at a higher value, I turn around and sell it back to you at a higher value, you turn around and sell it back to me at a higher value and so on. All those “gains” get “invested” into something else, and then I sell that at a higher value and you…
It’s not that there isn’t tangible value in AI, I mean the subprime crisis is an apt comparison. Packaged tranches of subprime mortgages had value too, hell they are still traded today. They had value too, it just became a question of was what the hell was that value, and the models and assumptions made to assign the value to them evaporated pretty much overnight, because there were a lot of flaws in the assumptions. As there is here. So then all of the sudden there was no bottom to be found, and trillions of dollars evaporated in the ensuing panic.
It’s kind of the same thing here, like what is the actual value of AI? It’s obviously got some uses, but other uses are massively overexagerated, at least in the current conditions of it. Maybe for the foreseeable future. Maybe forever, who knows?
It’s going to be one for the text books.
No, the difference is that when those subprime mortgages were bundled as assets, they were intentionally classed as AAA debt when they were worth much less. This created value out of thin air and allowed a shell game to be played by Bear Sterns and Lehman Brothers with the big banks. The AI stuff is paid for in cash. It’s real money. It is still an incestuous investment and contracting game between the 7 major players. But that money came from the sale of stocks that are worth what they are due to market valuations and real trade (which is still bullshit).
When the public and investors come to realize AI was oversold and its abilities were exaggerated and AGI is still a decade+ away, the valuations won’t just vanish. The circular investing game will absolutely cause stock devaluations and they will be sudden. That $560 MS stock will poof go back to $420 when they first invested in OpenAI. That will really fucking hurt the average 401k. OpenAI will probably go bankrupt. Meta will still be fucking worthless as a societal drain but paradoxically worth nearly a trillion dollars. Over 10% of the GDP of the entire US in capital will absolutely be destroyed. But it won’t take place in a moment. Investors will be stubborn and bet on the dead cat bounce and hope and pray for their gambling addiction to pay off and keep those companies on life support.
The same shell game these companies are currently playing trading stock for rapidly depreciatibg assets then borrowing heavily against those assets which each unit represents a daily liability because they operate at a loss. When the investment capital runs out all these companies operating overheads will kill them in days/weeks, and the hardware they actually own, which loses about a third of its value vs purchase price upon first install, will flood the 2nd hand market at probably 5-10% it’s current value.
As usual panic in the markets will be driver of a fast crash. Nothing is certain but this is currently the most likely outcome based on past precedent of such a large majority of all investment capital being funnelled into something with such low (negative in this case) economic productivity.
Nvidia is financing OpenAi using the loans against the stock value though?
Then Open Ai uses that money to pay Nvidia, which inflates their stock value.
Does not seem like cash to me.
It’s funny money. The story is always generally the same when it comes to this stuff. You sell to me at a higher value, I turn around and sell it back to you at a higher value, you turn around and sell it back to me at a higher value and so on. All those “gains” get “invested” into something else, and then I sell that at a higher value and you…