They tech companies themselves likely won’t get a bailout, but don’t rule out the Fed warming up the ol’ money printer. All the borrowing for data centers, where do you think they’re borrowing from. Banks, insurance companies, bond investors and private credit funds. Those first two are the key. If a too-big-to-fail bank or insurance company gets jammed up by their own bad loans to hyperscalers, you best believe they’re going to the Fed, hat in hand, asking for another bowl of that sweet, sweet quantitative easing.
Yeah, my understanding is that once bankers have bet more of other people’s pensions and life-savings than they can cover if they lose the bet, they are in line for a bailout.
In effect, the more catastrophic your bet is, the less personal responsibility you have to take for it.
One of the many hypocrisies and perverse incentives of capitalism.
That’s anything but capitalism. Capitalism says if you fail you die. If that takes other people down, so be it. But bailouts were never supposed to be a thing.
Also there could be contagion to the big banks and institutional investors (think pension funds) from the bond sales and the construction loans for the data centers.
What about all the major companies who have scraped their workforce to replace it with AI, so sure that it would pay off. They also can’t afford for AI to go under, so they’ll add to the “please bail us out” for the good of the economy.
They tech companies themselves likely won’t get a bailout, but don’t rule out the Fed warming up the ol’ money printer. All the borrowing for data centers, where do you think they’re borrowing from. Banks, insurance companies, bond investors and private credit funds. Those first two are the key. If a too-big-to-fail bank or insurance company gets jammed up by their own bad loans to hyperscalers, you best believe they’re going to the Fed, hat in hand, asking for another bowl of that sweet, sweet quantitative easing.
Well crud. I hadn’t seen that angle.
Yeah, my understanding is that once bankers have bet more of other people’s pensions and life-savings than they can cover if they lose the bet, they are in line for a bailout.
In effect, the more catastrophic your bet is, the less personal responsibility you have to take for it.
One of the many hypocrisies and perverse incentives of capitalism.
That’s anything but capitalism. Capitalism says if you fail you die. If that takes other people down, so be it. But bailouts were never supposed to be a thing.
Sounds great! Where do I find a capitalism like that?!
“If you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.”
Needs to add if you owe the bank $1 Billion, then that’s the governments problem.
And seemingly
“If the bank owes $100 billion, thats the taxpayers problem”
An entire financial industry ruined by bad loans to a single market you say… Wait, I think I’ve seen this one…
Also there could be contagion to the big banks and institutional investors (think pension funds) from the bond sales and the construction loans for the data centers.
cough 2007 cough
What about all the major companies who have scraped their workforce to replace it with AI, so sure that it would pay off. They also can’t afford for AI to go under, so they’ll add to the “please bail us out” for the good of the economy.