I'm just going to copy my comment on a previous post about this topic:
You think that Trump won't demand something in return for this?
I keep telling everyone I know that AI will be enshitified just like every other internet business. Tell me why the incentives will be different this time around. Putting yourself in hock to an aspiring authoritarian is certainly one way to supercharge that process.
What do you think OpenAI's output about Jan 6 will be one year from now if this goes through?
The China "AI" threat? Xi has warned of a bubble, has shut down the Internet during exam time and is in no hurry at all to push this nonsense.
Perhaps the government should loan OpenAI $1 billion so it can donate to a four times larger ballroom, upon which it will receive $100 billion in public money to fund the TikTok Sora videos.
There is certainly some concern around what is effectively a giant bet but I’m finding Gary’s aggressive doomer takes a little tiresome lately. Just like Sam can’t know for sure that the bet will work, Gary can’t know it won’t. Conviction levels should reflect that
Every startup begins with lots of debt and little revenue and a all in bet that it’ll change. Sam’s company unsurprisingly follow same playbook
Why should we bail out OAI again? It’s hardly sota anymore. Replacing it with a (more) competitive model made by a trillion dollar company with tons of cash is as easy as replacing an API key
The idea is that they're too big to fail, or at least trying to become so - that if they go down, they'll take Nvidia, AMD, Microsoft, and Oracle down with them. (Maybe not literally, but at least in terms of share price, which of course is the only thing that really matters.)
Obviously this is not a good reason to bail out a company, but I wouldn't be surprised...
Let them fail, and take the overhyped tech economy with them I say. After the utter disaster that were the 9/11 Airline bailouts, the 2008 Bank bailouts, and the COVID bailouts, I am sick and fucking tired of tax dollars supporting rich sociopaths who can’t make rational financial decisions beyond the scope of their personal wealth.
If banks were too big to fail back in '08, it makes total sense that the current AI bubble is also too big to fail, given that it is many multiples of the financial crisis.
Not to mention that it is propping up the stock market. Ain't no way the current admin will allow the biggest financial crisis to unfold on their watch.
sama showed a really bad side of himself in that answer to Brad Gerstner. You can tell Gerstner thought Altman was kidding at first, but when it became apparent he was lashing out, the answer became less about the answer and more about why Sam Altman was so injured by the (very fair) question. Which, if you haven't read TFA or seen it, the question was "How are you going to make money given how much you borrowed" but Sam's answer was essentially "How dare you ask me that question, we're happy to take back your shares if you have a problem with the way things are going". That was my read on it anyway.
Corporate leadership in America has a megalomania problem. Billionaires in general have a megalomania problem. OpenAI specifically, apparently, has a megalomania problem.
What an amazing financial innovation.
If the government involves itself now it'll actually be much cheaper then if the government involves themselves after they've entangled the entire stock market and financial sector into their bet.
Maybe we can call it the pre-bailout.
They also propose that their services will be so key to some sectors (like pharma) that they'll also seek revenue sharing as part of the companies getting the privilege to use the most cutting edge intelligence. Insane stuff honestly.
All I'm going to say is I'm actually really hoping that China stays competitive in this field. Just like they are delivering EVs for $25k to the world it'd be great for all consumers and companies if they can also deliver 90% of the AI performance for 1/10 of the cost.
Wait, if I reading the original article (https://news.ycombinator.com/item?id=45830380) correctly, this is not a bailout? It's more that the US government acts as a guarantor for loans from other parties, and only steps in if the debt is defaulted on.
Also this is not a loan for what has already been done so far, this is what will be built out in the future, so the US is getting something in return: huge amounts of infrastructure, most of which would be datacenters, chips, and power. (In an alternate timeline this would be clean power, or at least be built out in Australia, cf https://news.ycombinator.com/item?id=45836104 -- but sadly this is not that timeline.)
Worst case, when the bubble pops, we get a glut of power and compute which (ideally) should reduce overall electricity and the obscenely bloated cloud bills. However, at the rates that demand is growing, this seems unlikely.
So to rephrase: The real problem is that the infra needed to support the forecasted growth is very expensive, and requires trillions in funding, which gets very expensive to borrow. And so the US government is being asked to provide loan guarantees, because who better to appreciate what interest payments on trillions of debt look like?
American tech giants like OpenAI and Nvidia borrow and spend far beyond what they can realistically earn back for decades. Now, short on cash, they’re framing AI as a national security race — warning that without government backing, China will win.
The real play is to socialize their risk while keeping profits private. When markets call this “innovation,” it’s worth remembering: that’s not capitalism working — that’s capture.
Nvidia shows total liabilities of $32bn, annual profit $73bn. I think they'll be ok.
OpenAI is a much more interesting question. $1.4 tn is 4.7% of US GDP or about 1% of global. It's a lot of money to extract to pay your debt back. Short of full AGI I'm not sure how that happens.
And although I think AGI will happen my thoughts are it'll need algorithmic breakthroughs which are probably best achieved by a lot of different people trying things rather than all the money going to Altman.
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[ 3.0 ms ] story [ 54.8 ms ] threadAnyways, OpenAI is not in profit-seeking mode, and there's no economic incentives to do so right now.
Which indicates to me that the value add will come from somewhere else, which would seem to be whales and addicts.
You think that Trump won't demand something in return for this?
I keep telling everyone I know that AI will be enshitified just like every other internet business. Tell me why the incentives will be different this time around. Putting yourself in hock to an aspiring authoritarian is certainly one way to supercharge that process.
What do you think OpenAI's output about Jan 6 will be one year from now if this goes through?
Perhaps the government should loan OpenAI $1 billion so it can donate to a four times larger ballroom, upon which it will receive $100 billion in public money to fund the TikTok Sora videos.
Every startup begins with lots of debt and little revenue and a all in bet that it’ll change. Sam’s company unsurprisingly follow same playbook
OpenAI asks U.S. for loan guarantees to fund $1T AI expansion
https://news.ycombinator.com/item?id=45830380
Obviously this is not a good reason to bail out a company, but I wouldn't be surprised...
Let. It. Burn.
Not to mention that it is propping up the stock market. Ain't no way the current admin will allow the biggest financial crisis to unfold on their watch.
Corporate leadership in America has a megalomania problem. Billionaires in general have a megalomania problem. OpenAI specifically, apparently, has a megalomania problem.
They also propose that their services will be so key to some sectors (like pharma) that they'll also seek revenue sharing as part of the companies getting the privilege to use the most cutting edge intelligence. Insane stuff honestly.
All I'm going to say is I'm actually really hoping that China stays competitive in this field. Just like they are delivering EVs for $25k to the world it'd be great for all consumers and companies if they can also deliver 90% of the AI performance for 1/10 of the cost.
They can blend leverage, 100% 1st year depreciation with using the hardware itself as a financing asset and dozens more financial engineering steps -
Their actual cost of financing is probably incredibly low already.
I worry that they are thinking of trying to run the company just ahead of debt/lease payments or something, otherwise this is just a distraction
So they want even more?
Also this is not a loan for what has already been done so far, this is what will be built out in the future, so the US is getting something in return: huge amounts of infrastructure, most of which would be datacenters, chips, and power. (In an alternate timeline this would be clean power, or at least be built out in Australia, cf https://news.ycombinator.com/item?id=45836104 -- but sadly this is not that timeline.)
Worst case, when the bubble pops, we get a glut of power and compute which (ideally) should reduce overall electricity and the obscenely bloated cloud bills. However, at the rates that demand is growing, this seems unlikely.
So to rephrase: The real problem is that the infra needed to support the forecasted growth is very expensive, and requires trillions in funding, which gets very expensive to borrow. And so the US government is being asked to provide loan guarantees, because who better to appreciate what interest payments on trillions of debt look like?
The real play is to socialize their risk while keeping profits private. When markets call this “innovation,” it’s worth remembering: that’s not capitalism working — that’s capture.
OpenAI is a much more interesting question. $1.4 tn is 4.7% of US GDP or about 1% of global. It's a lot of money to extract to pay your debt back. Short of full AGI I'm not sure how that happens.
And although I think AGI will happen my thoughts are it'll need algorithmic breakthroughs which are probably best achieved by a lot of different people trying things rather than all the money going to Altman.