Well technically they don’t own the debt, the SPVs that own the data centers do. The giants just have long term commitments, but if shit hits the fan, it’s not the tech giants but the banks that lent the money to the SPVs that are at risk. This usually means all of us are on the hook.
> By investing in the data center's operating company with a 20% stake and using the facility under a lease agreement, Meta secured computing resources but also increased its hidden debt.
> Meta has a contract guaranteeing investors' losses if the data center becomes unnecessary and the lease is terminated.
The way they are hiding these debts is by having a stake in a data center company. But if shit goes tits up they are contractually liable for 100% of the losses.
It's not the fund that lent the money to the SPV, it is Meta who is offering guarantees here.
We're not on the hook. The systemically important banks are very well capitalized now and have limited exposure to these debts. Even if there are substantial defaults the big banks will be fine.
On the one hand, these debts may be off the balance sheet, but institutional investors certainly know about them and can reason about the company's valuation. Retail investors may be caught out slightly more.
But on the other hand, these companies are essentially paying for the service of taking the debt off books (by paying the leasing premium to the SPV partners). I guess I'm wondering what they really gain from doing so, if again sophisticated investors can see through the games?
These debts mean nothing if the US government actually views AI technology as being on par with the Manhattan project. They'll just bail them out or nationalise them.
Shorting is a very different thing from buying a stock and living through a drawdown. You can bleed money fast and if you don't have options protecting your trade, your loss potential is unlimited. Once you pay for the insurance through options, the profits aren't that attractive unless you can see the future and predict exactly when the stocks will go down.
It's hard not to be fatalistic about all of this now: In my mind, it's crystal clear that the investments will never be paid back. The revenue streams from all the companies involved don't add up. It must fail at this point.
That means losses. Big losses for some.
I assume that these off-the-books companies can quite literally be pinched off and the debt becomes the banks' problem, so the primary company, i.e. Meta, Oracle, can walk away but the banks will be left holding the bag.
We know what happened the last time the banks played their stupid games!
The banks are not the ones on the hook here - they no longer lend in a meaningful way as first loss lender on many things. If they lend they do so as a senior financing provider to vehicles that provide the financing.
The actual lending is done by private credit institutions that have raised money, sometimes on the order of 10s of billions of $.
It's a tough job market out there and it took 4 months to land job offers after being laid off.
I have a competitive offer from Oracle OCI with a team adjacent to this initiative and I am seriously considering it. How long do you guys think it will take to blow up (if it does)
To the experienced devs out there; would you take a 15% less offer from a medium sized company for job security?
You need to listen to what Bryan Cantrill said about his experience at Oracle, before you go there.
> What you think of Oracle is even truer than what you think it is: "Shit mediocrity, inflict misery, lie our asses off, screw our customers, and make a whole shitload of money"
> You need to think of Larry Ellison the way you think of a lawnmower. You don't anthropomorphize your lawnmower, the lawnmower just mows the lawn, you stick your hand in there and it'll chop it off, the end. You don't think 'oh, the lawnmower hates me' -- lawnmower doesn't give a shit about you, lawnmower can't hate you. Don't anthropomorphize the lawnmower. Don't fall into that trap about Oracle.
What would be the alternative scenario to a crash? As I understand it, for AI companies to not crash, they have to end up putting us all out of jobs which will end up with us becoming slaves/serfs.
I don't know who gave them that Utopian end goal but they could just settle slowly into a useful function. They didn't have to inflate so much as to make a crash almost inevitable.
But this reminds me of 2008. Because when it goes all wrong, the US government is just going to bail them out just like they did with the banks to just keep the scam going.
Because after all, they will be treated as "too big to fail".
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> By investing in the data center's operating company with a 20% stake and using the facility under a lease agreement, Meta secured computing resources but also increased its hidden debt.
> Meta has a contract guaranteeing investors' losses if the data center becomes unnecessary and the lease is terminated.
The way they are hiding these debts is by having a stake in a data center company. But if shit goes tits up they are contractually liable for 100% of the losses.
It's not the fund that lent the money to the SPV, it is Meta who is offering guarantees here.
The consequences could be unpleasant.
But on the other hand, these companies are essentially paying for the service of taking the debt off books (by paying the leasing premium to the SPV partners). I guess I'm wondering what they really gain from doing so, if again sophisticated investors can see through the games?
That means losses. Big losses for some.
I assume that these off-the-books companies can quite literally be pinched off and the debt becomes the banks' problem, so the primary company, i.e. Meta, Oracle, can walk away but the banks will be left holding the bag.
We know what happened the last time the banks played their stupid games!
The actual lending is done by private credit institutions that have raised money, sometimes on the order of 10s of billions of $.
It's a tough job market out there and it took 4 months to land job offers after being laid off.
I have a competitive offer from Oracle OCI with a team adjacent to this initiative and I am seriously considering it. How long do you guys think it will take to blow up (if it does)
To the experienced devs out there; would you take a 15% less offer from a medium sized company for job security?
> What you think of Oracle is even truer than what you think it is: "Shit mediocrity, inflict misery, lie our asses off, screw our customers, and make a whole shitload of money"
https://www.youtube.com/watch?v=-zRN7XLCRhc&t=2047s
> You need to think of Larry Ellison the way you think of a lawnmower. You don't anthropomorphize your lawnmower, the lawnmower just mows the lawn, you stick your hand in there and it'll chop it off, the end. You don't think 'oh, the lawnmower hates me' -- lawnmower doesn't give a shit about you, lawnmower can't hate you. Don't anthropomorphize the lawnmower. Don't fall into that trap about Oracle.
https://www.youtube.com/watch?v=-zRN7XLCRhc&t=2308s
But this reminds me of 2008. Because when it goes all wrong, the US government is just going to bail them out just like they did with the banks to just keep the scam going.
Because after all, they will be treated as "too big to fail".