CWs: Cory Doctorow, newsletter, mentions of his upcoming book that he’s selling.
I feel like he missed a key opportunity to tell the kid asking “what do we do?” “You need to unionize. Collective effort and mutual aid will serve you better in life than most things.”
“And then that happens.”
“What is that?”
"That’s global economy.’
Ain’t gonna be no recession this time
Anyone have any historical data on the dotcom bubble and what stocks benefited from the crash?
bump
If I had to guess, all the big companies that were deemed “to big to fail” and were bailed out.
Well Nvidia’s the one laughing to the bank here; they’ve offloaded their GPUs for cash and stakes, and Microsoft/OpenAI/‘AI’ providers are the ones holding the bag (and GPUs).
Picks and shovels. The profiteers of the gold rush were the suppliers… I mean, Nvidia wants the grift to keep going, of course, but still.
Seriously. NVDA and AMD are the only ones who are going to profit from this. And the CEOs, of course.
Their golden parachutes are locked and ready.
FYI
Nvidia’s CEO, Jensen Huang, and AMD’s CEO, Lisa Su, are first cousins once removed.
Cool?
most of those sales on credit actually
They’ll be hit hard also. Apparently about 50% of their sales revenue comes from 3 customers, almost certainly members of the Magnificent 7 buying GPUs for data centers. In the modern economy, a quarter without revenue growth is failure, but imagine double digit decline.
I mean, their stock price will take a hit. But realistically, that is not necessarily bad for Nvidia as a company, as long as they are ready for the burst and don’t over extend.
Yeah, exactly.
Their stock will tank, but financially? They will be fine. They’ll go back to a more sane baseline market with an absolute mountain of cash and disturbing market share to show for it.
Microsoft “invests” in Openai by giving the company free access to its servers. Openai reports this as a ten billion dollar investment, then redeems these “tokens” at Microsoft’s data-centers. Microsoft then books this as ten billion in revenue.
[…] Nvidia … “invest[s]” tens of billions in a data-center company, which then spends that investment buying Nvidia chips. The the same chunk of money being energetically passed back and forth between these closely related companies, all of which claim it as investment, as an asset, or as revenue (or all three).
investing back and forth, forever
Tautologically tautological economics
Feels like when banks could lend x10 times their wealth, they’d just borrow lots of money forth and back, infinite money (and a good old crash)!
This is actually kind of scary. These huge tech companies that, for better or worse, form the foundation of modern life, could collapse overnight if the chips fall a certain way.
Practically, what would the impact be?
At the best, it would drag the entire economy down with them causing not just a recession, but more than likely full on depression. It wouldn’t just be the US either, worldwide market crashes.
Worst case? The worldwide depression makes those companies go bankrupt. Due to the market collapse, no other company is able to step in and prop them up. MAYBE governments bail them out, but then we end up with major tech not just influenced by government, but owned and run by them (see TikTok currently).
A massive shedding of stock market wealth that triggers a recession as everyone pulls back on consumer spending since their primary retirement savings have taken a huge dip.
It would hit every good and service in every sector because the entire economy revolves around consumer spending and the consumption of goods and services. If you lose your job then good luck finding anything during a recession, as if it weren’t hard enough already. And you may not lose your job, but your employer would feel the pressure to cut costs and pump revenue. The stock market would take a few years to recover effectively adding another year or two before retirement for some people, which also has workforce implications.
Plenty of other indirect costs to you that filter through wider society and the workforce, even if nothing direct actually happens to you. Like your favorite spots reducing hours or having worse service or raising prices to make up for the drop in demand.
Hehe chips.
I’ve seen this with M$ power contracts. Microsoft sign 10Y deals and pay a large % of their electricity costs in cloud credits.
We should tax financial transactions.
We should tax securities. Stocks, bonds, and other financial instruments. Tax them, annually, in shares of the security. Let IRS liquidators auction them off over time.
Exempt any natural person holding less than $10 million worth of securities. No exemptions for artificial “persons”.
Use it or lose it.
i mean, there are no financial transactions in that quote.
Don’t forget a similar amount is tied up real estate and that bubble is already popping, starting in the SE
My whale oil investments are looking pretty good now
I’ve shored up mine with a ‘hooked beef’ portfolio to help offset the AI risk. Everyone agrees “Whale Oil / Beef, Hooked / With AI” is a predictable return path.
I’ve chosen to put everything into gourd futures.
We need a better tool than that old, easily-manipulated “stock market” to track value. Value needs to become real again, not always inflated, because “shareholders”.
And shareholder interests (create money!) make the too-big-to-fail companies think only in quarter year profits, turning them evil.
Value is a mechanism that hides what actually creates value: human labor power
Energy & material extraction also create value.
But who mines the materials? Natural resources are given to the oil and gas industries. The gasoline and fuels displace the value of human work by technological means, but the machines still need people to run them. The machines were built by workers. Without people doing stuff the oil and minerals just stay in the ground.
You can argue that oil and gas mineral industry mines the resources, but those resources, and the work it takes to extract them, is incredibly valuable to society. So who owns them, and why, becomes a political question.
Value is nothing but a store for human labor.
Absolute bubble for the datacenter middlemen and the AI software behemoth models that need data centers. The hardware companies though, and AI/LLMs overall, are here to stay and even if they waste their profits on investing in middlemen/datacenter/software customers, they can be profitable by inflating costs of their GPUs/hardware.
GPU depreciation matters, but tends to be relatively slow due to controlled incrementalism in hardware. Still, the high end faces the most risk, and Huawei/Alibaba won’t be satisfied with small share gains over Nvidia to keep pricing gains. Even AMD is improving software stack fast enough to make affordable private AI. The low end has signficant disruption potential to the datacenter/Skynet model.
It’s not just an overall stock market bubble, it is a US GDP bubble. Where datacenter growth $ is larger than consumer spending growth $. Skynet for Israel control spending is an unstoppable corruption vector, and yes the champions of Israel must be financed and supported as geniuses by all media or “China and Iran will win.”
they would have to sell us $800 billion worth of services over the life of today’s data centers
$100 for a yearly AI subscription for each human is possible. The problem is, which jobs do the people have to pay for it?
It might be possible for people on the Fediverse. Lots of people working in the tech sector with a good salary. But we are not the norm.
I don’t think so. Half of the population on earth lives on less than $6.85 a day
https://blogs.worldbank.org/en/developmenttalk/half-global-population-lives-less-us685-person-day
The problem is, which jobs do the people have to pay for it?
If one half wants to keep getting their wages, there should also be enough jobs for the other half. New jobs have to be created anyway.
$100 for a yearly AI subscription for each human is possible.
Or, more likely, companies doing something actually profitable will use AI and pay for it.
Nvidia is profiteering
selling shovels aint illegal
selling shovels on credit is pretty dumb though
If Nvidia the creditor? That’s real dumb. Don’t mix banking with business, there’s conflicting interests.
Why shouldn’t they ;D
I love how with the previous schemes like crypto, communities like this would have thought they were in on it, now with AI it’s like nope not falling for that Spanish prisoner BS again.
Crypto allowes everyone to gamble. LLM hype only works for the owners, everyone else have only fugly pictures and schizophrenic texts
Why is Cory Doctorow a CW?
Sometimes when I post links to Doctorow’s writing, some people are very clear they would rather not have clicked, so I thought it’d be a good idea to be upfront about who I’m linking to.
Who is dissing my boy Doctorow in this way, and to what address shall I mail my punches?
I wouldn’t want to call anyone specific out, but occasionally someone will mention his wife works in tech/venture capital, or that he’s always bringing up the latest book he has on sale.
How dare a writer talk about his books! Utterly preposterous.
Thank you for that very clear demonstration of the problem. :)
AI may not be profitable right now, but there’s a lot more to “the magnificent 7” than AI that keeps them profitable. Even if the AI bubble popped, people would still be wasting their time on Facebook and Microsoft teams.
They still have to make that money back somehow though. They can’t just put a load of investment down on AI, make zero money off it (or worse, less than zero) and then expect everything to be fine with the existing profits. They need to raise revenue from existing streams to cover for the loss they just incurred by doing AI. That, or cut costs, which means layoffs, which means people have less money, meaning they spend less money, which means businesses make less money, so they do layoffs, and so on and so on leading to a recession.
I don’t know the exact numbers but I doubt these 7 companies employ enough people to cause a recession even if they fired everyone. Hell, they are laying of a lot of their employees already.
over 2.3 million people. yeah it’d be pretty big.
Wou… Is that globally?
The economy is weird man, it’s all about collective vibes. If enough people in the right places care about these companies, they’ll see small changes and freak out, making their own small changes and so on and so forth.
Vibes is a pretty loose way of putting it. It’s about information and lack thereof. Like a poker game or a real time strategy game. You might have some idea what your opponents are doing but you don’t know exactly what it is, and you don’t know if it’s actually going to work or not. You also have plenty of cash (minerals, vespene gas) to spend on a possible defence that may not work out.
Or it will never work out because you tied 20% of your company’s value to vaporware and the bad vibes cause panic selling of your stock.
One third of the stock market’s value suddenly dropping by 80% would definitely have wider reaching affects on other companies, leading to further issues.
US taxpayes will be proud to carry this burden, as always.
Privatize profits, socialize losses. The American (and thus global) way
the american exceptionalism reeks with this* one
I could understand the arguments about banks being too big to fail, because normal people and businesses have their money tied up in them.
But is Meta too big to fail? Are any of the tech giants too big to fail? Let them.
Especially after the 2008 debacle.
They are too big to fail because the politicians that are suckling at their teats say they are. If those companies go under, the
bribes, er donations dry up. They won’t let that happen. Millions, if not billions, of dollars are being funneled into the policical machinery to make sure that when the bubble pops, the people responsible will not pay any real price for it. It’ll be the workers and the tax payers who will have to clean up the mess while the ones who created it will sail off into the Caribbean on their newest super yacht.
It’s a pyramid scheme, always has been… every decade for the last 30yrs there’s been a few of them… The dot.com boom and bust of the 90’s was the start, in the 2000’s everything went ‘digital’ which was the same old shit with an LCD added to it and a doubling of the price, digital services for games/music/movies where they could take away what you bought… then they got even more serious in the 2010’s where the real enshitification of the internet started… the ‘cloud’ where you were no longer allowed to own your own data, subscription fees for everything… ‘smart’ appliances that just tracked you and stole your privacy for the enrichment of a few billionaires… Crypotocurrency, the biggest scam and pyramid scheme to date… and now in the 2020’s, crypto as a means to launder money and bribe politicians, massive corruption, fraud and consolidation of power by evil people and their corporate paymasters… and of course… the newest and worst pyramid scheme of them all… AI…
The only way to win is not to play… don’t use it, disable it, remove it… every time you use it you are encouraging them to invade you life, take away your rights and exert control over what you can do and think… I know some of you will think that’s an over reaction, you will learn one day that I and others were right to warn you as I have been doing for years now… But by then it will be too late, the climate is burning and these billionaires are trying to make it happen quicker, they value their wealth more than your very existence and they will hide away in their bunkers and private islands as the rest of humanity burns.
