A Nikkei study found Alphabet, Microsoft, Amazon, Meta and Oracle carry $1.65tn in off-balance-sheet debt for AI, more than they report. It is all legal.
  • SocialMediaRefugee@lemmy.worldEnglish
    2 days

    Now that every generation from gen-x on mostly no longer gets pensions but gets 401ks this can really f up people’s savings that they will depend on in retirement.

  • neuracnu@lemmy.blahaj.zoneEnglish
    2 days

    We’re all witnessing a terrifying game of musical debt. At some point the music is going to stop.

    • MunkyNutts@lemmy.worldEnglish
      2 days

      And the chair gets pulled out and the public is left on their ass with the debt. Privatize profits, socialized losses.

    • massacre@lemmy.worldEnglish
      2 days

      Theor goal is to make sure retail 401ks don’t get the last seat.

      • explodicle@sh.itjust.worksEnglish
        2 days

        It’s absolutely crazy to me how many people are investing their 401ks in AI. If you’re gonna gamble away your savings on tech bros, then there’s a much better investment…

        • Jakeroxs@sh.itjust.worksEnglish
          2 days

          As if most people self-manage their 401ks, it’s almost always managed by the holding company unless someone does a PCRA or something along those lines.

    • krisevol@lemmus.orgEnglish
      2 days

      Just wait until you find out how much of these stocks are bought on margin.

      • Stupidmanager@lemmy.worldEnglish
        2 days

        And like magic, there was just an article that said margin debt at an all time high… either we’re going to have a whole new class of billionaires, or we’re about to see a bubble pop like no other.

        • krisevol@lemmus.orgEnglish
          2 days

          Actually you will see both. the current bubble we have now is the largest ever seen. A lot of people are going to their retirements, have to go back to work, lose their investments that are heavy in the bubble. But this is going to create billionaires from companies that survive and continue to provide AI services, and people that bailed before the bubble, and people betting on the crash. They will be the new generation of rich.

  • Optional@lemmy.worldEnglish
    3 days

    A Nikkei study put that hidden figure at $1.65 trillion, up roughly eightfold in four years. It is more than the $1.35 trillion the five report outright.

    The Enron echo

    The money is tied up in off-balance-sheet vehicles, the same kind of structure Enron used to hide debt before it collapsed 25 years ago. Back then it was fraud. Now, tightened rules and fuller disclosures make it legal.

    The tools are still there, though. “Enron’s crime wasn’t having special purpose vehicles,” analyst Gil Luria told Bloomberg Law. “Enron’s crime was hiding them.”

  • testaccount372920@piefed.zipEnglish
    2 days

    What can people do to avoid getting caught by the bubble popping? Remove all tech stocks from their portfolio? What about indices like S&P500?

    • AdolfSchmitler@lemmy.worldEnglish
      2 days

      I mean you can sell everything and leave it in cash i guess. But you have no idea how long these fuckers can keep the house of cards propped up. Government bailout, angel investors, who knows.

      Or if you really wanna get risky you could try to find a fund that shorts the market, specifically tech companies, then you could actually make money instead of just not lose any. I’m assuming you don’t want to get into options trading.

      But again, timing is the biggest issue. There’s an old saying “the market can stay irrational longer than you can stay solvent”.

    • brucethemoose@lemmy.worldEnglish
      2 days

      I’m hedging, mostly with Berkshire Hathaway stock, some agriculture, and a few others that historically perform well in recessions.

      I would not touch S&P 500 with a ten foot pole. It’s all wrapped up in Big Tech.

      I don’t like shorts; you can’t predict when the drop will hit, so you’re just burning cash betting against growth until then.

      I don’t like commodities either. As Buffet said, a big block of gold doesn’t do anything; a factory or farm does.

    • xiii@lemmy.worldEnglish
      2 days

      No, this is have enough canned food scenario.

      If the money would wipe out from the economy, that is less money for everyone. First round of bankruptcies will also wipe out contractors and debt issuers of the bancrupted companies, and so on. Mass layoffs. People cannot afford restaurants, or car washes, more businesses out, more mass layoffs.

      In 2001 tech bubble the money haven’t been lost. Virtual valuation dropped sharply. But the economy recovered in a year.

      This is like 2008, money have been poured into concrete and silicon chips. They were spend, gone for good. It will take a few good years to recover if the bubble would burst.

    • TubularTittyFrog@lemmy.worldEnglish
      2 days

      not much, unless you’re rich and you make some smart hedge bets against it.

      diversify assets is always smart, move more of your portfolio to cash and bonds.

      • suigenerix@lemmy.worldEnglish
        2 days

        Yep hedging would work .

        But why do you need to be rich to buy a hedge? A leveraged option can be bought starting from a few dollars.

        The issue is not getting the hedge, it’s getting the timing right. Plenty of people saw the GFC crash coming and invested in hedges, but they were too early and lost a bundle.

        • TubularTittyFrog@lemmy.worldEnglish
          2 days

          well if you’re rich and you lose a bundle it wont be a big of a deal, that’s why.

          hedges are risky, and it’s much easier to take risks if you have a large cushion to fall on when you fall.

          • suigenerix@lemmy.worldEnglish
            1 day

            Those are reasons why loses aren’t as big of a concern for rich people. Not why hedges are only for rich people.

            The cost of a hedge is proportional to the assets being protected. If someone has say a $10,000 portfolio of stocks, and they think the market will crash in the next month or two, they could buy a protective option hedge for around $100. And if someone has a portfolio of $300 million, they could hedge for ~$3 million. Wealth is irrelevant.

            Also hedges aren’t risky. They reduce risk. They’re insurance.

    • hobovision@mander.xyzEnglish
      2 days

      You really either ride it out or be OK with the chance of missing out on a few more years of a hot market. I’ve been expecting a big (sustained) correction since 2018 and even COVID couldn’t get it done.

      If you need money soon, put it in something fully insulated, like a CD or HYSA if you need it even more liquid. If you need wealth in 10+ years, just ride it out. Keep putting that piece of your paycheck in the infinite money glitch machine.

    • majster@lemmy.zipEnglish
      2 days

      I bought some value etf to hedge it. There is some theory out there that so called factor investing is worth it. The real deal is of course to catch the bottom. But as we saw with Iran war and the market it all gets eventually priced in even though everything seemingly goes to shit from different directions. I’m not smart enough for this…

  • comador @lemmy.worldEnglish
    3 days

    We’re on track for what several analysts said would happen prior to an AI crash around November to February.