I saw an article a couple of days ago on one of the popular sites (ft or Bloomberg or something), about how now is a great opportunity to purchase private company credit. Guess this is the submarine https://paulgraham.com/submarine.html
This is just what banks do O_o underwrite loans, then collateralize (i.e. bundle) to people who want the risk.
> This is just what banks do…
Sure. Sometimes they cause global financial crises as part of that process.
You might as well say that banks giving mortgages caused that. Sure it happened as part of the process but that wasn't the thing that caused the problem.
No, banks collateralizing mortgages caused it.
https://en.wikipedia.org/wiki/Collateralized_debt_obligation
> In the early 2000s, the debt underpinning CDOs was generally diversified, but by 2006–2007—when the CDO market grew to hundreds of billions of dollars—this had changed. CDO collateral became dominated by high risk (BBB or A) tranches recycled from other asset-backed securities, whose assets were usually subprime mortgages. These CDOs have been called "the engine that powered the mortgage supply chain" for subprime mortgages, and are credited with giving lenders greater incentive to make subprime loans, leading to the 2007–2009 subprime mortgage crisis.
It's hard to ignore the similarities.
> subprime in risk as if they were prime
What if this winds up being the case for the trillions dumped into AI in hopes of future revenues?
https://www.reuters.com/business/oracle-corp-goes-high-stake...
> Cloud computing giant Oracle Corp is on the cusp of a junk-grade credit rating and its shares have tanked as the artificial intelligence hyperscaler becomes the fall guy of investors' concerns over the sector's debt-fuelled spending binge.
Another factor in that case was that the government regulated, in some cases, the ratings of bonds that entities were allowed to buy (they couldn't be as highly levered with lower rated bonds) and so there was an incentive for bond ratings to be falsely inflated, happily carried out by the rating agencies. Of course collateralized junk is still junk, and many people at the time knew that, but there was money to be made in looking the other way.
> the consumer is quite healthy this time around
Inflation's way up. Real wages are down.
https://www.nytimes.com/2026/10/14/business/economy/inflatio...
> Wage growth has remained relatively muted over the past year. That, combined with higher inflation, means Americans are earning less for an hour of work. Average hourly earnings, adjusted for inflation, fell 0.5 percent in September, and were down 0.7 percent from a year earlier. It was the sixth straight month of year-over-year declines in real earnings.
https://www.cbsnews.com/news/household-debt-delinquencies-ri...
> The share of seriously delinquent auto loan balances has hit a record high this year, while nearly 13% of credit card balances are seriously past due — close to their 2010 peak in the aftermath of the housing crisis — according to recent data from the Federal Reserve Bank of New York.
https://www.cnbc.com/2026/10/09/american-debt-delinquency.ht...
> The ability of U.S. families to stay current on their debts worsened over the past three years, hitting levels not seen since the aftermath of the global financial crisis, the Federal Reserve reported Friday.
The cause is always a failure of underwriting. That was true of the Savings and Loan Crisis, the Great Financial Crisis.
It feels like each bubble gets bigger.
I reacted the same. What could be a bad sign though is if they try to sell it and they dont get what they want.
This is what a lot of, if not all, IPOs are for too.
Lots of names to obfuscate the same financial yada yada.
yes just like mortgage backed securities in 2007
Next thing you know, they're going to take the money in your savings account lend it out to anyone who asks for a loan!
/s
So, is this the type of signs we should be on the lookout anticipating an impending implosion?
I remember in Summer 2007 feeling that there was an impending implosion coming based on the shady practice of using 2nd mortgages as downpayments - it had become a common practice. Started doing a bit of shorting (not too much), made a little, lost a little and then sort of lost interest in doing it just about the time things fell apart in '08. All that to say that these things can take a lot longer than you'd expect. You can look at the situation (like the circular funding as well as this article) and decide that yes it's not sustainable. But it can sustain longer than you expect.
Oh, I am well aware it's hard to time it. But still getting a general sense of the impending crash can help preparing in different ways. You can park part of your assets, not completely withdraw. Or pay extra for piece of mind by hedging them. Sure, it will cost, maybe won't be needed at all, or still misfired, but I'll sleep better with less anxiety, so that's still a win in my book...
If I knew the answer to that I’d go short some stock…and maybe not post about it.
The big two AI labs are still not listed on the stock market, and SPCX is still above it's listing price. Unless you can remain liquid more than the market remains irrational better find some other use for your investment funds. No?
Depends on what price the banks offload at.
When the debt in 2007 sucked, it crashed the economy. But when the price was good in 2006, everyone celebrated.
Note: prices are getting worse for bonds today but nothing panic worthy yet.
When are we getting CDOs with Nvidia GPUs as collateral as Nvidia envisions?
Same thing they did with bad mortgages just before the 2008 crash.
This is completely normal. Banks underwrite large loans and then package a bunch of them in different ways to sell to different investors.
They should offload the overprovisioned, hyper concentrated GPUs back to the people
Why? It's hard to see what they're good for outside of AI data center workloads. Your average member of the general public arguably doesn't have much use for a "graphics processing unit" that isn't actually capable of processing graphics
You sound exactly like the people who didn't understand personal computers because mainframes existed.
Who is building the infrastructure to resell the gpus from failed data centers if / when this collapses. It would be a waste for everything to get wasted
The GPUs used in data centers cant really be used outside the same context. They cant connect to standard PCs or servers. They are highly specialized. The resale would need to be at the server or rack level for the same use case.
Aren't they PCIe like everything else or am I missing something? I know they have some fast interconnects. If not, is an adapter to PCIe possible?
Cooling is usually what kills you with server gear at home. I don't have a cold aisle, or a case that flows that much air. Can I water cool it enough?
No video outputs would probably be my biggest annoyance. It should be fine at headlessly rendering games for streaming though, as well as AI.
If there's a will, there's usually a way.
There have been some examples of folks ripping off the SMX interface and rewiring the card for PCI-E but I'm not sure how efficient that would really be or what kind of market there could be
Oracle data enter debt.
'nuff said.
This tracks with recent reporting that AI debt issuance fell 50% month over month in September[0]
> Tech companies raised $23 billion in AI-related debt globally in September, less than half the amount raised in August, according to Morgan Stanley data covering public bonds and private placement transactions.
> The decline marks a continued drop from June, when companies raised a record $113 billion for AI infrastructure including data centers and chips. In the US investment-grade market, where blue-chip tech groups borrowed around $306 billion between January and August, AI-related bond issuance stopped completely last month.
0: https://www.investing.com/news/stock-market-news/tech-compan...
The CDOs on some loans are getting to the point where it’s too expensive to even bet that the loans will fail as the CDO market seems to have concluded the loans will fail.
Hah, this is remarkably short turnaround. The OBBB only lifted the ESLR on April 1!
thank you for this link, all these years on the internet and I had not come across it