Just not gonna buy any new games then.

looks at housing bubble “… god i hope you’re right”

Totally stealing Cyber Enron

I hope so, but there’s a way that bubble doesn’t burst even if we’re right that AI never delivers competent/competitive quality: that monopolies simultaneously integrate AI into their products and the entire world simply gets worse, while consumers pay extra for those very AI features they don’t want and which produce an inferior product.

As much as private equity wants to think it is, housing is not a commodity like DRAM is.
Housing always has a base value in that people always need places to live, so it’s price is sticky. The need for DRAM could disappear overnight if it so happened that way.

In 5 years china is going to ramp up their domestic production, so they’ll have cheap RAM while we don’t

Even that isn’t going to be enough. OpenAI has to start making payments on some (most) of these deals and startups starting this fall. If they don’t make these payments (it’s mathematically impossible for them to do so) then everything gets wiped out and the bubble pops.

Pro tip to all you investors here, if your hot new thing can’t do anything other than net360 terms and has double-pledged collateral, it’s not a good investment.

As far as it being like the dotcom crash, at least the few companies that were actually viable and legitimate survived and it “separated the wheat from the chaff” or something along those lines.

There is no viable AI company here, and the market will quickly find out that there isn’t even chaff to be found here, it’s mostly floor sweepings of post processed MDF sawdust and dirt.

I suspect very creative firms of accountants and CFOs are working hard right this moment to identify the next step in the shell game. So I suspect some creative refinance could avoid that outcome. But I definitely hope you’re right.

A 5 year DRAM shortage is pretty hard to imagine. I have to suspect that’s a projection that assumes no AI bubble popping (which given how insanely over-leveraged basically every company involved in the bubble is, its inevitable. They’re literally spending more building these datacenters than they can ever dream of recouping once built!) The last DRAM shortage (around 2017-2019 by memory) was only really bad for about a year or so, getting gradually better until it became an absolute glut of DRAM supply that lasted until…well about 3 months ago. $60 per terabyte of SSD storage was glorious, and hopefully I can afford to benefit from the next DRAM glut in 2-5 years

Oh no it’s far worse than that. Private equity is heavily invested into data centers, and so are most large international banks. Private equity is playing the fun “volatility laundering” game where they are deliberately not reevaluating assets to make them look like they are worth more on paper than they actually are. They are basically saying this asset house is still worth the $50,000,000 it was valued at 5 years ago, never mind the fact it burned down and is now a superfund site and uninhabitable.

International banks are also issuing loans based solely on “just trust us bro” paperwork, using the AI companies paperwork as gospel and not looking at anything other than what they are presented with. The average cost of renting a Blackwell CPU is now $4.41 an hour, and that’s before the vast majority of these data centers have even come online.

Something something supply and and demand just trust us tho.

Currently, with data from all AI compute companies and services COMBINED in 2025, revenue comes out to 0.5831% of expenditures.

So for every $1,000,000 spent, you will make $5,831.

The only way out of this mess is if the banks either get paid back for their loans (see previous figures) or private equity gets a lot more capital… and starts paying back banks again (see previous figures comment about previous figures)

As an additional note if I am right and this bubble pops (if a single startup goes under, literally any one) then it’s pretty much the collapse of the global financial system and an economic crisis at the level that the world has never seen before.

Literally, and I cannot stress this enough, the entire current system is built on the belief/sentence/mantra “number go up” with no regard for literally anything else.

What way is that?

Well, great. So looking at 2008 for the most recent model, I suppose that means government bailouts or subsidies using taxpayer money to save the companies and thereby prevent a complete collapse of markets?

The solution is surprisingly simple:

“Sorry, I can’t use your online services. My electronics died. Oh well.” ‍️

DOJ launches criminal investigation into Fed Chair Jerome Powell, he says

Federal prosecutors have launched a criminal investigation into Federal Reserve Chair Jerome Powell, he confirmed in a statement Sunday night.

ABC News (abcnews.go.com)

Saw this in the news. They’re trying really hard to stack the federal reserve board and send interest rates back down to financial crisis/pandemic levels. AI bubble can have some leg room if interest rates tank

For the dram unfortunately won’t be possible to use it in the consumer space, at least not in the current form. Hbm is really server stuff, and as is, you cannot repurpose it. As for the GPUs, maybe they can be used for the consumer space but I am not entirely sure the specs would be wise to use it at home, since they need some very serious cooling capabilities, as well electricity consumption. Biggest winners of this pop in my opinion would be anyone who need cheap server rack stuff.

Honestly interest rates dropping might be ultimately be a good thing. The job market is so tight and most recession indicators have already been blazing. I doubt they’ll do the same hard drop they did in Q2 of 2020, but I do think more aggressive rate cuts might alleviate a lot of the burden consumers (especially young adults and anyone unfortunate enough to have been/be jobless over the last couple of years) have been feeling. A big chunk of the inflation consumers were seeing on goods in 2024 was just companies making opportunistic price increases, as evidenced by the heavily advertised price drops afterwards.

Additionally there is the statistic that nearly 50% of all retail spending in the United States is made by the top 10% of earners which is a heck of a dangerous tightrope for the economy. I do think that’s the other shoe waiting to drop right this second. If the wealthier Americans get spooked and start to pull back their spending this economy is going to tumble

Kind of? Except the lenders with the largest amounts of loans in order are: 1.Blue Owl (USA) (remember this company, it’ll be important as a canary probably) 2. Mitsubishi UFJ financial group (Japan) 3. JP Morgan Chase (USA) 4. Deutsch Bank (Germany) 5. BnP Paribas (France) 6. Morgan Stanley (USA) 7. Sumitomo Mitsui Banking Corporation (Japan)

So kinda like 2008 but you need (at the very least) Japan, Germany, France, the USA, and possibly South Korea to all coordinate and do bailouts cooperatively together to maybe have a chance.

Good thing we haven’t pissed off our allies or disrupted trade in general, and we also haven’t fucked with interest rates or bonds or anything so we have plenty of tools in our arsenal (god help us all, puts on all of our collective livers.)

There is no saving the AI companies because it is mathematically impossible for them to make money. You would have better luck investing in your local meth heads trying to make alchemy real using nothing but books published by Wizards of the Coast.

Part of it is not finished DRAM that was sold yet, it’s wafer capacity at the factory.

Sam Altman has promised orders for a kazillion wafers that don’t exist yet. It’s been argued this is less legitimate demand and more an effort to crimp the scaling ambitions of other competitors.

If his cheque bounces early on, the manufacturers are likely to reassign his slots to other buyers.

The manufacturers are taking a fair bit of risk though. If they aren’t getting paid before work starts, and the bubble pops in the middle, thry could end up with a lot of (partially or fully) finished wafers that they can’t just slice up and sell to Corsair and G.Skill.

Or we hunt them down