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US Reps Lead Democratic Resolution Opposing A.I. Bubble Bailout for Big Tech

361 points DeepLogin 3 hours ago 233 comments

theandrewbailey 2 hours ago | parent

Privatize the losses. These are the largest companies the world has ever seen, sitting on piles of assets like dragons. They have hyped AI endlessly to the point that everyone else is sick of it. If they haven't saved any money, and can't bail themselves out, they deserve bankruptcy.

Signed, the Silent Majority

techblueberry 2 hours ago | parent

Can you privatize the losses if the banks are investing, providing debt to and repackaging that debt into broader instruments?

I worry that one of the reasons that Anthropic has 500 billion in commitments and everyone is running to the credit markets is to make it so that if they fail everyone suffers.

bluGill 2 hours ago | parent

All the more reason to make them fail. FDIC should pay insurance and otherwise fail the banks. Capitalism cannot work if there isn't feedback that not watching for things like this will hurt you.

AnimalMuppet 2 hours ago | parent

I actually liked the approach that happened with several large companies in 2008 - the stockholders get wiped out, the senior management is gone, but the depositors get protected.

JumpCrisscross 2 hours ago | parent

> the stockholders get wiped out, the senior management is gone, but the depositors get protected

Who are you thinking of?

That’s what happened in 2023. In 2008, depositors almost got wiped out and a lot of senior managers and stockholders got bailouts.

AnimalMuppet 1 hour ago | parent

Where did depositors almost get wiped out in 2008?

At NetBank? Only if they were over the FDIC limit. Stockholders got destroyed, though.

At Bear Stearns? No, depositors got protected in a convoluted deal. The shareholders got very close to nothing.

At Lehman Brothers? They did "break the buck" on money market funds for a bit, but weren't depositors made whole? And weren't stock owners wiped out in the bankruptcy?

Washington Mutual? Depositors were covered by the FDIC.

Where were depositors "almost wiped out"? Where specifically? Where were stockholders bailed out?

JumpCrisscross 1 hour ago | parent

> Where did depositors almost get wiped out in 2008?

“The [Deposit Insurance Fund] fell to the lowest point in its history, a negative $20.9 billion on an accounting basis, by year-end 2009.

…

To address this issue, the FDIC adopted a novel approach that required the banking industry to prepay its quarterly risk-based assessments for the fourth quarter of 2009 and for the next three years” [1].

Where did “significant amounts of cash” this was funded out of, which “banks were holding at the time,” come from? From the Fed and the bail-outs.

Without the bail-outs, banks wouldn’t have been able to fund the DIF and the FDIC would have faced the threat of insolvency.

> Where were stockholders bailed out?

Every institution that participated in TARP [2].

[1] https://www.fdic.gov/bank/historical/crisis/overview.pdf

[2] https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program

mastax 49 minutes ago | parent

The fed was always a backstop to the FDIC by design. None of what happened suggests depositors "almost got wiped out."

JumpCrisscross 2 hours ago | parent

> FDIC should pay insurance and otherwise fail the banks

That’s what happened in 2023.

alpha_squared 1 hour ago | parent

Are you talking about SVB? Because FDIC paid out much more than just insurance, it made sure everyone was whole. I think that set a very dangerous precedent.

JumpCrisscross 1 hour ago | parent

> FDIC paid out much more than just insurance, it made sure everyone was whole

FDIC didn’t pay anything out. The new capital requirements and conservatorship processes worked.

> that set a very dangerous precedent

I don’t like how it happened. But codifying universal deposit insurance in U.S. banks isn’t a bad idea. Maybe one caps it for foreign deposits.

59percentmore 1 hour ago | parent

No, it is not. The way the SVB et al. collapse was handled was highly unusual. FDIC guaranteed deposits in excess of the insurance cap, bailing out (wealthy tech and VC) depositors to the tune of 30%ish of the fund set aside for such purposes. The Treasury stood up a new facility to prevent contagion to other banks.

You cannot do this if the big Wall Street firms collapse.

SpicyLemonZest 1 hour ago | parent

> You cannot do this if the big Wall Street firms collapse.

I'm not sure what you mean by this. Wall Street firms as such don't have deposits; Wachovia, Washington Mutual, and a number of smaller but still large banks were handled in similar ways to avoid any loss of even uninsured deposits.

Perhaps you're under the impression that the FDIC paid out of its fund for those deposits? (e: Originally I claimed this impression was wrong, but in fact I was wrong.)

59percentmore 42 minutes ago | parent

Are you claiming that the DIF wasn't touched in the process of handling the collapse of SVB, Signature, and First Republic?

Are you further claiming that large commercial banks don't have depositors?

SpicyLemonZest 24 minutes ago | parent

That was my claim, but it does seem like I was wrong. I'm going to have to figure out where I got this bad information from.

I do think that "Wall Street firms" in even the most expansive sense isn't generally understood to include large commercial banks. Some companies like JPMorgan are big enough in investment banking to kinda land on both sides of the line, but I've never heard anyone refer to Bank of America or Wells Fargo as a Wall Street firm.

vinyl7 2 hours ago | parent

We're due for a recession to wipe out all this irrationality that has been cooking for the last 20 years. I say let it fail.

driverdan 2 hours ago | parent

Of course. Governments shouldn't be bailing out corporations ever.

JumpCrisscross 2 hours ago | parent

> Governments shouldn't be bailing out corporations ever

Ever is a stretch. Government shouldn’t be bailing out shareholders and senior managers.

whatthejesus 2 hours ago | parent

Anthropic is not going to fail. Claude does amazing things and all the companies built on top of it are more likely to fail because at the end of the day, we can remake their value proposition by using Claude and a few command line tools…

theandrewbailey 2 hours ago | parent

If Anthropic has made promises that its wallet cannot keep (as it looks like), it will fail. Let me remind you that Anthropic isn't profitable yet, and there's no clear path that it will be.

whatthejesus 1 hour ago | parent

Okay fair enough. I don’t track the finances just what the tools are doing. And on that all these AI-Ifying documents and stuff doesn’t really have a moat, but Anthropic has a great product.

Either way the people should never bail out corporations.

autuni 1 hour ago | parent

great products only take them so far, the question is are they great enough so people would be willing to pay the prices they'd need to ask if they would want to at least match their spending with their income

automatic6131 1 hour ago | parent

>but Anthropic has a great product

Let me guess, subscription user?

whatthejesus 1 hour ago | parent

Yeah Pro subscription. I realize building something targeting API is probably astronomically more expensive.

And I realize also that they are reducing churn by keeping the value there for subscribers. Not sure what that’s costing them, but it’s definitely holding me as a customer. The product works so well for me that I honestly don’t need to even glance at the competition.

And honestly, this has been the case since day one. I’ve always used Claude. ChatGPT a bit in the beginning, but it’s emoji fetish and “bro” personality gave me the ick so I dropped them.

nkrisc 1 hour ago | parent

> but Anthropic has a great product.

Give me $100 billion and I will make the greatest pencil sharpener that has ever existed, and possibly that will ever exist.

gosub100 47 minutes ago | parent

Jet airliners do amazing things, moving people across continents. But they are seldom profitable. Airlines, in general, struggle to make money and have to try every trick in the book to sometimes squeeze a profit.

jerf 2 hours ago | parent

Privatizing the losses doesn't mean the rest of us are going to escape without a scratch. It just means that we let fail the things that are going to fail.

What makes this so politically unpalatable is that having constantly bailed out the last few cycles, everyone is now operating on the assumption that they will be bailed out, so many entities who in a more perfect world would know better have done a lot of stupid things, like pensions that have a lot of bonds that will go bad if the AI bubble collapses.

Frankly we're looking at massive problems and upheaval at this point no matter what we do. But the advantage of not socializing the losses is that the signals of what needs to be changed go directly into the economy. Socializing the losses means that the signals get muted, confused, and mangled and people in the future end up doing the wrong things as a result.

Unfortunately, at this point I think the choice is between people clearly and forthrightly losing massive portions of their retirement as visible losses, or people deceptively losing massive portions of their retirement as the bailout creates massive inflation and their retirement is inflated until it has a fairly similar amount of losses. Unfortunately, it is a feature for the rulers that the bailouts obscure the losses and dampen the correct apportionment of blame, even as it destroys the underlying economy. Giving people clear, correct targets for their rage, the same process of correct pain apportionment the economy needs to become healthy again, would point people at the "wrong" clear, correct targets, and the clear, correct targets are the ones deciding whether or not a bailout occurs. Not just the literal lawmakers nominally making the call, but the entire system that makes the decision.

So plan on bailouts.

foobarian 1 hour ago | parent

I remember the prevailing opinion in 2008 was that not bailing out would have caused much worse problems. We'll never know I guess

WarmWash 1 hour ago | parent

We do definitively know, with climate change level certainty (read: there is still the odd ball expert that dissents), that it absolutely needed to happen.

What is much less known, because it kinda kills the talking point, is that the "too big to fail" bailouts were fully repaid with interest, to the tune of an ~$17B profit.

The losses from the program were from the auto industry ($12B) and the struggling homeowners fund ($31B). Which is a bit ironic, because those two are probably the ones that would have the most public support.

59percentmore 1 hour ago | parent

What would have happened if we hadn't? What was the doomsday scenario? And, crucially, what would have happened next?

bennettnate5 1 hour ago | parent

I think the precedent folks were pointing to was the great depression--no strong signal of assurance to temper public concern means things like bank runs and sudden collapses of institutions that would have otherwise made it because of group fear. Not sure how accurate that comparison is though.

somenameforme 24 minutes ago | parent

Some countries like Iceland let their banks fail (in no small part because their total debt was something like 10x their gdp), and they even successfully prosecuted a number of executives. They got moderate slaps on the wrist but did serve some token time in prison as opposed to having to pay a ground-breaking fine of 5 minutes of revenue as is more typical. It wrecked their economy in the short-term but they were back to growth by 2011, and had a larger than ever economy by 2015.

But I think more than the one-off situation is also the precedent it sets. When you can bank on the government bailing you out (pun intended I guess?), it creates a perverse incentive of just trying to get as large as you possibly can, all foundation or principles absolutely be damned - because once you get big enough you win, even if you're the biggest loser ever. And I do think that's what we're probably seeing with LLM companies.

Not that LLM's a loser - it's a revolutionary tech and will only become more so. But multi trillion dollar valuations for a product that has viable open competitors already available and whose operating requirements continue to plummet and will almost certainly continue to plummet? This is extremely amusing, but absolutely batshit insane. It's like paying millions for a pretty flower because it's novel in spite of the fact that you know, and everyone else knows, that once people start planting them there will be endless amounts available for negligible cost.

59percentmore 1 hour ago | parent

Plan on them trying bailouts. Every inch of us should resist.

We've been living in an economy distorted by the forces that lead us to this point. We've been locked into the decisions necessary to keep things going as they have been, whether or not they make sense.

The correction that you're talking about frees us to actually make choices. Some of them will be tough choices, but we finally get to make them, with all of our resources and work ethic intact, which don't just disappear because a stock index craters.

If we want trains and local farms instead of data centers and new iPhones, we can actually make that choice, instead of being forced into the latter because every investment fund is pumping them to the point of being a foregone conclusion.

To borrow an aphorism: the bust is a feature, not a bug.

slowin 1 hour ago | parent

If they can't privatize the loses, they should definitely not be allowed to privatize the gains. AI should be a public utility and be required to open source their models.

bryanlarsen 2 hours ago | parent

Need to update the aphorism:

If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem. If you owe the bank $100 billion, that's country's problem.

etempleton 2 hours ago | parent

Fortunately, they do not owe the banks as much as they owe each other and private capital.

aeon_ai 2 hours ago | parent

I've got news for you on how the economy works.

yifanl 1 hour ago | parent

Well don't leave us hanging, what's the news?

totetsu 1 hour ago | parent

They borrow the banks money to owe to each other?

etempleton 1 hour ago | parent

Yes, but it appears that the banks are not over levered like they were during the housing crisis. They will take a hit, but presumably will not need bailing out.

ben_w 1 hour ago | parent

This was true last year, but it would be risky to assume it remains true from one week to the next.

The rate of growth in this sector is "1. move so fast legislators can't keep up; 2. keep going until you hit a limit, then find a way to hack around that limit; 3. GOTO 2".

hvb2 1 hour ago | parent

> Yes, but it appears that the banks are not over levered like they were during the housing crisis

Banks weren't over levered back then either because all the mortgages went straight into CDOs held by other people/institutions.

The problem was that nobody trusted each other because Lehman could just fail. So they stopped lending to each other (like the daily loans they give each other). Trust evaporated and the whole system stopped dead in its tracks.

Leverage is not the only thing that matters...

bryanlarsen 1 hour ago | parent

And the funds that were over-levered were just barely over-levered. One of the funds that failed had 97% coverage. But that's enough to trigger a run -- you pull your money out ASAP to ensure you're part of the 97%, not the 3%.

https://www.bloomberg.com/opinion/newsletters/2026-10-29/run...

gosub100 53 minutes ago | parent

I notice these comments everywhere now. It's some rhetorical sleigh of hand that the absence of a refutal leads to a false assumption that their claim is obvious and needs no support.

yifanl 40 minutes ago | parent

I mean, I've certainly used these cheap rhetorical tricks myself offhand, but I'd at least try to avoid using it when vagueposting something this out of pocket.

1718627440 17 minutes ago | parent

Not the person, but I think a corporation that hands out money that you then owe them, is called a bank.

cicko 1 hour ago | parent

Pyramid scheme?

mathgeek 1 hour ago | parent

You’re not wrong.

eloisius 1 hour ago | parent

If it’s the country’s problem, then nationalize them. Not loans, not bail outs. Confiscate and figure out how to wind them down in a way that benefits the taxpayers.

rtkwe 1 hour ago | parent

Didn't even have to wind them down to benefit in some cases. I can't remember if it was the automaker or some of the 08 bank bailouts where the stock the government took as part of the bailout turned a profit after a few years.

hluska 1 hour ago | parent

You’re likely thinking about TARP:

https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program

TARP delivered a $15.3B surplus on $426.4B invested for a roughly 3.5% return.

samudrijan 17 minutes ago | parent

And perpetuated the system. Iceland meanwhile let their banks fail,sent bankers to jail, took the medicine and came out stronger.

MonkeyClub 7 minutes ago | parent

Wild guess: I suppose in Iceland the banks weren’t buying the politicians.

CWuestefeld 1 hour ago | parent

If the gov't made bad decisions letting us get to some situation, it doesn't make sense to reward the government and give it even more authority.

That's got perverse consequences. Just like with the corporate leadership, you're encouraging bureaucrats to make bad decisions because (a) they don't have to answer for their bad decisions, and in fact (b) they'll get to expand their authority should their decisions go bad.

The corporate leadership that got us to the problem should suffer, but so should any bureaucrats who had a part it allowing it to happen.

consensus1 1 hour ago | parent

You have a point here. It doesn't make sense that a company should get to keep the upside while having downside protection from the government. The problem is that the government makes the biggest bloated legacy nightmare of a corporation look like a 10 person startup. Between the two options I would rather have a pile of my tax money set on fire once every decade decade or so.

krapp 48 minutes ago | parent

That would be socialism and socialism is bad.

howard941 32 minutes ago | parent

Liquidation is not socialism

vanuatu 28 minutes ago | parent

nationalization is likely on the horizon, but definitely not to wind them down (quite the opposite)

1718627440 19 minutes ago | parent

I am confused. In my country that is what a bailout means. How do you pay money to a company but not buy them? What is it that the state buys from the company, if not ownership, then? Or is it a gift? That would be insane.

clcaev 5 minutes ago | parent

I think the 2008 TARP program is instructive. Lots of loans to distressed banks and large companies.

https://projects.propublica.org/bailout/programs

While there were small business programs they were administered through banks, who generally did not pass along the generosity.

iAMkenough 1 hour ago | parent

Sucks that most of the country didn’t vote for the $100 billion, but will be left holding the bag. Are we witnessing the fall of an empire?

DFHippie 1 hour ago | parent

That's an evergreen template.

dingaling911 1 hour ago | parent

Trump admin, to their credit, seem to have somehow figured this out.

They bailed out Intel and the stock recovered.

Might do the same.

lemoncookiechip 1 hour ago | parent

Bad new for you, their stock fell -29% today, the largest collapse since the 70s. It's nearly back to last years' level.

dingaling911 1 hour ago | parent

It did the temporary job. INTC is doing the work. Things take time.

Larrikin 19 minutes ago | parent

So the bailout was a complete waste of money? Why couldn't they have done the work before and we just waited?

throw-qqqqq 4 minutes ago | parent

I think you may be confusing the (temporary) improved stock price with improved/recovered profitability?

Intel revenue is worse than 10 years ago. Their gross profits are 2/3 of what they were around 2012.

The temporary price hike was caused by a huge temporary jump in relative valuation (probably because the US Gov started subsidizing).

See:

- https://www.macrotrends.net/stocks/charts/INTC/intel/pe-rati...

- https://www.macrotrends.net/stocks/charts/INTC/intel/revenue

- https://www.macrotrends.net/stocks/charts/INTC/intel/gross-p...

Supermancho 1 hour ago | parent

> Trump admin, to their credit, seem to have somehow figured this out.

> They bailed out Intel and the stock recovered.

This is not demonstrated. What did the Trump admin "figure out"? Socializing private losses (especially if it's only temporary), is another problem, not a solution.

sjdh76 45 minutes ago | parent

If you print money, you are the bank. Tokens are the new currency.

woodpanel 2 hours ago | parent

> Privatize the losses

Isn't that what the IPOs are for?

tovej 2 hours ago | parent

The IPOs are for "socializing" the losses, in the sense that the losses are dumped on retail investors, who are the general populace. Especially if you consider big pension funds

Telemakhos 2 hours ago | parent

Nobody who has ever run a business or knows about how a business runs would think that any business "sits on piles of assets like dragons." Very little cash sits idle, usually for anticipated operational expenditures with a reserve for unanticipated expenditures; the rest is invested, loaned, spent on building the business, or returned to investors. If OpenAI is holding $25 billion in cash, it's because they anticipate spending that much in the near future, not because they're sleeping atop it in a mountain cave.

thesmtsolver2 1 hour ago | parent

Next you will be telling me the rich don’t have a vault of gold coins you can swim in like Scrooge McDuck!

4chandaily 1 hour ago | parent

I was so terribly sad to learn that gold is much more dense than a duck, and thus Scrooge would have certainly floated on top of his pool of coins. My childhood was ruined.

Now that I think about it, it would seem this may also apply to witches.

zardo 1 hour ago | parent

In this case, companies actually do have large inventories of GPUs they bought before they had datacenters to install them in.

Iolaum 1 hour ago | parent

He didn't say cash, he said assets.

Also funny enough - AAPL is siting on 62B$ cash according to google search.

deaton 1 hour ago | parent

AAPL has a history of sitting on massive quantities of cash tbh

braiamp 1 hour ago | parent

In this particular case and with these particular companies... yes, they were sitting in a hoard of cash like dragons. They literally didn't know what to do with it, so they gambled on The Next Big Thing™....

Either way, it's more efficient to give whatever money to bail out individuals/consumers than to bail out rent seeking organizations

d0liver 1 hour ago | parent

Right. Corporations own people, not cash.

theandrewbailey 1 hour ago | parent

Assets, not just cash. Though sometimes, they literally have stuff they can't use:

> Microsoft CEO says the company doesn't have enough electricity to install all the AI GPUs in its inventory

https://finance.yahoo.com/news/microsoft-ceo-says-company-do...

JumpCrisscross 1 hour ago | parent

> If they haven't saved any money, and can't bail themselves out, they deserve bankruptcy

Agree.

What we need is a revocation of the Exchange Stabilisation Fund [1] as well as hard limits on the Defense Production Act’s Title III [2] and whatever the fuck in the CHIPS Act let the President unilaterally invest taxpayer funds in Intel.

This announcement of a non-binding resolution does none of that. It’s pure puffery.

And in case anyone thinks this is hateful or harsh, remember: bankruptcy doesn’t mean we space laser these companies. Shareholders get wiped. Creditors take over. Services probably keep getting rendered, GPUs probably keep running.

[1] https://en.wikipedia.org/wiki/Exchange_Stabilization_Fund

[2] https://www.govinfo.gov/content/pkg/COMPS-8323/pdf/COMPS-832...

tinyplanets 1 hour ago | parent

"It's pure puffery"

How exactly are House Democrats supposed to revoke the Exchange Stabilization Fund or change the Defense Production Act when they don't have a majority in the House? All they can do is signal what they intend to do if they regain the majority.

JumpCrisscross 1 hour ago | parent

> How exactly are House Democrats supposed to revoke the Exchange Stabilization Fund or change the Defense Production Act when they don't have a majority in the House?

Introduce an actual bill. Draft and debate something specific so that when they are in power they don’t have to start from scratch.

Use procedure to try and bring it up for a vote. At least try to legislate.

Arodex 1 hour ago | parent

>At least try to legislate.

It is still "puffery" if they don't have the needed majority to pass it. I am sorry, I can see you try to find any excuse, purity test, "no true Scotsman" fallacy, to rationalize not voting for the Democrats, but you will have to if you want anything to happen.

roenxi 36 minutes ago | parent

It's difficult for a politician to do something that isn't political, so I think we can let them off the hook for making symbolic gestures.

However, putting legislation up for a vote is not puffery. Establishing what parties vote against and why is actually an important part of what the opposition does. Otherwise they may as well not turn up.

daishi55 14 minutes ago | parent

Haha nope. It’s the opposite actually. They need to run candidates willing to say things that I agree with in order for me to vote for them.

throwaway5752 53 minutes ago | parent

You're an example of what's wrong with the system, you hold Democrats to the standard of a functional political party, while the other party is openly corrupt with respect to this topic and hasn't even bother with "puffery" legislation even though they dominate every branch of government.

The other party in question is the problem, and you're nitpicking an utterly powerless minority party's efforts to make things better.

to the dead reply: "is currently the problem" then. The party alignments have completetly flipped in 150 years. Nothing is permanent, and I thought that didn't have to be explicitly stated. Since I was incorrect about that I'm talking about the current state of the world, with no naive attachement to a particular label.

newfriend 9 minutes ago | parent

Actually you're an example of what's wrong with the system.

My guys are the good guys! Your guys are corrupt, evil, etc!

miltonlost 10 minutes ago | parent

> Use procedure to try and bring it up for a vote. At least try to legislate.

They do introduce bills in committee. Which are shot down in committee by the instrangient Republicans that lead the committees refusing to compromise often before the bill can come to the full congress. You are asking Dems to do something they literally cannot do while minority party. You are asking Dems to do an impossible thing and then complaining they cannot.

> Introduce an actual bill. Draft and debate something specific so that when they are in power they don’t have to start from scratch.

You're also complainging about democrats not introducing bills... on a post from Democrats proposing bills (well, resolution. whatever, still not starting from scratch then)!!!! You're complaining about something that literally already exists! Stop being so blind.

iamnothere 5 minutes ago | parent

So try to pass it, let it fail, and then publish the bill text as an example of what you’ll pass when you win the election. Then when you win, actually pass the damn bill. “Promises kept.” It’s not rocket science.

runarberg 1 hour ago | parent

Everybody hates AI, even Republicans hate AI. Republican members of congress might not want to explain to their constituents why they are going to vote against an anti-bailout bill for AI, so some of them might opt to support such bill, fearing their constituents may vote them out of office.

chasd00 55 minutes ago | parent

> How exactly are House Democrats supposed to revoke the Exchange Stabilization Fund or change the Defense Production Act when they don't have a majority in the House?

They're going to have a majority in about 3 days. They won't have a veto proof majority but they will have a majority.

freeone3000 50 minutes ago | parent

Then we’ll see what they do in four days. This is indeed campaigning.

Matticus_Rex 49 minutes ago | parent

No, not until January

dylan604 46 minutes ago | parent

after many rounds of frivolous law suits if I'm reading the tea leaves correctly

dylan604 47 minutes ago | parent

without a veto proof majority, they might as well not be in the majority. Trump could become the most veto happy POTUS ever and stay his course. If they do not have a veto proof majority, they also won't have enough to convict on any potential impeachement. So all of this hope/prayer for a "blue wave" is not going to be worth much.

cmurf 29 minutes ago | parent

Impeachment requires a simple majority in the House.

Conviction requires 2/3rd of those present in the Senate.

There's no veto possible.The power is exclusive to the legislative branch, the other two branches have no say at all.

consensus1 1 hour ago | parent

We should have let the auto industry fail in 2008 too. The factories and IP still would be there for more innovative entrepreneurs to buy and make use of. Instead we have 3 legacy companies that can't even deliver an EV to compete with Tesla after 15 years of pretending to try.

AprilArcus 1 hour ago | parent

The factory equipment would've just been sold to foreign competitors in China and Mexico though.

t0mpr1c3 1 hour ago | parent

Disagree. The auto industry was not the cause of the great recession, and the money put into the auto manufacturers did help to remove excess capacity. Their subsequent failure to innovate is not Obama's fault.

peri-cl 1 hour ago | parent

> "they deserve bankruptcy"

Chapter 7, please! I would like them to *liquidate* Smaug's GPU hoard; and I would like them to do that all at once, in a swift and efficient fire sale.

the8472 1 hour ago | parent

A lot of those are datacenter GPU racks which will be difficult to operate for most people, even for smaller companies that don't have watercooling setups.

NortySpock 1 hour ago | parent

Sounds like a fun challenge with bragging rights if someone gets it working! Don't threaten me with a good time ;)

peri-cl 1 hour ago | parent

Sure, but reallocating those to their AI competitors would offset those competitors' demand for AI GPU's and HBM RAM. Which frees up the TSMC, Samsung, Micron fabs to shift back to consumer production. Displaced demand.

iugtmkbdfil834 1 hour ago | parent

can you imagine? gamers flush with all that fancy hardware?

nsagent 1 hour ago | parent

Likely with no place to run it. I considered an old (circa 2017) retired DGX-1 which has 8x V100 32GB GPUs as an alternative to an M5 Ultra Mac Studio. The problem is the power draw. The modern GPUs AI companies are sitting on draw vastly more power.

59percentmore 57 minutes ago | parent

I'd expect them to give "trusted partners" first dibs. You know, firms that can warehouse the chips and keep prices high. Gotta protect NVDA at all costs. I'd love to be proven wrong.

deaton 1 hour ago | parent

We can and should be the very very loud majority.

shafyy 1 hour ago | parent

The crazy thing is that government funded a lot of this hyper growth for these AI companies. Very similar to Boeing / McDonnel Douglas.

lazide 1 hour ago | parent

Sure, but they have a lot of money to buy me votes and new cars and stuff.

- your elected representatives

tonyrice 1 hour ago | parent

AMEN AMEN AMEN! This doesn't mean ai goes bust, this actually would force innovation even more. AI isn't going anywhere anytime soon. We have the CEO of OpenAI claiming that models running on consumer hardware is a waste of resources and encouraging that it should stay in big data centers that are extremely wasteful when it comes to resources. Most consumers couldn't afford to waste away their resources to run consumer models. I love technology. I have a deep-seated level of resentment of the difference in treatment these big corporations get vs the people.

Edit: Taking bailouts off the table forces discipline, it strips away the bloat and forces real efficiency.

Arodex 1 hour ago | parent

The "silent majority" doesn't exist if it doesn't vote. Democracy isn't Halloween, ghosts don't exist.

seydor 53 minutes ago | parent

But then USA loses to China, Communism will take over, moisturizer shortages etc. Signed, the noisy majority

Bender 39 minutes ago | parent

they deserve bankruptcy.

Indeed they may, but they will be taking a lot of people's 401k's with them. Does anyone here have a 401k and have they analyzed the portfolio to verify none of the assets are related to the AI companies? In some cases it will not be obvious.

If one owns a standard cap-weighted S&P 500 index fund or a default target-date fund in their 401k then about 30% to 40% of every dollar contributed goes directly to the dominant tech giants driving AI.

I am not a financial expert and this is not financial advice.

lopsotronic 25 minutes ago | parent

That's the scam, man. The managed funds are the marks in the room.

When I first heard the scheme as a kid[1] -- that my retirement depended on giving my money back to the owners, all in the hope that it will come back to me in fifty years -- my first thought was, "I'm never seeing that money". I signed for the matching contribution and not a cent more -- getting 2 bucks of Funny Money for each buck seemed like a decent gamble. As I got older I started thinking that the system must work, all the grown ups know what they're doing, "it's the responsible thing to do". Etc etc etc. Now, I'm coming back around to my teenage opinions: they're going to figure out a way to take every single cent of my money.

Shit like this makes people into goldbugs and ammo hoarders. Or worse.

[1] My generation had some of the last pension positions, and 401ks were fairly the new thing.

Bender 21 minutes ago | parent

That's the scam, man. The managed funds are the marks in the room.

You won't get any arguments from me. I have chased many 401k grifters and hawkers off corporate property. I'm just saying people may not realize that upwards of 30% to 40% of their portfolio may be impacted by a crash and maybe there is something they can do proactively (or not, I am no expert on this). It's just something to investigate, I think.

_verandaguy 21 minutes ago | parent

    > they will be taking a lot of people's 401k's with them
The US needs to stop allowing this kind of thing to happen, where the economy gets so hyper-concentrated in a few companies that they can hold the entire country's (and arguably much of the world's) retirement savings hostage.

We had that happen in the late 90s/early 2000s with Nortel. Before they collapsed (and infamously devastated their current and former employees' pensions in doing so), Nortel represented a THIRD of the TSX. The TSX responded by capping any individual stock at 10% of the exchange's overall value, with a forced rebalancing in the event that cap is struck.

At this point, that 10% is probably higher than it should be, since it doesn't account for entire extremely-well-funded sectors being caught up in a hype cycle like AI's, the sum of whose component stocks could easily exceed 10%.

Bender 18 minutes ago | parent

The US needs to stop allowing this kind of thing to happen

Agreed. I have no idea how to stop it. People push for legislation and then there is always some loophole that quietly appears.

dataviz1000 34 minutes ago | parent

> sitting on piles of assets like dragons

Dragons are famous for sitting on gold.

Today, approximately 7%–12% of gold is used for micro-plating connectors, contact pins, and circuitry in smartphones, computers, and GPS devices.

> 1. Total AWS Gold: 10,000,000 servers multiplied by 1.875 grams equals 18,750,000 grams (18,750 kg).

> 2. Bezos's Share: 18,750 kg multiplied by an 8.5% ownership stake equals 1,593.75 kg

1718627440 23 minutes ago | parent

I doubt bailout was originally introduced to help the companies. I think the point is rather that not bailing out has worse outcomes and higher costs for the general population than wasting public money. Of course the companies need then still to stop doing their harmful operations, otherwise you need to bail them out again and then the costs of bailing them out will eventually become higher.

The issue is that this gives perverse incentives for companies, unless you also have proper regulation, which you should have anyway. The issue is that you don't.

But in this case I agree with you, because in addition to the costs, there are also huge benefits for the general population to letting these companies fail. Both in actual behaviour and power right now, but also as a future incentive for all other companies.

zobzu 11 minutes ago | parent

we all know it's lip service anyway

wryoak 2 hours ago | parent

Gosh I really gotta get a real job again. The RLHF gig work has been great while I’ve been in school - flexibility, good pay - but I’ve known the whole time that it won’t last. Gig workers will be the last consideration when it all falls apart

Sol- 2 hours ago | parent

Is there any indication that such a bailout was even planned or is this just populist tilting at windmills?

apercu 2 hours ago | parent

The investment to date has been ridiculous and undisciplined. It’s very hard to understand the valuations of these companies. If this wasn’t an election year I think there would be more oversight and critical review. But we have a very unserious party in charge right now.

It’s good that it’s being discussed. We’re tired of the wealth class privatizing the profits and leaving us to cover the costs.

Forgeties79 2 hours ago | parent

Then the bill will never become relevant and it’ll just be a waste of time and you can laugh at it in hindsight. And I’m sure none of these companies will lobby against it, since it’s just tilting at windmills and won’t mean anything.

tt24 1 hour ago | parent

Oh I’m laughing at it now, no need to wait for hindsight

asjfhgw 2 hours ago | parent

David Sacks has been a bit sidelined by the regime, but he was the one lobbying for the bailout of Silicon Valley Bank (under the Democrats!).

So there will be a huge pressure. Trump Jr. and the Kushners are invested in all sorts of bubbly assets, too.

The Democrats should do this however, and if they win the midterms keep their promises for once and block everything. Then 2028 is easy.

buellerbueller 2 hours ago | parent

I agree with much of your sentiment, but if the lack of bailout (which let me reiterate, I agree with) leads to a recession, it will kill the D chances in 2028. They will apply this calculus to their political behavior, and (as is typical for the Ds) will do nothing.

Promises in the wind.

retwakm3 2 hours ago | parent

The Democrats I suspect are planning on doing the exact opposite unfortunately. They were very wimpy on the bubbly ai stuff under Biden, why would they change when they don't get punished from their own constituents for going against their promises. Same party apparatus as a whole that existed under Kamala. We need a Trump style clean out of the Democratic party because the brand is as bad as the Republican brand at this point. I can't with surity say that the Democrats are going to do anything to reign in big tech, all I can hope for is that they will be slightly better than trump or if not that, no worse.

AnimalMuppet 2 hours ago | parent

There are almost certainly bank execs who are looking at Anthropic's IPO and thinking "if it crashes, we'll get bailed out". Saying "no you won't" now, before the IPO, when it has a chance to affect peoples' behavior, is a worthwhile thing to do.

kccqzy 1 hour ago | parent

How? Since when do banks care about IPO crashes? A lot of IPOs crashed after listing; I can’t remember a single time when a bailout was needed after an IPO.

jelloroll42 2 hours ago | parent

It's just convention at this point in the 21st century. No indication of a plan is needed when it's the only outcome to be expected.

JumpCrisscross 2 hours ago | parent

It’s a resolution, so pure fluff. That said, a prohibition on bailing out this sector in particular might make it possible to claw back anything this regime illegally gives.

etempleton 2 hours ago | parent

It is preemptive. Everyone can see the bubble and these companies are barrelling forwarding anyway. It is reckless and irresponsible.

bluGill 1 hour ago | parent

I've seen lots of bubbles. I remember thinking Amazon was a bubble in the .com days...

iAMkenough 1 hour ago | parent

Companies themselves can’t be economic bubbles. Amazon survived the economic bubble it was in, but many others didn’t.

myersj 1 hour ago | parent

You mean the dot com bubble, which was in fact a major bubble that caused a lot of huge financial issues in the country? You'd think someone on a tech forum would have heard of it, but I suppose some of us would rather make asinine clapback comments than think about what we're saying.

bluGill 1 hour ago | parent

I mean Amazon. There were lots of companies part of the .com bubble that did fail. Amazon did not though.

retromagik 1 hour ago | parent

Individual companies are not bubbles

lelanthran 55 minutes ago | parent

What's the point of basing decisions on outliers?

etempleton 1 hour ago | parent

It was part of the bubble. Amazon's stock lost over 90% of it's value. The company survived, but many other companies did not. A bubble does not mean a company fails just that valuations are too high and that there will be a massive correction over a short period of time. Some companies fail, others survive.

retromagik 1 hour ago | parent

So if a few AI companies survive but most go bankrupt in the next 5 years, which is almost certainly what will happen, it will not have been a bubble?

SecretDreams 48 minutes ago | parent

It was a bubble.

Bubbles don't mean the tech won't one day be great and materialize into something great.

They mean there is a mismatch in valuations/equity/debt to revenue today, putting far too much emphasis far too quickly on potential revenue some time tomorrow.

Forgeties79 48 minutes ago | parent

And how many of their peers survived?

The vast majority of companies failed almost immediately.

scotty79 2 hours ago | parent

I have no idea who would they even bailout. Investors? Why? What for? What would that change?

Bailing out banks made some sense so that they couldn't operate. Without the bailout there would be no more banks and a hundred million of people left on the ice.

If you want to keep AI operating you can just (temporarily?) ban investors from tearing down the AI companies they invested in for parts. You could say they are important for national security or something. I'm sure they are already earning enough to keep the lights on. Just not enout to give investors payback for insate capital expediture to set up.

Such ban wolud the governement zero, especially if you write the law well enough, so that it can't be succesfully challenged in court.

MentalM 1 hour ago | parent

> Without the bailout there would be no more banks

> and a hundred million of people left on the ice

That is not true. There would be a lot of banks and people would have lost only part of their money.

kccqzy 1 hour ago | parent

Nope. The balance sheet of big tech companies are healthy enough not to need to bailout anyways. AI startups can of course fail.

jmull 1 hour ago | parent

It's not just populist tilting at windmills.

There's an existing concept of and precedent for, "Too big to fail." The wikipedia article gets the idea across [0].

This creates an implied "insurance" program, tilting the risk profile toward being aggressive. Taking a moon shot isn't so scary when you think the government will probably step in if it blows up bad enough.

This fluffy, political statement is a message: don't count on it.

Perhaps it will give investors/executives a few thoughts on preparing to deal with a potential blowup themselves?

[0] https://en.wikipedia.org/wiki/Too_big_to_fail

someguydave 1 hour ago | parent

It’s populism. The minute a big chunk of the voters face real pain you will hear cries for bailouts

SpicyLemonZest 1 hour ago | parent

For some reason* the rhetoric is focused on bank bailouts in 2008, but the more direct analogy is the auto bailouts in 2008, which weren't strictly necessary but did protect an industry many Americans felt attached to. I think it's reasonable to worry that the same thing could happen to AI companies.

* yes, I know what the reason is

tt24 1 hour ago | parent

The latter.

bongofizzbuzz 46 minutes ago | parent

Yes, it has been discussed a year ago in the Govt circles that AI will be bailed out.

https://youtu.be/FvBf9HBT_F8?t=1672

woodpanel 2 hours ago | parent

a) How courageous for them declaring wanting to ban something that isn't being proposed

b) if an AI bubble burst were to happen, the fallout would be severe, ie. hard to abstain for policy makers from giving the public ease of mind

c) All this proposal wants is to drive a wrench between the GOP and its new (?) populist voters, that don't want any favors given to any Big Tech oligarchs, regardless of it being AI or not.

d) this may work or not – neither party is going to abstain from bailing them out, anyways.

chasd00 1 hour ago | parent

Not sure why you're downvoted because you're right. If there wasn't a major election next week this would not even be happening. It's meaningless theatre to get the public cheering or jeering on their way to the polls.

In the 2008/2009 crisis the bailouts were approved by a red admin (Bush) and then the check signed, delivered hat in hand, by a blue admin (Obama). If they want a bailout they will get a bailout no matter which party is in charge.

alpha_squared 1 hour ago | parent

I seem to recall OpenAI's CFO inadvertently proposing a bailout about a year ago. I'm fairly confident that the industry has been considering the possibility of one since before that statement.

ineedaj0b 2 hours ago | parent

absolutely ZERO Ai companies need bailouts. this is complete theater.

if you are reading this, please do some research on how much money inference prints? its not wildly spoken about because people don’t yap about printing money.

“Oh but it’ll all come crashing down” - say you don’t work at a lab or know anyone at a lab.

My greater annoyance is HN becoming annoying political in the past few years. Sure, everything is political now but the moderation siloed these posts better. Maybe the user base is too old now. Fresh blood went to Discord or X.

bee_rider 2 hours ago | parent

I think the “it’ll come crashing down” argument comes from cheaper inference, not more expensive. The frontier labs have to pay for these massive training runs. If inference gets cheap enough that you can run it yourself, why run it on their side? Open weights are (much) less than a year behind.

etempleton 2 hours ago | parent

Please do some research on the other costs involved in AI. Not a single AI company is making any profit and realistically are not close. Training models costs billions of dollars. There is no moat for these companies. If an open model comes out tomorrow that is better than Claude what happens to Claude's 1.5 trillion dollar valuation? What happens if revenue does not grow as fast as anticipated when Anthropic alone has 750 billion dollars in obligations? How do they pay their bills? What happens then.

The only company making money are hardware manufacturers who are throwing logs on to keep the fire burning through direct capital investments in their customers. Without Nvidia some of these neoclouds would already have failed.

vehemenz 2 hours ago | parent

Projecting that none of these AI companies will demand bailouts after the bubble crash is wildly speculative in the other direction. This has nothing to do with politics.

armchairhacker 2 hours ago | parent

This doesn’t actually require anything like a law, it’s basically a verbal promise. Or am I misreading?

If AI companies were to go bankrupt, it’s possible they’d be nationalized. I don’t see any other feasible option besides that or a bailout (or one but it’s effectively the other, e.g. “nationalized” but the employees including leaders are the same, or bailed out but already subservient to the military). I think the best case is for the compute to be made effectively public: giving every citizen free access, since we’re paying taxes that prevent their bankruptcy.

sputknick 2 hours ago | parent

You are reading this exactly correct. It's the most government-coded kind of resolution: it sounds impressive, but means nothing. It is kinda nice to get that narrative out there though, we shouldn't bail out companies, we should let them fail and re-organize into companies that can work. "Bankrupt" doesn't necessarily have to mean you disappear and go away, it can mean you shuffle people and equipment around and get a new name and logo that makes more sense.

jd_hicks 1 hour ago | parent

Intuitively you would think that a law is not required to prevent this but you’d be wrong.

Check out this excellent article for more background: https://www.theatlantic.com/ideas/2026/10/bubble-bailout-tru...

bushido 2 hours ago | parent

A lot of comments read this is as fluff. And in some ways it is.

However, looking at the other side, I think what this might do is add some barrier or consideration when a bailout is considered.

The last time we did large scale bailouts (TARP[0], in 2008), It was rushed through and ratified in around two weeks following the sudden collapse of Lehman.

Any measures we can take to ensure that we don't fall into a situation where there is only one choice is sensible.

[0] https://home.treasury.gov/data/troubled-assets-relief-progra...

JumpCrisscross 1 hour ago | parent

> what this might do is add some barrier or consideration when a bailout is considered

It’s a resolution. Pure puffery. A serious effort would have involved floating a bill.

furytrader 1 hour ago | parent

Right before the Midterm elections, to show that they are "trying to do something".

tootie 57 minutes ago | parent

It's a signal to voters sure but it's also a signal to AI companies and investors to hedge their bets because there's not going to be a backstop if they come crying. That's not puffery, it's forward guidance.

ai-x 21 minutes ago | parent

There was never any backstop to equity investors at any time.

Even during GFC, equity investors were wiped out. Same with Silicon Valley Bank.

This trope that investors are bailed out is doing more harm than good. Because intervention and backstops actually helps the economy from not going into a death spiral that destroys the poor and middle class

myersj 1 hour ago | parent

> Any measures we can take to ensure that we don't fall into a situation where there is only one choice is sensible.

Amen. Prepare for a disaster tomorrow by planning for it today. The specific implementation might be mediocre, but we should be pushing for more, especially vis-a-vis pushing for anyone in the company who knowingly was involved in fraud to go to prison.

SpicyLemonZest 1 hour ago | parent

Treasury's summary is missing important pieces of the story. TARP failed its first vote in Congress, with opponents rightly pointing out that it was being rushed through and alternatives ought to be considered. But five days later, no concrete alternative had arisen, and it was clear to at least 60 reps who flipped their vote that something had to be done or the financial system was going to collapse.

jdlshore 1 hour ago | parent

It’s worth noting, though, that TARP succeeded in saving the US economy, which was much less affected by the crisis, and turned a profit for the US government.

modo_mario 1 hour ago | parent

>and turned a profit for the US government

Accounting for inflation and opportunity costs?

tootie 59 minutes ago | parent

There is really no comparison. Frozen credit markets would have dragged the global economy into depression. A crash in tech stocks will just cause investors to lose some wealth. Nobody depends on AI for core operations. Not yet at least.

Also, we did a long-term fix for a 2007-style crisis already with Dodd-Frank. Government can now invoke "orderly liquidation" before a crisis happens. When commercial banks failed a few years ago, FDIC solved it in a matter of weeks with no outlay of money from Congress.

triceratops 51 minutes ago | parent

I don't know about that. Consumer spending is being held up by stock market gains. And most of those gains are tech.

Forgeties79 50 minutes ago | parent

> A crash in tech stocks will just cause investors to lose some wealth.

The number of broader funds that are heavily invested in these companies as well, plus the unprecedented municipal, state, and national investment in data centers and the like, make this far more rippling than you think.

sgalbincea 23 minutes ago | parent

^^This. The ignorance of those who don't really understand is troubling.

dofm 18 minutes ago | parent

"Investors".

There is at least $1.5T in "dark" investment, in the SPVs building the actual data centres, off the major tech companies' books.

Enough that "investors" could mean almost anyone is exposed, internationally, through any number of funds and schemes.

anon291 2 hours ago | parent

I work on AI and I oppose a bailout for an ai bubble or whatever else.

If you're lucky enough to be in this field and you're not managing your finances, that's not the governments problem to fix

ETH_start 35 minutes ago | parent

Exactly. There's never an excuse for a bailout, for any industry.

delichon 1 hour ago | parent

Better to just oppose all bailouts for all sectors, always.

ajross 1 hour ago | parent

That's the logic that led to "Let's just let Lehman fail" and precipitated the 2008 crash. At scale, markets are not zero sum and failures sink all boats.

There are no good answers here. But pointing fingers and assigning blame is for sure one of the worst ways to do the analysis.

delichon 1 hour ago | parent

I don't doubt that there are possible bailouts with potential net positive outcomes, just that legislatures are capable of distinguishing them with an overall net positive outcome. Or that the benefits would outweigh the moral hazard of becoming reliant on them.

stego-tech 1 hour ago | parent

Lehman failed because of the 2008 crisis; its failure did not cause or precipitate it. Even Wikipedia lays it out in the opening summary (emphasis mine):

> “A liquidity crisis spread to global institutions by mid-2007 and climaxed with the bankruptcy of Lehman Brothers in September 2008…”

Letting Lehamn fail was the right call, because it allowed the Fed to bulldoze TARP through and save the wider economy as a result. If anything, I would say the subsequent bailouts were too generous in letting the companies retain controls and returns; the government should’ve kept a permanent, partially-nationalized control of those shares and added them to a sovereign wealth fund instead of selling them back on the market. “You fucked up so bad the entire system almost failed, so clearly you cannot be trusted to self-govern” should’ve been the unambiguous messaging from the Fed.

iugtmkbdfil834 1 hour ago | parent

Thank you. One would think that we are discussing ancient history, but the rewriting is just fascinating.

MentalM 1 hour ago | parent

> At scale, markets are not zero sum and failures sink all boats.

At scale, this boats sink somewhere, not disappeared into the void. And yeas, markets are not zero sum, amount of goods may increase and may decrease, and we should let agents that decrease them fail.

iugtmkbdfil834 1 hour ago | parent

Eh, no. The reality is that we are still paying for unresolved issues from 2008 crash. If anything, each time we kick the can, the worse the next iteration will be.

JumpCrisscross 1 hour ago | parent

> reality is that we are still paying for unresolved issues from 2008 crash

Because it was a mess. Compare it with the bank failures in 2023. Shareholders wiped out, multiple collapses, yet many people have forgotten it even happened.

benrutter 1 hour ago | parent

> There are no good answers here

I agree that there aren't any "silver bullets", but I think there are some decent pieces of regulation like, forced splits between investment banking and commercial banking, and heavy regulation of high risk markets, especially when it comes to inclusion in retirement funds etc.

Those aren't going to single-handedly solve the boom bust cycle, but they are amongst other similar policies, a bunch of levers than governments can use if they want to in order to shield the public from risks caused by financial speculation.

ferguess_k 1 hour ago | parent

Guess the big AI companies are not paying enough donation to them.

chollida1 1 hour ago | parent

The US media using the abbreviation Reps to mean representatives and Republicans at the same time is very confusing.

jrflo 1 hour ago | parent

Isn't the purpose of a bailout to stop a larger economic collapse rather than save a company?

bluGill 1 hour ago | parent

My contention is it doesn't stop a larger economic collapse - it just kicks it down the road and makes it grow even larger.

nisten 1 hour ago | parent

Soo does this mean RAM is gonna get cheaper or more expensive?

clbrmbr 1 hour ago | parent

isnt Anthropic already too-big-to-fail?

righthand 7 minutes ago | parent

I seem to get by fine on the daily without using any LLMs. They’re just-the-right-size-to-fail.

tangotaylor 1 hour ago | parent

> the billionaire AI boys who created the problem

Niki Parmar: am I a joke to you?

stego-tech 1 hour ago | parent

Fully support it. We’ve had a moral hazard in the USA for half a century with constant bailouts for speculation and gambling by businesses.

We must let them fail, no matter how many jobs it costs, no matter what the harm looks like in the short term, to send a clear and unambiguous signal to others that the government won’t backstop your shitty bets.

QuantumNoodle 1 hour ago | parent

Any pulse on how likely this is to pass or what hurdles it faces? Neews like these give me hope but often they are written before anything materializes.

boringg 1 hour ago | parent

How many people in this thread think that when the Dems win midterms the AI boom has a hard switch to a bust? I really feel like they will rapidly expedite the process instead of having air come out. I definitely didn't think the market would run up right to the date though.

iugtmkbdfil834 1 hour ago | parent

Not going to happen. Friendly reminder that when it came to money, politicians know exactly where the bread is buttered. When it came to Silicon Valley Bank bailout, Summers himself personally intervened[1]. Naturally, that is perfectly fine, but if one was to suggest the same for .. say.. students loan, immediately people will descend crying horrified cries of 'but but fiscal responsibility'.

[1]https://en.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Ban...

arn3n 1 hour ago | parent

For the people in the comments stating that this is just fluff for voters, that may be true. But consider that this memo has another target audience: Investors, Banks, and VCs.

I know that many people in those spaces are investing in AI precisely because they believe that should their AI investments fail, the industry will be bailed out by the federal government. Getting AI to be seen favorably by the administration and putting AI within civic government systems and inside defense contracts is a pretty big push towards that outcome.

talkingtab 1 hour ago | parent

The terminology is the issue - "A bailout".

But this is really socialism. It was not a bailout of banks, it was socialism for wealthy. Did the people lose their houses? Yes! What about the people who made obscene profits from lending money to people when they should not? Did they lose their money? No. We - the taxpayers, the ex home owners - gave them money.

What about socialism for the egg industry? When the centralized chicken stocks got a disease, we people who were paying usurious prices for food, also provided payments to ensure the wealthy owners did not suffer.

Socialism for the wealthy === good, socialism for the poor === evil. Hmmm. Oh no that can't be so lets call socialism for the rich "a bailout".

Since we force people on food stamps to work now, maybe with this "bailout" we should force those people to work minimum wage jobs?

anubistheta 9 minutes ago | parent

Nah, the wealthy would have been fine either way. Bailouts are done to placate the common voter and keep their lights on. The great depression didn't see the rich and powerful starving in most cases. The bailouts were loans, which returned slightly more than was borrowed.

Besides, business were net tax payers. It's perfectly reasonable we lend them back some of their own money so they can continue to pay taxes next year.

You end on petty vitriol, tsk tsk.

vlucas 1 hour ago | parent

Why does this even need legislation? Isn't this the default for all companies?

luckycharms810 1 hour ago | parent

I wonder how we'll look back at the last 30 years at this point:

- We have a total lack of oversight, transparency on private companies and their finances

- We have VCs that very much have the capability to pump up value in a way that is detached from reality.

- The language of startups discourages saying "We are trying to..", you just say "We are". This is a launch pad for a more general culture that lacks integrity.

- The founder has become more and more of an idolized archetype. Character flaws are accepted as part of "what it takes". We accept dishonest behavior as hacks and part of the hustle.

I think this is a risk that applies to the whole VC backed tech startup economy.

jgarzik 1 hour ago | parent

Yet more meaningless political theatre.

This generates ZERO passed bills, but lots of pre-election rage bait donations.

End-stage Alexis de Tocqueville material.

benrutter 1 hour ago | parent

This makes me think about a really interesting discussion on the awesome History of Business podcast with Adrian Wooldridge[0].

Adrian Wooldridge was essentially arguing that especially with the shift towards more privately owned companies (as in, non-publicly traded) that we've seen in the US, limited-liability companies give an incentive for a large amount of risk.

Essentially there's an asymmetry, because companies going bankrupt have no liability for debts, but they gain all profits if things go well. This has always encouraged risk (and often in a good way), but publicly traded companies are ultimately owned by retirement funds etc, which is not the case for private companies. So the risk of bankruptcy is still covered by the general public, but a lot less of the benefits are felt by the public.

I think we're in fairly uncharted waters for what this risk asymmetry means for the US and global economy. It doesn't sound like something that'll end well, I expect we'll see a lot of public fall out at some stage.

c54 59 minutes ago | parent

Do you have the link handy?

throwawayfifo 43 minutes ago | parent

>Essentially there's an asymmetry, because companies going bankrupt have no liability for debts

That's not what a limited-liability company is, not what it means. Anthropic and OpenAI are not LLCs.

qaq 58 minutes ago | parent

Have you guys actually tried getting allocation for frontier models on something like Bedrock as a smaller company? :) What bailout? Everyone is desperate for compute. Sure, some funds probably overextended themselves financing data center buildouts for smaller players. So what? Big Tech is critically short on compute, and not by a small margin. Google Cloud grew 100%+ in a single year, and if you actually listen to Sundar, they have at least 2x the demand they can currently serve.

andsoitis 57 minutes ago | parent

This ain’t rocket science. Capitalism demands that the investors carry the losses.

If the United States thinks it is a strategic investment of critical importance in the battle for the future with China, it should either nationalize the frontier labs OR build its own.

Magicrafter13 49 minutes ago | parent

So, they've discovered capitalism?

clutter55561 47 minutes ago | parent

Nonsense. The losses will be swallowed by the government, i.e. the tax payers, in the name of “National Interest”.

rfrm 23 minutes ago | parent

This is the dems version of “No more endless wars”

cmiles8 22 minutes ago | parent

It seem very unlikely AI will get a bailout. Politicians don’t want to touch that with a 100 ft pole. This is very different than 2008 in that regard.

This is going to be a “let it burn” scenario that will be absorbed by VCs and private credit markets.

Remember too though that even if a bailout does occur investors typically get wiped out. The companies live on but the investors and employee equity typically get reset to zero.

freakynit 18 minutes ago | parent

Is anyone noticing that from past few days, a certain level of "priming" has started with such articles appearing more and more?

asow92 16 minutes ago | parent

Excuse my ignorance, but aren't we screwed either way?