Who Owns What, When It's All Debt?

Update: Thanks again to Steve in Manhattan for including this article at Crooks & Liars' Mike's Blog Round-Up! 

P.S. I am waiting at home this morning to get new toilets installed, so while I'm sitting here I'd like to promote my book Notice a Trend to help pay the bills uh encourage more man reading! And women reading! And sentient rock creatures who travel through space! And...

This is something Comrade Misfit posted over the weekend, and I wanted to delve into this nightmare a little more (by Victor Tangermann at Futurism):

AI companies are pouring untold billions of dollars into enormous data centers in their efforts to sustain increasingly complex and resource-intensive AI models.

It’s an extremely costly undertaking built on seemingly bottomless hype — and a mountain of debt. As Japanese financial newspaper Nikkei Asia found in a recent investigation, just five US tech giants — Alphabet, Microsoft, Amazon, Meta, and Oracle — are hiding an estimated $1.65 trillion in debt that doesn’t appear on balance sheets. That’s even more than the $1.35 trillion in debt the five companies officially reported in their financial data for the most recent quarter.

This is the sort of thing that screams FRAUD. And nobody's doing anything about it except let it pile up.

Meta alone has amassed around $420 billion in off-balance-sheet debt, according to Nikkei, highlighting how precarious the AI industry’s steep investment in AI has become, and inspiring comparisons to energy company Enron, which collapsed in spectacular fashion in 2001 because of similar debts hidden behind shell companies. Like Enron, they’re using special purpose vehicles, or off-balance sheet arrangements such as legally distinct subsidiaries, as a way to make their financial reporting look healthier than it actually is — often a glaring sign that something is deeply amiss behind the scenes...

That none of these accounting tricks - those shell companies or "special purpose vehicles" - were outlawed when we had the chance spells out just how broken our federal government is when policing the uber-rich megacorps that are "too big to fail."

For the love of God, in my own lifetime we've witnessed financial collapse - the bankrupting of Savings and Loans - after financial collapse - the era of Enron and other tech companies collapsing under their own greed - after financial collapse - the mortgage industry meltdown of 2007-08 that led to a near decade of unemployment and housing woes. That last one directly affected me and my poor parents when I lost my job in 2008, and spent four years looking for a job and unable to sell my home to afford relocating to places where jobs were available.

I've learned a lot from that last economic collapse. For starters, I learned that we shouldn't bail out the CEOs first, we should bail out their victims - us - first, and then send those goddamn bastards to jail for their incompetence and greed. 'Cause one of the things I guarantee you is that these tech companies are getting us to pay in some form or another to cover for the massive costs they're adding up to keep their bubbles afloat. We've seen what happens when those bubbles pop: us taxpayers foot the goddamn bills (again).

I've also come to wonder why these businesses are allowed to accrue so much debt in the first place. My basic understanding of economics tells me debt is bad, and too much of it is very bad. I understand that in the complexities of running a business, companies may borrow loans to cover for expenses today on an understanding that in the future they will have more money to be able to pay off such debts. That they can use those debts to obtain more loans and add more debt to where they have more debts than money on hand is where things start looking insane IMHO.

This is where something like regulations and laws should be in place demanding that businesses hold themselves accountable to some degree: To prevent them from building up too much debt in the first place. You know, some sort of debt cap that says "whoa there, pay this off first before you go putting yourselves into billions more in debt." Without those regulations in place - and we've seen the damage when we've deregulated financial systems like Savings and Loans and the securities/financial markets - those corporate idiots can't stop themselves, spiraling into an ongoing cycle of borrowing and debt all because they're hoping their ship of gold-pressed latinum reaches port that big tech breakthrough pays off.

And this begs the question "WHO is lending these greedheads more and more money to put them further into debt?" The large international banks, obviously, but you have to ask them "At what point do you call in those debts? At what point do you stop lending to these guys - these techbros addicted to their AI hopes - when it's clear they're not going to deliver on any profit?"

In what way is all of this debt any good? Who benefits from this?

Because debt leads to one thing: Control. Any person - or business - deep in debt to another person has to obey the creditor. Otherwise, you lose your business, your car, your home, your livelihood, your very identity.

Debt is another form of slavery.

And if the megacorps collapse under debt, that cascade of financial ruin spreads out: Every other person doing business with them loses money and goes into debt they can't pay, which spreads out even further. A lot of us fell into debt after the housing crisis almost 20 years ago (!), and a lot of us are still paying that off.

Who owns all that debt? We don't, and yet we're the ones who are going to get stuck paying for it (again).

Goddammit. This cycle of economic short-sightedness and greed needs to end.