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.

Data Dangers

There's a thing happening the past few years of the tech companies rushing around trying to build data centers everywhere. Normally, a data center is a building - oft-times a warehouse - where companies can maintain their servers, networks, and other business functions.

Thing is, most of these newer data centers are built to handle artificial intelligence (AI), which requires more processing speed and power that demands more electricity - and water for coolant - to where the local communities are shoved out of their own access to such resources. These data centers also take up more land than ever before, squeezing out communities looking to expand housing, maintain farmland, or protect fragile ecosystems.

It's a problem that's literally developing in my back yard, as there's a corporation trying to build a large data center in nearby Fort Meade where the city council approved a deal in spite of the large and angry turnout of locals who opposed it (via Chad Mills at ABC Channel 28):

The Fort Meade City Commission unanimously approved a controversial development agreement Tuesday night, which advances a massive data center proposal that has drawn weeks of concern from neighbors, especially over water use and the project’s long-term impact on the city.

The vote clears a major hurdle for Stonebridge’s proposed data center campus, planned for more than 1,300 acres northwest of downtown. The project calls for up to 4.4 million square feet of development and, if ultimately built out, could become one of the largest data center campuses of its kind in Florida.

Tuesday’s meeting stretched for hours, with many in the crowd speaking in opposition before commissioners cast their votes.

Mayor Jaret Landon Williams told the crowd the city was not deciding whether a data center could be built on the site. He described Tuesday’s vote as approval of the development agreement tied to a project that had already won land use and zoning approvals during a meeting last June...

What I can tell you about Fort Meade is that it's a small community in a very rural part of the county, where most of the surrounding lakes are carved-out shallow remnants of where phosphate mining took place, meaning there's not a lot of water resources to rely on. Stonebridge's people were claiming they'll only take up 50,000 gallons a day for "potable" use only, but that's still an insane amount of consumption (and I don't believe them when they're claiming they will recycle water coolant: for what I know, data centers evaporate every last drop). 

Internet connectivity out there is meager at best, begging the question how well that AI data center can reach the web. And the electric grid out that way arguably can't handle an energy hog of that scale. They're going to have to add more power stations (or do something like build a solar panel farm to support it). It's like the only reason the Stonebridge corporation wants to build out there is because there's not a lot of residents who could complain when things go bad.

If you read Mills' article above, you'll see photos of the city hall turnout by locals to where the room was packed and standing room only: I've rarely seen a turnout for local issues like that before. It should have been a warning to the city council, but they ignored it as well as ignoring the evidence that a lot of Americans across the nation hate the spread of data centers (via Jeffrey M. Jones at the Gallup news site):

Seven in 10 Americans oppose constructing data centers for artificial intelligence in their local area, including nearly half, 48%, who are strongly opposed. Barely a quarter favor these projects, with 7% strongly in favor.

These results, from a March 2-18 Gallup survey, represent the first time Gallup has asked about data center construction, a topic that has met fierce opposition from local residents in many parts of the country. These data centers house computing equipment that helps power AI technology used by businesses, universities and other institutions. The centers cover large areas of land, require extensive amounts of electricity to operate and need substantial water to cool the equipment, raising concerns about their impact on the environment and local electric bills...

The March survey asked people to rate their level of concern about the environmental impact of AI data centers. Forty-six percent say they worry a great deal and 24% a fair amount, largely mirroring the degrees of opposition to data center construction.

To gain a deeper understanding of people’s reasons for favoring or opposing data center construction in their area, Gallup asked an open-ended question on an April web survey using the Gallup Panel. Americans who favor the building of a data center in their area mostly cite the potential economic benefits. Opponents of data centers have more varied reasons for their position, but they focus mostly on environmental concerns.

Half of opponents mention data centers’ excessive use of resources, including 18% each mentioning their use of water and energy. Sixteen percent mention a related environmental concern of pollution, including noise pollution and air and water pollution...

Most of the remaining opposition stems from general or specific concerns about artificial intelligence.

Speaking of, the growing disdain towards AI especially as the "techbro" elites push the technology is growing louder, even at college graduation ceremonies (from Mirna Alsharif and Austin Mullen at NBC News):

Former Google CEO Eric Schmidt was booed multiple times Friday while discussing artificial intelligence during a commencement speech at the University of Arizona.

Schmidt, who led Google for a decade, opened his remarks by reflecting on his own student years and the rise of the computer, — a device named Time magazine’s “Person of the Year” in 1982. He traced its evolution into the laptop and smartphone and its proliferation through the internet and social media...

Schmidt then drew a parallel between artificial intelligence and the transformative impact of the computer — and was immediately met with boos.

“I know what many of you are feeling about that. I can hear you,” Schmidt said, addressing the crowd as many continued to boo him. “There is a fear ... there is a fear in your generation that the future has already been written, that the machines are coming, that the jobs are evaporating, that the climate is breaking, that politics is fractured, and that you are inheriting a mess that you did not create, and I understand that fear.”

No, Schmidt, I don't think you understood that fear. It's not so much fear about losing jobs as it is fear of drowning in slop.

The disdain towards AI isn't entirely built on hostility towards technology overall: nearly everyone accepts the usefulness of things like smartphones and computers. Most of the ire is coming from getting overwhelmed - having it shoved almost literally down our throats - by high-tech oligarchs openly desperate to get people to buy their latest shiny toy that doesn't even work well.

I wrote about Artificial Intelligence over at my librarian blog last year, as the use of AI in research and document creation is showing up more in my profession:

This is a serious problem facing librarians and the overall reference/research profession. As a reference librarian it is (maybe was now) my job to ensure the proper information got to the people asking for it, that the materials were well-vetted, fact-checked, and proven. I was in a lot of trouble if I gave people the wrong info.

Now were we are with AI as a research "tool" except that people are expecting it to be 100 percent accurate; when AI still has problems seeing beyond the poor data getting uploaded, or understanding that the algorithms that produced those results might have been in error. It doesn't help if a patron's existing bias blinds them to the factual information that does come up: they'll take the bad info if it fits their world-view (even if it kills them).

Nothing since then has changed: AI is still faulty, still creating fake data, still untrustworthy, still a major health risk. And yet we are all getting AI shoved into our daily lives - in our browsers, our email services, even house appliances - when we didn't ask or even need them.

We're all in danger with this rush to an AI future that doesn't even look like it will work as promised.

Gods - or else Tech Support - help us.