The Subprime AI Crisis Is Here -- Ed Zitron

[erronis]

https://www.wheresyoured.at/the-subprime-ai-crisis-is-here/?ref=ed-zitrons-wheres-your-ed-at-newsletter

Another excellent (long and detailed) look at the similarities of this AI bubble and the subprime mortgage debacle.

In the first segment Ed lays out a very good and concise analysis and time-lines of what happened to get us to the 2008/2009 financial crisis. It really is worth reading his analysis since it debunks a lot of the reporting that laid the blame on families that were conned into buying inflated properties at unreal initial payments.

Quite a few pages (scrolls) in begins:

The Subprime AI Crisis Begins

In September 2024, I raised my first concerns about a Subprime AI Crisis:

I hypothesize a kind of subprime AI crisis is brewing, where almost the entire tech industry has bought in on a technology sold at a vastly-discounted rate, heavily-centralized and subsidized by big tech. At some point, the incredible, toxic burn-rate of generative AI is going to catch up with them, which in turn will lead to price increases, or companies releasing new products and features with wildly onerous rates -- like the egregious $2-a-conversation rate for Salesforce's "Agentforce" product -- that will make even stalwart enterprise customers with budget to burn unable to justify the expense.

This theory is important, and thus I'm going to give it a lot of time and love to break it down.

That starts with the parties involved, and how the economics involved get worse over time, returning to my theory of "AI's chain of pain, and the hierarchy of how the actual AI economy works.

How A Dollar Moves Through The AI Industry, And How Consumers Are Misled With Subsidies

The AI industry has done a great job in obfuscating exactly how brittle its economics really are, and as a result, I need to explain both how money is raised, money is deployed, and where the economics begin to break down.

. . .

What Is The Subprime AI Crisis?

The Subprime AI Crisis is what happens when somebody actually needs to start making money, or, put another way, stop losing quite so much, revealing how every link in the chain was funded based on questionable assumptions and deadly short-term thinking.

. . .

[usonian]

1. Raise billions/trillions, Fail, We the taxpayers bail you out. It's THE AMERICAN WAY!!!

Welfare and safety net for the billionaires.