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| ▲ | Aurornis 11 hours ago | parent | next [-] | | > The goal is to be too big to fail and get bailed out by US taxpayers I know this is the latest catastrophizion meme for AI companies, but what is it even supposed to mean? OpenAI failing wouldn’t mean AI disappears and all of their customers go bankrupt, too. It’s not like a bank. If OpenAI became insolvent or declared bankruptcy, their intellectual property wouldn’t disappear or become useless. Someone would purchase it and run it again under a new company. We also have multiple AI companies and switching costs are not that high for customers, although some adjustment is necessary when changing models. I don’t even know what people think this is supposed to mean. The US government gives them money for something to prevent them from filing for bankruptcy? The analogy to bank bailouts doesn’t hold. | | |
| ▲ | jordanb 7 hours ago | parent | next [-] | | I think what Altman is looking at is becoming so codependent with NVidia and Microsoft that they'll all go down together, meaning the US government would have to deal with the biggest software company and the biggest chip company both imploding together. If you look at the financial crisis, the US government decided to bail out AIG, after passing on Bear Sterns, because big banks like Goldman Sachs and Morgan Stanley (and even Jack Welch's General Electric) all had huge counterparty risk with AIG. | |
| ▲ | johnnyanmac 10 hours ago | parent | prev | next [-] | | >I know this is the latest catastrophizion meme for AI companies, but what is it even supposed to mean? Someone else put it succintly. "When A million dollar company fails, it's their problem. When a billion dollar company fails, it's our problem" In essence, there's so much investment in AI that it's a significant part of the US GDP. If AI falters, that is something that the entire stock market will feel, and by effect, all Americans. No matter how detached from tech they are. In other words, the potential for the another great depression. In that regard, the government wants to avoid that. So they will at least give a small bailout to lessen the crash. But more likely (as seen with the Great Financial Crisis), they will likely supply billions upon billions to prop up companies that by all business logic deserved to fail. Because the alternative would be too politically damaging to tolerate. ---- That's the theory. These all aren't certain and there are arguments to suggest that a crash in AI wouldn't be as bad as any of the aforementioned crashes. But that's what people mean by "become too big to fail and get bailed out". | | |
| ▲ | zozbot234 10 hours ago | parent | next [-] | | The closest analogy is the dot-com crash and there really wasn't any bailout for that, despite the short term GDP impact. And billion-dollar companies were involved back in the day too, like Apple, Microsoft, Amazon, Ebay etc. etc. | |
| ▲ | OGEnthusiast 10 hours ago | parent | prev [-] | | OpenAI isn't a publicly-traded company though, how will it going to zero affect the stock market? | | |
| ▲ | KaiserPro 2 hours ago | parent | next [-] | | Its about "animal spirits" The stock market isn't rational, its a room full of people talking loudly, and moving to various tables. All it takes is someone outside the room to shout something that triggers panic, and most of the people in the room will run for the exit. | |
| ▲ | johnnyanmac 9 hours ago | parent | prev [-] | | OpenAI collapses and MSFT tanks. Microsoft shareholders aren't quite that dumb. And that's ignoring the dominoes of other AI firms being pulled out of because OpenAi falters. | | |
| ▲ | OGEnthusiast 9 hours ago | parent [-] | | > Microsoft shareholders aren't quite that dumb. If they aren't dumb, why are they investing in MSFT now then if it's a bubble that's doomed to fail? And even in the worst case scenario, a 10-15% decline in the S&P 500 won't trigger the next Great Depression. (Keep in mind that we already had a ~20% drawdown in public equities during the interest rate hikes of 2022/2023 and the economy remained pretty robust throughout.) | | |
| ▲ | johnnyanmac 9 hours ago | parent [-] | | Like I said, they aren't "that" dumb. They are playing a risky game, but when they see the number go down rapidly they will pull. Which will make the line go down even faster. >And even in the worst case scenario, a 10-15% decline in the S&P 500 won't trigger the next Great Depression Only if you believe the 10% decline won't domino and that the S&P500 is secluded from the rest of the global economy. I wish I shared your optimism. > and the economy remained pretty robust throughout. Yeah and we voted the person who orchestrated that out. We don't have the money to pump trillions back in a 2nd time in such a short time. Something's gonna give, and soon. | | |
| ▲ | OGEnthusiast 9 hours ago | parent [-] | | > Only if you believe the 10% decline won't domino and that the S&P500 is secluded from the rest of the global economy. I wish I shared your optimism. So your hypothesis is that a 10% decline in the S&P 500 will trigger the next Great Depression, i.e. years of negative GDP growth and unemployment? I agree that it could cause a slight economic slowdown, but I don't think AI and tech stocks are a large enough part of the economy to cause a Great Depression-style catastrophe. | | |
| ▲ | samiv 24 minutes ago | parent | next [-] | | The problem is that the non AI economy is already in the toilet. The consumer and commodities markets are all flashing red. Consumer debt is all time high. Inflation is still punishing the bottom end of workers severely and the ACA cuts will cause a lot of financial stress (unless people of course discountinue their plans) An expected outcome from a AI blowout is the uncertainty and everyone holding onto their assets and credit recalls plus interest rate hikes. During the great depression it wasn't the stock market collapse that caused it as much as it was the credit crunch that followed. Prior to the blowout people literally bought stocks on credit. | |
| ▲ | johnnyanmac 8 hours ago | parent | prev [-] | | >So your hypothesis is that a 10% decline in the S&P 500 will trigger the next Great Depression, i.e. years of negative GDP growth and unemployment? Yup. I won't say it's the only factor, nor biggest. But I'm focusing on this topic and not 40+ years of government economic abandonment of the working class. It's the straw that will break the camel's back. |
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| ▲ | liamconnell 10 hours ago | parent | prev | next [-] | | > Someone would purchase it and run it again under a new company. That happened a long time ago! Microsoft already owns the model weights! | |
| ▲ | calvinmorrison 8 hours ago | parent | prev [-] | | > If OpenAI became insolvent or declared bankruptcy, their intellectual property wouldn’t disappear or become useless Yes but with all stock growth being in AI companies it would tank the market for one. Secondly, all of those dollars they are using are backed by creditors who would have a default. short of another TARP (likely IMO, the US NEEDS to keep pumping AI to compete with China) .... it could scare investors off too.. Plus with the growth in AI effecting the overall makeup of the stockmarket, something like this hurts every Americans 401k |
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| ▲ | senshan 12 hours ago | parent | prev | next [-] | | > It's mathematically impossible what OpenAI is promising Citation is needed | | |
| ▲ | testing22321 12 hours ago | parent [-] | | Don’t that have to make more money in the next 10 years than any company ever has… and that is just to break even. It’s going to crash, guaranteed | | |
| ▲ | senshan 12 hours ago | parent [-] | | It is the term "mathematically impossible" that caught my attention. Since it is about the future promise of OpenAI, one could debate the likelihood or "statistically improbable", but "mathematically impossible" implies some calculation, proof and certainty. Hence my curiosity. | | |
| ▲ | CharlieDigital 11 hours ago | parent [-] | | I've seen some calculation I think from an HSBC analyst that it would take a monthly subscription of $200/mo. from some large portion of the US population for some insane number of years to break even. | | |
| ▲ | Aurornis 11 hours ago | parent [-] | | > from some large portion of the US population What a silly calculation. OpenAI’s customer base is global. Using US population as the customer base is deliberately missing the big picture. The world population is more than 20X larger than the US population. It’s also obvious that they’re selling heavily to businesses, not consumers. It’s not reasonable to expect consumers to drive demand for these services. | | |
| ▲ | johnnyanmac 10 hours ago | parent | next [-] | | >OpenAI’s customer base is global. I'd be willing to bet that, like many US websites, OpenAI's users are at lest 60% American. Just because there's 20x more people out there doesn't mean they have the same exposure to American products. For instance, China is an obvious one. So that's 35%+ of the population already mostly out of consideration. >It’s also obvious that they’re selling heavily to businesses, not consumers. I don't think a few thousand companies can outspend 200m users paying $200 a month. I won't call it a "mathematical impossibility", but the math also isn't math-ing here. | | |
| ▲ | Marsymars 6 hours ago | parent [-] | | Even if you grant that OpenAI might be as successful as Apple at international expansion and support, that’s still only a non-US market about double the size of the US market. |
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| ▲ | consp 6 hours ago | parent | prev [-] | | > OpenAI’s customer base is global. Since when is English everyone's primary language? | | |
| ▲ | eisfresser 4 hours ago | parent [-] | | ChatGPT is totally fluid in German and French (i.e.), their market size is my no means limited to the anglosphere. |
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| ▲ | bloppe 11 hours ago | parent | prev | next [-] | | Bailing out OAI would be entirely unnecessary (crowded field) and political suicide (how many hundreds of billions that could have gone to health care instead?) If it happens in the next 3 years, tho, and Altman promises enough pork to the man, it could happen. | | |
| ▲ | johnnyanmac 10 hours ago | parent | next [-] | | This administration has "committed political suicide" dozens of times this year. What's one more to add to the pile? | |
| ▲ | jjulius 10 hours ago | parent | prev [-] | | >Bailing out OAI would be ... political suicide (how many hundreds of billions that could have gone to health care instead?) Not that I have an opinion one way or another regarding whether or not they'd be bailed out, but this particular argument doesn't really seem to fit the current political landscape. |
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| ▲ | throw-12-16 6 hours ago | parent | prev | next [-] | | Unlikely, Elon bought the presidency and owns a competitor. | |
| ▲ | doctorpangloss 12 hours ago | parent | prev [-] | | on the one hand, i understand you are making a stylized comment, on the other hand, as soon as i started writing something reasonable, i realized this is an "upvote lame catastrophizing takes about" (checking my notes) "some company" thread, which means reasonable stuff will get downvoted... for example, where is there actual scarcity in their product inputs? for example, will they really be paying retail prices to infrastructure providers forever? is that a valid forecast? many reasonable ways to look at this. even if i take your cynical stuff at 100% face value, the thing about bailouts is that they're more complicated than what you are saying, but your instinct is to say they're not complicated, "grooming" this and "cold war" that, because your goal is to concern troll, not advance this site's goal of curiosity... | | |
| ▲ | krupan 11 hours ago | parent [-] | | They've already spent so much money that even if they get any new hardware at a deep discount they will have a very hard time breaking even |
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