>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.

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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".

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zozbot234 8 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.

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OGEnthusiast 8 hours ago | parent | prev [-]

OpenAI isn't a publicly-traded company though, how will it going to zero affect the stock market?

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KaiserPro 10 minutes 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.

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johnnyanmac 7 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.

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OGEnthusiast 7 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.)

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johnnyanmac 7 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.

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OGEnthusiast 7 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.

	▲	johnnyanmac 6 hours ago \| parent [-]
		>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.