Financial gravity will kill them when returns don't match stratospheric expectations.

I hope so too, but I think it's wishful thinking. Be prepared for the mother of all financial bailouts from the world governments to make sure that doesn't happen

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hollerith 4 hours ago | parent [-]

I can understand why banks got bailed out by the US gov in 2008, but why would a government feel the need to bail out AI labs?

I hope you are not going to say, "to avoid a global recession or depression caused by the popping of the AI bubble". That would be unnecessary and harmful (in its second-order effects), and governments do have advisors who are competent enough in economics to advise against such a move.

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graemep 17 minutes ago | parent | next [-]

Can you understand why banks were bailed out to the extent of protecting shareholders?

In the UK the first bank to go, Northern Rock, was simply taken over by the government. The shareholders got nothing. The bailout of Lloyds bank required the government taking a 40% stake. This is the way to go - if you need a bailout there should be a cost to the shareholders. otherwise you are just privatising profit and nationalising risk.

Not that UK regulation was great all round or the bailout perfect. It certainly failed to prevent the crisis which could have been done (no doubt the same applies in many countries). I looked at Northern Rock's accounts some time (an year, maybe?) before the crisis and was horrified by their reliance on interbank lending. it was obvious they could not cope with a rise in rates.

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nyargh 3 hours ago | parent | prev | next [-]

Bold of you to assume competency will overpower politics in our current era.

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hollerith 3 hours ago | parent [-]

So far, the country I know best, the US, has been competent enough to avoid massive corporate bailouts except the aforementioned banks in 2008 and GM. The bailout of GM was not motivated by a desire to avoid a recession when a bubble pops.

If the AI labs become very influential and powerful, Washington might nationalize them, but that would be very different from bailing them out because they have become unprofitable and cannot attract additional investment from the private sector.

	▲	Scottn1 an hour ago \| parent \| next [-]
		You forgot about the $9b bailout to Intel in August of 2025. With the recent OpenAi deal with the government I am certain they would throw tons of money at OpenAi if it got real bad. But with upcoming IPO where they are expected to be valued at $840b, we would be a LONG way from them needing a bailout. Well past this current admin.
	▲	nyargh 2 hours ago \| parent \| prev \| next [-]
		Despite politics, TARP was arguably an economic success story for the US treasury despite public sentiment. Whether it created moral hazard or not I suppoae is up for debate. GM on the other hand should have been left to die. However, I was obliquely referring to the open transactionality and patronage encouraged by the current administration, and how the AI / big tech players have, with few exceptions, gleefully joined in. Unless they run out of money for bribes, I think it's inevitable that current government will bend over backwards to prop them up.
	▲	graemep 15 minutes ago \| parent \| prev \| next [-]
		Do the examples of the banks and GM suggest that it is likely that AI companies will get a bailout to avoid the bubble popping? The reason the banks bailouts did not involve nationalisation is that the US is very reluctant to nationalise anything.
	▲	attila-lendvai an hour ago \| parent \| prev [-]
		a bailout is a popular way in which public funds lose their publicness.

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lukan 12 minutes ago | parent | prev [-]

"but why would a government feel the need to bail out AI labs"

Oh easy, with all the drones and sensors, AI means military power. Those who dare opposing the bailout of the local AI gigants want the other side to win.