Starting to sound like subprime loans to me...

Subprime loans blew up because it was a bunch of opaque securities (mortgages sliced and diced together) that lenders thought were safe, but really weren't. Anthropic debt doesn't have this issue because everyone knows about anthopric and their business model.

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JumpCrisscross a day ago | parent | next [-]

> Subprime loans blew up because it was a bunch of opaque securities (mortgages sliced and diced together) that lenders thought were safe, but really weren't

Not quite. They blew up because the opacity meant nobody could verify that their paper was safe. That made them unsaleable. In the end, AAA-rated crisis-era paper all paid out and almost all of them paid out on schedule. But that doesn't help you if you need to fire sell them today.

Put more succinctly, a lot of people assumed that because Treasuries are highly rated and super liquid all highly-rated paper could be counted on to be liquid. Lenders thought the safe paper was liquid. In the end it was just safe.

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bushido a day ago | parent | prev [-]

As long as we aren't creating GPU-backed securities, we should be fine...oh wait https://nvidianews.nvidia.com/news/nvidia-partners-with-apol...

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gruez a day ago | parent [-]

GPU backed securities also don't have that issue because they're far more transparent. The problem with mortgage backed securities is that nobody has the time to inspect the credit worthiness of each mortgage in a MBS, each creditor has hidden correlated risk (eg. if the whole economy tanks), and on top of all that trenching obfuscates the risk. Lenders therefore had to take the credit ratings on face value. It's hard to make the mistake with datecenter/gpu/anthropic debt.

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bushido a day ago | parent [-]

> The problem with mortgage backed securities is that nobody has the time to inspect the credit worthiness of each mortgage in a MBS

Credit worthiness of each mortgage wasn't the issue with mortgage-backed securities. It was that low value mortgage-backed securities were repackaged into a basket with a mix of securities and given a higher credit rating than what Subprime would have gotten on their own.

This repackaging is absolutely going to happen again with GPUs. If there are GPUs of different generations within the same security, it's already happened.

	▲	JumpCrisscross a day ago \| parent [-]
		> low value mortgage-backed securities were repackaged into a basket with a mix of securities and given a higher credit rating than what Subprime would have gotten on their own This is fine. Tranching is fine. It works today, it worked in 2008 and it's based on the same mathematics as portfolio theory. (A physical representation would be a dam. You can turn volatile rivers into predictable flows if you hold a bunch in reserve and then let a small amount off the top.) Nobody knew that for certain, however, and that was a problem if you needed cash today but verifying the underlying mortgages would take months of work. (Some AAA-rated CDOs defaulted though they all paid out in the end. There has never been a AAA-rated CLO default since like the 1990s.)