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AI Companies Are Trying to Hide a Staggering Amount of Debt

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Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#381

Post by parpfish »

Terr_ wrote: post #344
parpfish wrote: post #336

Earlier quoted context omitted.

it's also why you shouldn't hold equity in your own company any longer than necessary (e.g., an apple employee shouldn't tie up the majority of their networth in apple stock).

My go-to example is always Enron, and the impact on employees whose retirement funds were in their own too-awesome-to-fail employer. Oh, sure, it's way worse because of the fraud-angle, but even if it had just been a more honest kind of mania, the arrangement was reckless and bad.

stock options/rsus are a great example of some sort of cognitive bias (maybe it's the endowment effect?).

give somebody $1000 worth of shares in their company, and a lot of folks will hang on to them. but if you gave them $1000 cash to invest, they almost certainly would not choose to dump all of that money into their own company.

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#383

Post by DenisM »

TacticalCoder wrote: post #172
DenisM wrote: post #113

Earlier quoted context omitted.

This media frenzy can go on forever tho. A Bear Sterns moment would be more solid. Oracle might ge the first to collapse if things go south, so we might be fine until then(?).

> Oracle might ge the first to collapse if things go south ... Truth be told ORCL already kinda went south: they're down 65%, at $120, compared to their all-time high.

Not quite a Bear Sterns scale event.

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#384

Post by kipchak »

riffraff wrote: post #348
kipchak wrote: post #125

Earlier quoted context omitted.

Regarding unprecedented concentration, wasn't the nifty fifty era comparable for the top 10, about 40%?

I frankly don't know, the "unprecedented" is something I read in articles but haven't actually investigated.

Looking at for example 1965, the top 10 of the S&P500 were, rounded, ATT 9%, GM 7%, Exxon (4%) IBM (4%) DuPont (3%) Texaco (3%) Sears (3%) GE 2%, Kodak 2%, Gulf 1%, for a total of 38%.

This is pretty close to current concentration, but the current top 10% is basically all technology except for Eli Lily at 1.5%, so in that sense it's arguably unprecedented.

There's a good chart here on page 5 of top 10 weights over time, and on 6 of how the 1965 top 10 fared to 2025.

https://corporate.vanguard.com/content/dam/corp/research/pdf...

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#385

Post by Terr_ »

parpfish wrote: post #381
Terr_ wrote: post #344

Earlier quoted context omitted.

My go-to example is always Enron, and the impact on employees whose retirement funds were in their own too-awesome-to-fail employer. Oh, sure, it's way worse because of the fraud-angle, but even if it had just been a more honest kind of mania, the arrangement was reckless and bad.

stock options/rsus are a great example of some sort of cognitive bias (maybe it's the endowment effect?). give somebody $1000 worth of shares in their company, and a lot of folks will hang on to them. but if you gave them $1000 cash to invest, they almost certainly would not choose to dump all of that money into their own company.

Tax-law also makes is sticky: StockX -> Money -> StockY means a portion of is lost as capital-gains tax on the money step. StockY might be better... but is it something that will perform better-enough to be worth the switching costs? (At this point logarithms and spreadsheets start getting involved.)

In contrast, starting with Money and then choosing between StockX or StockY is an easier choice.

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#386

Post by DangitBobby »

waterTanuki wrote: post #312
DangitBobby wrote: post #283

Earlier quoted context omitted.

I think your analysis assumes current closed SOTA models have no moat, which isn't a given considered the protectionism the Trump administration is already considering for US AI firms.

It is a given. Unless the Trump admin figures out how to ban 1s and 0s, you can't stop Chinese labs from open sourcing their models. They can certainly ban new providers from using the Chinese models, but they can't ban Canadian ones, European ones, other Asian countries etc. from setting up provider proxies and bypassing those rules. Then what, great firewall of USA? Block off all internet traffic to other countries…

Yes, banning 1s and 0s is completely impossible and unprecedented /s. I wouldn't choose either as a default until the dust settles. Either way, I wanted to point out the unstated assumption. Whether you personally believe it's a foregone conclusion or not, it's an essential part of the logic chain that not everyone will agree to.

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#387

Post by HDThoreaun »

HDBaseT wrote: post #291
HDThoreaun wrote: post #231

Earlier quoted context omitted.

Meta makes $60 billion profit a year and is still crazy bloated. $420 billion in debt legitimately is not an issue for them. The only companies with actual problems are oracle and spacex

Meta making 60B a year doesn't make this any less scary. If Meta put every cent towards their debt, it would take at least 6 years, assuming 0 interest and 0 new debt. The interest alone in the next 5-10 years likely would push it close to 1T debt. How on earth are they meant to pay for this?

Theyre gonna pay for it over the course of a decade. Meta revenue is still increasing 10% every year, a $50 billion lease payment on datacenters that are only worth $10 billion is annoying but they can handle it. Also this isnt actually debt, there is no interest. Its commitments theyve made to lease datacenters. A lot of the money here is a $10 billion dollar payment they owe a decade from now.

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#388

Post by alex43578 »

niemandhier wrote: post #364
alex43578 wrote: post #353

Earlier quoted context omitted.

>Your error here, or the missing piece if we're generous, is what people are spending money on. Health care is astronomically more expensive here. Schooling isn't free after high school. Day care isn't free. Hell, even property taxes are simply 'not a thing' in France or the UK, where the taxes and Council Tax, respectively, are a tiny fraction of what Americans pay in property taxes ---- which, of course, pay for th…

I took the liberty of computing my and my wife’s effective income tax burden: 24% We are both German and in the 92nd percentile of the income distribution.

I’m assuming you mean you’re in the top 8 percent of income distribution? Ie about 90,000 euros?

If so, by my rough math, you’re paying about 25% more in taxes than an equivalent American couple based on PPP. That American couple would have about $30K USD/26K Euro more in disposable income, would likely have good quality health insurance paid for by their job, be eligible for $3K to $4K in social security retirement income per month, and be able to individually contribute to tax free retirement accounts, tax free college funds for their children, etc.

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#389

Post by mancerayder »

alex43578 wrote: post #388
niemandhier wrote: post #364

Earlier quoted context omitted.

I took the liberty of computing my and my wife’s effective income tax burden: 24% We are both German and in the 92nd percentile of the income distribution.

I’m assuming you mean you’re in the top 8 percent of income distribution? Ie about 90,000 euros? If so, by my rough math, you’re paying about 25% more in taxes than an equivalent American couple based on PPP. That American couple would have about $30K USD/26K Euro more in disposable income, would likely have good quality health insurance paid for by their job, be eligible for $3K to $4K in social security retirement…

That's incredibly misleading. For a high salary, this American couple you mentioned, are probably living in California or New York or New Jersey or another high tax state.

Now redo the math.

I and most people in my peer group pay over 40 percent of income in taxes, and that's NOT including property taxes, which are much, much higher than in Europe. Some much more than that - like triple (city, state and federal).

State taxes were completely ignored from your math.

This message, and the message before it which I am at pains to rebut much of, contains a lot of misleading cherry-picking.

And you compared European universities to a two year county college degree? Healthcare costs were also greatly glossed over. I'm hoping someone else is triggered but if not I'll be forced to step in and correct this stuff.

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#390

Post by [deleted] »

Retric wrote: post #250
smallmancontrov wrote: post #227

Earlier quoted context omitted.

The tax advantages of being forced to pay ordinary income rates on your distributions as compared to long term capital gains (which are low, capped, can be exercised before a tax hike, and avoided entirely if you just need collateral)?

401k reduces your taxable income when depositing money, this is more tax efficient than paying normal income taxes and then also paying capital gains. 401k lets you rebalance a portfolio with zero tax implications. The downsides are generally high fees and a 10% penalty for early withdrawal which makes them surprisingly bad for young people. They tend to start in lower tax brackets, have fewer reserves when unemploye…

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