Zitron: The Subprime Datacenter Crisis

Summary

Thanks for reading this week’s free Where’s Your Ed At newsletter. Friday’s premium newsletter will ask the simple question: Is Oracle dying? It’s been one year since I launched the premium newsletter, and I’ve decided to extend the discount on annual subscriptions. Between now and 12AM ET, July 26, you can get a permanent annual rate of just $60— a $10 discount on the usual price of $70 — for life. Click here for the offer.In addition to getting access to the entire back catalog of premium posts, you’ll also receive one additional post each week — usually anywhere between 10,000 and 20,000 words — covering the most pressing topics in the AI bubble — the best value in tech analysis. Highlights include the Hater's Guide To The Memory Crisis, a guide to how AI made everything more expensive, How OpenAI Kills Oracle (which pairs nicely with the Hater's Guide To Oracle), The Hater's Guide To NVIDIA, The Hater's Guides To Private Credit and Private Equity, and how the entire AI Compute Demand Story Is A Lie.Soundtrack: Dillinger Escape Plan — Black Bubblegum (2007)In The Big Short, Mark Baum shook with anger as a CDO manager told him that the market for insuring mortgage bonds was about 20 times larger than the mortgage bond market, realizing in real-time that speculation driven by greed and hype had set up a massive systemic weakness under everybody’s noses. To get specific, Baum (played by Steve Carell) is giving a short, dramatic summary of a much greater problem — that there were trillions of dollars of synthetic collateralized debt obligations (effectively bets on whether somebody else’s bucket of mortgages (well, mortgage bonds) will actually pay up) that allowed multiple people to bet on the same mortgages again and again, meaning that once said mortgages went belly-up, the carnage would be widespread and hard to contain. This became even more chaotic when it became clear that the same mortgage bonds were attached to many different CDOs — one study found that 5500...