[dragontamer]

I thought Ed Zitrons argument was just corroborated by Nikkei last Friday with the new report that 1.6 Trillion in SPVs accounts for off-books debt, on top of the $1.4 Trillion of on-books debt that's in these AI companies?

The main argument of Ed Zitron is just that. Huge huge amounts of debt that's due "soonish". Every SPV is different but we are fast approaching the point where this all starts to become real.

Now I dunno why Ed Zitron feels the need to write 10,000++++ word articles that only says "more leverage than people expect", but that's really the crux of things.

[tptacek]

If that's all Zitron wrote, I don't think he'd be as polarizing (or as dunked on). But he goes way, way past that.

[dragontamer]

It all comes down to the fact that Zitron thinks these AI companies are over levered and have significant chances of collapsing industry wide.

Yeah he uses more words to say it and bad arguments as part of it. But so did Galileo's "The tides prove that the Earth is moving around the sun" argument. Some arguments are bad, even if the overall point was correct.

I think given the new Nikkei report from last week, we are seeing more and more of Ed Zitrons arguments bear fruit, after years (literally) of him calling wolf.

It all is crazy talk until real numbers come out and prove him correct. But it seems to take a long time for those numbers to materialize.

[tptacek]

He doesn't like or believe in the economics of the frontier labs and then works backwards from that, which takes him to some very strange places.

[dragontamer]

And I'm sure Galileo didn't like the idea of geocentrinism either for irrational reasons. Seriously, good enough telescopes havent been made yet and he's all confident etc. etc.

But Galileo was still had a useful framework for his criticisms despite all of his faults.

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I see Ed Zitron in virtually the same spot. Especially now that the SPVs thing is publicly confirmed by 3rd parties. I agree he made a bunch of shitty arguments over the years but Ed Zitron has seemingly stumbled upon something true and worth investigating now

[keeda]

The SPV thing has been known for months though; here's Matt Levine talking about it in his inimitable way last October: https://www.bloomberg.com/opinion/newsletters/2025-10-29/put... (https://archive.md/A40Fv)

Maybe what's become more public is the scale of these SPVs, but Matt Levine's writing makes it seem like a sensible thing to do given the $$$ amounts involved.

[dragontamer]

Matt Levine doesn't talk about what's good in finance. Matt Levine talks about what's bad in finance. Very consistently.

If you think that Matt Levine is making something sound sensible, you probably are falling for his dry sense of ironic writing.

[tptacek]

I don't have a direct opinion about Zitron's economic takes. I don't have a stake in that argument, I don't do financial planning for inference providers or training, I'm open to a variety of arguments, in either direction, about viability.

But I have direct subject-matter expertise with software engineering, and too much of what Zitron has to say about AI-mediated software development is clownish. Not wrong (everyone's wrong all the time), but literally risible. I can't get past that.

My thing is: there are smart people doing analysis with skeptical takes. Zitron gets cited because he has a business engine going revving people up and arming AI skeptics with (what I believe to be) Gish Gallup takes. It's profitable for him, and I don't begrudge him, but when people I otherwise respect cite Zitron it makes me sad: Zitron is going to make fools out of them. Cite better skeptics!

[dragontamer]

For all of Zitrons faults, he has workable numbers that a can be used and cited in arguments.

[ghjkghjkghj]

I don't understand how that affects what he has written here? How does his data not make sense?