Back to sudden debt.. lots and lots of zooming debt, and potentially in lots of trouble.
Open AI has borrowed $96 billion up to now, with major lenders being SoftBank, Oracle and a bunch of private debt funds. But, it turns out that Open AI is being rapidly overtaken by Google - not exactly a surprise, given Google’s massive data supremacy.
Taking a look at SoftBank and Oracle stocks… they are down sharply from their recent bubbly tops: SoftBank is down 30% and Oracle 45% while our blast-from-the-past 5 year CDS (Credit Default Swap) for Oracle has gone from 45 to 125 recently. Likewise, SoftBank CDS jumped from 200 to 300 in the last two months. Note that Oracle's debt is rated BBB and Softbank's BB+, not exactly stellar ratings.
And there is a lot of AI credit exposure to shadow banking out there, too. But just because it’s in the shadows doesn’t mean the “real” banking world is immune. In the end, all banking is connected, one way or another.
Great to read you again Hells! Any opinion on the spectacular rise in Silver so far this year?
ReplyDeleteHello C., thanks! Honestly, I know almost nothing about silver or any other precious metal market.
DeleteI think it's got all to do with dollar debasement. Silver is up more than 100% ytd.
DeleteHi Hell,
ReplyDeleteI have a question that has been bothering me. I heard that US banks can treat treasuries as reserves, like cash under capital requirements. If that was so, I would imagine every bank would hold treasuries rather than cash. However, this would make the bank very vulnerable to bank runs. It seems like a rule of madness. I thought the whole idea of regulating banks was to ensure they had enough cash. How can we legalize their not possessing cash?
Is this really true? (Gemini says yes.) And if so, how does it make sense?