Breaking Point_ Tether_s Massive Gold Buying_ Japan Crisis _ AI Bubble COLLIDE _ Andy Schectman

I mean, I, I, I think I'm, I read the same article you did, pretty sure, and the references made to previous developments that would be very impactful for civilization, um, uh, for, for economies, uh, for industrialization, and the two that, that I would point to would be the railroad and the internet.

And the railroads, um, experience that exact same type of investment where it was kinda like buying the picks and the axe for the gold boom, where you invested massively in the lumber companies for the, for the tracks and, and the, uh, um, the steel companies for the tracks and, and, and massive, massive investment that didn't, wasn't justified ultimately by revenue.

And so these These companies would resort to borrowing money to pay the interest on the loans that they had already taken out.

Sounds familiar, doesn't it? Kind of sounds like the United States government and perhaps even some of these hyperscalers who are borrowing huge money, and now this money is rolling into higher interest rates.

And all of this is based on an assumption of, of revenue growth in a world or in an environment that is very, very fluid and is changing instantly.

Now you have China that is entering supposedly just as good or better technology at less cost, and that starts to, to impact.

And, and ultimately what happened in whether it be the railroad or, or even the Internet, is this massive expansion, and many, many companies went bank, uh, broke, and the banks that financed them did as well.

And that's really the, the crux of that article is that this is expanding too fast under assumptions that are not justifiable, and largely even electricity, that they don't have enough energy to do this, and the costs that are being, um, absorbed might not be justified by what the ultimate revenue is.

Now, you, you start... things get a little bit, again, connecting the dots, get a little bit more interesting.

And I didn't see this in, in that story, but I think about it, could it be that private equity has a lot to do as well with these types of investments? And we look to BlackRock and Blackstone, the two companies at the forefront of private equity, who had experienced gating and, and, well, redemption requests that were gated last year and got a lot of attention.

Do you think it's ironic or coincidental that the, the head exec or the CEO of private credit at both BlackRock and Blackstone resigned last week? Do they see something coming that they don't like? So yeah, I think any time in particular gets even more concerning to me, Don, again, when you see the largest percentage of, of the public investment ever in the stock market, mom and pop, ever, and the largest exposure to margin, um, debt, where you're borrowing money off of your, your account.

Got a million bucks, they give you half a million to buy more stock.

So you're levered, and then you're speculating on options, highest exposure ever.

What could possibly go wrong when the public is all in to the largest degree ever in equities, on leverage, and on speculation into ten stocks that are now experiencing these problems? And the FDIC came out and said, "We're concerned about private equity.

A-and really we're more concerned about the banks that have lent them money." And so you put all this together, um, could private equity-- or excuse me, could AI, and even by extension, private equity, um, be the spark that, that ignites this, this collapse of the AI bubble that the author is, is saying? And, you know, like, like, what, I think it was Warren Buffett or whoever said, you know, "When the, when the tide recedes, you see those that are swimming naked." And that's, in essence, what they're saying is that far more investment went into this than potentially revenue will ever justify, um, based upon assumptions that aren't correct, and even as far as electricity.

So yeah, it's, uh, it's an interesting read, and it's one that I think people should pay attention to because any time you go back through history and see some event that changes, you know, the path of, of the way things are done in, in the world, and the railroad did, the internet did, and this will, there will be a bubble, and it will create an environment where only the strongest survive.

Many won't, and we've seen it before, and to think it's different this time is silly.

Especially, it, it seems to be even more, um, uh, jammed in or, or concentrated, if you will, into one very, very scary small group of, of, um, investments that could have q-- uh, very, v- have corollary and systemic effects because of the build-out and the infrastructure.

And, uh, yeah, I, I think that some people should pay very close attention.

If nothing else, read that article.

Wanted to augment what you said because, uh, you've talked about the exposure, whether it's to margin or the stock market and, and options.

But on the other end of the spectrum, what many moms and pops believe is their most conservative position of all their assets is their home, their, their, the home that they're living in as their equity.

And yet Blackstone, which is one of these hyperscaler s- uh, financers that, that you're talking about, is one of the largest owners of residential real estate, and they've, they've already divested with some, some, uh, one point eight, uh, billion was it recently? Let me just see.

Uh, one point eight billion of senior housing offloaded and recent industrial asset sales driven by shifting market values.

So the bubble of everything includes some-- many moms and pops consider their largest asset is their home, and yet if Blackstone and others start dumping, and you've talked about this in the past, you could end up with a rush to exits.