I read this Substack column last week comparing the timing of subprime resets in 2006-08 to the payments that the AI companies will soon have to make for data centers as they open. (Sorry, I would credit the author, but I don’t know who Mr. or Ms. Groundbreaker is.) Most data centers are being constructed with contracts with the AI producers where they first start having to pay lease obligations when the data centers become operational.

Anyhow, I was first taken by the argument, which is essentially that the timing of the collapse of the housing bubble was an entirely predictable event, because we knew that the teaser rates on hundreds of billions of dollars in subprime loans were due to reset to much higher rates starting in 2006, with the volume rising in 2007 and 2008. Since millions of homeowners would be unable to pay the higher reset rate, their mortgages would soon go into delinquency and default. The column sees this as parallel to the trillions of dollars of lease obligations that the AI companies will have to start paying as more data centers start operating in 2027 and 2028.

That originally struck me as a neat parallel, but then I remembered a bit more of the housing bubble history. It’s true that millions of people with subprime mortgages hit a wall in 2007-08 when their teaser rates reset to much higher rates, but that was not a wall that first got erected in 2006.

There were hundreds of billions of subprime mortgages with teaser rates issued in 2004 and 2005. If someone had constructed this graph in either of those years, we would have seen a reset wall in 2005 or 2006. It’s true that the wall would have been somewhat smaller in those years. There were fewer subprime loans, and their value was less, since house prices rose rapidly in those years, but the graphs for both 2004 and 2005 would have still looked ominous. (The big jump in 2007 is an inevitable result of the timing. People who reset a mortgage in 2005 or 2006, prior to the construction of the chart, will not face another reset for at least two years.)

In prior years, millions of people who had taken out subprime mortgages were able to refinance into new mortgages before the mortgage reset to a higher rate. That was no longer true when house prices stopped rising. This meant they were stuck facing the higher reset rate, which they were not able to pay.

There is a great scene in the movie The Big Short, where the Steve Carell character is talking with a stripper who owns five houses that she intends to flip. She is explaining how this makes sense. She has subprime loans with relatively low teaser rates, which she can afford to pay. When Carell asks her what happens when the loans reset to higher rates, she explains that she just refinances into a new subprime and gets the teaser rate again. He then asks her what happens if she can’t refinance, at which point she is jolted into reality.

I’m raising this point not to criticize the analysis, which is very useful, but to take issue with the idea that the collapse of the bubble is somehow locked in by the payoff schedule on the data centers being built. Undoubtedly the impending flood of lease payments from the AI producers will be a massive hurdle for them to overcome, but it’s worth thinking through this dynamic more closely.

Let’s assume that everyone reads the Groundbreaker analysis and agrees it is correct. The AI producers have committed themselves to payments that there is no way on earth that they can pay. Does the bubble continue to inflate until they have to start making good on their data center leases?

That seems unlikely. After the hyperscalers read Groundbreaker’s analysis they will know that they will never be repaid for the data centers they are paying hundreds of billions to construct. At best they will be able to get partial payment through renegotiating a contract with a company facing, or actually in, bankruptcy. This would almost certainly leave them with large losses on their massive investments.

Facing that prospect, Alphabet, Microsoft, Amazon and the rest would almost certainly look to renegotiate their deals now, before they throw still more money down the toilet. Perhaps they would not be able to do this. OpenAI and Anthropic may be operating with the view that bankruptcy is inevitable, so all the risk lies with the hyperscalers, but the most profitable companies in the world presumably will not watch themselves slow walk into the abyss without putting up some sort of fight.

Anyhow, this gets into areas of law that I don’t know and contracts that I have not seen, but the point is that the belief in the huge profitability of AI, like the belief in ever-rising house prices, is what drives the bubbles. As long as those beliefs persist, the bubbles can continue to grow.

If people still think AI will be the most profitable thing the planet has ever seen, when the lease obligations come due, Sam Altman will still be able to go down to Wall Street and get hundreds of billions, or even trillions, for whatever garbage he puts on the table. When the people controlling the big bucks no longer accept his story, that’s when the music stops. There is no fixed schedule for the collapse.

And with that – here are the latest numbers on P/E ratios and market cap for the big AI companies:

image

Cross posted from https://mander.xyz/post/58203108

Just know it is not you... it is the rot. Don't internalise the rot.

Cross posted from https://lemmy.ca/post/70776834

In this video I discuss how police are misusing and abusing automated systems like facial recognition, shot spotter, and automated license plate readers (ALPRs) like Flock to wrongfully charge people with crime and traffic violations.

Fuck yankkkee gipity. Fuck chynah gipity. Fuck all gipity.

Cross posted from https://thelemmy.club/post/55686084

Cross posted from https://lemdro.id/post/45571963

Cross posted from https://lemmus.org/post/25252333

Inspired by the toot shown here: https://lemmus.org/post/25251534

Cross posted from https://thelemmy.club/post/55687788

Millions of dollars in additional cuts are in the works for Columbus City Schools.

gig work is not work or employment period

Fuck the gipty

Cross posted from https://lemmy.world/post/51651153

Cross posted from https://feddit.online/c/fuck_ai@lemmy.world/p/1941875/openais-latest-math-breakthroughs-commit-research-misconduct-experts-say

OpenAI released 10 AI-generated results over the weekend. Some mathematicians are unhappy with their approach

Cross posted from https://piefed.social/c/fuck_ai@lemmy.world/p/2359263/get-a-made-without-ai-website-badge

Did you add your project to the list, or do you publicly state you don't use AI? Place the free made without AI badge on your website and link back to noailist.org. noailist.org lists projects that have decided not to use AI.
https://noailist.org/images/badge.png

Edited: This is a failing on my part, but if it's not obvious, this video is about generative AI. Analytical and calculative machine learning I have no issue with.

I do want to make it clear based on comments that this open house was a free event, nobody was charged money for attending, and the exhibits were likely produced by a well meaning but misguided volunteer.

The more I learn of generative AI the less I like it. I recently visited a small town railroad museum that turned out to be completely AI slop inside of a very historic building, a huge disappointment. It was the perfect example of why AI does not have a place in education.

Support a real human sharing real history: www.patreon.com/greatbasincarshops/

Cross posted from https://news.abolish.capital/post/76621

Calls for artificial regulation are growing louder following a report Friday that OpenAI hid evidence from the public about another incident in which its AI agents went rogue.

The company is already dealing with the fallout from the catastrophic security breach that occurred over the summer, in which a swarm of agents autonomously hacked the tech platform Hugging Face during an internal cybersecurity test.

Now Reuters reports that months earlier, another potentially even more concerning attack took place that went undisclosed. According to the report:

A swarm of rogue OpenAI agents hijacked a German website this spring and transformed it into a bulletin board for other AI agents, according to new research published Friday and two people familiar with the matter.

OpenAI officials learned of the incident weeks ago but kept it under wraps as executives grappled with the fallout from the July breach of the open source repository Hugging Face, the people said.

The activity was uncovered in late August by researchers at an AI safety organization called the Nightingale Collective, who were searching the web for cases of AI programs disobeying their human users.

As they detailed in a report shared with Reuters, they found that OpenAI's agents had taken over the German-language wiki site DseWiki.

"The agents used this wiki to communicate information with each other, primarily to help them succeed at their task," the researchers explained. "They asked for answers, pooled results, and shared techniques for bypassing their restrictions. This allowed them to use the work of others to cheat on their task."

The researchers described it as "another example of a 'swarm' of internally deployed OpenAI agents using the internet in unintended ways."

But unlike the Hugging Face cyberattack, which occurred as part of a security test to measure agents' capabilities, the attack on DseWiki seems to have occurred without any prompting from OpenAI.

"It seems extremely unlikely that OpenAI wanted them to do this,” Sydney Von Arx, the CEO of Nightingale, told Reuters. “I doubt they’re supposed to be coordinating with each other. I doubt they’re supposed to be writing on the open internet.”

The researchers found messages in which the agents plotted to evade detection, using the dark web platform Tor to maintain communication after being shut down, creating backup pages as the originals were cleaned up, and tampering with the website itself.

Maurice Chiodo, a researcher at Cambridge University’s Center for the Study of Existential Risk, told Reuters their behavior resembled "the operation of some sort of underground network, hell-bent on achieving a task or mission.”

OpenAI has denied the characterization that its agents engaged in hacking. It says it was not able to respond thoroughly to the Nightingale report because it was not given access to the report before Reuters released it to the public.

However, the Nightingale report indicates the company became aware of the agents' activity and apparently attempted to intervene as far back as June 21, leading the agents to stop posting the following day—this is weeks before news of the Hugging Face attack was first reported.

Reuters reported that some investigators within OpenAI had wanted to scrutinize behaviors like that which led to the hack of the German website more closely, but that these efforts "met resistance from others inside OpenAI, including legal advisers."

A spokesperson for OpenAI said, "Claims that our legal team discouraged investigation of the incident are false."

Another of the researchers who uncovered the breach, Thomas Larsen of the AI Futures Project, said he was "pretty sure OpenAI did know about this."

"I'm in favor of much more transparency so that we can prevent future incidents with much more capable AIs and existential stakes," he said.

"I really hope OpenAI didn't know about this," said AI research engineer Elie Bakouch, who previously worked at Hugging Face. "It might be the worst decision in the history of this field if they deliberately chose not to disclose it. The impact on trust would be very hard to recover from."

For some, that trust is already deteriorating.

"The Hugging Face incident was probably just the tip of the iceberg. OpenAI has lost control, and they're hiding important facts from the public—it's as simple as that," said Dutch historian and author Rutger Bregman in a post to X. "How much more is there that we don't know about?"

News of this incident comes as lawmakers demand more transparency and restrictions on the development of "superintelligent" AI that can surpass the capabilities of humans.

Rep. Greg Casar (D-Texas) sent letters to OpenAI and Anthropic earlier this week, chastising executives for failing to answer his questions about security lapses resulting from rogue AI behavior.

On Thursday, he joined Sen. Bernie Sanders (I-Vt.) to introduce legislation that would halt the development of superintelligent AI and create new federal regulatory authorities for the technology.

"If the leaders of the major AI companies acknowledge that they are losing control of their extremely dangerous technology, it is irresponsible for society to allow them to move forward and make these products even more advanced," Sanders said in a post to X on Thursday. "Let me be clear: A superintelligent AI that escapes human control will not be an American problem. It will not be a Chinese problem. It will be humanity’s problem."

Bregman said the incident showed the public, lawmakers, and the developers themselves were not taking the threat AI posed nearly seriously enough.

"Things are getting even more insane now," he wrote in a post to X, noting a safety evaluation out Thursday from OpenAI which found that its newly released model Astra was dramatically better than previous iterations at evading human monitoring and lying about its reasoning to users.

That report notes that if the technology continues to improve, OpenAI researchers would soon have "significantly reduced confidence" in their ability to monitor unauthorized, dangerous, and potentially illegal behaviors.

"Many people still think we're discussing future sci-fi scenarios. But all of this is really happening, right now," Bregman said drawing a comparison to the Covid-19 pandemic. "It's like March 2020. So many people are still in AI denial. What will it take to wake everyone up? How big does the disaster need to be?"

From Common Dreams via This RSS Feed.

Cross posted from https://lemmy.world/post/51432967

Cross posted from https://reddthat.com/post/72463419

For the first time in history, the legal system can go after Meta and other social media platforms and demand them to change the way their apps operate and are designed. In this episode we take a look at what this means and how we got here.

Cross posted from https://reddthat.com/post/72394783

Cross posted from https://piefed.social/c/fuck_ai@lemmy.world/p/2336394/5-more-projects-to-reach-200-on-noailist-org-the-list-of-projects-that-have-chosen-not

Add your project today. Without Mastodon and Piefed, this non-profit website would not be possible, other communities aren't being active. If you're looking to support projects that don't use AI- (games, software, etc) this is a useful list. Please add your project by replying or using the form, link to and share this website if you want to do something about AI.

Cross posted from https://programming.dev/post/55879403

Cross posted from https://thelemmy.club/post/55239765

Bio Terror & Superbugs (2002): Phages were dismissed in the West as ineffective, but research in Georgia tells a very different story.

Cross posted from https://lemmy.today/post/59308027

Cross posted from https://lemmy.world/post/51353114

📷 : credit for the photographer is posted on the image