No. of Recommendations: 4
nytimes.com - AI bubble banking crisis too big to fail
What Happens if the A.I. Bubble Bursts
By Bethany McLean, The New York Times, Sept. 26, 2026
It was about a year ago that Sarah Friar, the chief financial officer of OpenAI, said one way the company might sustain its current financial high-wire act was with a “backstop” or “guarantee” — as in, a government guarantee — “that allows the financing to happen.” Almost at the same time, Sam Altman, the company’s chief executive, said, “Given the magnitude of what I expect A.I.’s economic impact to look like,” the government should serve the role of “insurer of last resort.” They qualified those comments, but still, the gist seemed to be that the industry The Wall Street Journal calls “the biggest economic bet in U.S. history” is so important to the nation that if it needs more funding, taxpayers should be on the hook.
Another way to put it is that the government should regard artificial intelligence the same way it regarded the banks in the 2008 financial crisis: too big to fail...
The A.I. boom is far larger than the boom in subprime mortgages that set off the 2008 crisis. A.I.-related spending accounts for about half the growth in the U.S. gross domestic product, by some estimates. The vast majority of the $33 trillion in market value the S&P 500 has gained since late 2022 has come from spending linked to A.I. companies...
A.I. investment, though bigger than subprime mortgages in 2008, hasn’t infiltrated the banking system in the same way. ...
It’s hard to imagine the nation would accept a deal like the one that emerged in 2008, which prioritized the balance sheets of the investor class at the expense of everyone else — especially given the sums that would be required and the scale of our national debt... [end quote]
The history of technology is littered with the corpses of failed companies that were cutting-edge in their day. And no technology has the potential to create its own rapid obsolescence than AI.
No company should be “too big to fail.” Failure is one of the essential building blocks of capitalism. All technologies experience an “S” shaped progress of invention, adoption, stabilization, competition and price-cutting. AI is even more vulnerable than semiconductor memory chips.
Even the suggestion of taxpayers bailing out AI tech bros should be met with a “NO F’'‘N’ WAY!!!” and a big smack to the head for even suggesting such a ridiculous thing. Clearly, it’s not too early to start.
Wendy
