Patrick Ewing: Seattle Supersonics Legend

Add to this: Planned obsolescence was mostly just a theory 15 years ago. Old tech is hardier.

Kelsey Grammar achieved something remarkable with Down Periscope. Few genres of film have a hit rate quite like Submarine movies. Basically all of them are masterpieces. Yet somehow, Grammar starred in a bad one.

At any rate, I've been bearish on the market for a decade and anticipate feeling like a Cassandra for a bit longer, but I maintain we're at the end of the GenAI bubble, and it's now entering a "slow burst" that will really manifest in earnest in 2-3 years and might kill the global economy (again).

And because investment in GenAI has been such a disproportionate percentage of overall expenditure, when the market fails, we aren't just at risk of the GenAI funding bubble popping; we risk the total collapse of private equity, brought on by its own practices to the detriment of the world.

The irony is, had these companies gotten behind the *actual* ongoing tech revolution (The Energy Transition), there would have been ample chance to reduce the amount of noxious debt in the market with real returns on investment that could pay down princpal and interest.

But they backed a bad horse.

And this is why, in 2025, Private Equity funding has dried up for nearly everything except the GenAI/datacenter push: It's a means of furthering the debt cycle without addressing what it means for the global economy. A last gasp for profits while the recession has already hit average folks.

The answer for Private Equity firms is to spread out debt payments over as long a period as possible in their accounting while trying to pass the debt to any taker they can find, leading the PE world into a circular funding model.

If this sounds like AI's circular funding model to you, it should.

And now, the Private Equity debt has gotten so radioactive that investment banks won't even touch the stuff. They have stopped buying any PE debt to repackage into financial instruments, because it's judged to be so insolvent as to function as an economic time bomb. So these firms are stuck.

But after 15-odd years, the ballooning PE debt has become so onerous that firms have shifted to offloading it into bankruptcy buyouts and asset seizures. This is how Jo-Anne Fabrics went from having 97% of all stores in profit to a crater in less than a year. It was saddled with Private Equity debt.

But banks only wanting secure debt doesn't mean all the dogshit debt vanished. It all moved into the private sector to be diversified for investment there under new names. Now, instead of investing in Collateralized Debt Obligations, you can buy into a Bespoke Trance Opportunity from a PE firm! Fun!

Since the mortgage lending crisis of 2008 spawned the Great Recession, our financial sector's response wasn't stopping the outsized reliance on debt as a mechanism - it was letting PE firms take on the debt instruments. Banks in particular now only want to hold the most secure debt possible.

Oversimplifying again, but in short, in a market downturn I believe we are likely to see a total collapse of the lion's share of private equity firms in a cataclysm of their own making.

There's a notion that PE firms are all affluent to the point of being profligate. This is a debt-fueled mirage.

This assumes we are under normal market conditions with respect to debt and margin borrowing

I don't think we are

What keeps me up at night with respect to a full-on global economic collapse isn't the AI bubble bursting; it's the enormous private equity debt and margin borrowing present right now

This is very simplified, but when a bubble bursts, the speed of collapse is variable. Corps like NVIDIA, Google, and Microsoft will bleed share price, but it will be a slow bleed to their stocks' "bottoms" over 2-3 years. Companies totally built around GenAI will take weeks if not days to collapse.

Genuinely, I do not expect NVIDIA's stock to ever approach zero when the bubble pops. For all their GenAI gambling, they still make and produce semiconductors. These will always have value.

But companies like OpenAI & CoreWeave? They have no underlying fundamentals. Say hello to the big losers!

We've hit the same inflection point almost every bubble hits where the public has an awakening and realizes, "Hang on... this is WORTHLESS!"

From that point on, the survival of every business operating in the bubble is predicated upon how strong the underlying fundamentals are.

The threats are often packaged in the guise of "How can you NOT adopt XYZ!?!?!" The boosters of the bubble know they have a losing product. It can't show a long-term return. So they need to pass the bag. The only way to do that late in a bubble is through social pressure and outright bullying.

Forcing politicians - including the ones with the least scruples - to expend political capital rather than allowing them to endlessly hoard it is good, actually.