Mastodawn

https://www.quinnemanuel.com/the-firm/publications/client-alert-emerging-litigation-risks-in-financing-ai-data-centers-boom/

"Lenders who originated data center loans—including the private credit facilities described in Section A—have begun pooling those loans and selling tranches to asset managers and pension funds, spreading risk well beyond the original lending institutions."

IS
THIS
FUCKING
GOOD

Client Alert: Emerging Litigation Risks in Financing AI Data Centers Boom

Quinnemanuel

The Manchurian Idiot Mar 30

Ryan Gosling certainly getting a lot of value out of those Jenga blocks

Insurgo Formica Mar 31

@pikesley @davidgerard eas going to say I've seen this movie

CM Thiede Mar 30

@davidgerard of course, let "the people" shoulder the risk

jonny (nonvenomous)Mar 30

@davidgerard fuck dog this is going to be such a nightmare.

The Orange Theme Mar 30

@jonny @davidgerard "Please keep hands and feet inside the ride at all times. And may God Almighty have mercy on our souls. Amen."

jonny (nonvenomous)Mar 30

Cross-default provisions embedded in most data center loan agreements could amplify these losses dramatically. A default on one facility can trigger defaults across the borrower’s other obligations, cascading through the ecosystem: a CoreWeave facility default could trigger cross-defaults across every CoreWeave credit facility, impairing its ability to make lease payments to SPVs, which would undermine the cash flows backing the ABS issued by those SPVs.[61] In other words, what begins as a project level payment default can quickly become a system-wide enforcement event.

so awesome.

jonny (nonvenomous)Mar 30

@davidgerard thank god not everyone's incentives are aligned to kick the can as far as it can go and try and get out before the crash again, oh wait...

The Orange Theme Mar 30

@davidgerard Hmmm... selling junk debt that everyone knew was bad and spreading it throughout the broader financial system? Close enough. Welcome back, 2006! (Can we have the same RAM prices, too?)

Major Denis Bloodnok Mar 31

@theorangetheme @davidgerard What, $150/GB?

Not A Number Mar 30

@davidgerard We're doing ALL THE DIFFERENT FINANCIAL CRISES AT ONCE!?

@NaN @davidgerard look, they are just doing what the movie industry has been doing: instead of developing new ideas (risky!) just remake old stuff or recombine existing stuff, like Superman vs. Batman etc.

@davidgerard good unless your pension buys the potentially bad debt and the value tanks.

Sigh. haven't we seen this story before.

Killa Koala Mar 30

@davidgerard Chill dudes, as the stable genius said, "nothing bad can happen, it can only good happen".

Krzysztof Sakrejda Mar 30

@davidgerard tranches...

Neville Park Mar 30

@davidgerard HAHAHAHAHAHAHA 😭

@davidgerard
Now that does not sound familiar at all, does it?

@davidgerard “we are not Enron” is going to be the quote of the year

alexis grasso Mar 30

2008 re-visited.

Nicole Parsons Mar 31

@ethscithre @davidgerard

https://fortune.com/2025/11/18/jeffrey-gundlach-bond-king-next-financial-crisis-private-credit-subprime-mortgage/

https://www.cnbc.com/2026/02/12/alphabet-100-year-bond-debt-fears-ai-credit-risk.html

https://futurism.com/future-society/ai-hype-investment-subprime-bubble

Let's have a Do Over...

Financialization of subprime mortgages fraudulently converted into triple AAA exotic financial instruments.

Here we go again.

https://www.newamerica.org/insights/sub-sub-sub-subprime-borrowers-100-million-strong-worldwide-and-growing/

https://www.reuters.com/markets/private-credit-alarm-bells-echo-2007-subprime-warnings-2026-03-10/

https://www.cfr.org/timelines/us-financial-crisis

"No, Jeffrey Epstein didn’t trigger the 2008 subprime meltdown" but his allies within the Epstein Class certainly did.

https://www.ft.com/content/69019b85-7843-4335-96fd-6b42b882a9c2

https://archive.is/ijYWQ

‘Bond King’ Jeffrey Gundlach warns of the next financial crisis: ‘It has the same trappings as subprime mortgage repackaging in 2006’

The billionaire founder of DoubleLine Capital is also convinced the $38 trillion national debt will be addressed before 2030: "something has to happen."

Fortune

troy_friz_zell Mar 31

@Npars01 @ethscithre @davidgerard

It's almost as if getting away with massive fraud in the late 00s emboldened the Epstein class to do it again.

Nicole Parsons Mar 31

@troy_frizzell @ethscithre @davidgerard

The 2008 financial crash incentivized do-overs for the Epstein Class.

Arsonists rewarding themselves for setting fires.

https://en.wikipedia.org/wiki/Moral_hazard

https://en.wikipedia.org/wiki/Adverse_selection

The moral hazards ignored in the 2008 crash, trained the Epstein Class to not only benefit from crisis but also to create crisis from which to benefit.
https://fakenous.substack.com/p/the-true-cost-of-government-bailouts

War on Ukraine? Government bailout for corrupt corporations.
https://www.kyivpost.com/post/68831

Moral hazard - Wikipedia

Nicole Parsons Mar 31

2/

https://en.wikipedia.org/wiki/Economic_consequences_of_the_Russo-Ukrainian_war_(2022%E2%80%93present)

https://www.sciencedirect.com/science/article/pii/S221462962300261X

Covid crisis? Government bailout for cronies & corporate donors.

https://www.newsweek.com/trump-administration-farmers-bailout-brazil-brothers-1427346

https://cepr.org/voxeu/columns/moral-hazard-fear-markets-and-how-central-banks-responded-covid-19

Tech startups go wrong? Government bailout for Russian funded corporations.
https://www.americamagazine.org/politics-society/2023/04/04/banking-crisis-silicon-valley-moral-hazard-244990/

https://theconversation.com/what-does-moral-hazard-mean-a-scholar-of-financial-regulation-explains-why-its-risky-for-the-government-to-rescue-banks-202091

Iran war? Government bailout for energy corporations.
https://www.politico.eu/article/uk-rachel-reeves-signals-no-liz-truss-style-energy-bills-bailout-brits-hit-by-iran-shock/

AI bubble? Government bailout for sycophant corporations & petrostate despots.
https://time.com/article/2026/03/26/we-must-prepare-for-an-ai-bubble-now/

Economic consequences of the Russo-Ukrainian war (2022–present) - Wikipedia

Nicole Parsons Mar 31

3/

Blowback for funding a fascist movement? Government bailout of a political party's major donors.

https://www.bloomberg.com/news/videos/2026-02-06/why-musk-s-spacex-mega-merger-is-a-mega-bailout

https://theconversation.com/if-the-ai-bubble-does-burst-taxpayers-could-end-up-with-the-bill-269115

@Npars01 @troy_frizzell @ethscithre @davidgerard Its only a moral hazard when the poors do it. The need to protect people’s morality by restricting their freedom of choice doesn’t apply to the people in the oligarchy.

Calamity Joan 😷Mar 30

Can someone explain; and what (if anything) can us plebs do to protect ourselves?

paelnever Mar 31

@clickhere @davidgerard
If you live in USA I would suggest sell everything and leave the country while you still can. Soon dollar will worth nothing.

Calamity Joan 😷Mar 31

@paelnever I'm in Ireland thank god and/or god help me.

Rehana Rodrigues Mar 30

@davidgerard This time is different!

Kit Bashir Mar 30

@davidgerard putting the 𝙰𝙸 in “too big to f𝙰𝙸l”

BlueWinds Mar 31

"The financing structures described above present litigation risks along multiple vectors. The deeply interconnected AI ecosystem means that distress at any single node—a construction delay, a tenant default, unhedged energy cost differentials, a collapse in GPU resale values—can propagate across multiple counterparties and financing layers."

Another money quote, for those that don't want to wade through the whole document.

More people ruined when the bubble bursts

George B Mar 31

Are pension funds run by morons or people who are actively hostile to them? This shit keeps happening.

David Gerard Mar 31

@gbargoud pension funds *have* to get returns. and if there's no sane investments delivering returns, they have to invest in insane ones.

Stephen Foskett Mar 31

@davidgerard @gbargoud This is very true.

I am a client of “managed financial services” (strong previous IRA investments) and I get to hear their pitches.

They have pivoted from traditional bonds and stocks, and even index and hedge funds, to more unconventional investments like private financing and real estate deals. I’m constantly trying to steer my investments away from the AI bubble and the pyramid schemes. But there’s a whole world of unconventional finance that is rapidly growing.

David Gerard Mar 31

@sfoskett @gbargoud they did this with crypto a few years ago

@davidgerard @sfoskett @gbargoud When did they stop?

Dan Sugalski Mar 31

@davidgerard @gbargoud The need to get returns is a fundamental flaw, or at least limitation, of pension funds which makes their widespread use untenable as a mass solution for retirement under Capitalism, and I just realized I should probably sit down at some point and write up a lengthy post on why. It'll probably be a bit depressing, though.

David Gerard Mar 31

@wordshaper @gbargoud tl;dr there are no good pyramid schemes, get out the guillotines?

Dan Sugalski Mar 31

@davidgerard @gbargoud Sort of? Except not exactly, you can have a large-scale pension system of sorts that works. What you need to do for that is to focus on things that produce resources long-term so you don't have to produce them yourself (what with being retired and all) rather than on rent seeking options. Stuff like solar/wind for low-labor power generation, or investment in low-labor food production facilities.

Basically generate more resources from infrastructure rather than labor.

@wordshaper @davidgerard @gbargoud But also lots of guillotines. Or maybe compulsory hard(productive) labor in lieu of execution.

Dan Sugalski Mar 31

@su_liam @davidgerard @gbargoud While I wouldn't dream of denying someone a good class struggle, or the chance for the over-resourced to be productive, even in the absence of that you have an issue with how pensions are set up.

People need resources, and if you want to allow lots of people to retire (and thus not produce resources) then you need to have prepared to produce those resources for the retirees. It's not something you can save for, you have to invest. Pensions usually just save.

Dan Sugalski Mar 31

@su_liam @davidgerard @gbargoud Saving is just something you can't do with a lot of things -- ou can't save 30 years of electricity, or water, or food. You have to invest, which is to say produce things that produce more things. Buying a can of soup is saving, you stockpile it for later. Buying a solar panel is investing, you spend once and it creates something you need going forward with little or no labor.

You can collect money, but ultimately you need resources.

@wordshaper @davidgerard @gbargoud The necessity of these things is the reason why their abuse must be punished in the most vigorous and brutal way possible. If we could simply write off the entire investment(and to the degree we can, we should)this wouldn’t be as important. We could simply write this garbage off and let it wither and starve. But we can’t, so we have to make sure that the consequences of fraud outweigh the benefits.

@wordshaper @davidgerard @gbargoud Somebody, not some faceless automation, just people who choose with good reason to be anonymous, hid that material in those tranches. That’s not a passive act. I don’t blame the people who unknowingly invested in this garbage, but the people behind the AI circle jerk and the people who spread it around by hiding it in… everything, must be punished sorely.

George B Mar 31

Sounds suspiciously like a system deliberately designed to make sure the shitheads who start the bubbles always have a fall guy

arceuthobium Mar 31

@davidgerard an example of the tendency of a “gold rush” to suck up all available capital and smother the rest of the economy.

paelnever Mar 31

@davidgerard
Is going to buuuuurst.

Mark Lynch Mar 31

@davidgerard Collateralised Datacentre Obligations?

@davidgerard Cool. Cool. That's also how they spread the risk of subprime mortgages -- which were only about 5% of the mortgage market at the time -- all through the whole financial system.

That way, when there's a crash in the 5% we can all share in it. Nobody misses out!

@davidgerard Making that bubble pyramid shaped.

Bruce Simpson, Ph.D.Apr 2

@davidgerard This is the beginnings of subprime AI Ed Zitron was warning of this week.