YouSaid · the spoken record

Paul Kedrosky

lines on the record: 37
first: 2025-11-14
most recent: 2025-11-14
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“And it's in Reits now. Look at the larger holdings in Reeds now. Increasingly, our data centers. And it's even in sort of sneaky backdoor ways like we're seeing increasingly. I don't know if you guys are familiar with these new interval funds that are appearing there. It's all over now.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Not as simple as saying this has just been a wonderful stimulus program, we're paying people to dig holes and filling them back in again. This is a wasting asset on something that's likely to produce in quantities that we can never earn an economic return from, in part because of wildly flawed assumptions and projections about the future of demand for those units. And so that's the deep structural problem. And then you can get into this whole question of like Well, if it was just private equity guys get hurt, you know, cares screw those guys, right? And it's not, of course, because as we just talked about, it's in equity funds.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so to an Orthodox economist, the old line is it really doesn't matter what we pay people to do as long as we pay them, right? It's the idea of you should be willing to pay people to dig holes in the ground and people over there to fill the holes back in again. It really doesn't matter as long as the money is out there and in circulation, right? It's all just stimulus, right? So to that way of thinking, it doesn't matter because the money is all finding its way back into the economy. But I think that's obviously hugely misleading because in this context these are investments created with an expectation of a return. If they can't, then that flows backwards into all the entities that are built on that basis, whether it's private credit firms and their returns, the S&P 500, what is it like 35% now is AR related MAG 7, MAG 10, whatever, 40%, 50% now the last two years return. So these are massive negative wealth effect when you unwind it, not just in terms of the direct spending, but in terms of the wealth effect with respect to what people's holdings are. So this is”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Great stuff, just not really very exciting, but large language models are amazing at it, and small language models are amazing at it and almost free.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“And there's a bunch of that already happening. It's really interesting. But what's increasingly happening is the problems they're solving are really mundane. And so it's things like I'm trying to onboard a bunch of new suppliers. Right now, the people have weird zip codes and they sometimes don't match up. I have a dude in the back who fixes that. I'd rather have someone who could do it faster so they could onboard a lot more suppliers. Oh, it turns out these small language models are really good at that. These micro models like IBM's Granite and whatever else. But those things require a fraction of the training are very cheap, are not going to justify anywhere near the economics needed to pay for the current spend. And yet those things are almost very likely the future because it'll be profligate token use from micro models often hosted internally to do really mundane background tasks. Not very glamorous, onboarding new suppliers, matching records.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“And they say it's like the greatest call option ever. Like, what would you pay for a call option that could get you anything? And it's like, well, wait a minute. This isn't a way of justifying any particular expenditure. This is just faith-based argumentation. We're saying, you know, with the Uber call option for anything, you should be willing to pay anything for it. And obviously that kind of justification doesn't get you anywhere. So in-house, they'll arm wave a lot about these different models that will emerge. Who knows? I had someone at NVIDIA tell me the other day that we really are just waiting for the Uber of AI to come along and show us the future. And I'm like. Okay, so that's, but it's not an answer, right?”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's the first thing until you challenged them, and then it's the second. So, what happens is if you have the conversation internally, they'll say, yeah, no, no, no, no, we're building this really effective productivity enhancing tools that will be used across a host of businesses. And these all sound really good. But then when you walk through some of the math in terms of justifying the ROI on the spend, all of a sudden then it turns into what...”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Efficiency gains ahead from training, and training is 70% of the workload on data centers. Hang on a second, aren't we completely misforecasting the likely future, the arc of demand for compute? And the answer is yes. And this is rather than looking at it as an example of why China is doing something better or worse. Another way of looking at it is saying just refuted the approach that we're taking to training altogether because it shows how bloated and inefficient the approach we're taking is, and yet we're projecting on that basis what future data center needs are.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“And the Chinese are showing the huge efficiency gains to be had. And one way to think about it is that. Transformer models that underlie large language models that are so computationally intensive went from the lab to the market faster than any product in technology history. So they're absolutely bloated and full of crap, right? So these things are wildly inefficient. There's all kinds of other ways to do the same sorts of things, one of which is distillation. So what you're really seeing is a kind of an accident of history that we came down. The US came down this path that led directly to the original transformer paper in 2017. And the Chinese have said, yeah, we're not going to be able to do that for a bunch of different reasons, but we don't have to do that because I can take this approach of distillation, which lets us get, you know, if you look at Kimmy, this sort of relatively recent open source model, these things are actually really effective in benchmark very well. And it's not surprising because they've been trained by really good trainers, which is to say some of the other models that are out there. But these are about efficiency gains, which should then ask the next question is, whoa, wait a minute, if there's all these”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so that's a really good question. So I think it's going to be something closer to the Chinese approach, but not for the reasons they expect. So the reason is because I'll reframe what the Chinese are doing slightly. So I'll say that instead of it just being a sort of an example of open source, I don't think that's the right, the right way to think about it is they're using this kind of distillation approach increasingly where there's kind of a you think about it like, okay, I'm a sales manager. I don't want to train all my salespeople. I'm going to train this dude and they're going to train all the sales, but that's distillation, right? You train the trainer. I train somebody who trains something else. And the something else in this case are these smaller models. So that approach of kind of training the trainer really speeds up the process of creating new models because I distill them. I train them out of other models that are really compute intensive like anthropics or open AIs or whomever else is right so the notion is so is there a huge efficiency gains to be had in training”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Nothing So, here's what's going on. This is what's going on of hoarding going on. So what's happening is people saying, you have capacity. I can lock that up. I'll lock that up. And because I can't lock it up yet by building a data center quickly enough, I'll lock it up in the marketplace. So if once you start thinking of compute as a hordable commodity and what people are doing is trying to hoard it, control it before someone else can do it because until they bring on their own excess capacity, that's really what's going on in a lot of these transactions. This is a way of making sure that I may not need this, but you sure can have it. And so there's an element of compute hoarding going on across the map because of this backlog in building data centers that may or may not ever get built. So that's the answer. The answer isn't that they care at all about whether or not they can run giant workloads on any particular neocloud provider. It's the idea of hoarding capacity and making sure that no one else can have it.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. The Sarah Friars' accidental footed mouth thing earlier in the week. But that's right. But that's, again, goes back to my original point about what makes this bubble unusual. It's this element that not only is there a kind of backstop, but there's actually a notion of wrapping it in the flag. We have to win this competition. We have to do what it takes. This is existential. It's us versus China. And it's not just the US doing this. I was talking to some Canadian policymakers just earlier this morning. Exact same thing going on there. We have to build out a domestic industry, same thing in the UK, same thing in Germany. And so there's this idea around the world that sovereign AI is something that's incredibly important. So this government backstop isn't just mythic, it's global. It's this idea that we all have to win. We all have to win, which obviously can't happen, but that the government's playing a role in it, that creates this kind of limitless source of capital.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“But it's this deterrence program that's going on. Don't even imagine spending 50 because I'm spending 100. There's no point in you doing any of those. It's just game theoretic.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“It kind of raises, and this goes back to Tracy's question earlier, this raises a really interesting thing. Honestly, what the F are all these people doing who are announcing. These giant funding transactions. I think of it like people all showing up at the OK corral at once. And it's like, dude over there has one gun. I got two. Guys, oh, two, that's not”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“That creates two or three different issues, but among the more important is think about how long lived an asset, a natural gas plant is. This is not something that's got a five-year lifespan and we just cheerily wave goodbye. This is going to be running probably 25 to 30 years. And the only thing your ability to forecast, we know the cost of the natural gas plant, but in terms of the cost of the center and its ability to generate enough income to pay off the loan associated with the natural gas plan. God help you if you think you can sort that out because what you've really got is a huge likelihood of a stranded asset out there, natural gas plants that are no longer useful for powering these things that they were built for.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“If you think about it in more holistic terms, think about it in terms of one of the other gating factors here that's driving all of this is the scarcity of energy supply. It's really difficult. You can hook them up to the well, it's actually kind of turned into a bit of a joke. I can hook you up to the grid, but I can't give you power. I don't know if you saw the recent episode with the Oregon Public Utilities Commission. Amazon had three data centers that they connected to the grid, and it was kind of like the Oregon PUC said, oh, you want power too. Oh, well, I can't help you with that. We can't help you with that. So now there's a complaint in it, the Oregon PUC from ADS, Amazon, the Digital Services Group that runs AWS complaining that we now have data centers, but we have no power. Sounds a little bit like a winter storm hazard or something, but it's a structural problem with respect to the inability we can connect people, but we can't provide them with power. So the next stage is, and this takes us back to the collateral problem and the temporal mismatch, is that people are doing behind the meter power. They're building natural gas or if you're Fermi, you're saying wild things about nuclear power, and you're saying, okay, I'm coming with my own power. You don't need to connect me to the grid because I'm going to power this myself.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“So, what ends up happening, the collateral in this case, is there's no question it is the GPU. The issue is this disconnect, this temporal mismatch that you alluded to earlier with respect to the duration of the underlying debt and the assets that are producing the income that allows me to pay for the debt, right? So we've got this probably unprecedented temporal mismatch with 30-year loans and two-year depreciation on the underlying collateral, which is essentially the GPUs that are the income producing assets. And so that creates this constant refinancing risk because I'm going to continually have to turn over the base and we've seen this many, many times right now. It's easy to turn it over, but in two years it may not be possible. There's a wave of refinances coming in 2028 in many of the more speculative data centers. Will they be able to turn over their debt and refinance all the GPUs? Today they could. Today is in 2028. So that's Dherent problem is this structural temporal mismatch between the income producing assets and the duration of the loans. And it gets worse.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“The problem is it's got huge fragility, right? In customer concentration risk, so a cursor disappears as a user of Anthropics API and you just blew out 15% of your revenues because they're gone and they've done something else. And as it turns out, Cursor two weeks ago announced that they were trading their own internal model that you could use for software development. You wouldn't have to call the Anthropic API. So you can think about all these different ways to get there, but they all have a lot of built-in fragility with respect to either we all become software developers and we all subscribe to cursor.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's around the number that most people put out there, which I think is a completely wrong number, but nevertheless, that's a kind of number in which you'd have to do to get there. So you can get there from a bottoms-up model by making some really unreasonable assumptions about the total numbers of subscribers and what they pay. You can get there from a top-down model. You can also get there by thinking about it purely in terms of industrial users, like think about purely API users, then retail users of AI don't exist and say, you know, Anthropics projecting $70 billion in revenue in 2028, something like 35% of their current revenues, most of their revenues today are from their API. 35% of that is from software developers. That split between two large users, co-pilot and cursor. And so, you know, we can model that out. Everybody has to become a software developer and we can make the math work.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Was Right, right, right. No, exactly. And so, and then they play the next step is, of course, to say, well, imagine we can get 10% of that, right? Which is obviously one of the oldest cliches. It's like saying, you know, I'm going to get 5% of the Chinese market. No one ever gets 5% of the Chinese market. This doesn't happen. So the same thing won't happen with global labor. But if you were to do, you do the math on that, those kinds of numbers get you to a weighted average cost of capital basis, to a reasonable return on current and planned expenditures with respect to AI data centers. If you assume we're heading to about a three or four trillion dollar number, which is kind of the”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Across which I can spread my relatively fixed cause, yeah, that's not the way that for the most part current generation large language models work. Costs rise linearly or sublinearly with the number of users, which makes for really crappy unit economics. And that's a big part of the problem. So from there, you get to the question of, okay, so what does it have to look like in terms of making it look profitable? There's lots of ways to back into this. You can do bottoms-up models that would suggest that if every iPhone user on Earth paid $50. I love the global tab. I said that was right up there with saying if I reduce humans to their chemical components, here's what I can get for you. Well, this was Steve.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so the term of art obviously is these things have negative unity economics, which is a fancy way of saying that we lose money on every sale and try to make it up on volume, right? I mean, that's the problem here. But that's okay. I mean, we've had lots of things. Amazon in its early days had negative unity economics. You can get past that. And as an aside, I'll say right here, all of the things I'm saying isn't to say that, you know, AI is some kind of furry Tamagachi thing that's just a fad. AI is an incredibly important technology. What we're talking about is how it's funded and the consequences of doing that in terms of what's going to happen with respect to the businesses and the return on those businesses, right? So the unit economics are dire for a bunch of reasons, mostly having to do with the more tokens you have to produce, the costs rise more or less linearly with the demand on the system as opposed to orthodox software business where the more people who use my service, the more people”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“The people who are purchasing those things don't give a rat's ask what's going on inside this AI. I joke all the time that a lot of these people can't spell AI. They don't care what's going on inside the data center, right? It could be the World Hide and Go-Seek Championships going on in there. I don't care as long as it generates yield and I can secure it. Well, that's very much an analogous to what's happened in prior periods like this, where, again, you get this secondary flywheel effect of let's just create more of these things because our customers want more and they're really easy to securitize. And look, it's backstopped by Meta and Google or whoever else.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“There's nothing new under the sun, and uh, but I think that point's really important, it's not that tranches are evil, it's not that securitization is evil or that asset-backed security or project finance is evil. No, all of these things are terrific pieces of the arsenal whenever you're actually raising money for projects. The issues start to arise at the scale, which is what you guys have already alluded to. But the secondary piece, which again will sound painfully familiar to the financial crisis, is there's a flywheel that gets created at the back end of this. So once you start securitizing the yield-producing assets in the form of these tranche securities”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“The cap rate, the blended cap rate for these for the largest data centers that are tenanted by hyperscalers is horrible. It's like 4.8, 5.3%. It's like, why don't you just buy a treasury? Buy a treasury. So what happens then is people start blending in more different kinds of tenants to Tracy's point as an effort to try and improve the yield, the cap rate on the underlying instrument, which is the data center. So you could do all of this should start to sound familiar because it's this idea of if I blend together all of these different tendencies, I can increase the yield of the securitized instrument, but that also changes the risk profile of what comes out the other end, which takes us to things like the increasing usage of these things in asset-backed securities, which are these tranche securities that have all the different pieces. We have different layers associated with it, and that's a reflection of, well, there's different tenants inside these data centers, and people want different exposures to risks. So I may only want to buy the senior.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's really interesting. So, one way to think about data centers is as giant apartment buildings, right? They're essentially gigantic pieces of commercial real estate with a bunch of tenants. Sometimes there's a lot of tenants, sometimes there's only one. Sometimes Google bought the whole apartment building and just moved in, or there's a giant office building, they just moved in. It's all theirs, right? So think about it in those sorts of terms. And the reason why, as a sponsor of a data center, I might take a different view on how many tenants I want is, again, you think about it in terms of what can I get Google to pay, Blair says, what can I get someone who's a much flightier tenant to pay? Well, I can get the flightier tenants more of them and diversify it as all leasing inside the data center, paying higher lease rates for GPUs over the period of tenancy than I can get a Google to pay. Why? Because Google's got great credit. They don't have to pay very much and they know they don't. So if you look at the commercial real estate data,”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“So there's a huge difference in terms of how the chip was used, leaving aside whether or not there's a new generation of what's come along. So it takes us back to these depreciation schedules. So these depreciation schedules changed just as the nature of how the lifespan of the chips changed dramatically because I can use something for storing things in S3 buckets for a long time, six to eight years isn't unreasonable. But if I'm doing the Le Mans endurance equivalent with the GPU, it might be 18 months. That's a huge difference in terms of the likely lifespan of a product that I'm depreciating over a very different period. And so that's a huge part of the problem here with respect to understanding the intrinsics in terms of how data centers can and can't make money, how you have to think about the likely CapEx requirements because of this much shorter lifespan of the underlying technology.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Data centers using products like the chips from NVIDIA. And those have much shorter lifespans, so depending on the usage. So there's two different reasons why the lifespan and therefore the depreciation schedule of a GPU inside of a data center is very different. So the reason most people think about is, oh, well, technology changes really quickly. And I want to have the latest and greatest and therefore I'm going to have to upgrade all the time. That's important, but it's probably about equal, if not maybe slightly less important.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I'll start with the first one first. So, this gets into something Michael Burry was tweeting about the other day, which was sort of entertaining, that back about four years ago, tech companies changed the depreciation schedule for the assets inside of data centers. They extended them somewhat. Now, that wasn't an error. The reality is that data centers used for the purposes like at AWS, where you've got a big S3 bucket and I'm storing data inside of it, those things, generally speaking, the assets are long-lived. I'm not running them flat out. These are not streetcar racers that I'm running around inside of a data center. These are relatively inexpensive chips that I'm using for really mundane purposes, like storing large amounts, terabytes, exabytes of data inside of S3 buckets. So it's not unreasonable to say their lifespan's fairly long. They're not being taxed that heavily. So pushing out the depreciation schedule makes a lot of sense. But that was coincident with the emergence of GPU driven data.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“What happens if at some period in the future this thing isn't performing the way we expect? Who owns it at that point? Is there a payment exchange? Does it become metas? Does it become blue owls? Does it become someone else? And these things will turn out to matter right now. No one cares. If you go through some of the documents on these things, it's not entirely clear what the recourse payment will be whenever if and when it ever has to revert back to another owner and it's not going to be held on to by the SPV and I think this will turn out to be really important four or five years down the road but right now nobody cares.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“So mechanically, it's just a way of making sure that I don't have to roll down to my balance sheet. But legally, it's a structure into which I and my partners contribute capital that in exchange for which they retain legal title to the project that we've created, which allows us to all contribute capitalists but not have to put it back on my balance sheet and therefore not to have that debt rated, which is really the key. Now, if you look at the actual intrinsic, say, for example, the recent meta project that they did in conjunction with Blue Owl, it's wild in Byzantine. It looks like something you might have seen in, what was that in Harry Potter, the forest with all the spider webs? It looks a little like that, right? Where everything's connected to everything, and all I know is there's something in here is going to get me. So there's incredible complexity, but at the core, it's a mechanism via which I can raise more capital and keep it off my balance sheet by creating a legal entity that controls the actual data center and I don't therefore have to put it back, roll it all back onto my balance sheet and have it rated. Now there's weird intricacies, obviously. So for example,”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Bring in other participants, create new financing vehicles, and then we play this entertaining game of it's not really our debt, it's in an SPV, I don't have to roll it back onto my own balance sheet, and then bring in new lenders, new private credit firms, and others. And so that's the reason, obviously, it's partly because of the scale. It's partly because the privates will have no other option, and it's probably we've kind of tapped out the public companies in terms of the fraction of free cash flow that they feel as if they can spend with impunity on these projects.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, they don't, but there's these irritating shareholders out there. Get all pissy whenever you start diluting earnings per share too much and diverting it towards a single source. Now, that's not the case with private companies, obviously, but by the same token, OpenAI doesn't have the luxury of having cash flows via which they can do any of the things we're describing. So OpenAI and everyone else, they have no option other than to do exactly what we're describing. It's a different story with respect to how what percentage of Google's free cash flow or Amazon free cash flow that they want to continue to divert towards data centers. So in terms of the privates, this is the only option that they have. The publics obviously increasing the hyperscalers increasingly, we got up to the point where around $500 billion, we're about 50% of their free cash flow was going directly towards spending on data centers. And that's obviously a point at which, you know, we have other things we have to do with free cash flow and including having some of it be earnings per share. And so increasingly it's become the option you see what Met is doing recently with respect to SPVs.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Like to think of it as a kind of financial witness protection program. It was like, oh, you're those guys. That's great now who you are. Yeah, it's kind of like that. And it's now like one point, whatever it is, $1.7 trillion is the size of, which is larger than. Many components of the Orthodox lending market combined in terms of the private credit industry itself. So that's a huge new piece of this that sometimes escapes notice, how big it is and why it emerged. So all of those pieces.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Back to rural electrification in terms of a technology story, we have loose credit. You guys talked about what's happening with respect to not just the role of private credit, but how private credit is largely supplanted commercial banks with respect to being lenders here. So we have all of these pieces that have all come together at once. And I think in terms of framing what's going on right now, it's really important to understand that it brings together all of these components in ways we've never seen before, which is one of the reasons why the notion that we can land this thing on the runway gently is nonsense.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“Included all sort of externalities, all the other things that data center spending in turn kind Obviously, the same thing was true in the second quarter, and it was Thinking about my dog”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source
“This has become now commonplace that people know this What a large fraction of GDP growth in the first quarter data centers were. It was on the order of 50%, much larger.”
2025-11-14 · Odd Lots · Why Paul Kedrosky Says AI Is Like Every Bubble All Rolled Into One · IDENTIFIED FROM THE TRANSCRIPT · source