Let's turn now to data centers. More of the political world and the news media is opening up to this live issue. And let's put this up here on the screen. Quote, "The new price of eggs, the political shocks of data centers and electric bills." The New York Times starting to pay attention, actually doing a decent enough job of going over and actually, you know, interviewing some of the people who are most affected. So, they actually open the story with cattle ranchers in Georgia. quote, "They had one thing on their minds when they cast their ballots for the state's utility board to make a statement. They were irked by their escalating electric bills, not to mention an extra 50 bucks a month levied by their local utility to cover a new power plant more than 200 miles away. But after they heard a data center might be built next to their ranch 60 mi southwest of Atlanta, they had enough of Republicans who were far too receptive to the interest of the booming AI industry." First time I ever voted Democrat, Mr. Payton, 58, said. So you can see in that anecdote the political price now as this has propelled two Democrats in the state of Georgia to upset you also as I have you know said here before there are opposition organic movements across the nation Tucson Arizona here in Virginia New Jersey but all the candidates here in Virginia basically were like against data centers the power bills just what it demonstrates I think is that because we have finite amounts of power for a variety of reasons mostly corrupt corruption but for because of that reason and we're all kind of competing against one another and at the same time the government is going all in based literally on the AI industry that this will offset a lot and a lot of their costs which are you know a huge bet on AI which may not actually be a good bet and then socialize it to the entire United States and the consumer who's already struggling with inflation. So, I think it's one of those where as power prices, you know, look, I think they're going to continue to go up or broadly stay up uh because of this and a lot of the industry uh has continues to pour all these billions of dollars, which is good for the stock market, not necessarily good for the quote real economy because it's the only thing really propping us all that up. It's a huge bet that's increasing cost on the way up and it could also increase cost on the way down if it does cause a recession. I think that's one of the most dangerous points. No, in that Georgia election, so no Democrats had been elected to that board since 2007, okay? >> And you have two Democrats who won by like massive. They won by like 20 points. It was not close. And so, you know, there were a variety of reasons. When I saw that, I was like, you know, it fits my own view of the world a little too closely >> that this would be all driven by electricity prices and by data centers. So, I was glad to see the New York Times go and actually interview voters. And come to find out, those voters were like, "Yes, I am a lifelong Republican and I cast my ballot for two Democrats because I am disgusted with the rate hikes and the data center buildowns that are impacting my life directly." So, I'm not saying that's 100% of what was going on. Part of what was going on was a low turnon election. Part of what was going on is there were some, I think, Atlanta municipal elections that drove more Democrats to the polls. Those were factors at well as well that led it to be such a blowout. But it certainly appears that the data center buildout and the fact of consistent rate hikes and electricity bills skyrocketing led to the blowout victory of these two Democrats. Now you have um you know other Democrats who are really picking up the the message realizing that this is an incredibly potent issue. As Sager mentioned, you had a few trial runs in Virginia as well where that messaging really seemed to pay off. Mikey Cheryl also uh ran on freezing any rate hikes on uh the utilities in New Jersey. So that seems to have you know helped to power her victory as well. Tomorrow we're going to cover this Tennessee special election that is happening tomorrow in a Trump plus 22 district where you have the Democrat Afton Bane who is running aggressively also on overall affordability specifically on electricity prices and I don't know that she's going to be able to pull it off. It is a tough hill to climb and again a Trump plus 22 district. But they are nervous enough on the Republican side that they've sent in JD Vance. They've sent in Mike Johnson. They're fundraising aggressively. they're, you know, they're running all sorts of very aggressive ads against her. Like they are nervous that this could be an upset. And the fact that she's even in the ballpark is completely insane. So, um, you know, we've covered here how Steve Bannon and others realize that this is an incredibly potent populist issue and the Trump administration is driving the train in terms of the AI buildout. Republicans, of course, are always very close to, you know, to corporate power. Many Democrats are as well, um, too. by the way. But I think this is going to become a more and more salient issue as people connect the dots of these data centers that are going in that I'm not super happy about anyway and my electricity prices going up. >> Yeah, of course. And one of the things that we have to keep looking behind the scenes at is what about the money? How where is it going to come from? Because it's not just now. It's already fueling the data center boom. It's 10 years in the future. Let's go to the next one. Please put this on the screen. So they say OpenAI is quote a lossmaking machine. Estimates it has no road to profitability by 2030 and will need a further 200 billion in funding even if it gets there. Quote, "Don't call it a bubble. Lossmaking monster is on the hook for 1.4 trillion with a T in compute commitments as companies start turning to debt to fund the AI craze." I actually thought that they summarized it really well and showed even within their funding because even I didn't understand the extent to which not only are the losses the problem how even with their hundreds of billions in capitalization that they still don't have the money to even fulfill all of their commitments. This is why I said you're going to pay on the way up in terms of power prices and you can pay on the way down. If we have a recession that's going to affect everything and everybody's going to get fired no matter whether you work in AI or not because that's what happened with the financial crisis too. That's what happens. stocks start to go down 25 30% it's a disaster right obviously and so you can see in all of this that the signs are bubbling up let's go to the next one this but this this is one of the most important ones we didn't cover it unfortunately at the time this happened about 12 15 days ago but you'll remember I talked about a lot of those vendor finance deals where they announce a deal and then the stock goes up effectively paying for it even though no money has yet changed hands this Oracle deal was really important they say Oracle is already underwater on its quote astonishing $300 billion OpenAI deal because what happened is that when Oracle announced a $300 deal with a chatbot it stock shed some 315 billion in market value. Now obviously market cap is not the only thing you know that's not exactly saying that they lost some 300 billion but the equivalents of quote Oracle shares of little change overtine. So the $60 billion loss figure is not entirely wrong and what it has done is it's cost it nearly as much as one entire General Motors or two entire craftiness investor unease stems from the betting of a debt finance data farm on open AI. We have nothing. What they show also is that the theory goes that OpenAI is in a rush to quote discover AGI and that Oracle is quote uniquely able to scale the compute capacity. They promise the lowest upfront costs and the fastest path to income generation, but quote Oracle doesn't have as much operating profit to burn as its competitors. So throwing everything that it can at supporting this one customer in exchange for an IOU. Now the fact is though is that the fact that their market cap and their stock is not performing means that people are having less faith in that IOU for the and you should shouldn't you it doesn't make any sense in the in in the aggate. So I don't know. I just think I think that the problem remains the cost is going up for all of us and if it works the cost will only continue to go more but as it goes down and it just increasingly looks like it at some point something needs to pop that we will be left kind of like with the wreckage of all these data centers and then it will be put to use for what? We won't have HI. We won't cure cancer. Well, I'll show you all what it's being used for right now. C4. Let's put this up here on the screen. This is new quote nano banana versus nano banana pro. So on the left this is image generator was a previous image generator of this is a girl who's at a bar if you're just listening bartender in the back. You can just tell it doesn't pass the test. >> It has this sort of sheen to it where it looks a little bit it looks good but it looks a little surreal. >> If you have a sophisticated eye you could look at that one and go I think that's AI. >> Yeah. The one on the right, for those who are watching, that's also AI generated. It looks 100%. There's nothing in that photograph that I could be able to identify as fake. Not one. Not absolutely not. The lighting is perfect. >> The whoever sitting across from her took a picture with their iPhone and posted it. Yes. It's indistinguishable from reality, >> right? Not a single thing passes the test uh on that one to to for me to say that that is fake. And so yeah, I mean that's that's really what it all and this is kind of remains my critique is that everything they're doing is slop. It's just slopifying the entire economy. It's like oh image generation. I keep talking about the NFL. But it is important because nobody who's curing cancer is advertising on the NFL. They just they the results are the same. Instead they're like hey book a flight or whatever. I'm like oh you want to replace Xedia. You basically want to replace Google Chrome. That's what they did with the chat GPT browser. that is not worth all this money being poured and the power bills and everything. Image generation like I'm sorry. Yes, it's a better research tool. Cool. I think that's I actually think it's cool. I use it often, but that's not the promise of like this breakthrough, you know, kind of thing. It could come potentially uh with all of that, but I'm not buying I'm not buying it right Well, I hope you're right >> because I think the the actual promise being fulfilled, you know, I think is a much scarier prospect of the them actually making good on their promise to eliminate all or most jobs. Uh I don't think we're ready for that. I don't think we're ready for this. I don't think we're ready for a world where we can't tell f fact from fiction. I mean, you think we have responsible political actors and an educated society to be able to parse things out? Do you think that our tech oligarchs that are running our information ecosystem like Elon with Grock, do you think that they're going to responsibly use this technology? I think this is already where it's at incredibly disturbing and incredibly destabilizing. You know, for us to have a sort of shared project here, we have to at least have some metric of a shared reality and that is under fullscale assault by these AI tools and there is nothing in place to protect us at this point. Um, one last thing going back to that uh, Financial Times piece about Oracle and the deal with Open AI. You know, one of the reasons why this is so significant is because if you think about that infamous chart that showed all the lines going from Nvidia to Open AI and from Open AI back to Nvidia and, you know, all these companies just doing deals with themselves. The way that the bubble has continued to be inflated is that every time one of those deals got done, even though no real new value was being created, investors liked it and the stock price went up. So there was some, you know, sort of theoretical value that was created even though nothing real had happened in the economy. Because this deal, which was a sizable deal, didn't react. There wasn't a similar stock market reaction. It begs the question of whether this mechanism that they've used to inflate the bubble, inflate the bubble and keep the line going up whether that has run its course. So one of the things that has inflated the bubble seems this is one indication that that particular mechanism may have run its course. The way they put it in the article is they say beyond the charts a broader question relates to whether an open AI deal is still worth announcing. A few months ago any kind of agreement with open AI could make a share price go up. Open AAI did very nicely out of its power to reflect glory. most notably in October when it took AMD warrants as part of a chip deal that bumped share price by 24%. But Oracle is not only the is not the only lagard. Broadcom and Amazon are both down following OpenAI deal news while Nvidia's barely changed since its investment agreement in September without a share price lift. What's the point? Combined trillion dollars of AI capex might look like commitment, but investment fashions are fickle. So another warning sign that possibly this thing could be running out of runway. Now my own opinion, not being an expert in that any of this is that they are going to continue to inflate this bubble as long as they possibly can because they have to because a bunch of their fortunes are tied to it. The entire US economy is tied to it. I mean these companies already are too big to fail simply from the fact that we have as you know that our leaders have decided to bet our entire economy on this stuff. So I think they will move heaven and earth to make sure line continue to go up but at some point either they're going to deliver on their promise threat to take all of our jobs or you're going to have a tremendous uh financial calamity and also perhaps both is also on the table. Yes, that's exactly right. >> Hey, if you like that video, hit the like button or leave a comment below. It really helps get the show to more people. >> And if you'd like to get the full show, ad free and in your inbox every morning, you can sign up at breakingpoints.com. >> That's right. Get the full show. Help support the future of independent media at breakingpoints.com.