AIBS™️ = “Artificial Intelligence-Backed Securities” (also a clever pun for “AI - BS”)
As previously laid out in Part I & Part II , we have a very simple view of how the “AI Party” may end (feel free to call it a Bubble):
Firstly, hundreds of $ billions of DEBT financing will be put to work
Innovative financing structures will be “conjured” along the way, such as AIBS™️ instruments with different tranches of debt
Then, the German Landesbanks will load up on all the tranches, including some funny ones like AAA-rated “Meme-Generative-AI tranches” or something stupid like that
Then, we will get a proper Credit blow-up like with US Subprime in 2008 or US Shale in 2015 where we get to buy CoreWeave bonds for 30c on the dollar
Then, Netflix will produce the “Big Short 2” where a shrub will be mentioned in the credits for coming up with AIBS™️
Then we’ll be probably be loading up again on AI infrastructure names, just like with Subprime in 2010 and Energy in 2016. Rinse and Repeat.
In any case, there is one key ingredient missing before calling for a major Top in AI capex spend: We need MOAR DEBT!!!
The “good news” is that we are well past the first inning and moving pretty fast. After all, there’s nothing that Wall Street loves more than a Credit Binge and they are happy to oblige!
The front page of the Weekend FT shows that such concern is becoming mainstream. They forgot to add “Labubu Larry” on the cover, but I’m also happy to oblige!
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