The Coming AI Bankruptcies Will Be "Messy And Complex"

So far this week on Fringe Finance, I’ve tried to keep shining a light on the lesser known side of some of Wall Street’s favorite narratives: that housing is fine, that AI valuations are justified, and that buying every dip is foolproof.

On Thursday morning I published Harris Kupperman’s latest letter explaining why he thinks the AI crash happens now and a wave of bankruptcies could be incoming…and how he’s positioning his fund into Q4:

“The Economics Are Abysmal”: Harris Kupperman Warns The Crash Is Here

And while Wall Street remains mesmerized by the AI trade, the housing market is flashing increasingly troubling warning signs. Buyers are disappearing, transactions are slowing, and liquidity is drying up.

Housing Is Collapsing, Wall Street Hasn’t Noticed

I examined the growing disconnect between what’s happening on the ground in real estate and the complacency still dominating financial markets, and why housing could be sending a warning that equity investors are choosing to ignore.

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Meanwhile, investors have become conditioned to believe every sharp decline is a buying opportunity. But what happens when a company has enormous debt, negative cash flow, little tangible equity, and no obvious fundamental valuation floor?

Sometimes, Knives Just Keep Falling

The private-market valuations attached to OpenAI and Anthropic have become enormous, and some of the world’s largest publicly traded companies have billions of dollars riding on them. I wanted to explore what happens if these companies eventually test the public markets and investors refuse to pay the prices private investors have been assigning them?

If OpenAI And Anthropic IPOs Flop, These Stocks Could Suffer

After years of investigating questionable companies, calling out financial absurdities, and trying to warn investors about bubbles and outright fraud, I’ve arrived at a simple conclusion: you cannot save people who don’t want to be saved. This is a personal reflection on my years covering short-selling research, the incentives that keep Wall Street perpetually bullish, and why I’ve become much more comfortable letting people learn expensive lessons on their own.

Let The Morons Eat Cake

Finally, along those lines, after nearly twenty years of extraordinary monetary accommodation, enormous leverage, speculative excess, and an increasingly distorted understanding of risk, the financial system has developed an almost religious faith in the ability of central banks to prevent meaningful consequences.

I examine the staggering scale of the excess and argue that the eventual psychological reckoning could prove even more damaging than the financial losses themselves.

Two Decades Of Mass Financial Delusion Ends Now

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