Eurodollar University The First Crack in the AI Bubble Just Appeared
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Mar 17, 2026 A rumor about massive layoffs at a major tech firm sparks a deep dive into AI spending and where the money comes from. The conversation tracks off-balance-sheet borrowing, SPVs, and parallels to past structured-finance excesses. It highlights how private credit and hidden debt channels could tighten funding for big AI projects.
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Meta Layoffs Signal Credit Strain
- Meta's reported 20% layoffs likely aim to conserve cash, not replace workers with AI.
- Jeff Snider links these cuts to broader credit market stress and firms' years-long hiring binge that never met real demand.
AI Became The Replacement Growth Story
- AI became the growth narrative firms leaned into when the real economy failed to recover.
- Tech firms shifted capital to hyperscaling AI projects as a substitute for the missing real-economy recovery.
SPVs Reappeared To Finance AI Hyperscaling
- SPVs and structured finance re-emerged to fund massive AI builds when direct borrowing hit limits.
- Special purpose vehicles let firms raise huge sums off balance sheet by pooling investors and lease commitments.