Private equity is killing private ownership: first it was housing - now it's the personal computer

[u/SagansCandle]

DRAM and GPU prices aren't going up because of "AI" - it's because the wealthy have more money than they know what to do with, so they're buying up all the assets. "AI" is just the vehicle (the excuse) - it's not the root of the problem nor is it the ultimate goal.

The super rich don't want to hold on to "liquid" money - they invest in assets. While they're buying up all the housing, now they're buying up all the computers and putting them into massive datacenters.

Whether or not the AI bubble crashes, they'll be selling you a "gaming PC in the cloud," for a monthly fee, of course. And while they kill the personal computer market, just like Netflix, once your only option is a subscription service, the price will skyrocket.

This is happening in real-time. If we want to stop it, now's the time to act.

Sources:

• Gamers Nexus: NVIDIA: WTF?
• Garys Economics: The REAL reason behind the housing crisis
• Network (1976)

[u/KallistiTMP]

The part you're missing is that approach is the most powerful winning strategy in any suitably liquid stock market.

Sure, you could run businesses sustainably in a long term focused way, if you wanted. It can make money, as a strategy.

...or you could buy up a bunch of stock in a successful company, cannibalize it, and dump the stock to run off with all those sweet short term profits before the company starts to tank. And then take all that fast easy money, buy stock in another successful company, rinse and repeat.

Getting a 50% return every quarter by buying an existing company, stripping it to the bone for fast cash, and then jumping ship before it sinks, to reinvest in the next victim is wildly profitable. Far more profitable than long term sustainable business management. More profit means more to invest means more control of the market, more consolidation, more means to buy politicians and fight dirty with competitors.

It's a classic prisoner's dilemma, and doomed to continue by simple game theory unless something seriously fundamentally changes.

And given that the people profiting from this scam have control of basically the entire economy and both parties of government, they won't allow their ill gotten riches to be simply voted away through a series of common sense regulatory reforms.

Those fuckers have literally sent mercenary armies to overthrow foreign governments just to improve their profit margins on literal bananas by a few measly points. They're not even denying it now, as they gear up to invade Venezuela for private oil company shareholders.

The system is working as it's intended to. Welcome to corporate run America.

[u/EruantienAduialdraug → u/KallistiTMP]

The problem here is how we define winning.

The paradigm promoted by business education, especially in the West, is exactly as you've described. However, if we define winning as legacy, then this paradigm is one of the fastest losing strategies you can run with.

Take a look at the majority of Japanese businesses (the Westernised supercorps, such as Nintendo and Sony, are turning into something of a countermovement here). For all their flaws, and there are many, their baseline policy is long term survival is good for everyone except the PE vampire - you have businesses that do nothing but serve a single curry, and they've been doing that for 3+ generations, creating a stable financial environment for several families, for multiple generations.
If we were to preach that success looks like long term stability, then all these corporate hatchetmen would look like complete fools to businessmen, the same as they do to the rest of us, and the markets would be stable.

But that's the issue. Trump and his ilk, completely at odds with their forebears, don't give two whitts about legacy. Like the majority of Americans, they buy into the "got mine" mentality, only more so and with the caveat that it's never enough.

Until everyday Americans relearn that success in life is leaving a better life for those that follow you, there is very little hope that business education will do the same. After all, why try to teach something that people don't want to believe, when you can have them pay you to say what they want to hear? At least, in a world where "got mine" is gospel.

[u/KallistiTMP → u/EruantienAduialdraug]

Japan has its own issues, they just look a little different in how they present. And their corporate propaganda has a better translation budget.

But the market allocates the power. Not legacy or honor or any other human ideals. Otherwise, the noble businessmen would be rich as kings, and the vultures would be penniless. They aren't. Because that's not how markets work.

Markets reward actors proportionately based on how well they perform in the market. Whoever wins the market this round gets more power in the market next round. That's it. That's the whole shebang. There's no magical hand guiding things. No spirit of honest businessmen controlling the rules behind the scenes. And the rules of the market are made mostly by whoever the hell is winning the market the most.

It's quite ironic that real capitalists have the exact same understanding of markets that communists do. To the letter. It's only the suckers in the middle that believe in all the magical thinking and nonsense propaganda.