Data centers and finance

Whether to allow data centers to be built is a huge issue locally, with lots of talk about water use and competition for electric power. My gut feeling was that the AI frenzy felt like a bubble, and that a lot of the centers were going to wind up as white elephants (or worse, taken over by the government for China-style social score management).

This article, which assumes a fair bit of knowledge about market instruments which I don't have, proposes that the whole system is already starting to fall apart. He looks not at the growth (first derivative) but the rate of growth (second derivative) and explains why this matters.

Three errors, stacked, recreate 2008. The market is pricing AI as a technology cycle when its financing is the machinery of a credit-and-real-estate cycle. It is watching the level and the velocity while the structure breaks on the acceleration. And it is treating a concentrated, single-borrower loan book as though it were diversified forward demand. Each error alone might be survivable. Together they reconstruct, feature for feature, the conditions of the last great credit event - the same negatively convex structures, the same originate-to-distribute plumbing, the same correlation-of-one hiding inside the appearance of diversification, the same blindness to the one derivative that matters.

Maybe somebody with more finance experience than I has thoughts about it.