Forget AI AI AI. Think Enron Enron Enron
December 25, 2025
Another dinobaby post. No AI unless it is an image. This dinobaby is not Grandma Moses, just Grandpa Arnold.
Happy holidays AI industry. The Financial Times seems to be suggesting that lignite coal may be in your imitative socks hanging on your mantels. In the nightmare before Christmas edition of the orange newspaper, the story “Tech Groups Shift $120bn of AI Data Centre Debt Off Balance Sheets” says:
Creative financing helps insulate Big Tech while binding Wall Street to a future boom or bust.
What’s this mean? The short answer in my opinion is, “Enron Enron Enron.” That was the online oil information short cake that was inedible, choking a big accounting firm and lots of normal employees and investors. Some died. Houston and Wall Street had a problem. for years after the event, the smell of burning credibility could be detected by those with sensitive noses.
Thanks, Venice.ai. Good enough.
The FT, however, is not into Enron Enron Enron. The FT is into AI AI AI.
The write up says:
Financial institutions including Pimco, BlackRock, Apollo, Blue Owl Capital and US banks such as JPMorgan have supplied at least $120bn in debt and equity for these tech groups’ computing infrastructure, according to a Financial Times analysis.
So what? The FT says:
That money is channeled through special purpose holding companies known as SPVs. The rush of financings, which do not show up on the tech companies’ balance sheets, may be obscuring the risks that these groups are running — and who will be on the hook if AI demand disappoints. SPV structures also increase the danger that financial stress for AI operators in the future could cascade across Wall Street in unpredictable ways.
These sentence struck me as a little to limp. First, everyone knows what happens if AI works and creates the Big Rock Candy Mountain the tech bros will own. That’s okay. Lots of money. No worries. Second, the more likely outcome is [a] rain pours over the sweet treat and it melts gradually or [b] a huge thundercloud perches over the fragile peak and it goes away in a short time. One day a mountain and the next a sticky mess.
How is this possible? The FT states:
Data center construction has become largely reliant on deep-pocketed private credit markets, a rapidly inflating $1.7tn industry that has itself prompted concerns due to steep rises in asset valuations, illiquidity and concentration of borrowers.
The FT does not mention the fact that there may be insufficient power, water, and people to pull off the data center boom. But that’s okay, the FT wants to make clear that “risky lending” seems to be the go-approach for some of the hopefuls in the AI AI AI hoped-for boom.
What can make the use of financial engineering to do Enron Enron Enron maneuvers more tricky? How about this play:
A number of tech bankers said they had even seen securitization deals on AI debt in recent months, where lenders pool loans and sell slices of them, known as asset-backed securities, to investors. Two bankers estimated these deals currently numbered in the single-digit billions of dollars. These deals spread the risk of the data center loans to a much wider pool of investors, including asset managers and pension funds.
When playing Enron Enron Enron games, the ideas for “special purpose vehicles” or SPVs reduce financial risk. Just create a separate legal entity with its own balance sheet. If the SPV burns up (salute to Enron), the parent company’s assets are in theory protected. Enron’s money people cooked up some chrome trim for their SPVs; for example, just fund the SPVs with Enron stock. What could go wrong? Nothing unless, the stock tanked. It did. Bingo, another big flame out. Great idea as long as the rain clouds did not park over Big Rock Candy Mountain. But the rains came and stayed.
The result is that the use of these financial fancy dance moves suggests that some AI AI AI outfits are learning the steps to the Enron Enron Enron boogie.
Several observations:
- The “think it and it will work” folks in the AI AI AI business have some doubters among their troops
- The push back about AI leads to wild and crazy policies like those promulgated by Einstein’s old school. See ETH’s AI Policies. These indicate no one is exactly what to do with AI.
- Companies like Microsoft are experiencing what might be called post-AI AI AI digital Covid. If the disease spreads, trouble looms until herd immunity kicks in. Time costs money. Sick AI AI AI could be fatal.
Net net: The FT has sent an interesting holiday greeting to the AI AI AI financial engineers. 2026 will be exciting and perhaps a bit stressful for some in my opinion. AI AI AI.
Stephen E Arnold, December 25, 2025
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