I don't follow prediction markets that closely, but it seems to me that win or lose, this ruling shows they're screwed either way.

If they lose, showing that these are unregulated forms of gambling, then the states can come after them.

If they win and the injunction is dismissed, it's because these prediction markets are operating like credit default swaps, which are heavily regulated. This would force every prediction market to operate through clearing houses, eliminate direct holding of users' funds, force them to to become registered dealers, and most importantly limit their market to those who have high discretionary assets, because at least regulated swaps require you to have $10M in discretionary assets to even buy swaps.

Again I may be missing something here, but I read this as the injunction being put on hold because they could essentially be swaps; if that holds, then it could be argued they must then act like swaps which are highly regulated and would kill their retail business. I'd be curious to know if I'm missing something about these though that would suggest a different analysis.

You know what's funny? Weirdly enough I think they are paying more in tax revenue than they should because of this. For the AI companies to grow, they need to keep raising money. And I'm not just talking about Anthropic and Open AI, but Meta, Facebook, NVidia and the like.

Open AI and Anthropic pay no Federal Corporate income tax because they are not profitable. However, they do pay sales tax, which is a tax on revenue, so the states are getting some. Also they are paying property tax for data centers they own, although most are being built by others, but every data center pays property tax.

Meta is likely paying more in corporate tax. Zuckerberg is overspending on AI to try and catch up, adn he's behind. If the true spend was clear, Meta's stock would suffer. So they're pulling an accounting trick. When you buy equipment, you're allowed to depreciate the cost of that equipment as an expense, even though it's a non-cash expense. This is to recognize that machinery and buildings and such have a fixed life before they fail. What Meta did is change their depreciation schedule on GPUs from 3 years to 7 years. This way, their profits weren't hurt too bad. This is actually bad because teh GPUs last 3 years, so MEta will have to replace assets that ostensibly halfway through their useful life and take an asset write off when they do which won't look good, but it propped up their profitability for their earnings call. As such, becuase it increased their profits, they had to pay more corporate tax.

NVidia is likely paying more in tax than they should. WHat they do is they "invest" in groups like OpenAI. Let's say they invest $5B. However they don't give OpenAI $5B in cash. They instead give OpenAI GPUs that in total are priced at $5B. No cash changed hands, but a sale is made, and they need to pay taxes in cash on what was a non-cash revenue stream. Also likely at inflated prices because the demand is up by them doing this. So NVidia feeding everyone's addition raises the prices of their product, raising their revenue, requiring them to pay more in taxes but a bunch of it is not in cash. Of course that equity they receive goes up in value, theoretically, since it's private valuations and they have no real meaning. Nevertheless their revenue and profits are inflated, making them pay more in cash for sales tax and income tax than they otherwise would. Microsoft did the same thing; they "invested" in OpenAI, and did give them some cash, but much of it was in cloud-computing credits, not cash, but it's still revenue.

The cyclical growth of the valuations of these companies are heavily inflated, but you can't tax that because it's unrealized gains; it's meaningless value unless it turns into cash, and wealth taxes historically have done no good but damage economies.

Anyways, I think the tax part of this is entirely screwed up.

Except this time the US government doesn't have the finances to support them.

TARP was a net positive for the US. The banks that got bailed out paid back their loans with interest, and the stocks the US government took in those banks paid dividends. Eventually the US government took equity in hundreds of banks around the country through direct stock purchases and warrants (think options) of around $245B, and sold them for $275B for a $30B profit. There were several social programs to help individuals that ended up being a net loss that weighed down the overall TARP program, but the government did get paid back and in general made some money on it.

But that was when the US government was spending around 10% of net revenue on debt services and had a debt-to-GDP of around 35%. Today it's around 100% and it spends more on debt servicing than the entire US Defense budget. So a TARP-style protection program could be much more difficult.

But aside from all of this, the government won't want tech to fail. I doubt they really need Anthropic or OpenAI, but they will need Microsoft, Oracle, NVidia, and others for both DoD purposes and export purposes. So most likely there will be some kind of bailout when this all shakes out.

I would disagree with you on RAM. RAM all around is going up in price. RAM suppliers make good margins on the high-end RAM used in these data center GPU setups but the demand wasn't very high for them. Now with this buildout, the demand was very high and they made money hand over fist. But the RAM guys didn't build new production lines, they just shifted supply to the more profitable in-demand product. As a result, all RAM went up in price, because the RAM providers started making less of the lower-end, more common RAM.

So if demand dries up for AI data center buildouts, then there won't be as much demand for that high-end RAM. The suppliers will then shift production back to the more common RAM, which should bring hte price back down again. I don't see it crashing as the OP said, but I would use the term "normalize".

You're missing a big one:

5) Nvidia doesn't have the money to guarantee these loans. Nvidia has in current assets around 125B; about 50% to guarantee these loans.

We have a major issue here. These guys had all this circular finance with equity, where Nvidia would invest in OpenAI who then turn around and bought chips from them, adding to NVidia's revenue. Very little cash was exchanged, the equity was exchanged, but then the equity went up (in a private valuation) because OpenAI was spending more on Capex. Now people are calling BS on this circular finance non-sense, so they're turning to debt.

But the debt is a problem. Bloomberg came out (non-paywall source from Futurism) with a report saying they're using Enron-style accounting, essentially shell companies to hold the debt while they own 20% of the shell, so the debt stays off their books. Debt financing like this however is extremely reckless; it is the source of the Enron crash, the Lucent technologies crash (Lucent also got into trouble with risky customer financing and crashed big time), the 2008 financial crisis, etc.

These guys are headed for a fall and will bring the economy into recession with it, right when the US government is too over-leveraged too.

Sony is a big company with many divisions that do their own things and operate with their customers in their own ways. That being said, there does seem to be some consistency here. Many years ago when i lived in San Diego, a guy I knew worked for Sony Online Entertainment and he worked on Star Wars Galaxies. I recall how at a party he gleefully told stories about how players would complain about certain things, and the mods would actively punish and ban them for complaining about imbalance and lack of features. He wasn't directly involved with the infamous Teleport them into Space situation, but he knew people who were and laughed about it, and as a player when I said that seems kind of bad service to your customer his response was that "why should we care, we're Sony, we're the best and those players f*ing deserved it". The guy was a a total POS, and my admittedly long ago and minimal experience suggests they, at least at that time, hired that type.

I've heard others critiquing the modern tech industry talking about how the tech industry has no real ideas, and Mark Zuckerberg is the king of that. This is yet another case. First was VR and the Metaverse, which turns out no one wanted. Then it was rapid catch up to the LLM craze, which after massive spend they are at best an also-ran and at worst barely playing. And now it's A/R glasses, which Google already tried and it failed not due to technology, but because no one asked for that.

I don't think it's fair to say that the tech industry as a whole has no new ideas, but Zuckerberg in particular is guilty of that. No one asked for A/R glasses when Google Glass came out, and I can't imagine anything has changed, and looking at all the creepy stuff people are doing with their on-their-face-cameras-that-record-and-post-everything-they-see, this seems like a lot of bad ideas with no real good solutions to show for it.

This lawsuit is doomed to fail. From the CNET article:

"The plaintiffs allege that by cutting production of older memory in order to pivot to high-bandwidth memory geared toward data centers and AI companies, the companies caused the cost of memory to rise."

So... demand goes up for high-bandwidth memory, which as an aside is way more profitable than generic RAM used in computers. So the 3 companies shift production over to more of that RAM given the much higher demand and better profitability. But of course, the supply of DRAM goes down because they shifted manufacturing, which basic economics says: Supply of DRAM goes down, demand stays the same, price then goes up.

So they're suing because the companies made a sound business decision? Sorry, to prove collusion you actually have to prove communication. Doable with 2 companies, exponentially harder with 3. This doesn't seem like it's going to go through.

I will happily do so. Bear in mind I used Google and Gemini to help me find the sources and summarize the numbers, so take that for what you will.

First the problem is the definition of "productive allocation of resources". If you're a billionaire, either inherited or building a tech startup, that money goes to things that create new businesses, and your wealth is the reward of investing your time, energy, and resources into others. Very few billionaires can become one without average people buying what they're offering, be it rent from real estate or social media posts; the only exceptions are lawyers or finance people. The other hard part is it's not quite apples to apples; business people create jobs through their companies, whereas governments provide social safety nets to try and lift people out of difficult situations. Both can create jobs, but in very different ways and for people facing very different situations.

What we do know is that the California tech ecosystem, entrepreneurs deploy capital very quickly, creating jobs very fast. But by California's own data, the tech ecosystem now has 1.8M jobs in California, which is 9% of the State's workforce, but accounts for 19% of California's entire Gross Regional Product at $623B per year. On top of that, some older studies show that high tech employment is a net job multiplier; it is calculated that every tech job results in 4.3 jobs in services and local goods. Another estimate says that California's tech sector directly and indirectly supports 4.2M jobs, or 20% of the entire workforce statewide. That's with roughly a $150B and $200B annual deployment of capital. Notably, that capital comes from two sources, revenue generation (which also generates taxes, but is essentially lost as an expense) and investment. The investment part is key because the money isn't lost; while the money gets spent by the company, the source of the funds is the value retained by the investor, who often trickles money back to the money managers who backed the VC, and those money managers are often pension funds and insurance companies who serve individual needs.

Now let's look at the State Legislature. The annual budget of California hovers around $300B annually. They fund payrolls for state employees like teachers and various safety nets. Public sector job multipliers are around 1.3 to 1.5X. So right there, the tech sector where most billionaires are located, use fewer dollars to deploy into high paying jobs that have a statistical knock-on effect of creating 3 extra jobs for every tech engineer hired, whereas state employees create 1 extra job for every state employee job.

So there is one metric, backed by studies, showing that with less resources (around $200B spend annually) 4 jobs are created or maintained vs. the State budget which spends $300B annually but only 1.3-1.5 jobs are created or maintained.

But the bigger issue, and one of the key sources of why governments do not deploy capital efficiently, is the stated purpose of this tax. It is, per the SEIU who sponsored this, a one-time, emergency 5% tax to prevent the collapse of Californai healthcare and help fund California public K-14 education and state assistance food programs. Along with a bunch of other outright salesy stuff about how only 200 people will pay the tax who have $2 trillion. Sounds good for poor voters right?

The problem is, they're seizing assets to pay for expenses. This one-time tax will fund issues for 5 years; ok. What happens at the end of 5 years? The problems in education and health programs and food assistance are still there. Further, you practically guarantee capital flight. One study shows that with the billionaires who have already relocated ahead of the deadline, California has lost out on $2.7B in recurring annual tax revenue. Six have already left (Steven Spielberg, Larry Page, Sergey Brin, Peter Thiel, David Sacks and others), but many others are considering leaving. This tax, if passed, is retroactive back to Jan 1st, 2026, but that may be entirely unconstitutional. So you can be sure this will be litigated up the Supreme Court, costing California tax payers more money before they collect on the fund. The tax bill will also remove an existing cap of .4% on "taxes on intangible and personal property", making this an entirely new tax and would allow for unlimited future wealth taxes; the government will have every right to extend this down to the middle class, including personal homes and going around Prop 13. So absolutely the State Legislature could raise property taxes if this bill passes because it is a Constitutional Amendment, and they would not need to to voters at all.

So how's that for allocation fo resources, plus sources and the like? You can refute the studies by being partisan, sure, but you can't change the facts. Six billionaires left California before the tax went into play for a direct loss of 2.7B in annual revenue, and many more will leave. They will challenge it in court, creating issues before they collect. In the meantime, those people will be spending money outside of California, creating those jobs elsewhere, whereas more people are going to need social safety benefits as their jobs move to other states right when California is losing tax payer dollars.

WE have a solution. Property Tax. We've been taxing unrealized gains for decades.

In California it's a bit problematic because of Prop 13 which fixes property taxes at the purchase price of your home + 1.1%/year and no more, but in other parts of the country municipalities can just assess the value of your home to raise your property tax.

The key is how much is too much. 5% is too much. Maybe 2% is too much. 1%? Not really.

Part of the issue is also the definition of "billionaires" in California. There is an enormous difference between say Donald Bren who personally owns the entirety of the Irvine Company that owns roughly $19B in real estate or the Segerstrom Family who built South Coast Plaza in Costa Mesa along with several other properties in Orange County and as a family are worth roughly $3B, vs say Winston Weinberg and Gabe Pereyra who founded the Legal AI platform Harvey who are as of their last raise made them billionaires but their company is not yet cash flow sustainable.

Frankly though, if the CA billionaires who made their money the traditional way in things like real estate can't come up with 1% of the value fo their assets in cash, then they're overvalued. And if a tax like this disincentivizes ballooned valuations in CA tech startups because there are real cash implications the higher you go, then maybe we'd see a little more rationalization in startup valuations, or a stronger focus on revenue and profitability to pay these things.

Again, I think 5% is too much. But 1%? I could get behind this.

The US Government provided SpaceX with $278M in NASA Commercial-Off-The-Shelf grants in 2006; when SpaceX was valued at roughly $27M. If as a condition of providing those grants, the US Government took a 1 or 2% equity stake, then the IPO of SpaceX would have returned $25.2B - $50.4B.

The Government provides $30-$50B per year in grants to private companies and startups. That money is gone as far as the government is concerned; lost anyways. If they took 1 to 2% equity in return for those grants, even if a fraction of those companies got acquired or went public, the government would be reaping serious rewards, and many companies would happily give a small amount of equity to the US Government.

I am dead set against 50%; Sanders is insane and doesn't know economics at all. But 10% of Intel in exchange for financial assistance provided, and 1-2% equity in every company they support with that money going back to the treasury if the companies are successful? I don't see a problem with that at all.

I have a Roku stick on an old TV that makes it a streaming TV; it's pretty useful... to watch Netflix or AppleTV or Disney+. Does anyone use Roku's streaming services at all? Maybe it's just me, but I see them more as a dashboard for your streaming services rather than an actual streaming service.

It is actually believed that Russia has substantial Bitcoin reserves. Iran outright runs their own mining operation and mandates private Iranian miners must sell to the central bank of Iran. What they're buying is everything else they need, as both are heavily sanctioned and they use Bitcoin to get around sanctions. North Korea does it for the same reason, to avoid sanctions, but they gain these through hacking and theft.

As per the usual with your comments, your reading comprehension is terrible. At no point do I defend Elon Musk, I think all of his companies are nuts and what we're seeing is borderline feudalism masquerading as capitalism. I am explaining how it works though. You don't have to like or agree with Musk and his way of doing things to recognize that there are people that do, and the value of his companies are based on those people believing it. Which goes back to the point; if he left, he wouldn't be able to liquidate his stock fast enough to turn it into cash before the SEC halts trading and fines him for insider trading. He can't simply walk away. Without him at the helm, those keeping the stock price up would stop doing so and it would tank, so even the vested portion he has would plummet before he got any hard cash out of it.

I was incorrect about his vested vs. unvested; nevertheless an enormous portion of his wealth is still unvested and tied to unachievable goals so my point stands, because in addition to the many, many things that is abnormal and possibly illegal in the corporate structure of SpaceX, it's abnormal for one person to have a voting power of 10 to 1 for their special class of shares (only a few tech companies did this), and it's even more abnormal to be able to vote on behalf of those shares while they remain unvested. The whole thing stinks to high heaven.

Next time try not using your usual straw man tactic and try reading what people are saying, it's become tiresome.

You're insane. People need money to pay taxes; wealth isn't money, it's the value of your assets. A wealth tax like your talking about is nothing more than simple nationalization of companies and assets; outright takeover of companies by the government. It would wreck the economy for everyone.