If an AI model like Anthropic's Mythos is capable of causing 'cataclysmic' economic damage, it may be too powerful for a private company to control. This raises the serious argument for nationalizing such technology, similar to how governments control bioweapons or nuclear capabilities, to manage the immense systemic risk.

OpenAI's CFO hinted at needing government guarantees for its massive data center build-out, sparking fears of an AI bubble and a "too big to fail" scenario. This reveals the immense financial risk and growing economic dependence the U.S. is developing on a few key AI labs.

A plausible future scenario involves the AI data center debt bubble bursting, forcing a government bailout of collapsing pension funds. In exchange, the government would acquire the data centers, effectively nationalizing the core infrastructure of the AI economy.

Drawing from the nuclear energy insurance model, the private market cannot effectively insure against massive AI tail risks. A better model involves the government capping liability (e.g., above $15B), creating a backstop that allows a private insurance market to flourish and provide crucial governance for more common risks.

The systemic risk from a major AI company failing isn't the loss of its technology. It's the potential for its debt default to cascade through an opaque network of private credit and other lenders, triggering a financial crisis.

The US economy is now so dependent on the performance of a few AI-centric tech giants that their failure is not an option. When the AI bubble deflates, expect a government bailout, framed as a strategic investment like the CHIPS Act, to prop up the market and prevent a wider economic crisis.

The push for the U.S. government to invest in AI firms is framed as a growth opportunity. However, it's more likely a mechanism to bail out companies that have overcommitted on infrastructure spending when valuations inevitably contract, thus socializing future losses.

Geopolitical competition with China has forced the U.S. government to treat AI development as a national security priority, similar to the Manhattan Project. This means the massive AI CapEx buildout will be implicitly backstopped to prevent an economic downturn, effectively turning the sector into a regulated utility.

By inking deals with NVIDIA, AMD, and major cloud providers, OpenAI is making its survival integral to the entire tech ecosystem. If OpenAI faces financial trouble, its numerous powerful partners will be heavily incentivized to provide support, effectively making it too big to fail.