Month: September 2026

Top Hyperscaler gets a reality check

Last week news began to circulate about Oracle, one of the primary companies developing infrastructure for future OpenAI initiatives. They issued a “force majeure” notice to the construction company working on a large data center project in New Mexico over concerns about being able to source enough power to supply the anticipated demands of the computer hardware they will need for the facility.

Larry Ellison, the CTO and co-founder of Oracle (and a member of Trump’s inner circle), is trying to use a legal maneuver to delay the previously agreed upon payments necessary to complete the construction of their facility. With this news, their rating has dropped to a BBB- rating (a haircut away from junk status). Joining both CoreWeave and Meta who have already fallen into this junk territory. Add to that the circular financing from companies like Micron and Nvidia I’ve spoken about previously. How long until the curtain is pulled back, and these wizards are revealed as the con-men they have been all along?

Are these the portents of a larger collapse?

As we head into the 2026 Midterms, we are already seeing both Democratic and Republican candidates acknowledging that these planned data center projects, meant to power the future needs of AI (or “super intelligence” as Trump now insists we call it), are a key concern for the communities where these projects are going to be located.

These planned facilities will have an enormous appetite for both water and power, and most of these projects are planned in areas that are already dealing with shortages of both. Also, any promises of new jobs are short-lived because, once construction is complete, these facilities will require minimal onsite staff to perform the basic maintenance and upkeep to keep these systems running.

On top of the concerns about how much utility bills will skyrocket for these communities, there are additional concerns about the pollution spewed out by these data centers. This runs the gamut from air pollutants, heat exhaust as well as the noise from all the fossil fuel-based generators necessary to supply backup power for when the local power grid inevitably fails. These pollutants will affect not only the local citizens but the local flora and fauna as well.

What do you think comes next?

So far, we are seeing all the signs of something like the Dot-com Bubble (or other similar asset bubbles), where huge valuations were used to justify the cost of spanning the nation with fiber optic cable. Eventually, the “dark fiber” left from the Dot-com Boom was lit up to bring the Internet from the age of dial-up to our present where most homes and almost all businesses have access to high-speed internet. It just took a decade or so for those junk investments to finally pay off.

Perhaps, given enough time, properly aligned and regulated AI running in data centers with minimal carbon footprints (like those planned by Google and Microsoft) will bring about the Utopia they have been promising us. Perhaps we’ll finally even get flying cars!

Preventing Skynet

This past few weeks have seen many headlines and posts from Frontier AI companies (like Anthropic and OpenAI) insisting that the government take action now to slow down progress on AI by creating laws and/or agencies to impose guardrails that might prevent future harm.

Now, after hearing about this most people fall into two camps:

1. This is all a scam, they are just creating headlines to attract/retain investors/private equity and keep the investment firehose going at full blast.
2. We should have been doing this all along! Why did Trump throw out Obama’s AI plans during his first term to begin with?

I have touched on this previously, but the root of this is that these companies believe that without any other guidance, beyond Trump’s “beat China at any cost” imperative, they will need to turn over more and more of the training for next-gen models to AI itself.

Recursive Self-Improvement (RSI)

In layman’s terms what this means is that instead of human engineers crafting the tests to ensure that next-gen models are ready, it will instead be AI that determines and applies whatever metrics it devises to ensure that the next model is indeed faster and more accurate for each iterative generation.

The problem here is that today’s AI will already go to any lengths it deems necessary in order to fulfill any “prompt” it has been given. It will lie, cheat and/or steal in order to complete the task it was given. This goes beyond “hallucination” where it just makes up facts to seem intelligent (much like some politicians), but it will also hack internet infrastructure and instruct terrorists on how to assemble munitions.

If we fail to teach future models that certain actions are fundamentally wrong, they will only become exponentially better and potentially more insidious at pursuing any given task.

A Call to Action

The current trajectory suggests that the pursuit of raw capability, divorced from ethical constraint, is leading inevitably towards an uncontrollable point. The moment we fully embrace RSI is the ultimate inflection point. It is not enough to merely discuss guardrails; we must actively shape them!

To do this properly we must include policymakers, researchers, and the public to move past the stalemate of “win at any cost” thinking. We must establish and enforce constraints before the models become sufficiently advanced to the point that human judgment becomes irrelevant, ensuring that the unparalleled power of next-generation AI is harnessed responsibly rather than surrendered to its own drive for optimal completion.

Why we can’t have nice things anymore

I remember the excitement of opening a brand new video game (or box of software) the shiny disc (or floppy discs) inside had been kept safe from harm with a layer of shrink-wrap. Future generations won’t understand the simple pleasure of searching the store shelves to find what you had been waiting months for, or even the odd overnight lineup just for a chance to receive one of a limited number of items your local store had been granted. Now software is available relatively instantly as you download it to your device of choice.

The drawback is that even if you’ve paid a one time price to “own” the software, the company who “sold” you that software can at any point decide to disable it and/or take it down from their “digital” storefront so that you can no longer access it. Or, even worse, the software is only available via subscription. And if you stop paying, or there’s some problem with your credit card, you are locked out completely.

This extends beyond software as well, not only are gaming systems removing the disc drives that might provide an option to install the game via physical media that you indeed own. Companies like HP are selling printers that will not function unless you pay for your ink “subscription”. So, even if your printer is completely full of “official” ink, you are prevented from printing a single page unless your subscription is active. And, as additional hubris, your device is completely fine printing a page explaining this and directing you on how to (re-)activate your subscription.

Head in the clouds

The driving factor behind this, besides technological advancements, is that everything digital now lives in “the cloud”. No longer do companies run banks of servers on their own “tin”, instead they “rent” space on servers maintained by companies such as Amazon, Microsoft, or Google. At first doing this did indeed provide some savings, by outsourcing these line items from their budget to companies that were providing these services at a loss to increase their own market share – their revenue increased. However, once enough companies had removed their own data centers and were entirely dependant on these “virtual” servers, the giveaway ended and costs skyrocketed.

The same thing will happen with AI. And all of this is straight out of a drug dealer’s playbook. Get them hooked, and then jack up the price.

Renting your Human Capital

Now that I am unemployed and evaluating the job market, it appears that this concept has extended to employment as well. Most opportunities in my area of expertise (software development) seem to be dominated by contractor positions. Sure, on paper, this looks cheaper for these companies. No longer do they need to worry about health insurance, retirement account matching, continuing education, or many of the other “costs” of maintaining a permanent hire. But, with a constant revolving door of contractors flowing in and out of roles, you are losing the benefits of tribal knowledge as well as the interpersonal relationships that keep a good team united for a common goal. The new contractor won’t know which of their teammates is the most knowledgeable about key systems, or whom to go to when they need access permissions or a deeper dive into unfamiliar territory.

Welcome to Technofeudalism

This isn’t really about software, or clouds, or contractors. It’s the same con wearing different outfits. Somewhere along the way, “you bought this” quietly turned into “you’re renting this, forever, on our terms”. And nobody sent out a memo. Your games, your ink, your servers; all of it converted from a thing you finished paying for into a thing you never stop paying for.

And like any good dealer, the platforms and the C-suites learned the same lesson, never sell the first hit at full price. Subsidize the servers until nobody remembers how to rack their own. Underprice the software until physical media quietly disappears from the shelves. By the time the price goes up, there’s no going back. You’ve already forgotten how (or are now incapable of trying) to live any other way.

We never owned our jobs the way we owned a boxed copy of a game. But there was something that used to function like ownership regardless. You earned your spot on the team by showing up every day and contributing in order to help the the “team” grow and improve. Keep the labor market flexible and “efficient” until nobody has been there long enough to know where the bodies are buried, or whom to ask. And now you’ve evicted people from a home they never technically owned, but lived in all the same.

We used to call this feudalism when it was land. You didn’t own your field, you just farmed it for someone who could evict you whenever they liked. Turns out you don’t need the field. Just take away everything that made it feel like it was yours.