Banks Are Herd Animals – Ed Zitron on the AI Debt Slow Boil

A 45-minute episode of The Tech Report, uploaded on 9 October 2026, with Will Guyatt again standing in for the usual host and Ed Zitron on his newsletter piece “Credit Crunch”. The thesis is in the subtitle. People wait for the AI bubble to explode, but bubbles in railways, dot-coms and crypto all ended as a slow boil, borrowing getting dearer bit by bit until the deals stop filling. That is the stage he thinks we’ve reached. The ten-year Treasury yield hit its highest since 2002 that week.

Asked for the best argument against him, he gives it: maybe a smaller AI industry survives the crash. He’d have bought that a year ago, he says, but not now, with about $1.3 trillion of compute commitments and Anthropic claiming a $30 trillion market. Then he walks through who pays more. Every loan is priced off the Treasury rate plus a margin, so a rising floor hits everyone, and Oracle’s bonds already trade like junk. Data centres pay interest-only while they’re built, so each delay adds hundreds of millions for nothing. Credit agencies give these projects investment-grade terms because Meta or Microsoft is the tenant, which he likens to a student loan co-signed by Sundar Pichai, without pricing the real risk: whether the building gets finished. Meta’s Hyperion, 80 per cent owned by Blue Owl and leased back on four-year terms with a guarantee behind them, is his example of debt kept off the books.

On the IPOs he is blunt. OpenAI and Anthropic lease everything, own little and burn cash, so on a credit basis he’d rate them CCC, one step above default. He also takes on the run-rate numbers. The FT reported OpenAI was approaching $50 billion annualised, not the $70 billion that had circulated, because investors had “grossed it up” to match Anthropic, which counts the full price of Claude sold through Amazon, Google and Microsoft. Zitron puts Anthropic’s real 2025 revenue at $2.43 billion against the reported $4.6 billion, but that strips out all marketplace sales; netting out only the cloud providers’ cut leaves about $4.25 billion. His last point is the title. Banks keep lending because everyone else is, and the turn comes when one deal doesn’t fill. Two big lenders are already getting choosier, and Firmus’s float has been pulled.