I’m Sure There’s Nothing to Worry About Now That Mortgage-Backed Securities Are Driving AI

If you weren’t alive, or privy to the news, in 2007 as the slow-burning debt crisis around us began to give way to the Great Recession, what was strange was that you felt like… always Hear about debt refinancing. You can’t turn on a TV, or click on a MySpace page, without someone offering to refinance your debt. This was because there was a huge market – and a hidden market to most people – for things called mortgage-backed securities. This piece in The Onion captured the moment well.

You can get a cheap mortgage easily and surprisingly because of mortgage-backed securities. This involved restructuring people’s mortgages – such as mortgages on their homes – as lucrative, tradable assets, which were purchased on behalf of entities such as investment banks and pension funds. For example, Lehman Brothers was a staid, boring financial institution that invested heavily in mortgage-backed securities.

Mortgage-backed securities were ubiquitous in the economy, and the entities that owned them served as pillars of economic stability. As people, slowly but surely, defaulted on their mortgages in increasing numbers, mortgage-backed securities, which had been thought to be valuable, were suddenly viewed as a sham. In 2008, Lehman Brothers declared bankruptcy, and the world plunged into chaos. In this way, more than $10 trillion in wealth disappeared in the United States during 2008 alone.

That crisis has come and gone. We are in a different world, where things don’t work the same way. We have different problems.

Today, all US economic growth is driven by investment in artificial intelligence. Entire American cities are counting on the idea that data centers built in their communities will support their economies forever, or at least until another kind of business exists to create a different kind of prosperity. The real estate business, which caused the 2008 crisis, is also supported by the data center business. Artificial intelligence is inevitable. It is the crucial truth of this economic moment. But in surveys, people who don’t work in AI are largely skeptical that it’s good for the world.

With that in mind, Ian Fresh in the New York Times’ DealBook newsletter wrote something a bit alarming yesterday. A company called QTS Data Centers, “the biggest player in the AI ​​infrastructure market,” appears to be wholly owned by the investment firm Blackstone. Blackstone appears to be seeking to refinance $3.46 billion of QTS’ debt. DealBook appears to have caught a glimpse of the offering sheet showing that Blackstone is about to put this debt up for sale.

It’s the biggest AI “commercial mortgage-backed securities” deal in 2025. The biggest yet, anyway.

Things are not the same now, as you said. We have different problems. If OpenAI fails and never figures out how to generate revenue, and the investors all lose their hats, I’m sure other AI investors, like, say, Elon Musk and the Saudis, will pick up the slack and find a way to grow revenue from AI and keep this crazy amount of AI debt valuable.

I’m sure the contagion will not spread far, and there will be another completely healthy area of ​​the economy, with a real, valid, real engine of value at its centre. Because, hey, there has to be.