If you weren’t alive, or weren’t news-cognizant, back in 2007 when the slow motion debt crisis all around us started to give way to The Great Recession, what was eerie was that it felt like you were always hearing about refinancing debt. You couldn’t turn on a TV, or click a page on MySpace, without someone offering to refinance your debt. This was because there was a huge—and for most people, hidden—market for things called mortgage-backed securities. This piece at the Onion captured the moment well.
You could get a cheap mortgage weirdly easily because of mortgage backed securities. This involved repackaging people’s mortgages—as in mortgages on their homes—as lucrative, tradable assets, and these assets were being purchased on behalf of entities like investment banks and retirement funds. Lehman Brothers, for instance, was a staid, boring financial institution that was heavily invested in mortgage-backed securities.
Mortgage-backed securities were everywhere in the economy, and the entities that owned them were the pillars of economic stability. When, slowly but surely, people defaulted on their mortgages in higher and higher numbers, the mortgage-backed securities that had been thought of as valuable were suddenly thought of as doodoo. In 2008, Lehman Brothers went bankrupt, and the world was plunged into chaos. In this way, over $10 trillion in wealth vanished in the U.S. during 2008 alone.
That crisis has come and gone. We’re in a different world, where things don’t work the same way. We have different problems.
Today, all U.S. economic growth is driven by investment in AI. Entire U.S. towns are banking on the idea that data centers being built in their communities will sustain their economies forever, or at least until some other type of business exists to create a different kind of boom. The real estate biz, which caused the 2008 crisis, is also being propped up by the data center business. AI is inescapable. It’s the defining fact of this economic moment. But in surveys, people who don’t work in AI largely doubt it’s good for the world.
With that in mind, Ian Frish at the New York Times’ DealBook newsletter wrote something a little unsettling yesterday. It seems that a company called QTS Data Centers, “the biggest player in the artificial intelligence infrastructure market,” is entirely owned by the investment company Blackstone. And Blackstone, it seems, is seeking to refinance $3.46 billion in QTS’s debt. DealBook apparently got a peek at an offer sheet showing that Blackstone is about to put this debt up for sale.
It’s the largest of the “commercial-mortgage-backed securities” deals in AI in 2025. The largest so far anyway.
Things are not the same now, like I said. We have different problems. If OpenAI fizzles and never figures out how to make 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 drive revenue from AI and keep that crazy amount of AI debt valuable.
I’m sure the contagion won’t spread too far, and there will be some other perfectly healthy area of the economy, with a wholesome, substantive, real driver of value at its center. Because, hey, there has to be.