The Room Gets a Guarantor
The government's own risk analysts flagged this bubble weeks ago. Now the government is one of the counterparties.
Nvidia is in talks to guarantee roughly $250 billion so OpenAI can lease a data center that does not yet exist, on land the company does not own, powered by a plant that is not yet built. A second Nvidia deal, worth up to $350 billion more, would finance the chips that go inside it. Put the two together and one company’s balance sheet stands behind $600 billion of someone else’s infrastructure.
Follow where each dollar actually sits. Nvidia has already put $30 billion into OpenAI. SoftBank is one of OpenAI’s largest investors. The data center OpenAI wants to lease is being built by SB Energy, a SoftBank subsidiary. OpenAI has itself invested in SB Energy. So the guarantee runs like this: a company backs the customer of a company partly owned by the customer’s own investor, who is also the guarantor’s investment. Draw the arrows and they close into a circle with four points and one signature.
Last Sunday this newsletter mapped a version of that circle at industry scale: $46 billion in real cash sitting under $879 billion in purchase commitments among the hyperscalers, chipmakers, and labs. This past Wednesday it found a zip code in Richland Parish, Louisiana, where a state rewrote a tax statute for one buyer in nine months of closed-door negotiation. The Ohio deal is the same circle, drawn tighter, with a new party sitting inside it: the United States government, which controls the land and the power plant the whole arrangement depends on.
That is the part worth sitting with before reaching for a label. The site is federal land, a decommissioned uranium facility roughly fifty miles south of Columbus. The power comes from a plant funded in part by a Japanese trade commitment. Commerce Secretary Howard Lutnick is reported to be deciding who gets access to that power. OpenAI wants it. So, by report, do Anthropic, Microsoft, and Google. Four companies, each with the scale to solve their own power problems eventually, are instead competing for a meeting with one official who controls a scarce input none of them can otherwise get fast enough.
Gordon Tullock had a name for what that type of competition produces. Rent-seeking does not spend resources making a better product. It spends them trying to win a decision. The winner captures a concentrated benefit: guaranteed access to power and land on favorable terms. The cost is diffuse, spread across ratepayers who did not choose this allocation and taxpayers who back the federal commitments beneath it, and across the three companies that spent real money courting a decision they may not win. None of that shows up on any company’s income statement. It shows up later, in whichever utility rate or federal exposure absorbs the arrangement once it is signed.
Louisiana ran a milder version of this. A legislative committee rewrote a bill for Meta, and the state kept the fiction of an open process while the negotiation happened behind fifty NDAs. Ohio skips the fiction. There is no statute to rewrite because the government is not being lobbied into bending a rule. It is simply the counterparty, deciding directly who gets the power, with Nvidia’s balance sheet doing what Blue Owl’s bonds did in Louisiana: making the arrangement look investment-grade to lenders who would otherwise price OpenAI’s lack of one.
Three pieces, one circle, growing a chair each time. First it was corporate money circulating among itself. Then it was a state government pulled inside the circle to write the rules for one participant. Now it is the federal government sitting at the table as the source of the scarcest input in the deal, deciding among four suitors which one gets it.
The room where it happens doesn’t smell like smoke anymore. It´s still just off to the back of the house.
Enduring economic lessons plucked from the headlines, seen through an Austrian lens. Ground truth from 40 years in the Colón Free Zone.