this post was submitted on 29 Oct 2026
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OTTAWA — OTTAWA - The Bank of Canada raised its policy interest rate by 25 basis points to 2.5 per cent. It’s the first hike since July 2023. The central bank wants to control inflation by reducing the risk that high fuel prices could spill over and seep into the overall economy.

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[–] quanin@lemmy.ca 1 points 4 days ago (1 children)

Like I said. I admire your optimism. But I think you need to fact-check yourself. Microsoft owns at most 27% of OpenAI. And Microsoft is currently working on its own internal AI (MAI). Even in the unlikely event that OpenAI goes bankrupt, Microsoft and its own AI products will be just fine.

[–] definitemaybe@lemmy.ca 1 points 4 days ago (1 children)

I know that, yes. But it's relevant to my point: AI costs more to train and run than its value. That Microsoft, Google, Meta, OpenAI, Anthropic, SpaceX and hundreds of smaller players are all losing money at the same game just makes the problem worse.

There is no path to profitability for AI.

The cashflows needed to pay back investment to date is already impossible, and it's scheduled to accelerate.

And Microsoft being tied to OpenAI is largely about continuing their "growth story" to justify their valuation. The "value" of their ownership stake, even as huge as it is, is largely irrelevant; once the house comes tumbling down, it's going to be a very long path to recovery for anyone involved in AI. They will write off many billions and be responsible for many times that in evaluated paper wealth.

Google, Meta, and Microsoft will all be fine, eventually. They have enough stable revenue streams outside of AI to weather the storm, most likely (I'm not sure how leveraged they are, but with string cashflows, I imagine they'll survive.)

Musk's pile of companies are dicey. OpenAI and Anthropic won't meaningfully exist in 5 years.

So, I'm pretty confident that a variable rate mortgage is the right choice right now. But even if you aren't as doom and gloom, it seems pretty clear that signing a 5-year fixed right now is unlikely to be a good idea.

[–] quanin@lemmy.ca 1 points 3 days ago (1 children)

Like I said, I admire your optimism.

And signing a 5-year fixed is almost always a good idea. Remember when Tif said rates would be low for a long time? I'd have absolutely signed fixed then. The odds are greater my financial situation improves in 5 years than in 1. I like knowing what I'll be paying in October of next year. Variable means I don't even know what I'm paying in January of next year.

[–] definitemaybe@lemmy.ca 1 points 3 days ago (1 children)

AFAIK, variable interest rate mortgages only require payment increases if rates rise high enough to no longer cover interest payments.

Anyway, I hope you're right. As confident as I am in a pending financial disaster, it would be great for everyone if that doesn't happen!

[–] quanin@lemmy.ca 1 points 3 days ago

AFAIK, variable interest rate mortgages only require payment increases if rates rise high enough to no longer cover interest payments.

You're close. You're thinking Fixed-Rate variable. And the flip side of that is if you hit your trigger rate and your payments increase, they won't decrease again until you renew. So when interest rates go up, you're watching the BoC to see by how much and then doing the math - either that, or you're surprised when your mortgage payment increases. But when interest rates go down, you're basically on a fixed mortgage.

The other one is Adjustable-Rate variable, and that one follows the interest rate up and down more closely. BoC raises, your payments rise. BoC drops, your payments drop.

Neither is long-term better than a fixed mortgage, which is why that's what 60-70% of mortgages in Canada are.