One under-appreciated aspect of what’s quickly becoming the grandest market debate of our time — namely, the leveraging of mega-cap tech balance sheets to fund the AI buildout — is the extent to which the borrowers in question are considered by markets to be more or less as creditworthy as the US government.

If you’re inclined to joke about that being a low bar, I’d say that’s precisely the point. The crux of the issue. This issue, and an even bigger one: The crisis of Western democracies, some of which are becoming ungovernable.

The more fractious and dysfunctional a nation’s politics, the harder it is for governments to cooperatively conduct the “business of the people.” In a democracy, that business is famously messy and the associated debates commensurately prickly, particularly around fiscal policy. The messiness is supposed to be a feature of democracy, not a bug, but when messiness begets paralysis — when debate devolves into malignant disharmony — the whole project begins to look untenable.

That’s were things are in the US. And in France. And, to a lesser degree, in Germany. The UK’s been there several times since 2016 and will likely find itself there again soon enough. Ratings agencies have taken note, going so far as to downgrade America twice in two years (Fitch in August of 2023 and Moody’s in May of 2025). Suffice to say governability (governance) is a concern for Western democracies some (many) of which are sitting with very high (or relatively high) public debt loads. High debt and bad governance is a toxic combination.

Contrast that with blue-chip corporates, where debt profiles are generally healthy and management’s united around a common goal: Maximizing profits and thereby shareholder value. Maybe that’s not the noblest purpose ever conceived, but it’s at least a purpose, and the C-suite pursues it with the single-minded zeal of religious fanatics (which makes sense because capitalism’s a cult — a secular religion).

The figure above’s a reminder: The post-GFC era was defined by a transfer of leverage from the private to the public sector in the US, a dynamic which accelerated during the pandemic.

Sound money types will wail and holler, but if someone’s going to be over-leveraged, better it’s the government than households and corporates. Because the government can print money. (There’s a very real sense in which the government’s debt is also the debt of the body politic — it’s public debt, after all — but I’m leaving that aside.)

However, when the government ceases to function (figuratively or, in America’s case, literally), sovereign debt begins to look riskier. Normally in the context of developed markets, government bonds are seen as much safer than corporate credit no matter how testy the nation’s politics, but not always. And we’re at a pretty unique — I’d argue unprecedented — juncture which juxtaposes, on the government debt side, existential socio-political dysfunction with, on the corporate side, record profits and, in the case of the tech behemoths, product and service ubiquity that borders on omnipotence and monopoly power unseen in over a century.

So, who you gonna trust with your money? That’s a rhetorical question, or at least it is for the purposes of this short piece. The answer, increasingly, is corporates.

Bloomberg ran an entire feature article on this dynamic mid-week. “A weakening of the safe haven status enjoyed for decades by a small handful of nations is a sign that populist politics is corroding the basis for tough fiscal compromises,” Finbarr Flynn, Tasos Vossos and Greg Ritchie, wrote, on the way to quoting a CIO in London who cited “the erosion of the perception of rule of law” in explaining a “regime shift” that finds investors favoring “corporate balance sheets which are in better shape than some sovereigns.”

The linked article mentions Microsoft, a mainstay of this discussion: According to markets, Satya Nadella and Amy Hood are a safer bet than Donald Trump, John Thune and Mike Johnson. I, um, don’t disagree, certainly not from a chuckle perspective. But it’s important to note — as Bloomberg does — that governments can tax and, crucially, demand those taxes be paid in the nation’s currency under threat of imprisonment. That’s the ultimate trump card in the governments versus corporates debate.

And yet, I wonder if even that previously bright-line distinction is disappearing. After all, Alphabet, Amazon, Apple, Meta and Microsoft run a de facto oligopoly on the attention economy. At the heart of that economy are the products and services everyone depends on to make it through a given day. They set the price we all pay to communicate, share and transact. Because those are basic human needs, demand’s almost entirely inelastic. So in effect, those companies can “raise taxes” on us at will.

Coming full circle, this is the backdrop for the coming hyper-scaler borrowing binge. On a lot of vectors, these companies are better bets than most or, debatably, all sovereigns. Small wonder recent offerings from Meta and Alphabet were hugely oversubscribed, with the former garnering $125 billion worth of bids, the most for any corporate deal in history.