Bank of England warns AI stock bubble rivals 2000 dotcom peak
Bank of England warns AI stock bubble rivals 2000 dotcom peak
arstechnica.com
Bank of England warns AI stock bubble rivals 2000 dotcom peak
67 comments
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“It’s a ‘good bubble’” - Bezos
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All bubbles are good bubbles if you have the liquidity to survive the burst.
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Or better: buy the dip.
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Wasn't there some report that this is 17 times bigger than that?
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this is definitely gonna be a big one, always is when there's blatant fraud making front page news regularly. and the wolves are running the show for the forseeable future so it'll probably keep on going...
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that 100bn recently invested its going to have to be repaid somewhere. and nvidia doesnt want to hold the bag.
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Nvidia has a lot more to lose than $100bil if this all goes tits up
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When there are 4 or 5 companies worth over a trillion dollars each, and those companies combine for 60% of the volume and value of the S&P and NASDAQ, and they are all in on ai, well....
Buy ammo, I guess.
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It’s not quite right to say those companies are “all in on AI” when their core businesses are still based on physical products and established services. These were already highly successful companies long before the AI boom. If their valuations are inflated because of the hype, a correction wouldn’t send them to zero - it would just bring their prices back in line with their actual underlying value.
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Fair.
But, nvidia (the largest by weight/volume/value on each of the indexes) would be almost nothing without the ai hype, and the loss of Chinese contracts will see it plunge regardless of a bubble.
Google, ms, and apple have added nothing of worth to their products while pumping billions to their ai surveillance bots.
All told, the value of the indexes will plummet like Wile E. Coyote when cartoon reality kicks in.
The bottom, however, will hit much harder than he ever felt.
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Can't wait until we bail out most of silicon valley because they're too big to fail.
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Guys but a very smart person on LinkedIn said they discovered the formula E = MC² + AI
How could it be a bubble if the universe depends on it?
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I think that was satire. I hope. It's honestly impossible to tell anymore.
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So obvious
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It's almost as if there's an entire class of people who do this purposely, and walk away billions of dollars richer.
Gotta siphon up all the wealth and resources from the proles once every decade or so.
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Isn't it bigger than the subprime mortgage bubble by this point?
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Substantially bigger, but that's not the whole story. Subprime mortgages were interconnected to everything banks did. The AI bubble isn't quite so connected in the same way.
Compare this to the Chinese property sector bubble. Around 2020/2021, there were a lot of stories about how China had created a huge bubble and was going to take down everyone when it popped. Instead, it just sorta fizzled out, at least from an outsiders perspective. China has usually kept away foreign investment in their real estate market (along with pretty much all their big companies). There just wasn't that much fallout to be had outside of China. Tons of doom headlines popped up in Western media, but it was a nothingburger unless you were somehow embedded in the Chinese real estate market.
Let me be clear: the AI bubble popping will hurt. At this point, there's no way out of it, and it needs to pop sooner rather than later. However, comparisons to the 2008 financial crisis don't tell the whole story.
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Yeah the financial crisis bankrupted the banks themselves. The structural foundation of the financial and banking industries were interconnected to bad mortgages that were distributed into financial instruments everywhere and speculated on like crazy by everyone, because they were mortgages and considered safe like bonds. Part of the reason why companies like GM went bankrupt was because their financial arm was significantly invested in mortgages, banks failed because their entire financial model was centered on mortgage returns, and people defaulted on houses en masse because they were allowed to get mortgages they were never able to afford.
But no one investing in stocks, particularly tech stocks, is doing so without explicitly gambling that money. A lot of venture capital might collapse, retail investors are going to get shit on, the general economy will slow as it does during a recession, but mostly this will play out like the dotcom bubble and be a large asset correction in the stock market. A few years of correction, consolidation of the industry, and everyone will pile onto the next bubble in a decade.
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What I'm really curious is how far the bubble bursting will spread beyond the US, as America seems to be the nation which, by far, went more all-in on this, plus, ironically, Trump's aggressive and chaotic trade policy has pushed other nations to try and isolate themselves from dependency on the US.
Also the weakenning of the Reserve Currency status of the USD (which was already happening and has been accelerated by Trump's actions) also reduces that as a pathway for transmission of any Economic Collapse in the US - the USD value crashing is less bad for other nations the smaller their reserves in USD and USD-denominated assets are.
This will almost certainly be an Earth-Shattering Kaboom in the US, but might just be Really Bad for the rest of the World, plus it will probably be worse the closer a nation is to the US as a partner, so there might be interesting results in terms of for example Canada not being quite as badly hit now than they would be a year before whilst for the UK it will be the other way around.
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Everything is so interlocked it will fuck things up everywhere. The sub-prime crisis was sparked by American companies packaging up American mortgages to sell as assets, but it still was a global crisis.
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Oh yeah, I think the 2008 Crash proved it's not a question of if an Economic Collapse in the US will harm the rest, it's a question of how much.
I mean, last time around Landesbanken in Germany were going down because of buying CDO-squared derivatives backed by US Realestate Assets and plenty of large banks in Europe had to be saved because of similar malinvestements or simply their counterparties on the derivatives which were supposed to offset certain risks were other financial instituations which went bankrupt.
It's when the tide goes down that we see how many were swimming whilst wearing no shorts, and like in the US most Central Banks around the World never fully rolled-back the "temporary" ultra low interest rates thus having far less "dry powder" this time around to soften the Economic blow so this crash might very well be even worse than the last one, even with reduced financial interconnectivity between countries.
I expect that, once again, we will all be living the curse of "interesting times".
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It's gonna at least fuck over Taiwan's semiconductor industry and Softbank which has been lighting money on fire so that the smoke pleases the AI gods.
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And just like how online e-commerce went away when the speculative companies went broke, surely when this market corrects AI will vanish and everything will go back to exactly how it was before.
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What? Who gives a shit if AI vanishes or not. The greedy turds manipulating markets and raking in the money now won’t be the ones facing the consequences; that will fall on the rest of us peasants.
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I want to everyone to think about this, because I am very old. I have lived through many bubble bursts, I have lived through the recession. I think the most adept comparison to AI is when companies got this idea to do outsourcing. They outsourced EVERYTHING. Call centers, data development, manufacturing. It didn't work after a few years of the hype it came back to the US. We found equilibrium. Yes there is still some outsourcing but it's more globalization. AI will have the same thing. It will probably hang on a few more years then things will shuffle back to humanity. The difference then is there were still minimum wage increases on a federal level and it does concern me that there hasn't been since my youth. It was a regular normal thing in my youth.
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rivals
I don't remember spending $1.5T destroying 200,000 acres of farmland to build data centers for pets.com and GeoCities.
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this wrong, it's 4X bigger than sub prime crash.
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Don't forget that the main players in this theater of hell are all paying each other with the same money in a circular bullshit toilet bowl further inflating the bubble.
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https://www.wheresyoured.at/the-case-against-generative-ai/
A good read for anyone who wants to read in detail on how fucked it is.
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"Here’s Why This Is Bad
I dunno man, let’s start simple: $50 billion a quarter of data center funding is going into an industry that has less revenue than Genshin Impact. That feels pretty bad."
-My favorite quote from this blog post
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What will come first; the AI bubble popping or a US civil war?
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The dotcom peak was over a massive number of companies that folded, here it's pretty much just a few companies.
Now they may be talking about a lot of rich assholes that would be directly affected by the bubble bursting if they're actual evangelists of hallucinating LLMs but I guess I don't see that massive impacts that this AI BS has over the dotcom crash had where jobs were massively lost over a span of a few months.
67 comments
Everyone look out, the banks have made their money so it's time to dump on the poors again.
the banks only make money after the crash, when people can't pay their loans.
then they have to find baggers for the property they seize, only if they cant flip those in time do they come out ahead
Investment banks and the primary equity market. They’ve already traded their long positions for shorts
Time for the yellow trickle down.