The majority of the world’s retirement savings is tied up in the US stock market, and Nvidia is like 10% of the US stock market. And Nvidia’s current success is 100% from selling GPUs to AI datacenters. And not a single AI endevor has made a profit, they are all burning billions.
If the bubble pops then everyone feels it. Every single person.
But IMO it’s a bandaid that needs to be ripped off.
However, there might be a bright side: one macroeconomic researcher, Dean Baker of the Center for Economic and Policy Research, says a bursting bubble might be just what we need to get things back on track.
In a summary of the situation, Baker agrees with the school of thought that says we’re in an AI spending bubble, and that there are some nasty consequences — a recession, most likely — awaiting us when the music stops.
However bad that economic downturn might be, though, Baker says it will open the door for a potential recovery that makes life better for working people.
He is far too optimistic about liberal capitalism working out for the little guy.
Yup. After the 2008 crash they bailed out the banks while ordinary folks lost their homes and jobs. And that was with Obama in office.
I don’t want to let Obama off but Imagine how bad it would have been with Trump and MAGA in office.
I think you mean how bad it will be, cause this crash is happening.
Which is kind of my point. Even with Obama and Democratic majorities in both houses it was a bailout for the rich. Imagine how much worse it’ll be with the schmucks in power now.
I usually do my best to have substantive layman takes on topics like these, but truly, fuck the economy - the AI bubble bursting will solve nothing for regular people.
Ehh…you sure? I see you’re on solar punk. My first thought was the AI crash would be good for the environment more than economy, probably. Think of the water resources these things are taking alone.
My point was mostly that the economy isn’t good for regular people, even in the best case scenario.
With or without AI, data centers will continue to expand and grow and suck up water - unless we design them in more sustainable ways. Even if the AI bubble bursts, the US can’t exactly give up when actors like China are making great strides…
the US can’t exactly give up when actors like China are making great strides
Why? Is China going to send Terminators after Americans?
Why?
Regardless of my own personal distaste for AI, it’s hard for me to argue in good faith that there don’t exist potential sensible and sustainable applications for the technology as it advances and people explore its use cases. I think it’s vastly overhyped/overestimated in its present or near-future state unless serious leaps are made and I don’t want to be confused as a proponent. Are we presently developing or using AI in any way that is sustainable? No, not at all.
Is China going to send Terminators after Americans?
I don’t personally think that is going to happen, but those involved in the military industrial complex et. al may believe that or are preparing for AI being used in military applications in a general sense. Do I support these efforts? Not in the least, AI likely needs internationally regulated immediately to prevent such a reality.
Drag doesn’t feel like you answered the question. Why is China doing better with AI bad?
Why is China doing better with AI bad?
It’s not bad at all in my personal perspective.
I said:
Even if the AI bubble bursts, the US can’t exactly give up when actors like China are making great strides…
As long as capitalism is the dominant economic model of the world and there are borders/states on world stage, no state will willingly give up on a technology, in a purely competitive sense or militarily - unless there are significant shifts e.g. like an international agreement, increased diplomacy and international trust being built, or something like world peace.
Because if they use it in aggression e.g. against western allies in the SC sea, we need the technology to repel or counteract it.
I literally just read another article that said it would collapse the economy, since there are currently trillions of dollars being invested in that bubble. If it pops, all that investment go poof.
Well, a case could be made that the AI bubble popping will always happen, it’s just a question of when, and that to get the economy back on track, whatever malinvestment is going on because of the AI bubble will have to be unwound whenever the bubble does burst.
That being so, there will always be pain, but the sooner the bubble bursts the less unwinding needs to happen so the less the pain will last and the most likely it is that the unwinding that does happen goes back enough to put the economy on the right track.
This is kinda similar to what happenned in the 2008 Crash and after it: the overindebtness needed to be rolled back to get the economy back in the track before the Finance bubble that caused the crash, but the choice was very explicitly done not to do that (as it would’ve been very painful to Financial institutions and Large Asset Owners, so instead it as “Temporary” Ultra Low or even Zero Interest Rates that ended up lasting for over a decade and were never fully reversed, Austerity and in general the Economy for the most people has ground to a halt and even gone back (average real incomes are low, Inflation on necessities is insane, social mobility is pretty much zero even in countries which before had high social mobility like the US). Even by the official economic figures (which are based on an Inflation value which understates reality) show only anemic growth compared to most of the XX century.
IMHO the problems we have now in pretty much all of the West which derive from how the 2008 Crash and its consequences were handled are a pretty good example of what happens if you don’t fully unwound the misallocation of resources that happens in an Economy during a bubble in order to save people from the short and sharp pain that the unwinding inflicts.
PS: On the other hand, the example of how the 2008 Crash was handled, does indicate that governments will be incredibly adverse to letting the unwinding that needs to happen actually happen fully and hence the Economy won’t get back on track and we’ll all end up in an even more fragile situation, with long terms prospects of an even worse collapse, more so because all that shit reflects in Politics and the “desperate avoidance of pain” following the 2008 Crash that created the fucked-up-for-the-many Economy we have now, has led to the growth of the Far Right because it created large numbers of desperate people who are easy prey for populism.
The Magnificent Seven stocks make up about a third of the market cap for the S&P 500. Meta, Microsoft, Alphabet are all heavily invested in AI, and NVidia makes about half of their sales to three customers buying graphics cards for AI. It will be bad when the bubble bursts, but bubbles need to burst. It isn’t sustainable for companies to be spending hundreds of billion dollars on linear algebra machines with no real pathway to profitability.
Wait you mean my CEO can’t lay me off this year and replace me with AI after all? Quelle surprise shocked Pikachu face
Yeah but this one says when the bubble pops it will be bad news for everyone. However if government makes the right choices to invest in the middle class, despite this administration doing the opposite, we’ll eventually recover.
My reading of the article is much more negative than the headline
invest in the middle class.
…but that’s hard. There’s so many ordinary people but just a few rich ones. Much easier to help the rich people where I can put all the money in one or two places. I’m sure it will trickle down eventually.
– Karl Marx
Ah yes, Karl Marx, famous proponent of giving money to rich people.
Do you actually have faith that this government will make those choices?
I suppose I wasn’t clear enough between paraphrasing the article where it tries to support the headline vs “my reading is much more negative”.
In a world where the government served its constituents those points may have merit, but we don’t live in that world
I think it depends on how one defines “economy”.
Edit: having read the article, what you said and what the article is saying are not mutually exclusive.
The investment is already gone.
I didn’t invest in it. That’s their problem.
You probably weren’t invested in subprime mortgages in 2008 either, but I’d be amazed if you didn’t feel at least some of the effects of that crash.
We’re already being squeezed from every market for record corporate profits and high interests.
What are they gonna do? Squeeze harder? I’m used to it.
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“Wahhhh. We need a government bailout! Too big to fail!!!”
I hate this nonsense so much.
“Too big to fail” = “needs to be nationalized.”
Or “needs to be split up”. Or “ should never have been allowed to mega-merger to begin with.”
I hope it does collapse. Fully. Completely.
AI companies would have a very bad day.
The rest on us will be much better off.
Not really. The rich have ways of making sure consequences to them don’t go beyond having losses on paper. That shit flows downstream where we live.
That’s the part of “trickle-down economics” that actually happens
Investors would lose their investment. I don’t have any investments. Some jobs would maybe return, but the owner class would ensure they don’t pay a living wage. It wouldn’t help or hurt regular people all that much.
