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.
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.
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
…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.
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.
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.
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.
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
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.
I didn’t invest in it. That’s their problem.
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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.”
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.
The investment is already gone.
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
…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
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.
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.