Post #4415240

@juergen_hubert@mementomori.social By the bubble, or by the bubble bursting? 'AI' has had little impact on most industries, which is one of the major signs that it's a bubble: if it were significantly improving productivity outside of a handful of niche cases there would be some possible justification for the $3T sunk into it. The bubble bursting is a very different story. My back of the envelope calculation on the US stock market was that about $30T was overexposed to the AI bubble. I've seen people who actually know what they're talking about with numbers between $15T and $40T, the consensus seems to be around $20T. That's somewhere between a quarter and a half of the total value of the US stock market that has a significant chance of evaporating when the bubble bursts. Even if it's 'only' $15T, that's going to cause an enormous liquidity crunch. Any business that's dependent on being able to get loans to grow or on customers having free cash to spend is likely to be affected. For reference, the Wall Street Crash, which triggered The Great Depression, involved around 50% of the value of the stock market being wiped out in the first crash and a total of 89% over a bit more than two years, but that was in an economy where far less was linked to the stock market (for example, few people had pensions that were linked to the stock market). My question is not how bad the crash is going to be, it's whether the rest of the world can sufficiently firewall the USA so that the crash is mostly contained there. Preventing contagion when there's a massive liquidity crunch requires international cooperation. Trump is incapable of cooperating for the common good, or even for the good of the USA: he'd happily let the US economy burn if it made him and his friends a few billion.