I'm hoping for the AI bubble to pop. I want to see Nvidia and X and Tesla and Microslop and OpenAI all crash and burn.
But there's another part of me that knows there's a good historical precedent for what happens in these situations. My brain is zapped but Larry Fink was the architect of the previous market crash that led to BlackRock profiteering wildly and becoming the immense beast that it is today.
I know that the big AI companies/AI affiliated companies are what is keeping the US economy afloat at the moment and I know the US will play the "too big to fail" card to do yet-another immense transfer of wealth from the proles directly to these companies in the form of bailouts.
I don't think AI-only companies are gonna survive this. I think OpenAI might be the first domino to fall. But Google commands a vast amount of diversified income sources, unlike OpenAI, and I wonder if almost every other big player in AI will get swept under but, with big bailouts and the power that Google commands, it feels like they will be poised to gobble up all the smaller fish and expand their monopoly to integrate themselves into every level of government administration as the government cuts back on expenditures to weather the fallout from the bubble popping plus the immense cost of bailouts, so I can see it being a Faustian bargain where money goes into Google (either directly or indirectly), Google vacuums up all the business and especially the data centers, then Google offers the insolvent US government the "solution" of selling them terminals for every citizen interfacing role that runs on AI and embedding AI in all sorts of bureaucratic processes that occur mostly behind the scenes. For a "small" fee, of course. (Or maybe Palantir or some scumfuck company like Larry Ellison's swoops in and profiteers from the fire sale as the market burns.)
(I'd explain all the fuckery with Larry Fink and BlackRock and how I anticipate the parallels to play out this time around but there's a lot of threads and I'd have to have the brain power available to brush up on the sources and weave the narrative together but that's not gonna happen for me today. Has TrueAnon covered BlackRock yet?)
Strange to think that the scenario of the AI bubble popping and causing all sorts of economic catastrophe for the working class people around the world while the US starts to crumble and descend into fascism and civil war is my optimistic take and that my doomer take is that AI collapses but it doesn't take the market with it and instead AI gets monopolized, bailed out, and forcibly integrated into all levels of society while the US descends into fascism and civil war.
I do not think the AI bubble will pop on its own.
Like Tesla and so many other companies that one can point to as bubble-ish that have existed in our market ecosystem, they wont pop unless someone has a needle. And right now no one has any incentive: profit, spite, or intelligence to find a needle. I think the mechanism for this next market collapse is going to be more fundamental; in 2008 this was the bank backed mortgage market being bet on by huge firms collateralizing everything into financial instruments like CDOs.
In the next year or so it will be the treasury bond basis trade. Of recent the primary purchaser of US treasury bonds is not the tigers of the asian market like theyve traditionally been, but private equity rooted in the carribean. These private equity companies are shorting and longing (sic) trillions of dollars of treasury bonds on COVID policy banking tools like the repo to finance these trades on a few percentages of a percent. When or if private equity gets on a limb for this the money propping up the bubble industries will vanish.
This scenario of a burst isnt bailoutable without significant foreign investment, with private equity out no one domestic can really buy the bonds to finance the bailout, and if no one is buying treasury bonds because oops the federal government is already on the hook for trillions of bailout dollars already, what props up the system?
This is an interesting angle. China is moving away from its exposure by backing away from US bonds, and it has been doing that steadily over quite a while now, but also isn't Japan suddenly dumping its US bonds and isn't one of the henchmen of the Trump administration threatening countries if they dump US bonds or something?
I have to be honest, finance is far from my strong suit and I've been aware of some shifts in the market but I haven't been watching closely enough to remember all the details. But it seems like there's some serious instability in the once-dependable US bond market. I guess this would really signal something significant if countries were dumping US bonds en masse in favor of a more stable commodity... what's that? The price of gold and silver has been absolutely skyrocketing? Oh. Oh my...
I will fully admit my knowledge of economics begins to fail when you get into the intimacies of the bonds and currencies market, I find I get mixed up with buying bonds to secure foreign currencies which weakens your market but allows sales of goods... I get a little lost, but everything I've read on this keeps pointing to it being the weakest thing no one is probably looking at. My first paragraph should also belie that I dont really believe the bourgeoisie is not going to allow any simple failure (that could cascade into other industries) to even occur. So something really major, a fundamental thing, is going to be what does it. And yes the chinese especially used to buy something like a third of all our debts, which has now fallen to a little less than a tenth. Japan also had a huge sell off, we (the globe) is recognizing an American economic system without any ability to guarantee anything that Americans are selling.