Hey guys, so not all bubbles are the same. When the housing bubble burst, there were tons of debt that tied the housing bubble to wallstreet and big banks which tied in mainstreet to the bubble. When that bubble crashed, it put banks in jeopardy and THAT would have brought the whole financial system and main street down. We’d have been seeing bank runs, and the whole economy would’ve ground to a halt. That’s when the bailout happened. Anyone remember dot-com bubble? When the dot-com bubble burst there were no bailouts. Companies just went under.
Current AI bubble is funded by the gynormous profits and funds that big tech companies have - Microsoft, Meta, Alphabet, Amazon, etc. who have humongous cash reserves and profits that they are literally plowing into building AI data centers which in turn fuels Nvidia’s gynormous profits which it is plowing back into other AI companies. Nvidia doesn’t have debt. Big tech companies aren’t highly leveraged. When it crashes, it will go the way of dot-com.
I appreciate this (much needed) insight, but I think too many members of congress and high-ranking officials in this corrupt government have huge vested interests in this bubble and may not think twice in throwing the public under the bus
The bailout will be sold as protecting retirement funds, even though the median 401k balance is far lower than the average and even though people nearing retirement should have a higher mix of bonds instead of stocks anyway.
The AI bubble makes the Dot Com bubble blush by comparison.
US GDP is $29 trillion. The Dot Com bubble wiped $1.78 trillion in value from the US stock market in 9 months, and had a lot of flow on effects to banking - ultimately the bubble cost about $5 trillion, had dropped the stock market 78% from its peak, and triggered a recession that lasted most of a decade.
According to leading economists, the AI bubble is 17 times larger.
I believe the AI bubble today is in many ways worse than the Dot Com bubble of the 90s because we’re now so heavily reliant on technology for business, and so many major tech companies have invested heavily in AI, pretty much everyone has some exposure. A crash of the tech sector and multiple big names failing today would be just as bad economically as banks failing in the 90s.
If you think the US economy is somehow insulated by the wealth of the big tech companies… I strongly disagree. They borrow against their stock valuation, if their price dips a lot their lenders will be looking for loans to be repaid as their collateral has decreased. They are not too big to fail and when it pops they’ll cause a lasting recession.
It would be different if the rest of the US economy was booming, but all US economic gain in GDP over the last 5 years has been due to the AI bubble, take it out of the picture and you’re already in a recession. Add Trump as president and a Republican-led congress defunding so many US social support institutions and you may have a depression.
and triggered a recession that lasted most of a decade.
FALSE. Fake news. Please check your economic data before making a comment like that. Which fake news website did you go to that said there was a recession that lasted a decade because of the dotcom bubble? The recession after dot-com bubble burst lasted 8 months. Last time I checked, 8 months isn’t “a decade”.
Hey guys, so not all bubbles are the same. When the housing bubble burst, there were tons of debt that tied the housing bubble to wallstreet and big banks which tied in mainstreet to the bubble. When that bubble crashed, it put banks in jeopardy and THAT would have brought the whole financial system and main street down. We’d have been seeing bank runs, and the whole economy would’ve ground to a halt. That’s when the bailout happened. Anyone remember dot-com bubble? When the dot-com bubble burst there were no bailouts. Companies just went under.
Current AI bubble is funded by the gynormous profits and funds that big tech companies have - Microsoft, Meta, Alphabet, Amazon, etc. who have humongous cash reserves and profits that they are literally plowing into building AI data centers which in turn fuels Nvidia’s gynormous profits which it is plowing back into other AI companies. Nvidia doesn’t have debt. Big tech companies aren’t highly leveraged. When it crashes, it will go the way of dot-com.
I appreciate this (much needed) insight, but I think too many members of congress and high-ranking officials in this corrupt government have huge vested interests in this bubble and may not think twice in throwing the public under the bus
After so many years of financial education being “save early, save often” and “put your money in index funds to diversify” and “historically the US stock market has only gone up over long enough periods of time” there is a sizeable amount of retirement funds riding on this bubble. In the year 2000, the average 401k balance was a little under $60k (https://www.latimes.com/archives/la-xpm-2001-aug-14-fi-33836-story.html) and that has now ballooned to $326k (https://www.empower.com/the-currency/life/average-401k-balance-age).
The bailout will be sold as protecting retirement funds, even though the median 401k balance is far lower than the average and even though people nearing retirement should have a higher mix of bonds instead of stocks anyway.
The AI bubble makes the Dot Com bubble blush by comparison.
US GDP is $29 trillion. The Dot Com bubble wiped $1.78 trillion in value from the US stock market in 9 months, and had a lot of flow on effects to banking - ultimately the bubble cost about $5 trillion, had dropped the stock market 78% from its peak, and triggered a recession that lasted most of a decade.
According to leading economists, the AI bubble is 17 times larger.
I believe the AI bubble today is in many ways worse than the Dot Com bubble of the 90s because we’re now so heavily reliant on technology for business, and so many major tech companies have invested heavily in AI, pretty much everyone has some exposure. A crash of the tech sector and multiple big names failing today would be just as bad economically as banks failing in the 90s.
If you think the US economy is somehow insulated by the wealth of the big tech companies… I strongly disagree. They borrow against their stock valuation, if their price dips a lot their lenders will be looking for loans to be repaid as their collateral has decreased. They are not too big to fail and when it pops they’ll cause a lasting recession.
It would be different if the rest of the US economy was booming, but all US economic gain in GDP over the last 5 years has been due to the AI bubble, take it out of the picture and you’re already in a recession. Add Trump as president and a Republican-led congress defunding so many US social support institutions and you may have a depression.
FALSE. Fake news. Please check your economic data before making a comment like that. Which fake news website did you go to that said there was a recession that lasted a decade because of the dotcom bubble? The recession after dot-com bubble burst lasted 8 months. Last time I checked, 8 months isn’t “a decade”.
https://www.statista.com/statistics/1317029/us-recession-lengths-historical/?srsltid=AfmBOopNMYMMzh1y-_9PQimpVxSgbtENJypnX-Rf4E-d0PkGFsU1Wqsr
Well, at least hopefully we’ll see the Silicon Valley tech monopoly weaken a bit (but at what cost?)
Americans need to demand a better goverment, tho.