World Economic Forum Chief Warns of Three Possible 'Bubbles' in Global Economy (reuters.com) 83
An anonymous reader shares a report: The world should watch out for three possible bubbles in financial markets, including AI, the head of the World Economic Forum said on Wednesday, in comments that came amid sharp falls in global technology stocks.
Brokers and analysts say the falls are a cause for caution but not panic as markets have been touching record highs and some valuations are looking overblown. "We could possibly see bubbles moving forward. One is a crypto bubble, second an AI bubble, and the third would be a debt bubble," WEF president Borge Brende told reporters during a visit to Brazil's financial hub, Sao Paolo.
Brokers and analysts say the falls are a cause for caution but not panic as markets have been touching record highs and some valuations are looking overblown. "We could possibly see bubbles moving forward. One is a crypto bubble, second an AI bubble, and the third would be a debt bubble," WEF president Borge Brende told reporters during a visit to Brazil's financial hub, Sao Paolo.
Re: What, no ... (Score:2)
correct take. also "some bubbles move forward" lol.
yet, this will achieve the typical social effect, which will be leveraged by the same folks.
Why do we even talk about what an arbitrary group of people calling themselves leaders of the world again?
Imaginary money = Imaginary bubbles (Score:2)
The more I hear from economists the less I want to. I think the last economist who had a useful idea was David Ricardo. Websearch says 1817 for "comparative advantage", though I thought it was a few years earlier, when Adam Smith was still peaking...
Perhaps it would be useful to consider it from an applied versus theoretical perspective? Similar to psychology? Theoretical economists and psychologists are quite verbose and like to give themselves various prizes, but what do they actually know about their fie
Defense and Security (Score:2)
They will call it a critical industry needed for national defense because of every other large country's defense industry saying the same thing.
One country may even go and nationalize the training data set and LLM models if there is an AI crash.
WEF credibility (Score:2)
The WEF was promoting the financial system, banks, global hedge funds and their leaders both before and after the 2008 financial crisis.
Bubbles are strange. (Score:5, Insightful)
Crypto is always a bubble and has always been a bubble. It is either going to be a paradigm shift in how we do money, or it is going to be the next Dutch Tulip story.
There is a clear thought bubble (non-financial ) about AI. People are acting as if it is a real robot brain thinking, when it is not. It is NEVER 'intelligent'. It is always predictions without any creativity/understanding. But that is different from a financial bubble. Strip away the moronic 'AI' bullcrap and just think of it as the new, more advanced, computing style.
Computing power is still a hugely beneficial thing. Betting against computing has never been a good idea since before I was born. Mainly because of Moore's law (and the implications for software). The computing style is basically irrelevant. At some time I fully expect a new computing style to come along that will wipe out LLM, but they will probably use the LLM stuff in some minor way. Much of the hardware investments people have made for the LLM will likely be useful, even if they throw out most of the software.
Debt is a strange thing. It fuels economic growth so massive debt is not always a bad thing. What is bad is when the you can't pay the debt back. Large amounts of debt is basically doubling down. If the economic growth pays off, then the large debt vanishes into smoke as the profits roll in. If you picked the wrong thing to invest in, the large debt makes the bankruptcy much worse.
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While I remain sceptical about AI, I did recently talk to one that was actually helpful. At least I think I did... It was so good that I half suspect it was a human pretending to be an AI.
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I have found LLM /AI to be helpful several times. But not as helpful as checking wikipedia. Or a Youtube video. Similarly, I have upon occasion found a child to be helpful. The child is probably the best comparison, because they both are about as likely to lie when they do not like the answer.
The real problem with the LLM is not so much what it does well, but the so so many things people expect it to do well on that it sucks on. Legal filings are a prime example of it.
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I have found LLM /AI to be helpful several times. But not as helpful as checking wikipedia. Or a Youtube video. Similarly, I have upon occasion found a child to be helpful. The child is probably the best comparison, because they both are about as likely to lie when they do not like the answer.
The real problem with the LLM is not so much what it does well, but the so so many things people expect it to do well on that it sucks on. Legal filings are a prime example of it.
Greed wants to call todays AI solution Good E. Nuff for government work. And most all other work. Layoffs by the thousands have happened under the guise of this over the last 12-18 months.
Reality is still forced to hold the hand of ToddlerAI way too much to see otherwise. Child analogy, checks out.
Wait until that delusional little shit grows up into TeenagerAI and society assumes it's actually right most of the time.
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I have found LLM /AI to be helpful several times. But not as helpful as checking wikipedia. Or a Youtube video.
Outside of a few times when I played with ChatGPT just to get a feel for what it was all about, I've only given it a serious mission one time. It passed with flying colours in answering a question that I couldn't frame for Wikipedia or a search engine, and what I was looking for WAS a YouTube video.
Within the previous year I had seen a music video made by a band I wasn't familiar with. The vid was striking and, appropriately enough, relied on AI for its impact. I couldn't for the life of me remember the nam
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The DDG AI assistant is pretty decent. I like that it shows you it's sources so you can click through to verify the answer it provides. A lot of times, I'll kind of know the answer already but I want to confirm I'm on the right path, and AI can help with that as well.
I have a friend that built a little AI bot that scraps jobs forums and notifies her of anything new. Seems like a good use for it. I could see a shopper AI bot being useful as well. You tell it to watch prices for a specific item or list of ite
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This was actually a customer service one. I had something specific I needed to get sorted, and it got me the right information and passed it to the right person to get it sorted out.
Re: Bubbles are strange. (Score:2)
If your LLM isn't checking Wikipedia for you, use a different one.
But check its results anyway.
With the way AI companies lie, cheat, and steal (Score:2)
It probably was a person on the other end. I wouldn't be surprised if ChatGPT is really just a room full of 100,000 low-paid works in India.
Re:With the way AI companies lie, cheat, and steal (Score:4, Funny)
I wouldn't be surprised if ChatGPT is really just a room full of 100,000 low-paid works in India.
I haven't received any passive aggressive responses from ChatGPT, so I'm assuming it isn't people in India.
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My productivity has improved because I'm spending a lot less time hunting down information on the web about some API or error code. The
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>>Computing power is still a hugely beneficial thing. Betting against computing has never been a good idea since before I was born. Mainly because of Moore's law (and the implications for software).
Moore's law is WHY it's a bubble. The current investment in AI is mostly an investment in data centers. Due to Moore's law, those server farms will be obsolete before there's a demand for them if AI development slows even a little bit.
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"Crypto" (you mean crypto coins) have not been a bubble, but bullshit. Everyone who knows some tech knew that from the beginning.
Re:Bubbles are strange. (Score:5, Insightful)
Every other currency is based either on production (modern fiat) or utility (metals). Crypto is based on wasting something better used elsewhere, like making real things that have actual value. Or keeping me cool in the summer.
Now that I think of it, I have a similar issue with metal currencies. Gold, silver, and copper are wasted on coinage. Their industrial use is far more worthwhile.
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I do agree that electrical costs make crypto very suspect. Originally it was a cheaper way to ensure honest transactions, as compared to the cost of the current banking confirmation systems. But that no longer applies.
As regards to coinage, you are incorrect. Coinage was originally done as a way to save time testing the metal for purity and weighing it. Here is a set amount of gold/silver/ copper/ etc. that has already been tested and weighed once. Even when they debased the coinage, that amount of
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Electricity costs are just the measure of the worth. If the coin is worth more than the electricity cost, people start mining, what means coins get cheaper (because you want someone to buy them instead of mine own ones). This way the game theoretic optimum lies at the price of the electricity required to mine them. This alsos creates some imbalance because electricity prices are not everywhere the same, so mining is only lucrative where you have cheap electricity.
And this concept means the whole proof of wo
Betting against CERTAIN COMPUTING (Score:1)
> Betting against computing has never been a good idea since before I was born.
Betting against "computing" in the broad sense may be a bad bet, but betting against CERTAIN TYPES of computing technology has been a good bet. If you put all your money in long-term bets on home/business ADSL technology in the early 2000s, you would've taken a financial bath as other technologies, like copper-cable-tv-based tech, wireless tech, and fiber tech overtook ADSL.
Will "what we call AI in 2025,"* as a type of comput
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Computing power is still a hugely beneficial thing.
At the very least all this compute will ensure that we have plenty of energy going forward. People still assume that green power is about replacing fossil fuels. It isn't. We will need way more power in the future, and thank gods the green power wave came in time so that we won't burn up the planet next century with all those energy requirements. But we're not off the hook, because waste energy alone will simply cook us all in the 2300s, so we're going to have to find ways to reduce our energy footprint any
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the large debt makes the bankruptcy much worse.
Only for the lenders.
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Debt is a strange thing. It fuels economic growth so massive debt is not always a bad thing.
I keep hearing this, and I have seen proof of this; however, that claim just does not sit right with me. I think debt is far more nuanced than a simple good/bad determination and the good sides are trotted out when they likely shouldn't be.
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Three bubbles popping at once (Score:5, Interesting)
Just think about all three bubbles popping at the same time, likely caused by collapsing confidence in the AI market when it's revealed that training does not equal creativity and progress has slowed to incremental steps. That's when markets fall.
Falling markets will affect crypto and the ability to pay ballooning debt. Then you enter the debt death spiral.
I was in college when the Internet bubble burst. We were all there for IT, too. Same with the 2008 sub-prime bubble. If one bubble can be that bad, imagine a cascade of three.
I hope it's all just a bad guess.
Clankers die on Christmas (Score:2)
Turns out it wasn't because they were trained on that fact, but that the finance bros realized the AI bros were full of it and pulled funding.
It's the same bubble (Score:2)
It's all the same bubble. It's caused by central banks intervening in the credit market to artificially suppress the price of credit. Combine that with a deregulation of credit creation (there is no concept of fractional reserve ratios etc now - credit is limited by the 'discipline' of private banks) and you just have gobs of cheap money going everywhere. When they did the COVID stimulus this just supercharged the process. If you have credit expanding beyond the capacity for real investment to absorb it (ne
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When the problem is easy credit, adding more easy credit just makes things worse. The only fix is a massive destruction of credit and the malinvestments it created, but that's impossible in a democracy as you'll lose the next election.
Guaranteed bailout requests (Score:2)
[We'll see] bubbles moving forward. One is a crypto bubble, second an AI bubble.
And we're guaranteed to see bailout requests from both, since they'll self-proclaim themselves to be "too big to fail" (which just means "too big" has failed.
Just the three? (Score:2)
The debt bubble is already at the point that it simply can't pop because the entire economy will collapse. 'too big to fail'.
AI is what it is, as long as almost everyone ignores that current implementations are nothing more than a database with search (prompt) results determined by a coin flip. Real AI would never need a random number generator - it would also always give the same answer for the same prompt until it is f
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It is a scam needed by criminals so it will continue to exist, is that better?
No. Criminals have no stake in the value of crypto. They need it for transactions, but the price of crypto doesn't effect that use. Some may be using it as store of value and will lose value along with everyone else who owns crypto.
Weren't they... (Score:2)
Going to roll debt over into bitcoin and then let ai deal in it? 3-in-1 bubble right there.
I need to dig a bunker...
wish in one hand and spit in the other (Score:2, Interesting)
Re:wish in one hand and spit in the other (Score:5, Interesting)
Wish I had bought into the crypto bubble when bitcoin was 20$
If you sold when it was $19 you would have lost money. I am sure there are people who bought low and sold high. But the reason people think crypto is a bubble is because its impossible for people to take their returns unless there is someone willing to buy it. And there is no reason for anyone to buy it unless they think someone will pay them more for it in the future. The balance between those two keeps the price going up. As long as buyers are willing to pay more than the seller paid. But when that shifts and more people want to sell than there are buyers, the price people are willing to pay will drop off a cliff. There is no underlying value that would cause people to pay more for it.
What no one is saying is that the same is true of much of the stock market. People buy stock not to get a share of the companies earnings but as speculation on its future price. What crypto may be demonstrating is that the current stock market price is no more tied to underlying value than crypto. Both are essentially speculative markets based on the notion of a greater fool. What crypto may be demonstrating is that those markets don't collapse as long a there is a huge pool of cash held by people for whom money is a scorecard, not something they make use of. If they sell, its only to make a different bet.
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"its impossible for people to take their returns unless there is someone willing to buy it" this is true of anything you are trying to sell. Hardly evidence of a bubble.
It is if the only reason for people to buy is to sell it at a higher price. And it is not true of real investments where the value comes from what is created as a result of that investment.
I kept expecting sanity (Score:2)
I didn't count on multiple rounds of elections ending in absolute lunatics being put in charge of everything in multiple countries including my own.
Authoritarian (Score:2)
Re: wish in one hand and spit in the other (Score:2)
What no one is saying is that the same is true of much of the stock market. People buy stock not to get a share of the companies earnings but as speculation on its future price.
That isn't something nobody talks about, it's widely known everything is worth whatever someone else is willing to pay for it, and a share price is decoupled from a company's value. It breaks down when you buy someone's $1 for $10. You don't raise the value of a dollar, you gave someone your money.
I'm sorry dude but this isn't like assessing the value a piece of art. You can slap a banana on a wall and sell it for a million dollars. We can debate the value of bragging rights and publicity stunts all day. Bu
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I'm sorry dude but this isn't like assessing the value a piece of art
So you say, but my suggestion was that, like bitcoin and investment art, people aren't buying stock (even in lemonade stands) any more based on its worth. They are buying it based on how much they can sell it for. If that price has little or nothing to do with what its worth, then what its worth its irrelevant.
Bitcoin is an obvious example of the market price being completely divorced from values. People buy bitcoin because they expect the price will increase. People don't sell bitcoin because they expect
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I did and i made 4 figures off it. Sometimes I almost regret it but then realize that if I hadn't sold when I did then i would have just lost it when they robbed MtGox.
I think i did much better than the average crypto investor.
Not the same at all (Score:2)
A crypto bubble would hardly even be a blip that would affect cryptobros, criminals, idiots, and very few others. Impact on the real economy - near zero.
An AI bubble would be a typical correction to an industry where the hype is stupidly ahead of reality. Impact on the real economy- a tad painful, but well within the realm of "typical" financial corrections.
When the world debt bubble pops, it'll result in a recovery period similar to what was experience
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>> It took the US nearly 30 years to recover from the WW2 debt.
Did you mean the UK? Because the US was booming in the 50s and 60s. 30 years after WW2 was when things in the US started getting bad again but that was mostly due to the oil crisis.
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You can be wildly profitable and still in debt.
Yes. In fact you can't be wildly profitable without it.
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A crypto bubble would hardly even be a blip that would affect cryptobros, criminals, idiots, and very few others. Impact on the real economy - near zero. .
The total amount of crypto in the world is worth $3.5 trillion USD.
The total amount of mortgage backed securities in 2008 was $7.4 trillion.
The 2008 crash did not only affect those who owned MBSs or had mortgages, it affected nearly everyone. It's a bit naive to state that a crash in a market half the size of the 2008 one would only affect the people who own crypto or would have a near zero impact on the "real" economy, epecially since crypto is now allowed into 401Ks.
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Sorry you disagree with publicly available numbers and math.
It doesn't matter what you think of the underlying investment, that's the current market value whether you agree it is worth it or not. Just like the market value of MBSs was $7.4 trillion in 2008, even though the underlying product was basically fraudulent.
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But, I'm pretty sure that a crypto collapse would rapidly drive the price to zero faster than the OceanGate sub imploded.
I doubt it. Most of the people owning crypto are true believers. Its that belief that holds up the market. I see no reason to think they are all going to completely give up their belief because the price drops.
Many of them are only going to lose paper profits. Unless they need to sell, they are simply going to wait until the market goes back up again rather than sell at a loss. Other true believers will see the low price as an opportunity to buy low. So you have fewer sellers at lower prices and people sti
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A bunch of the CDOs went to zero in 2008. A vast part of the market were middle to lower tranches, and the CDOs were structured so that the lower tranches got paid last in the event of default. Those CDO tranches went to actual zero. The market for CDOs was 20-50 times larger than the market for the pass through MBSs, which is what most people thought MBSs were. Having assets behind them did not keep the economy from crashing.
And you are completely ignoring that people who are not invested in crypto still w
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But, nobody has a clue when it'll happen.
I came here to say pretty much this. "There are bubbles growing..." Yawn. The when is the important part if one wants to try to protect oneself.
The Boomer bubble (Score:5, Insightful)
I'm old enough that I could literally work part-time at a fast food joint over the summer and pay for my college tuition that year.
By contrast my kids tuition at the State University I went to would only cover about half of the tuition for the first two years and one third for the final two because it goes up. That's assuming a better paying fast food job though. Like Chick-fil-A or something.
So this matters because the younger generation doesn't make enough money to be effective consumers and drive our consumer-based economy.
If you look at travel for example something like 80% of the industry is people over 50. The same goes for new car purchases and home buyers although not quite to the extent of travel.
This wouldn't be a problem if the older generation was going to leave a lot of money behind but the healthcare system is going to bankrupt them in their old age and everybody knows it. So except for a few extremely wealthy individuals not only are most people unlikely to get anything from their parents but they are probably going to be chipping in to keep their parents going. Modern healthcare means the majority of people are going to outlive any savings or property values they have. And the American healthcare system basically guarantees that. Never mind all the people tricked into a Medicare advantage plan...
This means that as the older generation dies off they aren't likely to leave anything behind but they aren't going to be replaced by new high value consumers.
Large parts of the economy are just going to cease to be. Restaurants and travel agents and movie theaters and all sorts of things that the younger generation simply cannot afford. This is going to happen while there's a huge push for automation going on too.
The center cannot hold. You cannot have a consumer based economy without consumers.
I mean I guess it's just one more thing to put on the pile of stuff that we're ignoring like the last 50 years of automation or the 50 trillion dollars shifted to the 1% in the last 40 years or climate change wrecking the water cycle creating perpetual drought or AI data centers sucking down all the water and electricity or... Well you get the idea.
Too many problems and nobody actually trying to solve them because there's too many pointless distractions.
Not healthcare as in doctors and hospitals. (Score:2)
Long term care will be the killer of boomer fortunes. Of course, if Medicare Advantage plans get enshittified over the next decade or so, then maybe healthcare will eventually end up bankrupting boomers.
My projection is Medicare would not be able to support these bankrupted boomers, they'll likely die on the streets.
If they are bankrupted due to enormous healthcare costs, they're likely to suffer a tumultuous death. What do you do with them at that point? Offer them self-assisted suicide?
Look up the John Oliver video about Medicare adv (Score:1)
Medicare advantage is a scam to privatize Medicare and dumb old people into the incredibly shitty Private health care markets against their will. It only exists because we've been letting the Republican party chip away at Medicare here and there for decades and they've managed to tac
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I invite you to the most socialist province of Canada, the province of Quebec where all healthcare is paid for by the government. People wait for years to get a cancerous tumors removed and often die before the surgery. The best doctors are leaving the province to go work in the United States because the provincial government is out of money and is currently pushing to cut their salary and raise their workload. About 50% of the provincial government money spending goes to healthcare. On top of that, they sp
American here (Score:2)
As an American I had a couple of bumps on my head I wanted to get removed. I got them removed immediately because I happen to have decent health insurance. They were completely non-cancerous and they were reported to my private insurance as potentially cancerous because otherwise my private insurance would not have paid the remove them. T
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Good thing most the rest of the world doesn't have a US style healthcare system then. Europe should be just fine with their boomers passing stuff down to their children. USA may very well be done for though. Only time will tell.
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Your vision is poor. It will return to the Antebellum economy but now, with no obligations to the individual 'slaves'. Sure, the "economy" will be smaller, but wealthy individuals don't need much beyond what 'slaves' can provide. All of the things that are being sold to you right now are not necessary to life in a pre-industrial society. The only industrial type things they will need are weapons, and nuclear bombs are enough to prevent an invasion (in theory).
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This is mostly nonsense. Every generation accumulates wealth and then dies leaving it to the next generation. When people stop working, the people still working get paid to produce the goods and services they consume.
The rose colored glasses of life when college was cheap ignore the reality that most kids didn't go to college out of high school. They went to work. If they were working part time it was because they couldn't find a full time job.
The problem for college students is that the finance industry
AI Bubble (Score:3)
The AI bubble bursting can't possibly make things worse for the world. It will continue damaging the world until the bubble pops, then recovery will be swift, painless, and glorious for most of us.
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This.
I'm also surprised he didn't mention the housing bubble. Just because it's been running for decades and has been intentionally stabilized in an inflated state doesn't make it less of a bubble.
The real bubble (Score:1)
You should see my beans-loaded dinner last night. That's the real bubble about to burst right now.
Pitchforks Nearly Inevitable (Score:2)
https://www.politico.com/magaz... [politico.com]