New Report Suggests That a Global Recession Could Happen If the AI Bubble Were to Burst

Peter_Brosdahl

Peter_Brosdahl

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Some are worried that, as investments in AI continue to surpass epic levels, what the effects will be if the bubble bursts. A new report from the Bank for International Settlements (BIS), via The Register, cites precedents in which an overabundance of investment in industries or technologies resulted in global financial catastrophes. “In its annual […]

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Yeah no **** AI stocks are like 50% of the market capitalization of the S&P 500 right now.

Even shedding 5-10% of their cap would trigger a chain reaction sell-off and start the house of cards collapsing.
 
Look at how over inflated the market is. It severely needs to correct to sane levels. 20k dow again.
 

BIS warns 'pressure points' putting global economy at risk​

Basel (Switzerland) (AFP) – The Bank for International Settlements warned Sunday of multiple "pressure points" in the global economy, from inflation fuelled by the Middle East war to fears of cooling AI investments, threatening financial stability.

In its annual report, published Sunday, the BIS -- considered the central bank of central banks -- called on monetary policy makers to "act now", to help safeguard the stability of the global economy.

The report analyses four pressure points that demand urgent attention:

  • Inflation has risen. In a world of more frequent negative supply shocks, a key risk is that higher inflation could become ingrained if inflation expectations de-anchor. This could sustain inflationary pressure even after energy flows and oil prices normalise following the opening of the Straits of Hormuz.
  • Optimism surrounding AI may not last, despite its promise of future productivity gains. The current surge in capital expenditure could prove unsustainable if supply bottlenecks restrain production. And intense competition for market leadership may fuel over-investment, as seen in previous innovation waves.
  • Financial vulnerabilities remain a concern. Liquidity in core bond markets may be more fragile due to stretched asset valuations and investor complacency. The financing of AI is increasingly leveraged, featuring complex interactions within the AI supply chain.
  • Near-record high public debt and higher interest rates are straining fiscal positions in many economies, leaving governments with less room to respond to future recessions or crises.

www.bis.org

Global economic pressure points call for policy discipline: BIS

The sustainability of the AI boom, financial vulnerabilities and strained public finances are among pressure points facing the global economy, along with the return of inflation. The interplay of record-high public debt with the increasing role of highly-leveraged hedge funds creates a new...
www.bis.org www.bis.org

www.france24.com

BIS warns 'pressure points' putting global economy at risk

The Bank for International Settlements warned Sunday of multiple "pressure points" in the global economy, from inflation fuelled by the Middle East war to fears of cooling AI investments, threatening…
www.france24.com www.france24.com
 
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