Baldur Bjarnason“Opinion | I Predicted the 2008 Financial Crisis. What Is Coming May Be Worse. - The New York Times”
If anything, this downplays the risks as it seems to assume that there has to be something to "AI" to warrant calling it a "boom".
Open Risk@baldur He mentions the extreme market concentration in US bigtech but doesn't seem to specify some causal chain that could precipitate a financial crisis as a result. The link to private credit has been examined in some depth (I believe it was FT's Alphaville) and was not deemed sizeable enough to become a systemic risk.
One scenario that could bring the house of cards down is changing political winds. Bigtech enjoys total monopoly valuations. Outside the US this status may not persist forever
The private credit discussion
https://www.ft.com/content/742edb09-a856-41ad-aea6-207862cfd952
@openrisk Big tech has other risks than private credit. The “AI” promise is largely bullshit. Costs are much too high. Much of their business comes from their own investment (I.e. they invest in cos that then buy cloud services/hosting). Their stocks are overvalued. Much of their income are monopoly/oligopoly rents dependent on government inaction worldwide. Code quality is in a decline.
Etc etc.
@baldur all true, but they have incredible staying power due to monopoly status. E.g., Meta burned vast billions on VR with nothing to show for it, would have bankrupted a normal company but they simply shrugged and moved on to spending billions on "AI". Their insane valuations also reflect this extraordinary chokehold on basically a large fraction of the world economy.
@baldur they are of course more than aware of the extraordinary political cover they enjoy. That's why they hire politicians like Nick Clegg to maintain it, that's why they cozied up en masse to the Trump admin etc.
In this respect, current EU "regulation" is toothless, the real pushbacks would be outright bans, break-ups, forced open standards etc. Aggressive, even hostile action, effectively countries saying: we don't like your take on how digital society should be shaped, be gone now.
@openrisk It's not just a question of regulation. I keep hearing from tech people in the EU about a quiet but broad push to hire people to help large companies and institutions minimise their exposure to US software
A big threat IMO to big US tech isn't regulation but an global bottom-up move away from US dependence and a widespread animosity from the public.
But their biggest threat is their political cover. Authoritarians historically often turn on their corporate allies.
@baldur There is mutual dependency of bigtech and the Trump admin. The booming markets narrative is essential for the midterm elections. Americans are more sensitive to stock markets via their retirement vehicles etc. So if they could help it, nothing will happen till then.
But yes, the decoupling from US software seems now on an irreversible path, though with the extreme current dependency, it will be years before the situation flips.