"An artificial-intelligence bust (and thus bubble), inflation and fiscal stress are the three the most alarming threats to global prosperity at present, the Bank for International Settlements warned."
The full BIS report is here:-
This year's Annual Economic Report examines how the global economy is faring as progress meets rising perils – including a new fiscal-financial stability nexus and shifting inflation dynamics.
www.bis.org
"The assessment highlighted
AI-led risks prominently in a report that arrived on the eve of the ECB’s three-day annual symposium in Sintra, where a host of global policymakers will also scrutinize such stability dangers closely."
Of course, they are questioning the current AI and semi stocks valuations; who wouldn't, really. Look at these two sets of charts. Capex expected to reach 800 bn dollars this year; it's getting close to a trillion.
“Disappointment in returns could trigger a sudden pullback in financing and turn the capex boom into a protracted investment bust, with potential knock-on effects on financial conditions,” the BIS said, before observing that
“a major equity-market correction could have larger macroeconomic consequences today than in the past.”
"On AI specifically, officials highlighted vulnerabilities linked to funding, including complex arrangements such so-called “circular financing” deals that can mix equity and debt with supplier-client contracts"
- in other words, companies buying each other's stuff in a circular pattern, all ultimately dependent on the current astronomical stocks valuations.
In essence, they are saying we may well be in DotCom 2.0. All we can do is 'watch this space', I guess. Admittedly, not a staggeringly surprising conclusion, however, for the normally rather staid and reserved BIS to come out and say so publically, is noteworthy. Let's hope we don't get "dotcom crash 2.0" at some point in the next couple of years.
A couple of other headlines I noticed today.
GM replaces 1000 factory workers with robots.
General Motors is facing renewed scrutiny over automation at its flagship EV assembly plant after adding dozens of robots to the production line months after cutting more than 1,000 jobs. The changes at Factory Zero ... Read more
finance.yahoo.com
BAT fires 9000 workers, 1/5 of its workforce, to be replaced by AI.
And it seems 'tokenmaxxing' is suddenly a thing of the past in the Valley, who knew? For once, actually quite a well written article, from the torygraph.
“No one is safe anymore. Morale is down the toilet." Was anyone ever "safe"?
It's not just open-source developers, who are feeling the pinch.