Last week’s Alternative Visions show discussed the latest change to financial asset bubbles (cryptos, gold, silver, S&P stocks and AI). Why AI isn’t making any money except for big & tech corps and won’t any time soon. Latest stats on real economy consumer spending mostly just price increases since not adjusted for inflation. Manufacturing continues to contract. New housing flat. Recent govt shutdown distorting econ stats. Show addresses latest European scheme to seize Russian assets in its banks and use to fund Ukraine war. Why Euroclear in Brussels, Belgium govt, and now European central bank all against the seizure being pushed by European Commission and German chancellor Merz. (Next week: USA’s new Strategic Direction plan document and the rearming of German War Machine article in The Atlantic Mag. What does it all mean?)
Financial Bubbles, US Real Economy & Europe’s latest scheme to grab Russian Assets
December 8, 2025 by jackrasmus
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(Click on image) Obama's Economy: Recovery for the Few, explains how the weakest and most lopsided economic recovery since 1947 has been the direct outcome of failed economic policies of the Obama administration and US Federal Reserve bank since February 2009. Includes a detailed 'alternative program' in the final chapter.
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I am not understanding the discussion of why AI is so close to speculative collapse. My understanding that the original push for AI was based upon the idea that big to medium size businesses could get rid of some 20% of their work force assuming that that was the percentage of workers that are involved with simple decision making. But the most recent discussion re the speculative crash of AI is not in replacing workers but in creating a focused browsing capacity and thus the historical advertising revenue from browsing sales will be captured by big AI browser providers such as Google.
Likewise, from what little I know of AI, it seems that the speculative collapse related to a 20% work forced reduction seems quite attenuated. Okay so let’s assume to ramp up the IT infrastructure to implement AI and simple decision making may be quite expensive: say perhaps ten years of salary for those poorly paid workers who are currently making simple decisions. So it could be a very bad bet if a medium or large business “bet the farm” that an AI driven reduction in a work force would reap immediate benefits and instead incur large loans that cannot be paid off with current revenues.
So is the anticipated speculative AI bust related to browsing ad revenues or the high cost of implementing AI or both?
THe AI bubble is the financial side. AI stocks, big 7, data centers, etc. Debt is financing the data center expansion, as well as shady deals between the big techs and the data center companies where each is investing in the others stocks. Should general business not follow through with AI investments (generative AI browsers are not sufficient to justify the otherwise major data infrastructure costs they’d have to incur), then we get over investment in data center and data center companies default on their debt, it spills over to one or more of the big 7, and fears about the AI boom not yielding immediate results spills over to the stocks of AI companies. The S&P500 and or Nasdaq take a deep dive thereafter. There are other potential transmission mechanisms for the AI investment boom to slow dramatically or contract, leading to the puncturing of the stock bubble. The bubble is financial asset values, but underlying it is over-investment in data centers, chips, etc. that then pull back sharply, causing stock bubble to collapse. Hope that helps
I finally get it. And this explains why Warren Buffet dumped billions of Apple stock and warned about the billions of dollars of debt leveraging AI. Thanks.