Panic of 1873(en.wikipedia.org) |
Panic of 1873(en.wikipedia.org) |
They sought it with thimbles, they sought it with care;
They pursued it with forks and hope;
They threatened its life with a railway-share;
They charmed it with smiles and soap.
IMO the collapse will come because the insane profits that OpenAI/Anthropic valuations depend on will collapse due to margin collapse from competition from Open Weight / Chinese models.
IOW, a reduction in price of tokens. Which will increase demands for tokens, and the electricity needed to generate them.
This might result in bankruptcy of some of the holding companies holding data center debt, but with that debt discharged in bankruptcy the data centers will be quite profitable and keep operating.
Training demand will also collapse after a crash, but training is now a minority of data center demand.
IOW, those electric bills are going to continue to get paid. I wouldn't want to hold OpenAI/Anthropic stock or data center debt though.
The risk is in the financial world. The worlds central banks printed money because they thought inflation was tamed, but it wasn't, we just don't measure stratospheric stock and bond valuations as "inflation". I mean, euro-zone bond yields went negative -- but no, that's not inflation-like price mania at all! A big correction in financial markets towards some semblance of reality could amount to a psychological shock on consumers, a big negative wealth effect.
And a hit at the ballot box, hence no major political parties calling for raising rates (or sound money). They rather juice the markets for as much of their careers as possible.
> A boom in railroad construction, 33,000 miles (53,000 km) of track were laid across the country between 1868 and 1873.
> The railroad industry was the largest employer outside of agriculture and involved large amounts of money and risk. A large infusion of cash from speculators caused spectacular growth in the industry and in the construction of docks, factories, and ancillary facilities. Most capital was involved in projects offering no immediate or early returns.
Sounds like the AI bubble.
Every new technology causes a financial bubble, and railroads weren't even the first:
* https://en.wikipedia.org/wiki/Technological_Revolutions_and_...
> On 9 May 1873, the Vienna Stock Exchange crashed because it was unable to sustain the bubble of false expansion, insolvencies, and dishonest manipulations.
well lets not do those things again shall we
Bitcoin, or the AI bubble, or Peak Oil, or some panic or collapse?
No doubt something's going to fail, but I have zero confidence in the ability to predict any of it.
My prediction: they're all wrong.
> ... lasted from 1873 to 1877, continuing until 1879 ...
Isn't that just "lasted from 1873 to 1879".
Or is it written that way intentionally?
Reading the entire sentence makes it clearer.