4 ms·

Is the Bubble Bursting?

27 points by slow_typist 1y ago

austin-cheney 1y ago
> How can you tell if a tech bubble is about to burst? A bubble bursts when debt obligations exceed the ability to maintain that debt for multiple parties simultaneously, which results in a collapsing debt spiral. It is challenging to tell when the collapse is close and even once it has started. Because it is challenging to predict the moment of burst the best course of action is to limit exposure by transferring the high risk obligations to someone else before everyone else rushes to do the same.
- runlaszlorun 1y ago
  > A bubble bursts when debt obligations exceed the ability to maintain that debt for multiple parties simultaneously, which results in a collapsing debt spiral. Is this true? Not challenging this but hadn't heard bubbles tied to debt instead of market prices on equity or similar valuations.
  - austin-cheney 1y ago
    It’s more about debt than market prices. You can always shift to accommodate inflation by raising prices or shrinking your product as necessary to maintain your margin. Debt is different because it’s an obligation you don’t control. The more debt you carry the more leveraged you become, which is exposure to risk. Another way to think of that is brittleness, which is subject to breaking. Investments are forms of debt, money locked into a financial vehicle.
icrowley 1y ago
Betteridge's law of headlines: https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headlines https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...
Havoc 1y ago
The AI aspect of this worries me far less than the financial. The world can continue without a chat bot. It can’t if the financial system collapses And an alarmingly large number of things in financial world are starting to look shaky. I he A.I. bubble might tip it over
saaaaaam 1y ago
I think the fact that an elderly and highly opinionated jazz critic - whose usual output is Luddite-tinged moaning about the music business - has turned to clickbaity headlines about AI tells you need to know about bubbles.
jijijijij 1y ago
Apart from need, have newly build data centers at scale bought their GPUs for a reasonable price, or did they pay FOMO money? Because from what I can see on the consumer side, crypto and AI pushed GPU prices into funny realms. I imagine, if the AI opulencia actually massively over-payed for their toys, there is probably no recovering. In time, before the tech becomes obsolete, I see no application on the horizon, except for the one thing even worse than AI: crypto. So, a push for crypto, fitted to these GPUs, may be the signal to brace for impact. The music stops, billionaires eat the last chair, and all we get is tough love and a new aesthetic: Hypepunk, the dawn of Silicon Gothic.
- mgh2 1y ago
  I bet the next thing big tech is gonna sell us (after a bust) is quantum computing
mgh2 1y ago
The author points a discrepancy worth analyzing: the disconnect between consumer spending indicators and big tech funding - either this will result in a monopoly or a bust. https://en.wikipedia.org/wiki/Big_Mac_Index https://en.wikipedia.org/wiki/Big_Mac_Index
tim333 1y ago
There doesn't seem much bursting yet. NVDA is still up ~60% on a year ago and not far off its peak.

27 points by slow_typist 1y ago

> How can you tell if a tech bubble is about to burst? A bubble bursts when debt obligations exceed the ability to maintain that debt for multiple parties simultaneously, which results in a collapsing debt spiral. It is challenging to tell when the collapse is close and even once it has started. Because it is challenging to predict the moment of burst the best course of action is to limit exposure by transferring the high risk obligations to someone else before everyone else rushes to do the same.

runlaszlorun 1y ago
> A bubble bursts when debt obligations exceed the ability to maintain that debt for multiple parties simultaneously, which results in a collapsing debt spiral. Is this true? Not challenging this but hadn't heard bubbles tied to debt instead of market prices on equity or similar valuations.
- austin-cheney 1y ago
  It’s more about debt than market prices. You can always shift to accommodate inflation by raising prices or shrinking your product as necessary to maintain your margin. Debt is different because it’s an obligation you don’t control. The more debt you carry the more leveraged you become, which is exposure to risk. Another way to think of that is brittleness, which is subject to breaking. Investments are forms of debt, money locked into a financial vehicle.

icrowley 1y ago

Betteridge's law of headlines: https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headlines https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...

Havoc 1y ago

The AI aspect of this worries me far less than the financial. The world can continue without a chat bot. It can’t if the financial system collapses And an alarmingly large number of things in financial world are starting to look shaky. I he A.I. bubble might tip it over

saaaaaam 1y ago

I think the fact that an elderly and highly opinionated jazz critic - whose usual output is Luddite-tinged moaning about the music business - has turned to clickbaity headlines about AI tells you need to know about bubbles.

jijijijij 1y ago

Apart from need, have newly build data centers at scale bought their GPUs for a reasonable price, or did they pay FOMO money? Because from what I can see on the consumer side, crypto and AI pushed GPU prices into funny realms. I imagine, if the AI opulencia actually massively over-payed for their toys, there is probably no recovering. In time, before the tech becomes obsolete, I see no application on the horizon, except for the one thing even worse than AI: crypto. So, a push for crypto, fitted to these GPUs, may be the signal to brace for impact. The music stops, billionaires eat the last chair, and all we get is tough love and a new aesthetic: Hypepunk, the dawn of Silicon Gothic.

mgh2 1y ago
I bet the next thing big tech is gonna sell us (after a bust) is quantum computing

mgh2 1y ago

The author points a discrepancy worth analyzing: the disconnect between consumer spending indicators and big tech funding - either this will result in a monopoly or a bust. https://en.wikipedia.org/wiki/Big_Mac_Index https://en.wikipedia.org/wiki/Big_Mac_Index

tim333 1y ago

There doesn't seem much bursting yet. NVDA is still up ~60% on a year ago and not far off its peak.