The US AI Bubble Reminds Me of the Eve of China's Real Estate Collapse
6 days ago
- #Financial Crisis
- #AI Bubble
- #Economic Comparison
- The US AI bubble is compared to China's real estate bubble before its collapse, both starting with an 'indestructible' narrative.
- AI is positioned as a national strategic priority in the US, similar to how real estate was seen in China, leading to public subsidies and political backing.
- The 'Too Big to Fail' (TBTF) narrative repackages private-sector risks as national-level security, paving the way for future bailouts.
- Complex financial instruments like Asset-Backed Securities (ABS) and off-balance-sheet maneuvers are used in both bubbles to hide debt leverage.
- The AI sector's cash flow crisis mirrors China's real estate involution, with companies prioritizing scale over profitability.
- Key figures like Sam Altman in the US AI bubble and Hui Ka Yan in China's real estate bubble play similar roles in leveraging government support.
- Downstream applications like Duolingo show cracks in the AI value chain, failing to generate profits despite user growth.
- Token dumping in the AI sector artificially distorts demand, similar to China's 2015 monetized shantytown reform to clear real estate inventory.
- The US AI bubble combines dot-com narrative hype with real-estate-level financial leverage, creating a super-bubble with global implications.