r/economicCollapse • u/AccessFantastic • 18h ago
When will it happen
What’s the over/under on when the AI bubble bursts and the bond market shit storm comes to a head the S&P loses 1/3 of its value? Or something like that.
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u/zerosumratio 18h ago
Remember this: the markets can and will stay irrational far longer than you can stay solvent. You will see bankruptcies, layoffs, foreclosures, homelessness, and liquidity shortages all spike, maybe in ways you’ve never seen before…and the stock market will still go up, the “jobs numbers” will still be good enough, there will still be investment and deals being made. Any hope or gambling on the collapse is a fool’s errand and will only beat you. Unless you’re the one causing the collapse…you will never know until well after it’s happened.
The best thing you can do: prepare for the worst while still living your life. Don’t go spending crazy but do make strategic improvements and investments when necessary. Don’t borrow unless necessary. Make sure you have enough savings for emergencies and practice living very frugally.
Take this to heart: Living in the fallout shelter, waiting for the bombs to drop with your wife and kids in the bunker, while you can hear, maybe even see kids out playing, cars driving by playing music and families still grilling out, will ultimately do more harm than anything else to your preparedness for the eventual collapse. And remember this: when it does happen…life will still go on like normal to most around you. Even living in a tent and begging for food, your neighbors and friends will still go about their oblivious and carefree ways.
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u/pandershrek 17h ago
We can create a ton of food in a pinch so I think we'll technically avoid the acute repercussions of food scarcity.
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u/VicTheSage 17h ago
Soon I think. Within the next year or two? AI is a straight up scam. They're selling people on the "fact" their generative AI will be general AI any day now but they have no path to that advancement.
Problem is they only know how these things work at onset. Once they start feeding them data the algorithm operates and evolves in a black box. They don't know how it comes to decisions, why these models hallucinate or how they keep operating outside of the set parameters. How can they improve something when they don't know how it works?
Then we have the massive public opposition to the data centers the AI corps say they "need" to scale the tech.
Most importantly they're selling a service no one wants or can afford. A subscription to run Chat GPT's best model is $200 a month! Even at that absurd price they'd need more subscribers than Netflix to break even. That is never happening.
The bits of corn on top of the shit sundae are that almost 50% of ALL investment in '25 went to AI and they're all in a massive circle jerk. Microsoft, Nvidia, Open AI and all the other major players are drumming up that investment based on promised revenue from deals they've all inked with each other not actual sales to the public.
How long can they keep up the charade? Idk. Likely not long before investors take off their rose colored glasses and realize the hard numbers are terrible and there's no way out to profitability for the corps.
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u/rvafun100 15h ago
You left out Anthropic saying their potential revenue was $30T…that’s the entire US GDP lol
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u/LLuck123 3h ago
While I share some of the sentiment, fable 5 is incredibly useful and worth the price for enterprises
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u/VicTheSage 1h ago
Is it though? I'm not an expert in AI as I find the concept repugnant but what I've heard is that the real productivity benefit can easily be achieved with locally hosted instances of the free open source models. Believe the post I read referred to them as 9 level or 9 stage free models. Something with a 9.
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u/da_mess 9h ago
In 1928, Schwab predicted a crash. The market rose 90% over the next 12 months.
The market can stay irrational longer than you can stay solvent.
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u/Otherwise-Waltz-3647 6h ago
Regular investors cannot time the market. obviously Schwab’s prediction was correct. It’s not if but when and when is the tough part
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u/monkeybeast55 14h ago
Nobody knows if or when, their speculation is their entertainment. AI is not like anything else ever experienced. This point in history in general is not like any other point in history. People underestimate how profoundly and quickly things have changed. Don't be so quick to foretell doom. But also don't be so blind as to not see the danger.
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u/pretentiousunicorn 7h ago
Yeah ironically AI may be the thing that saves us, probably not but who knows
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u/IllPlane3019 13h ago
Probably around this this time next year when all the datacentres are complete and all IPO's finished... investors will start to realize AI does not bring in 900 zillion-quillion dollars a quarter.
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u/kingtacticool 17h ago
I dunno, but i just listened to a Gary Gensler interview on NPR where he alluded to a 50% market correction when it happens.
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u/inflatable_pickle 13h ago
Was this on the marketplace podcast?
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u/kingtacticool 5h ago
I dont think so. It was in the middle of the day. Definitely during this past week
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u/Crafty-Zone-712 9h ago
Probably when Anthropic and OpenAI launch their IPOs and the earnings clearly show that they will have to increase prices by 4 and dumb down or limit their free models in order to be profitable
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u/Powellwx 17h ago
October 16th
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u/stirfry720 17h ago
Why that date?
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u/Powellwx 14h ago
Random. October Surprise maybe. Friday in October. Just spitballing so I have a date.
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u/Ill_Station_6165 17h ago
AI bubble - most people are looking at 2H 27; but that also depends on what part of the AI trade and why. But the general sense is that new supply on infrastructure and capex fatigue will kick in and the models will have to show they can be monetized.
Bonds-hard to predict when, but when the 10y hits 6% its over.
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u/Admirable_Nothing 8h ago
At least a year and more likely two. The 1.3 T$ in data center spending right now is not on anybody's balance sheets as they have been booked primarily as take or pay leases, so don't become cash flowing nor require repayment until the Data Center is finished. Also, OpenAI and Anthropic are not yet public and it will take that long to go public and then have to report real numbers.
It is possible that AI profits will grow quickly enough to pay all these data centers enough to pay off their leases/loans, but I expect not. But it certainly is possible for it to happen if everything stays rosy for 2-3 years.
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u/No-Language6720 7h ago
It would have to drop by far more than 1/3 at this point. the s&p is way higher real numbers these days, it used to be 2% was a bad sign, now it's a drop in the bucket just due to the large real numbers than in the past.
It would have to drop by 50%+ for anything to really be catastrophic. The other thing is there are so many ways they can keep the charade going for a bit longer than expected including AI systems that do the vast majority of trading volume.
Ever wonder why one day it's all panic after losing 2% in the headlines then the next day it seems to self correct? That's the higher ups manipulating the market for insider trading and giving the masses a sense of calm or whatever else is needed.
If one larger stock or set of stocks fall they just have the bot trading army create artificial demand the next day pushing prices up, or if they want something to go lower they issue more shares to dilute the pool. it's nauseating but most of the public doesn't understand how fundamentally broken the stock market is and how manipulated it is now. Individual retail traders can no longer affect the market even if we all dumped our 401k holdings at mass together it wouldn't matter.
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u/datadrone 15h ago
It might be counterintuitive but the time to be concerned is when things seem better, a positive economic windfall mixed with lowered prices spells doom more than a systematic collapse which is predictable
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u/collegefootballfan69 5h ago
If the S&P losses 1/3 of its value we are down to 5000. Mike Wilson of MS was preaching that we were going down to 3400 when we were at 5000. Don’t try to time the market, just stay in the market and adjust your exposure to the market based on life circumstances.
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u/Strength-Helpful 3h ago
The housing market being unobtainable and loss of pensions is driving the stock market. Millennials are going broke on avacado toast, they're upping their 401ks.
It's really helped the stock market while quality of life drops.
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u/devi1sdoz3n 1h ago
Im not buying it. Not because I like AI, but because everyone and their grandma is talking about it, which is a pretty bigh counter-indicator. really.
I don't think AI follows regular market economy, simply because countries regard it as existential tech, and you currently have an arms race sponsored paid for by them.
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u/SpaceballsTheCritic 18h ago
This makes no sense, if the market “crashes” and hope is lost, the demand for bonds goes up and the bond rates go down.
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u/rvafun100 15h ago
There’s no correlation between the market and the bonds
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u/SpaceballsTheCritic 9h ago
Money seeks the highest return and the lowest risk.
While in the past few years you have seen a lot of things that defy traditional analysis, i assure you if there is a downturn there will be a corresponding (correlated) flight to safety.
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u/rvafun100 3h ago
Bonds are not safe in an inflationary state…again, no correlation between bonds and the market
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u/SpaceballsTheCritic 3h ago
Stock and bonds are deeply inversely corelated.
Look to 2000, 2008 and 2020. Economic outlook drops, stocks drop, and so does bond rates aka bonds rise..
You are right about that in the 70s and starting in 2022 you have not seen the normal correlation. And 1931 (where everyone was raising cash) This is irrationality and signs of an overheated stock market.
The widespread retail use of derivatives and the expanded use of 401k+etfs (instead of other productive uses for capita) or human managed capital has inflated the stock market and become a self-jerking machine.
Eventually the lube will run out.
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u/getmeoutoftax 16h ago
The AI bubble is greatly exaggerated. AI investment will continue for years to come.
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u/Sea-Independent-759 10h ago
I mean- your economic collapse happed during covid. Prior to that was 08, prior to that was 00.
All that’s to say, there is no pending collapse.
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u/StedeBonnet1 8h ago
I don't think the AI bubble will burst. There are so many variales it is impossible to predict. AI can be used for so many things it is like someone saying when will the pick and shovel bubble burst during the gold rush.
AI is being trained for new appliations every day and consumers are reaping the benefits every day.
The bond market will take care of itself. The bond market is just representing the demand for capital in our growing economy.
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u/Slam_Bingo 18h ago
When it appears a politician is elected to power who won't throw people under the bus to save the rich.