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AI is the Greatest Bubble of All Time – Ed Dowd
By Greg Hunter’s USAWatchdog.com (Saturday Night Post)
Wall Street money manager and financial analyst Ed Dowd of PhinanceTechnologies.com made a name for himself during the dot com bubble. It was not because he was telling people to buy, it was because he was telling investors to get out before it all blew up. Dowd saved people a lot of money by sidestepping a crash. Fast-forward to today, and Dowd sees the same bubble signs in AI (artificial intelligence) as he did just before the Dot-com bubble blew up. This time around, it’s far worse. Dowd says, “Being a student of history gives you an idea of where you might go in the future. Currently, we have the greatest bubble of all time, and that is the AI bubble. It is in the process of becoming exposed, and people are beginning to issue warning signals. Lloyd Blankfein, the former CEO of Goldman Sachs, has issued a warning . . . about the AI risk. He’s worried people are too concentrated in this trade. . .. First of all, there is not even enough power to power these data centers. That’s going to halt the CapEx (Capital Expenditure) on its own accord. There is so much capital that has to be raised that will compete with government debt, there will be a crowding out effect. The costs to finance this are going to keep going higher and higher, and this will cause some bankruptcies . . . and then it all unwinds.”
How bad does Dowd think this will get? Dowd says, “It would not surprise me to see a 40% to 50% correction at some point. Calling when that is going to happen is very difficult. I don’t suggest anyone short the market, but it seems like we are getting closer to the end game when people are openly calling this a bubble. People say the bubble does not pop until everybody believes. That’s not true. There were plenty of people during the 2000 Dot-com bubble who knew it was a bubble. They actually played it, and the game was ‘get out before everybody else gets out.’ So, people know it’s a bubble. The question is what will burst it? That is the credit markets and private credit, which has been a big source of funding for AI that is under stress. There is a default cycle coming, and general backdrop of the real economy is quite weak. The consumer is not doing well. Walmart just reported, and it had the lowest same store sales in six years. . .. The general population is not doing well, the housing market is rolling over, and we have the economic problems with China we have talked about before. So, it’s all conspiring to be a nasty correction.”
When will this negatively affect the economy? Dowd says, “It’s already affecting the economy. When excess d****s and excess disabilities starting showing up, what did life insurers do? They repriced their products higher. So, the cost of healthcare insurance is going up for everybody. More disabled means the system needs to spread that around. This means higher prices for everybody. Life insurance premiums are going up. Health insurance premiums are going up. Disability insurance premiums are going up. It also affects employers, and it’s harder to find people. The government will have to pay for disability. . .. It’s an economic drain and productivity suck. . .. This is just a disaster. There are seven million additional disabled since 2020. . .. and the trend is still going up.”
There is much more in the 45-minute interview.
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