Whether or not you use AI in your personal life, it is no longer possible to escape the grip of the industry. Several billion dollars now depend on the success of AI, much of which is tied to speculative debt. As everyone knows, debt is only a problem if you can’t pay it off – and as major AI labs fail to generate enough revenue to cover skyrocketing costs, alarms are ringing that the world’s Jenga Tower may soon collapse.
As a new analysis from Washington-based think tank OpenMarkets concludes, this debt trap means that “the risks of a deep and severe AI crash are growing rapidly.”
The report, cheerfully titled “Prepare for Impact,” examines the long-standing and, somehow, still controversial narrative around the AI bubble. As OpenMarkets researchers write, the interconnected and highly concentrated nature of the speculative AI gold rush carries profound risks for the rest of the tech industry — and even the economy as a whole.
“If the AI industry fails to repay its growing debts,” the report warns, a “financial crash could ensue – and it could extend well beyond the technology sector.”
Although the researchers found that the current financial situation is “unique in recent history in its size, scope and risks,” they note eerie similarities with the 2008 subprime mortgage crisis.
While financiers are desperate to keep AI labs afloat, the report claims that “speculative data center debt is being repackaged and sold to pension and retirement funds, university endowments, and other institutional investors in a manner eerily reminiscent of the subprime bubble.”
As reckless spending on AI has increased, OpenMarkets observes, President Trump and his lackeys have made a habit of aggressively tearing all regulation out of the walls. This may keep the bubble afloat in the short term, but in doing so it further worsens the consequences of any crash.
“The Trump administration and federal financial regulators are destroying regulatory guardrails and exacerbating the damage a potential crisis could cause,” OpenMarkets continues. “Regulators, Congress, and state policymakers should instead act quickly to shine a light on the troubled finances of the AI industry, stop contributing to bubble inflation with regulatory subsidies and giveaways, better protect workers’ retirement savings from exposure to outsized risks, and strengthen the resilience of the financial system to protect the economic security of households and the stability of the economy as a whole.”
Learn more about AI: Prominent Economist Says AI Has Brought ‘Zero Financial Gain’ to Non-Tech Companies
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